Ignoring the Carrot!

Ignoring the Carrot

Ignoring the Carrot

There I sat, new job, GM of quite a large drink’s wholesale company and my new boss, the MD of one of Ireland’s largest drink companies outlined my “objectives” for the year.

Hit these objectives and you got your bonus at the end of the year …simple.

One of these was really unrealistic – he wanted me to raise the Gross Margin % from it’s current level to a higher figure. I explained clearly that this would be impossible as the business volume was shifting from pub products (higher margin) to off licence products (much lower margin) due to lifestyle trends which pretty much everyone in the industry had accepted.

This led to a really lengthy discussion where we both made our case and fought our corner with no real resolution. I explained that the “money” margin on these off licence products could actually be higher and the target should be a money one and not a % one.  At the end of the discussion he insisted that my “target” stood and I quite politely told him that it was impossible.

I left the meeting knowing this target could not be achieved but determined to drive the business forward in the most profitable way possible.

I’m not very happy with your performance, you missed your objective and as a result you won’t be getting your bonus!”  he said to me across the desk, a year later as we had my review. He waited for my reaction, expecting me to fight my case or get all offended.

I know, and I told you that a year ago” I responded “and to be honest I don’t really care about a bonus if it’s based on the wrong criteria. I care about doing a good job” …. silence.

After that , we never really got on too well. I guess it was because I didn’t behave like the others he was used to dealing with and the “Carrot” didn’t matter to me one way or the other.

You don’t always need a carrot to force good work and if you’re making targets for your team make sure they are realistic and they believe in them.

Greg Canty is a partner of Fuzion

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4 Responses to “Ignoring the Carrot!”

  1. audreymcsweeney Says:

    Love it Greg!

  2. Tom Keith (@Munster_Tom) Says:

    Great Post Greg, I don’t know if you have ever read “Punished by Rewards” (http://www.alfiekohn.org/books/pbr.htm) but it is a fantastic analysis on how incentive schemes and bonuses can work in reverse and dis-incentivise people similar to how you described in your story … and wipe out any “intrinsic motivation” which is the real key for encouraging and maintaining high performance …

    I previously worked in a team where technical support advisors regularly advised customers on upgrades and product changes because it helped the situation and was “the right thing to do” … they enjoyed solving problems for the customers. Guess what happened when a bonus was introduced to try to reward this behaviour and incentivise them to do this more often … The joy (intrinsic motivation) they got from helping was wiped out by the €1 upsell bonus and the behaviour quickly disappeared – a classic case of Overjustification.
    (http://en.wikipedia.org/wiki/Overjustification_effect)

    Keep up the good work – I am intrinsicly motivated to keep reading your blog :)

    Tom

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