HBS: Sins of Commission by Jeffrey Pfeffer

March 8, 2010

Be careful what you pay for, you may get it

Similar to Arrow Electronics’ compensation and EPR system, this case study outlines an incentive system gone awry, as it details the problems termed “the sins of commission” that arise when the city of Albuquerque incorporates a flawed system that would reduce the work hours over the garbage truck drivers. I am big on bullet points so see below the most interesting irregularities I found out of the case above:

  • Overview: this case study takes place in the city of Albuquerque, NM. The city faces a problem with its garbage collection due to the lack of completing the assigned routes on time by the garbage collectors which results in a huge bill for overtime pay, so the city implements an eight-hour workday for the truck crews to complete their routes by figuring they would be highly motivated by finishing up their tasks quickly and efficiently, although not effectively.
  • Bottom line: to have a cost-effective process by cutting the overtime pay.
  • Unethical decision-making: the city exhibits an unethical approach from start to finish as it doesn’t consider the garbage truck drivers’ viewpoints who are ultimately the ones affected by the work hours reduction , nor anticipates the fatal errors that would come along with the time maximization such as: driving over the speed limit which potentially leads to accident and fines; miss stops, skip garbage so a second truck needs to go pick up the skipped garbage, break rules as far as the legal weight limit is concern, so rather than being less expensive the system ends up being more expensive and costs problem to the city of Albuquerque.       
  • Failed System: it wasn’t a very cost-effective process whatsoever as it didn’t outline the expectations appropriately, and the worse the city did mess with people’s money, and employees’ money/incentive is something that we don’t want to play with as it is hard to earn. Therefore, overtime incentive system failed and so did the eight-hour workday.  
  • Financial incentives: “they shouldn’t be used to drive behavior, but instead to provide recognition and to share the company’s success with its employees” Pfeffer pointed out. This is absolutely right, as we know that job satisfaction and loyalty from employees come through other intrinsic motivational means that produce nothing but a healthy work atmosphere which leads to employee retention, higher productivity and profit than an incentive pay.

In summary, the city of Albuquerque should have had a good financial incentive in place not to appease its workforce but to motivate them and reward them for good work. Also, it should have clearly specified to its drivers what the expectations were with the eight-hour workday implementation so that everybody was on the same page and held accountable for the job. The rest would have been just mechanics: operation hours, overtime, stagger drivers, staffing accordingly, etc.

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