Steve Kerr on Working with Jack Welch, GE’s Legendary CEO, and Reward Systems for Organizations – Interviews of Notables and Influencers, by Joanne Z. Tan

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Dr. Steve Kerr shares inside stories about how Jack Welch led GE to be the best run company in the world, as the designer and implementor of renowned GE WORKOUT, and other systems and programs for rewarding collaborative behaviors.

(Sample gems of wisdom:)

“…anything you can behaviorally describe, you can measure, and anything you measure you can reward.”

“Your rewards depend on management, management depends on goals that have been operationalized, and objectives that are made tangible so people know what it is they work on.”

“It’s the operationalization. Because once you get behavioral, it’s easy to measure.”

“Rewards were the third thing…  You have to define it, you have to create the behaviors, after that you operationalize it, then you say how would we measure it? “

To watch the interview video on Youtube

To listen to the interview on podcast


Joanne Z. Tan is the founder, CEO, Brand Strategist, global branding expert, and Creative Director at 10 Plus Brand, Inc. 10 Plus Brand is a multiple award winning agency, known globally as a leading brand-building and brand-marketing, full service digital agency. We decode brand DNA with our proprietary process, create brand structure, positioning, go to market strategy, messaging, and storytelling, and amplify with content, SEO, website, videos, social media, and high authority blogs. Please contact us for more information.

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Joanne Tan  0:00  

This is Joanne Tan, founder, CEO and brand strategist of 10 Plus Brand, a multiple award winning, brand building and brand marketing, full service agency. I’m also the producer and host of the podcast “Interviews of Notables and Influencers” on 10 Plus Podcast. 

Dr. Steve Kerr, Chief Learning Officer at both GE and Goldman Sachs, Working with Jack Welch for more than a decade

Joanne Tan  0:19  

I am extremely honored to have Dr. Steve Kerr today, a global authority, thought leader and author on the use and misuse of organizational rewards. For five decades, Dr. Kerr’s paper “On the Folly of Rewarding A, While Hoping for B” has been one of the most cited and reprinted in the Management Sciences. 

Joanne Tan  0:47  

Dr. Kerr was a senior adviser to Goldman Sachs, and its Chief Learning Officer for six years, where he created Pine Street, the firm’s distinctive leadership development organization. Prior to that Dr. Kerr worked with General Electric’s legendary CEO Jack Welch as GE’s VP of Corporate Leadership Development and Chief Learning Officer for seven years. He led and expanded the renowned leadership education center at Crotonville with Mr. Welch and was the head of the famous GE WORKOUT

Joanne Tan  1:23  

After leaving Goldman Sachs, he again worked with Mr. Welch, serving as co founder and the first executive director of the Jack Welch Management Institute. During the last eight years of Mr. Welch’s tenure in GE,  when the company was labeled by a number of media outlets as the world’s best run company, a number of systems and programs initiated in GE was subsequently adopted by numerous private and public sector organizations around the world. Several of the tools Dr. Kerr devised in GE, to operationalize these initiatives, were identified in his book “Reward Systems”. 

Joanne Tan  2:10  

Dr. Kerr was also a faculty member at several universities such as University of Michigan, and was the dean of faculty at USC Business School for 10 years. He was national president of the Academy of Management, the largest US academic organization. Currently, even in his retirement, Dr. Cara has been a consultant to many of the world’s largest corporations, as well as a senior adviser to the US Department of Homeland Security. His many board memberships include the board of directors of Harvard Business School Publishing. Thank you, Dr. Kerr, for this great privilege. And welcome!

Steve Kerr  2:55  

Thank you, happy to be here.

Organizations need to understand how to define, measure, and reward behaviors

Joanne Tan  2:57  

There are some timeless gems of wisdom in your paper and book that I summarize as: For the workforce to perform and deliver organizational goals, leaders need to define, measure and reward performance. So those three elements – define, measure, and reward performance. Since it’s not enough to solely rely on (a) selecting only those individuals whose goals and motives are wholly consonant with those of management, and/or (b) training. Because selecting so-called the “right” people, and training are not enough. There needs to be an effective reward system that rewards the right behaviors, performance, and results, for the right goals, in the right way, and must be measured correctly, which in turn are dependent on clear, shared, agreed upon, overarching goals. 

Joanne Tan  4:04  

You also distinguish between rewarding performance and results, which to me is causal or sequential. We need to first be very clear about what desired results are, and what performance will lead to the desired results, before devising appropriate rewards, to avoid the folly of rewarding A, while hoping for B. 

Joanne Tan  4:31  

The listeners among the growing audience of 10 Plus Brand encompasses leaders of mid market, tech entrepreneurs, B2B service firms, attorneys, bankers, CPAs, consultants, executive coaches, board members of large public organizations and private companies, B2B small business owners, some of whom were previously executives at large corporations. 

Joanne Tan  4:58  

So question number one: To help the audience get a grasp about what reward systems are, in the hope that they may find it useful for leading their companies, could you give us examples, or tell us stories about both the use and the abuse of rewards?

Some of the more important and powerful rewards are not financial

Steve Kerr  5:24  

Oh, sure, I’d be happy to. Rewards are often formal, financial rewards are the one that are most commonly associated with the term. But really, some of the most important rewards, the most powerful, are the non financial rewards. And especially in early stages where cash is desperately needed to grow businesses, it’s dependent on even the ones that will eventually be financial, things like deferred compensation, things like stock options, they’re financial, but they don’t kick in right away, so even when you’re going to depend on those in the interim, and for every organization, there are periods of time when money is scarce, or is used for other purposes. So the idea of providing feedback, which is often considered almost a punishment, because in a way, negative feedback helps more than positive, but it has to be done in the right way. And it can easily make people defensive, but so people don’t think of that, but it’s an honor, it’s a way of being recognized that people know you are watching,  want you to do better. And then positive feedback, of course, can be a very strong reward. And then responsibility: being given access to information that was previously privileged. Or promotions, obvious is another form of recognition. They often again, are accompanied by more money. So it has,… it’s not that the non-financials never have financial implications. But in fact, their main use is to provide recognition, a sense of accomplishment. And those are very powerful ones. 

Steve Kerr  7:07  

Example, some of them, some of them are very important at the time, but they have no… one shot, it’s like, when a window office opens up, then you’ll have many people vying for it. And that’s something you can’t reproduce, and you can’t give it to more than one. So people often cop out and they start using, instead of measuring performance, which hopefully is how rewards are distributed, they will now make it seniority is often the determinant. For example, if a number of rewards including who gets the parking close to the building, and who gets the corner office and things like that, so they’re not bad rewards, but you said examples of good ones. 

Performance contingent rewards do not aim to change people’s basic nature

Steve Kerr  7:53  

Here’s one, just… it’s a classic, it just… it’s you have, you have competitive forces, whether they’re people in divisions.  So you have a brother and sister. And you have a rivalry, Isn’t it always fussing over everything, and you let some reward where the, the parent brings home a very nice cake, and has a knife and says “Johnny, you’re going to cut the cake and Sally, you’re going to get the first piece.”. You’re going to cut it in two pieces. And they’re no less competitive than they were before. But the way the reward was structured, now you’re going to find Johnny cuts the cake with surgical precision. He is panic that if one side is bigger than the other his sister is going to get the bigger piece. So again, sometimes it’s not changing people’s basic nature, but it’s the way rewards are… it’s called contingent. 

Rewards based on membership, seniority, performance, or combinations thereof

Steve Kerr  8:45  

Some rewards are always going to be based on membership, you belong to the organization, we have a cafeteria or we have a nurse, if you have a problem, or you have parking… doesn’t, it can be discriminative, it’s a lot easier just available if you need them. And that’s fine. But they don’t encourage performance, you get what you reward, and they are not rewarding performance. 

Steve Kerr  9:11  

Other rewards are based on seniority. So it’s not just being a member, but it asks the question, how long have you done it? How long have you done that job. And then reward is triggered by how usually more seniority equals the better office, even, even more pay, though. And that’s okay, also, but there has to be a lot left over for the third way basis for distribution, and that is performance. And in many cases, it isn’t in many cases, if you tell me your title, or how long you’ve been there, I can pick everything from the size of your office to the size of your paycheck. And I haven’t even found out if you’re a good performer. 

