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Driving Counterproductive Behaviors
Submitted by Leslie Allan on March 21st, 2014
How good are the employee incentives in your organization? I believe there are key principles for designing an effective rewards system. Best of breed organizations take these principles into consideration when they design or modify their incentives scheme. Did you know that poorly designed incentives can actually motivate the wrong behaviors? So, while your change initiative or training program is instilling the correct or best way to do things, the reward structures set up in your organization may actually be encouraging the opposite behaviors.
A common problem I see arises from the tension between the setting of team objectives on the one hand and individual objectives on the other. Challenges occur when a team incentive is outweighed by individual rewards. In one case following a training course on creativity, employees were encouraged to share ideas by the offering of a new award. The prize consisted of a plaque presented to the team that turned their idea into a viable and profitable new product.
The innovation program in the end faltered because the earlier “Employee Suggestion of the Month” scheme, with its cash prizes, was left running in parallel with the new scheme. The lesson here is that if you are going to offer team incentives, make sure that you look closely at what benefits currently exist in your organization that reward counterproductive individualistic behaviors. Once you find them, either abolish them or modify them so that they no longer conflict with your team incentives.
There exists a similar tension between productivity and quality. Many call centers espouse the value of customer satisfaction and conduct training programs for customer service operators to promote this. In some cases following the program, the existing incentives system continues to reward operators for achieving productivity targets. To reach these targets, operators either coerce some callers into closing the call or prematurely pass problems up to second tier support. Such rewards reveal the true “values” that the organization holds dear, paying only lip service to other espoused values, such as “customer service” and “quality”. This example demonstrates the importance of working out all aspects of your organization’s incentives scheme before training participants return to their job.
In other cases, the incentives may look effective, yet also produce damaging counterproductive behaviors that can remain undetected. In one software company, software testers were paid $5 for every software defect (or bug) that they found. After the software testers attended a quality testing training program, the number of detected defects rose dramatically.
This may seem like a success; however, the company was beginning to suffer under the financial strain of having to pay out such a high number of bonuses. A little detective work revealed that it did not take long for the testers to realize that if the software developers introduced extra defects in their work and the testers agreed to split the bonus with the developers, all would be financially better off. Teamwork is a worthy ideal; however, this is not the type of teamwork that the company had banked on.
How could managers redesign the rewards system so that it encourages productive teamwork? Here is one option that has worked well for many companies. Managers restructure the software developers and testers into product teams. They then allocate to each team the objective of reducing the number of software defects reported by the end users of the software; that is, the customers. For teams meeting their targets, the company awards a one-time bonus and a congratulatory note during a special award ceremony. The added advantage of rewarding this kind of team achievement is that all team members are focused on the external customer.
These examples illustrate how poorly designed rewards can end up costing the business more than it recoups in extra productivity and efficiency. With a little thought and redesign, a dysfunctional incentives scheme can be transformed into a scheme that works.
Have you experienced an incentives scheme that did more damage than good? What was the organization’s response? Please share your examples of rewards systems that backfired and those that have worked.
Do you need help with implementing your new employee incentive scheme? Many implementations fail because the change process was not handled well. If you need to keep managers and employees on board throughout your organization’s change journey, get a copy of my Managing Change in the Workplace guide and workbook.