My Photo

About the Author

Subscribe to My Newsletter

Useful Information

  • Gainsharing
    Gainsharing information is hard to come by. Here is a chapter I wrote that was originally published in the Handbook of Healthcare Human Resource Management.
  • Pay Equity
    I published this technical paper in Compenation and Benefits Review. It compares and contrasts internal equity and external competitiveness.
  • Pro-Rating Incentive Plan Payouts
    Useful guidelines for pro-rating incentive payouts when actual performance falls between Threshold and Outstanding or above Outstanding (includes sample calculations).
  • The Ten Commandments of Performance Management
    Reprint of an article I published in Personnel Magazine that provides some useful information on performance management.
Recently on this blog
Recently on other blogs

Upcoming Events

« John Thain -- Poster Child of Excess | Main | The Adulation Advantage -- Singing Their Praise In Place of a Raise »

February 03, 2009

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Corey Rosen, National Center for Employee Ownership

Kent is absolutely right about this. In the executive pay area, while I think bonuses and other incentives are very important, I think we got carried away with the notion that if corporate performance improved, any size of bonus could be justified. The underlying assumptions here are faulty. First, it assumes the CEO involved actually created that performance rather than the accumulated efforts of lots of other people. Or maybe it was the payoff from policies of a prior CEO (after all, CEO tenure now in large companies only averages about five years, and many investments take longer than that to pay off), or just random chance (for an enlightening discussion of just how much corporate performance can be attributed to random variation, not CEO inspiration, see The Drunkard's Walk by Leonard Mlodinow). Second, it sends a message to all the other people in the company that, contrary to what every CEO intones, people are not really the company's most important asset. The CEO is -- everyone else is worth some tiny fraction of that. It's dispiirting. People have a very strong, innate need for equitable treatment and, deprived of it, become cynical and detached. A major survey of employees that tracks attitudes over times finds that engagement at work has steadily declined and, tellingly, the longer people work for a company, the less they trust the CEO.

So by all means keep paying incentives, but keep them internal equitable with what other people get.

Kent Romanoff

Corey, we are twin brothers of different mothers. It is comforting to have a kindred spirit out there in this crazy world of greed and excess. I have been barking into the wind on these issues for decades. My consulting practice used to involve executive compensation, but I got disgusted by what I was being asked to do and gave it up. Now, when a Board of Directors or CEO asks me to look at executive pay, they know they will hear a voice of reason, not a mercenary paid to line somebody's pockets.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)