Pickin’ up the trash

The article about the sins of commission was very interesting.  In it, some excellent points were raised about the nature of a commission based system and the problems that are often inherent to it.  The city of Albuquerque had had problems with the rising cost of trash.  To combat this, the city planner of Albuquerque decided to pay garbage men a fixed amount for eight hours of work.  He hoped that this would lead to them working more efficiently so that they could do all their work in the time they were getting paid for.  However, this incentive only motivated the garbage men to go through their routes quickly, not to do them effectively.

Truck drivers began going through their routes too quickly and not unloading their trucks every time they were supposed to.  Furthermore, they took to speeding as that allowed them to get through their routes more quickly.  These behaviors led to higher costs to the city in the form of fines and traffic tickets.

This happened because the city planner did not set up the incentives in the proper way.  The article mentions that it would be difficult to change the incentive structure without making it too complicated.  A possible solution could be to change the incentive structure os that instead of rewarding garbage men for their timeliness, they were instead given a base pay and then fined a small percentage of fines that they incur through their negligence.  One of these fines could be for not finishing the route in time.  This would ensure that the garbage men not only were timely in their pickups, but that they also did them properly.  This strategy is based on the notion that if rewards do not work, then penalties might.  This same train of thought worked when the Chinese government tried to curb birth rates in the 1970’s.

This seems like the best strategy in this situation.  By not pitting the garbage men in direct competition against each other or time, they will ensure that they will do their best work for the team as a whole.  However, it is possible that penalties could drive away some drivers.  But, from a financial perspective it will probably make sense for the city.  As that was the point of these regulations this will likely be the best course of action.


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