Symptom: People feel that their performance doesn't matter.
When there are no personal consequences to performance (good or bad), it's tough to feel motivated. People think, "We should I work extra hard, when so-and-so does just as well with no effort?"
People may see their peers goofing off without being subjected to discipline, or others working extra hard for no apparent reward. In some organizations, everybody gets a "good" on their performance appraisals regardless of their performance. In the worst case, the organization doesn't even measure performance. A classic example is the union (and government) seniority system where there is no incentive to perform well since all rewards are based on seniority.
If an individual is not performing adequately, management must deal fairly but firmly with the individual. Management must find a way to measure performance, and then link rewards (and punishments) with those metrics.
With regard to measurement, the first step is clear objectives. To perform well, everyone needs a clear understanding of what constitutes success -- that is, well-defined and feasible objectives. This begins with a clear definition of deliverables, and may include target levels of performance (i.e., benchmarks, or a performance agreement).
Rewards (extrinsic and intrinsic) must be fair and tied to performance. This includes fair pay and raises or bonuses based on success. Rewards need not be strictly monetary (although we all like money). Management should be creative about intrinsic rewards such as recognition, status, growth opportunities, trust, and empowerment.
Punishment (negative rewards) can be important too. Management must deal fairly but firmly with performance problems to keep everyone else motivated. In extreme cases, termination pursued if objectives are repeatedly not met. Dealing with performance problems firmly will enhance everyone else's motivation, because they will see that their performance really does matter to management.
