My new book The Management Mythbuster is published today! Here is a brief extract from the chapter on incentive compensation one of the most emotive subjects in business today.
"The principle of paying for performance is elegant and simple. Sport has done it for years. However, in the corporate world, the problems start with the most basic element. Most organizations still insist on setting goals, targets, or budgets that determine rewards. If performance meets or exceeds the standard, bounteous rewards will be paid out. Once this principle is adopted, the rot has already set in. It is both naïve and stupid to believe that a fi xed performance target set months, or sometimes years, in advance of the measurement period will remain relevant given the uncertainty and volatility that are inherent in today’s world. However, this is not the only problem. The setting of fixed incentive targets destroys what should be one of the most valuable of all management processes — planning.
Planning is supposed to be an exercise in developing tactics, allocating resources, and optimizing performance to meet strategic goals. As soon as people understand that their personal rewards will be tied to the outcome, it immediately becomes a game to negotiate a set of performance targets that set the lowest bar possible for maximizing compensation."
Download the complete chapter for free here or order your personally signed copy at www.sonaxbooks.com
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