Incentive systems need to fit with a broader purpose

02/22/2013 | Harvard Business Review online

Lack of alignment with an organization's true purpose is a key reason that incentive systems fail, Vijay Govindarajan and Srikanth Srinivas write. They share a story about a city where bus drivers often don't stop for passengers because they have been incentivized to complete their routes faster. The problem with the incentive system is that it doesn't align with buses' true purpose of carrying as many passengers as possible to their destination, they write.

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