Incentives and Executive Compensation

I can’t get away from discussions about executive pay and bonuses on the radio and in the press (you know, Barclays Bank, G4S, etc., etc.). This morning I read an extremely relevant chapter in Jim Collins’ book Good to Great.

It’s not how you compensate your executives, it’s which executives you have to compensate in the first place. If you have the right executives on the bus, they will do everything within their power to build a great company, not because of what they will “get” for it, but because they cannot imagine settling for anything less. Their moral code requires building excellence for its own sake, and you’re no more likely to change that with a compensation package than you’re likely to affect whether they breathe. The good-to-great companies understand a simple truth: The right people will do the right things and deliver the best results they’re capable of, regardless of the incentive system.

One of the key phrases here is moral code. Leaders with integrity will build great teams and work to advance the whole team and the whole business – think of John Maxwell’s sixth leadership law, the Law of Solid Ground. The rewards (bonus, pay, shares) will then be a natural consequence of doing the right things for the long term.

Get the right people on the bus, and the bus will navigate successfully to your goals.

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About Andrew Stewart

Andrew Stewart exists to serve by igniting potential. Husband. Dad. Leader. Cyclist. Friend.
This entry was posted in Attitude, Integrity, Responsibility, Success. Bookmark the permalink.

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