Last summer the Wall Street Journal ran an article reporting that US Airways had achieved the best on-time performance of all major airlines, after being the worst performer the previous year. As I re-read this item while researching my next book, a paragraph caught my eye. It read in part: "How can one airline with big congested hubs run on-time while other major carriers stumble? US Airways rallied its work force to focus on one goal … and began offering financial incentives to workers for better service."
If a seasoned business reporter has to ask the question, how much harder must it be for CEOs who don't have the luxury of sitting back and surveying the landscape for others' best practices? Despite the best efforts of the researchers in this area, CEOs seem unwilling to believe that incentive pay is a valid tool for performance enhancement. This even though the record of American managers in guiding their employees to improve productivity through motivation or intimidation are mediocre at best.
Of course US Airways didn't achieve this most important milestone (at least in travelers' minds) by simply offering bonuses. They made changes in operating policies and practices, they upgraded equipment, and they improved the quality of their hiring practices. In the process the flying experience got better too – onboard annoyances got fixed more quickly because there were more mechanics around to do the work, for example. And motivational management practices encouraged employees to care more about their work – a message that was taken seriously because it was backed up with cash. Whether it's employee performance or a used car or a can of baked beans, you get what you pay for, and your pay practices tell everyone the kind of importance you place on performance and the level of performance you expect.
So what kind of message are you sending to your employees? Go for the gold or go for the beans?
As always, your comments are welcome.