Costly Mismatch

Ever since my early days of professional engagement, I have had a sense of discomfort about the nexus between commitment and reward. That I have started working in the public sector, in and of itself, means that there is much to aggravate that feeling. I had seen multiple occasions where poor commitment and incompetence were rewarded with lucrative economic incentives, such as travel opportunities, training, promotion, salary increase, benefits (such as top-ups, project fees, and allowances) and facilities, such as vehicles.

It was the one thing that remained to baffle me. Regardless of the time I used to spend thinking about it, I could not find any rational explanation to the faulty nexus. After all, having just got out of college, I was only informed about the linear relationship between commitment and reward.

Ten years into my professional life, I still see the incongruity. It is so pervasive that it exists in the public sector, private sector and non-profits. The indiscriminate existence of the problem shows that it has to do with the social value system.

I have come to understand the nexus by looking at who is being rewarded. And I was shocked to learn that those being rewarded are the ones living at the lower rungs of the productivity ladder in a given system. There cannot be a more disturbing fact than this.

People I have met try to paint this problem as one associated with the public sector only. But my years of working in the private sector and with non-profit organisations have proved to me that their hypothesis is far from true. The incongruence between competence and reward is as pervasive in the private and non-profit sectors, as it is in the public sector.

Of course, considering the fact that the public sector leverages resources owned by the public, it would not be unfair to account it to a better standard. Nothing would explain the level of dismay one would feel in seeing public resources used to reward those who are incompetent, unproductive, disengaged and irresponsible. So saddening is this fact that, in my earlier years of public service, I used to feel pessimistic about the future of our nation.

More puzzling is the fact that we are rewarding gossip, opportunism, affiliations, lineages and unquestioning loyalty. We seem to have lost our senses that, by way of our acts, we are disguising objectivism, commitment, hard work, innovation and action. It takes no genius to see that when inaction is rewarded, action gets sidelined.

So widespread has the trend become, it is now customary to hear people saying, “What is needed is flexibility and ‘good tongue’ (to mean speaking skill), not hard work”. Our institutional incentive structure is so lopsided that we are creating a whole new generation that believes in short-cuts, more than hard-work.

My years in working in the private sector, for instance, has shown that those who get promoted are those who deliver gossip to managers. The level of the gossip could vary from who is friends with whom to who is in favour of management or not. I have even seen companies that consider gossip as essential management instrument. At times, managers officially let their employees know that they get their information through a gossip channel of two or more people.

In confronting a manager over this trend in his company once, the answer I received was a misguided theoretical explanation of how “informal channels and information are determinant of employee productivity (and loyalty) and hence the importance to give them due”. For this manager, speaking upfront and challenging his presumptions was considered as threatening his power.

Another experience with another CEO entailed a salary structure in his company. In discussion organisational structure, I posed an inquiry as to why the salary structure is haphazard. I told the CEO that it would be better if salary could be aligned with productivity and responsibility. Eventually, the CEO told me that my idea is not acceptable as loyalty has more value to him that productivity. The puzzle is that he defines loyalty as agreeing with his ideas instead of standing for the vision of the company.

The trend is similar in the non-profit sector. About five years ago, I had an engagement with a non-profit. This Canadian-based non-profit has a management team paid three or four times higher than the average salary in the organisation. Amazingly, all of the members of the management team had formerly worked together in a UK-based non-profit. They were brought together by their colleague who was appointed to head the Canadian-based non-profit.

What was puzzling about this team of individuals is that they had a very low understanding of the core business of their organisation. In contrast, the lower level employees of the organisation had better understanding of the core business and a deep sense of ownership of the deliverables. Sadly, though, they were paid less, had no training opportunities, did not travel abroad to get exposure and are not recognised for their hard work.

Many more examples could be cited on the subject. But the fact is that our incentive structures, economic or otherwise, are not directed at the right people. We are incentivising people who are liabilities to our companies, organisations, systems, political parties and nation.

It would be naïve to wish to have a generation of aspiring, capable and productive youth, while our system is rewarding the opposite. It is nothing but impossible to create an industrious society with an incentive structure that prizes mediocrity.

Avoiding the mismatch between competence and reward is timely. The alternative is a journey that leads to a train wreck.


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