Building an organization that is committed to the growth and development of its people raises the questions of how to manage performance, particularly when that performance does not meet expectations. What about outcomes, incentives, compensation, and consequences? How do you incent the right type of performance and deal with the wrong type?

I would reframe the question from asking about performance and outcomes that produce value (profit) for the business and development for the people to asking about structures and processes that produce value for both the business and the people.

My experience has been that there is a deeply held (and mostly unconscious) assumption that there is a tradeoff between excellent business and doing “good” for people. The most extreme way to put this is something like: if you are a hard-nosed business person focused on maximizing profit, your people will suffer. And, conversely, if you organize yourself to benefit your people, the business (profits) will suffer. I think we find this to be true because we assume it is true. My experience at Decurion has shown me that it doesn’t have to be. We can organize ourselves so that by working to maximize the value to the business we create ideal conditions for people to grow and develop.

The key is how we organize ourselves (structure) and how we work (process). Outcomes are not ignored but they are not primary. Incentives are sometimes used, but usually only to recognize a long-term pattern of behavior, not an individual goal. Questions of purpose, aim, structure, and process take most of our strategy and management time: are these different aspects of why, what, and how constructively in integrity with each other?

For example: we set business goals that the business (group of people) cannot yet achieve. In order for the business to meet these goals the group will have to learn to do something together that it currently can’t do. In order for the group to learn, individuals in the group will also have to learn. Then we ask the questions: What does it mean to learn what needs to be learned? Who needs to learn what? Most of this learning will be relational: How will people work (behave) with each other? What identity is most constructive? What patterns should be explored? Next, we get busy figuring out the structure that will support reaching the goal we have set up: Who will have to work will whom on what? What are the reporting relationships, meetings, daily/weekly schedules that would make it more likely that the required people are working on learning the right things to reach our goal? Finally, we ask process questions: How are they going to learn it? Who is going to support that learning? How would we increase the likelihood of them learning it? How much quality time do people spend discussing the learning process?

Managing challenge and support is another way of thinking about this. The challenge comes from the magnitude of the goal: the difficulty, scale, scope, and complexity. The support comes from the way we organize structures, methods, processes, and relationships (community). We spend almost all our time in dialogue about balancing these two aspects — always adjusting (sometimes daily/weekly) the “heat in the container” by increasing or decreasing the challenge and/or the support. Goals are adjusted and refined. Timelines are moved. Teams are changed. Projects are reconsidered.

In general, these deeper conversations about learning are far more valuable than talking about only outcomes, or outcome based incentives because learning often changes outcomes. The type of group learning and performance we ask for doesn’t come from explicit incentives, at least primarily. It comes from an implicit motivation, a pull to answer deeper questions and make bigger contributions. I’ve found implicit motivation to be the far stronger impulse once activated, while the use of explicit incentives often blocks or retards its activation.

In general, waiting to see if outcomes are achieved takes too long and is too detached for us. We would rather be directly engaged with groups and individuals in the learning process. That way we are “in it” together. We don’t have to wait to see if we get the results, we are working the process together day-to-day. We learn about each other, what each of us and the business needs to learn, and what works and what doesn’t. It becomes a very intimate connection scaled across the entire organization and we know all the time how everyone is “performing” (learning and developing both horizontally and vertically).

At Decurion, people get promoted by demonstrating a pattern of learning. When groups and people learn, results happen, but the learning comes first. As people develop they can handle more in scale, scope, and complexity, which allows them to move within the organization to take on new roles and compensation levels. Those people who don’t demonstrate a pattern of learning and get “stuck” — even when they produce results — eventually leave or are asked to leave the organization or take different and perhaps smaller roles. There is a lot of movement in a DDO. This movement is the primary marker of organizational development.