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April 18, 2008
The Defect Black Market

The Defect Black Market

It all started a week before, when the CTO of Damon’s midsize warehousing and transportation company in Northern California announced an innovative program to motivate employees and boost the quality of their logistics software. For every bug found by a tester and fixed by a programmer, both would get $10.

Well, this doesn’t sound very well thought out. Bonuses often distort behavior. Dr. Deming was not against such targets and bonuses because he thought they would not result in bugs being fixed: Dr. Deming on the problems with targets or goals. It is a question of how that will happen. The system being distorted is the most likely result of any such system.

Everyone worked a bit harder the next day. Testers made sure to check and double-check every test case they ran, while developers worked through lunch to fix their assigned bugs. And it paid off. On that second day each had earned an average bonus of $50.

Everyone worked even harder on the third day. On the fourth day, however, the well had started to dry up. The testers ran, re-ran, and re-ran again the test cases, but they could only find a handful of issues. The developers strained the issue-tracking system, constantly reloading the “unassigned bugs” page and rushing to self-assign anything that appeared.

And then something strange happened at lunch. Instead of going out to eat with his usual teammates, one of the developers went out with a tester. Soon after, another developer went out with another tester. Within a few minutes, almost all of the developers had paired up with testers.

As the developers returned from lunch, they immediately got to work. Instead of scavenging for newly found bugs, they worked on “code refactoring” and new functionality. And as soon as they deployed their changes, testers found bugs — minor, obscure bugs that a developer could easily overlook. And just as quickly as testers found bugs, the developers were able to fix them and re-deploy. By the end of the day, developers and testers had earned an average of $120.


It is simple to blame employees for taking such action. But the management that setup such a system deserve more blame. This type of manipulation is what is encouraged by managers that think management means setting up such simplistic, senseless systems (Why Extrinsic Motivation Fails). This is one more example of forgetting the proxy nature of data (among other things).

Related: Stop Demotivating Me!How to ImproveManagement is helping others become greatFix the Root Cause of the ProblemIncentive Programs are IneffectiveArbitrary Rules Don’t WorkThe Problem with Targets

6 Responses to “The Defect Black Market”

  1. clarke ching Says:

    Wonderful!

  2. CuriousCat: Individual Bonuses Are Bad Management Says:

    The idea that bonuses are bad management is one of the more difficult management improvement ideas for people to accept…

  3. Curious Cat Management Improvement Blog » Motivate or Eliminate De-Motivation Says:

    I still see far to many managers thinking in a theory x way – 50 years after McGregor’s The Human Side of Enterprise. If there was not such a systemic failure to apply effective management practices and such a desire to substitute motivation for management I wouldn’t see this as a big deal…

  4. Curious Cat Management Improvement Blog » The Software Engineering Manager’s Lament Says:

    [...] they will replace anyone who ships without quality. Unfortunately, threats work a lot better at incentivizing people to CYA than getting them to write quality software. … * Practice five why’s to get to [...]

  5. CuriousCat: Google Should Stay True to Their Management Practices Says:

    Google is still growing and developing their management culture. The ability to continue to experiment and adjust is good. I just firmly hope they do not bow to a short term quarterly earning focus…

  6. Curious Cat Management Improvement Blog » Combinatorial Testing for Software Says:

    Combinatorial testing looks at binary interaction effects (success or failure), since it is seeking to find bugs in software, while design of experiments captures the magnitude of interaction effects on performance…

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