Reward Systems: Does Yours Measure Up? (Memo to the CEO) (Hardcover)

~ Steve Kerr (Author)
Key Phrases: good reward system, content rewards, prestige rewards, Reward Systems, Goldman Sachs, Pine Street (more...)

Editorial Reviews

Product Description

It's one of the thorniest management problems around: dealing with unmotivated, low-performing employees. It's easy to point the finger of blame at them. But in most companies, it's the reward system, not the workforce, that's causing poor attitudes and performance: many reward systems actually discourage desired behaviors while rewarding the very actions that drive executives crazy.



In Reward Systems: Does Yours Deliver? Steve Kerr describes the steps you must take to create an effective reward system:

• Clarify what you mean by "performance" -- in ways that help employees understand how they can support what you're trying to accomplish
  
• Devise an effective performance-measurement system that distinguishes between metrics used for control and those used for employees' development
  
• Design a reward system that motivates people to do what you want them to do while also meeting their needs

To get the most from employees, you don't need to add headcount, upgrade your IT capabilities, or hire consultants. You do need to develop the right reward system. This book shows you how.



From our new Memo to the CEO series -- solutions-focused advice from today's leading practitioners.

About the Author

Steve Kerr is the former Chief Learning Officer of Goldman Sachs and General Electric. He is a former professor of management and has served on the faculties of the University of Michigan business school, Ohio State University, and the University of Southern California, where he was faculty dean. He has authored numerous academic articles and coauthored the bestselling business books The Boundaryless Organization and The GE Work-Out.

Product Details

• Hardcover: 144 pages
• Publisher: Harvard Business School Press; illustrated edition edition (December 4, 2008)
• Language: English
• ISBN-10: 1422119114
• ISBN-13: 978-1422119112
• Product Dimensions: 7.3 x 4.4 x 0.8 inches
• Shipping Weight: 7 ounces (View shipping rates and policies)
• Average Customer Review: 4.5 out of 5 stars  See all reviews (46 customer reviews)
• Amazon.com Sales Rank: #591,794 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

4 of 4 people found the following review helpful:

2.0 out of 5 stars Do reward systems work? It depends on who you ask..., January 15, 2009

By	Gregory Ehrbar "mousetracksonline.com" (Orlando, FL) - See all my reviews (REAL NAME)

(What's this?)

After over forty years of experience in large and small organizations, I have been on both sides of rewards, both receiving them and being passed over for them. If there is anything this experience has taught me, it is that in general, corporate rewards offer little on the positive side and a lot on the negative side.

There are several issues missing - or at least not fully realized, in this book, though it does contain some very true insight into failed rewards systems, such as those that start out claiming to reward outstanding performance but degenerate into mere attendance contests (a sure sign that management is either too busy, lazy or out of touch with its employees on a personal level).

One of the missing issues is favoritism. People are human, whether they are CEOs or the custodial staff and they respond more positively to those who make them feel good about themselves. They also cannot help but become somewhat biased toward those they know over those they don't know. That is why the first people in a large organization to receive awards are those in their immediate field of vision -- a phenomenon I have witnessed time and time again. Kerr does allude to the fact that, even in a quantifiable reward system, it must be taken into consideration that the playing field is not always level for the candidates -- but what also factors in is that the "favorites", or to put it more charitably, the "high-profile" persons, are often going to get the better chances?

That is not to say that this book does not have value. Kerr does acknowledge flawed systems and, most importantly, points out that there are employees being rewarded for the wrong behavior. There will always be people who figure out how to work the system. That is absolutely true. Some terribly horrendous people who make life miserable for those around them and are a drain on both morale and company resources are given awards, making those awards mockeries of their actual intent.

Another very important point Kerr makes is that saying "No" is punished and saying "yes" without question is rewarded, even if the directive is going to be damaging to the company, the client, or the future. I can't help but wonder how many "less than excellent" employees could see the current problems coming for the fall of the banks or the auto companies but were considered "negative" and "not excellent" while those who carried out the flawed orders of those above them were called "outstanding?"

So Kerr's book is valuable if only that it re-opens the subject and hopefully institutes improvement, if not perfection. You can't expect awards to always be fair, just look at the Oscars or the Emmys. But they're probably here to stay because they're a cheaper alternative to raises and bonuses in these lean times.

That said, the most important part of the issue of whether rewards work is this -- what happens to the people who DON'T get them? They may never speak about it, not wanting to be "poor sports," but for all his quantifying, Kerr can't possibly account for all the hurt and possible bitterness that giving public awards to a select few incurs on the mass of losers. Who is really getting "rewarded" ultimately? The employees or the management who can rest a little easier now that they have rewarded "the best people?"

