What if we’re wrong? What if everything we’ve been thinking about how to optimize human performance in the workplace is off by a significant measure? What if the reason business results continue to be unpredictable and disappointing has more to do with our thinking about all this than what employees are or are not doing?

What We Want

When we are disappointed in or worried about our business results, basically we want it All, we want it Now and we want it to be Easy. We are wired to deal with stress by looking for the easy answer that gleams with the sparkle of potential success. It takes a good deal of effort to stay focused on one problem at a time and not begin to feel the pull of catastrophic thinking: “If we don’t fix this, we might as well just shut the doors.” As a result, what we really want from our employees likely looks something like this:

• People working hard and smart, every day.
• People taking ownership of their part in the company’s success.
• Creative ideas that can be implemented quickly.
• Reasonable anticipation of problems and quick, effective solutions.
• Limited if any distracting conflict, lots of cooperation and limited complaints because people resolve issues themselves.
• Reasonable but challenging goals are set and accomplished within the established timeframe.

Sound about right? There are probably other things we want, but hopefully this sets the stage for our investigation.

What We Believe

Now let us go about building an organization that will allow these things to happen. What do we believe is true about getting these elements in place?

• There are variations in performance, and we (as leaders) are able to distinguish them fairly and accurately.
• Giving people clear, concise information about how they are doing will help them continue or improve their performance.
• People will not work hard and smart unless they know they will be paid a fair wage for their efforts.
• If we reward higher performance, we will get more of it – from the high performer and from lower performers because they are interested in receiving the same rewards.
• Money is important to people and is a good way to ensure a reasonable balance between what people do for the company and what they get in return.

We believe these things because we have seen, time and again, the evidence of their truth. Of course, we have also seen, time and again, the evidence of their fallacy, but when we want it All, Now and Easy, we ignore that part. In fact, look at the list of what we want again. When in any part of your life have all of these been true for any length of time? What we want is a fantasy.

What We Know

Time for a reality check. Truly, it really is time to stop ignoring 50 years of research about human behavior and 25 years of research about brain science. What will it take for us to apply what we know to be true about how to lead and manage employees in the workplace? Well, it will take a serious challenge to our beliefs about what works, and some hard decisions about how to change in order to undo the systems, processes and procedures that have gotten us into our complacent position.

Performance Management Systems Don’t Work

Paying for performance does not get you higher performance, it gets you higher pay. Consistently, your organizational decision makers buckle to beliefs about performance management and pay decisions in a way that costs more for the same or less. Think about it – has anything really changed much over the past 10 years in your organization regarding performance? Can you claim, for example, that you used to have an average performance rating of 3 out of 5 from your performance management system, but now have an average of 3.5 with proof that performance has indeed increased and, therefore, business results have increased by a complementary amount?

Here’s why you’re unable to make reasonable claims about the impact of your performance management system. There is no way to make it work! Any system that has as its basis the judgment of people’s performance is fraught with danger, because people do not want to be judged unless they are going to be judged a star. Some leaders know this intuitively – you have heard at least one of your managers over the years say “all of my people are fives” and won’t back down on the ratings unless forced to do so. Your organization may have even demoted a leader who would do something that blatantly outside of the organizational belief system. What this leader had learned is that “all my people believe they are stars and I’m going with it because they do better when I do.” People are more likely to do their best when they believe they will be recognized for it. No pay distinction need (yet – we’ll get to that one).

It doesn’t matter how your performance management system camouflages the rating, everyone wants to (a) have their hard work recognized and (b) be seen as successful in comparison to others. Even if there is no rating and only a write-up, if it is going into a file for future review or if it is going to influence a pay or placement decision, it is destined to tweak a defensive posture that is dangerous to the goals of the program: increasing performance.

One of the biggest problems with performance management systems is that by design, they look at the past. Looking at the past is only valuable if (a) there is limited danger of being blamed and shamed by it and (b) there is a high probability that something can be learned from it so that progress can be made in the future.

So you are using a performance management system that everyone understands and accepts at least on a surface level. It does not motivate people to think, “if I do the very best job I can every day, I trust that my boss will recognize it and do right by me.” Instead, it motivates people to think, “how can I get the boss to think the best of me, how can I ensure I get what’s due me because I work hard and do my best.” If an employee’s concerns are about other people’s judgments instead of about the outcomes of the job and how those outcomes impact others, performance suffers. People will do what is best for them, not what is best for others including co-workers and customers. This brings out the worst, not the best, in us.

