Wells Fargo provides amazing example of red line management

Wells Fargo’s experience with the consequences of paying people to hit targets on indicators, in this case, employees were paid based upon how many new customer accounts they opened which resulted in millions of accounts being opened without the knowledge or consent of the customers in whose names they were opened, is a perfect demonstration of what often happens with red line management. No one would argue that they were unaware that the behavior in which they were engaging was incorrect – the instinctive awareness of value destruction, and the conscious awareness of breaking rules and laws and trust were both rampant. But that didn’t stop them. Nor did it stop the top management from leaving the red line incentives in place. We wouldn’t argue on the side of the employees who broke the laws – they deserve to be fired. But it is rather unkind to put people in a situation where they must choose between doing what they are being paid to do, and doing the right thing.  Let this be a reminder to us all that humans will respond to incentives in highly predictable ways, so be careful what incentives you place in front of your employees.