Management learning, performance and reward: theory and practice revisited

Management learning,performance and reward:

theory and practice revisitedCaroline Rowland

Chester Business School, University of Chester,Chester, UK, and

Roger HallHall Consultancy, UK

Abstract

Purpose – The purpose of this paper is to explore the extent to which organizational learning isrecognized through performance management systems as contributing to organizational effectivenessand competitive advantage.Design/methodology/approach – It reviews several pieces of research, employing a wide range ofmethods, including: content analysis of managers’ reflections; questionnaires completed by managersand mentors; a large-scale survey involving ethnography, interviews and questionnaires; and analysisof documents from professional bodies and management delivery centres.Findings – Genuine integration of individual and organizational goals or transfer of learning from theindividual to the organization is not evident. Few qualitative measures of organizational performanceare employed. The impact of metrics such as IIP or EFQM on organizational effectiveness is nordiscernible. Management learning and development is rarely measured even when it is encouraged bythe organization. There is a clear divide between research, teaching and learning and workplacepractice. Performance management systems create perceptions of unreliability and inequity.Research limitations/implications – Espousing the value of learning and learning to learn,measuring them accurately and rewarding them with meaningful changes to working life can onlyimprove organizational effectiveness. Research into the few organizations that have successfullyembraced triple loop learning in their development of managers may offer a template for transformationallearning to sustain competitive advantage.Originality/value – Management development processes have been successful in developingindividuals but less successful in achieving organizational development. This paper offers new insightsinto that gap and the omissions in the metrics by which performance is measured.

Keywords Performance, Reward, Management learning, Triple loop

Paper type Viewpoint

OverviewOver the last 20 years there has been considerable growth in literature onorganizational learning, performance management and reward. The contribution oflearning to organizational effectiveness is well recognized. Yet, this is rarely reflectedby measures of performance. This paper re-examines research carried out by theauthors into learning, performance and reward. Data from over 700 respondents, mostof whom were managers, is considered. Managers value their own learning, which isfrequently appreciated by their organizations. Yet, learning is not measured formallyby their organizations. Monetary rewards are used to recognize achievement of whatare universally perceived as unreliable and irrelevant measures and there is noconsideration of wider concepts of reward. Little progress has been made in aligningcompetitive advantage through learning with appropriate performance measures andreward systems.

The current issue and full text archive of this journal is available atwww.emeraldinsight.com/0262-1711.htm

Received 24 August 2012Revised 2 January 2013Accepted 18 June 2013

Journal of Management DevelopmentVol. 33 No. 4, 2014pp. 342-356r Emerald Group Publishing Limited0262-1711DOI 10.1108/JMD-08-2012-0110

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IntroductionSince the early 1990s a growing literature on organizational learning has emphasizedthe central role of learning in developing and maintaining competitive advantage.Over the same period measures of organizational performance have emerged,which include processes alongside the more familiar outcome-based measures.Performance-related reward systems have continued, particularly in the financialservices sector. More recently there have been important contributions to thepsychology of happiness or well-being, which illuminate theories of human motivationand organizational reward systems.

Yet, there is little sign of significant linkages between these developments.Few measures of organizational health or excellence give learning the prominencethat theory suggests it should have. Research has continued to demonstrate theoften negative relationship between payment by results and long-term sustainableorganizational success (Geary, 1992). Expressions such as “reward for failure” haveentered into the popular lexicon since the 2008 banking crisis and few lessons seem tohave been learned about reward systems in particular. It seems that organizations maybe not only rewarding the wrong behaviours but using the wrong rewards to do so.

The authors have been designing and managing Management Developmentprogrammes for over 20 years, both university and organization based, mainly atpost-experience, postgraduate level. During that time they have questionedparticipants about their own development and the way in which organizationalperformance management systems have supported and promoted this. Someadditional organization based research was also undertaken. Our findings indicatedthat appraisal systems rarely encouraged learning and that performance-related paywas always counterproductive.

In this paper we re-examine the data to explore whether there is any support for theproposition that, if performance related rewards are to contribute to organizationalsuccess, they must measure organizational learning and employ rewards, which reflectrecent theoretical developments in human motivation theory.

