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.
- 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?
- What are the responsibilities of top managers? What is accountability? Are bonuses the best way to ensure CEO accountability?
- 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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