5 Lessons from Glittery Smelly Incentive Plan Mistakes
I hope everyone had a great holiday season. One of the little highlights for me was the video made by a guy who booby-trapped a package on his doorstep to punish package thieves. If you use social media, you’ve probably seen this. Glitter Bomb video.
The video has footage of thieves reacting to an avalanche of glitter and a horrible smell, usually while trapped in a car. The producer invited other people to put it on their porches in order to get more videos of more thieves. He paid people to return both the box and the video. This is where things went wrong.
After more than 30 million people had viewed the video the producer, a former NASA engineer, had to edit out more than a minute of footage. It turns out that incentive compensation doesn’t just work, it can work too well at motivating the wrong behaviors.
There was a payment for a returned box with video of a thief getting bombed. Some people simply had their friends “steal” the box and act out their reactions. Everyone gets paid, no one gets hurt. But then the thing went viral.
Viral videos drive ad revenue, so the producer was making money (and companies were paying money) based on the popularity of the video. When some of the people on the video realized this, they fessed up and the producer did the right thing. He announced that there had been some fraud and that it had been removed and reposted. About a minute of the video was removed and the media coverage of the error and correction has brought even more attention to the video. As I am writing this the video has been viewed more than 51 million times.
What can we learn from this episode?
1. Make sure you design your incentive plan to reduce the possibility and rewards for cheating. Think through all possible results and work to ensure the worst doesn’t happen.
2. Verify results against expectations and be wary of anything that looks “too good.” Great results are great, but measure twice before you pay once.
3. Be quick about fixing problems. When you find a problem don’t debate the best path. The best path is always fixing the problem (and never hiding the problem.)
4. Be transparent and honest about errors and their solutions. The truth will come out. It’s more likely to stick to you, personally and professionally, if someone had to call you out on it.
5. Don’t throw away an entire plan, because of a couple flaws. Incentive plans are difficult to get perfect. The best plans require consistent communication and regular evolution. Instead of keeping a bad plan or tossing it away, work to improve it. Practice makes perfect refers to learning the same thing, again and again, to get better and better.
Dan Walter is a CECP and CEP and works as Managing Consultant for FutureSense. He is passionately committed to aligning pay with company strategy and culture and is considered a leading expert on equity compensation issues. Dan has written several industry resources including an issue brief on Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.