Recognizing the Wrong Things in an Organization

By Bob Nelson

At any level of recognition within an organization, but especially at the organizational level, it’s critical to identify exactly what you’re rewarding. If your organization isn’t getting the results it wants or the behaviors needed to achieve them, perhaps you’re just confused about what you want.

It’s amazing how many times organizations do what management expert Steven Kerr calls “the folly of rewarding A while hoping for B.” In his classic article of the same name, Kerr gives a wide range of examples of undesired outcomes that are, usually inadvertently, being reinforced. Read on.

Misguided recognition

Here are some examples of my own that you and your organization might be facing:

  • Many organizations want profits but recognize any sales revenue. It’s amazing how many salespeople receive recognition — and significant cash rewards — for closing unprofitable deals. Recognizing sales revenue, period, can result in a big top line and a small — or nonexistent — bottom line.

  • Many organizations want teamwork but recognize internal competition. If there isn’t enough teamwork in your organization, you probably don’t have to look beyond your recognition system. In fact, most performance evaluation systems pit employees and departments against each other in an internal competition for scarce rewards. When he was dismissed as CEO of Digital Equipment Corporation, founder Ken Olsen admitted that his major failing was not getting his engineering managers to team up with product and marketing managers.

  • Many organizations want quality but recognize inspection. For years, companies tried to improve quality by inspecting-out defects. Factories that shipped no defects were recognized, even though they wasted millions of dollars on scrap and rework . . . and quality was never built in. Some software firms even went so far as to give employees cash rewards for finding bugs in their products, creating an incentive for employees to plant these bugs in the first place and then (hopefully) catch and fix them before the products were released to the public.

  • Many organizations want effective training but recognize trainee attitudes or training time. The desired outcomes of training should be business-critical skills, job knowledge, and improved business results. However, rather than recognizing this, most organizations recognize the amount of training that employees receive and the attitudes of trainees toward training events. Both of these factors have very little bearing on whether the skills are valuable, and the extent to which they will be used on the job, much less the impact on organizational effectiveness.

  • Many organizations want high performance from employees but recognize seniority. There’s nothing wrong with celebrating service anniversaries, but not at the expense of performance. Some companies not only tolerate mediocre performance; they encourage it by giving mediocre performers the same recognition they give outstanding performers. What kind of message does this send? To get high performance, you must recognize it.

  • Many organizations want problem-solving but recognize problem-hiding. What happens when an employee speaks up about a problem in your organization? In many companies, problem-finders are viewed as troublemakers. No one can solve problems that are being hidden or ignored. Does your organization recognize whistleblowers or punish them? Remember that problems are really opportunities for improvement, and then trumpet those who make efforts to uncover them.

  • Many organizations want knowledge-sharing but recognize individual expertise. You might be surprised by how many organizations are investing heavily in knowledge management but don’t have the most critical enabler in place: a recognition system that recognizes knowledge-sharing and not knowledge-hoarding. As long as you recognize individual expertise above corporate expertise, this will continue to be the case. Make sure to reward collective knowledge!

  • Many organizations want creativity, but recognize conformity. No organization can be successful without some degree of conformity. However, no organization can be truly successful without a significant amount of creativity. Creative behavior manifests when employees go beyond the “normal” requirements of the job and take initiative. Unfortunately, in many organizations, creativity is often punished rather than rewarded because it’s messier and often causes problems associated with innovation.

    Many employees try to be creative, only to encounter resistance (not recognition) in the form of phrases like, “It won’t work,” “We’ve never done it that way before,” and “That’s just not feasible.” Resistance also comes in the form of bureaucratic and cumbersome suggestion systems that purport to welcome ideas but do the opposite. Ensure your systems are welcoming of and recognize creativity!

  • Many organizations want safety but recognize not reporting accidents. Recognizing lack of accidents often encourages employees simply not to report accidents or injuries. There are two ways to achieve excellent safety records: (1) maintain a safe workplace and recognize employees who engage in safety behavior or (2) recognize employees for not reporting the accidents that will inevitably happen, especially in an unsafe workplace. Which approach do you think is the better one?

  • Many organizations want cost containment but recognize bloated budgets. How many times do you get “rewarded” for being under budget by getting your budgets cut the next year? In fact, that is the most frequent consequence of managerial frugality. Managers learn that the best way to defend against organizational cost cutting is by having a bloated budget!

    In addition, across-the-board cost-cutting hurts those who have been running a tight ship much more than those who have bloated budgets and redundant staffs. This kind of cost-cutting actually reinforces budget padding, buffer stocks, and inventory cushions to protect against future shocks.

  • Many organizations want excellent customer service but recognize lack of complaints. Really outstanding hospitality organizations realize that it’s virtually impossible to improve customer service without customer complaints. In fact, the best customer-service organizations actually solicit complaints! Research has verified that effective recovery from a customer service problem is one of the key drivers of customer delight and building customer loyalty.

Recognizing desired results

Recognition is a wonderful thing, but recognizing the wrong things can actually undermine your organization’s competitiveness and threaten its very survival. So, then, what should be done about this problem? In short, you must take an inventory of what is being recognized in your organization and then change it, if necessary, so that the recognition inspires the desired behavior or outcome. That means

  • If you want profits, recognize profitable sales.

  • If you want teamwork, recognize collaboration.

  • If you want quality, recognize process improvement.

  • If you want effective training, recognize business-critical skills used on the job.

  • If you want high performance, recognize the results achieved.

  • If you want problem solving, recognize problems found and solved.

  • If you want knowledge sharing, recognize organizational expertise.

  • If you want creativity, recognize creative ideas and solutions.

  • If you want safety, recognize safe behaviors and conditions.

  • If you want cost containment, recognize reduced spending.

  • If you want customer service, recognize customer loyalty — which means that customer complaints are solicited and solved.