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It's Not Just Wells Fargo - How Sales Targets Can Encourage Wrongdoing (bloomberg.com) 110

The revelation of Wells Fargo employees opening more than two million unauthorized customers accounts to hit the sales target might have come as a shock to many, but they are just the tip of a very old problem the industry has been facing. Bloomberg has an article today in which documents several similar incidents when employees went a little inventive to keep their jobs afloat. Marc Hodak, an adjunct professor of business ethics at NYU's Stern School of Business and managing director of Hodak Value Advisors says, "Companies tend to forget that an incentive to perform is identical to an incentive to cheat." In the early '90s, Sears "switched the compensation system in its auto centers from an hourly wage to a system that had more upside potential based on commissions and sales quotas." In the wake of this program, Sears customers were reported to keep running to the store for cheap brake jobs. The Bausch & Lomb scandal was also similar, with the employees were found manipulating earnings to reach financial goals using a trick called "channel stuffing" (in which someone ships goods and then book them as sales without having actually sold them. There are several similar examples in the story. From the artic;e:"Every large organization in the world has got these land mines of perverse incentives," said Hodak. "It's just a matter of degree to which of these things are allowed to run amok" because of those three factors. Barry Schwartz, an emeritus professor of psychology at Swarthmore College, goes farther: "Incentives poison people's will to do the right thing. It's the worst way to get people to do the things you want to do."
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It's Not Just Wells Fargo - How Sales Targets Can Encourage Wrongdoing

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  • by bettodavis ( 1782302 ) on Wednesday September 14, 2016 @05:57PM (#52889429)
    In my personal experience, these boneheaded metrics and goals are the sign of an manager, organization or company seriously lacking in competency and even self-awareness of their intended goals.

    And software development, alas, isn't free of managers and companies pushing such boneheaded stupid goals that get the contrary of what they intend to.

    My default response to a manager pushing you to pursue a stupid/easily gamed goal is to leave ASAP.
    • by alvinrod ( 889928 ) on Wednesday September 14, 2016 @06:10PM (#52889503)
      Apt Dilbert cartoon [dilbert.com] illustrating your point nicely. Any metric that's simple enough for management to come up with is simple enough to be gamed heavily by the workers.
      • Wow, that's exactly what has happened to me some 10 years ago, only I was the developer that had to deal with this mess!
      • by tchdab1 ( 164848 )

        Why are only workers to blame here?
        Companies themselves are driven by sales and profit targets, nearly every one. And nearly every one is potentially pushing the envelope of acceptance in making their numbers. This is why for-profit education and healthcare, tobacco, fast food, sugar, oil, GMOs, and nearly everything else driven by profit is suspect: because people will do what it takes to sell potentially bad stuff to you in the name of making their numbers.

    • by networkBoy ( 774728 ) on Wednesday September 14, 2016 @06:17PM (#52889565) Journal

      I worked a retail job that was all sorts of f'd up (pay wise) fresh out of high school.

      It was commission draw, which means you're guaranteed minimum wage, but once your commissions exceed that any time you were performing below was taken out of your earnings to repay it.

      E.g assuming a $10/hr minimum wage (easy math):
      you worked a sloooooow day for 8 hours and sold only $40 worth of commission; you're paid $80 ($40 commission + $40 draw)
      next day was a lot better and you sold $120 worth of commission in 8 hours; you're paid $80 ($120 commission - $40 draw from yesterday).

      While in theory this was okay, the problem was that when you were working and the store was closed you effectively were not paid.

      Add to that some of the products had negative commissions...

      So, the game that was used: on a slow day buy a product for cash that was on incentive (high commission for short time) that was due to be off before 30 days were up.
      Wait between two weeks and 30 days for it to clear your paycheck *and* the spiff to go away, return for cash under generic ring number.

      Naturally this resulted in arrests for fraud, which resulted in countersuits for unfair pay. All in all a total F* fest.

