Scott MacStravic, Ph.D.
In my last position as Vice President for Strategy and Marketing at a multi-hospital system I enjoyed a pay-for-performance bonus, based on the extent to which my division achieved budgeted performance. This included both controlling costs and achieving promised revenue impacts on the system as a whole, since we were responsible for not only traditional marketing but relationships with payers.
For most of the years I held this position, I was able to include four of my key professionals, out of a staff of twelve, in addition to my own participation in this bonus system, and we all enjoyed significant annual additions to our salaries on a regular basis. But toward the end of my tenure there, the four were dropped from the system, presumably because our large proportional participation was dramatically greater than for all other divisions, and it reduced the bonus pool available for executives.
The fact that executives typically award themselves the lion’s share of all credit and compensation for the organization’s performance has been a long established and often criticized practice. We may be in the era of evidence-based management, but there is no evidence that I know of showing that executives or senior managers are the sole reasons that organizations succeed, nor that bonuses are what attract and keep such valuable individuals on the job.
This tradition was recently criticized in a newspaper article, noting that the bonuses awarded by the Centers for Disease Control and Prevention had recently begun receiving the lion’s share of bonus awards, amounting to almost $150,000 to the Center’s COO and $85,000 to his deputy. While members of the officials in the director’s office had previously received rare and small bonuses, in 2005, they garnered over half a million dollars in bonuses. [G. Harris “Inner Circle Taking More of C.D.C. Bonuses” New York Times Sep 17, 2006 (www.nytimes.com)]
One would assume that the scientist and key professionals as well as direct managers had something to do with the benefits that CDC delivers to the public, yet they are leaving in droves, since the re-organization prompted by its director. Apparently, the scientifically unsupported notion that senior executives make by far the greatest, if not the only difference in the performance of organizations is accepted by all – senior executives at least. And they have the power to decide.
It would make an interesting scientific challenge to actually study the relative differences that people in specific positions within organizations, including health care and government organizations, make to overall performance. Most workers, I suspect, would say that they do their best work in spite of what executives issue in the way of memos or expound at annual meetings.
Many charismatic executives undoubtedly have energized and led their organizations to new heights, and their employees usually recognize and revere such people. But absent scientific evidence on the relative worth of ordinary employees, supervisors and managers to organizational performance, the practice of awarding the lion’s share of credit and compensation to executives remains one mainly attributable to the power of such people, not necessarily their worth.