LiteratureLearning organizationsLearning organizations as a distinct area of study may be thought of as dating from theearly 1990s when two seminal books were published, one on either side of the Atlantic.In the USA Peter Senge’s The Fifth Discipline (1990) focused on systems thinking,personal mastery, mental models, shared vision and team learning as essentialelements in building a learning organization. In the UK, Pedler et al. (1991) publishedthe first edition of The Learning Company. Their contribution proposed a three-stageevolution, which comprised surviving, adapting and sustaining.

The intellectual foundations of organizational learning stretch back well beyondthe 1990s through the work of Argyris and Schon (1978), Cyert and March (1963),Simon (1955), Kolb and Fry (1975), Lewin (1951), Emery and Trist (1960) and theTavistock Institute (Miller, 1976; Rice, 1965). These, in turn, owed much to earlierdevelopments in the natural sciences. Over the last 20 years the literature hasburgeoned, but, in this paper, we re-examine the key elements on which the notion oforganizational learning depends. To us these are; systems thinking; double/tripleloop learning; and transformation.

Systems thinking is Peter Senge’s fifth discipline. It is the conceptual framework,which integrates his other four disciplines and is, in Senge’s (1990), words: “a body of

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knowledge and tools developed over the last 50 years, to make the full patterns clearand to help us to see how to change them effectively” (p. 7).

Open systems theory emerged as an interdisciplinary school of thought during the1920s and 1930s through writers such as Von Bertalanffy (1950). Bertalanffy saw someproblems in applying concepts from natural sciences such as ecology and biology tosocial sciences such as sociology and anthropology, but, by the 1950s, the theories werefinding applications in many areas and are central to the idea of the learningorganization. By the early 1960s many of the key concepts of open systems theory hadfound their way into key texts on organizational psychology.

Edgar H. Schein (1965, p. 95), for example , employs open systems concepts ofconstant interaction, multiple goal seeking, interdependence, the input-transformation-output model, subsystems and system boundaries in his redefinition of organizationsin terms of processes. Other concepts such as entropy/synergy and homeostasis ordynamic equilibrium are implicit. All are important in what Senge describes assystems thinking. Understanding dependencies, causality and the impact whichactions in one sub-system may have on another sub-system or on the organization as awhole are crucial if organizations are successfully to adapt to a turbulent environmentand avoid pitfalls such as sub-optimization, where one part of an organizationmaximizes its efficiency to the detriment of the whole.

The second key feature of organizational learning for us is the idea of levels oflearning. Chris Argyris (1977) is frequently quoted as defining organizational learningas “a process of detecting error”. However, he also goes on to say: “Error is for ourpurposes any feature of knowledge or knowing that inhibits learning. When theprocess enables the organization to carry on its present policies or achieve itsobjectives, the process may be called single loop learning” (Argyris, 1977, p. 116).

In the following paragraphs Argyris introduces double loop learning and theories inaction, which he had developed with Donald Schon (Argyris and Schon, 1974).

Single loop learning is about error detection and correction; double loop learning isabout examining underlying values and assumptions, about challenging fundamentalnorms and aims and surfacing differences between theories in use and espousedtheories. It is holistic, adaptive and future oriented. It has also been described assystemic learning (Broersma, 1995). Triple loop learning, the origins of which are fullydiscussed by Tosey et al. (2012), is described as deutero leaning by Bateson (1973) andas transformational learning by Broersma (1995). It is about learning how to learn,about reflecting on previous learning or failure to learn, identifying facilitators andinhibitors of learning and devising new learning strategies. It may involve developingtolerance for failure, acknowledging outcome/expectation mismatches, challengingtheories in use through collaborative review and encouraging inquiry and reflection onlearning (Figure 1).

