by David N. Bowman

Most would agree that the days of our parents’ and grandparents’ almost-contractual relationship with their employers are long over. The unstated contract was structured in such a way that as long as an employee worked hard, was loyal, and didn’t cheat, rob or steal, they would pretty much be guaranteed their job and a livable pension at the end of their work life.

The benefit to the employer was that they were able to retain a steady and hardworking workforce to either maintain the status-quo or very slow cycles of growth, by today’s standards. People generally didn’t question authority and did the job they were told to do without regard to how well they felt the job utilized their individual skills. Most probably didn’t question—or it didn’t even occur to them to question—how the direction of their assignments fit or didn’t fit the strategic direction of the organization and their contributions to the long term global success of their employer. In short, it was a job that they did, and did well, but there was little connection for many to their life. In short, work was what one had to do to live.

Contrast this historic social contract with the one that has replaced it. First, and most strikingly, is the reality that good intentions and hard work don’t cut it. The only thing that matters is whether or not the person is effective and efficient. It doesn’t stop there though; after one has achieved today’s set of outcomes and performance expectations, the memory is wiped clean and the process starts over tomorrow as a cyclical reality of “what have you done for me lately?”

One could rightfully argue that this change is positive and reflects the reality of today’s rapidly changing business environment. It has contributed to organizations that have record returns, period after period, and has provided those employees that continue to perform with higher pay and more opportunities to prove their value. Some would even suggest that the bottom 20% or so of performers in any organization should be turned over every year to cull for new talent that is going to gravitate to the top 20% tier.

There is no doubt that this new contract works much better for the highest talent in our organizations than the previously described “old” contract. Top talent is motivated by self-actualization, creative problem-solving, high esteem, and recognition for their accomplishments. It fits.

What about the rest of the organization? Even if one agrees that 20% or some other percentage of non-performers should be weeded out, that leaves 60% or more of the organization that don’t exactly thrive in the new environment that today’s contract requires.

There has been a huge effort in recent history to manage and motivate this core group in order to increase their productivity and effectiveness. First, there has been a tremendous effort to select the right employees. There has been psychological, personality, IQ, technical and competency testing, to name a few, yet there is no evidence that these efforts have had any effect on performance or retention for organizations that use these techniques, as compared to those who do not.

There has also been considerable effort to design systems with a balance of carrots and sticks (rewards and punishments) that will focus employees on the level of performance needed to thrive in their jobs. These efforts fly in the face of scientific evidence that they absolutely do not work. The evidence is well-documented in books such as the recent Drive, by Daniel Pink and Punished by Rewards, by Alfie Kohn.

We, as an economy and as a society, have spent billions of dollars on trying to tweak techniques that are inherently flawed. We cannot know the true depth of a person, even if we could accurately assess one’s personality. Individual behavior is governed by an infinite set of motivations, perspectives, experiences, environments, and genetic factors. Attempting to artificially objectify infinite data that make up who we are, through a subjective scoring system, does not make the data more accurate.

We cannot manage another adult’s behavior no matter how well we believe we know what makes them tick. We cannot motivate them through fear or rewards in such a way as to provide long term increases in performance. The assumption that we have to bribe people or threaten them as a way to get them to work is not scientifically valid. The reality of human behavior demonstrates that we work all the time in many different life environments without immediate reward or fear of punishment.

Once one has rejected the carrot and stick assumptions, it brings us back to the incomplete new social contract mentioned earlier in this article. I believe that the business side of the contract is very clear to everyone: the organization does not owe anyone employment; things will change and the organization expects the employee to change, as well to figure out how to continually add value to the organization.

This is where I believe the new contract breaks down. Organizations want the flexibility of treating their employees as though they are contract employees, yet they don’t want to be tied down as to what those needs are, precisely because things will change. However, as one who has spent most of his career in contract employment situations as a business coach and consultant, neither I, nor my clients, would ever enter into a contract relationship without being very specific about the scope of work and the outcomes that I am expected to perform and deliver. Yet, we don’t make the same effort with direct employees. This, I believe is the crux of the breakdown of the new social contract that governs the employer/employee relationship.

The core piece missing from employment governance is this: organizations don’t create the organizational capacity to serve as an effective employee development tool, capable of continually updating the employee as to the new outcomes that are required from their position to move the organization forward. This capacity takes the organization out of the business of managing employee’s personalities and makes them focus, and think through strategic outcomes. It’s then up to the employee to manage their strength of personality in such a way as to achieve said outcomes in their own unique way.

Personality testing becomes valuable as a development tool only to help the employee learn more about themselves and how they best operate, as opposed to personality testing that allows the manager to “know” how the employee operates. All the manager should care about is whether the employee reached the outcomes that were required of them. As the employee understands the tools and environment that helps them use their strengths to their fullest, they can then “negotiate” the support they need to organize their work in a way that leverages their strengths.

Focusing on outcomes allows the organization to increase accountability while allowing the employee to know exactly what’s expected of them, with the autonomy and leeway to get the outcomes that suit them best. This approach is aligned more closely with what we know about human performance and scientific motivational theory.

More on specific tools to help achieve these capabilities will be covered in future articles.

David Bowman has more than 15 years of experience in organizational design and structure. He has worked with a variety of organizations from Fortune 100 firms to small privately owned companies. This, coupled with wide exposure to diverse industries, including manufacturing, retail, non-profit, healthcare, union, and non-unionized environments gives him a unique perspective into a wide range of organizations and to the people who lead them.