The Find: If you want your reward system to actually succeed in encouraging the results you want without spawning unintended dysfunctions, this podcast aimed at middle managers lays out basic but useful principles.- The Source: Cranky Middle Manager’s Wayne Turmel talks with Steve Kerr of Goldman Sachs (and formerly of GE) about his book, Reward Systems - Does Yours Measure Up?, in this 35 minute podcast.
The Takeaway: Never mind the long spiel on Greek mythology and Herman Melville at the opening of the podcast, around six minutes in things get more interesting when Steve Kerr finally shows up and starts talking about his years of experience crafting rewards systems that actually work. Kerr lays out fundamental principles 0f successful reward systems, including:
- Rewards must be available (and right now money just isn’t available for many firms).
- People must be eligible (a principle which starts the host off on complaining about operations staff frequently being ineligible for sales-only rewards.)
- Rewards should be scarce, visible and timely (leading to some discussion of the phenomenon of the annual review and efforts to game the system).
- Rewards should be reversible.
The lengthy interview goes into greater detail on many of these points and also delves into surrounding topics like the wisdom of some of Jack Welch’s management principles, including firing the bottom ten percent of performers every year and pushing all staff to publicly post the amount of their bonuses. Also, Kerr offers an inside view of Goldman Sachs in difficult times.
The Question: Do you have any rewards systems success stories (or nightmares) to offer as examples (or cautionary tales)?
(Image of trophies by terren in Virginia, CC 2.0)
