A friend has been confronted with the following situation:
- Complex procurement process combining auctions and proposals for hypothetic projects: his company passes and gets in the database.
- The professional buyers of the company that request the service have an interesting performance measurement criteria: the more they manage to get discounts on the original quote, the best performance reports they get.
Poisoned system: what is really happening is that they sort of encourage the vendors to provide them with high quotes in a first instance (lets assume it's not completely conscious) and then they negotiate and get discounts. Approved vendors know about the situation or rapidly find out about it.
The original objective of putting in place this performance criteria is completely corrupted by the system in place. Prices are actually not getting lower but higher.
We have to be careful with the kind of rewards and performance criteria we set up.
This reminds me of the story (would love to remember where I heard this) of teachers being rewarded based on the percentage of students that passed a particular exam. Teachers tended to ignore the best students (they were going to pass anyway), ignore the worse students (they were going to fail anyway) and simply concentrated on the mid-level students to help them get the level of passing the exam. The reward and performance measurement criteria, just like in the first example, had of course a very different intention: encouraging teachers to make a better job.
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