      Old way of straight pay (above min wage) for hours worked and *stores* getting a bonus for good performance worked a lot better.

      -nb

      • by swb ( 14022 )

        That's crazy -- so if you had an awful day, and sold zero for 8 hours you got $80. The next day you sold $80 worth of commission, your net pay for two days is zero?

        In many ways that seems worse than straight commission where you make zero unless you sell something. What you described sounds like a way to basically cut the effective commission rate to half or worse.

        • by Anonymous Coward

          no, worse than that. on a 'draw' system that guarantees $80 a day.... if you sold nothing over 8 hours one day and got your $80 anyway, you're "in the hole" for that $80, if you earn $80 in commissions over 8 hours the next day and got another $80, you're still down that $80 from the day before which still needs to come out of your commissions > $80 in a day. if you have too many days without making your quota (i.e. fall too far 'behind') you usually get shitcanned pretty fast in these types of situation

      • by AthanasiusKircher ( 1333179 ) on Wednesday September 14, 2016 @09:32PM (#52890539)

        Not directly in sales, but I have a personal anecdote on point about how such bad "targets" destroyed an entire department (and ultimately the company).

        Years ago I took a summer job working at a collections department for a small cell phone company (back in the days when there were more independent companies around). Horrible job, but paid better than some other options I had at the time. You had the folks working the 30-day delinquent files, the 60-day delinquents, and then the 90-days and 120-days+ files.

        Anyhow, when I first arrived there, they had an bonus incentives for two goals: (1) covering the most accounts, and (2) bringing in the most collections money. What did this system do? Well, it made the 30-day and 60-day delinquent account folks do a sort of "triage" to find the accounts that were most advantageous or easiest to take care of. So, they'd try the easiest and quickest methods to contact each account and then move on as fast as possible.

        (The dirty secret was that something like 25% of accounts were set up incorrectly in the first place, usually by haphazard handling during the sales process -- a product of bad incentives in that department too. The collectors avoided these "problem accounts" like the plague.)

        After my training was over, I optimized my computer for handling accounts as fast as possible, creating various computer shortcuts that could allow me to handle about 3 times the average number of accounts per day. My boss was so shocked when she saw how I was doing things that she insisted I show her how to implement my shortcuts and tools for everyone else in the department (roughly 30 people, as I recall).

        Because I was doing so well, I got put on the 90-day/120-day+ accounts then, since they were supposed to be "harder." I soon found out what made them "harder" -- roughly 75% of them were disasters left over because the 30-day and 60-day people didn't have the time to figure out what was wrong. There were loads of accounts with all sorts of things screwed up... so over half of these weren't just simple cases of people not paying a bill for a few months. They were cases where accounts were shut down incorrectly, cases where account had been incorrectly set up by sales people and weren't billing correctly, cases where customers had phones still active 6 months after they should have been shut off, cases where customers had shifted to a different account (usually by someone in sales) but no one had fixed the old one, cases with VIPs who were basically given unlimited phone usage and never were supposed to receive bills but were flagged wrong in the system, even outright cases of fraud, etc. I even uncovered a complex fraud ring in my few months there, which likely saved the company many times what the other collectors earned in collections.

        Anyhow, despite the complexity of cleaning up these "messes" with most accounts, rather than just doing the normal collections job, my numbers for account handling were still pretty good. But I wasn't bringing in a lot of money, because... well, mostly I was cleaning up messes left by the way the incentive system was set up. And let's face it, people whose bills are WAY overdue and likely had their phone service shut down for at least a month were unlikely to pay.

        So, even though I had been highly praised by my boss (and even the boss's boss) for all of the great work in optimizing the entire department's computers (not my job description), tracking down fraud and other weird cases that required a bunch of detective work to "correct" the many account errors, my "numbers" didn't look good on the spreadsheets for the higher levels of management.

