Today, we’ll discover the cobra effect and its impact on the results of your organization. It is important to keep in mind this effect when the performance indicators, and more specifically the objectives of each sector or individual, are defined. It would be a pity that the way of measuring and incentising causes the opposite of what you want!
It is named after a legend of colonialist India. Believing there were too many cobras in the city of Delhi, the authorities decided to set up a reward for each reported cobra head. The measure was a great success, until the administration discovered farms cobras, authorities then stopped the program of rewards and breeders released their animals, increasing the number of cobras initially present in the city.
Another well documented case is that of rats in the city of Hanoi, during the French colonial period. In 1902, faced with a health problem of plague, the governement looked for solutions. They determined the cause of the plague: the rats are carriers of the disease and they swarm in the sewers (yet modern) of the city. With a 5 why, they could have gone further in their root cause analysis and perhaps eradicate a problem that still exists in Hanoi, but that’s another story.
They set up a team dedicated to the control of the sewers, but the ungrateful and poorly paid task degenerated into a labor dispute, as explained in the document “Of rats, rice and race” by Michael G. Vann. The governement then offered all the inhabitants a penny per captured rat’s tail. The whole rat would have imposed too much work on already overburdened health authorities. All was well until the administration discovered, besides farms of rats, rats without tail in town …
Use incentives wisely
The human being is so made that he needs motivation to accomplish certain tasks. I would not go back to the intrinsic motivations (sense of accomplishment), which are hardly perverted. Financial incentives, extrinsic motivators, are most at risk. Everyone trying to gain the maximum with the minimum of effort.
Since imagination and human creativity have few limits, it is useless to try to guess how anyone could pervert the system. Rather, one has to question the objective sought. Is it clear to management, as well as to employees? This is the first step of alignment. If the people of Hanoi understood why the government was trying to eliminate rats, the result could have been different.
In this case, the goal is to reduce the number of rats in the city, especially in the sewers. Today, one of the indicators could be the number of rats passing each day in front of cameras placed in different sewers of the city. In the absence of an infrared camera and vision system to perform this calculation automatically, further assessments could have provided information on the trend of sewer use by rats.
We need to be creative and go beyond the indicators we know to properly evaluate the progress of the organization. Goals should measure real progress or tangible improvement in the organization’s performance and results. It is much more difficult to define an incentives program, just based on good indicators, because it is necessarily more complex. Would the measure have had the same success (beyond farms and tails) if the authorities had put in place a reward system that would have indexed the rat tail reward according to the fall in the number of rats per square km? It would have been necessary to record the number of tails reported by each inhabitant and to pay the reward the following week … I am sure that there will be such a great enthusiasm for this activity.
Do your employees bring you rat tails, or do they really contribute to the success of your organization? On the contrary, is your profit-sharing system simple enough for your employees to understand and contribute directly?