Stickman Players Coaches RefsThe NFL pre-season is once again upon us. New rules, players, coaches and referees, means new mistakes and new opportunities for improvement.  Perhaps it’s no coincidence that the NFL season occurring the same period as the busiest time of the year for compensation professionals, makes me think about last minute improvements to performance and governance.

Like the players and playbooks in football, compensation structures continue to evolve. This brings attention and scrutiny that in turn brings new rules. New rules bring new strategies and tactics and hopefully better performance. Additional complexity and focus on performance means more mistakes, rule-bending, and outright cheating.

In our sport, the players are the people from executives through the rank and file. The referees are government and regulatory bodies. And we, the Compensation professionals, are the coaches.

A 2012 report from Labaton Sucharow claims that 24% of financial executives would cheat. The LIBOR scandal showed that cheating can go on at massive levels.  Even teachers have been caught cheating to improve standardized test scores in several locations. What is the common link between the above? Compensation can be directly or indirectly linked to the cheating.

People will cheat. Without constant oversight and training, most cheating will grow insidiously. It starts as tiny, almost imperceptible, movements that grow as people become comfortable with not being caught (while being paid). We often discuss communication as a way to ensure that people understand their compensation or a way to improve engagement. We must also remember that communication reminds everyone of the correct way to do things.

It is generally accepted that the NFL teams that win the penalty battle win more games. Penalties are simply players being caught cheating. So, the coaches who can get their players to cheat less (or less overtly?) are more successful, have longer careers and make more money. As your team’s coach, it falls on you to do what you can to improve performance and reduce cheating as related to compensation issues. We all do a lot to improve performance, but most of us are uncomfortable discussing cheating. It turns out, you might not need to talk about cheating at all, research shows that reminding people of what is right may help them choose not to cheat all by themselves. Problem solved.

Take two and a half minutes to listen to Professor Daniel Ariely discuss his research and see if you are convinced. Then try it at your company and get back to me in a year or two.  (Start at 5:30 and end at 8:00)

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