A lot of companies seem to misunderstand the role of pay in hiring and retaining smart people.
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A lot of companies seem to misunderstand the role of pay in hiring and retaining smart people. In my first year at Microsoft Research I listened to a (normally sensible) member of the lab’s leadership team explain that the bonus structure was there to incentivise good research. I looked around the room and wondered who had ever thought ‘well, I was going to do some mediocre research, but for 20% more money this year I will do something world leading!’ My guess: no one.
If you want to hire the best people, you are looking for the people who, if money didn’t matter, would do the job for free because they believe it’s important and care about the outcome. You don’t pay them well to persuade them to work. You pay them well so that they can afford to work on the things that they think are important. If smart people don’t think the things you’re doing are important then you should consider why you’re doing them.
This is especially true for executive compensation. The best CEOs are ones that care about the company’s products and want everyone to use them, not the ones that want to make the most money. This is especially true for non profits where your pool should start with people who care a lot about the organisation’s mission. Paying more (above a certain level) won’t find more of those people it will simply dilute the pool with people who are there for the money, not the mission.
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A lot of companies seem to misunderstand the role of pay in hiring and retaining smart people. In my first year at Microsoft Research I listened to a (normally sensible) member of the lab’s leadership team explain that the bonus structure was there to incentivise good research. I looked around the room and wondered who had ever thought ‘well, I was going to do some mediocre research, but for 20% more money this year I will do something world leading!’ My guess: no one.
If you want to hire the best people, you are looking for the people who, if money didn’t matter, would do the job for free because they believe it’s important and care about the outcome. You don’t pay them well to persuade them to work. You pay them well so that they can afford to work on the things that they think are important. If smart people don’t think the things you’re doing are important then you should consider why you’re doing them.
This is especially true for executive compensation. The best CEOs are ones that care about the company’s products and want everyone to use them, not the ones that want to make the most money. This is especially true for non profits where your pool should start with people who care a lot about the organisation’s mission. Paying more (above a certain level) won’t find more of those people it will simply dilute the pool with people who are there for the money, not the mission.
@david_chisnall Also the highest paid CEOs are the worst performers according to the leftist hippies at *checks notes* Forbes
https://www.forbes.com/sites/susanadams/2014/06/16/the-highest-paid-ceos-are-the-worst-performers-new-study-says/ -
@david_chisnall Also the highest paid CEOs are the worst performers according to the leftist hippies at *checks notes* Forbes
https://www.forbes.com/sites/susanadams/2014/06/16/the-highest-paid-ceos-are-the-worst-performers-new-study-says/We pretend that companies are synthetic profit-seeking entities, but companies are still just collections of people working together trying to do their best impression of a ruthless machine.
You hear people say co-workers are "like family" -- and sometimes companies make choices that serve aims other than profit. That meet the needs of communities, or individuals, or even just the vision of doing something that started the process in the first place. 1/
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We pretend that companies are synthetic profit-seeking entities, but companies are still just collections of people working together trying to do their best impression of a ruthless machine.
You hear people say co-workers are "like family" -- and sometimes companies make choices that serve aims other than profit. That meet the needs of communities, or individuals, or even just the vision of doing something that started the process in the first place. 1/
And everyone loves a tale of the dedicated craftsman who still uses the old methods to make a quality product even though it would be more profitable to move on. The story of the person whose wages are more than coins, because they take pride in what they create.
We love this stuff and have made a system designed to destroy it. Which means that the metrics Forbes has used in this article: stocks and accounting can't capture just how BAD the bad CEOs really are. 2/
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And everyone loves a tale of the dedicated craftsman who still uses the old methods to make a quality product even though it would be more profitable to move on. The story of the person whose wages are more than coins, because they take pride in what they create.
We love this stuff and have made a system designed to destroy it. Which means that the metrics Forbes has used in this article: stocks and accounting can't capture just how BAD the bad CEOs really are. 2/
What kind of profit maxing CEO wouldn't try to max out their own salary? The normal human notion of saying "OK that's enough money." it antithetical to that value system.
It's what's valued most. Though it seems that too pure of a focus in this line might mean that the CEO has lost sight of the other reasons the human organization they run exists.
And since THAT is bad for "the bottom line" we are meant to care, but just a little.
3/3
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