Ending bonuses

Henry Mintzberg one of my favourite business thinkers lets rip in the WSJ: No More Executive Bonuses! Conventional wisdom seems to take it for granted that finanical incentives are the only way to ensure high performance. It’s based on assumptions that seem to go unquestioned but where there’s a lot of evidence they are false. Mintzberg gives a few examples:

• A company’s health is represented by its financial measures alone—even better by just the price of its stock.

• Performance measures, whether short or long term, represent the true strength of the company.

• The CEO, with a few other senior executives, is primarily responsible for the company’s performance.

He challenges them forcefully – highly recommended reading.

Hat tip: Bob Sutton

1 thought on “Ending bonuses

  1. Jon Husband

    Yes, he makes the case quite clearly and eloquently.

    Given my past with Hay, I’d love to see someone do a cogent and comprehensive analysis of how much the compensation consulting industry played a role in accelerating executive pay and boni.

    As you might imagine, I have an opinion, and it is not a kindly one towards compensation consultants in general.


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