Organizations today are generally managed by either the “Control” or the “Caretaker” Model.

The Control Model is based on the military where rules and chain of command are the hallmarks. Pure forms of this model are rare today and are consistently attacked by today’s leading management gurus. Among the many problems with this form of management is that it is both inefficient in use of resources and totally ineffective with the Generation X/Yers.

The Caretaker Model is also generously known as the Commitment Model. Most management gurus prescribe some form of this model. All forms derive from Frederick Herzberg’s theories on motivation. He says “motivator factors that are intrinsic to the job are: achievement, recognition for achievement, the work itself, responsibility, and growth or advancement.” Other associated caretaker concepts include:

• Empowerment
• Self-managed teams
• “Money doesn’t motivate”
  
• Individual autonomy
  
• Trust
  
• Job enrichment, especially vertical job enrichment
  
• Individual accountability
  
• Flexible hours
  
• Job rotation
  
• Open and visible business information
  
• Minimal critical specification of rules
  
• Variance control at point of origination
  

What is wrong with these concepts? Generally nothing! It’s just that no combination of the above ideas will come close to realizing an organization’s potential.

In addition to the Control and Caretaker Models, consider the Performance Model of management theory: 

1. Emphasis is not on control, empowerment, or any traditional management focal point. 
   
2. Key Performance Indicators and other measures are used to facilitate Fact Based Management. 
   
3. Everyone in the organization is preoccupied with performance. They are owners and are rewarded for organizational gains through a Gain Share Plan, possibly in the form of a Virtual Performance Company™. 
   
4. Key core value adding linear work is covered by a Direct Incentive Plan that changes all traditional dynamics and moves individuals out of the Entertainment / Entitlement Zone to the Performance Zone. 
   
5. Gain Share and Direct Incentives are uniquely linked to reinforce each other, and the design effort is socio-technical. 
   
6. Incentive Baselines are set using 6 weighted rating factors including culture & business mechanisms. 
   
7. Situational Sculpted Pay Curves optimize incentive impact. 
   
8. A Continuous Improvement System works in concert with the Pay System. 
   
9. Non-value adding work naturally disappears. 
   
10. The underlying principle is, “When a group of people work in concert to advance the business, a by-product of the effort is a better functioning social unit.”
    

Profound differences between linear and non-linear work must be accounted for in any management system 

• Linear work is observable, measurable, and generally repetitive and unstimulating. 
  
• Non-linear work cannot be measured through observation. It is generally creative, varied, and stimulating. 
  

Most management gurus solve the linear work problem by pretending it doesn't exist, eliminating it through automation, or camouflaging it with things like vertical job enrichment. The fact is there will always be linear work, and much of it is critical to an organization's bottom-line performance. 

For those doing purely non-linear work, the Herzberg concepts are generally valid. However, in many instances they are not enough. Take the example of an Engineer who is doing totally creative design work and still sneaks out of work for half a day to prepare his dirt bike for a weekend race, or the Ski Instructor who plays computer games while he should be updating his student plans. In today’s world, there is always something more interesting to do.

Linear workers, who toil very hard for no extra money, are under attack ... from other people, and even from within. The notion is: “Why am I busting my tail to make some owner (or executive) richer when I could coast like Susie, have some fun, and take home the same pay.” organization performance entertainment factors as compared to performance factors have to leave at 2:30” … even if backlogged with critical work.

One design option for Gain Share is the Virtual Performance Company™. The idea is to build an organization within an organization. Anything from a small Work Group to a large division could be a virtual company. Virtual Revenue and Virtual Expenses are used to calculate Virtual Profit or Gain.

To get the right VPC mindset, ask yourself this series of questions:

1. If you were going to outsource a functional area of your organization, such as billing or transcription, would you compare your costs and value or product / service to the costs and value of the outsourced work?
2. If you were going to double the size of a functional area and sell your services or product in the open market, would you first estimate expenses and revenue of the new enterprise?
3. Can any company perform well or 
4. Would it help if employees in any enterprise were motivated, and also thought and acted like owners?
5. If you do neither 1 or 2 above, would it still make sense to create formulas for Revenue and Expenses to be used to calculate Virtual Profit to gauge performance?
6. Would it then make sense to share exceptional gains in Virtual Profit with associates thereby transforming everyone into an owner?
   

 If you answered yes to these questions, you should learn more about the Virtual Performance Company™.

Professional or Entrepreneur Group Design Criteria include: 

1. Is simple to understand pay system via words, numbers, and graphs 
   
2. Insures that bonuses are truly earned by staff 
   
3. Protects against staff bonuses caused by Professional / Owner effort or initiative 
   
4. Assures that historic trend, stretch target, and budget are exceeded before bonus is paid 
   
5. Compartmentalizes non-professional gain 
   
6. Focuses on staff controllable gain on both the revenue and cost sides 
   
7. Energizes linear work with Direct Incentives 
   
8. Incorporates professional objectives and ideas into the design 
   
9. Assures if bonuses are earned by individuals, a commensurate gain goes to company 
   
10. Embodies the message: “Fair to Individuals & Fair to the Organization.” 
    
11. Utilizes regular brief and graphic update meetings to assure alignment 
    
12. Includes Continuous Improvement & Redesign Criteria 
    

Expenses are identified expenses of the VPC including employee cost. For Revenue, it is ideal to have a linear measure such as accounts processed coupled to a financial measure such as 8% of Net Revenue. There is a Step by Step Process and a flexible Key Performance Indicator Model to facilitate design & implementation. 

Everyone can and will think and act as an owner!