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What has gotten into those folks at Harvard? A while back they wrote an article calling incentives dysfunctional. Perhaps they think that the whole world is made up of Cambridge, Massachusetts residents who are extremely brilliant, self-motivated, and with a unified vision of the future.

Thanks for the comment, Paul. Although Harvard pointed out a legitimate concern, they're answer of throwing the baby out with the bathwater didn't seem very thoughtful.

Speaking of Harvard, did you see Congressman Barney Frank berate the Harvard student for asking what role he played in the financial crisis?

Maybe there's hope for Harvard students yet!

Hi Darcy,

Love your post.

Yeah, using a compensation analogy to help nail your point home, we see that there is a reason why Scanlon's gain sharing methods are only supposed to be used for short term stimulation of getting employee morale moving again. If one uses gain sharing as a long term device a law of diminishing returns rears its ugly head.

In other words, the employee focuses on cost cutting instead of quality and will eventually start abusing the processes and machinery to find way of upping the ante on continually trying to manipulate the ways he/she can create material savings.

Using the Scanlon gain sharing system as a long term reward system - that gets workers to think only of quarterly gain sharing results - is just like a Skinnarian Pigeon trying to get its feed. It seems analogous to how a board of directorship puts executive management in the same box; but, instead of using feed-seed as the reward, the reward is bonus-money for pecking at higher quarterly earnings to satiate the needs of stockholders and the board of directors who own much of the company's shares themselves.

Yes, this example and many other traps come into play when we reward for short-term profit gains and short-term profit results within the long term panoply we call life. Corporate life and its many cycles are longer than quarterly reports. So why run pathologically, continual short-term game plans concurrently with a long-term corporate life? We don't do that to ourselves? (We eat right, exercise, and get enough sleep so we can sustain a long healthy life, right? Hmmm.) What happens is the inevitable - companies pay for this type of behavior on the back end.

Quality suffers and customers will serve their loyalty elsewhere. Oh, and companies go bankrupt. Heck, one could argue a point, anecdotally: this type of corporate behavior of short term goal setting and immediate gratification for quarterly results instead of a two to three year plan may rub off on the consumer themselves along with the consumer's life style. Just a thought.

This of course is an American endemic problem within the corporate world. We are always thinking short term (mostly, the continual drive towards company quarterly profit earnings is the paragon of this endemic problem). If a board of directorship continually applied pressure on executive management to sure-up and get geared for long term profit gains instead of short term quarterly earnings, maybe things wouldn't be so...

The golden line that I take from Darcy's post: "The big take-away from my college classes is that a reward isn't necessarily what you think it is, it's what causes repetition of a behavior; and that you get repeated behaviors when you reward them." - This is great insight, Darcy!

Darcy then tandemly supports this statement with a highly well defined scenario argument:

"So we wanted to make sure that their focus [restaurants] remained on creating sales as well as cutting costs. The real key to properly using goals is to make sure that the goals don't create short-term gains at the expense of long term success. If we ensure that we reward a focus on enduring success as well as current success, goals can and will help the organization to continue to move forward."

No one in the U.S. could've put it better than you, Darcy! Well put. Perhaps B.F. Skinner wasn't totally wrong when it came to his theory of Operant Conditioning. It was only on us on how we perceived how it should or could be utilized in a global corporate manner. The question that should come to mind before we put in a reward paradigm is: What are we really trying to reward and why - as Darcy intimates above.

I think Darcy hit a home run of an argument in her post. Really, well said.

Long term relationships seem to be the zeitgeist, now. Many are now on the sidelines and can see the relevancy of courting friends, customers, and clients for the long term. This is a good thing; a good correction.

Remember the Ford corporate jingle from the early 80's: 'Quality is job one'. Yes it is. Let's do what they said those many years ago - maybe they should have also.

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