Understanding Comp Plans

| Mon Sep. 26, 2011 8:09 PM EDT

Dan Ariely says you shouldn't be too specific in your compensation practices because it motivates people to game the system instead of working hard. For example:

A consulting company once told me they made a rule that if you stayed until 8 in the office, you could order food and use the car service to get home. So what happens? A ton of people are there at 8. Nobody’s there at 8:05.

Really? A "ton of people" who probably billed out at $300 per hour were there at 8? At a cost of maybe 30 bucks in food and another 50 for the car service? Sounds like this strategy worked great — as long as you understand that it's primarily aimed at increasing billable hours. What's the problem?

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