Editor's Note: Incentives are a tool. When we mis-apply them and the consequences are not good, the blame typically lies somewhere else - and not with the tool. Jim Brennan expounds...
Incentives are not the cause of bad reinforcement programs, any more than forests should be blamed for the existence of warfare. Some opponents of incentives show the same thinking that would condemn trees because they may be shaped into spears, arrows and catapults instead of being turned into sturdy houses or inspiring artworks. A hammer can be used to build or to destroy. The instrument is not at fault if the application is misused. Then, it’s not the material but the defective treatment that should be criticized.
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 pontificating.
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 an independent compensation advisor with extensive total rewards experience in most industries. After corporate HR posts and consulting CEO roles, he was Senior Associate of pay surveyor ERI before returning to consulting in 2015. A prolific writer (author of the Performance Management Workbook), speaker and frequent expert witness in reasonable executive compensation court cases, Jim also serves on the Advisory Board of the Compensation and Benefits Review.
Creative Commons image "Jewellery material 9" by Mauro Cateb
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