Executive Pay: For Results Only
Pay executives only for what they accomplish. Start with doing away with incentive packages as they are presently designed. Forget about “motivating” the results the organization needs or desires. Incentive package formulas, if they are to be correct, have to be complicated beyond calculation to take into effect all of the variables.
Because executives operate at a strategic level—five, seven, ten and more years—make pay adjustments retroactively over these time frames to maintain fairness to the executive and to the organization.
Certainly, executives should command big salaries; they have big jobs. They make far-reaching decisions, much more so than technicians, professionals, administrative staff and operatives. O.K., as a base, give them more for the bigger demands but not for lousy results.