On 14 September 2026, a pear orchard in the Hood River Valley, Oregon (an example, with invented values) began paying its 10 pickers $4 a bin on top of the hourly wage. Two weeks later the crew filled 120 bins a day instead of 100, but the share passing the packing house grade fell from 90% to 70%. The orchard lost $1,980 a day. Before you announce a bonus, write on one sheet of paper the job you want done well, the count you plan to pay on and the easiest way to raise it. Keep the count only if you can pay on what passes the grade and tell whose fruit it is. Otherwise pay a fixed wage.
Why does paying by the bin make the picking worse?
A bin is the large crate the pickers fill and the truck hauls to the packing house. The grade is the standard the packing house sets for the fruit it accepts, and a sound bin is one that passes it. In the example, a sound bin sells for $250.
People put their effort where the pay points. When one task is easy to count and another is not, paying for the first takes attention from the second. A bin is counted the moment it is full. Bruising shows up only when the packing house grades the load.
Bengt Holmström and Paul Milgrom set this out in a 1991 paper. They worked it out in mathematics and did not test it on farms, but the mechanism is the one you see at harvest. A piece rate pays for each unit of work, here each bin. When the volume of output is easy to measure and its quality is not, they write that a piece rate may lead agents to increase the volume of output at the expense of quality.
Fritz Roka, in a University of Florida extension bulletin for growers, notes that “productivity incentives tend to drive workers to harvest at faster speeds, which in turn could damage or prematurely destroy a plant”. Blemished fruit, he adds, “must be culled or discarded, resulting in a direct financial loss to the grower”. The owner in the example set out to raise the harvest and ended up paying the crew for bins that sell for less.
On your sheet, give the bins filled and the bins that pass the grade a line each.
Is the crew cheating, or doing what the bonus pays for?
The crew is doing what the bonus pays for, and that is the uncomfortable part. A picker paid by the bin fills more bins. If the quickest way to fill more bins is to pick roughly, the owner has paid for rough picking. The fix lies in how the bonus is set up, not in a talk about effort.
Researchers call this pattern Goodhart’s law. David Manheim and Scott Garrabrant describe it in a 2018 paper as what happens when a metric that can improve a system is used to an extent that further optimization is ineffective or harmful. In the orchard, the metric is the bin count. It went up while the sound bins went down.
Sarah Fogleman, in an incentive guide from Kansas State University, gives a case from a hog operation that raises pigs from birth to market. Its farrowing unit, the barn where sows give birth, had seen more piglets die before weaning. The owner started a bonus on live pigs out the door. The result, in her words: “nursery mortality starts to rise”. Sick and weak pigs that would normally have stayed in the farrowing unit were shipped to the nursery, the next barn, and died there.
Fogleman does not blame the staff. Given their pay, she writes, the employees “were following the carrots”. When a bonus gets gamed, look at the count before you look at the crew.
Before the first payday, write on the sheet the shortcut your count makes easiest.
Which count is safe to pay on?
A count is safe when it passes two tests: the worker can raise it by working better, and it rises only when the work you care about is done well. The first test is an old rule for pay, which is to base it on what people control. Fogleman puts it in one line for farms: managers must “search for things the employees influence” and build the objectives on those.
The second test matters when a job has an early step and a finished product. In the orchard, the full bin is the early step, and the fruit that passes the grade at the packing house is the finished product. Careless picking shows up in the finished product as fruit that fails the grade. Paying on the bins that pass the grade already pays for careful picking, and a second bonus on bins filled adds little.
That works only if you can tell whose fruit is whose. A foreman can check each picker’s bins, or each bin can carry the picker’s tag to the packing house. Where the packing house grades whole loads and no bin traces back to a picker, a bonus on the grade cannot reward each person.
| One picker’s day | Paid per bin filled | Paid per bin that passes the grade |
|---|---|---|
| Usual pace: 10 bins, 9 pass | $40 | $36 |
| Rushing: 12 bins, 8.4 pass | $48 | $33.60 |
Put your count through these three questions before you announce it.
When is the right bonus no bonus?
Sometimes the sound choice is a wage and no bonus. Holmström and Milgrom show that when the quality of the work is hard to measure, “an optimal incentive contract can be to pay a fixed wage independent of measured performance”. A fixed wage is pay that does not change with the count. A strong bonus on work you cannot grade rewards the shortcuts.
Between a strong bonus and no bonus there are two middle options to try on the sheet first. The first is a quality gate: keep the bonus on volume, but pay it only on output that passes the grade, so speed without quality earns nothing. A gate works where someone grades the output and you can tell whose it is. Roka is blunt that “supervision of piece rate workers to ensure performance quality is necessary to avoid adverse consequences”. With a gate, that supervision becomes part of how you pay.
The second option is to split the job, so the task that is easy to count goes to some workers and the care goes to others. Holmström and Milgrom offer this as an idea, not a proven result: the tasks in which performance is most easily measured are assigned to one worker, and the rest go to another.
The split works for care that can really be taken off the pickers, such as keeping the ladders and bins in repair. The pickers keep the bonus on the bins, and whoever does the repairs earns a fixed wage. It does not fix bruising, because care is part of the picking itself. In the authors’ words, a picker might always be able to “substitute speed for attention to details”.
Choose the gate, the split or the fixed wage on the sheet, and write why.
What do I write first, and how long does it take?
Write the job you want done well, in one line, at the top of one sheet. Then fill in the other five lines in order. The whole sheet takes about an hour. The figure shows the example orchard’s sheet, filled in.
Once a count gets through the sheet, write it into the terms of the bonus: the goal, how the money is divided among the crew and the payout date. Hand the terms to the crew before harvest. If your terms are not on paper yet, the people section of the library has an article on how to write the bonus terms before the results come in.
The same habit, a rule written before the work and checked against the result, applies to any other part of farm management.