Tag Archives: bonus

Massively Unjust Executive Compensation Damages Companies and Investments

Posted on March 13, 2012 by John Hunter

For years I have believed the massively unjust executive compensation packages have been doing great harm to American businesses. As an investor, one of the big risks that has to be evaluated is how much of the business profits executives will divert to their personal bank accounts. And investors also have to worry about the risks executives take to reach huge incentives which then greatly damage your investment. In 2007, I added two of my own deadly diseases to Dr. … Continue reading →

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No More Executive Bonuses!

Posted on November 30, 2009 by John Hunter

Henry Mintzberg, wrote an excellent article for the Wall Street Journal today, No More Executive Bonuses! Don’t pay any bonuses. Nothing. This may sound extreme. But when you look at the way the compensation game is played – and the assumptions that are made by those who want to reform it – you can come to no other conclusion. The system simply can’t be fixed. Executive bonuses – especially in the form of stock and option grants—represent the most prominent … Continue reading →

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When Performance-related Pay Backfires

Posted on August 3, 2009 by John Hunter

When Economic Incentives Backfire by Samuel Bowles, Sante Fe Institute Dozens of recent experiments show that rewarding self-interest with Economic incentives can backfire when they undermine what Adam Smith called “the moral sentiments.” Punished by Rewards, by Alfie Kohn, is a great book on this topic. The area of “motivating” employees is one it is often hard for managers to learn. Even managers that have been studying Deming, Ackoff, Ohno… for years still have trouble with the idea that trying … Continue reading →

Posted in Competition, Data, Deming, Economics, Management, Performance Appraisal, Psychology, quote, Statistics, Systems thinking | Tagged , , , , , , | 4 Comments

Another Year of CEO’s Taking Hugely Excessive Pay

Posted on April 6, 2009 by John Hunter

I continue to do my part to publicize the abusive CEO pay packages that the current crop of unethical CEO’s, and those sitting on corporate boards have supported (Tilting at Ludicrous CEO Pay 2008 – 2007 post on CEO pay abuses). It does seem there is more anger now at the looting these corrupt CEOs have engaged in; though far too many people seem to think the corruption is some isolated few CEO’s. The widespread failure of ethical standards by … Continue reading →

Posted in Economics, Management, Management Articles | Tagged , , , , , , , | 6 Comments

$60 Million Bonus – For all Staff

Posted on February 15, 2009 by John Hunter

This is similar to a story I posted last November: Family Business Gives $6.6 million in Bonuses to Workers. I both cases long time owners sold their company to a foreign buyer and then gave a significant amount of the proceeds to long time employees. Miami banker gives $60 million of his own to employees After selling a majority stake in Miami-based City National Bancshares last November, all he did was take $60 million of the proceeds — $60 million … Continue reading →

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Family Business Gives $6.6 million in Bonuses to Workers

Posted on November 29, 2008 by John Hunter

The PEER Bearing Company (a manufacturer of bearings based in Illinois) was bought out by a Swedish company this year. The family that had owned the company gave surprise bonuses of $6.6 million to the 230 employees of the company (an average of over $28,000). family thanks employees with surprise bonuses Family members signed two thank-you cards to each employee, one in Spanish and one in English, expressing gratitude for “the loyalty and hard work of our employees over the … Continue reading →

Posted in Management, Respect | Tagged , , , | 2 Comments

What’s the Value of a Big Bonus?

Posted on November 21, 2008 by John Hunter

What’s the Value of a Big Bonus? by Dan Ariely To look at this question, three colleagues and I conducted an experiment. We presented 87 participants with an array of tasks that demanded attention, memory, concentration and creativity. We asked them, for instance, to fit pieces of metal puzzle into a plastic frame, to play a memory game that required them to reproduce a string of numbers and to throw tennis balls at a target. We promised them payment if … Continue reading →

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Restaurant Eliminates Tipping to Improve System Performance

Posted on October 13, 2008 by John Hunter

Why Tip? by Paul Wachter When he opened the Linkery [the broken link was removed], Porter said, he hoped his employees would become as emotionally invested in the venture as he was, sharing a sense of purpose and joy in their work. … Porter instead proposed a service fee of 18 percent, to be pooled and split roughly 3 to 1 between the restaurant’s front of the house and its kitchen. … Porter, like the anti-tippers of yore, was persuaded … Continue reading →

Posted in Creativity, Deming, Economics, Management, Psychology, Systems thinking | Tagged , , , , | 1 Comment

Individual Bonuses Are Bad Management

Posted on August 7, 2008 by John Hunter

Gojko Adzic provides a nice post on Mary Poppendieck’s presentation at Agile 2008 on bonus, compensation and motivation: Paying programmers: are bonuses bad and what to do about it? In software development, it is very hard to establish the effects of individual contributions and good teamwork is key to the project. Most individual compensation schemes, according to the presentation, absorb vast amounts of management time and resources and leave nobody happy, but team compensation strategies are not easy to implement. … Continue reading →

Posted in Competition, IT, Management, Performance Appraisal, Psychology, Respect, Software Development, Systems thinking | Tagged , , , | 1 Comment

“Pay for Performance” is a Bad Idea

Posted on July 21, 2008 by John Hunter

Pay for performance is a bad investment [the broken link was removed] by Pete Waters “Teacher pay set by the results” was the headline of a (Baltimore) Sun article I read the other day which suggested that “performance-based bonuses (were) cropping up across Maryland” in our state education system. Bonuses would be given to teachers and principals that were successful in raising test scores of students. … One of the many shortcomings of the program was that job duties were … Continue reading →

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The Defect Black Market

Posted on April 18, 2008 by John Hunter

The Defect Black Market It all started a week before, when the CTO of Damon’s midsize warehousing and transportation company in Northern California announced an innovative program to motivate employees and boost the quality of their logistics software. For every bug found by a tester and fixed by a programmer, both would get $10. Well, this doesn’t sound very well thought out. Bonuses often distort behavior. Dr. Deming was not against such targets and bonuses because he thought they would … Continue reading →

Posted in Data, Deming, IT, Management, quote, Respect, Software Development | Tagged , , , , , | 9 Comments

Losses Covered Up to Protect Bonuses

Posted on March 24, 2008 by John Hunter

Does it surprise you to learn traders would cover up losses to protect bonuses? It shouldn’t, it happens over and over. Would it surprise you that almost any bonus (or quota) scheme increases the odds that the data will be doctored to meet the goals? It shouldn’t. Intelligent measures to make such doctoring difficult can help reduce the practice. But it is a likely risk of any such goal. As we have quoted Brian Joiner as saying: there are: “3 … Continue reading →

Posted in Deming, Investing, Management, Psychology | Tagged , | 8 Comments

Problems with Bonuses

Posted on April 3, 2006 by John Hunter

What sort of bonuses should we pay? by Seth Godin: Money, it’s been shown time and time again, is a demotivator. I’m not talking about a fair or even generous salary. Being a cheapskate is no way to find a great employee. But once people have joined your team, incremental money–bonuses and the like–usually demotivate people. He is right. Why salary bonus and other incentives fail to meet their objectives by Dale Asberry. Lean Manufacturing Visionary Jim Womack On Frontiers … Continue reading →

Posted in Deming, Management, Performance Appraisal, Psychology, Systems thinking | Tagged , , , , , | 5 Comments