Goldbricking

Goldbricking describes workers’ deliberate restriction of output when an incentive system makes greater effort liable to bring a higher target rather than a proportionate reward. In the book, the term names a broader organizational failure: when people are paid for beating expectations, the pressure to hit a target can make honest information and productive effort less likely.

The machine-shop incentive

In the early 1950s, sociologist Donald Roy worked as a lathe operator in a machine shop whose workers were paid under a piece-rate system. They began with a set rate for each piece produced. Once they reached one target, the rate rose; after a second hurdle it rose again, and then the rate was capped. The structure appeared to reward production, but its effects depended on where management set those hurdles.

If operators worked too fast or produced too much, the company could raise the hurdle. The workers therefore had reason to hold back rather than reveal how much they could make: increased output might reset the standard against them. Instead of maximizing production, they tried to manage the piece rate so they could earn as much as possible without inviting a tougher target. Roy called his account “Goldbricking in a Machine Shop.”

From shop-floor restraint to corporate targets

The book treats the machine shop as a miniature of a corporate problem. In both settings, workers or managers adjust their reports and effort to the rewards attached to measured performance. A system that claims to motivate people to meet ambitious goals can instead encourage them to conceal capacity, understate prospects, and treat the target itself as something to manipulate.

The same logic appears in corporate budgets and executive compensation. As Michael C. Jensen argues, when managers receive bonuses for meeting targets, they have an incentive first to make those targets easier to reach by lowballing forecasts and presenting their prospects pessimistically. Once the targets are established, they may use accounting maneuvers to improve current results at the expense of the future. The book connects this pattern to chief executives facing Wall Street expectations in the late 1990s and summarizes the perverse incentive as companies “paying people to lie.”

Organizational consequences

Goldbricking matters beyond the immediate loss of output. Companies need reliable information to plan, but target-based rewards can make the people supplying that information less candid. The book sets this incentive problem alongside a wider difficulty in organizations: information moving upward through a hierarchy may be distorted by pressure to meet expectations and by the reluctance to disclose unwelcome facts. The result is a system that seeks better performance while making accurate reporting less likely.

The contrast with a market clarifies the mechanism. Companies often reward people according to whether they exceed expectations; a local deli owner, by contrast, earns according to actual sales, not according to whether sales beat the owner’s forecast. Goldbricking thus serves as a concrete example of how institutional rules can turn an apparently sensible reward into an inducement to restrict effort or misrepresent performance.