At this point it is worthwhile to consider what learning is in the context ofan organization. We will use a psychological definition whereby learning is“any relatively permanent change of behaviour that occurs as a result of experience”(Collins, 2012). In an individual, learning takes place in the cognitive, affective andbehavioural domains. It could be argued that, in an organization, knowledge,understanding and feelings cannot exist other than in individuals and that it wouldconstitute a category error (Ryle, 1949) to assume otherwise. It would be more difficultto argue convincingly that organizations cannot behave or act, as some behaviours,such as insect swarming, birds flocking or crowds rioting are not merely the sumof individual actions. The organization can be considered as an appropriate unit of

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analysis for behaviour and, therefore, for behavioural change, organizational learningand performance improvement.

There are, of course, differences between individual and organizational learning. AsSenge (1990, p. 139) points out: “Organizations learn only through individuals wholearn. Individual learning does not guarantee organizational learning. But without itno organizational learning occurs”.

Individual learning is, in other words, a necessary but insufficient condition fororganizational learning. Individual learning may or may not depend on changes in thecognitive and affective domains; for organizational behaviour to change there may need tobe antecedent changes in individual knowledge, understanding, beliefs and attitudes.

In individuals behavioural learning may be informal, spontaneous and reactive.Individuals will certainly improve their learning through a planned and deliberateapproach to lifelong learning and continuous professional development, but learningwill take place in any event. Planned or deliberate learning is not necessarilyinstrumental. It can encompass learning for learning’s sake and does not excludeserendipity. Organizations are less likely to react spontaneously to environmentalchanges. Their learning is usually deliberate, responsive and formal. It is through thisplanned approach that organizations can build a core competence (the ability to learnquickly), which can help achieve a sustainable competitive advantage (De Geus, 2005;Hatch and Dyer, 2004; Dai et al., 2009).

The concept of transformation is central to systems thinking, to the pioneeringwork of Argyris and Schon and to the early literature on learning organizations. In thesecond edition of their book Pedler et al. (1997), define a learning company as: “Anorganization that facilitates the learning of all its members and consciously transformsitself and its context” (p. 3).

It is nonetheless worthwhile to re-emphasize transformation as the concept iswidely used in leadership theory to describe the characteristics of successfulleaders (Burns, 1978; Bass, 1985). If successful organizational learning requirestransformational or triple loop learning and we know something about thecharacteristics of transformational leaders, then the tools developed to measure suchleadership may be useful in evaluating contributions to organizational learning as wellas the selection of individuals who are able to encourage organizational learning(Transformationalleadership, 2007). If we accept that organizational learning is asignificant source of competitive advantage, then those elements of organizationallearning we have identified need to be capable of being measured and ought to be partof any framework, which purports to measure organizational health, performance orexcellence. We turn now to an overview of such schemes and an evaluation of theextent to which they do measure organizational learning.

Context Assumptions

Double loop Learning

Triple loop Learning

Single loop Learning

Are we doing the right things?

How do we decide what is right?

Are we doing things right?

Actions Results

Source: Thorsten.org

Figure 1.Single, double and

triple-loop learning

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PerformancePerformance measurement and performance management methods and outcomes havestimulated much discussion in the past two decades. Initiatives such as strategic qualitymanagement and human resource alignment have sought to improve performancethrough developing people. These initiatives are exemplified by the models of Baldrige(2011), Deming (1986), Kaplan and Norton (1992), IIP (2009) and the EFQM (1999)Excellence Framework.

However, when examined, these models have much to say regarding learning anddevelopment needs and the importance of the learning organization but there is adearth of information regarding measurement or acknowledgement of learningin terms of the individual, the organization and tacit knowledge. As Holloway(1995, p. 93) points out, benchmarking has a “potential universal relevance”. We arguethat learning can be measured and benchmarked.

Encouraging workers to learn has enormous leverage in enabling them to managemore effectively and contribute to the bottom line. However, little emphasis is evidentfrom either theory or practice in this area. The Investors in People Framework (IIP,2009) rates the areas of: learning and development strategy (02); recognition andreward (06); learning and development (08) and; performance management (09).In these areas there is mention of “explaining what learning activities should achievefor them”, “that people can describe how their learning and development needs aremet” and in terms of performance management “how learning and development hasimproved their performance”.

