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When Pay-for-Performance Goes Bad
Sep 9There’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?
About the Author
Frank Roche
Frank started IFRACTAL over 7 years ago with Sarah Chambers. Together, they've created HR communications and HR software for some of the world's leading companies. Frank is also studying Flamenco guitar and origami.
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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!
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.