The Fad Phenomenon
By Steve Barber and Wendy Cowen

What'll it be for you this year? Contracting out? Nope, that was three years ago ... or was it the year before? How about privitization? Is that what everybody is doing this year? Nope, that was two years ago.... How about downsizing or right-sizing? Nope, the CEO of PetroCanada said that was like trying to "shrink to greatness". This year's fad is PAY FOR PERFORMANCE!!! Ah, now we know what to do!

Every year there's a new buzzword. Unhappily, a fad isn't reality. These fads are wrapped in all the froth of anecdotal success stories, presented by well-coiffed consultants, tapping over the lips of colleagues, and encountered on the pages of various association magazines with solicitations for quick and dirty workshops.

As a consequence of facilitating issues related to improving productivity and quality we have found ourselves becoming unexpectedly knowledgeable about "pay for performance" and "merit pay" Because this is the latest of the parade of management fads which seem to find their way through America's public sector, we thought it was time to offer some straight talk on the subject.

The Myths that Satisfy

This menagerie of management methodologies does have a certain attraction, residing as it does in our subconscious understanding of how the universe is "supposed" to work. Things are "supposed" to be predictable, right? Government is "supposed" to be run like a business, right? Management makes decisions and others are "supposed" to carry them out, right?

While our elected and ascribed officials find themselves seduced by these simple homilies, a reality check gives lie to these myths. Yet they continue to spawn quick fix solutions captured in buzzwords.

Where does this stuff come from?

Our practice takes us to many venues in both the public and private sectors, giving us the opportunity to trip over some rather surprising [earnings. Perhaps the most sobering of these learnings is that much of the furor generated on behalf of these buzzwords comes from self-serving consultants and brokers who profit from introducing dramatic solutions such as privatization and contracting out.

We are also observing that the private sector is screaming specific solutions at the public sector. The demands are for more services at less cost or for a reduction in onerous and intrusive regulation. Unfortunately, public sector officials don't understand the interests buried in these demands. The medium of the message as well as the message itself are interpreted as threats and condemnation thereby eliciting a defensive response. The defensive response is taken as a denial or condemnation of the underlying motives assumed to be understood in the message. As a consequence the real message never gets heard by either party.

Why do these fads emerge?

One reason these buzzword methodologies are attractive is the erroneous belief that human behavior is solely driven by a stimulus/response impulse. Because we never really understood the psychology of Pavlovian behaviorism in the first place we think that people respond to beats, e.g. pay for performance and meat pay, like dogs and chickens were thought to do.

It appears to us, From our experiences where the rubber meets the road, that the what's motivating a belief in these myths is fed by three basic fuels of change. The first of these is the combination of global events/economy and the velocity of technological change. The second of these fuel sources is the demographic shifts occasioned by the first. The third is the awkward and ham-fisted attempts to respond to the first two through financial and institutional reordering such as property tax initiatives or marketplace analogies applied to public sector services.

Global and economic events drive e/immigration of people and money around the world as witnessed by the out-migration of California's middle class to places like Arizona, Idaho and Washington following the collapse of the aerospace industry (a peace dividend!). The sociological upheaval occasioned by these events has transformed the demands made upon the public sector by an increasingly penurious public. One need but eavesdrop on a school board meeting, teacher's lounge or bus barn tool locker to discover that the service demands placed upon public education which would have seemed wildly out of place as little as ten years ago are a reality today. An identity crisis in public education has resulted: "Are we educators, baby-sitters, social workers, probation officers, public health nurses, or what?"

In order to respond to these and similar demands the public sector is wrestling with how best to transform itself. Yet, rather than allow the public sector entities to pull off of the freeway to change the flat tires, the public expects transformation to be accomplished while driving down the road, all the while yelling "Go faster!"

When the public sector's response is too slow or inept at meeting the public's need for immediate gratification (whether as a consequence of a lack of courage by elected officials to educate Dead) the public or its deliberate, accountability- driven approach to decision making) the public takes matters into its own hands through initiative processes or the election of decision-makers full of anti-government animus. The resultant dismantling of public sector entities as a means of punishment for this lack of responsiveness is well chronicled. The implications for economic and political infrastructure are staggering.