        The last straw came when they instituted a system where we had to "log into our phones" when at our desks, supposedly to prevent people from taking long breaks or something. Well, obviously a lot of folks just didn't even bother to log out then for breaks. But I did, because I was a "good" person who obeyed the rules.

        About a week af

        • by mr_shifty ( 202071 ) on Wednesday September 14, 2016 @10:09PM (#52890659) Homepage

          It's a tough situation. If you incentivize fixing "problem accounts", then you create the perverse incentive for people to create problems so that they can fix them and earn more.

          Any incentive program needs oversight to watch for the most common abuses, which means that it needs to be simple enough to spot, and managed by people smart enough to maintain it.

          I manage the incentive program for my department where I work, and I can tell you that it falls into what I feel is the 3-leg stool equation.

          1. It has to benefit the customers
          2. It has to benefit the employees
          3. It has to benefit the company

          If you can pull this off, you're good, but a BIG PART of this is human understanding.

          Example. Last month one of my teams spent the entire month dealing with a messy bunch of clients from an acquisition. As such, their productivity (by the raw numbers) were way below the minimum thresholds for participation in the incentive program.

          Their supervisor brought this concern to me. I'm not about to punish one of the best teams I have because they busted their asses to provide good service to clients we just gained from another company we purchased (and want to retain!!!).

          So I said fine, those techs get an average of the 3 previous months' performance for bonus payouts for the month of August.

          The techs were very happy with this (and continue to not shy away from work just because it's "difficult" or may detract from the raw numbers everyone is bonused on), their supervisor is the hero because he looked out for his troops, and I'm the understanding manager because I understand that no numbers for any incentive program can exist in a vacuum.

          Productivity continues so the company benefits, the customers benefited and will continue to do so, and the employees benefited -- but only because human understanding made for reasonable exceptions.

          If you don't run an incentive program with these kinds of approaches, you deserve the mess you inevitably get.

        • Accidentally Moderated you Flamebait, my apologies.

          Posting to clear, please ignore.

    • My default response to a manager pushing you to pursue a stupid/easily gamed goal is to leave ASAP.

      Yeah, by that point it's usually too late. By the time they notice their algorithm is being gamed they've already been rating employees on it for a while, so now they'be got the dishonest employees who happily gamed the system and never cared about the company, the formerly honest ones who started gaming the system to keep their jobs (and now resent the company), and the rest have been laid off or, like you, left for a better job.

      Even ditching the rating system won't get the good employees back. Welcome to

    • More to the point, I've always said: "It's not that you measure metrics that matter - it's what metrics you measure that matter." Case in point: I was meeting with a call center manager pitching a new system and we were swapping war stories and he told me about taking over at another company's call center and was reviewing reports, only to see what seemed a really high number of complaints about reps hanging up on customers in the middle of a call. Interviewing some of the worst-offending reps, they told hi
      • by jafiwam ( 310805 )

        For best results, start a sentence and hit the "hang up" button right during the middle of a word.

        That way, it doesn't piss off the biddy and you still get to end the call.

        Good customer service!

    • I made that observation years ago.

      If you reward workers for collecting red jellybeans and punish them for getting blue ones, the first thing they'll do is bring in a can of red paint.

    • I saw the same behavior with my company's upper management. They'd do anything to make the quarterly report look "good" so they could pocket their bonuses at the expense of the company's health.

      "You get the behavior you measure".

      It's not a unique practice. It's commonplace.

      Holding plebes responsible at Wells Fargo is like putting lipstick on a pig. These directives come from top down.

    • Good thing our entire tax system is pretty much entirely based on 'incentives' to get people to do the "right thing".

    • by Agripa ( 139780 )

      And software development, alas, isn't free of managers and companies pushing such boneheaded stupid goals that get the contrary of what they intend to.

      http://dilbert.com/strip/1995-... [dilbert.com]

  • The inherent nature of banking, combined with standard marketing/sales techniques, means this sort of thing is standard operating procedure.

