Welcome!

News Feed Item

Smart Managers Don't Punish Failure -- They Reward People Who Flag Problems and Punish Those Who Don't Help Solve Them

Organizations Are Risk-Averse and Good at Blame -- but People Who Fear Punishment Hide Problems, Which Then Get Worse, Say the Authors of Six Simple Rules, a New Book by The Boston Consulting Group

BOSTON, MA -- (Marketwired) -- 07/16/14 -- Most organizations are risk-averse and good at assigning blame. They reward success and punish failure. But this approach can backfire. People who fear punishment hide problems -- which then get worse and hurt performance.

Smart managers take a different approach. They reward people who bring problems to the surface. They reserve punishment for when it really matters -- they punish people who hide problems or who don't contribute to a solution.

This radical approach to failure is one of the ideas at the heart of Six Simple Rules - How to Manage Complexity Without Getting Complicated (Harvard Business Review Press, April 2014), a new book by Boston Consulting Group partners Yves Morieux and Peter Tollman.

The rules show managers how to go beyond the traditional management toolkit and instead embrace "smart simplicity" -- a set of principles designed to make people more autonomous, cooperative and better able to solve problems, so that organizations become more competitive.

The first step for organizations that need to solve problems is to find out they exist. But the blame game can keep that from happening.

"If people are afraid to fail, they will hide problems from you and their peers," Tollman says. "If they are not afraid, they will bring problems to the surface much faster than you could find out about them on your own. Managers should reward people who surface problems -- and punish those who don't come together to help solve them."

"Blame and risk aversion are at the heart of organizational culture," Morieux explains. "But smart organizations accept that problems happen for many reasons, and the only way to solve them is to reduce the payoff for people who don't contribute to a solution. Performance and reward systems are key -- but instead of using them to punish failure, use them instead to punish failure to cooperate or to ask for help."

The book includes the example of a major railroad where on-time performance deteriorated. Management responded by creating a "monitoring department" to investigate each failure and find out where to lay the blame. But performance didn't improve. Workers feared punishment -- so they didn't alert others to problems that might cause delays. When they couldn't solve the problem themselves, the delays spread through the system.

The solution fell into place when management changed its approach -- the railroad created rewards for workers and departments that called attention to problems and asked for help. Punishments were reserved for those who failed to ask for help, or failed to help when they were asked. The result was a radical improvement in on-time performance -- it jumped from 80 percent to over 95 percent within four months after the new reward system was put in place, with no other changes made in the railroad's operations.

The railroad succeeded because its reward system promoted autonomy and cooperation, the authors say. Autonomy and cooperation are essential if organizations are to respond effectively to the demands of an increasingly complex business environment.

"The business environment is becoming more complex -- and organizations respond by getting complicated," Morieux says. "They add management layers, dedicated functions, processes and 'best practices' -- all of which make the organization clumsy and slow to respond. What's needed is more autonomy and cooperation -- qualities that make companies more agile, flexible, responsive and competitive."

Reward and punishment systems are powerful ways to influence behavior -- which means they need to be designed to encourage autonomy and cooperation, so that the organization benefits. The specific behaviors these systems should promote include sharing, helping, cross selling, informing others, finding ways to standardize, compensating for other's problems, etc. -- all elements of "cooperation."

"Without cooperation, organizations find themselves allocating more resources -- time, equipment, systems, teams, etc. -- to compensate for the loss of quality and/or quantity of what they produce," says Morieux. "Conversely, companies who cut resources without strengthening cooperation will find that their end products are negatively impacted by shortages, defects, safety issues and accidents, or people's disengagement and burnout."

According to Morieux and Tollman, rewarding cooperation, like the other rules of "smart simplicity" starts with the reality of how people behave.

"The basic approach of smart simplicity comes down to this," Tollman says. "Find out what your people are really doing in the organization; remember that whatever they are doing is rational -- for example, they are trying to protect their jobs or avoid punishment -- then give them rational reasons for doing what you need. They will help you identify and solve problems -- if you make it safe and rewarding for them to do so."

For more information, or to schedule an interview with Yves Morieux or Peter Tollman, contact Frank Lentini, Sommerfield Communications at +1 (212) 255-8386 / [email protected].

About the Authors

Yves Morieux is a senior partner and managing director in the Washington, DC office of The Boston Consulting Group (BCG). He is a BCG Fellow and director of the BCG Institute for Organization.

Peter Tollman is a senior partner and managing director in BCG's Boston office. He leads BCG's People & Organization practice in North America.

