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Technology + Management + Innovation
30
Jul
2014
Management

Traditional Project Management is 100 Years Old. It’s Time to Upgrade.

by Jake Bennett

Project management as it’s practiced today is a throwback from the industrial revolution and it hinders innovation in today’s fast-paced, digitally-disruptive world. Agile project management is it’s logical successor, but managers need to embrace it as more than just a software methodology.

Gnatt Chart Screen


Don’t worry—we’ve all done it. If fact, most of us are still are doing it. Actually, most of us are doing it and still think it’s okay to do it.

 Part 3 in a 3 Part Series

  1. Is Your Company Operating from an Industrial-Era Playbook?
  2. Why Performance-Based Compensation Doesn’t Work
  3. Traditional Project Management Needs and Upgrade

No, I’m not talking about sneaking in a little TMZ while we’re at work. I’m talking about using Microsoft Project or Excel to make a project plan—something far worse for productivity than the worker time lost by following the latest celebrity break-ups.

Okay, I admit it: I use Microsoft Project Gantt charts at POP for planning small internal projects. And this isn’t really a problem because the time horizon for these projects is short, the complexity manageable, the impact of delays relatively minor, and the amount of uncertainty fairly limited. In short, it’s a simple tool for a simple problem.

But what happens when the project gets more complicated? When the environment in which the product operates is constantly changing? When deliverables are complex and require significant collaboration across teams and partners? When money is on the line and people’s careers hang in the balance? That’s when the Gantt chart starts to break down.

Under these stressful circumstances (which are the norm for many digital initiatives), it’s natural for our desire to exert control to increase, and with it, our desire to seek familiar artifacts that give us a feeling of control. When the going gets tough, the tough make project plans. Unfortunately, feeling in control and being in control aren’t the same thing. No doubt the ancient tribes who performed elaborate rituals to control the weather felt in-control, even though they weren’t.

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5
Jul
2014
Management

Welcome to the 21st Century: Why Performance-Based Compensation Doesn’t Work Today

by Jake Bennett

The science is crystal clear: performance-based compensation hasn’t worked for decades. So why is business still addicted to it?

factories


 

Almost all companies today have a compensation program for at least some employees based on performance. From CEOs who are awarded bonuses for hitting a target share price to bike messengers who are paid by the delivery, performance-based compensation is widespread today.

Part 2 in a 3 Part Series

  1. Is Your Company Operating from an Industrial-Era Playbook?
  2. Why Performance-Based Compensation Doesn’t Work
  3. Traditional Project Management Needs and Upgrade

Clearly, given the ubiquity of performance-based compensation, one would assume that a great of deal of research has been conducted to assess the efficacy of this model. Why would all of these smart business leaders follow practices that don’t work? That would be crazy. And if you made that assumption you would at least be partially correct: decades of research have been conducted to determine if performance-based compensation works. The problem is that, according to author Alfie Kohn writing for the Harvard Business Review, the research all confirms the opposite conclusion:

As for productivity, at least two dozen studies over the last three decades have conclusively shown that people who expect to receive a reward for completing a task or for doing that task successfully simply do not perform as well as those who expect no reward at all.

Huh? Say what? That doesn’t make intuitive sense. And what about the father of scientific management, Fredrick Taylor? Was he wrong about the motivation of piece rates? Actually, as it turns out, he wasn’t. Contemporary research supports his conclusion that performance-based compensation for piecemeal work increases productivity. The problem is that the tasks performed by modern day professionals are no longer piecemeal. We’re not in the 1900s anymore. Piece rates worked for industrial era factories when employees worked on simple products as they moved down the production line. And they also work for workers like bike messengers, who fulfill simple tasks. But most businesses today aren’t dealing with simple tasks. They are responsible for managing incredibly complex systems staffed with a highly educated workforce. So why would we think the same piece rate principle applies?

In fact, performance-based compensation for complex tasks actually reduces productivity. According Dr. Bernd Irlenbusch from the London School of Economics, in a 2009 study of 51 corporate pay-for-performance plans: “We find that financial incentives…can result in a negative impact on overall performance.”

Come again? But that makes no sense. Why would people perform worse when they are paid for their performance?

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