A good friend of mine, John Schlueter, provided me with some topics for this blog. Here is one of them.
If you go to a restaurant and the waiter is late with your order, and you can see that he is working very hard in a busy section with many demanding customers, will you still tip him?
Most of us, pretty much without exception will tip the waiter based on the situation and the obvious effort he is putting out. Unfortunately in a performance based role such as management, or sales, this would not be the case.
In past sales roles there have been years where I have worked some of my longest and hardest hours pursuing sales, only to be not rewarded when the sale did not come in. Everyone knew how hard I was working, that I had difficult customers and significant competition. It didn’t matter.
I didn’t get a “Tip”(commission).
A “tip” is an incentive commission to drive a desired behavior in business. It is not an entitlement.It is there to drive a desired outcome – either fast and courteous service, or achievement of a sales objective – as the case may be.
Despite that position, I would still probably leave a tip, but I have been in roles where my bosses didn’t feel that way at all.
I have always found it amusing how we can rationalize behavior when representing a management team, that we would never personally consider or implement on a private, interpersonal level.
The pay for results culture (PfR), made popular by Jack Welsh and the GE mega-stars is a great example. The current application of PfR is a great example of doctrine that has replaced humanity or decency.
For the record, I am usually rated / recognized as a high performing contributor. This is not a ranting of someone who gets burned by programs.
PFR, is usually linked to a series of objectives and goals set 12 to 18 months in advance in absence of any true market knowledged and usually without any viable ability to negoiate by the employee.
Legitimate macro events causing non performance or over performance are usually ignored by leadership teams, unless there is a method to reduce compensation legitimately for the immediate needs of the shareholders.
Most quotas, goals, targets, and budgets are really just documentation of arbitrary targets from the top based upon some perceived requirement related to stock price. Usually it is the finance team that sets these arbitary targets. Sales must go up 10%, hence your target is x, regardless of reality within a particular account group.
Additionally, PfR programs usually require a forced distribution ranking of the entire staff against an arbitrary 9 box grid system. This mandate for a bell curve pushes the idea that forcing turnover of 10-20% each year of the staff has merit. Usually, there is a rationalization against business unts which override individual actual results.
The most aggravating aspect of PfR is usually the lack of honesty that typical HR groups approach the process. the glossy snow job of justification and rationalization often undermines the logical and rationale outcome each business needs. why has HR become the office of internal propaganda? When did HR quit being the protector of the employee and instead become professional spin doctors and junior legal wannabees?
The typical dialog with employees is typically unproductive. Managers cannot defend or justify P, P-, I, or T ratings. Usually you can explain why someone is the highest performer, but not how any single employee could do better. Mechanics of an HR progam are paramount to the real objective of enriching an individual workers skill portfolio.
PfR and commission programs are incredibly powerful reward programs when managed upfront and with integrity. Goals must be interwoven and linked to the business objective. sometimes, you simply will not receive incremental targets for a variety of reasons. However, the most successful managers, never lose the humanity of the program and approach the application with integrity and directness. This is how you build winning teams that can confront obstacles and overcome them and later share in the mutual success.
I don’t say I agree with the system, but it is the system we have and we must understand how it works. Businesses exist to generate value for the stockholders, be they publicly or privately held. While the stockholders may have some temperance in reviewing the performance of management, it is my experience that they rarely display it.
Pay for Performance is here to stay because it is so eminently quantifiable. That is what business wants. The qualitative, while important, will usually be looked at and responded to in the form of continued employment, in the face of not achieving the quantified objectives. I think this is where the “Humanity/Decency” application comes in. I think in the purest form of PFP, if you didn’t make your “number” you were “gone” regardless of the environmental events that may have been outside your control.
The PFP system may not be the best, or in some instances the fairest, but it is a way to translate shareholder/corporate objectives and requirements into individual goals. While HR may have the “Human Resource” title, ultimately it is up to the employee (and his/her management) to work within the system to create the most equitable set of objectives and to understand and work within the system to try and maximize both their individual and the corporations returns.
Thanks for both the question and response on this one.