Friday, June 19, 2009


At all levels compensation drives behavior. If you want more sales of a certain product group or service line, then increase the commissions on the sales of those products. If you want more hours worked on task A versus task B, then increase the pay rate for hours worked on task A. And so on and so on.

Interestingly compensation continues to drive behavior all the way up the corporate ladder. I have to chuckle that the TARP recipients have started to pay back the TARP funds they received. If I am not wrong, the stampede to pay back the funds began as soon as the Obama Administration began chirping that compensation and bonuses of executives of TARP recipients would be subject to oversight by a pay czar.

What's that? Someone wants to oversee our compensation and cap our bonuses? I don't care what we have to do, borrow at higher rates, sell stock below the current market value, do anything we have to do to pay the Treasury back so we can get our bonuses. By the way, I don't think there should be a Pay Czar, but I am amused by the behavior.

The next group to rush to repay the TARP may be those companies whose CEO's were identified by the WSJ this morning as using corporate planes for personal travel. Getting TARP funds and using the planes for personal reasons??? Hah, the WSJ was all over it. Whatever. I didn't post the link to the article because, well, why?

So, back to the point, compensation drives behavior. And perks are part of compensation.

Cheers, Mike

No comments:

Post a Comment