Do Stuffed Chickens Lay More Eggs?

A friend of mine sent me an article recently that had me pulling out my hair óand I don’t have that much hair left to pull out! It seems a 3,400-person bank in Ohio had a big problem with turnover among its check-proofers (a low-paying job that combines the benefits of tedium with the rewards of low pay and mission-critical accuracy). According to bank managers, proofers were “vital to ensure the correct amount of money is moved from one account to another… The bank’s reputation and the customer’s satisfaction depend on it.” Someone’s innovative “solution” was to institute a pay-for-performance plan. In fact, the spokesperson said the pay plan worked so well that they intended to implement it throughout other departments. As the Church Lady on Saturday Night Live used to say, “Well, isn’t that special?” Be Careful What You Reward, You Just Might Get It I totally agree that good performers should receive good pay, but most research shows that pay only has a temporary effect on performance. However, tinkering with pay programs is similar to wandering into a blue-haired feeding frenzy… getting between people with bionic hips and boiled shrimp can be downright hazardous to your health. Most jobs follow the laws of supply and demand. More demand for a specific job combined with fewer qualified people yields higher pay scales. But ó and I mean BUT ó economic balance also assumes every employee has equal skills and is equally productive. Of course, anyone who has ever worked in an organization knows “equal skills” are pure fantasy. Employees naturally tend to separate into top-scale people, middle-of-the-roaders, and bottom feeders. In most cases, this follows roughly a 20/60/20 ratio. But did you ever wonder WHY? Or more importantly, how to change it? Traditional practices:

  • People (even professionals) believe interviews are effective because they do not systematically compare detailed pre-hire interview data with detailed post-hire performance.
  • People tend to “forget” that only about 50% of the people who pass hiring screens become good performers. No news about new-hire job performance becomes good news.
  • Human decision-making flaws encourage hiring managers to predict job performance based on social impressions and impact instead of empirical data.
  • No hiring manager wants to publicize 50% of his or her hiring decisions are inaccurate, so they often rewrite history by changing expectations to match reality.

Best practices:

  • Wake up and smell the coffee. Effective placement practices are not a learn-as-you-earn activity. Study as much about best hiring practices as possible. The Uniform Guidelines on Employee Selection Procedures are a good place to start.
  • Thoroughly understand job competencies by doing a competent job analysis.
  • Choose professionally-developed tests that accurately evaluate specific competencies.
  • Make sure every test score is causally associated with some specific aspects of job performance.
  • Measure each competency at least twice using two different methods to reduce error.
  • Follow up and monitor the system, tweaking it as necessary.

Did you notice that “pay for performance” was not included as part of a good selection process? When Pay for Performance Goes Bad

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  • One company paid incentives for orders. Sales went up. Returns went up. The company implemented a restrictive return policy. Clients became very unhappy.
  • One company paid their programmers for catching software bugs. Payroll increased. Software bugs increased.
  • Auto mechanics were paid based on the size and number of their repair bills. Customers complained about high prices, unfixed problems, and unnecessary repairs.

There are several psychological principles that drive this kind of behavior:

  • People tend to slack-off when they feel underpaid. That is, they adjust their productivity to compensate for low pay.
  • When pay is tied to group performance and individual performance is ignored, group productivity tends to fall. High performers tend to resent slackers.
  • Senior manager’s historical shabby treatment of subordinates has encouraged a get-mine-now attitude among employees.
  • What is measured (and rewarded) tends to get more attention, while everything else takes second priority.
  • Individual pay for performance generally leads to self-serving behavior.
  • Innate attitudes and beliefs can lead to unproductive work behaviors such as workplace violence, low integrity and theft.

Bottom line: Pay is a very complicated process that often leads to unexpected consequences. Recommendations The recommendations are so simple they seem complicated: 1) use best practices to hire right-skilled employees and managers, and 2) get out of the way and let them do their job. Best practices ensure that marginally qualified people are screened out pre-hire, instead of later. They also maximize diversity by basing decisions more on skill measurement than impression management. Getting “out of the way” means training, managing, and evaluating people on the job they were hired for and then rewarding people fairly. It also means actively searching for and removing silly blocks and obstacles that inhibit work. A bank-wide pay-for-performance system? It won’t be a pretty sight. Chickens produce better eggs when they are healthy and fed a balanced diet. More feed only leads to fat fowl, not more eggs.

