By Daniel B. Sundberg, PhD
bSci21 Contributing Writer
If you haven’t heard, late last year Wells Fargo Bank landed in very hot water for its employees fraudulently opening customer accounts. The effects of this have reverberated throughout the company, leading to the resignation of the CEO, more than $185 Million in fines, a complete revamp of its bonus system, and thousands of employee layoffs (For more details and a behavioral view on what happened at Wells Fargo, read this article).
Banking and clinical ABA may seem a world apart, but Wells Fargo can teach us some valuable lessons about how pay can encourage (or discourage) ethical practice and high performance.
In recent years, pay-related costs for clinical ABA companies have steadily climbed. A 2014 report from the Association for Professional Behavior Analysts (APBA) indicates BCBAs are commanding steadily higher salaries than in previous years, with nearly 20% earning more than $100,000 annually in 2014.
Add to that new expenses like iPads and computers for staff, digital data collection and practice management software, and supports for insurance billing. These expenses mean limited room for pay increases, less cushion for lean times, fewer resources for staff development, and less ability to invest in growth, innovation, and success in an increasingly competitive field.
Now, most behavior analysts got into this field to make a difference in people’s lives and for a love of science, among other reasons. And, I am a firm believer that while pay may influence employee retention, its effects on performance are questionable. Other factors like coaching and mentorship, positive reinforcement, effective onboarding, administrative supports, and career development opportunities make a tremendous impact.
But that said, money still talks.
ABA companies must remain competitive with compensation to retain employees who often have a choice between many ethical employers, with very reinforcing work environments.
So, what is an ABA company to do?
One option is to increase salaries and eat the costs, but this may be missing a valuable opportunity. Skinner himself once said a paycheck is not a reinforcer, but rather a way to establish a standard of living that can be held over employees to encouraging performance. Many ABA companies have recognized this and offer performance bonus programs, intended to tie higher pay to valuable performance.
And so, this is where we get back to Wells Fargo. This intention of tying employee performance to valuable outcomes was the driving force behind Wells’ bonus program that got them in such trouble.
Now you may be saying to yourself “ah, but we’re behavior analysts, and we know how to influence behavior!” But keep in mind 1) bankers tend to be a smart lot, and having worked first hand with bankers who were designing their bonus program, I can tell you they think long and hard about their pay systems and 2) just because we know theoretically what should be done, doesn’t mean it is easy in practice (just think, how many behavior analysts do you know with pets that are little monsters?).
A previous article on what went wrong at Wells Fargo, identified 4 areas of focus that can make or break a pay for performance bonus system. Here are some ways that behavior analysts in clinical ABA companies can learn from Wells Fargo, and avoid those errors
- One-Dimensional Measures
This means paying people based on only one set of results. Wells Fargo intensely rewarded staff for one result – sales. Clinical ABA companies often bonus for hours billed, and like Wells Fargo, bonusing for billable hours alone rewards only 1 dimension of what makes a successful and ethical business. This focus on billing alone can also put staff at risk for higher stress and burnout, and can lead to statements like “all they care about is money”.
Bill Abernathy suggested pay can be linked to at least 7 dimensions of performance, which cover both short term and long term goals (Abernathy, 2011, 2014). Here are just a few examples of what these measures may look like in clinical ABA companies:
- Sales: Hours billed, donations, new client intakes
- Expenses: turnover costs, non-billable hours worked, cost of materials/stimuli
- Productivity: contract fulfillment rates, behavior plan progress
- Cash flow: Accounts receivable, billing submission, timesheet submission
- Regulatory compliance: BACB CEUs received, insurance audit compliance, supervision provided, employee trainings
- Employee/Customer satisfaction: satisfaction and feedback surveys, ethics checks, client progress, client retention
- Special projects: converting to electronic data collection, implementing career development program, community outreach
Measuring and rewarding multiple dimensions helps ensure all aspects of the business thrive.
Performance goals in a pay for performance system should be challenging yet attainable, and based on real performance data. Wells Fargo reportedly set their performance goal of 8 sales per customer because 8 rhymed with great. Most behavior analysts no doubt know better than this, but setting goals can still be tricky to do right. One strategy is to set a sliding scale for performance, so the better staff perform, the more they earn. For example, a low-end goal for hours billed could be just above minimum acceptable performance, say 70 hours. If performers want to earn more money they can bill 80, 100, 120 or more hours. And you can cap a pay goal, to prevent staff from burning themselves out, or focusing too much on this measure. This allows more performers to contact reinforcement and creates a clear track to shaping desired performance.
