Rewards and Punishment Part II

As most of you may know, I am reading the book "Making Strategy Works" published by Wharton School Publishing. Inside, the book it is talking about the components that are critical in making your corporate or business strategy works. So one chapter was devoted to Rewards and Punishment. As I mentioned in my previous blog, in many of the ancient chinese military works, there are many mentioned of having a good system of rewards and punishment. So I just want to share some of the thoughts and stuff that I have read here.

There are many brief mentioned of the system of rewards and punishment in many of the works, for example, Sun Zi Art of War, Six Strategist by Jiang Taigong, Han Fei Zi and many others. They only mentioned that the system must be transparent and should be the same regardless of who. Which means, there is no such thing as biasness, all are treated equal under the system.

The system is suppose to reward the correct behavior and rectify the undesirable behavior in the army, thus it is necessary as it impose certain level of discipline and unity into the troops which is critical because how can one fight an army that has a mind of its own or, each individual in the army act according to what they deem fancy.

Bringing this to business will be actually, rewards and punishment should help the company's staff to focus on getting the short term goals that would ultimately lead to the success of execution of strategy. So rewards must be given immediately when the target has been reached and like I mentioned in another set of blog, the goals set must be clear-cut. There is no such thing as grey area. It is either achieved or not achieved yet. And once it is achieved, rewards must be given out quick so as to send a signal that you value and recognize the staff's contribution to achieving the short term goal. Thus would incentivise him to quickly achieve the next goal, knowing that once he achieved it, the rewards would be given as promised. This is just one side of the integrity of the rewards and punishment system. When rules are broken, some form of punishment must be meted out as well, but one must also built in the consideration of the circumstances as well. For example, if the goals set was to achieve, 20% increase in sales revenue, but the manager only achieved 16% but his peers in other companies only achieved 12% due to the industry conditions, then punishment should still be meted out but one must be lenient not to enforce the full extent of the punishment. Even if the person committing the mistake is of the highest level of authority, he must also show that he is liable for punishment as well. Or else he himself would compromise the integrity of the system and in the end incur an even larger costs to the company.

In Romance of Three Kingdoms, in one of the scenario, Cao Cao order his troops not to trample the rice fields of the commoners, those who committ the offense will be executed, but during the march, his horse was startled by the birds that suddenly appear from the rice fields, his horse ran through the rice field, trampling a good part of it. He wanted to execute himself, to maintain the integrity of the system, but his advisor knows his intention and told him how can the leader be executed, so in the end, Cao Cao cut his hair to represent that he has been 'executed'. (In the past, hair is not cut because it is believed that since any part of the body is given by the parents, it would be unfilial to cause 'hurt' to the body) Thus, Cao Cao was able to maintain the integrity of the system.

Of course in business, things are not so straightforward. The extent of rewards and punishment is also important as well. One must reward enough to make his staff motivated to achieve short term goals on time. Too small an extent of reward does not have a good effect of motivation, too large an extent would incur unnecessary costs to the company. Too small an extent of punishment, may cause the mistake to be repeated. Too large an extent may actually weaken the morale of the staff, because the person being punished may hold grudges and consequences maybe unthinkable. And the extent may be difficult to grasp when the rewards promised or punishment meted out maybe to a group of person.

So this system is a critical part of strategy execution, and definitely it is an art and science to implement it successfully. Hope I can discover more of it and share it with readers here.

Cheers!