Organizational Accountability Warning Flag 1 – Equality of Outcomes

StrategyDriven Organizational Accountability ArticleNo two individuals are exactly alike; therefore, each uniquely contributes to the organization. Subsequently, it is reasonable to expect that each individual’s efforts will result in a unique value contribution to the organization. In the accountable organization, this value is proportionately rewarded. Thus, no two individuals should expect to consistently receive the same reward outcomes.[wcm_restrict plans=”25541, 25542, 25653″]

Employees are generally aware of their individual value and are certainly aware of their relative value to the organization. Subsequently, when equal outcomes are distributed, those having superior performance and offering greater value are slighted. Those underperformers who are over-rewarded tend to be thankful for the equality of distribution and often justify their acceptance of these rewards as simply being a ‘fair’ distribution.

The result of equal distribution is the disenfranchisement of top performers and the endearment of underperformers. The top performers often reduce their work output to that of their lower performing peers or leave the organization altogether. The underperformers, having their poor performance positively reinforced, continue to perform at these mediocre levels. The organization subsequently endures significant losses in productivity and from the cost of attrition of its top talent – all because of its equal distribution of rewards practice.

Another shortfall of equal rewards is their failure to be inclusive of the diverse needs and desires of the organization’s members. Not all employees value rewards in the same way. Some individuals will prefer monetary rewards, others time off, still others flexible work schedules. Mandating the same outcome for all employees ignores the diversity of value held by individual employees. While it may appear to managers that an equal reward is being given, to the employees an equal reward may not appear to be received.

Perfectly equitable distribution of rewards based on an individual’s value contribution is not achievable because it is impossible to precisely calculate an employee’s overall value contribution. However, managers should seek to reasonably estimate individual employee value and distribute rewards accordingly. Additionally, the distribution should be meaningfully different in magnitude according to value contribution and well aligned with the individual employee’s needs and desires. While not all inclusive, the four lists below, Process-Based Warning Flags, Process Execution Warning Flags – Behaviors, Potential, Observable Results, and Potential Causes, are designed to help organization leaders to recognize when they are equally instead of equitably distributing rewards. Only after a problem is recognized and its causes identified can the needed action be taken to move the organization toward improved performance.

Process-Based Warning Flags

  • Pay increase funding is distributed to each work center in equal percentages relative to the work center’s overall compensation budget
  • Compensation determination programs do not consider organization value contribution when establishing pay bands
  • Merit increase policies dictate a percent pay increase without allowances for consideration of individual employee value contribution
  • Recognition programs provide for one or a very limited number of rewards
  • The organization lacks a robust performance appraisal system
  • Performance appraisal and review programs do not quantify an individual’s value to the organization
  • There exists a lack of job descriptions for each position within the organization
  • Job descriptions do not quantify the position holder’s expected baseline value contribution to the organization
  • The organization lacks sufficient performance measures to identify the value contribution of work centers and individuals to the organization
  • Performance measurement systems and/or individual performance measures do not have a correlated organizational value contribution identified

Process Execution Warning Flags – Behaviors

  • Executives and managers distribute compensation rewards equally among individuals within a given position or rating band
  • Executives, managers, and supervisors seek to recognize all employees regardless of individual performance
  • Executives, managers, and supervisors use the same recognition method and value in all or a majority of their rewards
  • Executives, managers, and supervisors do not invest the time necessary to adequately evaluate individual employee performance
  • Executives, managers, and supervisors inadequately determine the expected baseline value of positions under their direction
  • Executives, managers, and supervisors fail to demand adequate appraisal programs, job descriptions, and/or performance measurement systems and do not act to create these within their area of responsibility

Potential, Observable Results

  • Reduced profitability resulting from lower overall productivity, diminished innovation, limited performance improvement, and higher attrition
  • Elevated turnover among top performing employees
  • Elevated retention of underperforming employees
  • Diminished productivity among top performers over time
  • Lower rates of discretionary effort contribution by talented employees
  • Decreasing rate of innovation and performance improvement particularly among top performers

Potential Causes

  • Failure of organization leaders to recognize an altruistic sense of fairness through equality of outcomes is neither fair or charitable
  • Laziness of knowledgeable executives, managers, and supervisors to effectively determine the value of each of their employees. These individuals themselves lack accountability for the performance of their jobs
  • Failure of inexperienced executives, managers, and supervisors to recognize that people management is their first priority. Subsequently, these individuals focus on administrative tasks rather than the employee management work needed for the equitable distribution of rewards
  • Executives, managers, and supervisors seeking to avoid difficult performance and rewards conversations with underperformers
  • Organizational culture that holds in esteem non-value adding personal qualities and characteristics such as tenure, titles, age, education source, heritage and relationships/connections, political affiliations, etcetera and/or diminish personal standing for non-value related personal qualities. These organizations are discriminatory

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