The Biggest Misconception About Compensation
In The News
One of the biggest managerial misconceptions is that compensation provides sufficient incentive for employees to do good work. This idea, deeply ingrained in many organizational cultures, suggests that higher pay directly correlates with increased productivity and job quality. This simplistic view overlooks the complexities of human motivation and the diverse factors that contribute to high performance and engagement.
A recent article by Bloomberg highlights a significant shift in how major companies like Apple, Netflix, and Amazon approach compensation for Hollywood stars and is a good example of this fallacy. Traditionally, these stars were paid large sums up front, with the assumption that this financial reward would drive exceptional performances and successful projects. In fact, a producer and talent agent make the argument that when you “get $10 million whether your show is good or bad, you have less incentive to do it well”.