In 1975, management professor Steven Kerr wrote an article for the Academy of Management Journal titled, "On the folly of rewarding A, while hoping for B." The following excerpt sums up the paradox now known as Kerr's Folly: "Numerous examples exist of reward systems that are fouled up in that the types of behavior rewarded are those which the rewarder is trying to discourage, while the behavior desired is not being rewarded at all."

Three decades later, organizations continue to suffer Kerr's Folly. Corporations hope for long-term growth, but reward managers for meeting the latest Wall Street estimates. Companies encourage teamwork, but establish winner-take-all compensation systems around the private interests of individual employees. Sell the most, and win that terrific cruise. Employers want workers to take initiative, but reward those who display strict adherence to even the most out-dated rules. Manufacturers say they care about quality, but pay employees by the number of items produced. Despite the obvious disparities, most leaders seem to have no clue as to why they're not getting the results they want.

The cure for Kerr's Folly is obvious: reward people for the behavior you want. For example, the best approach for getting your employees to work together is to structure their rewards around teamwork. Only then will you get the desired results, because only then will you be exhibiting values-based leadership. You see, if the mission statement professes that your organization values teamwork, but you reward only the top performers, you've lost credibility as a leader.

Perhaps it's time to look at your reward systems. Bookmark this post on del.icio.us