In the Deming, Baldrige and European Quality models there is reference tooperational and statistical measures of improvement but no explicit referenceto transferable learning nor deciding to do the right thing. This is also true whenapplied to Kaplan and Norton’s (1992) balanced scorecard. The focus is on the reflectivepractitioner that mostly emphasizes single loop learning, that is to say, “Are we doingthings right?” They occasionally move into double loop learning when challengingcurrent practice by asking, “Are we doing the right thing?”.

A review of quantitative studies carried out by Van De Voorde et al. (2012) examinedthe relationship between employee well-being and HRM-organizational performance.The authors distinguish operational performance outcomes and financial outcomes.The former include measures such as productivity and quality and the latter includemeasures such as returns on invested capital and shareholder return. They arguethat financial measures are more distal and subject to more additional interveningfactors than operational performance indicators, which are proximal and likely to bemore influential. We have included any measures of performance but our expectationswere that our samples of mainly senior and middle managers would focus more onoperational measures.

RewardAs in the case of performance much has been written concerning reward andmeasuring contribution. The discussions have centred mainly around payment byresults focusing on operational metrics rather than strategic or tacit knowledge(Cumming, 1988; Chen and Fu, 2008). Research since the late 1950s has shown thatreward linked to personal development programmes or appraisals in the form ofpayments has proved unhelpful and often counter-productive (Meyer et al., 1965;Geary, 1992; Robinson, 1992; O’Neill, 1995; Armstrong and Baron, 1998; Toynbee andWalker, 2008; Rowland and Hall, 2010). The Investors in People Framework (IIP, 2009)

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section entitled: recognition and reward (09) does not make mention of any rewardsfor learning. Intrinsic rewards of learning are touched on by less mainstream literature,mainly in the social sciences concerning well-being and happiness. Here learningis seen as an end in itself and considered by many as central to happiness andan important component of well-being (Aristotle, 2006; Bentham, 1789/1996; Layard,2006; Robertson and Cooper, 2011). Van De Voorde et al. (2012) include happiness,health and relationships as dimensions of employee well-being. We argue thatwider concepts of reward go beyond these dimensions to include areas of personalgrowth and autonomy.

Other recently emerging theorists build on established models of motivation such asself-actualization (Maslow, 1943) and extrinsic/intrinsic factors (Herzberg, 1968).Recent research by Seligman (2011) examines the notion of flourishing and introducesthe idea of PERMA, which stands for Positive emotion, Engagement, Relationships,Meaning and Achievement. He contends that if people have enough to live reasonablythat meaning, achievement and engagement with work and colleagues may be whatthey seek. Within the work context Fisher (2010) provides an overview of job/taskcharacteristics related to happiness at work and concludes that “happiness at work islikely to be the glue that retains and motivates the high-quality employees of thefuture”. There is no evidence at present to suggest that these factors are routinelymeasured or reflected in reward systems.

PurposeIn order to explore the relationship between organizational learning, reward andperformance, the authors have re-examined the research in these areas that they havecarried out over the last 15 years. Both authors have been involved in managementeducation as teachers, managers, tutors and examiners for many years, largely indesigning and developing postgraduate, post-experience programmes including MBAs.Their research interests are in; learning and management development; and motivationand performance. The research under re-examination reflects these interests.

MethodsA range of methods was employed in the six pieces of research. They included:

. Content analysis of reflections of 185 managers participating in ManagementDevelopment programmes over 15 years.

. Questionnaires issued to participants and their mentors.

. Ethnographic surveys, interviews and questionnaires with over 500 people intwo manufacturing organizations. This was a sample of both managers andemployees and was representative in terms of age, gender and length of service.

. Observation by the authors in their roles as tutors, examiners, reviewers andverifiers.

. Analysis of documents including: professional body standards, syllabi, schemesof work, assignments, examinations and examiner reports. Documents from teninstitutions, which were a representative cross-section of centres accredited byone professional body in the northwest of England, were examined in detail.

Sampling methods were convenience in the case of management developmentparticipants, representative diagonal slices in the case of the two manufacturing

347


organizations and purposive in other studies. Multiple data sources and memberchecks were used to verify the accuracy of the data. Where sampling methodspermitted, significance testing was employed.