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13 Comments on “Do Stuffed Chickens Lay More Eggs?

  1. Dr. Williams,
    I find it interesting that you would present this argument to a board where many of the individuals either are 100 percent straight commission, or commission driven? thus meaning incentive driven. We are personal proof that it does work?

    I realize that you like examples I would like to use some that will show that do prove that reward is very important in the workplace- and that the stuffed chicken may not lay more eggs but could definitely lay bigger eggs.

    For many of us who took psych 101 we would remember the ? skinner box? – rats are rewarded based upon performing the same task and given instant gratification.. Immediately after eating the delivered food the rat begins to press the lever fairly rapidly. The behavior has been strengthened or reinforced by a single consequence. The rat was not ‘trying’ to do anything when it first touched the lever and it did not learn from ‘errors.’ Thus you are right, straight reward without training, ethics, is not a good idea

    So let us take a look at the process better know as operant conditioning ?

    Operant conditioning, It is response-stimulus. In operant conditioning, we look for relationships between behavior and the environment in which certain environmental changes reliably follow certain operant performances and what we learn to do to satisfy these motivational states.

    This is a pretty formal way of saying that, what’s important in operant conditioning is that important changes in the environment follow, or are contingent upon, some behavior. Looking at behavior, the environmental event that follows and how that change affects the behavior in the future

    Imagine a rat in a cage. This is a special cage (called, in fact, a ?Skinner box? Burrhus Frederic Skinner ) that has a bar or pedal on one wall that, when pressed, causes a little mechanism to release a foot pellet into the cage. The rat is bouncing around the cage, doing whatever it is rats do, when he accidentally presses the bar and — hey, presto! — a food pellet falls into the cage! The operant is the behavior just prior to the reinforcer, which is the food pellet, of course. In no time at all, the rat is furiously peddling away at the bar, hoarding his pile of pellets in the corner of the cage.

    What if you don?t give the rat any more pellets? Apparently, he?s no fool, and after a few futile attempts, he stops his bar-pressing behavior. This is called extinction of the operant behavior.

    Now, if you were to turn the pellet machine back on, so that pressing the bar again provides the rat with pellets, the behavior of bar-pushing will ?pop? right back into existence, much more quickly than it took for the rat to learn the behavior the first time. This is because the return of the reinforcer takes place in the context of a reinforcement history that goes all the way back to the very first time the rat was reinforced for pushing on the bar!

    So he decided to reduce the number of reinforcements he gave his rats for whatever behavior he was trying to condition, and, lo and behold, the rats kept up their operant behaviors, and at a stable rate, no less. This is how Skinner discovered schedules of reinforcement! Schedules of reinforcement are important in maintaining behavior

    So what does this mean in employment, The perspective adopted here is that an organization can control the employee motivation by regulating the energy output of employees by manipulating reinforcement schedules The basic assumption on rewarding the desired behavior- ‘the stronger the link between the behavior and the reward, the greater the probability of the behavior.

    Dr. Williams in today?s world it is highly important for us to remember how to maintain good employees, yes we can have applicants take tests and make sure we hire the ?Higher Power? himself, but it still comes down to if we bring on the great one, and he comes into an unfriendly un-stimulated environment, he will eventually stop performing. He too will ultimately burn out, become disillusioned and performance will suffer.

  2. I left my psych book at home, but I’ve been on my fair share of employee incentive programs, and three major errors tend to pop up.

    The first error is when the incentive program is intended only for high performers. If your middle level people don’t think an incentive is attainable, what is the point of incremental work for incremental pay raises?

    The second error is the error of the big bonus. Just about every good salesperson has been the recipient of a large order coinciding with a big bonus plan. We’ll take the money, but most of will admit that luck plays a large role in closing the deal on time, especially if it’s not a one-call close. This bonus is wasted money, as it often doesn’t actually spur performance.

    The third error is not understanding who and what drives your business. People often do exactly what they are paid for. When executives come up with pay plans that pay for appointments scheduled, they always seem amazed when scheduled appointments rise up without a corresponding increase in sales per appointment.

    I’m inherently distrustful of incentive plans that pop up for short term gains. I’ll take them, but my long-term business will always bring me more money than any short-term bonus.