Pay-for-Performance Doesn’t Work

People are not rational about money. Several years ago, two cognitive psychologists received a Nobel Prize in Economics, for demonstrating this clearly. This is the fundamental issue with paying people based upon a set of specific performance criteria – or even a general set of criteria!

Money is about messages. How much can I earn is a message about how the company views my job and abilities and their impact on company success. How much do I earn is about how satisfied I am personally with my pay and, more importantly, how I think my pay lines up with others in the organization.

You have seen it happen. You pay “Joe” a very big salary by anyone’s standards – let’s say, $150,000 per year. Now he’s complaining because he’s just heard that “Pete” makes $175,000 and he knows he is doing more or better than Pete. This is not rational – Joe makes a good salary, period. Yet he’s complaining because of the message that Pete is worth more than him. Joe may work harder, but his building resentment will eventually fester and overall his performance will likely drop.

By now, you have surely heard about the mounds of research that demonstrates that when you pay for something that someone would do anyway, they will do less of it. Internal motivators are the key to success. External motivators like pay, performance ratings, bonuses, awards, gold stars and praise will muffle the impact of the internal, emotional drivers that result in the best performance.

Finally, it is the anticipation of receiving the pay that motivates, not the receipt of it. People are motivated to work for the message they want to receive. Once received, it has it’s short-term impact and it’s gone.

The most insidious impact of reward systems of any form is that they are manipulative. Can you deny that the purpose of most interaction with employees is to see if you can squeeze another drop of performance from them? You have experienced this yourself. Over the long run, it beats down the internal motivation we all have to be good at something.

What To Do Instead

Moving away from performance management and pay systems that manipulate is not going to be easy. You will experience both personally and from others very high levels of resistance to shifting your organizational perspective about employee performance. You will fear losing your best players. You will feel extremely uncomfortable trying to explain some of the changes because your belief system will change after your actions will. So, perhaps you can stop reading now, keep on keeping on, and complain when ten years from now you are struggling with the same issues as today.

However, if you are still reading, you are at least a bit intrigued, so here goes.

Take Pay Off the Table

You want to pay people enough so they are not thinking about it, at least in terms of individual pay. It can be effective to share profits or gains with employees, but the discussion is about the messages, not the money, and the opportunity is shared, not individual.

Taking pay off the table presents a number of decisions to make. How much will we pay people and why? How will we make pay distinctions between and among jobs, departments, skill levels, whatever, that represents internal fairness and meets reasonable “market” demands? During all of these discussions, company leaders will benefit from input and guidance from a variety of sources. None of the decisions can be made quickly and easily, and the likelihood of discomfort on many people’s parts is high.

Talking about how people can earn more money is about how the company can afford to pay more money. The company can afford to pay more when profits increase, so that there is more to share. Presumably, it takes every employee in the company to increase profits – otherwise, you may have some “fat” in the system – and the conversation about how people can do their best work and help others do their best work is where the potential success for everyone resides.

Focus on the Future

The moment something happens, there’s no longer an opportunity to change it. Talking about it is only helpful if there is something valuable to be learned. Otherwise, any talking is about what happens next. The more specific everyone can be about what they are going to do, the more likely they will do it and do it effectively.

It is very difficult to defend something that hasn’t happened yet, and it is reasonable to ask people to try something new. Include in your future vision of success how the changes you are implementing will be assessed and how people will play a role in the success of these changes.

You Change First

Take the time to rethink what you want, what you believe and what you know. Get advice, guidance, new ideas, and support from those around you. Invite and even challenge people to articulate their resistance and their concerns, and avoid supporting short-term catastrophic thinking. “This simply won’t work” does not have a place in bringing about sustainable change. When you are comfortable in what you will do and say that is different from the past, you can lead others to do the same.

There are many, many actions you can take that will reduce manipulation, increase performance and settle pay issues. No one answer will do. The challenge now is whether or not you will enter the “cynical free zone” of change and allow your skepticism to drive good thinking and decisions.

