The Real Cost of Mismanaged Incentives: Wells Fargo

Compensation Cafe

Well, so much for the warm-hearted caffeinated, pick-me-up from the Comp Café. Today is a steaming jolt of quadruple espresso in response to the Wells Fargo incentive pay mess. I answered that if I had been asked a few weeks ago, Wells Fargo would have been on the list.

Learning Corner with Jeffrey Pfeffer: Less Is Better Than More When it Comes to Incentives

Cornerstone On Demand

Zimmer commented on a bonus program I had written about where each store employee (except the store manager) would receive $20 if the store met its “good" sales target for the month, and $40 if it met its “excellent" sales goal. Incentives are a poor substitute.

Incentives and The Rule of Three

Compensation Cafe

Designing an effective incentive plan is always a challenge. Over many years I have come to rely on what I call the Incentive Plan Rule of Three. No more than three metrics (KPI), no more than three defined goal levels, no more than three incentive plans for any one individual.

Incentive Plans Work Too Well (here’s the trick)

Compensation Cafe

It's not that incentive plans don't work well, it's that they can work too well in motivating unintended consequences. Are any incentive compensation experts shocked by this? The failed Wells Fargo incentive plan and Tax Reform are similar.

When Incentive Pay Goes Rogue!

Compensation Cafe

A friend of mine likes to say: “It’s not that incentive pay doesn’t work well, it’s that it works TOO well. Wells Fargo just paid $185M in fines and penalties because its employees fraudulently opened additional accounting for people who were already customers.

5 Lessons from Glittery Smelly Incentive Plan Mistakes

Compensation Cafe

It turns out that incentive compensation doesn’t just work, it can work too well at motivating the wrong behaviors. Make sure you design your incentive plan to reduce the possibility and rewards for cheating. Incentive plans are difficult to get perfect.

Woulda, Coulda, Shoulda: An Incentive Compensation Story

Compensation Cafe

Not the least of them was the creation, design and management of the company’s long-term incentive program. She planned her year well and executed with the precision of a heart surgeon. She also combined all of these skills to build and manage her incentive compensation plans.

5 Reasons to Design Your Incentives Like IKEA Furniture

Compensation Cafe

Use their methods for building your incentive plans. Your incentive plan should be designed to ensure even the unexpected isn’t a surprise. When you build an incentive plan, take the time to customize the tools for planning, modeling and tracking progress. All of the familiarity, ease, and well-thought-out designs would be pointless if the final product sucked. Make sure your incentive plan delivers on its promise.

Long-Term Incentives for a Short Term Generation

Compensation Cafe

Second, this means that the majority of these workers do not intend to benefit from the entirety of their Long-Term Incentives (LTI). Designing LTI to attract, motivate and retain the “next” generation: Opportunity 1: Consider “Mid-Term Incentives” that link to Long-Term Incentives.

Cafe Classic: Is Your Incentive Plan a Strategy Killer?

Compensation Cafe

Editor's Note: Do your incentive plans make the right decisions seem wrong and discourage the choices most critical to your organization's future? Are your incentive plans designed to support or defeat your organization's business strategy?

Get Your Office Involved: Holiday Giving + New Year Incentives


Here at Kazoo, we’re able to earn points through Behavior Bonuses when we donate any item during the month of December. Kazoo has some great choices directly within our store, or you can simply incentivize your employees to donate points with a Give Back Bonus.

17 Words About Incentive Pay

Compensation Cafe

The 17 words listed align incredibly well with common incentive plan designs. A quick review of incentive pay basics. The following seem to align well with Minimum levels of achievement: Almost Certainly. That leaves three that don’t fit our normal incentive models.

Go Team – And Me Too! Incentives for All


Over the past few years, there has been a lot of negative press about incentives. Specifically that incentives don’t work, they are a hangover from “motivation 1.0” Incentives do a great job of focusing attention, focusing behavior and signaling what we think is valuable.

Double the Incentive – Reduce the Impact


I am a fan of incentives. I’ve on record defending them when the book Drive came out 8 years ago and basically tried to shunt them into the dust bin of management and motivation ideas. Incentives are great when seeking to break behavioral inertia. Incentives are very powerful.

Here's Why Cash Bonuses Don't Work for Referrals


The value of the employee referrals hiring channel is old hat in the recruiting world, with some companies going as far as offering exorbitant bonuses in exchange for access to their employees' networks. What seems to be the issue with cash bonuses for referrals?

59 Awesome Employee Engagement Ideas & Activities for 2018 (Plus 10 New Bonus Ideas)


59 Awesome Employee Engagement Ideas & Activities for 2018 (Plus 10 New Bonus Ideas). Free bonus: Download this entire list as a PDF. Includes 5 bonus ideas not found in this post. Get your health and wellness program in order. Here are 10 bonus ideas!

16 Workplace Wellness Challenge Ideas to Try at the Office


Companies could all be better for focusing on their people’s personal health and wellness. Workplace wellness challenges are a great way to encourage healthy living amongst employees. We’ve compiled a list of 16 workplace wellness challenge ideas to get you started.

coworker bogarts all the food at work events, asking for a bonus when resigning, and more

Ask a Manager

Can I ask for a bonus when I’m resigning after being underpaid for two years? Is there a case I can make for some kind of parting bonus? Bonuses are generally used as a way to retain good employees. Because you’re leaving, they have no incentive to give you a bonus on your way out. I make a lot of purchases for our office, as well as help book travel for people. It’s five answers to five questions. Here we go….

