And One Ring to Rule Them All…

Alert – long post.

Just finished reading "The Halo Effect" by Phil Rosenzweig.  If you’re in business get it!

The book is a smart discussion on the "delusions" that shape the way we view business performance.  Skewering some of the most heralded business books of the last 30 years, Mr. Rosenzweig does a great job of unraveling the flaws in their research and the flaws in recommendations on how to drive business performance.  If either "Search for Excellence" or "Good to Great" have become your business bible, this book will be heresy.  I am one who has fallen victim to many of these delusions.  I’m sure you have as well.

But that’s not what made me post today.  What made me post was this post on "Disorganizational Behavior."  The snippet that started my thinking…

One thing I am learning through my continued studies is how complex and
wide-ranging leadership and motivation really is. So many different theories
exist concerning motivation, but is one really correct? Again, it comes down to
the situation and the context in which to look at the issue.

People are complex. Thus, the understanding of what motivates humans is
complex. It would be nice to have a simplified theory of motivation in humans,
but that will never happen. The complexity will continue, and managers and
leaders both will struggle with the issue of motivation.

The idea that there is one simple theory of why people do what they do is the same starting point for many of the hottest business books – that there is "one" way to get to greatness, or there are 6 principles to high-performance, or there are 7 steps to success – "just do this and win!"  Sounds more like a late night commercial than a solid study of business success.  After reading "The Halo Effect" and seeing that post on the "simplified" theory of motivation it struck me that the same problems – or delusions – that Mr. Rosenzweig discusses about new-age business punditry apply equally well to the theories and recommendations used daily for incentives and motivation.

"The Halo Effect"  says there are 9 Business Delusions that deceive managers.   I have listed all 9 delusions and provided comments with respect to the motivation issue.  One point to make…many of the delusions are connected.  One delusion spawns another and once you fall into one – it is easier to fall into the next.  As one of the delusions references – there is no "one" delusion that rules them all.  But I am convinced (until proven wrong) that there is one ring that rules all performance issues.

Or am I delusional as well?

The Halo Effect – The tendency to look at a company’s overall performance and make attribution about its culture, leadership, values and more.  In fact many things we commonly claim drive company performance are simply attributions based on prior performance.

This is probably the most common delusion in the incentive and performance improvement world.  Take a high performing company, interview the employees and whatever comes out of the survey is why the company is performing well.  Yet this is precisely what the Halo Effect says is a delusion – the result of the survey will be colored by the fact that the company is doing well – not a true representation of the cause of high performance.  Employees at companies that are doing well will respond to surveys in a more positive manner.  The "halo" of good performance colors the survey results.  In other words, the same survey will yield much different results for the same company if it is given when the company isn’t doing as well – even if nothing changed in the employee environment.  No one is saying that employee engagement activities aren’t important but don’t think they are a panacea for failing business performance.  In addition, don’t look for "feelings" – look for behaviors – measurable representations of performance.

The Delusion of Correlation and Causality – Two things may be correlated, but we may not know which one causes which.  Does employee satisfaction lead to high performance?  The evidence suggests it’s mainly the other way around – company success has a stronger impact on employee satisfaction.

Having received my undergrad in statistics and quantitative business analysis this point has been hammered home on more than one occasion.  In fact, I’ve used the fact that most people don’t ask if correlation and causality are two different things to my advantage in some instances – not in a duplicitous way, but to simply position information.  The example used by Rosenzweig above is a great one however since it is used by so many practitioners of employee reward and recognition programs as evidence that the company should run a program.  Does that mean you shouldn’t run a program to reward, recognize and motivate employees?  Absolutely not.  Understand however, the real goal of these programs is to reinforce a value system or change a behavior.  You must first understand the behaviors you need to impact – which means you need to know what the performance problem is and focus on that.  Simply installing a reward program will not change the companies performance.  Structured well, incentives can be causal, and measurable.  This is also why no program should be "off-the-shelf" – no two companies have the exact same issues that can be addressed by the exact same program.

The Delusion of Single Explanations – Many studies show that a particular factor – strong company culture or custom focus or great leadership – leads to improved performance.  But since many of these factors are highly correlated, the effect of each one is usually less than suggested.

This was the one delusion that got me thinking about motivation, engagement and incentives -  and it was part of the post in Disorganizational Behavior – what is the simple solution to what motivates people?  Too may incentive companies or performance improvement companies will state that a single approach will drive performance.  The truth is that a company needs many different ways to engage employees to ensure that all the bases are covered.  If anyone tells you that this "one" program will drive performance – run away!  What they are really saying is that they have one thing to sell and that’s what you need.  That is why we recommend recognition, incentives, communications, measurement – different things targeting different needs with different motivational and influence impacts. 

The Delusion of Connecting the Winning Dots – If we pick a number of successful companies and search for what they have in common, we’ll never isolate the reasons for their success, because we have no way of comparing them with less successful companies.

