How to Troubleshoot Your Business Unit’s Goals

Troubleshooting your incentive plans can help you avoid undesired behaviors.

Goal setting processes can sometimes lead to unintended behaviors or undesired behaviors. If you don’t understand how compensation and incentives relate to how your team members work, they may do the wrong thing. Troubleshooting your goals requires you to look at the irrational behaviors that can arise from the goals you set. When you find those situations, you’ll need to either revise the goal or change the incentives.

I worked at a credit card company at one point and I ran part of the collections division. We were trying to get delinquent customers to pay us money back and get their accounts back to current status. If they didn’t pay us back, they were charged off as bad debt and we lost that money. We looked at our call center and we said, “How do we want to change their behavior? How do we get more of our money back?” We changed their goals and their incentives to move from being focused on curing accounts to just dollars collected. We thought if we collect more money, we’ll perform better.

What this led to was a behavior we didn’t expect. Our call center associates started getting smaller payments. They made the telephone calls shorter so they could collect more dollars. This led to more customers charging off down the road because our associates weren’t helping them pay down their balance and get their account back to current status. We said, “Well, that’s not what we want to happen. We need to change the plan.”

So, we changed the plan and we said, “No, it’s not dollars collected anymore. Now it’s the number of accounts that you cure back to current status.” Well, the associates said, “How can we make the most money doing this?” What this led them to do was focus on really small accounts and they let those big accounts go because they were too hard to work. We said, “Well, that’s a problem. Now we have a lot of bad debt charging off. How do we change the plan?” We stopped and we thought and we said, “What behaviors do we want out of our associates?” And we changed the incentive to focus on the cured dollars, how many dollars are you moving back to current status. This finally got us the behavior we wanted.

If you want to fix your goals and make sure these bad behaviors don’t happen, pretend you’re the person on the incentive plan. Set aside doing the right thing and think about what would benefit me the most if I was on this incentive plan. Be willing to go into the gray area where you’re not breaking the rules, but you’re not exactly following the spirit of the incentive. This is how you’re going to find those places where behaviors won’t match the actions that you want your people taking.

At one point, I used to do this regularly with one of my associates. Before we rolled out a new compensation or incentive plan, JC and I would sit down and say, “How do we break this plan? What are all the things that we can do to put the most money in our own pocket?” And we would break that plan. We would figure out all the behaviors that were not desirable but they put a lot of money in the associate’s pocket. What was important then was we changed the plan until we found a plan where we couldn’t break it and we were getting the right behaviors.

Spend that time troubleshooting your incentive plan. Think through from the incentive to the behavior. Think about what could go wrong and make sure you don’t roll out that incentive plan until you have the right behaviors identified. This extra time you spend in the troubleshooting process will prevent your associates from doing things that you don’t want them to do and it’ll get them to focus on the right behaviors that drive your overall goals.

Want to learn more about setting business unit goals? How about taking an entire course on it? Check out the video below to learn more about the course and get started. Or you can go directly to the course and start learning how to set business unit goals. The entire course is available at LinkedIn Learning. Enjoy!

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