Compensation Dentistry (part 1)

Compensation Cafe

Annual and long-term incentive plans are often not as well cared for. Just like the fact that most kids don’t grow up wishing to be a dentist, few compensation professionals aspire to be mavens of incentive plans. Yes, incentive plans can be harder than base pay.

Cafe Classic: Putting on Your Explorer Cap via Appreciative Inquiry for the Compensation Pro

Compensation Cafe

Several people recommended AI and I decided to give it a try, to the tune of an all-day workshop, several articles and a book purchase. At its essence, AI is an approach that focuses on discovering what an organization does well and then looking for ways to do more of that.

Are You Paying for Peripheral Vision?

Compensation Cafe

We seem to love to get granular with incentive plans. So many compensation professionals are tasked with not missing anything, they include darn near everything in their incentive plans. It is not a great evolutionary trait in incentive plans.

Broadway Acts on Sharing Success

Compensation Cafe

Before this, company stars sometimes did well, but those who came in early and helped turn a good idea into a great company received little more than experience and the pleasure of the job. It should be noted that these incentive plans are true incentive compensation.

Cafe Classic: Driving Your Compensation Programs in Reverse

Compensation Cafe

We think it’s OK and want to fix our bonus program by the end of this year. Of course, none of this matches the well-structured process that we are all taught is the key to success. Compensation Philosophy Incentives/Bonuses Pay for Performance Stock/Equity Compensation Total Rewards

Develop Grow Achieve - 3 Tiers for P4P

Compensation Cafe

These are the kind of goals that work well for regular coaching sessions and a loose link to pay. Grow metrics and goals work especially well for short-term-incentive programs and as interim measurements in long-term incentive programs.

Cafe Classic: Can You Spell D E B U N K?

Compensation Cafe

There is an extreme mismatch between what our employees really want and our efforts at motivating them (through feedback, merit increases and incentives). . The thing is, we seem to be easily distracted by the loud and charismatic, especially when their books sell well.

5 Ways Credibility Comes with Communication

Compensation Cafe

The second, done well, may work so well that it precludes the need for the first. If you proactively answer these well enough, consultants will often be a “nice to have”, rather than a “must have.”.

Fixed Pay, Variable People

Compensation Cafe

Incentives, both Short-Term and Long-Term, are harder to design, require more effort to communicate, and have a higher risk of administrative error than more consistent pay elements like base pay. When things are going well, we tend to focus mainly on the upside of incentive pay.

4 Ways CEOs Mess Up Pay Programs

Compensation Cafe

If your CEO passionately believes in your pay programs they will probably work pretty well. He has co-authored ” Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation” , “Equity Alternatives ” and other books.

Applying Pixar’s “22 Rules of Storytelling” to Pay

Compensation Cafe

As it turns out, these rules adapt well to the world of compensation plans and philosophy. You reward participants for performing well AND for achieving results.

The High Success Rate of Low Expectations

Compensation Cafe

But this is how many companies view targets for their incentive plans. Too often, plans are designed this way because of a misunderstanding of incentive pay. If your company is to grow, your people have to grow as well. Congratulations, you read this sentence! Not impressed?

Cafe Classic: Can Your Compensation Plan Tell Time?

Compensation Cafe

Too often “simple” compensation programs means simple for the practitioner as well as the user. He has co-authored ” Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation” , “Equity Alternatives ” and other books.

Cafe Classic: The Top 4 Risks in Pay for Performance

Compensation Cafe

A colleague of mine often says that the problem isn’t that P4P programs don’t work well, it’s that they work TOO well. Defensive players were provided incentives to not only stop their opponents on the field, but to literally make sure they could not return to the field.

Autonomy Doesn’t Mean Anarchy

Compensation Cafe

Mostly the problem was inventory, but sometimes quality suffered as well. They may recommend some kind of an incentive plan to reward better behavior (it might not be a bad idea). Au-ton-o-my: freedom from external control or influence; independence.

Soylent Green Stock Options

Compensation Cafe

Perhaps not today, but the risk of unintended consequences regularly rears its ugly head in the world of incentive compensation. The funder can theoretically “go back to the well” to get their investment back until the person is destitute or is essentially owned in full.

What You Need to Know About the Science Behind Your Baby’s Brain

Thrive Global

That’s a survival instinct (and nature’s strongest incentive), put in place to ensure that you will want to be present and engaged in this crucial, forma tive time of your baby’s life. Well-bonded boys develop securely with a stable and sustained sense of self.

Dealing with Veruca Salt

Compensation Cafe

If we do our jobs very, very well, this is likely the best we can hope for when a star says they want it all and they want it now. . Base Salaries Compensation Communication Compensation Philosophy Incentives/Bonuses Small Company Compensation Stock/Equity Compensation Total Rewards

Eternal Sunshine of the Spotless Mind

Compensation Cafe

How well can you explain your past decisions and actions? . What were the specific "asks" and "expectations" five or six years ago How well did you meet these objectives and did you ask your employees or executives how effective the plan was in motivating them to those achievements?