Articles

April 2019 – Question of the Month

April 23, 2019 - By Ian Munro, Director, B Bus Sci (IS Hons) M Com (IS)

Question of the Month: How do you implement care and growth if the company’s existing reward system is tightly coupled to results?

Answer: The Legitimate Leadership Model says people should be held accountable for their contribution. Not how hard they tried or how much effort they put in, and not whether the result was achieved or not, but their actual contribution against an agreed standard.

The leader then needs to determine whether the contribution made was on, above, or below the standard; understand why this was the case; and then reward, recognize, censure or discipline appropriately.

In practice, this can be difficult to implement. And in practice, most company rewards systems are actually funded by the results achieved. Rewards are tightly coupled to results and people are promised bonuses on the basis of how much money there is in the bonus pool (i.e. the result).

But the perceived conflict here with the Legitimate Leadership Model is often overstated. This is because in any leadership situation there are seven possibilities: Care; provide the Means; build the Ability; Reward; Recognise; Censure; Discipline.

A misaligned rewards/bonus system is not disabling of the Legitimate Leadership Model – it only actually affects one of the seven possibilities: reward.

If there is no money in the bonus pool for contribution, then get creative – or just type “how to reward without money” into Google.

The organisational fix to this problem is consistency and planning. If you reward for contribution consistently in both good and bad times, you fill the coffers during the good times by not giving money away to people who didn’t contribute, and so you have money in the bank to reward excellent contributions in when the bad times come.

Ian Munro
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