Steve Kerr  9:54  

Now, rewards can be delayed. So you might say, Well, your title determines your pay, but performance determines your title. We don’t promote other than qualified people. So it’s indirect. And you might want to have short term thank yous or other ways. Because timeliness is another characteristic, the good reward. One has to be available. So developing firms, startups can’t use money a lot, because it’s not always available. And then the idea of timeliness some rewards, like in Wall Street, where I worked with Goldman, you will give rewards, but you need to add up how well you did before, you know, had distributed rewards among the senior people and the junior people. So the rewards can’t be timely, because you can’t commit before you know how much you have, and sometimes that waits, and then you have… but performance contingency should be one of the factors, not saying the only one. But often, it’s almost irrelevant in teaching where seniority determines most of everything. But there are examples of very good rewards as well. Can I describe one? Or you want to ask another question? 

Joanne Tan  11:06  

I have a question. You said,… it sounds to me that among seniority, among membership, and performance, performance should be the most important criteria.

Speaker 1  11:20  

It should be important, I mean, some, some societies are built around seniority, the prestige you get, just by being older in places like Japan, in some Asian countries, but some here too. That’s pretty important. And it’s not that rewards will be based on that. But again, if these, if your seniority is governed by how good a job you do, your position in the higher table is based on performance, then a lot of things can be not based on performance, but in a way they are, they’re indirectly so. So performance would get you to be a senior executive, VC, or… at Goldman, once there are a number of things came automatically, but they… you wouldn’t have been access to these unless you weren’t good performer. So it works that way.

Rewarding performance needs to be timely, visible, and measurable

Joanne Tan  12:12  

And rewarding performance should be timely, because people need that immediacy, you know, rather than delayed, but also, it needs to be transparent. Right? 

Speaker 1  12:24  

Visibility is another characteristic with good reward. Transparency is a good word to use for it. If you can give people a secret, and they do it sometimes, because they know they’re gonna have 40 people vying for it, if they find out, but the moment you’ve either rewarded zero people because he thought he should have gotten more, are you rewarding one person who’s happy, but since other people know, that’s a very expensive way to do it. So ideally, it should be transparent or visible, and that character a good reward, that puts pressure on your measurement system, which is why I said rewards have to be the third thing, because when they found out Ernie got a big raise, or a salary increase, or a promotion, that’s okay, but but if they look at Ernie as a mediocre performance and just played up for the boss, that is the negative reinforcement for everybody else. So again, we didn’t… you alluded to it, but the rewards have to be the third thing you do. 

Measure rewards before rewarding: what behaviors can be operationalized

Steve Kerr  13:22  

Measurements has to be the second thing you do otherwise, you can’t reward high performance, if you really don’t know who they are, in turn has to be based on a clear definition of what is it people are supposed to be doing, and operationalizing it, that is: what behaviors do we look at, what numbers do we see, some return on investment, very few people are going to be able to be singly determining of that. So you have to have all kinds of sub goals, and some measure that will apply at the levels, so everyone is connected and used properly. It’s motivational, and then when the rewards come, everybody would like to get them, but at least they know, at least they know, in my boss’s eyes, I was not in a high performance category. You may resent it. But now you have a course of action. You have a meeting with your boss and you say, let me know I’m not saying you’re good or bad, but let me know what I need to do better. So I will be in that category next time. So that’s why your rewards depend on measurement, measurement depends on goals that have been operationalized, and objectives that are made tangible so people know what it is they work on. 

Joanne Tan  14:30  

Right. But first and foremost, you got to know what goals, what the purpose of setting up a reward system is. Then you can figure it out, you define that goal and purpose, and then you figure out: is this measurable? Is it transparent? Is it timely and, and then you implement the rewards and the measurement, right?

Reward system’s “Bullseye”: desired actions and behaviors

Steve Kerr  14:55  

We had an exercise that we had in GE and also at Goldman. I’m sure many others use it, which was called the bullseye exercise, which started by saying: We won’t even look at rewards, what is it we’re trying to do? And this can be at the company level for senior executives, and it could be one department, or one branch, or one region, but one person’s job even. And that’s what you say…and then the exercise is to say, it’s backward looking, you say, it’s 12 months from today. And we’re celebrating, and you’re enjoying a raise, you’re enjoying more possibility, we’re all excited, we’re all happy. What are we doing… what, what has occurred during that 12 months that led to this? And doing is a key word, it’s not wrong to say, Oh, our return on investment way up or return on sales, it’s got our operating margin has improved, profits are up. But you don’t… it’s too broad. You can… I want more money, but heaven knows what they will do. You say, we’re looking back 12 months ago, what is it we did in these 12 months that have led to this change? And if it’s negative, it’s more of an autopsy. So it’s not as much fun. But it’s the same question, what did we do that we have to stop doing? Or what could we fail to do the we’ve got to start? And then the bullseye. So that’s how it starts. Put down the thing, what is it? And if you set goals going forward, what do we want to do so much? Now looking back on today, if we do our jobs, what will we say? What has… what are we doing more of? What are we doing less of? What do we start doing? What do we stop doing. Very simple. The mailman, the guy in the Xerox room, everybody can follow it up to the senior executives, define performance. 

Steve Kerr  16:38  

And they usually say, well, we want more teamwork. We want more passion, we want more…and that in the bullseye that, that’s the middle circle. It’s not bad, you’re on the way to what you need. But there’s always a follow up question. Imagine Division Five has teamwork. Division Six does not. What are the… what is Five doing that Six isn’t doing? Or what is Six doing the Five isn’t doing? And that, there’re certain things can we agree if we do more of those, we’ll have that. So and… So that’s, that’s Hitting the Bullseye means describe the behaviors. And if you do that, you’ll find even the things that people don’t think can be rewarded – oh, you know, we need more passion – you can we win anything, you see, those people are passionate, or 12 months from now, we are more passionate. What would a person see? What are we doing differently? And what numbers will reflect that? And if you have that anything you can behaviorally describe, you can measure, and anything you measure you can reward. 

Steve Kerr  17:41  

So I had a person actually said to me,  “the old workforce, we had more passion, the senior executive’s mourning the passing of the culture. ” I said, “it’s not going forever. What what did these people do that is people telling you’re not doing?”  “While they share information, they would come to me.” So I mean, and sometimes, the middle circle, and he’s still not there. You say: “What’s the action?” what they get… And once you have that, once you’ve hit the bullseye, or you can… you also can disagree, If people say I want more team building, what’s gonna say no, I want less team building, I want better teamwork. But often it means different things to different people. And if you don’t hit the bullseye, “let’s all go out and have more passion”, and people… “Ernie, What are you doing?”  Well, you remember, you said … I just said all this about Ernie. So you behave and then nobody can like you. 

Steve Kerr  18:31  

And then once you’re there, you can always measure. So once this… when I was working with him as a CEO and once he said, “Here’s what I miss, and the actions of the people that used to work here compared to today’s workforce.” Now we know what to measure. Now we know what to teach, now we know what to reward. All that… all the HR systems kick in. But as long as you say, “so you know, we’re going to be more trusting,” you can’t go anywhere with those things.

Joanne Tan  18:57  

So here’s my question before I ask that question, which is, how can you measure passion versus trust? You said, Trust is hard to measure, but passion is measurable. So I will deal with that question later. But before that, I want to explain what bull’s eyes in your design. So in the center is behavior, is what behavior, what action can be changed, can be rewarded. And the Outer Rim is…what’s the Outer Rim where you go from the center behavior outwards, is that the… the… the plans, performance, and motivations?  And then the you go another ring to the edge, that’s the corporate mission, corporate goals, and strategies, — did I describe it correctly?