    There will be more of this happening, as desperate people make bad decisions in order to keep their jobs.

    • Re: (Score:3, Interesting)

      by Hylandr ( 813770 )

      Sales aren't the only area affected by the need to keep the money flowing. Research grants work the same way. In order to keep your job you have to produce the data the people with the money are looking for.

      • by Ol Olsoc ( 1175323 ) on Wednesday September 14, 2016 @07:10PM (#52889885)

        Sales aren't the only area affected by the need to keep the money flowing. Research grants work the same way. In order to keep your job you have to produce the data the people with the money are looking for.

        I've worked in sales with a quota. I've worked in research.

        They don't remotely work the same way. The sales were sales, nothing particulary difficult. My sponsors wanted correct answers, not something that corresponded with their desires. There were no "wrong" outcomes, just abandoned avenues.

        For the occasional rogue researcher, there's a path to find out their transgressions. Most take this very seriously, and disgrace can be forever http://time.com/3084494/japane... [time.com]

        Andrew Wakefield lost his career permanently after his conman anti vaccine conspiracy came to light.

        Malcolm Pearce did fraudulent work on ectopic pregnancies - presumably transplanting the out-of place embryo into the uterus and resulting in a full term healthy infant A man who signed on as co-author because of being the head of the medical department where Pearce worked, one Geoffrey Chamberlain also lost his career in disgrace.

        Dong Pyou Han was sentenced to 4.5 years in jail, and a fine/repayment of 7.2 million dollars.

        Now if you will, let us compare disgrace ending in suicide, disgrace ending in lost careers, with the treatment of the head of the unit of Wells Fargo that was doing this sandbagging, Carrie Tolstedt. http://fortune.com/2016/09/12/... [fortune.com]

        She made the decision to retire after 27 years, and is getting 125 million. Nearly the amount of the fine levied against Wells Fargo. Toltsted profited off the sandbagging, and although Wells Fargo could have elected to demand the fraudulently received money in a device named "clawback", she is keeping the money that was illegally obtained.

        And finally, who was punished? It's pretty difficult to call retiring with a 125 million bonus punishment. But the employees who fell to the pressure to do this industry standard dandbagging? Oh - they were fired. Seldom happens to the technicians involved in a research fraud case, unless they were highly complicit

        Fscking identical treatment between scientists and the banking industry - damn near exact, eh? Meantime the stockholders are picking up the Wells Fargo tag.

        And that's the really weird thing. A huge amount of fraud going on, and people committing the fraud getting away stock free, and people who might have an issue with scientists act like they should be lined up and shot for their malfeasance.Yet appear to think that the bank fraud is just business as usual. I dunno if that's you or not.

        • by Dog-Cow ( 21281 )

          Scot free. I would presume they still have their stock.

          • Scot free. I would presume they still have their stock.

            Of course. We little people don't understand that the banking industry answers to no one. Too big to fail, and the woman in charge of committing the fraud is now happily retired, and with more money than most of us will make in our lifetime.

    • It's not just banking - it's virtually *any* publicly traded business.

      When pressure is on to look good on the quarterly reports, you quickly lose any sense of ethics.
      =Smidge=

      • by RabidReindeer ( 2625839 ) on Wednesday September 14, 2016 @08:08PM (#52890165)

        It's not just banking - it's virtually *any* publicly traded business.

        When pressure is on to look good on the quarterly reports, you quickly lose any sense of ethics.
        =Smidge=

        Not unique to public businesses. Private businesses can press employees to please the bosses, government agencies can be squeezed to placate CongressThings (despite all the civil service cruft that's supposed to make that impossible). And so forth.

  • you ain't trying, and Patriots are 'trying hard' http://blog.masslive.com/patri... [masslive.com]
  • I've had multiple run-ins with multiple big telecoms. If you are a lawyer specializing in suing slimy companies over "ghost upgrades" and other billing games, the telecoms are prime pickins'

    Please, sue the living #!@&* out of em!

