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
SYS-CON Events announced today that DatacenterDynamics has been named “Media Sponsor” of 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. DatacenterDynamics is a brand of DCD Group, a global B2B media and publishing company that develops products to help senior professionals in the world's most ICT dependent organizations make risk-based infrastructure and capacity decisions.
"Matrix is an ambitious open standard and implementation that's set up to break down the fragmentation problems that exist in IP messaging and VoIP communication," explained John Woolf, Technical Evangelist at Matrix, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Growth hacking is common for startups to make unheard-of progress in building their business. Career Hacks can help Geek Girls and those who support them (yes, that's you too, Dad!) to excel in this typically male-dominated world. Get ready to learn the facts: Is there a bias against women in the tech / developer communities? Why are women 50% of the workforce, but hold only 24% of the STEM or IT positions? Some beginnings of what to do about it! In her Day 2 Keynote at 17th Cloud Expo, Sandy Ca...
As software becomes more and more complex, we, as software developers, have been splitting up our code into smaller and smaller components. This is also true for the environment in which we run our code: going from bare metal, to VMs to the modern-day Cloud Native world of containers, schedulers and micro services. While we have figured out how to run containerized applications in the cloud using schedulers, we've yet to come up with a good solution to bridge the gap between getting your contain...
"We host and fully manage cloud data services, whether we store, the data, move the data, or run analytics on the data," stated Kamal Shannak, Senior Development Manager, Cloud Data Services, IBM, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Information technology (IT) advances are transforming the way we innovate in business, thereby disrupting the old guard and their predictable status-quo. It’s creating global market turbulence. Industries are converging, and new opportunities and threats are emerging, like never before. So, how are savvy chief information officers (CIOs) leading this transition? Back in 2015, the IBM Institute for Business Value conducted a market study that included the findings from over 1,800 CIO interviews ...
IoT is at the core or many Digital Transformation initiatives with the goal of re-inventing a company's business model. We all agree that collecting relevant IoT data will result in massive amounts of data needing to be stored. However, with the rapid development of IoT devices and ongoing business model transformation, we are not able to predict the volume and growth of IoT data. And with the lack of IoT history, traditional methods of IT and infrastructure planning based on the past do not app...
All organizations that did not originate this moment have a pre-existing culture as well as legacy technology and processes that can be more or less amenable to DevOps implementation. That organizational culture is influenced by the personalities and management styles of Executive Management, the wider culture in which the organization is situated, and the personalities of key team members at all levels of the organization. This culture and entrenched interests usually throw a wrench in the work...
Niagara Networks exhibited at the 19th International Cloud Expo, which took place at the Santa Clara Convention Center in Santa Clara, CA, in November 2016. Niagara Networks offers the highest port-density systems, and the most complete Next-Generation Network Visibility systems including Network Packet Brokers, Bypass Switches, and Network TAPs.
WebRTC services have already permeated corporate communications in the form of videoconferencing solutions. However, WebRTC has the potential of going beyond and catalyzing a new class of services providing more than calls with capabilities such as mass-scale real-time media broadcasting, enriched and augmented video, person-to-machine and machine-to-machine communications. In his session at @ThingsExpo, Luis Lopez, CEO of Kurento, introduced the technologies required for implementing these idea...
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.
Apache Hadoop is emerging as a distributed platform for handling large and fast incoming streams of data. Predictive maintenance, supply chain optimization, and Internet-of-Things analysis are examples where Hadoop provides the scalable storage, processing, and analytics platform to gain meaningful insights from granular data that is typically only valuable from a large-scale, aggregate view. One architecture useful for capturing and analyzing streaming data is the Lambda Architecture, represent...
SYS-CON Events announced today that delaPlex will exhibit at SYS-CON's @CloudExpo, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. delaPlex pioneered Software Development as a Service (SDaaS), which provides scalable resources to build, test, and deploy software. It’s a fast and more reliable way to develop a new product or expand your in-house team.
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...