Editorial board member Sarah Lethbridge reflects on last month’s article from Yeo Valley’s Steven Welch and Christopher Coles about rewarding a workforce by giving them a voice which is heard.

I read Steve Welch and Christopher Coles’ article about the superior benefits of intrinsic rewards over extrinsic reward with interest, as it’s an area of operations management that often wrestle with. As a teacher of lean, there are certain textbook lean mantras that are now drilled into my head, one of which is Deming’s take on the subject; “you shouldn’t have to bribe people to do the job that you are paying them to do”. Deming was very clear on the
subject, and called “evaluation of performance, merit rating, or annual review” one of the Seven Diseases of Modern Management. One only needs to think about the over inflated bonuses of bankers, goading them into gambling with money that isn’t theirs, or worse, money that doesn’t exist, to understand the destructive ability of bloated extrinsic motivations.

Fast forward to modern-day thinkers on the subject, such as the fantastic Daniel Pink, who cites motivation experiments around Duncker’s candle problem (a test which explores a person’s ability to develop solutions) as proof that extrinsic motivation simply does not work for tasks which require an element of creativity and skill. Dan believes that “mastery, purpose and autonomy” are the key ingredients to enable an individual to realise their full potential.

I agree with him. I look at myself and my career and know that each of those three elements have been important in terms of helping me to arrive where I am. Would I come to work if I wasn’t getting paid for it though? No way. Would I be working as hard as I am now if my salary hadn’t increased as my career progressed? Probably not. I know that that is not entirely the point of the article, but sometimes I think lean can be guilty of preaching too much altruism. I have to say that I am probably guilty of this more than most. I stand up in class and genuinely believe that it is a manager’s role to coach and develop staff, to nurture their skills, develop their career – a vision of a selfless, servant leader.

But if I’m honest with myself and with my students, how realistic is this? Can everyone achieve this every day? Being a pesky human being always seems to get in the way. So how to be a better human being? Well another of the quotes that is imprinted onto my brain is that of Elbert Hubbard. “Many people fail in life, not for lack of ability or brains or even courage, but simply because they have never organised their energies around a goal.” I fundamentally believe this to be the case, especially again, because of personal experience. In one of my first jobs, my role was to investigate some of the key characteristics of successful female entrepreneurs. It was astonishing how, interview after interview, each business owner would cite, unprovoked, that they had set themselves a target to aim for, many of which were financially oriented. “By this time next year I’ll be able to buy a convertible”, “By the time I’m 30 I’ll be a millionaire”. How does this type of drive fit within a world where we offer recognition without cash? What’s wrong with a goal of getting to that next step on the ladder? A goal of wanting to earn more?

I think that many people have seen lean and CI as a vehicle to achieve these aims. In fact, it’s one of the things I enjoy most about my work, the uncanny ability for lean or CI to help employees to shine. It’s often quite clear to me which individuals ‘get it’ and are prepared to go above and beyond to improve their work and the work of the organisation. These people are often the organisation’s rising stars. Deserved recognition is an essential part of nurturing these people’s talent and enthusiasm, but I simply don’t think it is enough. We have to ensure that their career progresses as a consequence of their efforts, that yes, the fruits of their additional labours are rewarded, and I think one of the ways that employees feel appropriately rewarded is through the simple transaction of work = cash.

Netflix have clearly taken this approach as their “Freedom and Responsibility Culture” shows. They pay at the top of the market to create and ensure their high performance culture, because “one outstanding employee gets more done and costs less than two adequate employees”. They “endeavour to have only outstanding employees”, utilising three tests for a top of the market person.

  1.  What could that person get elsewhere?
  2.  What would we pay for a replacement? And;
  3.  What would they have to pay to keep that person if they had a better offer elsewhere?

These all seem like sensible questions to ask and find the answers for to me – questions I wish some of my previous employers had considered. Actually, this strategy would help to tackle another of Deming’s deadly diseases of modern management, that of manager mobility and “job-hopping”.

I agree that ‘bribing’ employees to contribute improvement ideas does not work, but I believe that exceptional contribution to lean and therefore, work, should be rewarded through improved career progression and with that, comes an increase in cash. Lean, when
deployed sensitively and with the best of intentions, can create the most fantastic organisational cultures, but people come to work to get paid, and to completely disconnect lean from payment is naïve. As ever, the more I muse on such topics, the more confused I become. I’m devoting my career to a fundamental belief that lean is the answer, but secretly hoping for a bonus from my annual appraisal. The key to everything, as always, is balance.