1. The Pursuit of Happiness creates covertly disrespectful environments. You cannot control another person’s emotions. By taking responsibility for another’s happiness, you are likely to avoid the truth, fabricate unhelpful stories and even get caught in deception that can last for quite some time.
2. The Pursuit of Happiness creates huge distractions in time and effort. Happiness is the potential result of doing certain things. By focusing on happiness, we get distracted from what is truly important – the grand purpose of our work, the relationships that allow us to generate ideas and action, and the focus on specific actions that produce results.
3. The Pursuit of Happiness magnifies the things that are wrong. When someone complains, wanting people to be happy means focusing on what is making someone unhappy. By focusing on doing the right things, complaints fall into the background and good work can get done.

Are you caught in the pursuit of the illusory target of happiness? Do you feel challenged when others complain about things not going well? Do you find it easier to tell people a sugar-coated truth? It may be time to pursue the goals that result in success and leave happiness to catch up.

SAS CEO Jim Goodnight believes an organization will spend as much money on recruiting and hiring as on benefits that increase worker productivity and longevity, and makes the choice for the latter. SAS offers a high quality childcare facility at a reasonable charge and parents can have lunch with their child or take them to an employer-paid on-site healthcare clinic if they are not feeling well. The health clinic is available to all employees and their families at no charge. Thereʼs also a summer camp for kids.

Employees can drop off their dry cleaning, get their car washed, and work out in a state-of-the-art gym to stay in shape. Running late? Stop by the cafeteria and get yourself a take-home dinner.

The list goes on, and the head of HR says all of their benefits and perks are intended to reduce distractions so that employees can focus on their jobs. The more cynical among us might think that SAS employees work long, hard hours as a result under high-pressure performance expectations, but evidently thatʼs not true. Flexible time and unlimited sick days indicates that this employer of choice is actually more interested in healthy, committed employees.

One of the outcomes that may not explicitly be considered by SAS is the reduction of decision fatigue (see Decision Fatigue: Not Everyone Experiences It Equally). Decisions about how to take care of all of lifeʼs little errands can exhaust our ability to make good decisions. SAS continues to be successful in the market, implying that good decisions are being made at all levels.

It is easier to focus when mind-chatter calms. But add that the quality of decisions increases, and youʼve got a solid argument to consider reducing decision fatigue for your employees.

Consider, then, the impact of decision fatigue on yourself, regardless of your economic situation. Here are two “normal” examples from current America.

Example #1: You receive a good income and live in a nice neighborhood. At dinnertime, you probably have food in the house, but if you do not, it doesn’t take much for you to grab the keys and run out to the grocery store. You can call for a food delivery, or even choose to go out to a favorite restaurant without much thought. These choices are available, even if you just filled up your car, or if you just paid your mortgage, or if you just renewed your health insurance. Your son mentions to you as you walk out the door that he needs some new sneakers, so you invite him along so you can stop to pick them up on the way to dinner.

Example #2: You have a job and are “getting by.” At dinnertime, you discover that you do not have enough food to eat in the house, but you also know you do not have enough gas in the car to get to work the next day and only have enough money available to pay your rent this month. You had to let your car insurance lapse and know that reinstating it will cost you a penalty that you do not have the money to cover. Your son mentions that his sneakers are hurting his feet. You add to your current equation how you can pay for new shoes.

The parent in Example #2 could well decide to fill the holes in his son’s shoes with newspaper to get a few more weeks out of them, and decide that bread and butter will have to suffice for dinner so that the rent check can be paid. He may just as easily decide that fast food is the answer to the dinner problem, because he can get so much more food for his limited funds. Or he may pick up a 6-pack of beer and medicate his confusion and anger.

In any case, if you are living the life of Example #1, Example #2’s decisions may look stupid and thoughtless, and you may begin to blame him for his life (check out our article on Attribution Error). After all, he chose to eat junk food and now has become obese. You won’t be surprised if he becomes diabetic on that diet, and expect that he will be unable to keep a job. From your perspective, this just looks like faulty thinking and poor decision-making. The guy brought it on himself; it’s not your problem to fix.

