How To Find Unintended Consequences in Your Incentive & Reward Program

$25,000,000 Bonus

A $1,000,000 mansion

What do these have in common?  Simple – they are things you would probably do something different to get.  You might sky dive, you might bungee jump, you might make a few more cold calls every day.  In other words they could influence your behavior if you were given the opportunity to earn them.

And they are huge awards.  So huge in fact, you might do something outside your normal comfort zone to earn them.  You might cheat a coworker, you might figure out how to scam the system, you might lie to a client. 

And that's a big clue that the program will have unintended consequences.  And trust me you don't want that.

Take a moment and look at yesterday's Dilbert cartoon…

Even the Pointy-haired boss has an inkling that something is amiss.

I know there is a lot of pressure to show an ROI and the only way to do that is to tie it some outcome, some metric.  Unfortunately, the typical response in order to ensure a positive ROI, is to have the program focus on a result (outcome) and tie it to a big award.  However, when the award is huge and it's based solely on a result, there is a natural tendency for participants to maximize their return and find a way to shortcut the process and get the award.  

Marry your outcome based goals with behavioral goals to keep the program in check.  The behaviors – the things the individual can control – should bear the weight of the program.

Putting too much of the award on the outcome communicates you don't care how they hit the goal – just that they hit it.

Ask the folks on Wall Street how that worked for them?