  • by UPZ ( 947916 ) on Wednesday September 14, 2016 @06:10PM (#52889507)
    I've been with my credit union for >10 years now. They are not in for profit-making, so no systemic reason(s) for upselling or fraud. They have online bill pay, apple pay, visa signature credit card with a huge credit line, more free ATMs than any bank due to their credit union network, and will refund my fees if I use a bank ATM. Oh, and I can call and reach a human being in less than 5 seconds, and the human being does not read a script. The only reason now for staying with a bank is if you can't be bothered to google a credit union near you.
    • by Anonymous Coward on Wednesday September 14, 2016 @07:00PM (#52889831)

      The upselling and fraud are due to employee incentives and internal competitions. Anyone can have incentives or competitions, non-profit-making has nothing to do with that. Credit unions are not immune to this.

      Credit union users, please stop thinking of credit unions as some type of magic entity. They're groups of people, same as everything else.

    • by Anonymous Coward

      Or belonging to a group or class of the population no conveniently located credit union wants to deal with.

    • by alvinrod ( 889928 ) on Wednesday September 14, 2016 @07:28PM (#52889973)
      To state that they are not attempting to make a profit is incorrect, it's just that the profit they do make goes to their members (who are considered owners of the credit union) rather than some smaller group of individuals. You could conceivably get the same kind of employee misbehavior if a credit union were to implement that kind of incentive system for its employees, but they're unlikely to since there's no impetus from shareholders to drive up the stock price for the next quarter.

      Credit unions are typically organized as a non-profit or treated as such for tax purposes, but to imply that they're against making a profit doesn't make any sense as it would suggest they don't care about how they manage their members money or would just give out a loan to anyone for no interest at all. If my credit union weren't making a profit, it wouldn't be able to pay interest on the money I have on deposit with them.
      • by tlhIngan ( 30335 ) <(slashdot) (at) (worf.net)> on Thursday September 15, 2016 @12:54AM (#52891169)

        Credit unions are typically organized as a non-profit or treated as such for tax purposes, but to imply that they're against making a profit doesn't make any sense as it would suggest they don't care about how they manage their members money or would just give out a loan to anyone for no interest at all. If my credit union weren't making a profit, it wouldn't be able to pay interest on the money I have on deposit with them.

        A non-profit is just that, non-profit. It means their revenues and expenses at the end of the year balance, hence no net profit.

        That doesn't mean they can't make a profit, it's just that profit is spent before the fiscal year ends so it's back to zero. Now, some non-profits are arranged so they make very little profit on what they do - thus giving lower prices to everyone, and the profit is then used to pay salaries and all that. But it doesn't have to be that - it can be making ridiculous amounts of profit and they then spend it on something else.

        For an example of this, look at the College Board - they are the makers of many of the academic tests out there, and they charge an arm and a leg (ask any student who has to take the SATs). But any other standardized test is probably administered by them as well. They rake in the money, both in the tests, the study guides they sell, and many other things. So much so they spend their profit on luxury hotels and other things - as a non-profit they have to spend it all to even it out.

        Of course, most credit unions are less evil and spread any profits as dividends to the members.

        • A non-profit is just that, non-profit. It means their revenues and expenses at the end of the year balance, hence no net profit.

          That doesn't mean they can't make a profit, it's just that profit is spent before the fiscal year ends so it's back to zero. Now, some non-profits are arranged so they make very little profit on what they do - thus giving lower prices to everyone, and the profit is then used to pay salaries and all that. But it doesn't have to be that - it can be making ridiculous amounts of profit and they then spend it on something else.

          For an example of this, look at the College Board - they are the makers of many of the academic tests out there, and they charge an arm and a leg (ask any student who has to take the SATs). But any other standardized test is probably administered by them as well. They rake in the money, both in the tests, the study guides they sell, and many other things. So much so they spend their profit on luxury hotels and other things - as a non-profit they have to spend it all to even it out.

