Noted management guru Henry Mintzberg critiques the current system of bonuses for top-level managers. His contention is that bonuses do not accomplish what they exist to do – ensure sustained health of a company. Instead, Mintzberg argues that bonuses encourage CEOs to gamble away long-term performance for short-term gains that drive up compensation. His solution? Do away with bonuses completely. Never pay them. And use insistence on bonuses as a mechanism to screen out undesirable CEO candidates.

QUESTIONS:

1. Are Mintzberg’s thoughts consistent with what the text says about organizational performance? Why do analysts rely so heavily on stock price and other financial measures to assess firm performance?
2. What are the responsibilities of top managers? What is accountability? Are bonuses the best way to ensure CEO accountability?
3. Now study the upside-down pyramid. What level of the organization is most directly responsible for company performance? What is the CEO’s role?

SOURCE: H. Mintzberg, “No More Executive Bonuses!” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB10001424052748703294004574511223494536570.html)

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