The Folly of Rewarding a While Hoping for B
Kerr’s observation on “The folly of rewarding A while hoping for B is true today, simply illustrates the sometimes fouled up rewards systems that most companies have in place. Fouled up in the sense that most companies wrongly reward not so positive behaviours while hoping and expecting for better ones.
Kushell, E., Michael A, Heide D and Bosserman N, in their article explain that “Kerr’s words help explain today’s disappointing competitive results.” They further explain that most organisations continue to reward less productive behaviour, using the example of getting a job done being more important that how the job gets done at the expense of long term gains in productivity.
In his article, “The folly of rewarding A while hoping for B” (1995), Steven Kerr explains how this proposition often occurs in businesses and cites the example of an insurance company that awarded their employees based on their performance. Those who performed to an outstanding level were awarded 5% of the company’s profit share. Those who performed satisfactorily were awarded 4% and those whose performance was found wanting were awarded 3%. However, the company had a low tolerant policy to absenteeism and any employee who was absent or late for three or more times in a 6 months period would not be entitled to any percentage of the company’s profit share. The result was that employees realised that all they had to do was show up at work and not necessarily perform since the performing and the non-performing were entitled to receive a part of the profit share. In this case, the company was hoping for performance but rewarding attendance.
The same can be said of the examples cited by Gibbon (1998) of Dun&Bradstreet, whose policy on commissions earned by their sales team was dependent on the number of purchases made by their clients. The salespeople deceived clients into making huge unnecessary purchases so as to earn commission. In this case, the company was hoping for profit/good sales
Kushell, E., Michael A, Heide D and Bosserman N, in their article explain that “Kerr’s words help explain today’s disappointing competitive results.” They further explain that most organisations continue to reward less productive behaviour, using the example of getting a job done being more important that how the job gets done at the expense of long term gains in productivity.
In his article, “The folly of rewarding A while hoping for B” (1995), Steven Kerr explains how this proposition often occurs in businesses and cites the example of an insurance company that awarded their employees based on their performance. Those who performed to an outstanding level were awarded 5% of the company’s profit share. Those who performed satisfactorily were awarded 4% and those whose performance was found wanting were awarded 3%. However, the company had a low tolerant policy to absenteeism and any employee who was absent or late for three or more times in a 6 months period would not be entitled to any percentage of the company’s profit share. The result was that employees realised that all they had to do was show up at work and not necessarily perform since the performing and the non-performing were entitled to receive a part of the profit share. In this case, the company was hoping for performance but rewarding attendance.
The same can be said of the examples cited by Gibbon (1998) of Dun&Bradstreet, whose policy on commissions earned by their sales team was dependent on the number of purchases made by their clients. The salespeople deceived clients into making huge unnecessary purchases so as to earn commission. In this case, the company was hoping for profit/good sales