In every HR role I’ve held over the past 20 years, I’ve rallied the organisation behind implementing performance management practices, often alongside introducing variable pay. Looking back I question, was it worth it? Has all that time and effort really delivered the outcomes we were seeking? Has it made the change in performance that we hoped it would? Have we really delivered a return on investment?

Performance management processes tie up huge amounts of our managers’ time, yet they continue to lack the skills and confidence they need in order to motivate employees to be at their best. Furthermore, employees themselves often dread the whole process. Where differentiation of pay is concerned, I’ve found that you often gain a few happy people, but the vast majority, despite receiving what would traditionally be considered a good bonus outcome, are unhappy because others receive more than them and they question why.

During my first year at Nationwide, I focused my time on implementing performance management and performance related pay structures. For the majority of employees we removed the ‘profit share’ type bonus that was linked to. Group performance results. In its place we implemented individually differentiated bonus payments based on the principle of a standard distribution of performance ratings. For sales consultants their reward was based around driving sales – all within the boundaries of treating customers fairly – whilst meeting their financial needs, of course. For this department in particular, it had a very beneficial effect.

I have since met with Tony Prestedge, COO of Nationwide, and we debated whether we did the right thing. We both agreed that we were no longer convinced that the age old theory ‘better pay drives better performance’ is the way forward in every case. We referred to the catalyst of this debate, Dan Pink’s book entitled ‘Drive’. Pink sets out the scientific evidence that performance related pay and ‘carrot and stick’ reward schemes, the sort many organisations use to drive performance, actually inhibit rather than enhance performance. He cites a software business which, having read the book, removed commission bonuses from their sales team, added the difference to their base pay and were astounded when sales performance increased.

Upon arrival at my current employer, SuperGroup, I was presented with a completely blank sheet of paper as Group HR Director. What I walked in to - virtually no HR practices and processes to unpick and replace – was a once in a lifetime opportunity to take the very best of what I had learnt over the past 25 years and use it to create something amazing that could truly propel SuperGroup to the next level of success. The culture is quite different to previous organisations I have been involved with; hugely entrepreneurial, very creative and more emotionally - less rationally - driven. We do need some process in order to be able to operate effectively, but I’ve found that there is a fine balance

between freedom to act and leveraging an element of governance and efficiency. It has left me thinking deeply about whether it is time to step off the traditional path that we often tread as HR practitioners and to try something different. I don’t have all the answers, I’m not sure any of us do, but I do now strongly believe that traditional performance management is the wrong answer.

Instinctively I think we can all relate to Dan Pink’s philosophy that purpose, autonomy and mastery are key drivers of the engagement utopia that has become a big focus of HR in the last 5 years. David McLeod in his “Engaging for Success” work identified very similar drivers – shared purpose, engaging leaders, employee voice/involvement and aligned values and behaviours. I analysed the data that came as a result of an Employee Motivation survey at Nationwide and found that the key drivers of motivation were very much the same as those suggested by Pink and McLeod. It was also found that ‘big conversations’ with employees also play a significant part in understanding our people better and, consequently, what really drives them.

So, how do we make these things happen in the corporate world? The concepts are easy to grasp, but aren’t they much harder to deliver in the real world? To discuss these questions, I was invited by Mike Beesley, CEO at RSG, to lead the Debate event at Bentley’s Oyster Bar & Grill in Mayfair, London. The evening presented a rare opportunity to meet with some of the UK’s leading HR professionals who represent a variety of industries from Financial Services and Retailing, to Construction and multi-national FMCG brands. This white paper comprises the insights and ideas that were provided throughout the Debate as well as some additional research into the secret behind employee motivation in the 21st century.

- Andrea Cartwright, Group HR Director, SuperGroup Plc

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