A real behavioral scientist in the real world

A review of Managing without Supervising: Creating an Organization-wide Performance System By William Abernathy, Ph.D. PerfSys Press, 2000

Dwight Harshbarger, Ph.D.
Cambridge Center for Behavioral Studies
336 Baker Avenue
Concord, MA 01742
978-369-2227
harshbarger@behavior.org

Many times, out in the field slogging through the muck of organizations and their performance problems, I have wished I knew more; I wished for help. Help from a greater sharing of the private technology and methods privately held within consulting firms. Help from a greater commitment to science by OBM practitioners, making their methods and data public, rather than guarding them like palace secrets. Help from a shared value among private consultants that the rising tide of knowledge created by the full disclosure of outcome data and replicable intervention methods will raise all boats. Managing Without Supervising offers this help. And more.

This book breaks the mold of traditional OBM intervention in two ways. First through its quantitative and systemic linking of multi-level human performance and company financial performance. Second by demonstrating that the leader of a private sector consulting firm can take the risk of being a real behavioral scientist in the real world, making a full disclosure of replicable methods and outcomes. In doing the latter Bill Abernathy deserves the respect and admiration of his scientist-practitioner consultant colleagues who fashion themselves as applied scientists in the world of the workplace. The truth is that behavioral scientists practicing good science are hard to find in the world of organizational consulting. Bill Abernathy is one.

This is a rare and exemplary book, embodying scientific principles that we scientists-practitioners preach but too infrequently practice. And it is a book that has flaws, so I will unload them here. For example, the book could use another round of copyediting. The book is often densely packed with important information, sometimes quite technical. There may be two books here, not one. The addition of anecdotes and at times a more leisurely discussion of issues would help engage and instruct the reader.

At the outset of this work, Abernathy asks an important question, one he has worked to answer over the years. How do employees, supervisors and managers near the base of an organizational pyramid, people at or near the first line, share in an organization's profit performance? This question can be answered through adopting incentive and bonus systems, such as gain sharing, and compensation consultants will help do that. But rarely are these systems extended to the "little people" whose day to day performance is critical to the success of a company. Lincoln Electric is the exception, not the rule.

Further, rarely do these systems pinpoint behaviors and results at every level of the organization. And systematically and quantitatively link performance and profitability. Many behavioral consulting firms talk about this, but few do it. Among those firms who purportedly do it, explicit descriptions of their proprietary, trademarked and copyrighted methods, and full disclosure of outcome data, are not provided in publications. Abernathy has done all these things.

Motivating and managing employees to deliver high quality performance is neither simple nor easy. We have a body of impressive scientific evidence that demonstrates the power of the systematic use of antecedents and consequences to improve human learning and performance. The three-term contingency is applied in some creative ways to tackle problems in organizational life. But even a cursory review of common practices among consulting firms, and the small number of applied research studies published on work done by firms in the private sector, quickly becomes repetitive. How many ways can a consulting firm find to market and sell the A-B-C model and still appear to be offering something new? The answer: More than you can imagine. But appearances are often very deceiving.

As the late Glenn Latham advised so often, we work too hard trying to control the behavior of others. Let consequences do the managing for you. Bill Abernathy has given new life and new technology to Glenn's advice. He has developed a set of methods to improve personal, work team and organizational performance that departs from A-B-C models of training and intervention. He offers a system that departs from social consequences for achieving behavioral pinpoints, one that is anchored in the architecture of hard-nosed economics.

Why do behavior-based interventions have a short life? Or fail?

First, in most organizations a very human process weakens the often-dramatic successes of behavior-based performance engineering. Once a system is built and managers trained to work positively within it, the resources needed to insure the continued development and updating of the system are sometimes overlooked, and sometimes cut in moves to reduce costs. Other changes occur. Key people are promoted or transferred and others may leave for jobs elsewhere. New managers may not receive the training they need to become proficient in keeping the system working effectively. As all this happens, small but important tasks get overlooked. The system, once welcomed, becomes a chore. Competing contingencies, many with long histories, come into play. Managers revert to old ways of doing things.

Second, and most importantly, the performance of first line employees and supervisors, who typically are the principal target of behavioral interventions, is not linked to a company's financial success. In most organizations, company financial performance has no impact on first line people. Good work or marginal work, fast or slow, employees still receive a wage or salary. And bonuses and incentives are awarded to more senior people on the basis of outcomes over which first line employees have little or no direct control, but influence a lot.

These continuing difficulties led Bill Abernathy to develop methods linking employee job performance and company financial performance. His approach is based on the work of economist Martin Weitzman, whose book The Share Economy describes the societal value that grows from effectively linking employee performance to company financial performance.

How does the program work?

