Incentive Effectiveness Example
What a terrific example of how incetives can work wonders. My great mate in Cape Town, Henry, runs an accounting Practice. With a government-imposed deadline on a particular filing requirement of 31 August looming, he realised normal productivity would not clear the inevitable backlog the authorities arbitrarily dreamed up. He further knew that given shocking S African public sector ineptitude, any two-way conversation necessary in the puirsuit of compliance would never happened.
So he hit upon the idea to create an incentive. Announced a month before the deadline, he informed his 17 clerical staff of his “all or nothing” reward scheme. The details were:
- To succeed, every case within their control must be complete
- A pot of 30,000 Rand was the size of the reward pool
- 20,000 of this would be allocated according to the team’s wishes
- The remaining 10,000 would be at Henry’s discretion
Pretty soon, it was clear many of the clerks were hugely motivated by the thought of extra cash. Likewise, a couple stood out as not giving a flying fig. The results were staggering. The huge amount of work (Henry reckoned maybe treble their normal workload) got done. People worked into the night, at weekends, and came in very early.
Then came time to divvy up the funds. Henry gave the team member that had recognisably worked incredibly hard (the bubbly Michelle) a sheet of paper. Each clerk’s name was on one side, and on the other, he asked that Michelle request each one self-assess their proportion. They must allocate a weight themselves. These values were 0, 0.25, 0.5, 0.75 or 1. A score of 1 would mean a full 2,000 of the team’s pool, 0.75 equalled 1,500 and so on.
And then the results came in. And they make fascinating reading for anyone contemplating a similar exercise:
- 7 out of 17 awarded themselves a ‘1’
- 3 of the 17 self-assessed at zero
- only 1 of them saw their personal score revised downwards by peer pressure
- after Henry amended the weightings according to his own observations to add in his 10,000, the total pool added up to 29,500, with a combined team score of 14.75
- the final standings were; 2 zeros, 2 0.25s, 5 halves, 1 0.75, 3 1s and 4 being awarded great than 1
- as the sheet went round, Henry received SMSs suggesting that two of the team get awarded more than ‘1’ by other colleagues
- at the end, only 1 person voiced their disapproval of the whole process
An absolute winner.
On the following Monday morning, 2 of the 17 were off “sick”. Henry smelt a rat. So he sent round a firm yet polite mail empathising with the lot of a busy Articles Clerk. He suggested that should the absence continue, all bonuses for everyone would be rescinded. Frantic texting and calling by the 15 stalwarts revealed that the absent pair were indeed trying it on (one even extending their weekend break to Langebaan). Both appeared before 11am.