In addition, Lincoln’s incentive pay was based on things that are measurable and can be controlled by the
employees, while the incentive system for NYC teachers is ambiguous and is based on something that
cannot be totally controlled by the teachers. At Lincoln, an individual’s share of the bonus pool was
determined by a “merit rating” which measures individual performance (based on four separate factors)
compared to that of other members of the department or work group, and the merit ratings varies
widely. Workers also got paid by piece rate, which was fair for everyone because you work more and you
get more. For NYC teachers, although high-quality teaching did improve student performance, student
performance was also affected by other factors, such as their background, IQ, etc. And as is mentioned
in the case, teachers might lack knowledge of the production function, so even if they wanted to get the
incentive pay, they might not know how. Furthermore, schools were evaluated by their relative
performance compared to their peer schools and all schools in the city, so there is possibility that the
teachers in a school work really hard, but they still lagged behind if everyone else works even harder.
Therefore, teachers were less willing to adjust their teaching behavior.
Moreover, Lincoln gave rewards to each individual directly and there was difference in term of the
amount; while in the NYC teachers case, each school had the power to decide how to distribute the
money and it turned out that a majority of teachers get equal amount. Therefore, at Lincoln, workers
were willing to give up their breaks to produce more, because this directly affected their earnings. But
NYC teachers were less motivated because as long as the school gets reward, very likely they can get the
reward without working hard.
Lastly, Lincoln employees were willing to change their behavior for the incentive pay because they valued
monetary reward and it was very generous. However, for the teachers, the incentive of teaching students
could not be attributed to money. Instead, they might place more values such as responsibility, self-
fulfillment.
Based on the analysis, it is not surprising that employees reacted to these programs very differently. At
Lincoln, employees generally felt satisfied and were highly motivated to improve productivity. Teacher
incentives, however, failed to change student or teacher behavior, and sometimes even decrease student
achievement.
For each organization (Lincoln and Teachers), how well are its’ HR policies aligned with its workforce,
culture, and organizational goals?
For Lincoln, its HR policies aligned with its workforce, culture and organizational goals well. Lincoln’s
strategy was to concentrate on reducing costs and passing the savings through to the customer by
continuously lowering prices. To build quality products at a lower cost than its competitors, Lincoln
handsomely rewarded employees for their productivity, high quality, ideas and contributions. In this way,
employees were motivated to work harder and harder and create more values for company, and the
company could then share the increasing profits with its employees as a return. There was a virtuous
circle at Lincoln.
