As the iconic Silicon Valley computer hardware firm Hewlett-Packard (H-P) discovered to its cost in the mid-1990s, the road to performance and reward hell is sometimes paved with good intentions. For years, H-P had prided itself on having an inclusive, high-trust work culture – known affectionately as the ‘H-P way’. During the 1980s, H-P was lauded as an archetype of high-involvement people management. H-P's decision-making processes were inclusive and democratic, and its workers were rewarded generously via traditional ‘merit’-based pay increases and egalitarian profitsharing and employee share ownership arrangements. The company also avoided the use of executive bonus payments, a further signifier of its egalitarian approach to reward management.

Then, in the early 1990s, under growing cost pressure from local and international competitors, and in a bid to lift plant productivity and performance, H-P rolled out a range of ‘alternative’ pay plans in more than a dozen of its American and European plants. Senior plant managers leapt at the chance to ‘re-engineer’ their performance and reward management systems and proceeded to install a range of new pay practices, chiefly involving skill-based pay, team incentives, gain- or goalsharing and other group incentives, as well as some individual cash incentive plans. In several plants where teamworking was in place, peer evaluation was also introduced as a means of keeping team members on their toes. In large part, the new measures were intended to support the adoption of self-managed teams and a focus on team effort.