By Graham
Posted on: 2010-09-14 Uncategorized

Are executives worth their huge pay packets?

There are a few who do, but the majority do not. And the situation is deteriorating.

A BBC Radio 4 programme, “Can Pay, Will Pay” broadcast on September 16 and 17, concludes that there is a pay bubble and bonus bubble.

The drivers behind this bubble are systemic. So there is little any individual company can do to reduce compensation to match it to executive and managerial performance.

What any organisation can do is increase executive performance. In particular, few executives are high-performing motivators, few can enable their people to consistently themselves perform at the highest level. PhD research done by Gerrit Knodt, for example, showed that 84% (Experimental group) of managers were below standard. And these managers were not themselves aware of their performance gaps. However, their reports were!

This translates into their reports themselves performing well below standard. And there is more than enough data showing that employees know the company uses a fraction of their potential.

The good news is, you get a huge increase in ability if you combine targeted development with two levels of feedback. (In the group mentioned above, only 17% at the end of the intervention.)

  1. Feedback to the executive on their actual performance, how it is changing, and how it needs to improve.
  2. Feedback to the organisation on the enablers (supporting executive learning) and disablers (preventing executive learning) within the system.

360 feedback has been around for a while, giving the data needed to give the executive feedback. It’s only over the past few years that the statistically validated tools have been developed for the second level of feedback.

Using targeted interventions linked to the outcome of level 1 and level 2 feedback, any organisation can increase performance. And thereby make executives worth their package.