          Of course, most credit unions are less evil and spread any profits as dividends to the members.

          But when most people say non-profit, they actually just mean tax-exempt. The organization may make a net profit, but due to its nature is not taxed.

    • by guruevi ( 827432 )

      I'm member of two credit unions and 3 other banks, there are credit unions that are actively in the business of ripping their customers off, as soon as the account ceases it's use, I'll be closing it with that credit union.

      I've seen 10 day delays for bank transfers when the account nears it's due date, no notifications of due payments until the day before (which is strictly speaking legal, but the mail takes 3 days to deliver), turning off automatic transfers whenever there is 'late' payment. I get my money

    • I would switch to a credit union in a heartbeat, IF I could find one that was open on Saturday. There are plenty of credit unions in my area, but not one of them is open on Saturday.
      • Have you emailed them and told them this? Also, why do you need them open on Saturday? The ones I use I can do just about everything online.

    • I had to file for bankruptcy in 2011. My attorney advised me to switch my accounts away from Wells Fargo Bank as they would freeze my accounts once they get the bankruptcy notification. Just so happened that a credit union opened next door to the branch I went to as WFB started this product upselling campaign. Switching to a credit union was the best financial move I ever made.
    • I worked at a credit union in NC. They have 20% less overhead because they don't pay taxes.

      So everyone works 20% less hard because of an unfair exemption they have. Rewarding their laziness.

      Just a part of the crony capitalism narrative as far as I can tell.
  • Isn't stress regarded as a silent killer? It makes people do things way out of context especially if it is protracted, long term, and necessary for survival.
  • by MountainLogic ( 92466 ) on Wednesday September 14, 2016 @06:15PM (#52889549) Homepage
    This is common in any environment, including Dilbert [dilbert.com]. Reward or punish a behavior without any common sense and you get what you ask for. On the other hand, if you do like Nordstrom's did in their five word employee handbook [businessinsider.com] then you just might get what you want: Use good judgement in all situations. Then of course that requires the same of management. The other side is zero tolerance, as in we have zero tolerance for bugs leads to a situation where nothing is ever label as a bug.
  • ... now installed on 200 million computers.

    What's a more valuable statistic: How many people managed to pull the network plug before it downloaded.

  • What came as a shock was that it took so long to see such a visible high profile example of this. Of course this would happen when rigorous quotas are introduced and a job is on the line.

  • by acroyear ( 5882 ) <jws-slashdot@javaclientcookbook.net> on Wednesday September 14, 2016 @06:23PM (#52889615) Homepage Journal

    "The more any quantitative social indicator is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor."

    https://en.wikipedia.org/wiki/... [wikipedia.org]

    it has impacts in a great many areas, including the test-based teacher and school evaluations.

  • Keeping their jobs (Score:2, Insightful)

    by Anonymous Coward
    Any organization is a bunch of people trying to keep their jobs. Government employees do it by expanding their departments powers and budgets, justified by sticking their noses into affairs which really should have nothing to do with them. Corporate employees do it by shit like this. Dragging work out, inventing projects they don't need and exploiting evaluation systems is how they do it. Smaller companies won't tolerate it because it because eventually hits their balance sheet and can send them under, but
  • by swb ( 14022 ) on Wednesday September 14, 2016 @06:32PM (#52889677)

    How many of these things are actually incentives and how many are just outright coercion re-labeled incentives?

    I tend to think of an incentive as a motivation to get X+N if I do some extra thing. If I don't do the extra thing, I just get X. But if I say "do the extra thing or you're fired", that seems like coercion. I don't get X+N, I don't even get X if I don't do the extra thing, I get fired.

    Holding a gun to someone's head and demanding their wallet and then claiming that staying alive is an incentive to hand over your wallet seems like a perversion of the concept of incentives.

