President Bush spoke on Wall Street today on “the State of the Economy”. A better title would be “the Improving State of Executive Compensation”. The gifts Bush came bearing include permanent tax cuts for the wealthy, relaxing aspects of Sarbanes-Oxley regulations to make America more competitive in the world of international finance, and giving a free pass to 90% of companies fudging their executive stock option programs (the SEC is investigating some 200 out or 2,000 companies found backdating in a study).
In encouraging CEO’s to be transparent about executive pay, the President hid his motivation. If the government is going to relax financial reporting requirements, then someone will need to step up. Who? Bush has always loved self reporting and self investigations to the exclusion of any outside oversight.
Of course the President needed something distinctly American to hide his real plans, pay for performance. This means the top person in any organization benefits whether the company had a good year or bad. Think how much worse it would have been had we not had the CEO to save us! Cheating or re-defining terms is an acceptable way to achieve goals. (How else did Bush cut the deficit in half early?)
President Bush believes in the great man theory, that one individual heroically is responsible for a system made up of thousands of employees, not to mention customers. He also believes people work harder for the prospect of more money, that the company’s mission or purpose and a livable wage are not enough to motivate people.
Unfortunately the promise of such pay systems is yet to be delivered.
“Pay-for-performance programs can be too effective in rewarding self-interested behavior at the expense of overall company morale and the bottom line.” Harvard Business School Professor Michael Beer.
Their pitfalls are well documented. An arkload of consultants are available to help tinker the program to achieve optimal results. Sailing behind are data consultants to make sure people don’t cheat in reaching the targets. Bringing up the end of the flotilla are the word shapers who use catch phrases to keep intrinsically motivated workers from becoming disheartened by the endless bribes to perform.
Bush spoke on "the State of Executive Pay" which is already outstanding. This is the same place our President needs to be, out standing in a field back in Crawford, before he can renew pay for performance for our public schools via No Child Left Behind or export it to Medicare and Medicaid.
For a President who wants to simplify government regulations, his desire to add complexity to teachers’ and doctors’ pay is puzzling.
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