Here
are few instances where incentives & bonuses led to unethical behavior of
managers/employees

·       Scandal
at Department of veteran affairs: This is an example where monetary incentive
to the administrators in department of veteran’s affairs led to unethical behavior.
Here the incentives are designed to reduce the wait times of patient treatment
which is basically good for patients and hospitals. This means administrators
receive incentives for keeping shorted waiting times but these incentive scheme
led to motivating bad behavior. Instead of improving the health care, they falsified
the records to make wait time shorten on paper. Even though incentives are
designed to greater performance, but employees may want to maximize the incentives
by cutting corners and crossing ethical boundaries. Professor Maurice, Wharton management
along with colleagues in their research found that when people are rewarded for
goal achievement, they are more likely to engage in unethical behavior, it can
be overstating their performance, or rig the data to make the numbers look
better, especially when they fall just of their goals.  

·       From
HRM cross roads case: Where Bharat dubbed shifter from being ethical to
unethical for financial incentives and promotions which eventually led to major
union problems in the firm

·       Decline
in quality of General Motor Cars: At GM employees are partly incentivized to
improve quality & safety of a car but most of the incentives are assigned
to cost savings. Hence employees to get more incentives compromised on the
safety and quality and even discouraged individuals from raising safety
concerns. This led to major issues & customer complaints in the quality
& safety of the car which led to huge recalls and high losses.

·       In
my previous company, Customer support agent are incentivized on the resolution
time of an issue. Shorter the resolution time higher the monetary incentives.
Reason for this incentive system is to resolve the customer problem faster so
that customer has a good experience. But this didn’t led to the expected
behavior. Customer support agents started cutting the call behavior the issue
is resolved which is leading to worst customer experience. Many customers started
writing bad reviews online ie., android appstore, social networks like
facebook, twitter etc.

·       Avoid
short term incentive plans: example let’s say there’s an incentive plan on monthly
sales. That means incentives are given based on monthly sales which creates
pressure on employees to achieve results in short period of time, shorter
period of assessment leads to greater problem which will make employee look for
ways to complete the task even its unethical. Many companies give monetary incentives or bonuses to
the employees, managers and even CEO’s and these companies may not be aware that
the incentive scheme is encouraging even good employees to behave unethically. If
the incentives/bonuses are not designed properly will lead to unethical
behavior. Professor Maurice, Wharton management along with colleagues in their
research found that when people are rewarded for goal achievement, they are
more likely to engage in unethical behavior. Employees/ managers may overstate,
rig, distort, conceal or even manipulate the following·       Financial
statements or results.·       PPP
rewards·       Data
related to finance ·       KPI’s
of performances·       Budget it can also be overstating
their performance, or rig the data to make the numbers look better, especially
when they fall just of their goals.

Studies have also shown that the employees having high
power are more likely to indulge in unethical behavior to maximize their
incentives.