Recently I came across an article in The Economist entitled “The Rot Spreads.” The article chronicled the rise of corporate crime in recent years, especially this year due to the recession. It also noted that economic crimes of all sorts were “markedly more common” in firms that made a lot of use of performance based pay.
What is the lesson here? Excessive reliance on performance based pay breeds a culture of self-centeredness and a heightened temptation toward dishonesty. Individual Incentives are important, but teamwork and morale are more important to business success.
That is a lesson we should have learned from the Japanese auto industry and from common sense… years ago.
As we move towards the new decade, let’s hope teamwork will slowly replace me, me, me.