Steven Kerr illustrates how an organisation can unintentionally encourage behaviour that differs from its stated objectives. In the insurance firm he examines, employees received annual pay increases based partly on performance, but the difference between average and outstanding work was relatively small. By contrast, accumulating three instances of absence or lateness within six months meant forfeiting the entire increase. The financial consequences of poor attendance were therefore considerably greater than those of mediocre performance.

The quotation highlights how employees respond to the incentives that matter most in practice, rather than simply to management’s stated priorities. Although the company wanted effective claims handling, its reward system placed greater emphasis on attendance. Kerr’s broader argument is that organisations often measure and reward what is easily observable rather than what they ultimately wish to achieve. Attendance may be necessary for effective work, but it does not necessarily demonstrate productivity or quality. Reward systems must therefore distinguish between employee presence and actual performance.