You get what you pay for
I am reminded far too often that you must be very careful how you incent people. You may not always get the outcome you want. Here is an example from a leadership program I attended almost 10 years ago.
You work for a company that sells “red marbles”. Unfortunately, the only supplier of marbles ships mixed boxes of red and white marbles. So, your company created a special paddle to catch marbles from the mixed boxes. the paddle has twenty holes in it, each one just a bit smaller than a marble. This allows a marble to settle in the hole. the paddle can not distinguish a red marble from a white marble so your company created an incentive plan for workers.
We only sell red marbles. We don’t want any white marbles. You are to use these paddles to fetch marbles out of the mixed boxes. The fewer white marbles you have on your paddle, the better. The person with the fewest total count of white marbles over the course of each shift will get a bonus.
You and the rest of your shift proceed to plunge the paddle into the boxes and lift out the marbles, one sitting in each of the holes. The “quality control staff” count the number of white marbles and keep tally for each worker. You feel pretty good when, of the 20 holes, you have only 5 white marbles. Some times you have 10 or more but for most of the shift, you keep a pretty low count. At the end of your shift, you have filled and sealed 12 boxes with red marbles. You notice that you have the most boxes ready to go off to shipping. You are guaranteed the bonus only to discover, a worker who didn’t fill a single box for shipping, gets the bonus. The next day you and your colleagues all watch yesterday’s winner to see what they did differently. You watch with amazement as the person plunges the paddle into the mixed box and then carefully tips it sideways as they pull it out, dumping all the marbles back into the box. The quality control staff mark down “zero” for the number of white marbles on the paddle.
Obviously, wanting “red marbles” but scoring “white marbles” is a bad idea. If you reward for behavior other than what you want, you are likely to get what you reward and not what you expect; but this is exactly what many companies do !
This is so obvious that it appears to be completely beyond the comprehension of many employers.
I read a recent example on the internet. The company wanted to improve customer satisfaction with new sales. They realized that often the customer needed help after the sale. The support team was forever going in and helping customers use their newest purchases. The support costs were high and customer satisfaction with the sale was low.
The company created a bunch of new sales tools to help sell products in predefined bundles. So, the sales people went out and sold the bundles. It was great because the sales people were making bigger sales with the bundles than before with the individual products. Customer satisfaction did not improve and the support team still had to go in and help the customers with their new sales.
The incentive to the sales people was still to sell as much as possible. There was no incentive (or penalty) for all the needed support or the customer satisfaction rating.
OpEd: To be honest, it’s hard to incent “sales people” to do anything other than sell because “sales people” in general are motivated by money and sales make the quarterly reports look good which makes analysts happy and makes stockholders happy. So, if the company is all about selling, then that is what they incent and that is what they get. The “savings” side of the equation is much tougher. It’s easy to tighten the belt but eventually all the “easy” blood has run out of the turnip. Eventually, there is no more “efficiency” to be gained. This is where attributes like customer satisfaction, customer loyalty, and repeat business improve the bottom line. Just don’t try to get that from “sales people”. … (Note: “sales people” is in quotes for a reason!)
