Incentivizing Behavior and Changing Outcomes

Incentivize the desired behavior. It is a classic piece of compensation modeling – pay your people to do what it is you want them to do. You want sales numbers to go up, pay your sales people for new business. You want higher quality controls, more widgets produced, incentivize your people accordingly. So simple really, yet the corollary to that is rarely, if ever discussed – do not reward people for doing what you do not want done.  And the part which is never discussed openly, is risk versus reward – what are the temptations to cutting corners to meet the incentives?

Sunday’s New York Times Opinion Page included a piece by Johnathan Vaughters, a former professional cyclist and now the executive director of Slipstream Sports.  The column was much more than an opinion piece, rather it was a confessional under the title How to Get Doping Out of Sports . In the course of the column, he shares a great deal of insight into why one would decide to dope.  But one point above all others stayed with me, and he is dead on correct, no one should ever be put in a position to have to decide to cheat. In sport, business, or just life in general – it is not a dilemma anyone should face. However, there also seems to be more there that he is not mentioning; specifically that the reward for doping far outweighed the risk of being caught.  And that issue, which seems to go far beyond cycling and sports, is the real issue that is not being addressed.

Yes, I am a total outsider.  The extra 2% advantage that he mentions doping might provide, well that still would leave me a solid 40% short of the ability needed to compete at a professional level.  Yet, I find myself understanding the choices he faced and choices he made.  While I might be as honest and ethical as most, I am also no naive fool.  Look at the choice – cheat, in an environment where it is for all intents and purposes accepted, and make literally millions – provide a life for you, your family, your extended family, generate revenues to support others on the teams, and their family, or simply walk away from your dream, your career and frankly the only real opportunity you might ever have for a profession. Yea, I get it.

And to me there in lies the real issue.  The risk-reward paradigm was completely out of whack in cycling, and to a degree it still is.  It was massive upside for limited downside.  And why that lingered with me is that so much of our society seems to now be tilted in that very same way.  Let’s face it, all of the issues with “Wall Street Bankers” – how many have went to jail or lost real money?  There is Bernie Madoff, and then…?  That is the point, there is no real risk to balance out the rewards.  We have incentivized winning at all costs in sports and business.  Well, sports is business, so it is all the same.  It was the reality of the “housing crisis” and is still a reality in our society – there is no real risk to getting yourself over levered.  We allow folks the ability to walk away from debt by filing some form of bankruptcy.    It might sting a little, but it is not that big of a deal, nothing tangible is really lost.  Just look around – people are literally doing it all the time.

Balancing risk and reward lies far beyond testing, regulations and controls. The real answer lies both in how you incentivize and the level of risk associated with “doing whatever it takes” to reach the goal.  It is something every leader and manager, coach, business owner and frankly political leader really needs to consider – is the incentive to achieve outweighing everything else?

The real answer to cleaning up sports, business, and yes even behavior in general, is not to punish forward.  The answer lies in punishing backwards.  The risk has to outweigh the reward, and that is only possible when the very reward itself that spawned the behavior in question is put at risk.  And let’s be very clear, we are not talking titles and jerseys, promotions or corner offices, we are talking dollars.  If we want to keep rewards high, which is fine with me, I am a big supporter of everyone making a ton of dough, then make the risks to breaking the rules just as high if not higher.  Make the risk the very thing that they earned by cheating.  Congressman trades on insider information and makes money – they lose the office AND the money they made.  Cyclist cheats to win – they lose the salary, the winnings, the sponsorship and endorsement money, all of it that was earned by cheating.  Clawback.  That is a risk that will trump a reward.

It is not about banning someone from sport for a game, the post season, or even a year or two – clearly that has helped, but it has not solved the problem.  Peer pressure and cultural changes in sport, that has also helped.  However, the pain threshold is not high enough yet.  Even when an athlete is caught doping, they have already reaped the benefits of cheating!  You want to stop doping in professional sports – hit the incentive – take back what was earned through cheating.  Going forward, make salary, prize money, and above all, sponsorship and endorsement money all subject to a “clawback” clause.  It is outlined in the contract and then enforced.  That will stop doping.  The risk then truly outweighs the reward.

There it is, the real answer – clawback.  It is a form of risk that is real to everyone for it attacks the very incentive that spawned the behavior you are trying to correct.  Maybe a bit harsh, but the decision Johnathan Vaughters was faced with, and made, at that time in place seems to surround a good many of us in every walk of life.  No one should be placed in a situation where the wrong path is the more rewarding and easier path.  Putting that temptation out there to begin with is wrong.  Look around you, the fallout is literally everywhere.

Leave a comment

Filed under Business, Coaching, Politics, Sports

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s