compensation and productivity (was IMPROVING WRITERS' EFFICIENCY)

Subject: compensation and productivity (was IMPROVING WRITERS' EFFICIENCY)
From: "Andrea Brundt" <andrea_w_brundt -at- hotmail -dot- com>
To: "TECHWR-L" <techwr-l -at- lists -dot- raycomm -dot- com>
Date: Thu, 6 Nov 2003 10:36:57 -0500

Hi there!

Somebody wrote "Non-monetary incentives (free soda, free food, etc.) - these
boost morale, but that may have no effect on increased productivity."

There's an argument that *monetary* incentives don't do much for
productivity, either -- at least when dealing with CEOs. Below is the text
of a recent article in Toronto's Globe and Mail. It's long, but the opening
analogy about huskies is intriguing.

How does compensation affect your producivity and that of other tech

Best regards,

How much is enough?

Friday, October 24, 2003 - Page C1

If you ever get a chance to ride in a sled behind a team of huskies,
take it. When those sturdy little beasts get up to speed, you have to lean
into the turns to avoid being dumped out on your ear. They go like the wind
and demonstrably love doing so. In part, running is their built-in work
ethic -- it is what they do. And they run because they like to please the
boss, social creatures that they are.

They don't run for food -- "Hey, musher, come up with another bucket
of ground round and we'ill consider with favour your request that we move
our furry butts" -- but food is their compensation. It keeps them whole,
keeps them strong and ensures that they don't hunt the local fauna. Good
sledders attend carefully to canine compensation. Underfed huskies lose
strength and speed. Chubby huskies may feel pampered but extra food does not
make them any faster, stronger or more motivated to run.

A dog team can tell us a lot about executive compensation. There's a
lot that we need to be told.

We have little need to hear repetitions of the horror stories from
south of our border. Names like Lay, Skilling and Ebbers are synonyms for
stupendous greed and malfeasance. We read about the failed chief executive
officers of collapsing corporations looting the treasuries as they depart
"to pursue other interests." Canadian business compensation practices for
executives have not reached the levels of cupidity/stupidity achieved by our
cousins in the United States, where CEOs now earn on average 532 times the
salaries of their lowest-paid workers. Currently, in Canada it is 20 times,
which means we have not yet gone utterly barmy. Lest you find this
comforting, please note that every significant business trend and every
batty business fad hatched in the United States seeps north in due course
and finds fertile growth media in the Bay Street meadows.

Absurd executive compensation is an American invention. It arises from
the heartwarming mythology that hard work and Davy Crockett grit can
overcome all obstacles. Americans, as a result, have not historically envied
or begrudged success, even when they should have. That is changing but it is
still the abiding myth -- everyman with a million bucks fairly earned;
everyman a candidate for the presidency. This cultural mythology has spawned
an executive compensation mythology that is as well accepted in Canada as it
is in the United States. The myths would not resonate with smart huskies and
their smart sledder bosses.

Myth # 1: Compensation is an incentive that produces improved

This doesn't work with huskies and, according to psychologist
Frederick Hertzberg, who knows more about people at work than about dogs in
harness, pay is never a positive motivator. A raise, a bonus or a fistful of
options tend to work like a good meal. You enjoy the meal and may even be
energized by it, but six hours later, you are hungry again. Mr. Hertzberg
noted that underpaying works as a disincentive but that overpaying produces
nothing useful. This seems reasonable. If your boss, be that the board of
directors or the Simon Legree who makes you work late at the warehouse
doubles your pay, do you then become twice as smart, twice as strong and
doubly energetic?

A few weeks ago, William McDonough, who heads the U.S. Securities
Exchange Commission's accounting board, remarked in part: "CEOs 20 years ago
made about 40 times the income of the average person who worked in the
company. That multiple has increased 10-fold over the last 20 years. Now, I
knew the CEOs 20 years ago and I am a CEO today. And I know that we are not
10 times better than the folks were 20 years ago . . . I don't think we can
justify the present levels of executive compensation . . . I don't think you
can do it morally."

Myth # 2: The company survives and prospers because of the brilliance
of the executive team and the team will jump ship if we do not reward it

This is the myth of the irreplaceable executive combined with Myth #1.
This myth is the raison d'être of compensation consultants and the easy out
for board compensation committees reluctant to grasp the nettle. In reality,
CEOs and executives are all replaceable and, forgive the heresy, often at
lesser cost to the enterprise and its shareholders. In 30 years of executive
coaching, outplacement and organizational proctology I have never met an
irreplaceable executive or CEO. I have met some brilliant women and men who
have made extraordinary contributions to their enterprises. I have met in
equal number "children of lesser gods" who could replace them ably and
cheerfully. And at lesser cost.

The notion that capable executives stay in their jobs, ignoring dollar
blandishments from competitors because they love the current and increasing
financial largesse, is a myth.

The executives who respond to money primarily may be the ones best
encouraged to leave.

Myth # 3: CEO Superstar! We gotta have one!

There is a cheerful myth much loved by compensation consultants and
compensation committee types that the CEO makes all of the difference and
must therefore be sought and richly rewarded, like a latter-day
walk-on-water Jesus with an MBA and good contacts.

This is the CEO-as-saviour myth. The mythology demands heavy
expenditure of shareholder dollars to attract and amuse the saviour. The
saviour usually has expensive tastes in the style of most CEO superstars.

