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Oops!
13 Management Practices That Waste Time and Money
Reviewed by Beverly Feldt
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"Just because something doesn't work doesn't mean managers won't continue to use it."
"The best way to double the effectiveness of the typical annual performance appraisal is to do it once every two years."
"If you reward employees for zero defects, the sure way to do that is to make no product."
Counterintuitive? Exactly. Aubrey C. Daniels, founder of the consulting firm ADI, has produced a guide to managerial strategies that don't actually produce the results they seek—with suggestions for more effective replacements. Focusing on 13 common management practices, OOPS! (PMP, 2009, $21.95) reveals the contradictions and superstitions that underlie business as usual.
Daniels's thesis is that behavior analysis, of which he is a passionate proponent, proves that these methods simply don't work. So why do we use them? Despite volumes of experimental research on why people do what they do (and the obvious fact that people's actions determine the success or failure of any enterprise), the scientific study of behavior is virtually absent from business-school curricula. So managers tend to repeat conventional strategies such as automatic raises, overvaluing smart people, and honoring the "Employee of the Month," even though solid evidence shows that these strategies lead reliably to poorer morale and less productivity.
Behavioral science explores the factors that increase or decrease any specific action. Unfortunately, Daniels's explanation of these factors could be clearer. For instance, he introduces a few technical terms so he can use them in the discussion, but I had to read that section several times. In fact, I eventually wrote out my own version as an aid to following the book. (Rather like the character lists that come with Russian novels, so you can remember that Pyotr, Petya, and Petka are the same person.)
As I understand it, anything that encourages a behavior to continue is a reinforcement. Positive reinforcement increases a behavior through a desire to gain a reward when it's performed: the carrot. Negative reinforcement increases a behavior through a desire to avoid the consequences of not performing it: the stick. Generally speaking, positive works better, because negative reinforcement tends to make people do just enough to squeak by—though both of them increase the desired behavior.
But all too often, business reinforces—works to increase—behaviors that really hinder rather than help, and fails to reinforce or even actively discourages useful behaviors. Take performance appraisals, one of Daniels's favorite targets. He quotes a 1994 survey by the Society for Human Resource Management that found that 90 percent of appraisal systems failed.
According to Daniels, part of the problem is that performance reviews are based on an assumption that employees' efficacy will fall along the classic bell curve, with a few top performers, a lot of mediocre workers, and a few hopeless slackers on the other end. But this statistical model is based on random samples, and businesses don't hire randomly. They spend enormous amounts of effort and money to hire smart, motivated people—and then force them into an evaluation system that demands that a certain percentage of them be found wanting.
The clearest example of this problem is Jack Welch's infamous "rank and yank" system, which required that the lowest-ranking ten percent of employees each year be fired. In addition to destroying teamwork and morale, this approach creates a work environment where, as Daniels points out, "employees compete with each other more than with competitors in the marketplace." Not a plan for long-lasting success.
What would Daniels have companies do instead? Develop a performance matrix, a form that allows employees to measure their performance on a daily basis so they can review it with their managers frequently. The matrix system (detailed in an appendix) clearly states the rewards the employee earns, and managers reinforce improvements frequently, not just once a year. The goal, says Daniels, is to have all employees performing in the top group. Managers are then rewarded for the number of employees reaching the top level, turning them from judges into coaches and encouraging them to become more involved in their employees' progress.
OOPS! tips over many other sacred cows, including the usual budget process, restructuring, and even downsizing—which, studies show, fails to decrease expenses, increase profits or even reduce staff overtime. Daniels' contrarian wisdom urges leaders to decide what they want to accomplish, then use proven strategies to get there—not conventional belief in what ought to work.
Although the writing is awkward at times, OOPS! is definitely worth reading. It's timely, too, in this era of outrage over CEOs receiving huge payouts for destroying companies. Reinforcing the wrong behaviors has harmed business and the entire world economy. Maybe it's time to try something different.