Boring Bob Rocks Our Socks – Part II

  • Not long after Bob takes out our finance prof with his evaluation question, we take up an accounting case that hinges on how to compensate plant managers. Should we do it based on plant revenue? Return on investment? Gross margin?
  • I marvel at the differences in behavior that ensue, based on the choice we make.

    Today, I stumbled upon a brilliant business classic by a fellow called Steven Kerr that I’ve somehow never encountered before. The article is called ”On the folly of rewarding A, while hoping for B.” I thought of Bob immediately.

    It’s a quick and easy read, but nonetheless packed with paradoxical situations you’ll instantly recognize from medicine, politics, law, education and business. Each one illustrates how how reward systems are too rarely aligned with our goals.

    Despite the fact that the article has been referenced and quoted infinite times since it was written, it almost didn’t get published at the time it was submitted. The publishers didn’t like the tone. They insisted on the addition of a table of data and some mangling of text by an ‘academic’ copywriter (Steven, I feel your pain).

    I hope it makes you smile. Enjoy.

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