A summary of the research projects, methods and findings is presented in Table I.This paper reviews the earlier research and presents the findings and discussion

in terms of three themes – learning, performance and reward – and the relationshipbetween them.

FindingsLearningPersonal development was seen as management rather than individually driven andthere was considerable suspicion of appraisal systems. However, there was littleevidence to show a genuine integration of individual and organizational goals and atransfer of learning from the individual to the organization (Project A).

Even in organizations where there was an explicit commitment to learning, the role ofappraisal in this process was rarely fully explored. Appraisal was carried out as a symbolicritual in many instances with little evidence of organizational learning (Project B).

There was a clear divide between research, teaching and learning and workplacepractices. The nature of the divide was dependent on the area of study. In areas whichfocused on the development and application of management techniques there was analignment between research and workplace practices, not reflected in teaching andlearning. In more theoretical areas like motivation there was a congruency betweenresearch and teaching which does not permeate through to workplace practices. In routineareas neither teaching nor workplace practices were influenced by research findings.

This has profound implications for the role of the educator on professionalmanagement programmes. Improvements in developing the ability of managers tolearn and manage their own learning has much greater leverage than any amount oftaught knowledge (Rowland and Hall, 2010). Individuals have differing learning needswhich cannot be satisfied through a focus on teaching (Project C).

The notion of the learning organization was frequently referred to in a cynical anddismissive manner, for example: “learning organization that’s a joke” or “We learnwhat the organization wants us to learn – it is no reflection of our PDR”. The appraisalsystems in place were manifestly not fair. Moreover, the idea of organizational learningwas seen as an espoused theory which bore little relationship to the realities oforganizational life. The overwhelming impression gained was of a complete disconnectbetween notions of learning and the measurement of performance (Project D).

Jordanian banks were operating at a rudimentary level in any typology designedto evaluate Management Development or Strategic Human Resource Development.There was certainly evidence of isolated tactical HRD but little evidence ofco-ordinated and structural development tactics. There was nothing at all to suggestthat the Jordanian banking sector was employing the “strategic leverage of learningand development processes to enhance the core competences of the organization”.As Holbeche (2012) has argued, the development of a learning culture is crucial tocompetitive advantage in a modern globalized economy. Jordanian banks fall far shortof this ideal (Project E).

A list of skills and competencies drawn from generic management competencies,requirements of professional bodies and employers and from action learning literaturewas endorsed by the respondents as essential to the performance of their roles. Thiswas not surprising. Most of the respondents reported that they had found the action

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349


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learning process helpful and that it had in some instances changed the way in whichthey learned. It had an even greater impact on the way in which they were better able tomanage their own learning. However, none of the respondents commented on thetransferability of the idea of action learning to the workplace (Project F).

Performance. Formal appraisal systems were widespread among our sampleand their organizations. Many of the appraisal systems were driven by Investor in Peopleinitiatives, yet there was little evidence of formal training of appraisers nor of formalguidance to appraisees. Most appraisals were carried out by line managers onindividuals. Self-appraisal formed part of the process but peer appraisal, 3601 appraisaland team appraisal were rare.

In most organizations appraisal was part of a performance management system.Objectives were set far more frequently by management than they were jointly or byindividuals. Training needs analysis was the most frequently cited function ofappraisal. There was some evidence of appraisals focusing on skills and competencesand recognizing the need for continuous development. Most organizations measuredperformance in a quantitative way. There were few measures of the softer aspects oforganizational performance, either qualitative or quantitative. Most organizationsfocused on financial performance or output but with a growing recognition of quality,often measured through customer surveys.

There was evidence of fairly recent initiatives to widen definitions of organizationalperformance with an emphasis on Investors in People or the European Quality Modeland their associated audit systems. These were generally welcomed, but there waslittle concrete evidence at that time of their impact. There were, however, emergingindications that this wider concept of organizational effectiveness might have beenbringing about a shift in the approach to organizational learning and personaldevelopment (Project A).

