Performance-related earnings should include learning-related pay

Managers should not be paid for results, only for managing the processes that lead to them. Since learning from experience is a crucial part of the process, according to behavioural psychologist and learning consultant Peter Honey, it follows that managers should be rewarded for learning.

Do you agree with the above statement? Most people don’t. Managing is more about means than ends – and that is not to belittle the importance of the ends or results. Ends never justify means. Every result is preceded by means. Look after the means, and the ends look after themselves.

One of the key processes (only one, there are more) that leads to successful results is learning from experience, which is the best sort of learning. It follows, therefore, that managers should be rewarded for being effective learners.

I’m fully aware that performance-related pay is a minefield, and anyone entering it risks being maimed for life, but I’ll take the risk. If we believe all the propaganda about learning being the only sustainable competitive advantage and learning from mistakes etc, it follows that a crucial aspect of anyone’s performance is learning. If we are serious about learning as a key competence then we need learning-related pay.

There are only three basic ways to reward people financially:

  1. For time
  2. For results
  3. For effort.

The reason why pay features so often as a so-called hygiene factor, is because it is rarely contingent upon performance. If you get paid the same monthly salary, regardless of how hard you worked and/or the results you achieved (you might even have been absent on a three-week holiday) then you can be sure your pay is not contingent.

Paying people for time is administratively convenient but only motivates them to turn up and does nothing for their performance once they are there. Paying people for results is fine so long as the results are within their control. Too often external circumstances muck up results despite people putting in their best efforts. An example would be a salesperson who never achieved their quarterly sales target because insufficient units were supplied by the manufacturer.

Of course, it can also work the other way round. Profit-sharing schemes, for example, are rarely linked directly to people’s performance, and while welcome, the bonus seems purely fortuitous. Pay for effort – ie for carrying out the key processes that maximise the chances of securing the desired results – seems to be the key to making money a real motivator. Of course, it presupposes we have identified which processes are key and/or which competencies people need to demonstrate and that we can measure them with sufficient accuracy.

Managing is all about maintaining and improving processes and neither of these are possible without measurement. It follows, therefore, that a manager who doesn’t know the extent to which his/her people are putting effort into key processes is failing to manage. This leads me to the view that no manager should ever be paid for results, only for managing the processes of which the results are a happy consequence. So learning-related pay would financially reward people, a maximum of one month in arrears, for whatever learning-related behaviours you have on your list.

Those on my list would be:

  • Asking questions (as opposed to acquiescing)
  • Suggesting ideas (as opposed to rubbishing them)
  • Exploring options (as opposed to going for expedient quick fixes)
  • Taking risks/experimenting (as opposed to being cautious)
  • Being open about the way it is (as opposed to telling people what they want to hear/filtering bad news)
  • Admitting inadequacies and mistakes (as opposed to justifying actions/blaming others or events)
  • Converting mistakes into learning (as opposed to repeating the same ones)
  • Reflecting and reviewing (as opposed to rushing around keeping active)
  • Discussing what has been learned (as opposed to discussing what happened without ‘lessons learned’ and plans to improve)
  • Taking responsibility for learning and development (as opposed to waiting for other people to do so).

If this seems too radical and/or unwieldy, you could just give people a bonus each time they demonstrated they had completed all the stages in the learning cycle. When it comes to something as important as learning, we need to put our money where our mouth is. Or putting it another way, you get what you pay for.

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