Ann All spoke with Brad Hall, Ph.D, managing director of Human Capital Systems, a firm that designs systems for improving work force performance. He is also an instructor in Duke Corporate Education's teaching network, a columnist for TheStreet.com and author of "The New Human Capital Strategy." Hall was formerly a senior vice president at ABN AMRO Bank in Amsterdam and IBM Asia-Pacific's executive in charge of executive leadership and organization effectiveness.

All: You say that perks like pizza parties and golf outings don’t improve productivity. But do they serve a useful purpose?
Hall: I think there are some good reasons for offering them. A software company I just worked with took all of its senior managers and gave them two weeks of leadership training. But when I asked, “Are your leaders better?” they said, “Well no, they aren’t better.”

All: So just providing perks without attempting to quantify the benefits is bad?
Hall: Right. Nobody knows why they do these things. They just do them because they think they need to be done. So if the purpose of a pizza party is that you want to build community, I have no problem with it. What I object to is companies doing things while assuming they work, and nobody even questions whether they do or not.

All: Which incentives actually improve productivity? Financial incentives seem fairly obvious, but are there non-financial incentives that can do so?
Hall: That's another assumption that doesn’t make sense, that if you don’t pay people to do something, they won’t do it. People will say, “They won’t do something because it’s not on their performance appraisal.” Oh, really? You know the Navy SEALs don’t get financial incentives. Are you telling me they aren’t motivated?

To motivate people, you need to make them something that fits their talents, and then help them be successful in that role. When they’re successful in a role that fits them, they’re happy. They don’t need all the pizza parties and other perks. Pizza parties are a nice thing to do, but they won’t make employees happy. You need to clarify the role so everybody knows what’s expected.

Here’s a great example: I used to work for McDonald’s. I talked to a good manager, a B-plus manager, and I asked him how he rewarded his employees. He said, “Often when we have a $1,500 lunch, I buy a pizza and we celebrate.” Then I talked to one of the top 10 managers in the country and asked him the same question. He said, “When we have a $1,500 lunch, I buy a pizza and we celebrate.” Those are close, but not the same thing. The first one was really saying, “I’m the benevolent judge, and I’ll decide when and if you are worthy for me to buy a pizza.” The other guy was saying, “Here’s the bar. It’s $1,500. Jump it and get a reward. I’m here as your manager not to judge you, but to get you over the bar.” You need to be clear about what you expect, and assess people on those expectations.

All: So don’t be vague?
Hall: I just wrote an article called, “Do Performance Appraisals Improve Performance?” Isn’t that a question companies should ask? Yet so many of them don’t. Performance appraisals don’t improve performance.

All: You suggest individual incentive plans for each employee. I am especially interested in how this might work.
Hall; Here’s the way it works today. Rob and Sue are parents of four children, ages 5 through 15. It’s Dec. 31, time for the annual performance appraisal. Sarah, the 15-year-old, is first. She gets a three on the family’s five-point scale. She asks, “But I thought you were proud of me?” Mom says, “You missed your chores several times.” Sarah says, “But that was last February.” Mom says, “It was in the calendar year, so it counts.” Now, that’s good HR. It’s differentiating and it’s behavior-based. So it’s great HR. But it’s child abuse. That’s why people don’t like doing performance reviews. They’re bad and can be abusive.

You need to start out clearly and say, “How do we know you’ve been successful at the end of the year?” You and your manager talk. So if you’re a reporter, it might be number of views on your blog, doing good research and having strong relationships with sources. Then you need to decide how to measure each of those things, so you know where the bar is. Good performance reviews are doable, but almost no companies do them well.

All: How about ideas for monitoring performance-management programs?
Hall: I am working with a bank in Peru. One of the jobs is bank branch manager. There are five things the managers have to do. So when the regional manager comes, they train on those five things. The performance appraisal is on the five things, the merit bonus is on the five things. What happens in so many companies today, they create a program promoting something like “primal leadership.” To what end? What’s wrong with making branch managers better branch managers?

The most important thing is to define what success is and the four or five major things you need to do to achieve it. Then you create all of your HR systems around a job. Rather than saying you have one leadership training for everything, one performance review for everything, you have role-based ones. The job of a CFO and a restaurant manager are different. Why would you have them going to the same class? Teach employees how to do their job. It’s almost impossible to change who a person is, but it’s practical to change what a person does. If you coach a children’s basketball team and you say, “Joey, I want you to be aggressive,” he’s probably not going to know what to do. But if you say, “Joey, I want your shoulders never to be less than 12 inches from Timmy,” he knows what you want him to do. So tell Joey what to do rather than what to be.

All: Why aren't more companies doing this? Is it because it requires more effort?
Hall: I think people aren’t doing it because no one’s thought of it. Many companies have these enormously complex competency models, and they largely don’t work. It should be so simple. Just tell people what to do.