What if One of Every Two Managers is Terrible at Paying for Performance?

A lot has been written about the failures of performance pay.  In our search for explanations, we have considered everything from plan design to performance measurement, from upping our investments in training to employing social feedback techniques.  We often overlook, however, a little thing called accountability.

One out of every two managers is terrible at accountability.  That is the conclusion of research covering more than 5,400 upper level managers across the globe, completed by Darren Overfield (Senior Consultant at Kaplan Devries) and Rob Kaiser (President of Kaiser Leadership Solutions).  That's right.  Holding people accountable, according to this team, is the single most shirked responsibility of executives.

Their explanation for this deficit of managerial fortitude?

... there is an even deeper explanation for the lack of managerial courage to hold employees to account for their performance. The evidence comes from experimental studies of cooperation and the problem of "free-riding," which reveal the individual- and group-level outcomes that accrue when some team members don't carry their weight and drag on the performance of others. The first lesson from this research is that within a group, free-riders and cheaters often get ahead of hard working contributors: they enjoy the benefits of group membership without making the personal sacrifice.

However, groups of cooperative contributors outperform groups of cheating free-riders. Thus, it is no surprise that groups in which free-riders are punished for their loafing outperform groups in which they are not. But the interesting finding in all of this is that the person who does the punishing actually pays a personal price in terms of lost social support. In a nutshell, group performance requires that someone plays the role of sheriff, but it is a thankless job.

If this holds true, can it be any wonder that we struggle to make pay for performance work?  In many places and in lots of organizational cultures, the odds are stacked heavily against the manager who goes out on a limb and makes tough reward calls -- withholding from one individual or group in order to reward another who cranked out the effort and energy to make success happen.  Without support and reinforcement, and lacking sufficient positive consequences, paying for performance can indeed be a thankless task.  When the rest of the management team is in it for the popularity, avoiding unpleasantries and tough conversations, fighting for maximum rewards for their teams, deserved or not, it is the exceptional leader who will stick their neck out and making the right pay calls.

Are half or more of your managers failing at pay for performance?  Before you bother fiddling with the merit matrix, performance rating scale or bonus plan design, perhaps the place to begin is taking a good hard look at the state of accountability in your shop. 

If nothing else, it's good to have a real bead on the size of the boulder you're trying to push up the hill.

Ann Bares is the Founder and Editor of the Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School and is a bookhound and aspiring cook in her spare time.  Follow her on Twitter at @annbares.

Image courtesy of bigscreenanimation.com

Comments

[E. James (Jim) Brennan]

Since almost half of all workers are "below average," it should come as no surprise that supervisors share that quality.

[Ann Bares]

Not according to the performance rating distributions at most of the organizations that I encounter, Jim. Are you suggesting that these might not be completely truthful?

[Stephen Kirkland]

Thanks for the info...

[E. James (Jim) Brennan]

Heaven forbid that I should argue with executives who "know it all; but I'll just make a simple observation. The laws of statistics decree that half of every population sample must lie below the midpoint. Therefore, one half of all managers are "below average" (roughly speaking. That dull half can make more messes than the bright half can ever solve. For every great supervisor, there is an awful one.