Saturday, October 11, 2008

You get what you pay for. The tragedy of the incentive plan.

Pay for performance is a big deal in American health care, though I have a hunch enthusiasm is already waning.

It won't work.
for.How Hard Could It Be?: Sins of Commissions, Marketing and Advertising Article - Inc. Joel Spolsky

.... back to Austin, the Harvard professor. His point is that incentive plans based on measuring performance always backfire. Not sometimes. Always. What you measure is inevitably a proxy for the outcome you want, and even though you may think that all you have to do is tweak the incentives to boost sales, you can't. It's not going to work. Because people have brains and are endlessly creative when it comes to improving their personal well-being at everyone else's expense....
Talk to anyone who's designed an incentive program for a sales force. Incent product A, and product B will go down the toilet. That's ok if you want to kill product B, not so great otherwise.

Sales guys are honorable mercenaries (I love 'em for that), but surgeons, physicians, nurses, teachers, professors, principals, and priests will all do more or less the same thing.

If you want to change behavior look at cultural reinforcement, look at changing systems to reduce error and make it easy to do the right thing, make it possible for people to privately compare their work to the mean. Work on a culture of excellence.

Don't expect incentives to do the work for you.

PS. I think Spolsky is deluding himself in his conclusion. Otherwise, a good essay.

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