    I think most of these companies where Wells Fargo style fraud happens aren't actually operating on incentives, they're operating coercively. People will do all kinds of unethical things if they think the outcome from not doing them will be termination and subsequent financial peril. Wells was probably holding a gun to their head and claiming that continued employment was an incentive.

    There is probably also a threshold where the incentive on offer is so lucrative that people are willing to risk unethical activity to achieve it, but then again there should be sufficient checks to make the unethical achievement either impossible or with a penalty that outweighs the value of the incentive. Robbing a bank has a potentially lucrative incentive, but it also carries a penalty that makes a haul of low five figures in cash not work the risk of a 20 year prison sentence.

    • Re: (Score:1, Insightful)

      Hagbard Celine's Second Law:

      "Accurate communication is possible only in a non-punishing situation."

    • after 20-30 years of stagnant wages it's built into our economy. It's not how lucrative the incentive is. It's whether the spiff gives you enough to make rent, car payment _and_ eat this week. It's whether you can hang on to your meager standard of living (such as it is)...
    • by rhazz ( 2853871 )
      I think the real question is, since X is just the minimum, do you really want to be the kind of person who only does the minimum?

      Flair [youtube.com]
      • by swb ( 14022 )

        That's a moral judgement, not really a description of the terms of employment.

        It's used by employers who try to goad employees for doing more work than the job description requires.

        • by rhazz ( 2853871 )

          That's a moral judgement

          Actually it was a joke. The linked video is required viewing ;)

  • "People will always do what they perceive to be in their best interest." Being a sales guy and going through a variety of "comp plans", we all learn really quickly how to maximize our commissions. Oh - if we can sell more shit, great! But the first goal is to maximize commission-able revenue.
    • by k6mfw ( 1182893 )

      But the first goal is to maximize commission-able revenue.

      Give me a sales guy who knows my needs and systems, and can recommend solutions that will make my job easier, I will keep their email and phone # handy. Another real plus is being honest to recommend a product I'm not aware of instead of something I was first seeking but it was more expensive. Oh, and cut the show promoter, game show host, or Amway sales pitch technique.

  • by zerofoo ( 262795 ) on Wednesday September 14, 2016 @07:55PM (#52890101)

    I've asked lots of cops about ticket quotas - and every one of them says they don't have quotas, but their chief wants them to meet or exceed "performance metrics" similar to other districts.

    So yeah - that cop isn't "required" to write you that ticket, but if he wants his promotion - he will.

    • by k6mfw ( 1182893 )

      ... every one of them says they don't have quotas, ...

      I asked a cousin, deputy sheriff, about quotas, he said there are none. He then said there are days where he gets one call after another, no time to stop and give someone a ticket (unless it is a gross violation) because he has to respond to calls. Then there are slow days with not much happening, supervisor will look at activity logs of long periods of no calls and might question lack of patrol activity. Cousin said it's real easy to rack up lots of tickets (lots of drivers committing violations).

  • The Bausch & Lomb scandal was also similar, with the employees were found manipulating earnings to reach financial goals using a trick called "channel stuffing" (in which someone ships goods and then book them as sales without having actually sold them.

    Car companies do this all the time. They sell the cars to themselves and then count them as sales in order to increase their sales numbers. Then they either scrap them, part them, or sell them at a significant rebate as used cars (though with no miles on them beyond a few for transport) because they are no longer new. This also lets them skip out on the full warranty, which is important because the cars sit around in the open air in a lot until they're sold, degrading all the while. A car is not a horse, bu

  • by Anonymous Coward

    I once worked for a publicly traded company that was in the PBX business, but generally in the "communications" business since they adopted the PBX gear to work as a nurse-call system in hospitals.

