Jeffrey Pfeffer’s recent congressional testimony has received a good deal of attention around the blogosphere. Most that I have read have highlighted Pfeffer’s critique of pay-for-performance incentive structures, which he argues are systems that “effectively motivate the wrong behavior.”
In reviewing the testimony, I was struck by the alternative Pfeffer laid out for improvement. He explained that rather than tinkering around the edges with payment incentives, organizations seeking better outcomes should concentrate on building high performance cultures.
Although the list of high commitment or high performance work practices differs slightly among authors and studies, most such lists include:
a) sustained investment in training and development, including job rotation, both formal and on-the-job training, and a tendency to promote from within as a consequence of the successful internal development of skill and people;
b) an egalitarian culture in which formal status distinctions are downplayed, salary differences across levels are less than in the general economy, and in which people feel as if their contributions are important and valued;
c) delegation of decision making responsibility so that skilled and developed people can actually use their gifts and skills to make real decisions;
d) high pay to reduce turnover and attract the best people, coupled with rewards that share organizational success with its members; and
e) employment security and a policy of mutual commitment, so that the workforce does not fear for the outcomes of events over which it has no control and instead, feels reciprocally committed to the employer.
It is quite a feat for organizations to meet a majority of these ideals, meeting all five is phenomenal. Where does your organization fall out, and what discussions can Pfeffer’s comments help begin toward improvement?