Rewarding

"Incentives and rewards are some of the most powerful management tools available" (Cited from "Making innovation Work", written by Davila, Epstein & Shelton).

People work against some compensation. We do not expect people to come to work day after day if s/he does not receive anything in return. Yet, when we deal with rewarding, we redefine the scope, speaking not only about salary (or self-contentment in case of volunteers). People expect to be rewarded; they expect a system that will encourage those who do well and punish those who do not).

A close examination of what I written above, can teach about two objectives in rewarding:
The first sentence was cited from an excellent book I read on innovation. Innovation deals with changing the organization; leaving the current situation and replacing it by another one. Rewarding, as to the authors, is an essential tool for aiding this change and help it turning into organizational reality. If you want to change peoples' behavior, give them incentives before and while changing, and reward them after.
The second objective of rewarding is somewhat different. It deals with the daily routine, motivating us to continually work and perform better. It resembles the gasoline, which every car needs a steady supply in order to continue driving. This need is part of our genes as people, and it only grows with us being knowledge workers, choosing whether to stay and how well can we perform.

It is obvious why rewarding is so important: To help maintaining and to help changing.
The problem starts as rewarding is not as simple as we would wish.
It is not simple to reward, as, due to researches, to much rewarding, leads to poor performance. I think the reason is twofold: First, people get used to the rewards, and the level of rewarding required grows higher. The second reason has to do, with the fact that people understand that less is required from them in order to actually win the reward, and they naturally will tend to make fewer efforts.
It is not simple to reward as no company lives in a vacuum: The employees have expectations regarding what they were use to in previous places of work; towards what they hear from friends and family; and towards what happens in the market in which the company works. It is very easy to be drawn after others and build some rewarding system that does not serve us as a specific organization. Acting otherwise and not answering employees' expectations, and un-satisfaction and de-moralization can follow.
It is not simple to reward, as rewarding should be proportional to the phenomenon or behavior which we want to encourage. As already I have written in previous posts, measuring is difficult. In many cases, it is complicated to estimate how much each individual contributed to some success.

However, the main question is not why rewarding is not simple, yet how should it be done.
First, an organization has to conduct its own rewarding system, based on its unique organizational culture; I recommend not following others, not to be drawn after the industry, nor neighbors or friends. The saying "we are unique" can lead to a positive implementation, if communicated properly. Of course, expectations should be leveled with new employees, before they are hired, and as part of the interviewing process. In case of an existing organization, wishing to change its current rewarding system, things are more complicated. I read a study, conducted by Kaplan, claiming that people tend to become fixated on existing incentive and rewarding systems and resist the change. Such a change has to be managed, according to all well-known change management methodologies.

Second, any rewarding system has to be based both on organization needs as well as on the individual needs. In general, organizational needs are in high congruence with achievements and results, while individual needs are more connected to efforts. Both need to be rewarded. Rewarding can be "hard", mainly money in all formats, starting with higher salary, bonuses, stock options, etc. Rewarding can be "soft", examples including recognition, promotion, publication, compliments, professional course, etc. Using Maslow's needs pyramid can help in designing the rewarding system. What I find important is to balance between the two, being sensitive and wise.

Any rewarding system, no matter how designed, should answer some principles in order to be effective:

• Fairness. Living in a situation where other employees do understand why their colleague was rewarded and not them. Any rewarding system should aspire to reward individuals when the organization was rewarded significantly.
• Answering the individuals' needs. No matter if the rewarding is for a team or for the individual, s/he has to be touched and motivated.
• Balanced in scope. Too generous rewarding systems are not considered effective, and in some cases harm. To little yet communicated rewarding, will have cynical interpretations.
• Flexible. Never pre-define everything. Always there are unexpected situations in which an employee should be rewarded. The rewarding system has to be flexible enough to answer these situations as well.
• Stable. Do not change to often the rewarding system.

And most important-

• Suitable. Fitting the organization's spirit.

I hope we all succeed rewarding our employees and motivate them to work properly and change when appropriate. At the end of the day, we have to remember, that rewarding is one of the most powerful management tools available.

Yours,
Moria

To the Hebrew version

Changes

Changes; the world around us is changing. It always did, but it seems, that in the 21st century, the frequency of these changes is getting higher and higher. This fact is true looking at the world in general, and true in organizations, specifically.

