Bob Lieberman's Blog

Tools For Initiating and Managing Change

Pay For Performance

Sounds like a good idea, right? Rewarding performance provides an incentive, and human nature does the rest. But, leaving aside the fact that one man's meat is another man's poison, I wonder why we're so sure we even know what performance means.


For example, to a business, people are considered human capital – wealth that can be used to produce more wealth. Obviously people can produce wealth by adding value directly to the products and services they supply. That's what companies usually mean when they talk about performance. But people can also produce wealth by increasing their own value and that of their colleagues. By doing that, they amplify their ability to produce wealth for the company in the future.

For example:
  • They exercise their curiosity to learn about their work
  • They try new ways of doing things
  • They inspire each other
  • They mentor or facilitate each others' work
  • They develop relationships with the community
  • They relieve each others' distress by caring about each other
  • They make doing business with their company pleasant and rewarding

Now ask yourself – how much of this kind of behavior is truly valued and rewarded at your company? Are people merely recognized for it, or are they actually paid for it? If you conduct performance evaluations, how much do you take it into account? And if you, yourself, behave in these ways, are you getting paid for it?

Companies that don't pay for this kind of performance are discouraging people from producing wealth in these ways, because the incentives drive their behavior elsewhere. And companies that do pay recognize the common thread in these behaviors – they're all motivated by a person's need for fulfillment.

Honoring and rewarding our fulfillment needs at work leads to dramatically improved performance. Any company brave enough to take this truth to heart will have a major competitive advantage. The truth is so obvious to me that I can't understand why it seems to be such a big secret. I'm curious to hear your ideas on the subject. Feel free to share them with me in your comments.

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