There’s a very intriguing article in the NYT this morning titled “The Pitfalls of Linking Doctor’s Pay to Performance.” It’s a cautionary tale about the Law of Unintended Consequences.
When you’re designing your incentive plans, think about this. Are you emphasizing what you want? And what are the potential risks?
{ 4 comments… read them below or add one }
Frank, I worked for a company that had quarterly bonuses with payouts measured on results against goals set. In the last week of the quarter, production almost came to a halt because everyone was rushing around trying to complete their goals. I know that the boss didn't intend for this to happen!
I worked at a place like that too. We had bonuses for machine cycles. Guess what? Dry cycles were as good as product cycles…nutso. We got rid of that metric in a hurry.
Frank, I worked for a company that had quarterly bonuses with payouts measured on results against goals set. In the last week of the quarter, production almost came to a halt because everyone was rushing around trying to complete their goals. I know that the boss didn't intend for this to happen!
I worked at a place like that too. We had bonuses for machine cycles. Guess what? Dry cycles were as good as product cycles…nutso. We got rid of that metric in a hurry.