With these incentives, each division manager has an incentive to understate (or lie about) how much her division can earn. As a result, the negotiated division budgets need not reflect what managers actually know. Important decisions are then made based on based on budgets constructed from lies.
Fortunately, there is an easy fix:
[by]...changing the way organizations pay people. In particular to stop this highly counterproductive behavior we must stop using budgets or targets in the compensation formulas and promotion systems for employees and managers. This means taking all kinks, discontinuities and non-linearities out of the pay-for-performance profile of each employee and manager. Such purely linear compensation formulas provide no incentives to lie, or to withhold and distort information, or to game the system.
With a linear compensation scheme, there is no incentive to understate how much a division will earn. And with better information, better decisions are made:
I believe that solving the problems could easily result in large productivity and value increases - sometimes as much as 50 to 100% improvements in productivity.
This comment has been removed by a blog administrator.
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeleteTo know more about Chief Dr Lucky you can visit his website (https://chiefdrluckyherbaltherapy.wordpress.com/)
ReplyDeleteA friend that suffered from Herpes and was cure with the help of this great herbal doctor Chief Lucky so i decided to contact him for help in getting rid of my families genital herpes virus 1/2 which i did and all i was told to provide was just some useful information and some materials used in preparation of the natural cure and that i did and now i am the happiest person on earth because i am writing this testimony of mine with joy and happiness in my heart to the whole world to know that natural remedy is real because i am a living testimony of Chief Lucky traditional herbal cure and i want you all to contact Chief Lucky via his email: chiefdrlucky@gmail.com or WhatsApp him +2348132777335 am sure he will help you too.