I'm afraid my work's bonus program will backfire.
January 9, 2010 8:44 PM   Subscribe

My work now offers bonuses if our performance meets certain (fairly high) standards. I'm concerned this will hurt more than it helps. Are my fears unfounded?

A very basic background, kept vague because I don't want to give any identifying details about my workplace: I work in a job that is not competitive in nature and does not have commission. Accuracy, organization, and attention to detail are very important, but not a literal matter of life and death, and most errors can be fixed. I work with a small team; I get along with my coworkers but we're not super close.

Recently, I learned about a plan we're implementing in which each of us will be eligible for decent-sized cash bonuses if we meet certain goals each month. Pretty cool, right? However, our goal is, in a nutshell, to achieve 100% accuracy each month.

I'm not sure I've ever been 100% accurate at anything. Doing perfect work for an entire month seems to me like a very lofty goal. 95% or 98% I could imagine, but 100% seems close to impossible. I suppose they need to set the bar pretty high so that they aren't giving away tons of money, but I'm sort of pessimistic about ever achieving this.

There are two specific concerns I have about this new plan:

1. I fear that meeting the qualifications for the bonus will turn into a standard expectation - a 37 pieces of flair, third prize is you're fired sort of thing. Like if we're generally doing a good job but only getting 90%, we're underperforming and our jobs might be at risk.

2. I'm worried that this will inhibit and break down collaboration among the team, since each member will be aiming for total accuracy in their own work. In the past we've all helped each other out when needed. One of my coworkers snotted at me recently because I made a minor adjustment to one of his projects, and he wanted to keep his projects under his control for accuracy/bonus-earning purposes. (Someone asked me to do it, and I figured I'd help out instead of passing it on all "not my job.")

Am I overreacting? Are either of the above likely to happen? Has anyone had experience with a situation like this, and how did it turn out? Any advice, anecdotes, or general talking-me-down would help.

Other information: I have been in this position for under six months. I want to stay at this job; quitting is not an option right now. I wouldn't mind meeting with my bosses to discuss these concerns, but I'm sitting on it for the time being to gather my thoughts.
posted by anonymous to Work & Money (12 answers total) 2 users marked this as a favorite
It sounds like your concerns could pan out, but you have no way of knowing until you wait and see what happens. Be watchful and take notes. Then you will have something to talk about with your boss, if it comes to that. But if it looks like it's not going well, it might be a better idea to talk to your coworkers first and approach the bosses as a group.
posted by amethysts at 8:59 PM on January 9, 2010

As someone who has been somewhat responsible for setting up an incentive plan in a professional environment I can begin by saying that establishing one is not a simple thing. As you've noted, there are contrary tendencies. Employees want the incentives to feel achievable and rewarding while management wants to do well by their employees but also guarantee that the benefit to the company created from the improved work that earns the incentive will pay for the program.

With that background, it sounds like this one has not been put in place well, specifically because it is not producing the desired outcome. Rather than feeling inspiration and opportunity it sounds like it has instead created doubt and misgivings, at least for you. At this point I think you need to consider two things:

1> If you are doubtful about achieving 100% accuracy will you do a better job striving towards that, or simply ignoring the incentive and simply working as you have in the past? It sounds like it isn't worth it for your career to allow the incentive to get in the way of your own personal work.
2> What stance do you want to take about how the incentive is impacting the team? It sounds like the responsible thing to do is to mention to your manager that because everyone is concerned about their own qualification for the incentive there is less 'taking care for each other'. It is not your responsibility to fix it however. If whoever manages you is receptive to the idea of changes or improvements then it is an opportunity for you to show some leadership.

What we found in our own experience was that the conversations about the intention and implementation of the incentives were equally important to what happened as the policies themselves. In our office we set a 'perfection' standard for the full incentive, but give partial incentives to performance that is excellent but not perfect. This ends up being a somewhat subjective thing in certain professional domains, but works for us. In some businesses that would be disaster and counter to the whole point.

