Culture, Leadership

Inspiring People to Do Their Best: It Takes Rewarding Head and Heart

TripleCrown

By Bob Vanourek and Gregg Vanourek

There are two things people want more than sex and money — recognition and praise. — Mary Kay Ash, founder, Mary Kay Inc.

It is not enough to recruit and develop exceptional people. Triple crown leaders must also recognize and reward them effectively.

General Electric’s Ben Heineman (former GE vice president for law and public affairs) advocates designing compensation systems to include pay for “performance with integrity.” He recalls that GE was systematic about measuring and rewarding performance with integrity, anonymously surveying 130,000 people, asking whether the company cut ethical corners to make its numbers.

Don’t incentivize the wrong behavior

The company assessed leaders against their peers, using a matrix of how many audit issues were open, how many environmental issues leaders had, and more. While by no means perfect in its track record, GE puts significant resources into assessing and rewarding performance with integrity.

Despite good intentions, many compensation systems incentivize the wrong behavior. Michael Critelli, former chairman and CEO of Pitney Bowes (the global mail stream manufacturer and service provider), told us, “Occasionally integrity issues are a problem due to ‘bad apples,’ but often they are the result of giving people financial targets with compensation incentives that they cannot meet honestly.”

At Yum! Brands (the global fast-food company that operates in more than 100 countries with 2011 revenues of $12.6 billion), all senior leaders have their own personal recognition awards. Pete Bassi, the former chairman of Yum Restaurants International, told us, “Yum is all about a reward and recognition culture. At the meetings of the top three hundred executives, you are required to bring your recognition symbol for display. Yum takes recognition to a whole new level. I’ve had people break down and cry when they receive their award.”

What are some of the ways you can reward people, touching their hearts? In an age of tweets and Facebook updates, personal visits and handwritten thank you notes can go a long way.

Recognition can range from awards and praise in front of peers at special meetings to small gifts, such as coffee mugs, spot cash, or a “wall of fame” with pictures. Recognition — ideally coupled with creativity and fun — is an important building block of the culture of character, as long as the praise is legitimately earned and the appreciation is genuine.

Head and heart at Mayo Clinic

As we saw in chapter one, Mayo Clinic has endured as a high performing organization for more than a century. Its enduring success begins with its people. Mayo has built a culture that prioritizes recruiting, developing, and retaining great people.

Dr. Leonard Berry, professor at Texas A&M University, told us, “Mayo Clinic could not have sustained itself for more than a century and thrived as it has without major mistakes along the way had it not been so conscientious in hiring well,” including hiring for values, work ethic, and commitment to the clinic’s culture.

In their book Management Lessons from Mayo Clinic, Dr. Berry and his associate Dr. Kent Seltman observe that Mayo seeks “not stars but a constellation.” Those who want personal accolades will not fit in at Mayo, but those who thrive on teamwork will excel.

Mayo is not looking for homogeneous candidates. Embracing diversity and innovation, Mayo values what it calls “jarring individuals,” employees who question the status quo and shake things up, as long as they uphold Mayo’s shared values.

Mayo’s recruiting is deliberate. Drs. Berry and Seltman use the analogy of casting a Broadway show to describe the clinic’s hiring process. If candidates pass the initial screenings, Mayo convenes a panel of four to eight people to interview candidates for up to 90 minutes to probe their underlying values and beliefs.

Recruitment is only the beginning

Annual turnover among Mayo’s nurses is 4 percent, versus an industry average of 20 percent, and it maintains high overall staff retention rates. Mayo’s approach attracts people of the highest caliber who seek affiliation with a world-class enterprise. For example, it recently attracted nearly seven thousand applicants for 360 positions in its residency and fellowship programs.

The recruitment process is only the beginning. Meeting the clinic’s exacting standards requires continuing interest by every member of the staff in the professional development of all the others. At Mayo, professional development is woven into surgeries, consultations, staff meetings, and career paths—just about everything employees do.

Since most physicians are either not interested in leadership positions or not necessarily cut out to run a multibillion-dollar enterprise, Mayo’s leaders are constantly looking for doctors with leadership potential.

Shaped by the “Mayo Way”

They put aspiring physician-leaders on a comprehensive development track with committee leadership assignments and extensive training. Those who thrive obtain greater responsibility, eventually leading significant parts of the enterprise. Mayo overwhelmingly promotes from within, in part because the values and behaviors of existing employees are known, shaped by the “Mayo Way.”

Mayo also develops leaders by rotating them to different assignments, giving them valuable new experiences. Rotation makes job  change common and unremarkable, making it easier for leaders to move people who are not performing adequately.

One final key is Mayo’s reward system. In many hospitals, the financial incentives are perverse, with quality and cost considerations undermined by rigid rules and doctors competing against each other for referrals, bonuses, and promotions. At Mayo, physicians and staff are well paid and compensated through an all-salary system. They are not paid by the number of tests conducted, patients seen, or surgeries performed. They can focus on quality, not quantity.

According to Dr. Seltman, “Most people at Mayo Clinic feel they are a better employee there than other places they have worked. They don’t want to be the one who lets Mayo Clinic down. Mayo inspires people to do their best.”

Excerpted from Triple Crown Leadership – Building Excellent, Ethical and Enduring Organizations, by Bob Vanourek and Gregg Vanourek, © 2012, McGraw-Hill Professional. Reprinted with permission of the publisher.

Bob Vanourek was CEO of Sensormatic, a billion-dollar NYSE company, and serves as Chairman Emeritus of Vail leadership Institute. Contact him at bob@triplecrownleadership.com . Gregg Vanourek is an expert on leadership, entrepreneurship, and personal development. He teaches at the Stockholm School of Entrepreneurship and the Royal Institute of Technology. Contact him at gregg@triplecrownleadership.com .