In fact, the CEO can make most of the difference but in a
counterintuitive way. The best CEOs I know are quiet builders and team
players. They can disappear for months and their organizations chug along on
strategy, making money, taking care of customers, paying shareholders and
supporting employees. These good CEOs don't make the short list for the
high-profile "dream" jobs because they don't do the "saviour thing." They
get paid well enough for their own purposes and live well but do not yearn
for superstar pay. Other things intrigue them.

A recent Business Week survey of 365 major U.S. corporations made an
interesting point: "CEOs at companies with the largest layoffs, most
underfunded pensions and biggest tax breaks were rewarded with bigger
paycheques. . . . Median CEO pay skyrocketed by 44 per cent from 2001 to
2002 at the 50 companies with the most announced layoffs in 2001 while
overall CEO pay rose only 6 per cent."

The idea that the hiring of one man or woman can positively reshape an
organization in the short term is silly. Nobody is that smart or that
compelling. Hiring an apparently greedy superstar can have a different
effect, as the Business Week survey suggests.

Myth # 4: Most executives cleave to the simplistic philosophy
enunciated by the "dot-com" magazine Fast Company and abide by the
antisocial prescription of "free agent nation" best summarized as a trader
economy bereft of social values -- large sharks in a small pond driven by
shark-like primitive minds.

Most Canadian executives don't think this way, in my experience, but
the wretched idea persists and poisons the compensation well. Yet, if an
organization sets "greed is good" as the abiding rule it will attract highly
competent people who rejoice in the avaricious playing field and delight in
the rewards. Some professional firms are like this. I am amazed that their
clients never notice the opulent surroundings and evidence of great personal
wealth juxtaposed with the often pedestrian service offered. The
iconoclastic lawyer/scholar Alan Young makes this point better than I can.

Most executives, managers and professionals will work for the money if
you set the rules of the game to produce this result. If you set them so,
the greed imperative may lead to behaviour that your mothers advised you to
avoid and that may produce an unpleasant encounter with an unsympathetic

"Free agency" promoted by Fast Company and other social speculators
was and is a crock. We are social animals just like the lively huskies I

Myth # 5: There is a social/cultural/religious/business justification
for paying a CEO or senior executive more money than he/she could spend or
use effectively in several lifetimes, save in an indecent spectacle of
unhinged profligacy and spoiling of children. It is the American way. It is
not all bad but it suffers for lack of moral balance. The word "enough" is
absent in the discussion.

Myth # 6: Business (and its leaders) live and work in a walled-off
fiefdom in which only its self-asserted rules and values have resonance.
"Creating Shareholder Value" is a religious absolute - the Purpose.

Creating shareholder value by generating profits and sharing/investing
them wisely is a business imperative. Is that all there is, as the old song

Several people in various ways have noted that profit for a company is
like food for an individual. If you don't eat, you die. If a company does
not produce profit, it dies. But has anyone asserted that eating is a reason
for living? Profit and generating shareholder value are together a means to
an end and not an end itself. Businesses are not Rowland Emmett contraptions
that clank and chug according to their self-referential rules, unconnected
to the broader world and oblivious to their pervasive influence on us. As
the great American social philosopher Pogo put it: "We has seen the enemy
and they is us!"

Businesses have social purposes, are social organizations and are
inextricably part of the wider polity. CEOs are social workers, if they only
knew it.

We pay CEOs and business executives more than we pay social workers,
teachers and most of the rest of us, and that may be a good thing, given
that they produce for us an array of useful products and services at good
price and all beyond the dreaming of most folks on this troubled earth.
They, the business class, generate riches for us and deserve just rewards,
but this is no justification for greed.

Canadian business can avoid the ugly excesses besetting the United
States. It can begin by paying more than lip service to corporate
governance. While there are many gifted and responsible boards, there are
others sadly diminished by sloth, cronyism and old-fashioned incompetence.
It is this latter group that can be counted on to generate compensation

Good boards strive to be even better and bad ones have to improve
dramatically. Both categories (private and public) would do the greater
polity valuable service by challenging the pervasive and damaging
compensation myths.

Feed the huskies too little and they will eventually flag and fail.
Feed them to excess and note that they do not get stronger, faster or
smarter -- they just get chubby, self-satisfied and greedy.

Robert Evans is a Toronto-based consultant and author of Moral
Leadership - Facing Canada's Leadership Crisis.



RoboHelp for FrameMaker is a NEW online publishing tool for FrameMaker that
lets you easily single-source content to online Help, intranet, and Web.
The interface is designed for FrameMaker users, so there is little or no
learning curve and no macro language required! Call 800-718-4407 for
competitive pricing or download a trial at:

You are currently subscribed to techwr-l as:
archive -at- raycomm -dot- com
To unsubscribe send a blank email to leave-techwr-l-obscured -at- lists -dot- raycomm -dot- com
Send administrative questions to ejray -at- raycomm -dot- com -dot- Visit for more resources and info.



Previous by Author: Re: Designing hypertext for both online and print
Next by Author: Re: compensation and productivity (was IMPROVING WRITERS' EFFICIENCY)
Next by Thread: Re: compensation and productivity (was IMPROVING WRITERS' EFFICIENCY)

What this post helpful? Share it with friends and colleagues:

Sponsored Ads