a compensation system that produces superior results, those in the system have to feel just the right combination of autonomy, mastery and purpose.
Malcolm Gladwell, author of “Blink” and “Outliers”, points out in his stories about rice farmers in the Pearl River Delta and Jewish immigrant garment workers, that work must be meaningful, complex and autonomous in order to achieve consistently superior results.
In our book “Act Like an Owner”, Bob Blonchek and I suggested that in order to create a culture of ownership, there had to exist five beliefs in the company. A belief in the leader, a belief in the purpose, a belief in the operating model, a belief in empowerment and a belief in the reward.
Leaders are constantly looking for the secret sauce. They are looking for a compensation model that will motivate just the right behavior. They’re looking for a reward system that will benefit the customer, the company and the individual.
Put your current compensation plans through the following test to get a feel for whether you are engaging your workforce or just beating them up with heavier carrots and pointier sticks.
1. Does the workplace just make sense? Does the work have purpose? Is there a higher purpose?
2. Are employees encouraged to figure things out themselves? Do they feel autonomous and are they empowered to make decisions?
3. Is the work complex? Does it require higher-level thinking?
4. Do employees trust that you as a leader and the company in general will stand by their commitments?
Finding the perfect compensation model takes a great deal of effort. Rolling out an “if-then” reward system in a complex environment simply won’t work. Save the “if-then” system for routine and rule based tasks. Find ways to engage employees for your toughest challenges. Leaders have to stop using old methods to motivate our employees, and move towards intrinsic motivators to improve performance.