Wednesday, November 09, 2005

Groups' cognition and performance reviews

When reading about the potential differences between the social and cognitive properties of groups and those of the individuals in the groups, I thought about the performance evaluation systems in mainstream organizations (see pp 178-179).

Whether he means to or not, I think Hutchins presents a good argument for distributing rewards and responsibility among all group/organization members. Supervisors have more formal power and risk, but when one element of a system depends on the others, how can anyone say that the supervisor was responsible for the system's success (or failure)? Many organizations reward supervisors or regional managers with bonuses while the rest of the members of the system plod along and hope for some crumbs.

Here's an example of the alternative: RW Lyall & Co., the company I wrote about in my book, now has one bonus and only one bonus, which is based on the company's annual profitability. Every employee shares in that bonus via a percentage of their annual salary--and everyone is informed about progress toward that bonus throughout the year.

This compensation system acknowledges the interdependence of each element in their organizational system. As a manufacturer of natural gas and propane piping systems, the company can better ensure its product quality, and thereby its customers' safety, by retaining and cross-training employees. The employee turnover at RW Lyall & Co. dropped from over 80% to less than 4% within the first year after they implemented this and other systemic changes.

Now, low turnover might not be a goal of the Navy's, but as an employee, I would rather have an understanding of how my role influences the whole system than be engaged in a " contract between the agents...such that a subordinate can halt only when his superior determines that the responsibilities of the subordinate have been met" (p. 203).


Blogger IB said...

I like how you applied Hutchins to mainstream organizations. Autonomy and control are major influences on motivation. So it seems that in your example, the employees are in control of their bonus by doing quality work and staying with the company, but they also depend on each other in terms of the amount of bonus they receives. Only if everybody does quality work they receive a good bonus at the end of the year.

The whole distributed cognition idea makes sense at the organizational level. Think about the following (rather exetreme, I admit) example: A company bought a new machine (whatever machine it is) and only one person got trained to maintain it. Two months later the person has left the company. The machine cannot be used until another person has been trained. That wouldn't make much sense, would it?

3:57 PM  

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