  3. Hi Karen…

    In 1973 Skinner’s classical conditioning theory is species-specific (see the research done by Garcia, Clarke, Domjon, Hankins, Shettleworth, and others)..Sometimes it generalizes, somtimes it does not.

    ERE tells me about half the readers are corporate…

    Recruiters self-select into an incentive-driven sales-type job; people willing to ‘put it all on the line’ have significantly different motives and drivers than people who seek salaried jobs

    A personal conversation yesterday with a gentleman (whose organization implemented a program similar to the article), said it described exactly what happened in his company.

    In spite of what some folks may think, I don’t make this stuff up.

    Later,

    Wendell

  4. Karen with all due respect to an esteemed colleague in the search profession, you’re dead wrong that this board represents ‘100% commissioned individuals’.

    Look at the membership list roster for your region … and you will find the reverse to be trued: MOST of the ERE members are C-O-R-P-O-R-A-T-E employees on the internal recruiting/retention, and HR management side.

    I just checked the members here in New Jersey, about which are listed some 347 or so, and 80% are corporate recruiters, contract corporate recruiters, managers, diversity recruiters/officers, etc. etc.

    Even the national conference attracts suppliers and services geared toward the corporate side.

    If you want to start a board that is 100% recruiter side discussions … this is a GREAT IDEA and let me know if you create one as I’ll be the first in line to join. I’d even consider helping you with it.

  5. Frank, and Dr Williams
    and First off please let me clarify – I actually said ‘many of the individuals either are 100 percent straight commission, OR commission driven’ Not once did I state All, or mention TPR?s only-

    So please note that included the many of the corp recruiters who do get commissions/bonuses/incentives on each placement or on the effectiveness of the work done, the vendors who also get commissions on the products sold, as well as the owners of the recruiting companies and the TPR’s working for companies who get commissions/bonuses for each placement. Please remember even much of the time.

    Incentive programs have been around for a very long time, going back to the 1920?s when sales people receive watches, briefcases, etc. They are generally utilized in Sales ? they tend to work well when there is a sliding scale based upon margins of each numbers of sales sold, customer service of the clients and retention of clients which in many cases is very important.

    Throughout our lives, we receive rewards for behavior or performance, such as good grades in school, bonuses and incentives in the workplace, or increased commissions in sales positions. The behaviors associated with positive outcomes (like increased profits for an organization) are rewarded. We work hard, do a good job consistently we get rewarded, but in the same token, if we don?t work hard, fail at our job, we get fired?thus behaviors that are detrimental either to ourselves or an organization are also punished.

    Incentive plans should be based upon the requirements of the company. Let us use the TPR for example, they may have a salary, and a sliding scale based upon the sales they perform. The more they make the bigger the percentage. This does allow the individual the motivation to close more deals –

    Now let?s say a company thinks that customer retention is important, they create a plan which increases compensation based upon customer service and retention, thus the agent will also make more by retention of client, and consistent recurring revenue.. Then the individuals will also attempt to apply more effort on customer retention.

    In operant conditioning, a company must look within their organization, looking at what their biggest needs are to maintain consistent revenue, they apply an incentive plan based upon those needs, but they must consistently monitor the employees, have a control of pre measurement, provide quantity and quality goals, based upon team and personal goals, keeping the team/individual motivated. Management must maintain training, monitor, motivate, equip and supply all participants, in order for them to attain the required goals

    If you want a person to improve a behavior over a longer period of time, you need to supply a variety of positive reinforcements.. With incentives comes motivation, then self appreciation – A motivated team works so much better. It does more, produces better quality with better customer service, handles change easily, looks for new ideas and feels good about itself.

    Which brings us to Maslows model of self actualization – Security, Money, Ambition, Companionship, Social reinforcement, realising personal potential, self-fulfillment, seeking personal growth and peak experiences.
    When a company focuses on the individuals potential, and helps them gain it, it allows for complete contentment as it raises self esteem, which takes us through other aspects of Maslow?s hierarchy of needs ? A company is meeting the need of biological ? food shelter etc, Safety ? security order limits stability, belongingness ? work group, Esteem ? achievement mastery prestige, cognitive ? education learning understanding, and Self Actualization realizing personal potential, self-fulfillment, seeking personal growth and peak experiences. For a company to do well it should constantly be metting all those needs of its employees…

    Incentives, Motivation and Workplace Performance- Research and Best Practices,’ funded by the SITE Foundation and sponsored by the International Society of Performance Improvement. The study revealed that incentives increased individual work performance by 27 percent and team performance by 45 percent.

