Determining the Right Partner Compensation
If by “right,” we mean that there is a correct compensation level for each individual; we can precisely determine what that amount is; and, we can convince each person of the wisdom and fairness of that amount then the answer is no. But, if we mean that we can construct a compensation philosophy in which individuals strongly agree that those who are contributing the most long-term value to the organization are paid the most then the answer is yes.
I have stated for years that every compensation system can work and every compensation system can fail. Two research studies on high performing organizations (Practice What You Preach by David Maister and Good to Great by Jim Collins) concluded that the method of compensation, as a causal factor for high and sustained performance, is largely irrelevant.
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