When Pay-for-Performance Goes Bad

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?

Posted on September 9, 2008 by Frank Roche
Filed Under Pay, Performance

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Ron Ulrici 4 months ago 1 point
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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!

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Frank 4 months ago 1 point
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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.

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