Question

A major consulting firm recently launched a new incentive plan for their project managers. Basically, executives in the company were told to award $10,000 bonuses to about 40% of the project managers in their team based on how good of a job they did in managing people on their projects, meeting deadlines, and the number of projects each project manager was responsible for that year. There were no additional criteria provided, given the wide variance in projects and teams that the consulting firm services in a given year. What are the potential advantages and pitfalls of such an incentive program? What areas of support or concern do you think project managers might have with the incentives? What areas of support or concern do you think executives might have with the incentives? Given “you get what you pay for”, how might the bonuses influence behavior and the organizational culture in the future?

Answer 1

The advantages of such an incentive program is that project managers would certainly get motivated and try to give their very best to get the recognition as well as the monetory award related to the excellence in project management. This in turn is expected to provide filip to the organizational performance. The downside is that since the criteria was not specified in an objective manner, it might lead to biases and subjective evaluation. This might create discontent among project managers who did not get the bonus and thus this program may prove to be counter productive.

The project managers may be happy with the incentive program as it provides an additional benefit to them based on their performance. The possible concerns that they may voice is that since the evaluation critera is not well defined, it can lead to ambiguity and biases in final selection.

With regards to the executives, they would be happy that they could use another tool to motivate the workforce. But in absence of a objective qualifying metric, there could be competing opinions among the executives on the selection criteria and the final list of the candidates chosen for the incentives and this may be a concern for the executives.

The incentive program may influence the culture such that project managers may be interested or motivated to work in those projects only and manage the projects in a certain manner which maximizes the likelihood of their winning the incentives. Thus, a certain amount of short term thinking may creep in the organization with disproportionate focus on winning incentive rather than contributing to long term sustainability of the business.