How can you tell a crowd of employees that they're all valued and they're great, but a few are even greater? Shades of Animal Farm -- some are more equal than others. Such events not only cause deep wounds but also shove wedges between co-workers who are being told there's no "I" in "team." You can't give awards to everybody either, because obviously they lose their meaning. You might want to tailor specific awards for each individual contribution, which is time consuming, or -- heavens to betsy -- visit your people more often to let them know how valued they are. I have seen, too often, that citing the contributions of some while ignoring those of so many others causes hurts, the depths of which you may never be aware.

It's not an easy issue to solve and Kerr, to his credit, doesn't pretend to have all the answers, nor do the companies he served become magically transformed. But again, in these economically challenging times, it might do well to find more ways to do more than just create a blanket reward policy without taking the variables of the human factor into account.

3 of 3 people found the following review helpful:

4.0 out of 5 stars Concise information on how to recognize and reward employees..., December 13, 2008

By	Thomas Duff "Duffbert" (Portland, OR United States) - See all my reviews (TOP 50 REVIEWER)    (REAL NAME)

Reward and compensation systems are one of the most touchy subjects in a company. People don't like you messing with their rice bowl. But if not done correctly, management may well be measuring and rewarding the exact opposite behavior that they are trying to target. Reward Systems: Does Yours Measure Up? by Steve Kerr does a good job of drilling down to the core components of an effective reward system, and can help you get on track if you're floundering.

Contents:
The Power of Reward Systems
Step 1: Define Performance in Actionable Terms
Step 2: Devise Comprehensive Metrics
Step 3: Create Reward Systems That Work
What To Do Monday Morning
About the Author

At 136 pages, Kerr doesn't have a lot of time and space for fluff and philosophical ramblings. As such, the material is concise, direct, and ready for application. First, you need to get rid of the fluffy and lofty visions and goals that can't be nailed down in terms of "did we achieve it or not?" If a vision of "become the best company" doesn't have actions and behaviors associated with it, then it just won't happen. Next, set up the measurements that can be monitored and applied to the actions. Here's where many run into problems. It's a popular exercise today to "rank" all employees in order to weed out the low performers. Conceptually, it sounds effective, but it's loaded with landmines. For instance, all salesmen may be ranked against each other. Bob outsells Bill by a 2-to-1 factor. But that ranking doesn't take into account that Bob's territory is populated with high-income individuals, while Bill is selling to blue-collar workers. In terms of effectiveness, Bill might be a much better salesman that Bob, but his territory will never allow him to generate Bob-like sales. If these types of metrics drive the compensation system, you're rewarding things that people have little control over. Finally, the reward system has to meet the following criteria: eligibility, visibility, performance contingency, timeliness, and reversibility. If a reward system does not meet these criteria, it starts to have diminishing returns. For instance, say that there's a company-paid trip to a resort as a reward for "top performers". Many times this becomes an event that the same people attend year after year because of their past history. If that perk is not "reversible", as in the person not qualifying year after year, it ceases to become a motivator both to those who are locked in and those who might like to make it into the club.

If you've read any management books dealing with rewards and compensation, you've likely run across most of this information before. But generally it's not as concise and applicable as what Kerr has done here. Those running large companies would do well to read this and reexamine their reward systems. And those running smaller businesses should *really* read this and look to structure their compensation systems such that employees aren't "demotivated" to perform. What sounds logical may not be effective in actual practice...

3 of 3 people found the following review helpful:

5.0 out of 5 stars A fantastic business read. Get this even if you don't design reward systems, December 3, 2008

By	Russ Emrick (Monument, CO) - See all my reviews

(What's this?)

This book will help you in business regardless of what you do. The author is the real deal and has the chops to write a useful business book. This isn't a theoretical book written by an academic but by someone who rolled up their sleeves and worked with Jack Welch in transforming a global giant.

I had low expectations of such a small book, plus I don't design reward systems. However I learned how employees game the system and how important it is to have metrics in place regardless of your job description. "Reward Systems" shows how to define actionable items and make metrics based on performance instead values and emotions. One of the best books I read this year. Hits on all cylinders.

Proper reward systems based on the objectives of the business which are aligned with the business' values make all the difference. However they must FIRST have metrics in place that monitor actual performance, not personality traits. Being aware of metrics, performance, and how reward systems work will impact your own performance and career, regardless of where you are on the corporate ladder.

Other reviews have given details on Kerr's system and the major ideas, so I won't be redundant. Read this book. Every page is loaded with value. With so many terrible business books on the market - especially the faddish theories and verbose sequels to outdated ideas - this book is a treasure. A must read in my opinion, especially for leaders.