Employee Rewards Gone Wrong

Employee rewards can spur behavior, positive and negative

Properly conceived and implemented, employee rewards – in cash or in kind – can spur employee behavior in the direction you want. Or, done poorly, employee incentives can create resentment and envy, and even foster the opposite kind of behavior from what’s desired.

A recent lawsuit in Pennsylvania serves as a great case study for what not to do with an employee rewards and punishment program.

The employer, a commercial bank, set the business goal of increasing the number of consumer checking accounts opened at its branches. To support this goal, the bank enlisted rank-and-file employees. If they managed to get a certain number of people to open accounts with initial deposits as low as $10, they received vacation packages and prizes.

A bad result

Trouble was, managers thought it was a good idea to brandish a stick as well as a carrot:

Instead of letting the employee rewards speak for themselves, top managers put pressure on employees to sign up their friends and family.

The result was predictable: At least a couple of employees opened bogus accounts in the names of pals or relatives just to get the rewards. That was barred by corporate rules, and one employee – a branch manager – was fired after an anonymous informant turned her in.

She sued for sex, age and disability discrimination, and eventually lost. But the bank had to bear legal costs all the way to a federal appeals court.

What do we learn about good – and bad – employee rewards from this sad story?

• Think about how employees might “game” the incentives before you put them in.
• Consider the possibility of damaging jealousy on the part of employees who don’t meet incentive goals.
• Don’t confuse the issue by threatening consequences for failing to meet established goals.

Cite: Dowling v. Citizens Bank, No. 07-4054, 3rd Cir., 10/8/08.