To make today's unpopular government bailouts more palatable, the Obama administration has mandated caps on executive compensation. But given what science tells us about the way the mind works, proposed limits on pay--even if merited--risk being self-defeating.
Studies have shown that our level of satisfaction depends not on our absolute salaries, but on how much we're paid relative to our peers, and so salary increases are judged relative to what we've become accustomed to. Using salary as a motivator ensures only that financial incentives grow exponentially to obscene levels while they, at the same time, become less and less effective.
It's also been well established that such external motivators decrease our internal motivation. Working for the carrot displaces the human need for purposeful achievement, and it comes at a huge cost--both in results and in satisfaction. When people are totally engaged in their work, the neurotransmitter dopamine is released, which sharpens focus and increases performance while creating a profound sense of wellbeing. We are motivated by the work itself, not the reward.
By holding out a big compensation package as a motivator, we attract less-than-stellar performers and inevitably run out of money to motivate them. But when we cap their salaries, we not only focus attention on compensation, we virtually ensure we end up with executives that can't get jobs elsewhere.
Besides, most Americans still see a half-million dollars as excessive relative to their own incomes. We need to move away from the issue of money altogether, and the way to do that is to change the story we tell ourselves; a story that focuses on monetary rewards as the primary goal of work decreases both our motivation and performance.
But scientists have shown that our stories can be fundamentally changed by a crisis. The current financial meltdown gives us a chance to create a better narrative, one that's not just about the accumulation of wealth, but about community and public service.
If we replace the emphasis on financial rewards, capped or otherwise, with the significance of the work to be done and its importance to our country, we would see the American spirit of service rise to levels not seen since World War II. Back then, "dollar-a-year" men took government jobs because it was the right thing to do and our country was in need. Today, this same spirit is needed to get us back on track.
As studies of transformational leadership have shown, the example should start at the top. Think of the impact it would have if President Obama announced he would take a salary of a dollar a year until the economy turned around. The rest of the White House staff and perhaps even well-heeled members of Congress could join in. CEOs of bailed-out companies would quickly fall in line.
Studies of the brain show that when leaders seize the opportunity of a crisis to tell a new story that's a better fit with the times, it can change the way the rest of us think and behave. We eagerly claim the message as our own and willingly make whatever sacrifices are needed. During the Great Depression and World War II, our leaders told new stories powerful enough to recharge the can-do spirit America is known for.
The times may have changed, but our brains will respond to the same stimuli now as they did then. Forcing executives or citizens to blindly accept certain circumstances is not going to work, because neither extremely high salaries nor salary caps will properly motivate us to work ourselves out of the recession.
(Source: Charles S. Jacobs, Forbes.com, Mon, Mar 9 09:30 AM)
No comments:
Post a Comment