3 reasons why leaders should recognize effort instead of results

Here’s a thought experiment for you: Imagine two sales people working for the same company but in different regions.

Johnson slaves away in her area. She does a great job, she’s a professional and accomplished sales rep and she’s always ready to help her clients and colleagues. However, due to circumstances beyond her control she doesn’t reach her sales target this quarter. Maybe her biggest account goes bankrupt or maybe there’s just less economic activity in her region.

Smith, on the other hand, is lazy. He is not very competent and he never bothers to go the extra mile to help his colleagues or his clients. But due to circumstances beyond his control he achieves his sales target nonetheless that quarter. Maybe a big order drops in completely by chance, or maybe the growth in his region is increasing, or maybe his sales target just wasn’t ambitious enough from the start.

Which of the two deserves praise and recognition? Johnson, who does a great job, but performs below target or lazy Smith, who just got lucky this budget year?

To me it’s pretty obvious that it’s both better, more fair and more helpful to the future results of the company to acknowledge and reward the employees who have delivered the bigger effort.

And of course most companies do the opposite and reward only results, partly because results are easier to measure, but also because of we have a systematic bias for underestimating the ‘luck’-factor.

Daniel Kahneman is the only psychologist who’s been awarded a Nobel Prize. However he won it in economics, since there is no Nobel Prize in psychology. He got the prize for his work with identifying how humans make decisions and founding the field of behavioral economics.

One of the intriguing results of his research is that we highly underestimate the impact that luck has in many situations, and we massively overestimate the effects of our own actions. Good results are often due to luck (at least in part), but we choose to take credit for them anyway.

It’s extremely demotivating to those employees who have made an extra effort but don’t get recognition for it, to stand by and see their less competent (but luckier) colleagues receive both accolades and financial rewards.

Some companies try to solve the problem by creating more complicated bonus structures, but that’s rarely a good solution. Experience shows that bonus schemes are either so simple that they’re almost sure to be unfair to somebody, or so complicated that no one can make heads or tails of them. The study also shows that bonus schemes and rewards on the whole lead to poorer results, less motivation and inferior efforts. I’ve blogged about this before in this column.

To me the solution is simple: Leaders must focus just more on the effort of employees than on just their results. We must recognize not only those who reach their goals, but especially those who do an amazing job and even more so those who help others to become better at their job.

One great example if this is the New York-based company Next Jump. Their most important and prestigious employee award is not given based on performance but based on who helps others the most. In this video you can see their 2014 awards ceremony:

It’s not so straightforward, as results tend to be more measurable and visible. Encouraging a great effort will require that we as leaders have more insight and show more interest in our employees’ daily work. However there are three good reasons why we should do it anyway, even if it’s more demanding on us.

Effort is not reliant on luck
While good results may be due to luck, great effort is always due to the employee’s talents and attitude – and those employees who consistently demonstrate and improve skills, should clearly be recognized and celebrated.

A strong effort will – in the long run – always lead to better results
It’s no good if we only optimize for this quarterly result. We are optimizing for the next 20 or 30 quarterly results.

We avoid suboptimization
If we only recognize the employee’s results, we’re creating a culture in which we’ll do anything to obtain results – instead of doing what’s right for the clients and for the long term targets of the company. If I only get rewards for achieving my own sales targets, why on earth should I spend time and effort helping my colleagues?

The upshot

So leaders must encourage and acknowledge effort rather than results. In the long run it will create more fairness, more motivation and – ironically – better results.

Your take

What is valued most in your workplace – results or efforts? What does that approach do for your motivation and engagement? How has it affected you and your coworkers?

Write a comment – we’d love to hear your take.

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2 thoughts on “3 reasons why leaders should recognize effort instead of results”

  1. Alex,

    The logic here is faultless and supports a point that I have long made: namely that we are obsessed with performance measurement to the point that it is often largely counter-productive.

    However. …

    There is a danger in focusing on effort, because it is both extremely subjective and open to manipulation. For example, if I have children and/or elderly relatives to look after I may not be able to put in the same effort as my colleague, and therefore the deck is already stacked against me before I even start. As for manipulation, I once worked with a man who only ever responded to emails and phone messages via emails sent in the middle of the night. As a result most people, including senior management, considered him extremely hard working, but the fact is he was the most idle individual you could ever encounter and spent most of his day away from his desk (I never did find out what he did) and actually delivered very little.

    So, as ever when dealing with human affairs, there is no definitive right way or wrong way of dealing with things. For me it ultimately boils down to creating an environment where the individual is able to do the best they can to fulfill their own potential (and thus to achieve a level of self-satisfaction that you could perhaps describe as happiness.) This objective can be further enhanced by dispensing with incentive remuneration and rather allowing everyone a share in the organisational results. This will eliminate the internal competition and make the whole working environment more co-operative and collaborative and thus a happier place in which to work. Especially if exceptional individual effort – identified by colleagues – is recognized and acknowledged, showing that it is appreciated.

  2. Alex,

    Your article brings to light a thought that I have had for a long time about the performance of the individuals who work in my small sales office. Our team consists of 3-4 people who, for the most part, have strict sales goals that we are expected to meet. Each person in the office earns individual commission based on a tiered bonus structure. Once each individual reaches the highest possible tier, then there is an opportunity for a team goal in which the incentive is higher. However, the only ones who can benefit from that “team” bonus is the ones who were lucky enough to reach their highest possible individual tier. In over a year of being open, we have never once reached the team level or earned the supposed incentive for it.
    In his attempt to “motivate” us, our leader made the tier system more complicated and added additional levels. At this point, no one in our office really fully understands what they are shooting for or why. Frustration and discouragement is a daily happening, and there is little teamwork or collaboration. Although team members are primarily responsible for training new members of the team, most of us are so focused on our own work, that we have little time for training or explaining things to anyone new.
    My research on organizational theory and motivation over these past few weeks has significantly changed how I view and want to organize my own office in the future. Rather than assigning individual sales goals, I will instead have an overall office goal for a specific time period. To encourage team members to help each other learn new things and become better sales people, bonus’ will be paid out when the team meets their overall goals as a whole. Each quarter, team members will vote on the team mate they feel put in the most effort and helped others the most during that time, and that team member will receive a special award and bonus. Although this is just the start of a change, and it is on such a small scale, I believe that change must start somewhere. In addition to making changes in our office, true organizational change can only happen when everyone changes as a whole. For that reason, I will be encouraging my area sales leader to encourage these types of changes throughout the organization.
    Your article was truly inspirational, and I will continue to take you advice. Thank you!

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