Work Matters

Tag: Incentives

  • Brandi Chastain’s Advice on Incentives and Cooperation

    As regular readers of this blog may recall, my wife — Marina Park — is the CEO of the Girl Scouts of Northern California.  It has been a busy year from Marina and her staff because it is the 100 year anniversary of the founding of the Girl Scouts and there have been many celebrations.  There was an especially wild one called 100 Hundred, Fun Hundred where some 24,000 girls gathered at the Alameda County Fair Grounds to camp and engage in activities ranging from rock climbing, to scuba diving, to dancing to roakc bands.  You can read about the various celebrations here on their website.  

    Today, I am focusing on the Forever Green Awards — a series of dinners that have been held throughout Northern California to honor women who "have made a significant impact to sustaining the environment, economy, or community."  I have been three of the eight award dinners now and have been inspired by many of these women (here is the complete list), from opera soprano Katherine Jolly, to Jane Shaw the Chairman of the Board at Intel, to Amelia Ceja — the Owner & President Ceja Vineyards. 

    I  heard something last week at the dinner in Menlo Park that especially caught my ear — from none other than Brandi Chastain, the Olympic Women's Soccer gold medal winner and world champion, who still plays soccer seriously and now often works as a sports broadcaster for ABC and ESPN.  Of course, Chastain we always be remembered for throwing off her jersey after scoring the winning goal at the Women's World Championships in 1999 — in 2004 she wrote a book called "Its Not About the Bra."

    The award winners at Menlo Park were each asked to describe the best advice they ever received.  Brandi began by talking about her grandfather and how crucial he was to her development as a soccer player and a person.  Brandi said that he had a little reward system where she was paid $1.00 for scoring a goal but $1.50 for an assist — because, as she put it, "it is better to give than receive."

    I love that on so many levels.  I helped coach girls soccer teams for some years, and getting the star players to pass was often tough.  And moving into the world of organizations, as Jeff Pfeffer and I have been arguing for years, too many organizations create dysfunctional internal competition by saying they want cooperation but behaving in ways that promote selfish behavior.  Chastain's grandfather applied a simple principle that can be used in even the most sophisticated reward systems — one that I have seen used to good effect in places ranging from General Electric, to IDEO, to McKinsey. 

    P.S. The last Forever Green Awards will be in Santa Rosa at the Paradise Ridge Winery.  Click here if you want to learn more.

  • Winner Take All Incentives And Cheating

    Steve Levitt of Freakonomics fame has shown that, when teacher's pay is linked to the the performance of their students on standardized tests, they are prone to cheat — I mean the teacher's cheat.  Levitt's data from Chicago suggest that about 5% of teachers cheated to get bonuses and other goodies.  A recent New York Times article shows that this problem persists, and tells a rather discouraging story of a principal from Georgia who "erased bubbles on the multiple-choice answer sheets and
    filled in the right answers." And if you look check out the Freakonomics blog, there is evidence that Australian teachers cheat too.   

    The kind of pressures that educators face aren't just financial
    incentives (although that alone is plenty of pressure as many systems
    reward only the top performers no matter how well everyone else does),
    they also risk being fired, demoted, or their schools may lose
    accreditation, be put on probation, and in some cases, closed for poor
    performance

    The Times article offers an interesting quote that has implications beyond education:

    John Fremer, a specialist in data forensics
    who was hired by an independent panel to dig deeper into the Atlanta
    schools, and who investigated earlier scandals in Texas and elsewhere,
    said educator cheating was rising. “Every time you increase the stakes
    associated with any testing program, you get more cheating,” he said.  

    I found this quote to be interesting because a related implication is that, the more pressure that people face for performance, the more likely they are to cheat.  Perhaps the most extreme case are winner take all games.  Just watch how soccer players in the World Cup fake severe injuries to draw fouls again and again, even though they have barely been touched by opponents or not at all.

    To this point, BPS research reports a new study by Spanish researchers that shows the dangers of winner take all incentive systems.  The experiment entailed online completing mazes but divided subjects into two conditions.  In the first condition, students were paid based on how many mazes they completed.  So, there were incentives, but not competition or severe pressures to succeed.  In the second condition, subjects were only paid if they completed more mazes then the other five members of their group — so it was winner take all.  The subjects in the winner take all condition didn't perform any better, but they cheated more (the researchers figured out a clever way to catch them), especially if they were poor performers or women. 

    As the researchers conclude:

    'It turns out that individuals who are less able to fulfill the
    assigned task do not only have a higher probability to cheat, they also
    cheat in more different ways,' the researchers said. 'It appears that
    poor performers either feel entitled to cheat in a system that does not
    give them any legitimate opportunities to succeed, or they engage in
    "face saving" activity to avoid embarrassment for their poor
    performance.

    After years of reading research and working with organizations of all kinds, I have learned to become very wary of winner take all incentives.  Or as often happens in organizations, systems where the top performers get the lion's share of the money and their more ordinary peers get a few crumbs.  These systems not only encourage cheating, unless they are managed with extreme skill, they also undermine cooperation because, "If I help you, it means I am less likely to succeed."

    Well, whenever I write about these kinds of problems, people ask me what the alternatives should be, and I confess, that is a tough question.  But I do think that a few guidelines are useful:

    1.  When in doubt, anoint a higher percentage of your people as "winners" and a lower percentage as "losers"

    2. When in doubt, err on the side of smaller differences in pay between the top performers and everyone else.

    3.  Define superstars as people who help others succeed ,not who stomp on others on the way to the top.

    Those are my three. Do you have other guidelines to add? This is a tough problem and every organization that I know struggles with such issues. 

    P.S. The article summarized at BPS is: Schwieren,
    C., & Weichselbaumer, D. (2010). Does competition enhance
    performance or cheating? A laboratory experiment Journal of Economic Psychology, 31
    (3), 241-253

    P.P.S. Also see this great article by Chip and Dan Heath on "Why
    Incentives are Effective, Irresistible, and Almost Certain to
    Backfire."