Dancing for dollars

September 8, 2010

You’ve got to listen to this! Today I travelled in both space and time to planet UN-BE-LIE-VA-BLE and back. Actually, I only took the commuter train to the north side of Stockholm, but it sure felt like I passed through several dimensions of stupidity.

I was invited to a meeting for salespeople and managers, to what supposedly was an opportunity to learn from experts in the business.

The first presenter of the day was a seasoned manager/president/marketing director (you name it) who was now working as the president of a management consulting company. The theme of the presentation was “increased profitability and performance related pay”.

The topic alone was almost enough to make me miss out on this opportunity but I figure that sometimes it’s good to hear what “they” say, just in order to keep an open mind. I don’t feel so open minded anymore, however.

There was a lot of discussion about how to design effective systems of performance related pay. Most people seemed to agree that PRP was essentially a good thing, BUT I couldn’t hear one single success story where people actually enjoyed working for any of these companies. Everyone had a bunch of issues with their systems that they wanted to be fixed before they were entirely satisfied. One common problem was that the systems changed too often(!?!).

One guy at my table, who was very pro-PRP, told us how their system kept their sales people alert:

– I’m also payed the same way and my salary is very much depending on the sales performance of my staff so you can see how I keep the whip on them at all times.

When I asked if he would pass down a top sales person who was not driven by money the same way he was, the answer was a distinct “YES”. Such a person would not fit into his salary system.

Our speaker then proceeded to tell us how it is a good idea to update a performance related system every couple of years or so:

– You see, after a couple of years people will learn how to beat the system and will start to take advantage of any weaknesses in it.

I simply had to ask if he wasn’t able to see a bigger problem in this picture. If you design a system that people feel compelled to beat, don’t you think that the problem might lie somewhere else than in trying to foolproof the system? At this time the guy at my table spoke up again:

– Well, that happens every now and again. But we have a general clause in our contract stating that the company can intervene and withhold the payment if we suspect that someone is using any unforeseen side effects of our system.

I completely lost my breath at this point and failed to say anything else. However, I think that I got an explanation for this behaviour when we were told to be careful to take any soft values into consideration when trying to keep employees happy:

– You see, it’s very hard to handle these soft values, everyone feels differently. It’s much easier to just pay people according to the sales that they bring into the company.

Scotty, please beam me home to 2010 now. This place scares me.


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