As to the 'standard expectation' concern, I think you will always find that once you deliver a quality of work, that will be the expectation in the future whether there is an incentive system or not. If you really can't repeat the performance (or will do better next time for a clear reason) you need to let people know that as soon as possible. Else, whatever you did will be the standard for what they will expect to get next time.

I think that if you approach the bosses in a calm mood and express your concerns about team cohesion they will at least appreciate your taking responsibility for caring for bigger issues than just your own work.
posted by meinvt at 9:08 PM on January 9, 2010 [2 favorites]

If anything it will likely lead to less productivity as everyone will be focused on accuracy as job 1 instead of efficiency.

People, of course, will naturally take more time in order to ensure that they are more accurate. If this is something your bosses can accept, then fine. But I'd speak up now if you expect there to be repercussions if your volume goes down markedly in order to accommodate the stat of the month.

I have experienced things like this. The bosses at my work (I work in a call center) have stressed Average Handle Time as their preferred stat. This, in my opinion, leads to sloppier calls and more repeats as agents rush to get the caller off the phone instead of their issue resolved.
posted by inturnaround at 9:11 PM on January 9, 2010 [2 favorites]

Oh, yuck. Based on my experience in '100% is the standard' kind of situations:

It absolutely will have a negative effect long term if it is aimed at individual stats. Here's why: nobody can be 100%, ever. It's a fact. The best protocols have more than one person cross-checking and proofreading before the product is "done," and then a supervisor does a review. The second checker WILL find errors from time to time, but the odds of the first person making a mistake AND the second checker not noticing it AND the reviewing supervisor not catching it and kicking it back are pretty slim.

Now, let's say the first person loses their cash bonus if they make a mistake. The second checker doesn't want to be the one who brings that up, right? So they give it back to the first person so the first person can fix it, or they just silently fix it themselves. No problem, right?

Wrong. You're creating a culture where problems are not reported, errors are covered up, and the process can't be meaningfully evaluated for improvement. Also, you create a favoritism situation where one person's errors can be covered up, but a less-liked person's can be reported. The less-liked person can't really complain, since they did, after all, make the error.

The system you want is one in which people are not afraid to catch and report errors, either their own or someone elses. Because it's about the quality of the product and the effectiveness of the team as a whole, not about individual stats. Also, error reports provide clues to trends that indicate process problems that can be fixed.

I'd recommend rewarding the top 5 employees in individual accuracy rather than a fixed percentage goal, maybe. That would instill a little healthy competition and not discourage error reporting. If I did that, though, I might also reward the top error finder (of other people's errors,) though you'd have to keep a close eye on whether that was helping or destroying morale. I would definitely have a bonus for a team goal that was fairly high, maybe even 100%, to encourage employees to find their own ways for the stronger employees to help the weaker ones and for everyone to back each other up.
posted by ctmf at 9:51 PM on January 9, 2010 [3 favorites]

I'm going to relate to you what I've experienced in my profession, with one particular job. Your concerns mirrored mine, when my group was faced with a similar situation.

I'm a physician. In the hospital setting, there are certain measures that are tracked, one of which is basically whether or not we gave medicine X for every case of a heart attack that's admitted. The goal is 100%. If medicine X is not given, then there must be documentation stating the reason why it was not given, such as "ah, the patient has a drug allergy to medicine X." If no such valid reason is given, POW! We're no longer at 100%.

These measures have been used as bonus pay criteria. If we're at 100%, we get our bonus. If not, not.

As you've mentioned, getting 100% with anything, for any given period of time, can be very difficult. Here's how you could go about doing it:

- Make the bonus pay all or nothing, for everyone in your group. The group must get 100%, or no one gets their bonus
- Allow for some flexibility in the criteria. For example, if the group does not reach 100%, but has documented valid reasons why, the bonus is still to be paid out. This is exemplified above with the medicine X example
- Try to set things up such that any bonus not given out is held, and to be given out with the next evaluation
- As a group, address why bonus pay is so high vis-a-vis your standard salary. It may behoove you to argue for an increase in your base pay, and a smaller bonus.