Steve Kerr  20:02  

You did.  And the answer is all of the above. Many times, once we taught the bull’s eye exercise, it just, it’s so easy. You’re not paying expensive consultants, you’re not interrupting… You just look, sometimes we’re talking past each other in a meeting, it could be a division head, or it could be first line supervisors, or it could be one team. And somebody say: “Bullseye drill.” Meaning, he’s calling for, he’s doing one shot: Bullseye drill. Okay, what are we talking about here? So, we want to use the word passion. In this case was the CEO, “so the way I addressed it, say, why do you say these people don’t have passion today?” And then he starts, he doesn’t know about bullseyes, he doesn’t need to. Well, he said to CEO: “We didn’t even have a clock to punch with these people. They stay, we would went… we don’t want to leave until something was done. We work.” So he’s saying, “so basically, what do you see here today, and five to four, they’re watching the clock, ready to leave, if they leave at four o’clock.” So he’s, …so he doesn’t know about bull’s eye… on an average case, so you can think and if you say, “Oh, you’re gonna get rewarded for just stay till four, they will start staying till four,” but he said “they,… we didn’t think about that.” 

Behaviors can be taught

Steve Kerr  21:16  

So in the beginning, you may have to teach the behaviors. And it doesn’t mean they have the right attitude. But in the end, it doesn’t matter: if people behave, like the person who said he wanted teamwork, …only if I say as an example, if I can. Welch was, … we had wonderful teamwork within divisions, and within departments, and within the GE businesses, but across business, they were rivals. And if somebody needed a very good electrical engineer, maybe Appliances needs one for what they’re doing, and Power System has one, they would never give him up. Because this is my guy. And if I give him up, I have a vacancy, and I have to worry about it. So a lot of things happened. And Welch… Welch always said: “A conglomerate or a holding company gets 15 to 18 times earnings in the stock valuation, we get 28. And yet we’re in every business, every, every country in the world. And we are given the price multiple of a…an integrated cooperation.” And that’s he says, “It’s amazing. No one, no one else is like that, the other conglomerates.” So he said, “We definitely have to do.” 

Steve Kerr  22:24  

So for example, what we had these meetings, I was part of the group of core Executive Council, we met every quarter, and he used to… when Welsh came in, they met in the first week of the new quarter. And they did a look at, well, the third quarter books and went, what do we do, they kind of do an autopsy of the quarter and they do an analysis. And samples are bad. Welch said, and, “we’re not doing that anymore, ” he said, “I don’t want an autopsy of last quarter, I want to fix it.” 

Jack Welch’s two questions for creating teamwork in GE: “Who’s in trouble?” and “Who can help?”

Steve Kerr  22:51  

So he created the first week of the third month of every quarter, when you report your earnings per quarter, the first week of the third month of every quarter we met, and he had two questions: Question one: Who’s in trouble? So so you see, we didn’t use the word teamwork. But we needed it. But something …but… who’s in trouble? So, so, one example: So the Power System guy, he is kind of type people not investing in capital equipment, “we’re just persons with a big business, we’re hurting, we’re having trouble closing sales, and we still got one month, we can’t, we can’t …” And the second, and all others, for the sake of in one example. 

Steve Kerr  23:28  

And then the second question was: who can help? who’s in trouble? Who can help? Now, this was different. We can solve it because we have to report corporate earnings. But Lightning didn’t. I wouldn’t say they didn’t care. It’s not that they are mean, but they’re not going to worry about Power Systems problems, it’s certainly not going to give their good people to.. someone… who can help? So here’s an example, GE Capital, which is another business that’s doing well, They said, “well, what’s the, what’s the question? Why is this a problem? Why sales are lower than expected?” “Money is tight, and people having trouble borrowing, the interest rates are high, and Power System buy giant turbines, is a lot of money. So need capital which is a lot of money.” They said, “We can help.” And they said, “well, we’re going to give you funding rates, you can offer your people rates that are way lower than the other competitors are doing. And it helps sales.” And Gary went red with capital at that time. And he knew that when it came time to view no one was going to help him if he didn’t solve his problem if he’s not given below market rates. No one’s going to forgive him if his numbers are bad, so it’s teamwork, he knows “I’m helping”. 

Steve Kerr  24:48  

One more example we had, they’re opening up a new lighting plant in Norway or someplace, and they need a particular kind of engineer, and they can’t find it in the local market. That’s like,… Meanwhile in Appliances, they got a guy that’s perfect. Now, “Old GE, I need that guy!” I’m back on:  “Who can help?” So the guy gets up, he says, “I’ve got a guy”, he doesn’t do it happily. He’s sick. He knows he’s gonna have to find a replacement. They needed him more, the opportunity in Lighting is better than he can use him in Appliances. Those are examples. So look what you’re doing. You didn’t have to use the word teamwork. But you institutionalize systems and, and the guy in Appliances, now if he misses his numbers, Welch, ” well, you know, he gave a guy up, instead not helping him at all.” But down deep Welch’s watching. These are his team players. So I’m saying… these are different examples because I didn’t stick around. I was visiting. I tried to help the guy who’d told me he missed his passion. I wasn’t. He wasn’t… But that’s what you do. You set up things. 

Steve Kerr  25:51  

And oh, and another one. When Power Systems and NBC stepped up.  This was the year 2000. And what made it special was the Olympics are in Australia that year. And it’s a Sydney Harbour, Darling Harbour all the, it’s beautiful there. It’s great. And the weather’s good. Because December. So, so GE Capital has rigged that and exclusive for all the Olympics, and they take the top executives and their biggest customers and they rented yachts. And these guys gonna live together and they’re gonna go between Darling Harbour, Sydney Harbour, and all the other sites and see the different events. And NBC is using it. NBC is nice, but now they had Bob Wright, the man at NBC. And he said, alright, we can help. And he said, we have, we’re gonna have a lot of spots open and Power Systems, you can invite your best customers. And they will come on these yachts. So we have the MD celebrity, the cask of “Friends” is coming, and all this stuff. So, and the Power Systems are grungy business, they don’t have any glamour. So now they’re offering to these people, hey, you know, we got to come on the yachts and enjoy the Olympics. And we got the cast of “Friends”, and the cast of “the West Wing”, it’s going to be in this, they saw that. That’s the kind of things, I mean, it was a different culture and healthy. I use the word teamwork, but we have a number of objectives. And I could give you the same thing. 

Steve Kerr  27:07  

And one last thing because I think it may be useful: friction point. Lighting wants to get into aircraft engines because the Boeing and Lockheed the big companies are buying their lighting products from Honeywell, somebody else. But they’re buying engines from GE. Now Gees, this service is antic. They got great mark machines, great engines, great. But now who’s in trouble? So the lighting people losing big market. And who can help? Well, Welch looks at the guy from Engines. The guy from Engines got a lot of good contacts inside of these companies, because Lockheed and Boeing are buying our engines. So they actually kick them and sometimes they’re not that noble. So Welch say “it seems to me, Engines guy, can’t you help them? Don’t you have contacts in lighting?” So now you’re stuck, you can’t say no. So he said,Okay. So as the lighting people,… the Engine’s people are not mean, but they have a special relationship with Lockheed, and Boeing, and it’s a big deal. And they’re big shots, because they bring a lot of money. And if I introduce the lighting people to your outside people, two things might happen, and they’re both bad. One is they’re not going to like him. Now they get mad at the Engine’s guys, ‘you’re bringing these dummies in here, we’re supposed to…’ The other thing the Engine people are afraid of: they will like them. And that’s great, except that means I don’t own the customer anymore. Now these guys, they don’t need me to get to see. So it’s basically like, Well, either way, it’s not good for Engines. But now we got to do it. The way they want to have revenue sharing. And the old competitors comes out. Engines wanting to get 20% because they’re letting lighting people and 20% of the of the business royalty. The Engines people want 20, the lighting people don’t want to give up (they want to give up…) The Engines people want to give up 10 Only, Lightning people want to give up only 20. So one wants 90, the other wants 20. It goes all the way to Welch, I was in the office when they met, I was sometimes just being around. And so what happened was, they say here’s why we should get 20, he said we should get 90, and Welch said four sentences. He said, “Here’s how we’re going to do: Engines, you get 90; Lightning, you get 20. Get out of my office.” Four sentences. And if you… 90 and 20, – that’s more than 100, and Jack said: ” I’m not given 110 of the sales, I’m given 110 of the royalty for the sales. It’s small, and if I get these guys working together, it’s huge.” So those… that’s examples of how you, you change it, culture, of one of the world’s largest corporations, we have a third of the million full time employees, not counting contractors, and part time, interns. We will have big country… and I’ll stop it if you want, I could show an example of how the businesses, even ones they have nothing in common, work together. 

