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Entries in Perverse Incentives (4)

Thursday
Mar162017

Finding perverse incentives is hard, fixing them can be harder

Searching for perverse incentives that can become compliance land mines means messing with people’s pay.

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Wednesday
Mar012017

How perverse incentives distort individual and corporate performance

Consider a salesperson that has reached his bonus cap three months before fiscal year-end. Any achievement after that is not only unrewarded, but is actually penalized in the sense of creating higher future performance expectations and targets.

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Monday
Feb132017

Revisiting EpiPen: Steep incentive thresholds are corporate disasters waiting to happen

The root causes of perverse incentives often hide (in plain sight) in the most common variable compensation structures, which include payout floors, thresholds, payout caps, and stretch goals.

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Monday
Jan302017

How perverse incentives cause companies to abandon controls

In the prior post, we talked about reasonable goal setting that can turn into perverse incentives, leading to compliance and reputational disasters like Wells Fargo. In this post, we look at whether companies can contain the excesses of their incentive programs with controls.

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