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Is money really the great motivator?
By Wan Lixin |
February 14, 2009, Saturday
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Print Edition
Print Edition
THE recent reports about fabulous pay packages handed out to senior executives in some state-owned Chinese financial companies have triggered public outrage.
People are wondering what's wrong with their pay structure.
Steve Kerr's "Reward Systems: Does Yours Measure Up?" provides comprehensive instructions on how a company should construct and execute its reward plans.
The author is senior adviser to Goldman Sachs and former vice president of corporate leadership development at General Electric.
The book says that incentives are used to coax maximum performance from your employees, specifically, in defining, measuring, and rewarding performance.
Judged against this principle, the inadequacy of giving huge salaries to senior execs in state-controlled enterprises is apparent.
In state-controlled enterprises, the senior management are often former officials appointed on the understanding that their political consciousness should ensure the best results.
The second inadequacy is that the astronomical pay is totally unrelated to the performance.
Last year was a bad year for all, but some-state own enterprises, cashing in on their positions of monopoly, are actually diverting state resources into private pockets by handing out huge pay packages.
These kinds of revenues are out of line with the stated organizational earning objectives, and benefit none but the execs themselves.
That some brokerage execs can get nearly a million in salary is way beyond the imagination of ordinary Chinese wage earners.
As these hefty rewards can only be meted out to a privileged few, it is sure to incur discontent among grassroots employees, who are usually more productive.
"The quality of your rewards and metrics depends greatly on how well performance is defined and made operational," the author says.
The book also cautions that goals must be challenging so that people don't stop at achieving only small gains.
Any assessment must take into consideration a host of intangible factors as well as quantitative parameters.
So be wary of those metrics that claim to be objective and scientific.
"One of the most cherished beliefs in the management literature concerns the existence of objective measures of performance. The belief is erroneous; there is actually no such thing," the book points out.
Rewards don't have to be monetary. Employees who show a high sensitivity to money can easily be lured away by competitors.
"The most obvious limitation of money as a reward is that it's seldom available in sufficient quantities to attract, motivate and retain all those who are deserving," the author confesses.
Some firms give employees prestigious job titles and executive privileges, which enable the employees to make more money in the future.
People are wondering what's wrong with their pay structure.
Steve Kerr's "Reward Systems: Does Yours Measure Up?" provides comprehensive instructions on how a company should construct and execute its reward plans.
The author is senior adviser to Goldman Sachs and former vice president of corporate leadership development at General Electric.
The book says that incentives are used to coax maximum performance from your employees, specifically, in defining, measuring, and rewarding performance.
Judged against this principle, the inadequacy of giving huge salaries to senior execs in state-controlled enterprises is apparent.
In state-controlled enterprises, the senior management are often former officials appointed on the understanding that their political consciousness should ensure the best results.
The second inadequacy is that the astronomical pay is totally unrelated to the performance.
Last year was a bad year for all, but some-state own enterprises, cashing in on their positions of monopoly, are actually diverting state resources into private pockets by handing out huge pay packages.
These kinds of revenues are out of line with the stated organizational earning objectives, and benefit none but the execs themselves.
That some brokerage execs can get nearly a million in salary is way beyond the imagination of ordinary Chinese wage earners.
As these hefty rewards can only be meted out to a privileged few, it is sure to incur discontent among grassroots employees, who are usually more productive.
"The quality of your rewards and metrics depends greatly on how well performance is defined and made operational," the author says.
The book also cautions that goals must be challenging so that people don't stop at achieving only small gains.
Any assessment must take into consideration a host of intangible factors as well as quantitative parameters.
So be wary of those metrics that claim to be objective and scientific.
"One of the most cherished beliefs in the management literature concerns the existence of objective measures of performance. The belief is erroneous; there is actually no such thing," the book points out.
Rewards don't have to be monetary. Employees who show a high sensitivity to money can easily be lured away by competitors.
"The most obvious limitation of money as a reward is that it's seldom available in sufficient quantities to attract, motivate and retain all those who are deserving," the author confesses.
Some firms give employees prestigious job titles and executive privileges, which enable the employees to make more money in the future.
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