A culture of “not permitting others to fail” in GE under Welch’s leadership

Steve Kerr  27:32  

So it started with we need teamwork. And then it became not permitting others to fail, not enjoy watching others fail, that was not permitting, you can’t let Power Systems fail, you can help, right? Give up part of your ships and run around Sydney Harbor with you, in the world’s, one of the world’s largest companies. So you can do it. And you can do it this one guy and his team sitting in Texas where I’m at. 

Joanne Tan  30:26  

So, to summarize what you said: they need to create a culture of teamwork, they need to create a culture of not letting anybody else fail, even though I value hoarding my top engineers, because if my top engineers are sent to the other department, I have to look for replacement. So the leader, the leadership play the role of rewarding collaboration, rewarding teamwork. And that paid off. 

Define what to be rewarded, create the behaviors, operationalize, and measure

Steve Kerr  31:02  

Yeah, they defined it first, they came up with a definition. And then we saw the measurement. But in the end, you still want to see the payoff. But in the early days, you can’t look to the pay off. But yes, you said exactly right. And it’s not one and we had some failures. No one’s saying you do this quickly. But it was amazing, a company of rivals, which had built their business by competition within, and they’re helping each other it’s not because happy thought in the fairy dust. It’s not; it’s just you create systems that encourage it, you have top management, all the classic things put up. And and it was amazing. And there were gambles where people did and didn’t do so, I mean, it was… it became a culture of teamwork, and rewards were the third thing you did.  You have to, you have to define it, you have to create the behaviors, after that you operationalize it, then you say how would we measure it? And I gave you examples at the top where you could see it because key people are moving, but you build measurements to see if people are helping each other. And then you get the payoff. 

Joanne Tan  32:02  

Yes. So if I’m the one who give up my top engineer to the other department, and then the whole company succeeded, what was my payoff? What was my reward?

Steve Kerr  32:15  

In the short run, you have the chore, the punishment of finding replacements working without that key person. In the medium run, you will have… your numbers will be looked at. And if you fail, you’re still going to be punished for failure, or whatever happened to you won’t be rewarded. But you do know that at the top people are supportive and are looking. And in this case, you have a CEO. I mean, I could tell you stories he, he’s he was amazing. He knew what was going on. We had people coming in from … guys coming in from China. And he’s running a second shift and and Jack said, “is Ernie still out?” How did Jack notice a guy who’s sick on the second shift and from China? So I mean, it helps when you have that. So and in GE you had enough but we meet with problem…  we, we help we build measurements, you could tell. And you could even track, and even though we never forgave a person for missing numbers, that was a sin, you missed his numbers, but we knew that we had upset Lighting by making them give somebody up, or we upset NBC by they could have served more of their own customers than letting Power Systems use it for their customers. So in the end, it didn’t go unrecognized. 

Steve Kerr  33:31  

And you do need that.  If you’re mindlessly just looking at numbers, you’ll never get teamwork because people know they’re going to be punished. When you punish something, you get less of it. And if you, if you punish passion, you will stay… if you have to show passion by staying till 10 o’clock every night, you’re punishing it, you’re not going to get it. But we were able to find that guy found ways he went back to the old days: Why do you think people had passion? He said he’s the things that showed me. I said, what do you see I’m not seeing that. So I’ve got.. you’ve got some kind of… stay in the wall protect, but you got something to work on. So it’s exactly what you say. And so nothing protects him, but, but it’s worse if you don’t do it now. I mean, you… it…teamwork may not automatically pay off, but hoarding talents, I mean, we know you got a top engineer, when this guy is saying what he needs in a Appliances, the lighting, that we know that, he’s describing the key guy in Lighting. 

Reward activities and performances that lead to results towards goals

Steve Kerr  34:28  

So you get rewarded, in a short, in the short run, you get rewarded for behaviors. In the end, you still have to have results. It’s called lead indicators, right? You can’t know when we started six sigma, we couldn’t know we were going to have zero defects. So we had to measure activities. We, in short run, how many projects did we launch, are they what stage analyze, improve, control… How many black belts do we have? What color? We have black? You know that’s not performance, but It leads to it. And in the short run, you gotta measure needs because you don’t have outcomes yet. But you never kid yourself. You’re like people just look at nailing all the bells, at some point is, not too long you turn your attention to what’s the, what’s the results, right. You, you can’t reward results, you reward, you reward performance, but it’s not results. And you can reward activities before your performance. And the beginning, you want to see motion, you want to see doing things, but you never kid yourself that that’s the goal, because otherwise people just pretend to do and they’ll never get good at them. 

Joanne Tan  35:32  

Right. So here’s my question about reward. You mentioned just now, the relationship between activities, and performance, and results. Well, as my next question is, actually, I believe it’s sequential. Okay. Activities lead… is part of performance. But it may not be, like you said that, you know, you’re, you’re all focused on getting your belt for the six sigma, but what does it lead to? Is it enhancing the performance, it may or may not, right? Performance, will… the correct performance, the rewarded performance, the measurable performance should be all aligned with the results you desire.

Steve Kerr  36:16  

Yeah. And that’s… let me go back to that Bullseye drill, you start by saying it’s 12 months from now, what are we doing differently? And if they say, we’ll have more passion and more teamwork, excuse me, that’s the middle circle. That’s an attitude. That’s not a behavior, what will they DO differently? It was, what do passionate people do, I believe that people have passion, but to people who said, Well, what does it look like? What do they do? So you move from the attitude – that you really can’t measure what’s in people’s minds, you don’t want to try – you move to… you watch them, you watch the action, you watch the guy get up in the meeting, give up his best engineer, because they get a greater opportunity in another division. Or Bob Wright gives up his boats, he passes to some others. But that’s good. In the short term, you pay for that, because that’s what you need. But you don’t stop. You know, people can look, they are busy, they shuffle papers. That works for a month, that doesn’t work for free at GE. You don’t get through shuffling papers looking busy, sits at meetings, he’s always on the phone… What’s the result? And the beginning, the result: Send me as a result, lightning begins to sell products into Boeing and Lockheed. And even that’s not… that’s… in the end, that’s fine. But if they have to introduce in the beginning, as you know, you may offer lower prices. The correct business is you want to sell. But in the end, we still look at the results are really the performances: what’s the bottom line. 

How do the principles of rewarding performance apply to small, midsize and growth companies?

Joanne Tan  37:40  

So my, my next question is: how do the principles of rewarding performance apply to small, midsize and growth companies? Any differently from its implementation at large corporations?

Steve Kerr  37:57  

The principles are the same. The people are the same. It plays out differently. We already said that startups of any size and small businesses, often cash is the key thing that make or break them. And so financial rewards deferred, you could still offer the options, but you have to believe the stock price is going to go up or if it’s a private company, there’s no stock, but you can do deferred compensation. And so that’s one thing that the small company have access to different rewards, but they still do it in the same manner. And the other thing is, you won’t have the same… they might be small and yet dispersed, but normally, you have closeness to contact, you can really do more by looking…kinds of things. That’s one thing… the… back to the example I gave, when the guy said people used to come stay late. He didn’t know but it turned out they didn’t have a lot of businesses, it wasn’t that big, but he had some offices and branches. People were really looking passionate by his definition, but he was in the home office where they didn’t do it so much. So that’s the point. You it’s… you don’t change your principles, but it plays out very differently. Small meaning one location, you don’t need as much looking at numbers if you can feel people and see and interact with them. So a lot of it is how you get the changes, but you still have to go from activities to behaviors, and operationalize, and then once you have behaviors you can always measure, once you measure you start connecting the dots for rewards. 