Few managers seemed committed to appraisals. Both they and workers identifiedtensions between multiple purposes such as developing individuals, analysing trainingneeds, determining reward and planning careers and promotions. The notion thatappraisal is “a bad idea and it doesn’t work” (Armstrong and Baron, 1998), held bymany academics, is not always echoed by those who engage in the process. There weretwo distinct, yet closely related, reasons why appraisal was not successful in practice.First there were problems associated with the measurement of performance and secondthere were difficulties arising from tensions between development and control.

Performance measurement was approached with caution by both appraisersand appraisees. There was a reluctance to play God on the part of appraisers anddistrust on the part of those being appraised, arising out of marked discrepanciesbetween rhetoric and reality. Measurement was perceived as inconsistent, subjectiveand political (Project B).

In the Jordanian banking system training and development (T&D) is not long-termand there is a widespread perception that it has little impact on organizationalperformance. Participants agreed that the most important training impact was onimproving the quality of services, customer satisfaction and productivity. It was seenas having less impact on profitability, sales, labour turnover and absenteeism,innovation and cost reduction (Project E).

Reward. There was a widespread strongly held belief that individual appraisalbased reward systems promote conflict amongst and between teams. There was aparadox between this focus on individual appraisal and management insistence on theneed for team working (Project B).

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There was almost universal confusion about performance management systems;interestingly many employees were unclear as to whether their performance wasmeasured and if so what were the methods used to measure it. Performancemanagement systems were viewed as bureaucratic, costly and often a waste of time.Many workers and managers spoke at length about discretionary activity andtheir frustration with the organization’s inability to deal effectively with disciplinaryissues. Many did not believe that performance reviews improved job performance.Respondents stressed the difficulties of measuring activities and placing similarvalue on different activities. Statistics were often seen as open to manipulation anddistrusted. Rewards for individuals were seen as counter to core beliefs in equity andobjectivity. Equity and performance emerged as the overwhelming pre-occupation ofthe majority of participants (Project D).

Discussion and conclusionsThe research provides clear empirical support for the positive contribution whichpersonal competence models made to individual and organizational learning. There isalso evidence of the value of established management competencies and the ability ofmanagement development programmes to enhance those competencies. Appraisalswere widely used and, despite poor experience of appraisals, they were seen by most ofour sample of managers as crucial to the development of people. Few organizationsused simple judgmental systems. Yet, most organizations did not benefit as they might.All too often appraisals had multiple functions – to develop individuals, to analysetraining needs, to determine levels of rewards, to plan careers and promotions – whichdo not lie easily together. It is this more than anything which created much of themistrust and scepticism which was prevalent and inhibited organizational learningand individual development.

As long as appraisals are considered as part of a performance management system,their full potential for increasing organizational learning will never be achieved.Organizational effectiveness is frequently defined in terms which are readily measured.Yet, these indicators may fail to portray the essential strengths of organizations, whichare often deeply embedded in unique cultures. Organizational learning offers anopportunity to explore such issues and for organizations to transform themselves.In order to do so it will be necessary to harness the considerable force which individuallearning can bring and to ensure that this is captured and disseminated to where it isneeded. Appraisals have the capacity to act as a conduit for learning.

Where appraisal attempts to fulfil the twin aims of measuring performance anddeveloping people, it usually fails to encourage learning. When appraisal interviewsattempt to both control performance and develop the individual, the ritual charadeof measuring performance may foster a cynicism about identifying areas forpersonal development. The research clearly indicates that managers see a potentialfor appraisal, which is rarely achieved in practice.

Organizations are purposive entities. They have goals and need to measure theachievement of those goals, but the trauma of the measurement process may hamperdevelopment. Creating an environment where individuals can grow and develop can beenhanced by appraisals designed for that purpose. Measurement of individualperformance is of dubious relevance in team working environments. Judgements, abouthow individuals contribute to teams, are perhaps best made by teams themselves.Individual appraisal interviews are best suited to counselling and identification ofdevelopment needs. Certainly, the inclusion of performance measurement clouds the

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process and leads to cynical beliefs about organizational value systems. If appraisalis to contribute to the achievement of an organization’s goals, then the organizationneeds to be clear about why appraisal is in place and how it fits with strategy, cultureand philosophy.

