Moral hazard can be very hard to isolate. It’s usually hidden in the moments of an employee’s day; one more email to a friend, one more news article, ten minutes to make coffee in the morning.....I hear some people do that.
So how can a manager decrease moral hazard costs?
•Hire more managers to look over employees’ shoulders? This merely shifts the costs of moral hazard to new personnel.
•Implement draconian rules in the workplace? This shifts moral hazard costs to diminished employee engagement, which may be more costly than the original problem.
•Use appropriate Business 2.0 technologies. I’ve been working with Salesforce.com a lot over the past week. The software provides employees with all the information and tools they need to take ownership of their tasks.
Salesforce is just one example of collaborative software that gives employees more ownership over their work. Find the one that suits your organization and give it a shot. Pay attention to employee feedback. To date I haven’t seen a fit-all program for every company and situation, so you’re going to have to tweak it as you go. Good luck!