A short excerpt from a YouTube video arguing that organizational clarity and properly aligned incentives are essential to prevent perverse outcomes. The speaker warns against incentivizing sales on close rate (which can harm operations by pressuring budget hours) and cautions that incentivizing operations purely on efficiency or budget hours can reduce customer support and service quality.
To prevent that. You need clarity. You need clarity of the roles. You need clarity of what metrics they're responsible for. And you want to make sure you don't perverse incentives. So, for example, if you tracking close rate, like you should for sales, don't incent them on close rate, because if they do, if you do, they will increase their close rate, but they'll put pressure on budget hours and make the operations manager really brutal. And if you make the operations person incentivize, like efficiency, if they're going to get in the business of the admin person time and time again when there's complaints or when someone calls back and they want you to come back to the job, like, no, they'll give way too many excuses and customer support will go down because they're incentivized on budget hours and capacity and efficiency scores, which I think you should do for operations.
