Business

Case 4: The Best-Laid Incentive Plans*

Hiram Phillips finished tying his bow tie and glanced in the mirror. Frowning, he tugged on the left side, then caught sight of his watch in the mirror. Time to get going. Moments later, he was down the stairs, whistling cheerfully and heading toward the coffeemaker.

“You’re in a good mood,” his wife said, looking up from the newspaper and smiling. “What’s that tune? ‘Accentuate the Positive’?”

“Well done!” Hiram called out. “You know, I do believe you’re picking up some pop culture in spite of yourself.” It was a running joke with them. She was a classically trained cellist and on the board of the local symphony. He was the one with the Sinatra and Bing Crosby albums and the taste for standards. “You’re getting better at naming that tune.”

“Or else you’re getting better at whistling.” She looked over her reading glasses and met his eye. They let a beat pass before they said in unison: “Naaah.” Then, with a wink, Hiram shrugged on his trench coat, grabbed his travel mug, and went out the door.

Fat and Happy

It was true. Hiram Phillips, CFO and chief administrative officer of Rainbarrel Products, a diversified consumer-durables manufacturer, was in a particularly good mood. He was heading into a breakfast meeting that would bring nothing but good news. Sally Hamilton and Frank Ormondy from Felding & Company would no doubt already be at the office when he arrived and would have with them the all-important numbers—the statistics that would demonstrate the positive results of the performance management system he’d put in place a year ago. Hiram had already seen many of the figures in bits and pieces. He’d retained the consultants to establish baselines on the metrics he wanted to watch and had seen various interim reports from them since. But today’s meeting would be the impressive summation capping off a year’s worth of effort. Merging into the congestion of Route 45, he thought about the upbeat presentation he would...