Without going into theory, let me start by saying that there are many different types of management styles as perhaps you may have experienced yourself throughout your working life. The one that relies most on sanctions is the autocratic type of management. Often the sanctioning manager has little or no trust in the employees. Any initiative by the employees is considered a threat to the manager, hence highly limiting creativity and innovation. Had Zuckerberg been an autocratic leader it would have been the end of Facebook, as the creativity of his team is one of the main ingredients of the success of Facebook.
Nowadays in a highly competitive and fast-changing environment where innovation is important to keep up with the market, autocratic management is becoming increasingly not in sync with the requirements of the day. An autocratic manager operates under a set of structured rewards and punishments and often relies on a small set of employees with whom trust has been achieved. Rewards are often for the small team the manager likes and punishment for those who are in his or her bad books. That is not a recipe for success.
A recent study of close to 3,000 leaders of a large financial services company shows that the more a leader is bad, the less the employee is satisfied or engaged and the less successful that agency is. In fact, in one of the agencies I worked, the head used to terrorize the employees. Needless to say, this institution was not effectively fused with high performance! A trait of this punishing management was a high level of insecurity.
The head of the agency did not understand the entire operation and terror became a means to hide his own inabilities. Often when sanctions are applied, the problem lies with the management rather than the employee.
The problem with sanctions is that instead of bringing the employees to the directed path, it makes them scared. Employees thus become unable to progress in their work. Work done under the pressure of punishment will not be as good as that done in collaboration with the employee. Collaboration indeed is the key word. A manager should work along with his/her team and the team members should work with the manager in a top to bottom and bottom up fashion. This makes the employees satisfied, engaged and committed in their work. The more satisfied and engaged an employee is, the better the customer satisfaction of the agency and the higher the revenue of the company. For better customer service, it is better to avoid sanctions.
Some would justify sanctions in structures where work quality is stringent, time is limited, managerial power is challenged by employees. In such situations, if management adopts a positive and collaborative attitude, sanctions are not even necessary. Cases of dishonesty, major faults, theft, lack of candor and attitudes that contradict company values, may call for sanctions. To prevent such deviations, leaders need to set norms and values.
If you are in management: Authority can be expressed differently. Instead of sanctions, try investing in building up a real team. With a strong team spirit, the realm of fear dissipates and positive feedback sets in. You will understand the root of problems and better address issues without sanctions.
Have an open discussion system. Conversational communication will help you build trust. Interaction bring in inclusiveness allow the management to create robust processes and collaboration.
Finally build a corporate culture, with strong and shared values, code of ethics and a corporate integrity that will lead your business to success. And of course beware of sanctions!