Joanne Tan  39:26  

Operationalize, is what I want to focus on. But before you are going to explain, give some examples of operationalization, I have two lingering questions from previous answers you gave. One is the measurement of passion and measurement of trust. One is, it can be measured because when people show passion, their behaviors change, and, or, they use…or, reversally, you can use behaviors to induce more passionate commitment. Trust is the result of something, it seems to me. Okay. So that’s one thing I want you to clarify. The other is about the rewards, you know, corner office, parking lot, but there are other non financial, non monetary rewords such as participation in decision making, recognition… What other non monetary rewords can be used other than what I just said? So, first is your explanation about passion and trust, and the other is non monetary rewards.

Steve Kerr  40:42  

Well, as deflected the passion and trust issue. In the end, it doesn’t matter. I mean, if people are passionate or not, it may have your face…your customer facing people, customers can directly benefit, you can benefit with customer seated people. I’m not just selling a product because I am getting a commission, but you can tell if people mean what they say, they recommend you go to their daughter’s school, and they talk about… you can just… so it works in that sense. So you can look at the passion, it’s not a substitute. You have people who are passionate, but they still, you know, “I have my housekeepers out there, I’m divorced, I have a kid, he comes home from school, I got to be on way to get home.” So this idea of passion is disconnected. He says, when the person is leaving, you know, she’s not passionate, he’s not passionate. So I’m saying this stuff you’d work it out. But you’re right, what you say, those things, and it can lead to trust. And trust is also very important as, in general, for characters in any organization, because rewards are often disconnected. Again, one of the other characteristics, we need to have is timeliness. Financial Wall Street firms like Goldman, they may be into January before they know, they close out the books for the year, there’s a lot of… some of the big Power Systems once the machine are delayed by instruments… So the point is, you can’t do end of year stuff, you really can, you don’t want to, you know, you can do a Christmas bonus, or whatever the holidays in a different culture. If you don’t yet know who you are rewarding, so you have to build, then the trust comes in, because you say things… there are reasons why they can’t do this thing now, but I know that they’re watching me, I know that they they’re gonna take care of me because they know I’m a good performer. So if you build that in, then you can create a… patience and people are waiting, it doesn’t have to be connected as clearly. 

Steve Kerr  42:36  

But over time, if you see the kid, you know, he apple polishes, he just kind of fakes it, and he’s getting these awards. It just… it kills the culture if you watch that happening. So you have to you may have to wait to delay rewarding high performance, but you’d better not rewarding the political types who suck up to the boss and people don’t respect them. That then that, then I’ll have the answer for that’s just bad leadership, and bad leadership will sink business, which is why we spend so much time. 

Steve Kerr  43:04  

The other thing is I’m trying to get the point about what you said: The sequence is always that, you’ve got to decide what you want. And and usually you don’t get it early. So it’s what leads to what you want. You want passion. What leads, what do you… what can we, what can we manipulate the cause for it to happen? I mean, you said no, because it’s such a… tough on people think that’s, that’s not invest, most think it’s easy. Most of you don’t want passion, you want return on investment, you want lower… higher quality, you want more… anyway, you… the, the systems you use will make or break that. 

Steve Kerr  43:40  

You know that you have a company that want to improve customer service. So they decided to count the number of times the phone rang before it was picked up. And people would be swamped. And they would, and if you didn’t pick it up, it didn’t count. So they were getting rewarded for not answering the phones, they knew they couldn’t get to it quickly. They just let it ring because they get on the fourth ring, and it was like their own phone they can handle but when they trust environment and cooperation, they would go into somebody else’s phone and they would take care of it. So the objective goal is to keep the customer from waiting. They put in a system so dysfunctional, it began rewarding not answering phone if you can’t pick that up quickly. But things like that, crazy things will develop if it’s not the right way. What do we want?  The behaviors, you don’t want behave, Let it ring. So if you start there, you won’t get down these crazy blind alley. 

Operationalizing behaviors is harder than defining, measuring, and rewarding

Joanne Tan  44:29  

Right. So another question: among defining, measuring, and rewarding performances, what do you find to be the most challenging for corporate leadership and management in your experience? So that’s probably the bull’s wheel…

Steve Kerr  44:48  

That’s a good question. They might not answer it this way, but I know I’m right: Definition, but the first task people aren’t disciplined to go hit behaviors. So it’s easy for him to say “passion”, for somebody else “I want Trust”, the GE could say “teamwork”… the definition itself is easy. But operationalization the second half that’s in the chart, middle of the real target, the middle circle is attitudes and behaviors, so… nobody finds it that hard. You say, Well, what does a passionate person DO? They think in their heads, there must be something they don’t say color of necktie, because they don’t have in their head that it makes any difference. That guy, he knew, he knew, he knew there was something, but he initially he couldn’t put it in words. 

You can only measure what you can describe behaviorally

Steve Kerr  45:33  

So that’s why you can’t measure passion, because you can’t measure it, you can’t, of course not, because you haven’t described it behaviorally. But you must be thinking of… if nobody acted different, why would you care if they have passion or not?  You don’t care if they’ve had breakfast or not, unless you find they can’t work because they’re running for the cafeteria in the middle of morning. So that’s the thing. It’s the operationalization. Because once you get behavioral, it’s easy to measure. You can film it, you can tape recorder, you can ask other people, if they see them doing it, you can observe things yourself, you can look at their… Everything gets easy if you can operationalize it. 

Stop thinking of rewards equal money

Steve Kerr  46:08  

Once you’ve measured something, you may have not much fund, you may have to use non financial rewards. But the key is knowing who the right ones are to reward. You can reward 5-to-5 performance, and if you also rewarded people nobody respects, they just kisses up to the boss, you get nothing. So you got to be able to reward, but once you’ve measured it, it’s not hard. I mean, resources may not be there, but some people reward not equal money. If you don’t pay people, eventually they don’t stay. But in the short run, there are more things more important than money. And even money is often used for another purpose you can often find, I mean, if they needed to pay the mortgage, you can’t help them without paying money…

Steve Kerr  46:49  

But if they want a prestige, they want pride, they want to beat something in the neighborhood, you can give them things, be it in terms of titles, in terms of the size of office, who gets chosen for special assignments. That was a big one in GE where we had a … in Goldman especially, you had the US senators came in, premiers, prime ministers of other countries came in, and you got to just spend a little time with them, do briefing was kind of an honor. Nobody gave him more money. But it was amazing. You really look forward to that. And so how do you choose people like that? And so often these things didn’t happen often to be in the pool of people that it showed such respect for you. So those are the things you can do which responsibility even opportunities to present. Again, people would rather have root canals their committee but don’t do, they know this is, this is good, I should do this. And if you’re good at it, there’s nothing better than say I had a briefing the executive committee to them and went well. 

Steve Kerr  47:51  

So I think that that’s why rewards are not hard, but you got to stop thinking of rewards equal money. And, and something now. Here’s it, it’s about I think I put in, it’s real quick. You go to a meeting, scenario one, you go to a meeting, and you give report and a boss says, the division head says, Good, thank you, very good, well, good work. Or, he is, to the same thing: You go to the meeting, you present, you come back in your office, the head of the division comes in, he puts his head into your offices: “I just want you to know that you really helped me out there. That was a great presentation.” He really focused on the conversation. Same comment, same guy. But instead of saying thank you at the meeting, he comes to him. What power that is! you haven’t spent any money on it, just it’s personal. And it’s, it’s somewhat meaningful. Now he may want other people to know and so he may let people know “I though he did a great job.” And you just have something good to say. Exact person, same situation: “thank you, good presentation. Let’s see ahead. That was really good. That helped me.” Walk out. 

Joanne Tan  48:59  


Steve Kerr  48:59  

So, so you don’t, don’t ,you can never use excuse: “We don’t have money. We can’t… ” – You CAN. You CAN. In the end, you got to pay people to stay and feed their family. But you’re right, what job do you have, ability to report, when you will present, more responsibility, being involved in certain kind of meeting,… there’s a lot of things you can do that make people feel wanted, and powerful. 

