Stacking up the rewards

Measuring, and rewarding performance is often considered hard – what approach should we take?

I was recently invited to speak at Svenskt Näringliv (the Confederation of Swedish Enterprise) on this subject so I realised I better find a way to simplify it – and quickly! It was time to start my own business, I decided. Ok, only metaphorically, but go with me…

I imagined started a box stacking company. I employed a lot of people. One of them constantly stacked 30 boxes a day in the corner of the warehouse. Another stacked 20 boxes on average, but she did it in the middle of the room, and as she stacked she talked about her method and inspired 5 people to stack 15 boxes a day in the same way, out-stacking their usual average of 10 boxes.

But how did incentivise and reward work to keep the stacker motivated? Well, first I hired a manager that didn’t really understand box stacking and asked him to pay for performance. He rewarded the top performer (person who stacked the most boxes per day) in the corner.

To mix things up a bit, next I hired a manager with passion for box stacking and it took him just a day to see who added most value to the business. And he rewarded accordingly, and the overall production of stacked boxes increased exponentially.

It would be simple to say that an expensive, admin heavy performance management system would support the poor leader to keep doing wrong. But that would be too simple. In actual fact, if the system is complex enough, with feedback loops and whatever functionality you can squeeze in, I think it can come to the same conclusion as the good leader, but I will get slightly less boxes stacked when people spend time in the system…

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