  6. To make my last post more condesed –

    Whether a company decides to motivate their employees with cash or tangible awards, many factors must be considered for the programs to work ? One could implement a pay-for-performance plan that gives the hardest working employees the ability to make additional money every year, or a recognition program built around tangible awards that express gratitude to top producers or to workers who have improved their performance significantly during the year like a vacation, television or such like, but none of these will work unless the following are implemented –

    -Clearly specifying the required behaviour in order to achieve desired company outcomes, thus the employee is aware the needs of the company and maintains an effort to value those needs
    With clear goals linked to organization objectives. Your employee can work as hard as possible, but it won’t do any good unless people perform necessary functions that bring the organization closer to its objectives.

    -Attainable goals. No compensation or recognition programs stands a chance of influencing behavior if the majority of employees feels incapable of achieving the desired level of performance. To make sure you don’t set the goal too high, review the group’s previous accomplishments.

    -Training. In addition to the desire for success, people need knowledge and tools. Offer someone the most compelling compensation plan or recognition, but neither will work unless the individual has the ability to achieve the goal, it helps maintain and strengthen sales relevant actions.

    -A measurement systems to monitor progress on a daily basis providing feedback on performance, promoting encouragement

    -Job satisfaction. Few compensation or recognition plans succeed for long if they don’t consider fundamental workplace issues, such as employees’ role in job design, responsibility for quality of the finished product, and commitment to organizational goals.

    Remember Reward is important, whatever you should decide to implement – but without some type of reward or compensation within your org. employees will ultimately feel unappreciated and will look elsewhere

  7. I think we are all in agreement.

    People should be fairly compensated for what they do, but the compensation program should never encourage unproductive behavior.

    One final techie point. Maslow’s theory is highly popular in business-school and training environments…but, there is scant (if any) independent research to link his heirchary to job performance.

    Fun theory…but….

    Wendell

  8. Dr. Williams,
    Again we agree to disagree, actually Maslow’s theory is highly implemented regarding research articles, academic papers, and articles on Personnel management and motivation of employees –
    Excellent papers have been written by Dr. Angela Bowey, Douglas M McGregor, Dale A. Timpe, Dr. Fred Herzberg and infact In the Hawthorne studies, Elton Mayo and a team of researchers tried to determine what physical conditions in the workplace -The research of Taylor, Mayo, and others led to the development of a number of theories that attempt to describe what motivates employees to perform. Among these are Maslow’s hierarchy; Herzberg’s two-factor theory; and the X, Y, Z, equity, and expectancy theories.

    Much of these can be found at http://www.academicresearchpapers.com/cgi-bin/results.pl

    also in the research and findings of Stolovich, H. D., Clark, R. E., Condly, S. J. (2002). Incentives, Motivation and Workplace Performance: Research and Best Practices.
    found at http://www.incentivecentral.org/PRINT.462.98.html
    or
    http://www.awards.co.za/admin/092003_research_statistics.html

  9. Just like anything in life: There’s an appropriate time and place for anything.

    (Much more simpler to follow than the musings of psychologists past and present).

    Incentive based pay may be suitable in some instances, such as garment workers, seamstress, or personnel recruiters where the weekly numbers of production is the single most critical factor.

    But I agree with doc Wendell than when you pay for performance for those ‘finding descrepancies with checks’ this is the wrong way to go. I see where he’s going: You can easily create your own source of incoming by ‘finding errors’ you may previously never have found (a.ka ‘Making the errors appear from nowhere’!).

    I’m reminded of Policemen I occassionally see at town court meetings staying until 8 or 10 pm. They love it when someone tries to fight a summons as this generates not only ‘bonus points’ for the summons but residual overtime pay for appearing in court. I once asked such an office ‘Must be aweful to sit here this long huh?’

    ‘No’ he said, ‘I get paid overtime so I don’t care how long it takes.’ Yep. On my tax dollar!

