Incentives are good in principle, but did Bear Stearns get competent risk management in return for the $4.4 billion bonus pool it distributed in 2006? Does any organization have to give its CEO a $40 million bonus to secure his services? If you pay people enough money to make any future payment beside the point, don’t be surprised when they take vast long-term risks for short-term wins. In almost any pattern, overshooting produces negative returns.
Content: Quotation
Author: Richard Rumelt
Source: McKinsey Quarterly
Subjects: Accountability, Human Resources, Management, Motivation
Author: Richard Rumelt
Source: McKinsey Quarterly
Subjects: Accountability, Human Resources, Management, Motivation
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