In spite of the overall positive impact of CP plans, we should be aware that not all CP plans work as intended. In fact, several recent corporate scandals are directly related to the implementation of CP plans. In general, why is it that CP plans may not succeed and may, in cases such as Wells Fargo, produce results that are so opposite to what they intend to do? Consider the following reasons:

A poor performance management system is in place. When a CP plan is paired with a poorly designed performance management system, biased ratings may cause employees to challenge the CP plan legally, or not be motivated to perform well. Rewarding one thing while hoping for another. The system rewards results and behaviors that won’t help the organization succeed.

Rewards are not considered significant. A CP plan includes rewards that are so small that they do not differentiate between outstanding and poor performers? Managers are not accountable. When managers are not accountable regarding the performance evaluation of their employees, they are likely to inflate ratings so that employees receive or set goals that are easily attainable.

There is extrinsic motivation at the expense of intrinsic motivation. When there is too much emphasis on rewards, employees who have jobs that require a great deal of personal investment may start to lose motivation. Rewards for executives are disproportionately large, compared to rewards for everyone else.