Operationalization = Bullseye = Doing 

Joanne Tan  49:21  

Yes. Now, operationalize. That’s the word. Sounds very interesting to me. And you have experience, and you have some unique approaches to operationalize reward systems. So could you give us some examples to explain what does that mean? operationalization?

Steve Kerr  49:43  

I can give you more examples, but I think I mean it as a synonym, really, when I said, you have to hit the bullseye. can the bullseye exercises when you start with, and the middle is actions and behaviors. That’s what it’s called. And that’s where the operationalization. If he said: “I want you do have better relationships with your customers.” And I don’t know what that means? if I was rude? But I mean, maybe I didn’t bargain enough, and maybe I bargained too much? And I know it’s a defect, I don’t want him to think I’m not good with customers. But so far, it’s not operationalized. It’s just a statement. So then again, sometimes you say,  it SWAT again or backwards, and it’s 12 months from now, these people have a much better relationship with customer, they are much more sensitive to customer needs. What are they DOING that they weren’t doing 12 months ago? Well, you can say, “I go to this department, and they are really customer centric. And I go there, I don’t see it.” What do you see that you don’t see? What do you see here that you don’t see? You know, it’s, it’s, it’s key. Because once they enter… once they hit the bull’s eye, you can always measure that with something tangible is happening. It might not be quantitative, quantifiable, but he wouldn’t say: he says, I want yellow neckties. Why? Now if you know you go to China, you find you wear different colors at a funeral color might vary. You know, you can be rude without meaning to be. But I’m saying usually, what matters? So in that, that’s operationalization, you … you can measure it, you can reward it, you can teach it. You go to HR and say, “teach people to have more passion”. But if I say teach them, please do three things it tells me they need to get, I can teach that. If I cannot, have somebody. Let’s get the book, tell me what behaviors you want to change. Right.  It was B. F. Skinner: When people say “you don’t believe me”, he would say, I do believe you, what you do? (You) speak so loudly, I cannot hear what you said. What you DO? Everything’s possible. What do you want to see them DO differently?

Joanne Tan  51:45  

Differently. Right. So let me just imagine an example of what you just said. Like, the outcome is that we want more customers by improving relationship. Okay, so what behaviors – bullseye – what behaviors will change that? Well, we used to have, like, no more than three minutes of answering customer complaints. And, and, we, the passing on… passing the ball to those other departments was the practice, and I really piss customers off. And that was bad for our retaining customers. That now we’re going to change the behavior, that we’re going to drill all and teach each agent who answered the call that you are going to make sure you do not pass the call to someone else or to the supervisor, until you have spent quality, minimum how much time, and you’re going to… your goal is to figure out what the complaints are about and solve the problem on your own, and whatever, – that behavior. So we’ll, we’ll focus on that behavior. And then we’ll lead to the results. Is that, Is that a good example?

Steve Kerr  53:02  

It’s a good example. It gets… And it’s not instead… it’s a good example, period. But it might be, for example, you’re counting the number of rings and the number of phones and how long it takes to pick in one department. And sometimes what happens is… a real life example: last week, I found out that I still give them some insurance through the Goldman system. And they had changed the plan administrative. So it’s the same company. But when you call the company, they can’t answer the question, because they are not administering the policy, I knew that I didn’t know what to do. And I just, I got to have my son go for medical treatment. They will take the card. They said no, it expired December 31. My son and I know what happened. We still have coverage, but it’s a different administrator. So I call Goldman. And they say, “No, we’ll be .. Correct, we don’t cover them anymore, we still… you’re still covered. You’re covered now through a different company.” Now that could be the end of the transaction. It’s informative, but it leaves me hanging for what the Goldman price is. “Listen, I know the number. “They’re like, “Hang on, uh, let me.. stay on the call, Iet me transfer, see we get this done.” So the person at Goldman didn’t know because they’re not administering it, it is a true story only happened last week. But the Goldman person knew that I wouldn’t know what to do next. She said  “Hang on, let me transfer you.” So they got on, then before turning over, “Sally I’m here with Mr. Kerr. He’s one of the people that was covered by Goldman and now it’s being covered by this new company. So he’s got questions and it’s about his son and he should be changed as dependent.” So I would have might maybe said it but I’m not sure if I could frame it. So that’s a perfect example of customer service. I’m proud to tell that Goldman did this pretty well. And they were saying no to me, they couldn’t help me but in a way they did leave me hanging knowing what to do next. So it’s just make my phone that ring. It’s now if you had a bad, bad system, they would now punish her because she spent 20 minutes on that call or 15, instead of five, but actually was good customer relations, because she ended up getting the customer in my case what they needed.

Joanne Tan  55:07  

So the bottom line is the leadership needs to prioritize what culture they want to set. So in a Jack Welch case, it’s teamwork, interdepartmental collaboration, and that’s the culture, you will be looking really good if you play along the teamwork track rather than just being selfish. And in Goldman’s case the customer service, is priority, we, we prioritize customer service, and along that direction that set by the leadership on top, then they can come up with what specific performances, and what behaviors, and, and how to operationalize the reward system, to, to reward the behaviors that leads to the leadership’s priority, either it’s teamwork, or its customer service. Correct? Did I say it correctly?

Make it safe for employees who often know better than leaders about what to do

Steve Kerr  56:09  

Yes, that’s right. Sometimes the people underneath are the ones that know, in this case, you know, I don’t have it, but I could transfer the call. But sometimes it’s the ability to have people, people who do a job know how to improve it. In this example, the boss said, Okay, let’s do this and do that. But I’m saying a system that’s open, because a lot of the best changes come from below. And it’s not even that they have been rewarded. And I think many, some do, and many, they want to do the right thing. But they don’t, the way they’re doing now, it’s what some high level person told them to do, and it’s not… 

Steve Kerr  56:47  

we got to make it safe. It’s amazing what your people know, that they don’t tell you. We have a case where they, we finally had workshops where they could come in and contribute ideas. And they were talking to a guy who ran a copy center, when he gave people a two page report, there was 11 pages of wasted stuff that the copy machine would print out on need as was told. And he would rip it out and get people only two pages. So when he got… when he was safe, we made events to permit him to do that, and it turned out, he could save on his machine $62,500 a year, counting the cost of paper, the cost of hauling the paper away, the cost of ink person, you get, you got 13 pages if you wanted two. But he was taught give them only the content, he would throw the 11 away, given the two, he did that and all the copy machines in GE were doing this, it was a major saving. So in this case, you created a… in the case I gave you before, management knew what to do. And this, this was obviously worth of doing. In some cases, though, it’s amazing what other people can do to help you whether it’s teamwork, or passion, or cross selling, or efficiency, but you got to permit it. Sometimes it’s just a box on the wall. And it’s better than nothing. I’m not criticizing them, but an environment that permits that, it’s amazing what your people know, and you don’t know. Yes, because they do, they know, that if you just make it safe. Yes, make it safe. Don’t think you’re bothering them. 

Joanne Tan  58:13  

Right. So to add, Yeah, to add what I previously summarized: leadership leadership’s are not know-it-all, and often they don’t know. Okay, so we got to humbly go down the ladder to the people who are delivering the, the jobs, doing the work, the employees, the lower rank, because they often know way better, okay, than those on the top. 

Steve Kerr  58:37  


Joanne Tan  58:37  

So, hear them, respect them, and solicit opinions and suggestions for improvement and make it safe for them to say things that may not be very glamorous or complimentary. So that is before they decide what culture, you know what behavior, to be rewarded.

Okay, so have you – here’s another question – have you experienced that after every aspect of reward systems were correctly implemented, starting from defining, to operationalizing, to measuring, and rewarding, you still did not achieve the desired results?

