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
Internet of @ThingsExpo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devic...
"The Striim platform is a full end-to-end streaming integration and analytics platform that is middleware that covers a lot of different use cases," explained Steve Wilkes, Founder and CTO at Striim, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"At the keynote this morning we spoke about the value proposition of Nutanix, of having a DevOps culture and a mindset, and the business outcomes of achieving agility and scale, which everybody here is trying to accomplish," noted Mark Lavi, DevOps Solution Architect at Nutanix, in this SYS-CON.tv interview at @DevOpsSummit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
SYS-CON Events announced today that Calligo, an innovative cloud service provider offering mid-sized companies the highest levels of data privacy and security, has been named "Bronze Sponsor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Calligo offers unparalleled application performance guarantees, commercial flexibility and a personalised support service from its globally located cloud plat...
21st International Cloud Expo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Me...
"With Digital Experience Monitoring what used to be a simple visit to a web page has exploded into app on phones, data from social media feeds, competitive benchmarking - these are all components that are only available because of some type of digital asset," explained Leo Vasiliou, Director of Web Performance Engineering at Catchpoint Systems, in this SYS-CON.tv interview at DevOps Summit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
SYS-CON Events announced today that DXWorldExpo has been named “Global Sponsor” of SYS-CON's 21st International Cloud Expo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Digital Transformation is the key issue driving the global enterprise IT business. Digital Transformation is most prominent among Global 2000 enterprises and government institutions.
SYS-CON Events announced today that Datera, that offers a radically new data management architecture, has been named "Exhibitor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Datera is transforming the traditional datacenter model through modern cloud simplicity. The technology industry is at another major inflection point. The rise of mobile, the Internet of Things, data storage and Big...
Kubernetes is an open source system for automating deployment, scaling, and management of containerized applications. Kubernetes was originally built by Google, leveraging years of experience with managing container workloads, and is now a Cloud Native Compute Foundation (CNCF) project. Kubernetes has been widely adopted by the community, supported on all major public and private cloud providers, and is gaining rapid adoption in enterprises. However, Kubernetes may seem intimidating and complex ...
"Outscale was founded in 2010, is based in France, is a strategic partner to Dassault Systémes and has done quite a bit of work with divisions of Dassault," explained Jackie Funk, Digital Marketing exec at Outscale, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We focus on SAP workloads because they are among the most powerful but somewhat challenging workloads out there to take into public cloud," explained Swen Conrad, CEO of Ocean9, Inc., in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"DivvyCloud as a company set out to help customers automate solutions to the most common cloud problems," noted Jeremy Snyder, VP of Business Development at DivvyCloud, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We provide IoT solutions. We provide the most compatible solutions for many applications. Our solutions are industry agnostic and also protocol agnostic," explained Richard Han, Head of Sales and Marketing and Engineering at Systena America, in this SYS-CON.tv interview at @ThingsExpo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We are still a relatively small software house and we are focusing on certain industries like FinTech, med tech, energy and utilities. We help our customers with their digital transformation," noted Piotr Stawinski, Founder and CEO of EARP Integration, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"I think DevOps is now a rambunctious teenager – it’s starting to get a mind of its own, wanting to get its own things but it still needs some adult supervision," explained Thomas Hooker, VP of marketing at CollabNet, in this SYS-CON.tv interview at DevOps Summit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.