Regarding your two questions:
1. I've seen bonus/incentive pay be sold as or thought of as a given. While being recruited, I've been told "don't sweat the bonus criteria-- everyone gets it. You can expect it quarter after quarter." It is my strong belief that this is a completely backwards way of looking at the pay. Getting the bonus pay, which you've come to expect regularly, held, is a really crappy thing to experience
2. Bonus criteria must be set for the group as a whole, and not for individuals, or things will become cutthroat very quickly. This is especially true if the bonus pay is significant, and even if your job is not competitive in nature. It will become competitive if bonuses are individual in nature.

Good luck. Bonuses are great to get, crappy to have withheld. Consider things from a business aspect as well: if you were running a business and wanted to incentivize performance, but wanted to maximize control and minimize expense, how would you go about doing it? Would you give everyone a raise and a small bonus, or give them a big bonus with difficult or mutable criteria?
posted by herrdoktor at 10:30 PM on January 9, 2010

You've pretty much hit the nail on the head. At some level 100% error free is actually impossible, but long before you're being called on to violate the third law of thermodynamics, you're output is going to hit the floor.

The conventional wisdom is, in a work system there is a curve that describes the relationship between output and the accuracy. If I only have to put one nut on one bolt every shift, you can pretty much count on that nut being right, with exactly the right amount of the blue locktite and dead center of it's torque specifications. If I have to put a nut on every second, the number that will be missing, cross threaded, stripped, loose or where I snap the bolt off may well be greater than the number that are correct. If you want to change the quality and keep the speed then you need to change the system.

Check out the work of W. Edwards Deming if you want more on this.
posted by Kid Charlemagne at 10:46 PM on January 9, 2010

Unless your bosses are total incompetents, they'd probably realize that it's beneficial to hear your concerns. Just come at it from the angle of "I'm concerned this will hurt our bottom line, because of side consequences like weakening teams." Also, your bosses might tell you things you may not have thought of. If you show your concern in the right way, you'll feel better and you'll also get points for being a good employee. Win-win.
posted by rjacobs at 8:55 AM on January 10, 2010

Any management team that implements any bonus system that requires 100% is either foolish (i.e. wide-eyed team players who regularly recite the "give 110%" mantra) or disingenuous schemers looking for a back-door way to cut pay/benefits.

You are correct that no-one can be 100%. I'm pretty sure your bosses know that, too, and expect that you and your fellow workers will come-up short. That's the scam. They know they will never have to pay-out the bonuses. Additionally, now they will have a metric (you didn't reach the stated goal again...you aren't even trying...are you on the team?) by which they will be able to penalize employees.
posted by Thorzdad at 9:49 AM on January 10, 2010 [1 favorite]

Are they using this extra pressure for perfection as a mitigation measure for something else? They may be cutting back on supervisors to save money. With less oversight, that makes it more important to need less oversight by making fewer errors. So, the money saved is (the supervisor's pay) - N x (bonuses paid) - (cost of rework the supervisor would have prevented).

Notice how, up to a point, they don't care if you make 100% quality or not, because the bonus and the rework cost offset. If they're paying bonuses, that means no rework. If they're paying for a lot of rework, no bonuses. Ideally, you'd minimize the rework and still not qualify for the bonus.

To that I say: doom. For the culture and morale problems I mentioned previously. Everyone is going to qualify for the bonus (except the odd person nobody likes), at the cost of a dog-eat-dog mentality, an us vs. them worker/supervisor relationship, and management not having any idea what's really happening on the floor.
posted by ctmf at 10:02 AM on January 10, 2010

Also, maybe your team will self-organize into having the senior person assume the role as de facto supervisor. Then be pissed off at having the extra responsibility/pressure without being paid appropriately, while everyone else is a worker short-handed. The more I think about it, the more devious it sounds, if that's what's happening.
posted by ctmf at 10:18 AM on January 10, 2010

