Paying executives extra doesn’t guarantee optimum performance. It’s a question of balance, argue Jenni Henderson and Josh Nicholas.
Office perks like slides down stairs may not be the best way to motivate good behaviour.
Photo: Scott Beale/Flickr, CC BY-NC-ND
Research shows that when it comes to cognitive tasks, like decision-making, paying people more can lead to worse outcomes. If we want to get the best out of our executives, the ideal amount to pay them is “enough to take money off the table”.
Anything extra might excite them, but not in a way that makes them better executives. Put simply, giving a CEO one, two or three million dollars might motivate them. But it doesn’t necessarily follow that they will work any harder if offered four, five or six million.
Research shows that when you have enough money, then you value the next dollar less, and may not work as hard for i
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