Incentives and Contracts

If you incentivize a person, you have to be ready for that person to try her best to maximize her incentives. Its natural. This is why you have to ensure that your incentives benefit the system as a whole. Individual incentives don’t necessarily benefit the greater good.

This is a paragraph I read today:

“Mitchell said ACORN threatened to close the office if he and his team didn’t meet their quota to register 13 to 20 voters a day.”

Let us pretend that the sentence read as follows:

“ACORN gives their employees a quota of registering 13 to 20 voters a day”

What do these sentences tell you about this organization? What are your concerns? Would you give a developer a quota of 50 lines of code a day? Are we living in the 21st century? Are you comfortable with even the second statement?

Look at Deming’s 11th point:

11a. Eliminate work standards (quotas)

11b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.

If we introduce incentives that make little sense for the organization as a whole, eventually, the organization is bound to suffer. The leaders are at fault here. Not the workers who had to stay within the system.

What afflicts us at the moment is a lack of ethical leaders who value honesty, openness and integrity. Let us make the difficult decisions and the difficult choices so that we can create a culture that enables the organization to last beyond a few years.