Ability X Motivation = Performance.  Increase ability and competence, not just rewards

Steve Kerr  59:20  

That can easily happen. It’s sometimes called the most fundamental equation in psychology and it says: ability times motivation equals performance. And you rewards can do a lot for motivation and esteem and recognition in having a boss pop in your office and tell you this is great. You can do wonderful things to improve motivation. But there still has to be, it depends on the job, but in most jobs is a certain amount of expertise or competence that is required. And the reason we put a multiplication sign in the formula in psychology, ability times motivation equals performance, is because anything times zero is zero. So if you motivate people, I say to you, I’ll give you $1,000 if you fly around the room, nobody, okay $5,000.  $10,000. they do it for one thing you have, the more you make the reward attractive, the more frustrated they get it, they don’t know how to do it, or they don’t have the tools to do it. So you’re right. I mean, you want motivation, I mean, it’s a high number. But it… do we always say in any kind of intervention, any kind of initiative, work the side of the equation that’s low. So if my motivations radius is 10, you can make it 11. But if performance is only 2, ability is only two, 10 times 2 is 20; 11 times 2 is 22, you’ve only added a little bit to efficiency, but take that same a little bit and add on the bottom: 10 times 2 is 20; 10 times 3 is 30; 10 times 4 is 40. Look how much you pay. So if you know that your people are basically want to do the right thing, it really pays to put some resources into training, give them what expertise to do it. Or if you hire a doctor and a lawyer, you don’t expect that to their expertise. Hopefully they have that when they come in. That’s the credential. So there’s a case where you want to build a company motivation system. So you’re right, it’s a good point to remember that you work on rewards, and you work on motivation, but that may not be the key here and jobs get specialized this. So it’s a great… your response is perfect. 

Rewards are neutral tools for encouraging any types of desired performance

Joanne Tan  1:01:20  

Thank you. So in human centered organizations, where employees increasingly demand work to improve their life, and employers are expected to be servant leaders in creating the environment, AND work befitting employees talents, do you believe a good reward system is always needed as a behavioral and motivational tool?

Steve Kerr  1:01:50  

You can build short term substitutes for it. So I will say always needed. I mean, I joined the Army as well, they my choices were worse. So I joined the army, they didn’t give me any safety, joy, but I didn’t want to be a draft dodger was what they called in those days. And then in the short term, the boss says, I really hate to tell you this, I know you’re playing anniversary dinner, but you might do it tomorrow night, we just got to rush order from a customer. And I just can’t do without your help. So if you have a good relationship, and you don’t do that too often, you can, you can avoid all the niceties and you say, Look, we’re all in trouble here. Now, if you say that in the boss goes home at five o’clock every day, it wears thin pretty easily. So it helps if the boss is in there, paying that cost with you. But in general, you’re right. Other than that, most people, if you have a good relationship during times when there’s nothing in it for you this time, all it means is you get angry by your spouse when you come home late, I know that but I need you here. And that’s fine. But, but you can’t live like that. And these people have continued weekly crisis. And it’s I mean, people will stay if they have to. But now this thing for the paycheck, and (A) they are not going to work as hard or as well, and be (B) they’ll leave when they get a better offers. So use it sparingly. So technically, it’s not always, but be aware when you’re not honoring these principles. They’re good principles, and you’re going to pay a price. But you won’t pay it once in a while, especially if they see you sitting there, getting dirty with them, you know.

Joanne Tan  1:03:19  

Right. So, also, if the goal of the company is to be more innovative, to be more creative, they can always use the principles of rewarding innovative, creative behaviors. So rewarding tools are neutral. They are not like if I use rewarding system, then I will be dis-incentivize in other ways or have any side effects. It can be used for whatever the goals and priorities of the organization. Is that correct? 

Steve Kerr  1:04:02  

Yes, that’s correct. 

“Make it safe” for the workforce to voice their concerns, & value and empower people

Joanne Tan  1:04:03  

Yeah. Okay, so last question. I asked everyone in my interview, the same question, if you can use less than five words to describe Steve Kerr’s personal brand, what would these be? What does the Steve Kerr brand stands for?

Steve Kerr  1:04:25  

Well, good five words. I can’t say much but I would say always: make it safe. Always make it safe for them to do the right thing. Always make it safe for them to tell you what they think. When I do performance appraisals my whole career. I say when you come in you must also tell me the one thing that if I did differently would help you do your job better. Make it safe, and they will tell you.  Again the Zerox thing, we created they called workout. He felt safe enough to say I know how to say $62,500 a year just on my machine. And there’s 100 million machines around GE. And they had to do with the paper thing. But he didn’t mention it because he he didn’t know he didn’t know. So you make it safe. And you’d be amazed at what people know, how much to help you, and how much they’ll flourish, if they, and that says to me, always, always do your best to make sure it’s safe. Or I can give you one, one last example?  Or are we out of time?

Joanne Tan  1:05:25  

please, please go ahead.

The worst thing in the world is root cause analysis: “If the car is a lemon, sell the car!”

Steve Kerr  1:05:29  

In the early days of Workout, we had low level people challenged the practices of high level people. So you always said that: Is it safe? Is it safe? So Welch try this idea, created models and metaphors. So he said, “This makes you think, you have a really old car. It’s unreliable, it’s breaks down all the time. It’s terrible.  Question: Was it a lemon when you bought it? Was always a bad car, or was it used to be a good car? Answer: Who cares?” He said, “What’s the difference? What does it matter? Maybe it was never a good car. Maybe… the point is,” so he said, “we have policies, we have practices. We have procedures, we have rules. Are they good? One of the things by the way, we’re not criticizing you. Now reports – we used to get reports that were very valuable. Now we have a new vendor, a new vendor gives you reports online, they are up to date, so nobody’s reading this. So you don’t find the person putting out the report. You say: Stop it. Why? Because we don’t need it now. ” So he said again, make it safe. Those, for example, … stuck.. if you go to someone…, if he says…  The worst thing in the world is root cause analysis: Who did this? What does that do for you? I don’t care who did it! You know what did it:  the car is not working, sell the car! Maybe, you are not saying, you are not saying it’s bad, even if it was, if you tell the guy it’s this idea and it’s a bad idea, he is going to get defensive. Don’t tell him that. He says if the car is bad, get it out of there! Your policy, your report is a problem: get rid of it. Reports, approvals used to be eight people to sign off. Maybe it wasn’t needed for that. I don’t care. You need eight people now? What are you doing? Make it safe. And then the people find ways just make it safe. They underutilized resources. It’s the worst problem we have. 

Bonus questions for Dr. Kerr: Rank Choice Voting, Term Limits for US Supreme Court Justices

Joanne Tan  1:07:15  

Ah, that’s so insightful. I have a bonus question. Okay. For those who still are interested in hearing his wisdom, okay. I think I’m not the only one who are bothered by the state of our politics and the system, our political system seems to be not working. Okay. One example is that the Democrats or the Republicans, they vote for the weakest candidate of the other party, so they can have a better chance at the general election to win, and all this gerrymandering, and the things that created this gridlock in Washington. So there are people, they’re very intelligent professors and political consultants who are advising about Rank Choice Voting System, which are implemented for some gubernatorial and in mayor elections already. And they would like to see the Rank Choice Voting System for the primary for presidential elections. And they also recommend term limit for the US Supreme Court justices. So I want to hear you, okay, if… since you have worked for Goldman Sachs and GE for so many years, if we view our country as a, as if it’s a giant corporation, okay, and from the lens of reward principles, what do you think about the Rank Choice Voting System and the US Supreme Court justices term limit?

Pros and cons of setting SCOTUS Term limits based on age, mental competency test, or 3 terms of 6 years, 4th term up to 6 years

Steve Kerr  1:09:15  

They’re easy questions to think about, because I think the costs and benefits are pretty visible. This is not… by trying to choose to distribute a punk statement or something like that. But… the… but there are pluses and negatives. The question is, can you, can you max… maximize… I think you can. I think you’ve got good ideas. Both of those are, but the term limits for example. The danger is, people will become less competent mentally, their memories will fade. And as a Supreme Court justice, for example, knowledge of the law, of history is so important. If you begin to have blurry memories, it’s just gonna be less effective. So the trouble is, you have people in the 90s still very good, you have people in the 70s already shouldn’t be given sensitive work. 

