From the Ask Tom mailbag:
Question:
What is the incentive to the person who performs at a higher level than the status quo, if they are rewarded the same?
Response:
While this sounds like a simple question, it is actually quite complicated. While I am not a fan of performance bonuses, I am a fan of differential pay bands for those who are more effective than others. Simply put, people should not be rewarded the same.
There should be different consequences. But the most powerful consequence may not be compensation.
A study was conducted with a group of factory workers. One group produced a high level of product each day (avg 94), the other group produced a lower level (avg 76). The manager was instructed to change two things.
First, each day, post the personal productivity of individual team members. Second, any team member who improved one day to the next, received a complimentary remark from the manager. No pizza, no bonus, no extra time off, just a complimentary remark.
At the conclusion of the study, the low performing group had improved from (avg 76) to (avg 84). Everyone was quite pleased.
The high performing group improved from (avg 94) to (avg 146).
Most managers end up spending time with their poorest performers. Where is the real payoff? -TF
Question: Is this because the high-performers were actually severely underemployed or because they were more talented or some other reason?
Brooks saw something similar in programming, where the top performers were almost an order of magnitude higher in output than the mediocre performers, and multiples of the good performers.
And a study in IT that showed that while managers can see underperformance, they can’t see who is over-performing.
So how do you hire for performance?
Is there a source I can go to for more information on the study you referenced?