Accordingly, the fad phenomenon seems to emerge as a response to management panic attacks. Seeking to becalm the troubled waters and appear responsive to the snarling and fist-pounding demands of the electorate, advocacy groups, and the platitudinous prescriptions of elected officials, managers grasp at the straws of methodology myths that promise the instantaneous achievement of desired outcomes.

Legitimacy

We seem to get involved after the 911 call: After elected officials and their eager-to-please managers attempt to unilaterally implement these mythological methodologies in their organizations The resulting eruption and/or failure to achieve the desired result prompts some decision-makers to question whether there might have been "a better way to have gone about this."

The literature on organizational development/effectiveness is full of stories about the failure of these fads to achieve their stated promises. It would appear that 70 - 80 % of the initiatives implementing the likes of TQM, restructuring, downsizing, contracting out, privatizing, and the like stall or fail within 18 months. Because of the damage to the workplace relationship by the unilateral decision the resultant clean-up effort presents an even greater problem to the decision makers than the problems prompting the initiatives in the first place. So what was missing?

The answer is that those who were expected to implement the decision were not party to making it. There are common characteristics about decisions which thrive survive, and actually bring on something resembling that which was sought in the f rst place. These effective decisions are based upon asking those who are expected to behave within the decision to help make it, and they are based on reason rather than power or coercion.

This year’s fad -

Pay for performance

The myth of pay for performance or merit pay, a concept which has been around since the turn of the century is that you can use extrinsic rewards to incent employees to change their behavior to achieve outcomes described by management. This is based upon the direct translation of Pavlov's and Skinner's success with animals. What we really know is that human motivation is in large part intrinsic. The Hawthome effect, which essentially revealed that you could improve productivity simply by changing the illumination level in the factory, is a notable example that dispels the common beliefs about human motivation being based solely on extrinsic "rewards".

A further fallacy surrounding this myth is that the employer can control behavior through the allocation of fear and discipline in an institutionalized master/servant relationship. Employers seeking to reduce liability and improve outcomes with predictability cling to the mistaken belief that the route to this end is the control of employee behavior.

The fallacy in the pay for performance myth is that there is a connection between the idea of incensing for outcomes and behavioral adjustments by employees, managers, and supervisors. Obsession with controlling behavior supports an hierarchical fear-driven organization. A better way might be to focus on outcomes. This is an organic concept dependent upon systemic thinking and the development of a reaming organization.

A Better Route. . .

We urge that you explore the science of human motivation whereupon you will find that human beings in today's workplaces are not solely motivated by the promise of extrinsic rewards. Alfie Kohn, in his book The Punishment of Rewards identifies three central criteria which create what he calls the "conditions for authentic motivation" First, collaboration. The employees, managers and supervisors need to be participants in the design and development of their work rather than the mere recipients of directions from another who holds power Second, content. Employees, managers and supervisors will seek to achieve a "good job" if it offers a chance for them to engage in meaningful work that makes a difference. Third, choice. Kohn restates what seems like common sense to us in a democratic culture, that "we are most likely to become enthusiastic about what we are doing and all else being equal, to do it well when we are free to make decisions about the way we carry out the task." Yikes! Since when did the word democracy have a place in describing the employment relationship!!

In other words, the science of human behavior would indicate that a competitive approach to motivating human beings through "merit pay" or `'pay for performance" is ineffective. What we have found, when we facilitate the discovery of good science around human motivation by collaborative employer/employee teams, is that their inquiries about pay for performance or merit pay call into question the entire power-based, fear driven hierarchical model of organizations. The inquiry launches the negotiation into a penetrating exploration of process, assumptions about power, authority, responsibility and more.

This inquiry can indeed be an entry point for true and fundamental transformation of an organization; yet it may be perceived as a threat to those in positions of power and their codependent subordinates who are responsibility averse as it suggests a dismantling of hierarchy and movement toward democracy in the workplace. So, unless you are prepared to accompany Alice into Wonderland you should think twice about leaping after this white rabbit called "pay for performance".

Suggesred reading on this topic:

The End of Bureaucracy and the Rise of the Intelligent Organization by Gifford & Libby Pinchot

The Fifth Discipline by Peter Senge



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