The targets for performance improvement in Abernathy's system, Profit Indexed Performance Pay (PIPP), grow out of a strategic scorecard, a quantitative statement of the key drivers in the organization's business strategy. The performance targets, objectives, are "cascaded" or interconnected, and performance scorecards for employee and work team performance quantifies results. Frequent and timely performance feedback through measurement and performance charts answers the question "How do I know if I'm doing a good job?"

Performance targets for employees and work groups are specified. Then the economic impact on company profitability of pinpoint performance at target, above or below target, is carefully assessed. The assessment is used to develop formulas for employee incentives. Then employees are offered an opportunity to place a percentage of base salary at risk. If personal performance and profit performance targets are achieved or exceeded, employees receive the at risk portion of salaries plus an incentive that is attractively greater than the percentage of base pay the employee put at risk. If employee performance and company profits are below their respective targets, there is a lower or even no pay out to employees. Formulas also handle varying combinations of above and below target performance by employees and the company. There is a sharing of risk and rewards by employees and the company. In the language of performance engineering, managers and employees work under shared contingencies of reinforcement.

Performance measurement and feedback is central to the system, and financial incentives based on business objectives and related behaviors strengthen employee motivation for performance improvement. In the natural environment of the work culture, employees independently build social reinforcers to strengthen the behaviors that are critical for achieving business objectives. The consultant-based training of managers to use reinforcing social consequences to build and maintain employee performance becomes relatively unimportant. Whoops! This is what most behavioral consultants get paid to do. Not a small point. In traditional interventions, clients pay a lot for consultants' expertise in training supervisors and managers, believing they are buying a product whose fizz will last. Unfortunately the drink goes flat all too soon.

Social reinforcers are key variables that under the best of conditions lack precision and effective control in the workplace. Some managers do deliver them well, some poorly. A few managers refuse to do anything but punish, "no matter what those consultants say." Replacing a reliance on punishment and negative reinforcement with fluency in contingently using positive reinforcement is a high risk venture. Anyone doubting this should take a look at data on the survival of OBM interventions based on social reinforcers. What's that you say? Consulting firms don't make these survival, or client failure, data available? As Prefect of Police and casino customer Louis Renault said during the raid on Rick's casino in the film Casablanca, "Rick, I'm shocked to find there is gambling going on in your establishment."

The system-based and performance-focused financial drivers in PIPP can be controlled and finely calibrated. Social reinforcers can not. Potential financial awards and the percentages of employees' pay put at risk can be varied as job requirements and products change, and as market competition leads to changes in the economic value of performance outcomes.

A common misperception is that workers will react negatively to performance measurement and incentive pay linked to profitability. To the contrary, Abernathy has data from multiple clients finding that when offered an opportunity to participate a program linking a percent of salary at risk with profits, most employee groups are highly receptive to participating in the new system.

Employees realize that linking a part of their pay to profitability and personal or team performance is the only way they can truly participate in their organization's success. As Abernathy notes, stakeholder systems are particularly attractive to low paid workers who, within a conventional pay system, may lack the education and training opportunities to achieve levels of pay leading to a better standard of living.

In the wake of Enron's demise a note of caution about formula-based incentives is appropriate. In a behavioral framework, "cheating" occurs when a person or group receives positive reinforcers without engaging in the behavior designed to trigger the reinforcers. In a formula-based performance incentive system there must be a behavior-based performance logic that drives the system. It begins with a business strategy and is cascaded to pinpointed behaviors and results for individuals and business units, using quantitative methods of measurement and performance feedback. Aggregates of performance for large business units driven by the same performance logic. There must be valid independent audits of behavioral and financial performance.

Managers make choices about how to manage. OBM practitioners influence those choices, and sometimes make a fair amount of money in the process, by offering opportunities for performance improvement based on a scientific approach to managing people in the workplace. Along with many of you, I take pride in clients who have successfully implemented and maintained over many years, behavior-based performance improvement. However, the truth is that the numbers of these clients have been far outweighed by short-term successes that were unable to survive long-term.

Bill Abernathy's system is different. It is complex. It requires work to understand and use. It goes well beyond traditional approaches to performance management and uses of financial incentives. In Managing Without Supervising, Bill offers his technology to us, including many methodological points on "how to do it." Bill also publicly discloses client performance using PIPP, warts and all, in the data he presents on the long-term use of his system.

In short, Bill is an applied behavioral scientist in the full meaning of the term. He is making a significant contribution to our community of applied behavioral scientists. He could have done it differently, offering teasing glimpses of methods but keeping the whole truth just beyond the reader's grasp, and provided only when you engaged his firm. But he didn't. He could have presented outcome data on his firm's successful clients, keeping the less attractive data in the company vault. But he didn't.

Abernathy's book is a major contribution to our field. Bill's work and this book are distinguished by their scientific honesty and their challenge to an increasingly tired but historically successful way of doing business by too many behavioral consulting firms. If we want to be taken seriously as a scientifically based approach to behavior in the workplace, we would do well to follow the leadership of Bill Abernathy.

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