Steve Kerr  1:10:01  

So I think term limits should be at the right period. And you can, I mean, I guess you could make it performance contingent, if you had really trustworthy tests of competence. Like, they’re always saying they want US President, they wanted Trump to take another, Biden to take these tests of mental fitness, and so on. But absent that, you can substitute, your pick a year where probably, it’s early enough, so most people will still be competent when they hit that spot. So for example, Set it at, I don’t know, 75, you’d get gerontologist numbers much more likely, and so on. But you pick some number like that, now you run the risk of some really brilliant people will be asked to leave, while they’re still brilliant. But in the end, assuming there are brilliant people behind them. I mean, the person has had a long career, it’s honorable, if it’s set as a limit, you’re not embarrassing to them. It’s just… like you have… right now we have people that are two-term limited as governors, and no, it’s not about… Manchin, for example, he’s been very popular in West Virginia, he’s going to leave, because he has to. So it’s term down. So I think it’s no offense, and probably even if you lose a really good person, hopefully there are brilliant judges to replace. So I think term limits makes sense, the risk you run, when they sit there for years, and they’re meddling up things, especially with a five-four decision that you tend to get, it could really make a difference. So I think it’s valuable. 

SCOTUS Term limits at age 75, or three terms of six years, and the fourth term is up to six years

Steve Kerr  1:11:24  

I think that you can also do instead of age, you can do a number of terms. And that can be done as well, you know, the average, but I think it’d be sharper if you peg it as best you can to mental acuity. But that’s fine tuning. The one thing I would say though is, everything gets political. And the way they were badgering Ginsburg, for example, the Democrats to step down, because she was old, and they wanted, they didn’t know who would be the President next time. It turned out it was Trump and they wanted to be able to rush her and she wouldn’t believe, it was her life, she was still very sharp, but she did die. And sure enough, Trump got to appoint her successor. And I think that was a big deal. And the same thing. So that’s the only thing with term limits. It will happen automatically. But then now, you didn’t know when Ginsburg was going to die, because she didn’t know. So you could still nag them to step down. But now if you know your terms can end anyway in two years, like how selfish you are, you know, our party has the President now and in two years, it might be somebody else. So I think you will increase the intense pressure on these people to leave, in somewhere in that last term anyway. But it doesn’t matter that much. It’s still your unbalanced your ideas a good one, because just say that… they had three terms of six years, and the fourth term is up to six years. And it could well be that people get into the tradition of retiring early so that their party… unless the other party is in power, course then it doesn’t come in. So that’s what I think about that. And I think you can manage the negative things, as I said.

Ranch Choice Voting can avoid long delayed run offs and many ills from voting system’s flaws

Steve Kerr  1:12:58  

On the Rank Choice: It depends on… it’s still got pluses and minuses, but what you… the present thing is awful. I mean, the worst thing in the world is having these long delayed run offs. I mean, long, could be 30 days, but it’s awful what happens to democratic process during that time, whereas I think Rank Choice, usually it’s instant replay, you don’t have to update by the end of the weekend, you know, who when usually, as instinctually, it goes like what happened in Georgia, I mean, out of state money comes pouring in, people like crossing parties to vote for the other side, they get really weak candidates in all kinds of mischief can happen if you have a delay, so Rank Choice has more than one advantage. But the biggest negative used to be, well, you know, you’ll get somebody who people don’t really love. But the point is, it doesn’t prevent the majority winner. I mean, it depends on how you set it up, and you can set it up so it doesn’t kick in unless you have somebody doesn’t get 50%. So by definition, if there’s a clear choice, it’s not interfering with that; it only obtains when we already found that you don’t have a fit choice. So in that case, it’s not causing it, it’s just recognizing the fact that you don’t have a clear favorite, nobody got 50. And that case, it’s a much better remedy if especially if it’s accelerated revotes, right, I mean, put my next choices out…, to get that kind of thing. Because I think that… you sill have the problem though, people may be trying to game the system, but usually the Choice votes at the final level, that you don’t have that problem. They’re going to cross paths and vote for their own person. In nomination crises, we try to rig it so that the other party is putting up a terrible candidate you’re voting for. So you got to be careful, but I think Rank Choice that might happen in the first round, but usually in stages on…if it gets dragged on, and waiting a while for a recount is the worst thing, but you saw in Georgia,  people were voting who don’t even live in the state, and the billionaires were pouring money into it, and that, and the longer it goes, the more bitterness is, – just awful. So I think nothing’s perfect. But the both term limits and forced choice are better, on balance, now…

Joanne Tan  1:15:16  

Rank Choice. Yeah, see the Rank Choice for primary will allow more candidates. And it’s more fair, the process is more fair, and can avoid the ills you described earlier, you know, so it’s just a matter of getting these things operationalized, using your word: operationalized.

Advantages of SCOTUS term limits and Rank Choice Voting

Steve Kerr  1:15:40  

That’s exactly right. That’s what it is. And the term limits idea, it’s pretty straightforward, because the only thing you get is you get more intense, nagging on the part of people in power to get… to get their Judge out of there, so again, the younger one in, so the third term might be shorter, but both parties would do it. It’s natural. It’s not obscene, it’s logical. You can say I love you, Ruth Ginsburg. But you know, instead of one more year with you, we can get 18 more years if somebody, if you let us vote now… be placed in there. 

Steve Kerr  1:16:09  

And under the thing of Rank Choice. Again, it’s plus avoids the biggest minus in the world, which is these delayed second bouts with so much outside money. It’s not again, the people in Georgia, they not even the primary people electing that the runoff senators because it was crazy. So you still should be careful, I still would… I, I know it’s state by state. And it’s not my choice. But I wish states would not permit people in the nominating contest to cross parties, because there’s so much mischief is going on. And you don’t have the best of both candidates going forward, you have them sabotaging by putting in the least electable guy or gal and putting them in. So you got more work to do if you have Rank Choice, but you can do it, it’s still better than what you have instead.

Steve Kerr  1:16:55  

And term limits. You just get the one side effect you can avoid and it may not be bad. They say, why should you serve your whole six years, you know, resign in the month before our president leaves because the next election, we might not have the choice, so let’s get your successor. I think it’s safe to get an inkling that these are good ideas. I wish you would get them implemented, using influence, you know, a lot of people,

Joanne Tan  1:17:20  

You have more influence than me. But we, you know, in the future, I probably will edit this just about the last question about Rank Choice and term limit. And we can send the video to those who have the power to change. It’s it’s not gonna be easy. But…

Steve Kerr  1:17:40  

Well, you’ve got… I mean, Barry talks about you that you’ve a very successful program. But I think it’s true that there may also be some areas where people like me, you get windy, we may drift off into another area. That might be not what you want. But, but you might offer to me… you can even splace through it if you have a special interest in this topic. We have a couple of speakers as well in there. So you’re organizing us by session, one person and I assume that goes out. You could even have partitioning by topic and just kind of edit your tape. So maybe you ask four people, and so if you guys are interested in what some people thought about term limits, I’ll splice together for interviews that weren’t consecutive, but they are all timeline. So maybe… I’m not… just saying, you right, you can, you can cut it by events. So we can hear what speakers all thought; we can also cut it by thought, and have whatever the speaker cut as theirs…

Steve Kerr  1:18:34  

You have a great audience, so I’m told. that’s… you did good. And I mean, you really are. You’ve… you’ve impressed people to stay with you. And I think you’re very incisive in the way you ask the questions. And I think… I appreciate it.  I think you’re really good at what you do.

Joanne Tan  1:18:49  

Thank you so much. Thank you. Thank you. I, …we went over by 20 minutes, but that’s… I, I love hearing your insights. And

Steve Kerr  1:19:01  

I’m afraid I went over…

Joanne Tan  1:19:05  

People will benefit from your gems of wisdom. Thank you again, and we will stay in touch. We’ll talk about more issues at another time.

Steve Kerr  1:19:17  

That’s fine. I appreciate that. Thank you, Joanne. 

Joanne Tan  1:19:20  

Okay. Have a good day. Bye bye.


© Joanne Z. Tan   All rights reserved.


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