Steven Kerr, Academy of Managment Executive, 1995, Vol. 9 No. 1

It is hardly controversial to state that most organisms seek information concerning what activities are rewarded, and then seek to do this things, often to the virtual exclusion of activities not rewarded. Nevertheless, numerous examples exist of reward systems that are fouled up in that that the types of behavior rewarded is trying to discourage, while the behavior is not being rewarded at all. 

In politics: Official goals are “purposefully vague and general and do not indicate…the host of decisions that must be made among alternative ways of achieving official goals…” They usually may be relied on to offend absolutely no one, and in this sense can be considered high acceptance, low quality goals. An example might be, “All Americans are entitled to healthcare.” Operative goals are higher in quality but lower in acceptance, since they specify where the money will come from, and what alternative goals will be ignored.

In War: The American voter typically punishes (withholds support) candidates who frankly discuss where the money will come from, rewards politicians who speak only of official goals, but hopes the candidates (despite the reward system) will discuss the issues operatively. 

What did the GI in WWII want? To go home. And when did he get to go home? When the war was won! What did the Vietnam soldier want? To go home? And when did he get to go home? When his tour of duty was over! This was the case whether or not the war was won.

“A person can and will accept a communication as authoritative only when…at the time of his decision, he believes it to be compatible with his personal interests as a whole.” 

In Medicine: Theoretically, physicians can make either two types of error, and intuitively one seems as bad as the other. Doctors can pronounce patients sick when they are actually well (a type 1 error), thus causing them needless anxiety and expense, curtailment of enjoyable foods and activities, and even Physicail danger by subjecting them to needless medication and surgery. Alternatively, a doctor can label a sick person well (a type 2 error), and thus avoid treating what may be a serious, even fatal ailment. It might be natural to conclude that physicians seek to minimize both types of errors. 

A current example of rewarding type 1 errors is provided by Broward County, Florida, where an elderly or disabled person facing a competency hearing is evaluated by three court-appointed experts who get paid much more for the same examination if hte person is ruled to be incompetent.  For example, psychiatrists are paid $325 if they judge someone to be incapacitated, but earn only $125 if the person is judged competent. Court-appointed attorneys in Broward also earn more–$325 as opposed to $175–if their clients lose than if they win. Are you suprised to learn that, of 598 incapacity proceedings initiated and completed in the county in 1993, 570 ended with a verdict of incapacitation? 

In sports: Most coaches disdain to discuss individual accomplishments, preferring to speak of teamwork, proper attitude, and one-of-all spirit. Usually, however, rewards are distributed according to individual performance. The college basketball player who passes the ball to teammates instead of shooting will not compile impressive scoring stats and is less likely to be drafted by the pros. The ball player who hits to right field to advance the runners will win neither the batting nor home run titles, and will be offered smaller raises. It therefore is rational for players to think of themselves first, and the team second. 

A first stem for managers might be to explore what types of behavior are currently being rewarded. Chances are excellent that these managers will be surprised by what they find–that their firms are not rewarding what they assume they are. In fact, such undesirable behavior by organizational members as they have observed may be explained largely by the reward systems in use.

This is not to say that all organizational behavior is determined by formal rewards and punishments. Certainly it is true that in the absence of formal reinforcement some soldiers will be patriotic, some players will be team oriented, and some employees will care about doing their job well. The point, however, is that in such cases the rewarded is not causing the behavior desired but is only a fortunate bystander. For an organization to act upon its members, the formal reward system should positively reinforce desired behavior, not constitute an obstacle to overcome. 

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  1. What reward systems do we offer our cargivers?
  2. Would offering physicians a salary eliminate over utilization because it would not reward over-diagnosing and treating? How much of healthcare expense could be reduced by eliminating rewards mechanisms for “more clicks?”
  3. How can we reward our staff for HCAHPS results?