In our Human Capital Management class professor showed us a great video from TED.com featuring Dan Pink’s presentation on relationship between different motivational factors and human creativity and efficiency in solving problems. Needless to say, Dan Pink is a very entertaining speaker. I enjoyed his talking very much. But even more fascinating for me was the substance of his talk.
He was talking about a few important issues related to prevailing compensation model, based on contemporary management practices and their disconnect with reality and scientific research evidence. One of the issues is that the tasks of the XXI century has become more complex and require more creative thinking, than more mechanistic tasks of the last century. From that point he presents evidence that widely accepted model of incentivizing white-collar workers with only monetary stimulus does not in fact contribute to better problem solving in todays economy. It might as well indirectly stiffle the required creativity. In a nutshell, more money does not warrant the better the performance. And for the tasks that require cognitive skills, a larger reward leads to poorer performance.
From this evidence it becomes very clear why so many American CEOs don’t do better job, while insanely negotiating and getting larger and larger compensation packages. After certain point, which I believe has been already crossed by many of those self-indulgent executives, money does not really an issue for them. The competition of egos and vanity race come into play and command those blown out of proportion salaries and other benefits. And actual performance is going down. Just enough to look at all those failed and bailed out companies to see the connection.
The issue of money, as Pink presented and I completely agree, should be solved in a very straigthforward manner: “pay people adequately and fairly… Get the issue of money off the table. And then give people lots of autonomy.”
Anyways, I would not say it better than he said, so watch this video. Whichever camp you belong to on the issue of executive compensation, or monetary compensation in general, it will give you food for thought, unless you crossed the line and became completely incapable of critical reasoning.
By the way, I also incedentally stumbled on this great website that has collection of many transcripts for videos. I found there transcript of Pink’s presentation. So if you don’t have time to watch it, you can read it at Dotsub.com
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