Organizations change for several reasons: First of all, the business environment outside the organization is changing. The life cycle of products is shrinking. It is true that products can be designed and manufactured, so they last much longer, but people want to renew. They want to renew because they get tired from the existing; they want to renew because they want new functionality or different solutions, as they get exposed to such in advertisement, in the communication, or by their friends, other consumers. But, that is not all. Technologies change; computing changes; and- our employees change. Not their characteristic, rather their names and faces. If twenty years ago, a person who was hired to work in some organization at the age of twenty, most probably would stay there until he or she have retired, today, we find many people who have more than one carrier, and most people choose to work in more than one organization during their carrier.
The bottom line: Organizations need to be prepared to many changes, external and internal; organizations need to know to adjust; organizations need to know how to manage the changes.

One may think I am speaking about a business, practical change of equipment purchasing, change of processes, change of pricing, etc.; No. This is something much deeper: It involves management; it is a change concerning people.

As explained earlier, organization always had to change, and to know how to change. Nevertheless, nowadays the frequency of changes is higher. Much higher. And there is another issue: Nowadays, it is much more complicated to lead a change in organizations. Hiatt and Creasy, in their book "Change Management", and Surowiecki, in his book "The Wisdom of the Crowds", speak about this problematic situation, each of them from a different aspect: In hierarchical organizations, as we were used to in the past, employees followed instructions. Today, many employees are knowledge workers. They are responsible for decision making in the area in which they expertise. The classic hierarchical structure is not the organizational structure in some organizations (i.e. start-ups) and not the power structure, in others. No matter how we examine it, people do not just do things because they were instructed to do so. I will add and say, that this attitude is even stronger, as many times, we have the feeling that the employee decides whether to continue and work in an organization, and not vie versa. It is much easier for the knowledge worker to explain why the change is not relevant for him or her, why it is inapplicable or why the timing is not appropriate.

So, what can one recommend?
Here are a few ideas. I wish to say, that, beyond my personal experience, and mistakes I have done on the way, I learned a lot from Hiaitt and Creasy's book, which deals with change management.
First, we must understand, as managers, that the personal aspect of changes cannot be managed as one unified process for all employees. Yet, It is obvious, that it is not practical to run an individual management plan for each worker and worker. I recommend analyzing the change management needs, and building a unified plan, or a plan for large segments in the organization (i.e. managers, front line workers). In parallel, to give an individual treatment to thought leaders, for good or bad. The effort seems to be beneficial: Their influence helps moving the organization towards the change. And- to give an individual treatment to feedbacks and to people who give them.

Another recommendation, to do with preparing the change: Do not impose changes on people. Give them a clue, a hint that a change is near. In some cases, it is a hint regarding the coming change, with no details; in others, it will be accompanied with knowledge about the content of the change. This tip is not so easy to implement as it may seem. The organization starts speaking about the change. As we did not announce it yet (we are preparing), more is hidden and unknown. People will tend to guess, and damage can occur. Therefore, the time of the preparation hints should be adjacent to the time of beginning of the change. The professional term is "unfreeze". This tip is also relevant for personal changes. Preparation eases the move.

As we are speaking about knowledge workers, it is very important to communicate the rational of the decision. Not to come up only with the bottom lines- what is changed and how. We, as managers, are aware to the reasons that brought us to decide upon the change. Even though we are sure that the symptoms are hung out there, and everybody can see them, and therefore it is obvious why the change is performed, most times, this is not the case. It is not that we are smarter; we just had the time to think about the reasons, to process, to think about solutions, maybe even several alternatives, and choose one of them- the change to be implemented. The employees, who did not take part of the process, it is important that they will understand the "Why"; the rational, why the change is needed. Why is it important for them to understand? To ease implementation. Naturally, people are not enthusiastic about changes, one may say, they resist changes. People are comfortable with the status-quo. Explaining the "Why" eases acceptance.

The rational issue brings me to another recommendation, to do with channels. We, as human-beings, think and act, both upon our rational, our logic, and both upon the emotional, the way we feel. It is important to deal with both channels, when managing the change. On the rational aspect, besides updating the people as to the reasons of the change, we should also give the tools for implementation. On the emotional aspect, things are more complicated: We should deal with peoples' fears, both the spoken ones and both those who people feel but fear to share. We shall enable the employees to participate, mainly on the "How". It gives the employees a good feeling, but the benefit is mainly for the organization: It leaves us with a better plan for change management and with a better implementation and chances for success.

It is difficult to manage changes, but we shall not avoid them: Changes are one of the main factors, leaving us, as an organization, relevant, business wise. At the same time, it renews the organization and makes the employees more satisfied, on the long run. As much as we fear changes, we like to change and renew. Just as our consumers.

I wish us all, easy but successful changes.

Yours,
Moria