“So, tell me Reggie, what exactly were you trying to accomplish with the bonus system? Because that is where we have start our discussion. What was the purpose?” I asked.
“The purpose, well, you know. I want my managers to stay focused, to have the company’s best interest at heart, to take that one more phone call before going home,” Reggie replied.
“And how did you communicate this to each of your managers?”
“Well, once a year, we sit down and look at their job. We break it down into Key Result Areas, then create a goal in each area, for the year. We attach dollars to each of the goals, to be paid quarterly. We are doing it just the way our consultant told us to do it.”
“And what are the results?”
“It’s all over the board. Two managers made most of their KRAs, but I don’t think they did anything special, it just happened. Three other managers did some suspect things to manipulate the numbers into the last quarter, so they got their bonus, but, they didn’t really achieve the goal, it just looked like it. And two other managers, well, they missed their targets, in fact, they quit trying about halfway through the quarter.” Reggie stopped. He didn’t like his own expert opinion on this.
“So, by your assessment, the bonus program achieved results in two cases, but you figure those results would have occurred with or without a bonus program. And in five other cases, the bonus program created manipulation or became a disincentive to performance,” I restated.
“Yes, that’s it. So, you tell me. What could we do differently to get the behaviors we want that drive the results that we want?”