    In many New Jersey municipalities, the overtime court pay becomes a second revenue stream in itself for those that have ‘unlocked the code’ of making this revenue stream appear consistently.

    It makes you wonder that if the speeding limit was just on the ‘border line’ would the officer issue the summons if he/she knew there’d be no court overtime pay if you contested the summons ?????

    Require police officers to appear at Court ON THEIR OWN TIME and watch how the issuance of summons drops like a rock! (Not saying we should do this but just making a point to apply back to wages/incentives).

  10. Interesting points Frank,

    Any incentive plan could be flawed, whether it be for sales, seamstresses, or such like, if there is no monitoring of employees behaviors.

    A sales person could turn in work not really performed, and a seamstress could turn in suits that are not stitched well. The personal recruiter could be filling positions that fall apart in a week or two.. with High number of free replacements. No matter what type of incentive you have implemented, or to what type of occupation one must have A measurement systems to monitor progress, the work performed, the ethics, and performance either on a regular basis

    Using your policeman as an example, if his boss was noticing that he was posting an unusual number of overtimes, then there should be a review of his actions and disciplinary actions would be taken. If nothing was done, then eventually the whole department would say look at what Joe Cop was getting away with, why don’t I do it as well…

    In the corporate world no sane person would take a job for less pay or lessor incentives, especially if the competitor is paying better. ‘you get what you pay for’ as recruiters are fond of saying – With that being said, if you are paying well, but don’t have some sort of monitoring and review process, then maybe one should look internally and figure out why your staff are taking advantage of you.

  11. Once again, I have come to regret tossing my two cents in.

    If I were to answer this Karen, It would cost me a significant fee I must ‘monitor’ today (something you just suggested those of us tied into incentive plans ought to focus on) so I will have to let this argument pass.

    I chatted with Mr. Williams … and we both see eye to eye on this and from your statement you seem to agree there is potential for abuse as well.

    (time to get back to work where I actually get paid)

  12. Steve,
    Yes I am in agreement, there is a potential for abuse. Remember ? Nothing in this world is absolute. Not even Physics. What we learned in school about light refraction has since changed over the years?

    This said, we must always be aware that everything is NOT black and white, to suggest that incentive plans are imperfect and fallible creates an absolute statement ?
    Especially when there is substantial proof that incentives do have the ability to be rewarding for a company, but we must also note the important aspects and demonstrated, essential elements which are necessary when one is developing an incentive plan which would allow it to have the intended results.

  13. Had to bow before my heavily dogged-ear copies of Campbell and Stanley (1963), Cronbach and Meehl (1955), and Cook and Campbell (1979) books. Sure, results with white rats are certainly generalizable to college freshmen, but to a FAR lesser extent to CEOs, sales reps and commission-based recruiters (for one, I don’t think CEOs would work for meat powder or food pellets… recruiters possibly but it depends on many factors).

    There’s little that is binary when it comes to human behavior – those rare instances when the correlation coefficient is +1 or -1. Nonetheless, Wendell, Frank, and James clearly point out that (a) incentive plans are highly complicated vehicles and (b) many people driving them barely have the learners’ permits.

    Which reminds me of a joke…

    A Japanese company and an American company decided to have a canoe race on the Missouri river.

    Both teams practiced long and hard to reach their peak performance before the race. On the big day the Japanese won by a mile.

    Afterwards, the American team became very discouraged and morally depressed.

    The American management decided that the reason for the crushing defeat had to be found. A ‘Measurement Team,’ made up of senior management was formed.

    They would investigate and recommend appropriate action.

    Their conclusion was that the Japanese had 8 people rowing and 1 person steering, while the Americans had 1 person rowing and 8 people steering.

    So American management hired a consulting company and paid them incredible amounts of money. They advised that too many people were steering the boat and not enough people were rowing.

    To prevent losing to the Japanese again next year, the rowing team’s management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents and 1 assistant superintendent steering manager.

    They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the ‘Rowing Team Quality First Program,’ with meetings, dinners and free pens for the rower: ‘We must give the rower empowerment and enrichments through this quality program.’

    The next year the Japanese won by 2 miles.

    Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. Then they gave a High Performance Award to the steering managers and distributed the money saved as bonuses to the senior executives.

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