Reward Systems

Reward Systems by Steve Kerr is a very short book - and it is also a high level book. I have several books on practical reward systems, but that is not what this book provides. Instead, it is more meant for a CEO to think about overall company-wide systems that will help create a productive environment. In that sense I think the title is not quite helpful. Most people who are getting a book on reward systems want to actually create reward systems and get help with them. This book is more about how to decide who gets what raises, and how to get management to implement that well.

To begin with, the book talks about a scientist working with rats. He literally yells at the rats for "not doing what he wanted." Finally he realized his EXPERIMENT was flawed - that he was not rewarding the rats well, so they naturally were not doing the desired behavior. Once he gave them good rewards, they went for them. So for example imagine a maze with pieces of chalk at the end (assuming rats hate chalk ;) ). The rats would not make any attempt to go for it. If instead you had a really lovely cheese at the end, the rat would now try to get it. The book is saying that humans are the same way. If you have "rewards" that nobody wants, you cannot be surprised when the employees do not even try to get them. You need rewards they really do want in order to movtivate them.

The book launches into a long discussion about mission statements and then metrics of how to measure which employees should get a reward. It points out that measurements should be about improving performance. It talks about rating vs ranking - i.e. giving each employee an independent quality level, or putting them all into a long line from top to bottom. Steve points out that ranking systems only really works if every single job has the same skill set and warns that ranking discourages teamwork. He says it is much better to have standards that everyone meets or doesn't meet, vs trying to compare humans with each other to rank them.

As an example, the book cites how people sometimes talk about porpoises being wonderfully helpful and pushing sailors to safety. However, studies show that porpoises like to push all objects in all directions. The sailors that are pushed to land are able to tell their story - but the sailors pushed out to sea drown and don't tell their stories. Therefore we only hear half of the story.

All people in a system need to get treated equally. In many systems the high performers get rewards but no feedback - while the low performers get no rewards and lots of feedback. All people should get feedback so they can get better. Rewards should be quickly, so that it reinforces the behavior, rather than months or years later. You want to change rewards frequently so that they stay "special" and not "expected". Also, you should only rarely punish. People respond far better striving towards a reward than fearing a damaging activity.

The book does reasonably well as a high-end overview of what a reward system should aim for - but it is definitely NOT an actual, practical "how to think up rewards your employees will like" type of book. If you don't have a mission statement or a pay raise system in place yet - or if you are dissatisfied with either - this is a book to take a look at. If you want actual reward system designs and ideas, you will need to look elsewhere.

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