At the basis of the discussion about providing a higher level of living for every American is the argument that decision fatigue is resulting in pain for us all! We all ultimately pay the cost for poor decisions resulting from decision fatigue. Some decisions can be removed by “society” that would ease decision fatigue for all. Public transportation is one example. It provides a choice that eliminates decisions about how they get to work every day, or how they pay for it. Another issue is health care. What if some of the decisions currently made – like filling a prescription for blood pressure medication or new shoes for my son – can be removed from the equation? As everyone’s decisions improve in quality, we all benefit.

Do you think people of limited means think about the same things you think about? Do you find yourself criticizing poor people for making bad decisions? You may have fallen into a trap that prevents you from reducing your own societal pain. We have clear evidence about how decision fatigue impacts our lives, either directly or indirectly. Let us not pretend otherwise.

In primitive societies, leaders were “big men” whose power was persuasive, not authoritative. His role was to soothe tensions and reduce conflicts. The better he was, the greater leader he was for his group, and the less stress there was in the group.

When a community gets too large, one person cannot fill this role. Historically, what happens is “fissioning.” Larger groups split into smaller groups by various means, deliberately or not. If tensions grow too high, this fissioning manifests in violence.

Fissioning did not always occur. Often, higher order institutions – police forces, judges, political institutions – were formed to reduce stress. These groups provided a service to the community by eliminating or reducing stress or resolving conflict.

What happens when we stop trusting these and other institutions? When our trust falters, scalar stress reasserts itself. Our stress begins to show in territorial disputes, sub-grouping, blaming of others, and other unattractive social processes. One of the mechanisms we see in these situations is the effective ostracism of other sub-groups. A quick glance at any news source will show where this is exists today: criticism of gays, immigrants, atheists, the wealthy, the poor, and, of course, the other political side.

All of this becomes pervasive over time – even people whose lives have not really changed begin talking about how bad things are because they are aware of the stress and tension, and it scares them. The more stress prevails, the more our belief in the institutions that are designed to mitigate that stress is reduced. We do to ourselves the exact opposite of what we want.

Our country is currently struggling from a serious lack of trust. Regardless of one’s political perspective, there is low trust in politicians, our courts, corporations, and the police. What we need is for our current institutions to clearly communicate a specific focus on how to return to a state of less stress and tension. We can each assess for ourselves how likely this is to happen in 2012, with our politicians focused on getting reelected.

Are you skeptical of our country’s leaders, judges or law enforcement? Do you find yourself criticizing other “groups” in old brain rants? Be a part of the solution by eliminating your own “we-they” thinking and demanding clarity and positive action from the “big men” in charge.

Most of us have way more things to do than we have time to do them. As a result, we work on several things at once, switching between tasks as priorities vacillate and stakeholders demand results. We have plans, projects, and emergencies. This way of business seems natural because most of the people around us are doing it as well.

It is not natural, however. Our brains evolved to focus on only one thing at a time.

Out of the two-and-a-half pounds or so of cells that make up the brain, the only part where we actually focus our attention is about the size of your thumb. This is quite small in comparison to the rest of the brain. Indeed, most of our behavior occurs outside our intentional focus, in “automatic” processes.

So we are not actually “multitasking” (see The Myth of Multitasking: Fooling Ourselves into Reduced Capacity), we are”Task-Switching.” What feels like multitasking is actually frequent, often rapid movement from one task to another. The more tasks on our list, the more switching is going on.

Every time we are interrupted, it slows and distracts our effectiveness, reduces our impact, and stresses our energy levels. There are some of these interruptions that are more difficult to manage than others, but the “drive-by” phenomenon has increased over the past decade because in some cultures it is viewed as rude and anti-social to close your door, turn off your email “ping,” and not answer your phone.

Rethink how you are handling the shooting sprees that work colleagues go on, because they are in pursuit of their own goals, or worse, they have some downtime that does not align with yours. If you are inviting some return fire because of your own quest for immediate gratification, you’re in a position to make a real difference! No matter how much chaos you think you can handle, putting some boundaries around your work patterns and eliciting agreement from others to respect them will save you time, energy and attitude.

What can you do today, right now, to focus more intently and for longer periods of time on the work projects you have on your desk? What can you do to help others do the same?

Happiness is a transient experience. Our brains are not wired to keep us in a state of happiness. We can reflect on our current experience and generate a feeling of happiness, but that feeling will fade quickly as we re-engage in the next experience.