This was the major flaw in "Good to Great" and it is a very predominate one in the business book world.  The point is that there are probably many unsuccessful companies that do exactly the same things as the successful ones but since we don’t look for the same evidence in unsuccessful companies we don’t have the right information.  If we found that all successful companies have CFO’s that are over 6 feet tall would that mean that you should only hire tall CFO’s?  If we don’t compare to unsuccessful companies then you may not find out that more unsuccessful companies also have CFO’s over 6 feet tall and that it is more of an indicator of poor performance than good performance.  If Google gives all it’s employees free lunch – and the company outperforms its rivals then free lunch is the solution. 

The Delusion of Rigorous Research – If the data aren’t of good quality, it doesn’t matter how much we have gathered or how sophisticated our research methods appear to be.

This is a good one… more is better.  But it doesn’t really address the old garbage in garbage out issue.  Many books highlight the amount of research they’ve done to come up with their results but no one looks at the research through the lens of quality – just quantity.  One recent book called the "Carrot Principle" cites the fact that they have interviewed over 200,000 people over a 10-year period.  Sounds impressive until you think about the fact that they used self-reported data – information based on employee input.  If I work at a good company – and there is a lot of good press about my company’s success (the halo) it wouldn’t be too much of a stretch to think that the responses from employees would be positive. 

The Delusion of Lasting Success – Almost all high-performing companies regress over time.  The promise of a blueprint for lasting success is attractive but not realistic.

I think this is the biggest reason for the "model du jour" focus of most business books.  I know I have been guilty of this during the first internet bubble – thinking all new business models for the future will be "click" only – and the bricks will be passe.  However, as we now know, a combination is probably the best way to approach a market.  Even so, many people still think that the model that is successful today will be the model that will be successful tomorrow.  In the motivation world, it is manifest in the idea that only merchandise awards drive performance or that a debit card is the best answer.  The truth is that the appropriate award is personal and time and effort-sensitive.

The Delusion of Absolute Performance – Company performance is relative, not absolute.  A company can improve and fall further behind its rivals at the same time.

This is one that most people forget.  As a company installs best practices there are literally hundreds of other companies doing the same.  The fact that you’re doing the same things as others can only guarantee  parity at best.  This is where innovation and experimentation take on more importance.  How can a company take what is the current best practice and improve it?  How can the company provide some differentiation with a specific strategy or tactic?

The Delusion of the Wrong end of the Stick – It may be true that successful companies often pursued a highly focused strategy, but that doesn’t mean that highly focused strategies often lead to success.

This Delusion is almost specifically aimed at the "hedgehog" concept from "Good to Great" in that there is no evidence that having a specific focus that is unchanging will result in greater performance.  I think this goes to the point that having a core value system allows you to make day-to-day decisions quicker and with less angst – but doesn’t mean you’ll make better decisions that will result in extraordinary performance.  This delusion speaks to the need to have some core direction but an open mind.  An open mind is not the same as an unfocused approach.  With respect to motivation and influence it means that programs should change over time.  The world changes, the employee changes, the business changes.  If you have a program designed 10 years ago with the same rules and awards – change it – evaluate it – do something.  It probably isn’t doing what you want because the context of when it was created has changed.  The ultimate goals may still be on target – but the implementation may need adjustment.

The Delusion of Organizational Physics – Company performance doesn’t obey immutable laws of nature and can’t be predicted with the accuracy of science – despite our desire for certainty and order.

In other words… nothing is for sure.  There is no unified theory – no equation – that explains behavior and how to influence it.  I have posted before on this idea, labeling it "behavioral physics" with the goal being just that – certainty and order.  Nothing is certain when dealing with people.  People are complex and individual.  This is what makes us fun to be around.  If we were all the same it would be very boring.

The Wrap Up

So where does that leave us?  It leaves us with the one true statement relating to motivation and influence. 

It depends on people and it depends on context. 

People drive performance – whether that be your employees, your distribution channel or your end user consumers.  People are the core – and people operate within a business context – employee benefits and company value systems – channel sales processes and product features – consumer desires and new applications.  It is a symbiotic system in which a change in one changes something in another.  It is complex.  It is hard.  It is mission critical.

But… having a good background in the various ways to influence behavior, having a good database of past experience of successes and failures, understanding just what a company stands for and what their promise to their consumer is – all these things give you a better than average chance of actually increasing performance.  However, no amount of research will tell me that a specific solution will always work. 

As in the "Lord of Rings"  – there were many rings created but only one ring ruled them all.  In the world of business there are many factors that affect performance but the one ring that rules them all is people.  Without people businesses fail.  Does that mean this is all a crap-shoot?  Not really, what it means is there isn’t a unified theory of motivation – just  a unified theory of uncertainty and chaos.  Those that understand this and provide a foundation for hitting the most "certain" of the uncertain principles and provide a way to recognize change will find that they have a better than average shot at being a top performing company.