By Janice Molloy
When economic times are tough, businesses tend to focus on boosting employees' productivity--on accomplishing more with fewer people. With the current high levels of unemployment, some organizations rely on fear of layoffs to "motivate" their workers. Seeking a more positive spin, others may turn to incentives. But as explained by Dan Heath and Chip Heath in "The Curse of Incentives," published in the February 2009 issue of Fast Company, incentives "are effective, irresistible, and almost certain to backfire."
The "Fixes That Backfire" systems archetype (also referred to as "Fixes That Fail") commonly occurs when people think they have solved a problem, only to have it recur with a vengeance later. In their article, Heath and Heath give several examples of how incentives produce their intended effect in the short run while causing serious collateral damage down the road.
For example, NFL quarterback Ken O'Brien was notorious for throwing interceptions. In an effort to boost his performance, one team wrote into his contact a financial penalty for each pick he threw. The provision had its intended effect: O'Brien threw fewer interceptions, not because his accuracy improved, but because he threw far fewer passes than before. Presumably, this lower number of attempts adversely affected his teams' ability to move the ball and, ultimately, score points.
The authors attribute the problem of failing to anticipate the side effects of our policies to something psychologists call a "focusing illusion." Basically, by focusing on one variable--such as interceptions--managers fail to take into account the impact of a particular action on other variables in the system.
So, what light can a systems perspective cast on the incentive trap? Understanding the "Fixes That Backfire" archetype can help us:
- Better define the problem (in this case, the problem wasn't interceptions but not enough completed passes)
- Clarify the goal of any proposed action (improving accuracy)
- Be aware of possible unintended byproducts of policies (when you penalize the quarterback for interceptions, he will throw fewer passes)
- Ensure that we're addressing the underlying problem rather than a symptom (improve the quarterback's accuracy through training, the quality of the receivers, the protection from the offensive line)
- Identify a variety of potential fixes (rather than penalize for interceptions, reward for completions; hire a quarterback coach; reevaluate the game strategy)
- Test actions before, during, and after implementation for counterproductive effects, and
- Measure the impact of your intervention
While taking these steps may be time consuming, the alternative is investing in solutions that don't achieve their intended goals. And that's a game plan that no team can afford to follow.
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