When pay for performance goes wrong

Pay for performance took on new meaning with revelations about the New Orlean Saints and their bounty program for intentionally injuring opposing players.  Greg Smith resigned from Goldman Sachs last week with an expose about their incentives, a toxic culture, and treating customers in a less than respectful manner.  Politicians during elections are known to promise things they don’t intend to deliver because they need the votes.  Incentives, whether they’re designed to do so or not, can cause aberrant and even unethical behavior.

One of the keys to effective strategy implementation is having a sharply-focused organization, and that usually entails incentives for executives and managers.  Incentives are powerful things:  Aligned well, they create value for customers and shareholders.  Aligned improperly…you know what I mean.

Leaders are responsible for the ethical actions of their people.  The Saints’ head coach will sit out all next season with no pay, and their defensive coach is suspended indefinately from the league.

Does your organization have its incentives aligned properly and are you effectively monitoring behavior?

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