I've participated in several bonus schemes and designed a few from scratch, and I can tell you, most bonus schemes hurt more than they help. That's my experience, and it's also what much of the literature shows. It's just really, really hard to design a scheme that incentivizes the behaviours the company wants, isn't too game-able, and doesn't trigger a bunch of bad unintended consequences. Plus, the literature shows that people who are intrinsically-motivated often find bonus schemes inherently insulting/demotivating, because they feel like the implication is basically 'you will only work hard if you have a cash incentive.' And on top of all that, bonus schemes generally trigger all sorts of suspicion (as per hal_c_on above), compensation is inherently a tough topic for many people, etc. etc. etc.

So yeah, the odds are this bonus scheme won't work. Most don't.

Having said that, I think you should relax, keep your head down, and ignore this as much as you reasonably can. So long as nobody is proposing cutting your base pay, you are losing nothing -- and if you never achieve the new bonus, so what. It's unlikely that your company has a long-term plan to screw you and your colleagues, and if it does, the bonus scheme is just a symptom of a bigger problem, and you will ultimately need to just find another job. But you're not there yet, and you probably never will be.

Keep in mind Robert. J. Hanlon's old adage: "Never attribute to malice that which can be adequately explained by stupidity." In this circumstance, labelling your bosses stupid would probably be a bit harsh, but you take my point I'm sure :-) They probably don't love this scheme either, and if you're lucky they will revise-and-refine it once it's been in place a while.
posted by Susan PG at 1:29 PM on January 10, 2010 [2 favorites]

Your concerns are understandable and may well be justified. However, you probably won't look like a good team player if you start denigrating the plan before it's even rolled out, no matter how much it sucks.

My advice would be to try and note your thoughts on how the scheme changes your workplace. Focus on verifiable, substantial changes — things an outsider could double-check, or at least see if they looked / spent a day with you. Or at least try to focus on specifics: "I used to help out my colleagues an average of 3-5 times a week with their work, but now everyone just does their own and we don't collaborate at all." This is good because it references specific behaviors, and is much preferable to "we used to be friends and helpful and now everything sucks," which can easily be written off as simple complaining / change-resistance.

At some point in the future, if things really go downhill, be prepared to talk about what you think is wrong, but also have some suggestions in addition to your constructive criticism.

Performance pay schemes are hugely dependent — I would go so far as to say "entirely" — on the metric that they choose to reward. If "accuracy" is the metric that gets rewarded (e.g., to get a bonus you need to be 100% accurate that month), then it's logical that people will sacrifice overall volume in order to double-check their work and boost accuracy. If volume was the key metric, it's logical that accuracy would go down, as people concentrated on processing more records (or whatever it is that you process) and did sloppier work.

It's fairly common for employers to initially choose metrics that are easily measurable but unimportant (or not the most-important aspect) when rolling out performance-pay schemes. They pick some existing number that they have on a report, start tying it to pay, and then watch that number increase. Of course, what they may not be seeing (if they're just looking at their reports) is what their emphasis on that metric is doing in other areas.

For example, one common situation occurs in callcenters: call volume is almost always tracked by management. So in order to boost performance, they tie call volume to pay; you process more calls, you get paid more. But this results in CSRs blowing off customers who have problems that would take a long time to work, because they want the volume. The metric in use, the one that's being rewarded, really isn't the important thing — instead of purely analyzing volume, some other metric (customer satisfaction? percentage of tickets resolved in a single call? etc.) needs to be focused on instead. (Incidentally, this is why a lot of callcenters now send callers to a satisfaction survey after you talk to the CSR. If the CSR you spoke to did a good job, don't blow this part off, because it may factor into their performance evals or compensation!)

So ... what you should do is look for alternative metrics if you don't think 100% accuracy is the thing you and your fellow employees should be shooting for (from a business perspective). What else could management look at, instead of accuracy? If you can suggest something else, that's going to come off looking a lot better than just trashing whatever they're doing.
posted by Kadin2048 at 8:11 AM on January 11, 2010 [1 favorite]

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