There is a need to recognize that traditional teaching is not the only way in whichlearning takes place and to encourage innovative ways of facilitating the learning ofadults through appropriate funding. In the area of management education manyorganization cultures modify the impact of teaching and learning. There are strongindications to suggest that many organizations favour the pragmatic, short-termapproach and have a tendency to marginalize the academic approach. Research is alltoo often discounted in favour of quick fix solutions. The value of learning, particularlyof evidence-based learning, is frequently marginalized.

If T&D is to contribute to organizational success, there need to be explicit links tostrategy and performance management. T&D interventions need to flow from strategiesdesigned to respond to rapidly changing environments, most importantly by developingthe ability to learn, individually and organizationally. Performance management systemsneed to be developed which encourage behaviours that demonstrate a contribution tocompetitive success. If T&D is to make a significant contribution to increasingcompetitive advantage through people, it needs to do more than develop skills. Intrinsicto success is the encouragement of employee engagement and the satisfaction whichflows from this.

Future implications for leaning, performance and rewardWe now turn to see whether the findings and conclusions from the last 15 yearssupport the proposition that, if performance-related rewards are to contribute toorganizational success, then they must measure organizational learning and employrewards which reflect recent developments in human motivation theory.

Virtually all the managers sampled reflected positively on their learningexperiences at college or university. In some cases this had transformed the way inwhich they learned and, in most cases, their individual learning had an impact on theorganizations for which they worked. However, there was little indication that any ofthe organizations were measuring learning formally or routinely. Many organizationsused models to measure organizational effectiveness, some of which contained referencesto learning, but these were rarely operationalized to measure the learning at individuallevel in appraisals. The absence of group or team appraisals means that team learning isnot measured at all.

In professional bodies there has been a shift to recognize learning and its impact onorganizational performance. Chartered membership of both the Chartered Institute ofPersonnel and Development and the Chartered Management Institute now requireevidence that individuals are employing behaviours, grounded in learning, which havea positive impact on their organizations.

In many cases, performance management systems resulted in rewards forperformance. In no cases were these related to organizational learning and in all casesthey were linked to increases in pay rather than any other reward. Notwithstanding thealmost universal disrepute in which such systems were held, they persist. People areregularly measured using unreliable and often irrelevant criteria and in some casesrewarded for meeting these criteria.

If, as our research demonstrates, business schools are developing appropriate skillsand competencies in their student managers and these are valued by employers, then

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formal mechanisms need to be put in place to capture what that learning means. It isalso useful to reflect on reward. Financial rewards are often seen as compensation andtend to be divisive. If organizations are to embrace recent developments in concepts ofwhat makes people thrive, then perhaps a wider interpretation of reward needs to beconsidered.

If people derive satisfaction from engaging in meaningful work, from autonomy,social relationships and personal achievement, then designing work, which can deliverthese, is a worthwhile endeavour. It is likely that such arrangements would reinforceteam and organizational learning in a virtuous spiral. Espousing the value of learningand learning to learn, measuring them accurately and rewarding them with meaningfulchanges to working life can only improve organizational effectiveness.

This paper reinforces long-standing findings about the difficulties encountered inmany performance management systems and of the unfairness of reward systemsin terms of both distributive and procedural justice. It confirms the role of learningat both individual and organizational levels in enhancing organizational performance.It opens up the possibility of a more direct and explicit relationship between learningand reward in organizational performance management systems. The development ofsuch a direct relationship is a rich field for future research.

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Further reading

Ashkanasy, N. (2011), “International happiness; a multilevel perspective”, Academy ofManagement Perspectives, February, pp. 23-29.

Bhattacharyya, G.K. and Johnson, R.A. (1997), Statistical Concepts and Measures, John Wiley &Sons, New York, NY.

Corresponding authorProfessor Caroline Rowland can be contacted at: [email protected]

To purchase reprints of this article please e-mail: [email protected] visit our web site for further details: www.emeraldinsight.com/reprints

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