About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries. For more information, please visit bcg.com.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
We're entering the post-smartphone era, where wearable gadgets from watches and fitness bands to glasses and health aids will power the next technological revolution. With mass adoption of wearable devices comes a new data ecosystem that must be protected. Wearables open new pathways that facilitate the tracking, sharing and storing of consumers’ personal health, location and daily activity data. Consumers have some idea of the data these devices capture, but most don’t realize how revealing and...
The demand for organizations to expand their infrastructure to multiple IT environments like the cloud, on-premise, mobile, bring your own device (BYOD) and the Internet of Things (IoT) continues to grow. As this hybrid infrastructure increases, the challenge to monitor the security of these systems increases in volume and complexity. In his session at 18th Cloud Expo, Stephen Coty, Chief Security Evangelist at Alert Logic, will show how properly configured and managed security architecture can...
In the world of DevOps there are ‘known good practices’ – aka ‘patterns’ – and ‘known bad practices’ – aka ‘anti-patterns.' Many of these patterns and anti-patterns have been developed from real world experience, especially by the early adopters of DevOps theory; but many are more feasible in theory than in practice, especially for more recent entrants to the DevOps scene. In this power panel at @DevOpsSummit at 18th Cloud Expo, moderated by DevOps Conference Chair Andi Mann, panelists will dis...
SYS-CON Events announced today that Peak 10, Inc., a national IT infrastructure and cloud services provider, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Peak 10 provides reliable, tailored data center and network services, cloud and managed services. Its solutions are designed to scale and adapt to customers’ changing business needs, enabling them to lower costs, improve performance and focus inter...
There is an ever-growing explosion of new devices that are connected to the Internet using “cloud” solutions. This rapid growth is creating a massive new demand for efficient access to data. And it’s not just about connecting to that data anymore. This new demand is bringing new issues and challenges and it is important for companies to scale for the coming growth. And with that scaling comes the need for greater security, gathering and data analysis, storage, connectivity and, of course, the...
The IETF draft standard for M2M certificates is a security solution specifically designed for the demanding needs of IoT/M2M applications. In his session at @ThingsExpo, Brian Romansky, VP of Strategic Technology at TrustPoint Innovation, will explain how M2M certificates can efficiently enable confidentiality, integrity, and authenticity on highly constrained devices.
SYS-CON Events announced today the Docker Meets Kubernetes – Intro into the Kubernetes World, being held June 9, 2016, in conjunction with 18th Cloud Expo | @ThingsExpo, at the Javits Center in New York, NY. Register for 'Docker Meets Kubernetes Workshop' Here! This workshop led by Sebastian Scheele, co-founder of Loodse, introduces participants to Kubernetes (container orchestration). Through a combination of instructor-led presentations, demonstrations, and hands-on labs, participants learn ...
trust and privacy in their ecosystem. Assurance and protection of device identity, secure data encryption and authentication are the key security challenges organizations are trying to address when integrating IoT devices. This holds true for IoT applications in a wide range of industries, for example, healthcare, consumer devices, and manufacturing. In his session at @ThingsExpo, Lancen LaChance, vice president of product management, IoT solutions at GlobalSign, will teach IoT developers how t...
See storage differently! Storage performance problems have only gotten worse and harder to solve as applications have become largely virtualized and moved to a cloud-based infrastructure. Storage performance in a virtualized environment is not just about IOPS, it is about how well that potential performance is guaranteed to individual VMs for these apps as the number of VMs keep going up real time. In his session at 18th Cloud Expo, Dhiraj Sehgal, in product and marketing at Tintri, will discu...
So, you bought into the current machine learning craze and went on to collect millions/billions of records from this promising new data source. Now, what do you do with them? Too often, the abundance of data quickly turns into an abundance of problems. How do you extract that "magic essence" from your data without falling into the common pitfalls? In her session at @ThingsExpo, Natalia Ponomareva, Software Engineer at Google, will provide tips on how to be successful in large scale machine lear...
The IoTs will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
Increasing IoT connectivity is forcing enterprises to find elegant solutions to organize and visualize all incoming data from these connected devices with re-configurable dashboard widgets to effectively allow rapid decision-making for everything from immediate actions in tactical situations to strategic analysis and reporting. In his session at 18th Cloud Expo, Shikhir Singh, Senior Developer Relations Manager at Sencha, will discuss how to create HTML5 dashboards that interact with IoT devic...
Artificial Intelligence has the potential to massively disrupt IoT. In his session at 18th Cloud Expo, AJ Abdallat, CEO of Beyond AI, will discuss what the five main drivers are in Artificial Intelligence that could shape the future of the Internet of Things. AJ Abdallat is CEO of Beyond AI. He has over 20 years of management experience in the fields of artificial intelligence, sensors, instruments, devices and software for telecommunications, life sciences, environmental monitoring, process...
Much of the value of DevOps comes from a (renewed) focus on measurement, sharing, and continuous feedback loops. In increasingly complex DevOps workflows and environments, and especially in larger, regulated, or more crystallized organizations, these core concepts become even more critical. In his session at @DevOpsSummit at 18th Cloud Expo, Andi Mann, Chief Technology Advocate at Splunk, will show how, by focusing on 'metrics that matter,' you can provide objective, transparent, and meaningfu...
You think you know what’s in your data. But do you? Most organizations are now aware of the business intelligence represented by their data. Data science stands to take this to a level you never thought of – literally. The techniques of data science, when used with the capabilities of Big Data technologies, can make connections you had not yet imagined, helping you discover new insights and ask new questions of your data. In his session at @ThingsExpo, Sarbjit Sarkaria, data science team lead ...