MBO, Perf Reviews, Incent Pay in a L-O

Richard Karash (rkarash@world.std.com)
Sat, 10 Dec 1994 11:48:18 +0001 (EST)

It seems like this is the season for performance reviews -- in our
company, in my wife's company, and for several friends.

What would performance reviews, MBO's, merit pay increases, and incentive
compensation look like in an organization that was truly a learning

We could take the basic principles of Learning Organizations and quickly
1) The reviewer and reviewee should be on a more equal footing, not boss
vs. subordinate, and the conversation should be appraising and coaching in
both directions.
2) There should be more emphasis on coaching and less on evaluation.
3) The whole merit and incentive pay scheme should be oriented to
producing cooperation and overall performance, not individual or team
4) Coaching should be more continuous, not lumped into a once-a-year
perfromance review.

...and I could go on a bit. But, I'd like to go much further. What would
all of this look like in an organization that was *really* a learning

I'm stimulated in thinking about this by Deming's work. Here is a
quote that Deming offered for the dust jacket of the first printing of
_The Fifth Discipline_

"The prevailing system of management has destroyed our people.
People are born with intrinsic motivation, self-esteem,
dignity, curiousity to learn, joy in learning. The forces of
destruction begin with the todlers -- a prize for the best
Halloween costume, grades in school, gold stars -- and on up
through the university. On the job, people, teams, divisions
are ranked -- reward for the one at the top, punishment for
the one at the bottom.

"Instead, the job of management in education, industry, and
government should be the optimization of a system (not its
fragmentation into Management by Objectives, quotas, incentive
pay, business plans, put together separately, division by

Dr. W. Edwards Deming

(For some reason, this quote does not appear on recent hard-back or paper
back printings of the book.)

OK, so we want to eliminate the fragmentation, sub-optimization, and
competition encouraged by the old performance systems. But, what would a
more effective performance system look like?

Richard Karash ("Rick") | (o) 508-879-8301 | Mac * Flying
Innovation Associates, Inc. | (fax) 508-626-2205 | Systems Thinking
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