- Focus on Employee Behavior
A pay for performance system clarifies, and reward people for, the results and accomplishments that drive business. It identifies “what” people should be accomplishing, but not “how” to get there. For that reason, it is essential a pay system includes a strong focus on monitoring and reinforcing the behaviors that produce results. For example, there are several ways employees can reach billable goals. Most of them are ethical, but some are not, including clocking in and out earlier or later than appropriate, billing for non-billable activities, or sacrificing quality of service.
These behaviors should not be dismissed as “bad apple” staff as was done at Wells Fargo, but instead as a byproduct of the system’s design. We are fortunate that the culture in behavior analysis strongly supports ethical practice, but we should not be content to rely on that alone. Instead, monitor the behaviors staff are engaging in to get results, and coach and model desired behavior.
- Leadership behaviors
Performance pay is not a “set it and forget it” system. After establishing goals and expectations, leadership’s role in a pay system is to coach performers to higher pay, model appropriate behavior, troubleshoot issues, and monitor and tweak the system to adjust for issues that arise. Daniels, Daniels and Abernathy suggest a performance pay system is most effective when leaders rely heavily on social positive reinforcement. When leaders effectively recognize and reinforce the right behavior, people will engage in ethical behavior, even when it isn’t the path of least resistance.
Effective pay systems include leadership measures which reward leaders who support their staff, model desired behavior, and frequently coach and develop staff. Additionally, senior leaders should approach performance pay with willingness to modify the pay system when ethical behavior misses its mark, even when revenue doesn’t.
Though pay systems can be tricky things to get right, the upside can be well worth the effort (Bucklin & Dickinson, 2001; Jenkins, Gupta, Mitra, & Shaw, 1998). There is a lot to be learned from the mistakes of others, even in different industries. Clinical ABA companies are well positioned to continue to take advantage of all that behavior analysis has to offer by making better use of pay to reward performance.
We would love to hear your experiences with pay-for-performance systems in the comments below! And be sure to subscribe to bSci21 via email to receive the latest articles directly to your inbox!
Abernathy, W. B. (2011). Pay for profit. Atlanta, GA: Performance Management Publications.
Abernathy, W. B. (2014). Beyond the Skinner Box: The Design and Management of Organization-Wide Performance Systems. Journal of Organizational Behavior Management, 34(4), 235–254. http://doi.org/10.1080/01608061.2014.973631
Bucklin, B. R., & Dickinson, A. M. (2001). Individual monetary incentives: A review of different types of arrangements between performance and pay. Journal of Organizational Behavior Management, 21(3), 45–137. http://doi.org/10.1300/J075v21n03_03
Jenkins, G. D., Gupta, N., Mitra, A., & Shaw, J. D. (1998). Are financial incentives related to performance? A meta-analytic review of empirical research. Journal of Applied Psychology, 83(5), 777–787. http://doi.org/10.1037//0021-9010.83.5.777
Daniel B. Sundberg, PhD, is a behavior analyst dedicated to creating meaningful change for individuals and organizations using the science of human behavior. Dan has worked in a variety of organizations, including non-profits. Additionally, Dan spent two years as a university lecturer, teaching undergraduate students how to improve the workplace with behavior analysis
Dan earned his B.A. in Psychology at the University of California at Berkeley, M.S. in Organizational Behavior Management from Florida Institute of Technology, and Ph. D. in Industrial/ Organizational Behavior Management from Western Michigan University. During this time, some of the best thinkers in behavior analysis and OBM mentored Dr. Sundberg as an academician and business professional.
Dan is currently Regional Manager of Consulting Services at ABA Technologies, where he helps to develop and deliver OBM consulting services. Dan is also a guest reviewer for the Journal of Organizational Behavior Management, and in his spare time he creates behavior-based products that allow people to manage their time and accomplish their goals. He also has a special interest in building effective work practices and cultures for start-up companies, and increasing the positive effects of organizations working towards an environmentally sustainable future. You can contact him at firstname.lastname@example.org.