Rewards Systems

by Evil HR Lady on July 16, 2007

One of the things that HR is responsible for is implementing rewards systems. We want to reward good behavior and extinguish bad behavior. We implement Balanced Scorecards and pay for performance. We encourage managers to set goals for their employees and then rate them accordingly.

But, what if, rather inadvertently, our rewards system punishes the wrong employees?

California health authorities on Thursday released a study showing for the first time how many heart bypass patients die after surgery, the names of their surgeons and the hospitals where the operations were performed.

Excellent? Right. See the next paragraph:

Surprisingly, the state-mandated survey gave the worst ratings to some hospitals that have been regarded as among the best in the business.

UCSF Medical Center, one of the premier teaching hospitals in the nation, was one of only six hospitals out of 121 in the state awarded a black eye in the survey — rated “worse” than average in a statistically complicated analysis that counted deaths but gave credit to doctors and hospitals that treat sicker patients.

Most of us HR types don’t work in health care, but this can happen in all industries. How many times have you seen someone put on a “special project” and said, “boy, that is going down in flames and taking the poor sucker with it.”

I know I’ve seen it. Many projects that are complex have a high potential for abysmal failure, but if successful can turn a company around. When employees are assigned to a project, we know that they will probably fail, but they might succeed. Our traditional rewards structure would demand that “failure” of the project result in bad things happening to the employees.

As a result of this, people with good potential, great ideas and technical know-how steer clear of such projects. Why take something on that could ultimately end up with being shown the door? The people willing to take it on are those who have nothing to lose. As a result, we end up with failures where we could have had success. And the up and coming stars miss the opportunity to learn the lessons they could learn from such a project.

Make sure you don’t structure things such that employees avoid the most difficult work.

(Hat tip: Kevin, MD.

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