Chapter 22 of our latest book, Contented Cows MOOve Faster deals with the subject of motivation and rewards. A central tenet of the chapter is that organizations (and individuals) need to be very careful what they incentivize people to do, because, more often than not, that is exactly what they are going to do. While there is nothing new or remarkable about this precept (Psychologist, B.F. Skinner wrote and taught extensively about it in the mid-20th century), it seems that some of us have serious learning disabilities when it comes to our need to continually re-learn the lesson, often the hard way.

Witness the revelations over the weekend that insurance giant AIG planned to proceed with bonus payments ranging from $1,000 to $6.5-million ($US) to about 400 employees in its financial products division, the arm of the company that brought AIG, and the entire U.S. financial industry to the brink of collapse.

While word of these payments has led to a hue and cry about how a firm that recently posted one of the largest quarterly losses in the history of commerce, and has dined at the public trough to the tune of $170 billion can be paying bonuses to its employees, it should be of greater concern that company management, backed up by the board’s compensation committee, has evidently deemed the bonuses “earned”, consistent with established compensation plans, ‘er schemes. Yikes!

Before we get too sanctimonious, though, it would behoove all of us to revisit how pay and incentives work in our own organizations. How many of us, for example, are still paying people purely as a function of how long it takes them to do something? How many of us are incentivizing people who should be cooperating to compete against each other, and, how many of us, under the auspices of a poor economy have slashed or eliminated recognition and incentive programs altogether?

A thought leader in the arena of leadership and employee engagement, Bill Catlette is a seminar leader, keynote speaker, and executive coach. He helps individuals and organizations improve business outcomes by having a focused, engaged, capably led workforce. For more information about Bill, his partner Richard Hadden, and their work, please visit their website at www.contentedcows.com

In today’s NY Times, Tom Friedman wrote a compelling piece
“Start Up the Risk-Takers” in which he advocates that, “when it comes to helping companies, precious public money should focus on start-ups, not bailouts.” (e.g., GM, Chrysler). As is often the case, Mr. Friedman is on point, both about the general target for the stimulus money, and his recommendation that Chrysler and GM be allowed to go through bankruptcy rather than continue on life support infinitum at public expense.

In our 1987 book, Contented Cows Give Better Milk, we were among the first to suggest that GM’s troubles had less to do with strategy and talent than with effort, specifically discretionary effort. “The problems at GM had far more to do with the attitudes and commitment level of its workforce (demoralized by an inattentive and uncaring management) than with engineering, design, marketing, finance, or manufacturing processes. Think about it: GM enjoyed a huge brand name advantage, employed some of the best designers and marketing minds on the planet, had spent enough of their capital reserves on technological improvement to have bought Toyota outright, and yet they were still making crummy cars!” Now, twelve years later, as GM and Chrysler are back at the welfare window again, with hat in hand, I really wish that we had been proven wrong in that assessment. But there’s a lesson here:

Contrary to the opinions of some, demonstrating that you care about your workforce… A. Is important, especially today. Minds that are frozen by fear or otherwise self-absorbed don’t work very fast, generate many ideas, or respond to customers very well.

B. Does not involve lavishing people with money and expensive benefits which they haven’t earned, the market doesn’t require, and you can’t afford. Though a lot has changed about “the deal” in the workplace in the last 20 years, when it comes to the basics of motivation, nobody has moved the cheese. To wit, among a short list of other important factors (e.g., trust), people are still looking for the opportunity to do meaningful work, and the freedom to pursue it. They want to be in the game, not on the bench. Witness the kids at Cirque du Soleil who leave it all in the arena every night. If GM had 100,000 of those folks on the payroll, Toyota would be nothing but a speed bump in a Detroit parking lot.

A thought leader in the arena of leadership and employee engagement, Bill Catlette is a seminar leader, keynote speaker, and executive coach. He helps individuals and organizations improve business outcomes by having a focused, engaged, capably led workforce. For more information about Bill, his partner Richard Hadden, and their work, please visit their website at www.contentedcows.com