Rules, incentives and Barry Schwartz’s call for “practical wisdom” – and what of goals?

Another extraordinary TED presentation, this time by Barry Schwartz on The real crisis? We stopped being wise. It echoes a theme I’m seeing in many areas around how an over-attention to goals, metrics, rules, incentives, etc not only demonstrates a lack of trust by those setting them, it actually encourages the very behaviour they are seeking to avoid.

I’m a little leery about SMART goals. It’s in all the management books of course and as a manager I’m expected to set them but we tend to over-rely on them. As Barry says in his presentation, we need rules, we need incentives but not more and more of them. They have their place but understand the limitations. I also recommend When Goal Setting Goes Bad which discusses the working paper entitled Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting.

Barry talks about how any scheme of incentives can be subverted and calls for wisdom and ethics to be nurtured. There’s a Wired interview with Barry where he says:

“When you rely on incentives, you undermine virtues. Then when you discover that you actually need people who want to do the right thing, those people don’t exist because you’ve crushed anyone’s desire to do the right thing with all these incentives. And if you bring in a new set of people to replace them — virtuous, moral people who want to do the right thing — and they’re subjected to the same set of incentives, they’re going to become just like the people they replaced.

I’m not talking about getting rid of incentives; people have to make a living. But people need to understand that rules and incentives aren’t enough…. The more rules and incentives you have, the less wisdom you will have. There needs to be room left on the one hand to nurture in people the desire to do the right thing and on the other hand to give them the tools so that they’ll know what the right thing is. This incredible pressure to increase payoffs is an obstacle to doing the right thing. You will never be able to create a system of incentives that rewards people for doing the right thing. The system of incentives may start out that way, but very quickly clever people will find ways to … game it.”

Amen to that.

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1 Comment

  1. FrankH.

     /  May 11, 2009

    A bit late for an introspective like this … you’ve had years to contemplate why things went wrong, why employee loyalty, commitment, passion and ultimately performance nosedived. You were fully aware of (and later, as a manager, actively involved in) the subversion of Sun’s culture by becoming overburdened with process and mislead by made-up statistics whose only purpose it was to allow promotions to egostical senior management. You knew for years that "goals" were irrelevant as long as the best one could get for years of overperformance – both according to the letter and the intent of the goals – was matching the level of payrise the brownnoser was given, who barely managed to meet the letter, but overachieved on the unwritten: s*ck up to get up.
    Good luck with the attempt on repentance. There’s a lot of that left to do, and I give you credit for at least having it started in public.


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