The Cranky Middle Manager Show #176 Reward Systems with Steve Kerr
Today Wayne Turmel talks with Steve Kerr of Goldman Sachs ( and formerly of GE) about his book, Reward Systems- Does Yours Measure Up? How do you design rewards that get the behavior you want and not dysfunction? Also we look at unintended consequences in Greek mythology and there’s a Cranky Middle Manager e-learning course for you to check out on YouTube.
Steve Kerr, today’s guest
Show Notes
0:00 Welcome to the show. Today we have a lot to cover, starting with our dedication to Cadmus- the founder of Thebes and kind of the poster child for trying to manage effectively, do what your told and still get bit in the rear by unintended consequences.
4:00 Lots of cool stuff going on with the show in the next little while. Check out our Cranky Middle Manager YouTube video- 71/2 Minutes to Better Email. Also, watch this blogsite for upcoming webinars, training and other learning events. The nice lady in HR has slashed your budget, let me help you find what you’re looking for.
5:22 The quote of the week is from Herman Melville, who was a lot like my mother- good work is its own reward and we sleep the sleep of the just. Steve Kerr might disagree.
6:07 Welcome Steve Kerr. He’s senior advisor on learning for Goldman Sachs and former CLO at GE so our careers have crossed even if we’ve never met. We talked about him and his book in Episode 170 with the boys from 800 CEO READ. Why are reward systems so tough to design? First of all, we’re not taught to do it very well.
9:15 Rewards are the wrong thing to start with. First is what are you trying to achieve, then comes how you’re going to measure it, THEN figure out how to reward it. My own painful experience is that rewards and behavior aren’t always aligned.
11:10 Some dysfunctional behaviors include rewarding short term results if you’re looking for a long term solution. People will figure out how to game any system.
12:40 The components of a recognition system:
- The reward must be available
- People must be eligible (I go on a rant about President’s Club and letting the sales weasels have all the fun)
- Rewards should be scarce
- They should be visible
- They should be timely
- The should be reversible- they can be taken away
15:45 Should everyone know what everyone gets for a bonus? Jack Welch certainly thought so… Most people thing everyone is doing better than they are.
17:19 Jack Welch is identified as maybe the manager of the century, and I’m ambivalent. What did he do well and not so well? (Full disclosure, I taught at GE;s Crotonville facility as part of my old dreaded day job). What did their reward systems encourage and what were the downsides? We also discuss the GE policy of mandating the firing of the bottom 10% of the staff each year which has horrified me for years.
22:50 Rewards should be timely…. and this conflicts with the annual review. Yes, another discussion about the horrors of annual performance reviews. We also talk about reversibility of rewards- they should be able to be taken away
26:40 How does Steve approach learning at Goldman Sachs, a financial services firm dealing with chaos? Companies frequently slash training budgets when things get tight.
29:00 Are rewards universal? At GE did the same thing work in China as in the US? Middle managers can give great input here.
Steve’s resources:
Don’t let the weasels get you down!