Couverture de Five-minute Deming: Pay vs. performance

Five-minute Deming: Pay vs. performance

Five-minute Deming: Pay vs. performance

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 Most leaders believe pay is the lever that keeps people accountable. Tie raises to individual performance, and people will work harder. Untie them, and standards will slip. That belief feels especially strong in operations where timing matters—where a late start cascades into lost output, overtime, and frustration. But what if the very tools meant to enforce accountability are quietly making the system worse?W. Edwards Deming spent much of his career challenging a deeply held management assumption: that individual performance can be measured, ranked, and rewarded in a way that reliably improves results. His critique was not philosophical. It was grounded in how real work actually happens.Deming was blunt about the damage caused by this assumption. He wrote that “evaluation of performance, merit rating, or annual review” is a management disease—one that builds fear and undermines cooperation instead of improving results.A deadly disease: evaluation of performance, merit rating, or annual review— W. Edwards DemingIn most organizations, especially those that operate in shifts, results are produced by systems—by schedules, handoffs, training, equipment readiness, and staffing decisions. When leaders focus compensation on judging individuals instead of improving systems, fear replaces learning, and supervisors become referees instead of leaders.This tension is often dismissed as a white‑collar concern. But the opposite is true. The more tightly coupled the work, the less individual performance explains outcomes—and the more management decisions shape results.That reality plays out clearly at Sunrise Acres, a large egg farm running multiple barns across three shifts.When measurement isn’t enoughSunrise Acres depends on precision. Every shift change affects feeding schedules, sanitation routines, and downstream quality. When crews start late, the consequences ripple through the day.Miguel, the operations manager, is exhausted by the problem. “We track everything,” he says. “Names. Minutes late. Warnings. We even tie raises to attendance—and it still doesn’t stick.”Late starts keep happening.Sarah, the farm’s general manager, doesn’t argue with him. “What if the problem isn’t the people?” she asks. “What if it’s the way the day starts?”Together, they walk the process from parking lot to first task. The issues surface quickly. The time clock is deep inside the barn. Protective equipment is stored in multiple locations. New hires aren’t clear on relief coverage. Buses arrive with built‑in variability. And supervisors are stretched thin at shift change.No one would blame a single hen for a flock problem. Seeing the system end to end makes it clear that punctuality has been treated like a character trait, even though the system makes being on time unnecessarily hard.They make practical changes: moving the clock closer to the entrance, pre‑staging PPE kits, adding a short overlap for handoffs, and using visual start‑time cues. A bilingual lead helps direct arrivals. Attendance improves almost immediately.One employee, Rosa, is still late. Instead of issuing another warning, Miguel follows Sarah’s lead and starts a conversation. Rosa explains that her childcare opens at the same time her shift begins. A small schedule adjustment and cross‑training resolve the issue completely.What becomes clear is that most lateness was common‑cause—built into the system. A few cases required individual action, but only after the system barriers were removed.When raises come due, Miguel hesitates. “So… no merit scores?”Sarah is explicit. Base pay is set by role and market. Raises come through skill blocks—what people are trained and qualified to do. Any shared upside is tied to farm‑level performance. Attendance expectations remain firm, and willful noncompliance is addressed directly. What they abandon is the fiction that a yearly rating caused punctuality.Deming warned that “evaluation of performance, merit rating, or annual review” builds fear and rivalry while demolishing teamwork. He also cautioned that it is “unfair, as it ascribes to the people in a group differences that may be caused totally by the system that they work in.” At Sunrise Acres, supervisors stop keeping secret tallies and start removing barriers in the work. Training accelerates. Turnover slows. Late starts drop—and so do the hidden costs that came with them.[Performance-based pay] is unfair, as it ascribes to the people in a group differences that may be caused totally by the system that they work in.— W. Edwards DemingWhere managers go wrongMost leaders don’t rely on merit pay because they enjoy ranking people. They do it because it feels like control—especially when schedules slip or output falters.Deming warned that this instinct leads managers to confuse numbers with knowledge. When results vary, rating people feels decisive, even when the variation comes from the ...
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