Reward Systems: Does Yours Measure Up?

by Glenn Rifkin and Steve Kerr

It's one of the thorniest management problems around: dealing with unmotivated, low-performing employees. It's easy to point the finger of blame at them. But in most companies, it's the reward system, not the workforce, that's causing poor attitudes and performance: many reward systems actually discourage desired behaviors while rewarding the very actions that drive executives crazy.

In Reward Systems: Does Yours Deliver? Steve Kerr describes...

• Format: Hardcover
• Language: English
• ISBN: 1422119114
• ISBN13: 9781422119112
• Release Date: December 2008
• Publisher: Harvard Business Review Press
• Length: 136 Pages
• Weight: 0.50 lbs.
• Dimensions: 0.7" x 4.6" x 7.2"

Customer Reviews

A Must Read for Those Who Manage

We have all worked for companies that reward the wrong things: only seniority at the expense of results or only sales staff at the expense of support staff. If you find yourself in the position of offering rewards, this book provides clear and concise guidelines on how to ensure your rewards systems are effective. The idea of defining metrics and evaluating based on them is nothing new, but Steve Kerr combines impressive industry experience from Pine Street at Goldman Sachs and General Electric, with academic theory teaching at USC, Ohio State, and U of Michigan. He uses clear examples to outline common pitfalls and ways to avoid them. The writing style is clear and easy to read, but provides enough tangible action items to ensure that your work is cut out for you in improving your business (or classroom) to ensure that rewards are actually rewarding for everyone involved.

A fantastic business read. Get this even if you don't design reward systems

This book will help you in business regardless of what you do. The author is the real deal and has the chops to write a useful business book. This isn't a theoretical book written by an academic but by someone who rolled up their sleeves and worked with Jack Welch in transforming a global giant. I had low expectations of such a small book, plus I don't design reward systems. However I learned how employees game the system and how important it is to have metrics in place regardless of your job description. "Reward Systems" shows how to define actionable items and make metrics based on performance instead values and emotions. One of the best books I read this year. Hits on all cylinders. Proper reward systems based on the objectives of the business which are aligned with the business' values make all the difference. However they must FIRST have metrics in place that monitor actual performance, not personality traits. Being aware of metrics, performance, and how reward systems work will impact your own performance and career, regardless of where you are on the corporate ladder. Other reviews have given details on Kerr's system and the major ideas, so I won't be redundant. Read this book. Every page is loaded with value. With so many terrible business books on the market - especially the faddish theories and verbose sequels to outdated ideas - this book is a treasure. A must read in my opinion, especially for leaders.

Small book packs a big punch

In summary, this book simply makes you think! It really makes one think about the customers point of view, and where our rewards systems should be based. I really liked the fact that the author makes the obvious point that "money isn't everything". It is simply too fleeting, and so difficult to quantify when rewarding employees with money. Another powerful summary in the book is the comparison of what companies "want", and what they tend to reward, such as, "Wanting Performance, but rewarding attendance, which results in Employees who come in on time and look busy." Nothing should make a manager think, more than that single item. This book is full of examples like that, and challenges management to measure and establish metric systems for each area of the company. One of the strong points of the book is the observation that most company mission statements are woefully similar, with no real practical wording that will give clear direction. I think this is a wonderful tiny book that all managers should have as a desk reference. Now if we can just get upper management to listen.

Valuable information for anyone involved in compensation systems

This is a very short, compact book that is packed full of insights into what makes a good reward system. Kerr points out that many companies devise employee reward systems (often unknowingly) that discourage the behaviors they want and reward the very actions they do not want. For example most companies want long-term growth but tend to reward employees that achieve quarterly goals thus creating an environment where the focus is on short-term performance. The focus of the book is that the reward system is often the fault - it often discourages the behavior that the employer is trying to get by rewarding the wrong behavior. Kerr states there are three points to a good reward system. 1. Operationally define performance and convert the goals into action steps. 2. Devise comprehensive metrics that track actions. 3. Create a reward syste that meets employee needs, reinforce the metrics and aligns the company's goals with the work people are doing. He goes on to say that anything that can be measured can be rewarded. Most companies are rather lazy about creating meaningful metrics. But according to Kerr, anything that can be described in actionable terms can be measured. A central premise of the book is that the quality of the rewards and metrics depends on how well performance is defined and made operational. Management gets what it inspects, not what it expects. A large number of companies focus most of the rewards on financial rewards. As Kerr points out, financial rewards are tricky to adminsiter. And when dispensed foolishly you have not increased productivity or motivation, just the cost of doing business. While most of the book is focused on rewards, he does give a very brief discourse about punishment. Punishment is an ineffective way to change people. If you are in any way involved in compensation plans for your company, it is worth reading. It only takes a couple of hours to read but you will get a lot of insight. It is not a how to manual. It gives some very good points and some good questions to determine if your reward system is working. But it is not a detailed how to manual. Kerr has worked for large companies, GE and Goldman Sachs and in universities. So most of the material will be of greater benefit to those involved in larger companies. However there are still some great gems for the small business owner.

If you only read one book on supervising, make it this one!

This book, written by Steve Kerr, the former chief learning officer of General Electric and Goldman Sacks, is outstanding. It addresses how to get the results you want by rewarding employees for the right things. This might sound like a simple concept, but the fact that the process often doesn't work well is proof that it is often done incorrectly. This book shows you how to make it work right -- you end up with happy employees and the results you want -- a win-win situation. The book is divided into 3 sections: 1) define performance in actionable terms; 2) measure the right things & use the right measures; and 3) reward the right things & use the right rewards. Undesirable behaviors on the part of employees are often due to faulty reward systems. For example, if companies reward employees who achieve quarterly targets, they often get an "overemphasis on short-term performance or employees who game the numbers"; if companies reward individual goal attainment, they often get "self-serving activities and unproductive competition." This book shows you how to look at exactly what you want, and how particular types of rewards work, so that you can select the right rewards to get the behavior you want from employees, which leads to the business results you want. Section 1 is about figuring out exactly what you want, in specific terms. One way of doing this is through the bull's eye exercise, in which your mission/values/principles leads you to the thoughts/emotions you desire, which leads you to the specific actions/behaviors you want. Because you have gone through this exercise, the actions/behaviors you end up rewarding are more carefully selected than they probably would be otherwise. This section also discusses how many goals to set (probably more than you think) and "stretch goals", which are goals you want people to strive for but don't expect them to fully achieve often (these function to motivate people to greater achievement, if used correctly). Section 2 is about measuring people's performance and whether or not they are helping achieve company goals. As the book says, "Measurement also signals that something is important; if no one is tracking it, it will take a backseat to things that are being scrutinized." Employees should be monitored so that they can be shown what they are doing correctly and incorrectly -- and, at first, this should be presented as information only, without negative repercussions. This helps people be more open about the feedback. This section discussues rating people versus ranking them against each other and shows why rating is usually MUCH better. Kerr explains why limiting rewards (in various ways) before performance has even occurred can be very bad for morale (or motivation), and therefore performance. One very important part of this section discusses how to make sure you are measuring the right things. If you measure the wrong things, you will reward the wrong things, and not get the re