    To make their quarterly numbers look good, the upper-management had the nasty habit of borrowing from future sales to make THIS quarter's numbers look good. Once a contract was signed, they would ship the equipment even if the equipment wasn't needed until a year or more later, for example, a new hospital is being

  • I used to work in retail. The sales goals had both positive and negative reinforcement; [meager] commissions for selling extended warranties, and stiff reprimands for not meeting 'accessory sales' goals. One store in the district custom created their own signs for all of their furniture, marking the prices up by $20 or so, and selling everyone extended warranties with every piece sold, without ever asking the customer. I noticed this while visiting the store, and reported it to my manager.
    Guess who got in
  • This reminds me of the "will that be on your [store] mastercard" crap. Pushing customers like that is just BS

  • by wienerschnizzel ( 1409447 ) on Thursday September 15, 2016 @02:24AM (#52891369)
    The whole housing market bubble that had crashed the economy has been created this way - mortgage providers were incentivized to hand out mortgages to anyone (no income no assets) then funnel them to securities providers making them someone else's problem.
    • by dywolf ( 2673597 )

      thank you.
      that's exactly what I came to say.

    • My nephew got a job at one of these mortgage lenders that put him in the middle of the pipeline to move mortgages off the books. Made good money. He paid more in taxes than his father made in a year ($50,000). Bought one house, flipped it. Bought two more houses to flip but he lost his job and had to do short sales. He had a good accountant who helped him narrowly avoid bankruptcy and stay out of trouble with the IRS.
  • I worked for a consulting firm that tracked your billability or percent of time you could bill a customer vs doing other admin overhead. The stupid thing was if you did non billable work like writing proposals on top of billing you 40 hours a week, it still messed up you billability targets. Once i got a message about my billability being too low after working over 40 hours billable and doing proposal work then your manager would need to explain it to his higher up manager. They later fixed the policy, b
  • In economics this phenomena in general is called perverce incentive [wikipedia.org]. That is, someone tries to put in place an incentive to reward for productive behaviour but in the end a "workaround" is found to comply with the incentive criteria by doing something very counter-productive.

    Doing coding? One organization decided to start giving bonuses to coders by lines of code written. Suddenly all this extra whitespace appears out of nowhere and when looking into your favourite VCS you'll see same lines having a lot of

  • Has everyone forgotten so quickly the 2008 recession was in large part due to this kind of sales activity?
    People were getting bonuses for the numbers of mortgages they sold that could be repackaged into securities, making money on both ends.
    They wanted more more more, until the economy simply collapsed from the weight of all the subprime and toxic mortgages.

    • by Agripa ( 139780 )

      Has everyone forgotten so quickly the 2008 recession was in large part due to this kind of sales activity?

      Nope, I am sure many learned lessons from what happened like how to do it again but better.

  • Anytime you tie compensation into performance metrics, you will ALWAYS have a cheating problem. It starts with the one, or a few then spreads as others see someone else making big pay and bonuses because of their ( bogus ) performance numbers.

    Pretty soon everyone is doing it because, if you're not, management wants to know why you're such a slacker in comparison to everyone else.

    See any professional sport, standardized testing, entrance exams, etc. The list of exames are nearly endless.

  • The yerkes Dodson law as well as how people perform might be a big part of what drives this kind of thing. People perform best when there is uncertainty in when they will receive a reward, plus Thai need a certain arousal state to do something well.

    If your performance and profit is all that we are going to measure keeping one's job by, then this thing will continue to happen for ever. We need to recognize that profits should not be everything

  • Incentivization is often an evil, whereby those at the top levels use those beneath them to exploit the underlings - who are the customers and citizenry. Beware of the middlemen.
  • This bullshit "metrics" and "targets" mentality which has it's roots in game theory doesn't just apply to sales. Healthcare (at least in Canada) is often measured based on metrics like wait times. This results in hospitals trying various schemes to make sure a doctor "sees someone" very soon after they arrive in the ER. Thus they can say the patient experienced a very short wait time. Instead, they should make decisions based on patient satisfaction and outcomes. Education also suffers. Standardized t

Your program is sick! Shoot it and put it out of its memory.

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