Strategies To Enable High Performers Transform Organizations

In an ideal scenario, high performers are celebrated for the value they bring to an organization and rewarded for their efforts through both promotion and pay. Unfortunately, corporate cultures can be marred by politics and conflicts.

Examples abound. Steve Jobs was ousted from Apple. Co-founder Max Levchin departed PayPal after Ebay acquired it in 2002 to create Slide and Affirm that competed in the same industry.

Going further back in time, by postponing the promotion of Eiji Toyada to President until 1967, Toyota delayed its transformation through his lean manufacturing principles. Will Durant became a formidable competitor when he was let go by General Motors in 1910.

In all of these examples, high performers were “othered” by the organization in an “us vs. you” framing.

In almost all cases, the high performers bounced back and thrived, creating and leading other organizations.

But, for the organization itself, the fallout is beyond the focal high performer. Other high performers often feel demoralized and demotivated, questioning the organization’s commitment to recognize and promote talent. And the reputational consequences may reverberate in terms of the organization’s ability to hire other high performers.

In contrast to the above examples, my late mentor Ed Snider of the Philadelphia Flyers noted two critical factors for harnessing high performers in driving organizational success. First, “hire good people and let them do their job.” Second, recognize that for high performers, “money is the reward, not the reason.”

Here are five lessons, corroborated by research, on what leaders ought (not) to do to enable high performers transform their organization.

Recognize What Motivates High Performers:

High performers are individuals who possess a unique blend of skills, innovation, and dedication to achieving the organization’s purpose. Given their personal brand, they are often in high demand by rival organizations. They also have the cache to create their own ventures by luring other high performers for a joint exodus, as shown by my research with Raj Echambadi and Sonali Shah published in the Strategic Management Journal. We found that high performers perceive money as the reward, but their reasons center on an alignment towards a shared purpose wherein they can exercise their autonomy and foster their mastery. Author Dan Pink says the same. He notes that money acts as a threshold motive: you need to pay high performers enough so money is “off the table” Then, harness their autonomy, mastery and purpose by providing a platform to excel. This requires the creation of a culture that empowers rather than stifles their creativity.

Enable Self-Selection into High-Performing Teams:

Ed Snider recognized that “letting them do their job” does not necessarily mean that high performers do it all alone. On the contrary, high performers naturally gravitate towards each other. They recognize that they may not have all the domain expertise to create innovative solutions that help transform the organization. Also, the bigger the purpose, the more they need other high performers to contribute.

Steve Jobs understood this principle. Faced with stagnating sales in the core computer business when he returned to Apple, he recruited Tony Fadell to create the iPod and later, the iPhone, both pivotal to Apple’s transformation. In turn, Fadell relied on fellow high performers who were drawn to the project, including Matt Rogers, a fresh intern, to Greg Joswiak, a long-time product manager at Apple.

My research with Gilad Chen, Miriam Erez, Brent Goldfarb, Moran Lazar and Ella Miron-Spektor published in the Academy of Management Journal shows that high performing teams focus on both resource seeking and similarity-attraction strategies for their formation: team members represent differences in expertise so they complement each other and are aligned in their mindset and values. Team synergies then bloom through seamless collaboration of activities towards the joint purpose.

Do not Create Win-Lose Dynamics Within High Performing Teams:

Maintaining high-performing teams requires continual efforts at monitoring engagement. In my own experiences, I have seen entire teams being dragged down by the presence of even one member who does not carry their weight. This implies attention not only to “hiring” but also to “firing” to rectify mistakes in recruitment, or when team members are no longer contributing to the shared purpose.

Similarly, toxicity arises when leaders create a “fixed pie” mindset when rewarding high-performing team members. My research with Rachel Croson and Joseph Mahoney published in the Strategic Management Journal confirms that teams fail to achieve their true value creation potential within contexts where there is jockeying for who gets what piece of the pie.

I noticed one example of such win-lose dynamics in an organization where I offered consulting on strategic innovation. The leader of a core product line that had experienced declining performance realized the need for a change in its core value proposition. She also did right by following the above two principles. She empowered high performers with autonomy and mastery to innovate and implement a key strategic pivot, These were favorably received by existing customers and also bode well for future value creation and uptick in performance.

However, fixating on curent performance of the product line, the leader arbitrarily set rewards as a “fixed pie.” Team members were placed in an uncomfortable position of divvying up a “small pie” for win-lose dynamics. It reduced team morale, as team members who came together for the right reasons were not rewarded commensurate with their overall effort investment. Not surprisingly, many of the team noted a reluctance to contribute to similar efforts in the future.

Do not let Envy and Jealousy in Social Comparisons Mar Company Culture:

One reason cited by the leader of the above organization in creating a “fixed pie” for the high-performing team was equity of compensation relative to employees in sister product lines. Never mind that these other employees had not been called upon to invest valuable time, effort and energy in revitalizing an important product line. Research by Jackson Nickerson and Todd Zenger published in the Strategic Management Journal highlights that organizations often fail to reward high-performers because they worry about other employees being envious of their higher compensation packages.

Such pandering to social comparisons can have negative overall consequences. As IBM’s top salesman in 1962, Ross Perot met the capped compensation within the first month of the year. Stymied by IBM HR policies and a failure of the organization to follow through with his innovative ideas, he quit to create Electronic Data Systems Corp. EDS ultimately became a 2.5 billion dollar company that invented an entirely new business model for computer services.

Ensure that Rewards are Commensurate with Value Creation:

In acknowledging that money is the reward, Ed Snider recognized that promotions and pay affirm high-performers who create value for the right reasons.

While money may not be the primary motivator, neglecting to reward adequately can signal a lack of appreciation for high-performing teams’ invaluable contributions.

My article with Michael Holmes published in the Academy of Management Review provides reasons why leaders should not focus on “income equality,” but rather on ensuring that rewards are commensurate with value creation.

As an example in direct contrast to IBM above, Cisco had a different policy to deal with social comparisons. John Chambers recognized that rewarding high performers such as Mario Mazzola, Prem Jain and Luca Cafiero would pose difficulties within Cisco’s existing compensation structures. But Chambers did not want to lose them either. So, he thought outside the box. Not once, but three times, Cisco funded the “MPL” team to create startups which became “spin-ins” at a later stage. Such a strategy matched the risks and rewards undertaken by the high performers. Had any of these startups failed, Cisco mitigated its downside risk to the level of their “real-option” investment in the startups. But Cisco was able to benefit in all three instances by empowering the MPL team to follow through with their innovations, and later buying them out in win-win deals that rewarded these high performers for their initiatives.

Within the fast-paced landscape of modern business, the role of high performers is increasingly pivotal in driving organizational success. Organizations seeking transformative success must go beyond traditional motivators to leverage the enterprising spirit of their high-performing employees.

This requires leaders to recognize and address the unique needs of high performers, foster self-selection into effective teams, avoid win-lose dynamics, resist succumbing to envy and social comparisons and ensure rewards that match value creation.