Vanessa Sumo, Hal Weitzman, Michael Gibbs

Subjective evaluation by supervisors can address the shortcomings of numeric measures. When numeric measures focus employees on one goal, a second, subjective bonus can make employees pay more attention to other objectives that may be difficult to quantify, like managing controllable risks. If a plant manager’s bonus depends on profits alone, he might postpone maintaining equipment. A supervisor can motivate the plant manager to consider … [ Read more ]

Are CEOs Overpaid? The Case Against

Steven Neil Kaplan, Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance at Chicago Booth, is making a sometimes–unpopular but data–driven case in defense of high–earning CEOs. Kaplan has written a string of papers challenging the common views that executive pay isn’t tied to performance, that boards rarely punish underperforming CEOs, and that average CEO pay keeps going up.

Instead, he argues, the market for … [ Read more ]

Forget About CEOs, How Should We Pay Employees?

Subjective evaluation by supervisors can address the shortcomings of numeric measures. When numeric measures focus employees on one goal, a second, subjective bonus can make employees pay more attention to other objectives that may be difficult to quantify, like managing controllable risks.