Six dangerous myths about pay
- PMID: 10179647
Six dangerous myths about pay
Abstract
Every day, executives make decisions about pay, and they do so in a landscape that's shifting. As more and more companies base less of their compensation on straight salary and look to other financial options, managers are bombarded with advice about the best approaches to take. Unfortunately, much of that advice is wrong. Indeed, much of the conventional wisdom and public discussion about pay today is misleading, incorrect, or both. The result is that business people are adopting wrongheaded notions about how to pay people and why. In particular, they are subscribing to six dangerous myths about pay. Myth #1: labor rates are the same as labor costs. Myth #2: cutting labor rates will lower labor costs. Myth #3: labor costs represent a large portion of a company's total costs. Myth #4: keeping labor costs low creates a potent and sustainable competitive edge. Myth #5: individual incentive pay improves performance. Myth #6: people work primarily for the money. The author explains why these myths are so pervasive, shows where they go wrong, and suggests how leaders might think more productively about compensation. With increasing frequency, the author says, he sees managers harming their organizations by buying into--and acting on--these myths. Those that do, he warns, are probably doomed to endless tinkering with pay that at the end of the day will accomplish little but cost a lot.
Similar articles
-
New thinking on how to link executive pay with performance.Harv Bus Rev. 1999 Mar-Apr;77(2):91-101, 186. Harv Bus Rev. 1999. PMID: 10387774
-
The case of the unpopular pay plan.Harv Bus Rev. 1992 Jan-Feb;70(1):14-8, 20, 22-3. Harv Bus Rev. 1992. PMID: 10119713
-
Tailored, not benchmarked. A fresh look at corporate planning.Harv Bus Rev. 1999 Mar-Apr;77(2):41-8, 50, 189. Harv Bus Rev. 1999. PMID: 10387771
-
Rewards.J Am Coll Radiol. 2011 May;8(5):341-4. doi: 10.1016/j.jacr.2010.09.005. J Am Coll Radiol. 2011. PMID: 21531311 Review.
-
Using performance-based pay to improve the quality of teachers.Future Child. 2007 Spring;17(1):87-109. doi: 10.1353/foc.2007.0007. Future Child. 2007. PMID: 17407924 Review.
Cited by
-
Research on Predicting the Turnover of Graduates Using an Enhanced Random Forest Model.Behav Sci (Basel). 2024 Jul 4;14(7):562. doi: 10.3390/bs14070562. Behav Sci (Basel). 2024. PMID: 39062385 Free PMC article.
-
Behavioral Economics, Motivating Psycho-Education Improvements: A Mobile Technology Initiative in South Africa.Front Psychol. 2019 Jul 10;10:1560. doi: 10.3389/fpsyg.2019.01560. eCollection 2019. Front Psychol. 2019. PMID: 31354576 Free PMC article.
-
Performance pay remuneration for consultants in the NHS: is the current system fair and fit for purpose?J R Soc Med. 2006 Oct;99(10):487-93. doi: 10.1177/014107680609901008. J R Soc Med. 2006. PMID: 17021297 Free PMC article. No abstract available.
MeSH terms
LinkOut - more resources
Research Materials