When “good” ideas backfire

Ever thought of getting the professional opinion of a psychologist for your HR initiatives?  Maybe it’s time we did.  Perhaps then we could better nail down human behavior and predict employee reaction for every management action.

Take for example employee engagement.  You start of measuring engagement for the ultimate purpose of generating more profit (engaged employees > better customer service/product quality/innovation > more revenue > more profit).  Just the simple act of monitoring engagement  can create unintended consequences.  How about the employee that believes that it’s management’s responsibility to make them happy and keep them motivated?  Holy entitlement Batman!  Just try launching engagement surveys and not doing anything with the results – now you’ve got even more disengaged employees.  Then you’ve got the new topic of office gossip – “hey, did you hear about the engagement score for Team X?  Man, are they one unhappy bunch.  They are way underpaid and I hear their manager is a slave driver.”  Even better, dealing with the manager who manages to get an inflated score (via intimidation or mild bribery like a pizza lunch) to ensure they get their performance bonus.    Eek!

The bottom line is, when you start measuring employee engagement you may get some unintended consequences. 

Now let’s move on to the unintended consequences of compensation.  A timely discussion, what with all the kerfuffle around those AIG bonuses.  It’s a big discussion in all media, with all the rage and anger of “how could Americans possibly prop up the insurance giant with taxpayer dollars and then pay these grotesque bonuses”?  An interesting online debate was posted in BusinessWeek discussing the pros and cons of AIG Execs returning their bonuses.

I loved the comment posted by the reader Mark-Anthony who says “Wow, is it just completely impossible for America comprehend unintended consequences?”  In sum, he says you’ve got to give the promised bonus to individuals who meet their targets in order to keep talent and you’ve got to give some reward to the folks sticking it through on sinking ships.  Also, if governments increase taxes to claw back some of those bonuses, you know what will happen?  That’s right – companies will have to boost up that base salary to make up for that dollar loss.

Obama wants to cap executive salary, like they do in Japan.  Let’s consider the potential for unintended consequence there:  Capping CEO Pay – What It Means for All of Us.   Say you’re an exec and you’re putting yourself on the line, from reputation to family life.  Doesn’t greater risk require a greater reward?  Why would anyone put themselves out there without expecting some sort of payback?  And you know what happened in the US when SOX legislation required corporations to start publishing CEO salaries?  Everyone ended up knowing Joe Blow’s salary and wanted to make more than him because they thought they deserved it more than him.  Enter the salary cap and you may start to see all CEOs negotiating for that top range.  HR will have to work even harder to entice top executive talent using other, non-monetary incentives.

There are several more potential unintended consequences.  How about order some lunch in for your team, bring up the topic and hold a debate amongst each other about what other unintended consequences could come up with any of your initiatives.  A good lunch, lots of fun, and a way to engage your brilliant staff.  Are there any potential unintended consequence of doing that?


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