Incentivizing Unethical Behavior

Blog - Fishing for MoneyIncentivization programs work.  They really work.  The problem is they work all too well.  The single biggest problem with incentivizing an employee is that they become loyal to the incentive, not to the organization.  The actions of the employees then undermine exactly the results the incentivization scheme was created to boost.  This is why you often see a proliferation of management policies, bureaucracy, and integrity trainings spring up after incentivization schemes are introduced.  Because they need to be policed for the gaming that inevitably occurs.

Here are just a few of the numerous examples from my own experience:

–  I once had two managers in a row that refused to turn on the air conditioning in the sweltering summer heat.  They would tell their employees that it needed repair or a new system and that they were working to get that approved.  Employees and customers would leave the building exhausted, covered in sweat, and feeling terrible.  Why would a manager treat their employees and customers, the very people they depend on for the success of the business, so poorly?  The two managers in questions did it to keep utility costs low and increase the likelihood of their budget staying within margins so they could get a bigger bonus at the end of the quarter.

–  A notoriously poor-performing employee handed in their resignation.  The manager then convinced them to stay and promised that she would help the employee get promoted.  With the resignation withdrawn, the manager promptly transferred the employee to another center in order to keep her turnover ratio low to ensure a bonus that quarter.  The poor-performing employee continued their poor performance at the new center and was let go soon after threatening physical violence towards other employees.

–  A manager artificially raised her sales figures in the system to receive higher commission for her and her team without any real new revenue being generated.  Because the numbers looked good, the manager received large amounts of praise from upper management.  Other managers in the same position found out what was happening and then followed suit and the problem spread within the organization until some of the managers left and the new people coming in uncovered what had been happening.  By that point, tens of thousands of dollars had been lost in undeserved bonuses, incorrect strategic decisions based on false numbers, and the loss of frustrated employees with higher levels of integrity.

Stories like these are rampant throughout the business world.  We have all experienced the manager or sales person that over-promises, games the system, or only works for the bonus rather than work to support and develop their teams.

Incentives are great for short-term gains in the numbers, but at what cost?  Are the numbers being delivered real?  How much are they hurting you in terms of customer trust and employee satisfaction?  The reality is that your incentivization scheme is actually encouraging unethical behavior and hurting your business in the long run.

If you have to incentivize employees to do their job then you’ve either hired the wrong person or don’t have a mission at your company worth following.  First look at what your company is doing in the community and in the world.  Are they creating value?  Does your organization operate in such a way so as to act as a model for others?  What positive contributions does it aspire to make?

If you have good answers to these questions, then you have an organization people want to be a part of.  It’s an organization that delivers results because the people working there see the value in what they do and want to help the organization accomplish its mission.  Once that mission is in place, all you need to do is hire the people who are passionate about it.

Related Articles:

Why Your Incentive Plan Cannot Work

Daniel Pink’s TED talk on Motivation

Paying People to Lie

Balancing Pay and Commission


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