Unintended consequences...again.

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Looking at bonuses, I'm always amazed at how many bonuses create destructive behaviour in an organisation. e.g. fuel purchasing get a bonus for lowering the cost of fuel, even when it damages plant etc.

The Garuda crash the other week, which killed quite a few people was due to the pilot landing the plane at twice the approach speed that he was supposed to.

Turns out this morning that their pilots are paid an additional 3% based on their fuel consumption, and this guy was trying to get his bonus...at the cost of a plane, and a number of passengers.
 
Shannow, managers spend a lot of time devising for incentives to promote the kind of value added actions that will lower costs, improve quality, etc. Sometimes you have failures: like the examples you mentioned. Had the pilot been successful, and he must have been in the past, he would have saved a few dollars and everybody would have been happy.

The plant example is about a flawed incentive program - clearly when the incentive was cooked up, the management did not take the whole picture into account (maybe due to politics or incompetence).
 
Like the old saying, "Management gets what they reward".

I work in a lab. All management looks at is the chargeable time we spend working on projects that we quote on. So now we have a whole crew of people that don't clean up after themselves, don't put away tools, and don't bother maintaining or repairing instruments.... what a wonderful environment to work in!
 
You guys would love the books by Alfie Kohn, "Punished by Rewards" and "No Contest". Punished by Rewards systematically deconstructs the myth that rewards do anything positive, and No Contest does the same for the idea of competition as an economic or performance driver. He says there are literally hundreds of studies over the last several decades that show that rewards do not work, but we still cling to this idea.

Shannow - are you familiar with the work of Dr. Deming? If not, I can assure you you would find it fascinating. Get his videos if you can.
 
Years ago I worked for an electrical wholesaler (seller of electrical goods). We had several outside salespersons at each branch with assigned accounts, mostly electrical contractors as opposed to industrial or government accounts. (One salesman who did not handle contractors at all had all the other two classifications of accounts.) These salesmen called on their accounts in person and typically did most bidding and selling.

During bidding for the electrical components of large jobs, all the electrical contractors would bid to the general contractor for that job, and their bids in turn were based on our and our wholesale competitors' quotes to them for the materials. On a large job, there would typically be a "power" package including panelboards with circuit breakers, and a "lighting" package with all the lighting fixtures and lamps.

The problem is that with all the electrical contractors bidding the same jobs, our salesmen were indirectly competing with one another. If one of your accounts got the job based on your materials bid, you got credit for the sales, of course. We were supposed to quote all contractors the same price for the materials packages, but individual salesmen were sometimes unscrupulous enough to fudge this for their own accounts.

For each job bid one particular salesman would be chosen to view the blueprints and other details at a local service that handled this and then start the ball rolling with the manufacturers to get our costs for the materials. The winning contractor would not necessarily be an account of the salesman who had originally done the work on that job package. Obviously, no one could know in advance who would win the bid. The whole job bid process also meant that salesmen were tied up in the office most days when their very job was to visit their accounts. There seemed to be a lot of duplicate efforts and working at cross purposes in these processes, but our competitors in the electrical wholesale industry were all generally following the same pattern.

In my quotations position, which did not handle job bids, I proposed to the manager that he consider setting up a position to do nothing but job bids to free the outside salesmen to call on accounts and handle their other tasks. I was willing to be that person. He was not interested.

Before I left, there was a great deal of talk within the company of eliminating outside sales positions and going to uncommissioned inside customer service reps to handle all job bids. With this change, each branch would have only one outside sales rep to call on accounts in person, and he would not be involved with bids or quotes. His job would be mainly to "press the flesh" and get the company exposure. Most manufacturers likewise had only one rep in the territory to call on us as a distributor, and some other wholesale industries including plumbing and electronics had done the same thing. Those whose career goal had been to become an outside salesperson, but had not made it yet, heard these rumors, and some left the company when it would not dispel them.

I had mixed feelings about the rumors, but I had decided to leave regardless. It appears that the company has kept much the same arrangement as it had before I left. But not having several outside salesmen competing with one another would have to have some benefit for the company, if it ever were to adopt that system.

I'm familiar with some of Alfie Kohn's material. He directs a great deal of his writing toward schools and children's activities, where he advocated not keeping score in sports games, not keeping track of school valedictorians, etc. The problem is not too much competition in schools, but too little, since most public schools have gone the self-esteem route. Some competition is good, and eliminating it all is a feel-good measure when it comes to kids. We're all competing with others and especially with people in other countries, like it or not, and our kids need to learn to cope with that.
 
I agree that we need competition & incentives. Just look at how your children respond to punishment & rewards. You'll sometimes find a bad egg, but that's no reason to get rid of bonuses. Sometimes, though, it seems that employers tend to reward the wrong behavior.
 
A lab tech had a Web site a few years back, before the term "blog" was around.

Kind of an on-line diary. I believe it has disappeared.

The lab tech's job was a part-time affair while attending college. One of those 8-buck-an-hour jobs lusted after by many college kids due to flex-time.... come in when yah' can and go to work.

Task? Test urine samples for drugs. The writer told of the constant push to hurry with little regard for accuracy.

Also mentioned co-workers and how many were lackadaisacal in their job performance.

Mentioned a brief stab at incentives... do X amount per shift and receive base pay. X plus another X amount gave an extra 25-cents per hour etc.

The incentive was dropped as the complaint rate rose... so many false positives sent to customers, even more than the norm, and the lab had to revert to their old tried-and-true ways with fewer folks falsely accused of having drugs in their bodies.
 
When you set up a system (pay structure) which can be "gamed", you will attract people who are interested in gaming systems. The people who are interested in gaming systems will game the system more successfully than people who have other motives, such as "doing a good job".

Pre-existing management, which set up the game-able system, will then reward those who gamed the system for personal gain, as opposed to those who were interested in the greater good of the company. At this point the greater interests of the company sink to lower and lower levels of employees, who have not yet learned "how the game is played."

Pretty soon the idea of doing anything purely for the good of the company, and by extension society, just plain disappears from the company because it is full of people who think that this is a quaint, foolish idea, held only by idealists, suckers, or naive lightweights.

Does any of this sound familiar?
 
I once worked in a Truck Tire retread plant, they ran two shifts, the shift that processed the most tires got a bonus. After about the first week, I discovered our tires were requiring more than the average # of repairs (which slowed us down) The night shift were switching Tags on customers tires, so they only had to process tires that did not need repair. I reported the situation to management, and the night shift lost their weekly bonus. And we ALL got S#%@.
About two weeks later, I noticed that again the tires were requiring more than the usual number of repairs. Rather than report again, we just rejected more tires as un-rebuildable, or processed the tires without repairing nail holes (Good chance of a casing separation down the road)
I left the place about this time! Turned out, the night shift were 'Spiking' our Tires to create more repairs to slow us down, and management did not care, as the customer was charged per nail hole.
 
I work in a lab. Kinda like Blackstone, but we analyze minerals instead of oil.

Some elements are trickier to detect than others, so the tricky ones are handled by a few senior staff while the routine ones are given to the newer folks.

Senior staff end up running fewer samples per shift because of aforementioned trickiness and get in trouble with manager for low productivity. Now senior staff complain that they don't want to analyze difficult elements anymore and start running easier stuff when they think I'm not looking.

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Does any of this sound familiar?




Best one here was the Police Assistance and Emergency lines that gave Pizza vouchers and movie tickets for people who processed the most calls.

The "winner" ultimately was so efficient that he didn't get return numbers or addresses...guess it prevented all those costly ambulance, fire engine, and police visits.
 
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