Reinforcing Loop in Action

A system represents a complex dynamic between its various sub-units. One of the most visible parts of a system is the reinforcing loop. The reinforcing loop is perhaps most visible because it works on an incremental basis. It is that fundamental element in a system that defines growth and increment. As defined by Senge, a system is said to be in a reinforcing loop when each small action builds on the other. This snowball effect of each action building on the previous one can either lead to a virtuous cycle or can actually lead to decline of the system.

Most often reinforcing loop, perhaps because of it name, generates a perception of it being that element of the system that fosters growth, thus giving it a positive connotation. In systems thinking however, the concept is far broader. It refers to those elements or actions within the system that lead to amplification and maintenance of certain behaviours. This amplification does not necessarily mean that the behaviour that is generated is most definitely suitable for the system in the long run. For instance, within a team there might be an implicit assumption of not questioning the leader. This behaviour in the past has delivered good results for the team in terms of faster and more efficient decision making. These early successes act as a reinforcing loop. People continue to not question the leader and this for some time generates great outcomes. Thus the behaviour becomes entrenched. A possible downside of this may be lack of diverse ideas.

What such an assumption fails to take into consideration is the dynamic complexity of the system. Certain cause and effect patterns may not be immediately visible and this delay may lead to continuance of the reinforcing loop. However, the same action can have very different action on the short and the long run. Thus the same reinforcing loop that causes growth in the short run can lead to accelerated decline in the future.

I saw this play out in one of the organisations I was working with. Let me begin by systemically analysing the organisation. Being in the in an extremely competitive sector, the work culture at the organization paid a lot of emphasis on keeping the customers happy. The metric for measurement of the amount of customer satisfaction was the nature of reviews the client facing team members got from the guests. The more positive the review, the better was a performance appraisal.  There were a lot of levers that the organisation used to generate positive reviews from the customer. For instance, those who got a great review from the guest got more rewards and received higher variable pay. This change in approach of linking customer satisfaction with the R&R system proved to be highly effective. Over time, it seemed that the performance standards of the team went up. Thus the reinforcing loop seemed to be working. With increase in rewards and greater recognition of the performance, the efficacy of the team was improving exponentially.

The initial goal thus was creating customer delight. The underlying assumption of the leadership team as that of members were sufficiently rewarded, they would invariable perform well. Rewards were thought to be the most powerful motivators. As mentioned earlier, the team did extremely well initially. From the organisation’s reward perspective, the remuneration was good. Additionally the employees also had the intrinsic satisfaction of serving the client and receiving positive reviews. However, gradually the attrition in the team had also increased. Thus the presenting problem was addressing the ever increasing attrition. Despite being one of the most glamorous and the most well paid teams in the organisation, the attrition rate was very high. Nobody seemed to stick to the job, while the leadership and those in other teams really did look up to the work that members of the team in question did.

As I tried to understand the various reasons, it seemed that it was this very reward system that was leading to attrition. The constant focus on the team, the high value attached to rewards and the pressure to achieve outstanding reviews was impacting the team in two ways. First, the sheer stress of constantly being as good as the other team members was resulting in burnout. Secondly, it was also the causing severe competition between team members to the extent that it was vitiating the team environment. Thus, while great reviews were leading to organisational behaviours that should have increased the likelihood of good performance, the system and in particular, a sub-system (i.e the employees) were also generating balancing feedback. The attrition and the resultant decline in performance of the team was due to the fact that the goal of great individual performance did not take into consideration the impact such a goal would have on team dynamics. Since there are delays in a system and causal relations are not easy to decipher, it then becomes difficult to see that it was one of the interventions that was introduced to enhance the system was actually creating disturbance and preventing the system from functioning at the optimal level. The rewards had done their job of enhancing the efficiency. However, with human actors involved, there was only a limited extent to which performance and productivity could be built into the system. Attrition can be seen as balancing feedback since the exit of the team members was the systems attempt to maintaining sustainable performance.