It’s a common pitfall among experienced business leaders to believe punishing disappointing performance goes a longer way than rewarding good performance.
Statistics seem to be on their side: the immediate effect of punishment is often improved performance, the immediate effect of positive reinforcement is often detrimental to performance.
This can be explained by something called ‘regression to the mean’.
If a data point of a variable can be considered an outlier, a future data point is likely to be closer to the mean of all (future) data points combined.
Let me explain this phenomenon with the help of the following thought experiment:
You are managing a team of 10 people.
Gather everyone in a room (maintaining proper social distancing of course) and hang a dartboard on the wall. Now hand everyone two darts of the same colour, each person their own colour.
Next, give everyone one try to hit the bullseye, only using their first dart. Let your team know that the best two performers will be rewarded with a snack, the two worst performers will have to do push-ups.
After everyone had their shot, reward the two best performers and ‘punish’ the two worst performers.
Leave all darts in the board (or the wall and ground, depending on the skill level of your team).
Afterwards, give everyone a second chance to hit the bullseye and see if they did better or worse than last time.
You’ll likely find that the ‘outliers’ will perform more like the average of the group in the second round. Meaning the worst performers will improve and the best performers will do worse in the rankings.
This is called ‘regression the mean’.
An exceptional performance is called exceptional for a reason, it’s likely there was some (bad) luck involved. Luck seldom repeats itself twice in a row. It’s unlikely the reward or the punishment had a significant impact on the immediate change in performance.
Knowing this, would you rather create an environment where people feel safe and confident to throw the dart?
Or would you create an environment where people are so scared of failure, they don’t even start to play the game?
Failure is a stepping stone towards improvement. Accept the fact that it is part of the process and create an environment where it is safe to fail.
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