Lessons about the potential abuse of essentially neutral
elements also apply to total reward situations. Because incentives are powerful, they should be designed and
implemented with great care. People
react to the significant consequences they perceive resulting from certain
courses of action. Here is a story
about perverse incentives that makes the point much better than a lot of
The comp consultant finished his presentation about the new merit pay system to be implemented at the police force, where the performance of patrol officers would be evaluated against (among other variables) the accident rate in their assigned sector. The Chief stepped up to field questions, nodding to a grizzled veteran with his hand raised.
“Uh, Chief, so this means if the accident rate in Area 5 declines, I get a higher merit score that affects my pay raise?” The Chief just nodded. “Well, then, Chief, we just got to add a stop sign at the intersection of White Road and Route 14. I’ve covered that sector for years and it seems like I have to call out the meat wagon for collisions there every week.”
The Chief frowned. “Officer, after all the years you spent in that sector, why haven’t you ever made that request before?” The patrol officer smiled genially. “It was a hell of a good place to write tickets.”
What workers take from an incentive program may not be what was intended, so don’t be shortsighted when planning reward systems. Think beyond the horror stories to find the true lesson. Don’t blame the tool when it is badly used.
E. James (Jim) Brennan is Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. After over 40 years in HR corporate and consulting roles throughout the U.S. and Canada, he’s pretty much been there done that (articles, books, speeches, seminars, radio/TV, advisory posts, in-trial expert witness stuff, etc.), serves on the Advisory Board of the Compensation and Benefits Review and will express his opinion on almost anything.
Creative Commons image "Jewellery material 9" by Mauro Cateb