Super Project

1. Analyze Kidder's rewards and punishment for performance. In particular, analyze Kidder's incentive systems (including, but no only traders). Most of Kidder's reward system is based on performance of the individual trader. As you can read in the article, when Jett was performing poorly, he received a lackluster bonus as well as a warning to improve performance or be dejected from the firm. Alternatively, when Jett started to outperform everyone else in the firm, his bonuses increased exponentially. Beyond monetary benefits, Kidder also encouraged employees by showing that a more impressive performance could lead to ascending the corporate ladder quickly. Like the article mentioned, Jett became responsible for his own desk and 32 other people when he made a lot of money for the company. He did this without any prior experience and with a minimum time at the firm. In terms of punishment, Kidder enforced a "produce or perish" mentality - they were about the profit, which is probably why it took them a long time to figure out what Jett had done. This could probably have been a detrimental mentality because it was one of the reason's Jett tried to create fake firms.

2. Based on Kidder's formal structure as well as informal structure, which factors discouraged Jett's behavior? Which factors encouraged it? The normal structures that are put in place for any company in the marketplace discouraged Jett's behavior. The SEC's guidelines and other business administrative laws are a check on companies of this nature. Yet, an interesting point that is worth making that Kidder fostered an environment which was conducive to Jett's behavior. Lastly, Kidder executives don't spend much time on the trading floor to verify the reports that are generated by the audit and control functions which encourages behavior such as Jett's.