Book Review: Reward Systems

I’ve long been a fan of Steve Kerr, the former chief learning officer at General Electric and Goldman Sachs. His 1995 article, On the Folly of Rewarding A, while Hoping for B, (Academy of Management Executive, 1995 Vol.  9 No. 1), is a classic and one of my favorite readings from back during my MBA days. (It ranks right up there with Arthur Elliott Carlisle article, MacGregor (Organizational Dynamics v. 24, Autumn 1995) — which is another MUST read.)

The main premise of Folly was that reward systems are all too often all to fouled up. So I was particularly eager to see what Kerr had to say so many years later in his latest book …

Part of what made Folly so fascinating to me, was how clearly Kerr magnified the absurdity of so many existing rewards systems. Take these common management rewards, as example:.

Yes, good stuff calling things as they are. like that.

The takes this same premise — that many (most?) reward systems are fouled up — and builds upon it but focusing on the HOW TO fix it part via a plentiful array of stories, examples, antidotes, and case studies.

As far the HOT TO part, here’s his message: If you want to truly align your reward systems, you need to do three things:

1. Define performance in actionable terms.
2. Measure the right things and use the right measures.
3. Reward the right things and use the right rewards.

Unlike many (most?) of us, Kerr  not only knows how to recognize misaligned reward systems, he knows precisely how to FIX them, too.