Hoping to establish a constant “happy workplace” can doom your efforts to failure. It’s a dangerous game to attempt to manage other people’s emotional reactions to their everyday experiences at work in a way that produces and perhaps even guarantees happiness. If you can point to one single place in the world where this is true for any length of time, well, go there.

At the core of this concept, establishing “happiness at work” is an exercise in manipulation. The thought is that If you can do the right thing in the right moment with the right employees, they will be so pleased that things will work better around the workplace. In essence, it follows the formula of: I act nicely, you respond appropriately, I get what I want. I have successfully manipulated the situation.

This is consistent with pay programs and development programs and other “human resources” programs that manipulate in the same way. They don’t get you what you want either, not in the long run and often not even in the short run.

What can you do instead? Recognize that happiness is not yours to give. Engage, energize and challenge your employees, and allow them to reflect on the experience and find whatever happiness may exist (or not) for them. Invite your employees to bring their best to the table, remove barriers to do so, and watch your business results flourish.

Are you conducting annual “engagement” surveys to find out if employees are happy? Are you having the “hard conversation” with your employees because they are stirring up emotional reactions in others that are “preventing happiness?” If “happiness” is in your vocabulary when it comes to your employees, can you challenge yourself to think more critically about your business?

So many sports are about short, explosive exertion, regrouping, and repeating the short, volatile effort. Given the hundred years of sports analogies we’ve suffered, it’s really no wonder that business efforts sometimes looks like this. Well, the short, explosive efforts, anyway. The regrouping happens periodically.

Business is not like sports. Real businesses, the ones we work in, require lots of mundane, repetitive efforts that lead to success: answering telephone calls, producing shipping labels, relentlessly inspecting for quality and safety.

What we like about sports analogies is that successful sports efforts are heroic. Teams of people pull together and work in amazing harmony for short spurts that make the difference between winning and losing. Very romantic, not very helpful. Let us not forget that in sports, people get injured in career-wrecking ways, only a small percentage of sports figures are recognized for their efforts while the rest are showering off their own hard work, and some teams never win.

Admittedly, “going for the gold” captures our old brain’s desire for simplicity and tweaks our passion. Business has a duller edge – unless what you do in your business excites your passion. Then you don’t need to “hit a home run” or worry about a “flag on the play” but instead are able to focus on what it takes to do good work that has a reasonable return on your investment.

Are sports analogies common in your vernacular or in your workplace? Can you re-think your perspective on what realistically moves your business forward on a daily basis so that people are not spending more time losing than winning?

Some terminations are straightforward. The employee has stopped showing up to work regularly, or they have violated a “zero tolerance” rule like stealing money or bringing a firearm to work. Some are more complicated because the employee is really trying to do the job, but for whatever reasons simply cannot – not enough knowledge or skill, for example.

A harder situation, however, is when a higher level employee in a leadership position is derailing, because there is often so much to consider. An example is when a business leader who is technically very astute, makes good business decisions, and is creative in his problem solving chews up his direct reports at every turn. He is impossible to please. He is highly critical of others, often publicly. He has great excuses for why others are struggling, but they never have to do with his own behavior.

Perhaps when you hired this leader, you had good reasons to think he was going to be extremely successful, and you personally fought hard to bring him on. He may have cost you some serious money to get him onboard, through relocation costs or a sign-on bonus. You believed in him, and it has taken you awhile to realize that his behavior is toxic to the organization. Perhaps your HR people have been telling you for months that good employees are leaving because of him, but you continued to believe that if you just had the “hard conversation” with him, he’d straighten up and fly right.

If any of this sounds familiar, it is no longer about him, it is about you and your leadership. No one person having this kind of impact on many, many others can be good for the organization. Your old brain desire to have it be easy – “I’ll just talk to him and set him straight” – is working against you in ways that are way more expensive than you know.

It’s time to truly assess his ability to change those things that will define “flying right.” Chances are you already know that he isn’t going to change – you’ve had that hard conversation several times, he “gets better” for a few weeks, and then it slides back into the abyss. Recognize reality and invite him to have his success somewhere else, because it is not going to happen here.

If you have a derailing leader in your organization, can you deal with your own discomfort about his failure and take the action that will move your business forward? Then you can move on to place a leader in this job who can bring out the best in everyone.