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  1. #1

    Default The Candle Problem and Ridiculous Compensation

    The argument made by many is that the ridiculous compensation is required to motivate the best an brightest in the company.

    However, research has shown, consistently, that incentives often have detrimental effects on creativity (in particular, overcoming functional fixedness).

    http://www.ted.com/talks/dan_pink_on_motivation.html

    http://www.forbes.com/lists/2012/12/...n-12_land.html

    So what do you believe is the real reason some people get ridiculous amounts of money for what the "do"?

    Accept the past. Live for the present. Look forward to the future.
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    "[A] scientist looking at nonscientific problems is just as dumb as the next guy." Richard Feynman
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  2. #2
    Mojibake sprinkles's Avatar
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    Exorbitant monetary compensation is a competitive measure.

    You don't pay a lot to get people to perform. You pay more than the other guy to get them to perform for you.

    Also, the reason CEO's get paid so much is because they are employees hired by the board. Like any other employee a CEO can decide to work for another company. It looks really bad if a company allows this to happen because to a lot of people the CEO represents the 'boss' of the company, but in reality they are not. They are another employee that the board hires to do work.

  3. #3
    Filthy Apes! Kalach's Avatar
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    Quote Originally Posted by ygolo View Post
    The argument made by many is that the ridiculous compensation is required to motivate the best an brightest in the company.

    However, research has shown, consistently, that incentives often have detrimental effects on creativity (in particular, overcoming functional fixedness).

    http://www.ted.com/talks/dan_pink_on_motivation.html

    http://www.forbes.com/lists/2012/12/...n-12_land.html

    So what do you believe is the real reason some people get ridiculous amounts of money for what the "do"?
    Agent/Owner imbalance. Inflated compensation for Agents is a significant indicator of corporate sickness. In theory the Owner created the project or the business or the corporation for some purpose, but if the Agent uses the Owner's relative lack of agency in this purpose to screw that Owner for whatever the Agent can get, plainly the Agent is not ultimately working toward the same purpose as the Owner. But what is this sickness and how has it come to be so widespread? Don't know. Perhaps it signals a significant detachment of Agents from "society". The corporate institutions allow them to act with more concern for what they can get than for what they create.
    Bellison uncorked a flood of horrible profanity, which, translated, meant, "This is extremely unusual."

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  4. #4

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    I wasn't the only one thinking along these lines recently, apparently:

    http://www.scilogs.com/a_mad_hemorrh...andle-problem/

    @Kalach Thanks for reminding us of the Principal-agent problem, and the conflicts of interest that may arise. But I think @sprinkles was more to the point. The compensation is high because that's what they believe is needed to have people work for their particular company.

    So I suppose, now the question is, why do they believe that so much money is needed?

    Frankly, a lot of the jobs I see with ridiculous compensation, seem like they would be better done by robustly designed computer programs(like fund managers and traders)...they call for consistency, "nerves-of-steel", and rapid execution.

    Accept the past. Live for the present. Look forward to the future.
    Robot Fusion
    "As our island of knowledge grows, so does the shore of our ignorance." John Wheeler
    "[A] scientist looking at nonscientific problems is just as dumb as the next guy." Richard Feynman
    "[P]etabytes of [] data is not the same thing as understanding emergent mechanisms and structures." Jim Crutchfield

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    Filthy Apes! Kalach's Avatar
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    Imma say, without the principal-agent dynamic, you can't build institutions into corporate compensation where professional managers enrich themselves at the expense of the corporation's purpose. And you can't have the level of allowable enrichment rise so far and so fast without the disconnect between principals and agents having been over-emphasized. That the compensation reflects the quality or kind of work done is entirely bullshit. It reflects whatever institution presently obtains within corporate compensation schemings. So, yeah, it is a competitive measure. But it exists because competition has been distorted by whatever it is that divorces "professional" management from mom&pop management.

    It's a fake stardom. I think this aggrandizement of managers and "business" exists partly because it can and partly because no one knows any better. Capitalism isn't a surprising and interesting theory any more. It's instantiated in large, entrenched firms with deep interrelationships to the actual continuing functioning of society. It generates an implicit "too big to fail" worldview, except that those in power and those who manage probably do know they're not actually responsible for over-all control of anything. They only have their partial fiefdoms. No one creates anymore. They seek opportunities to exploit.

    Bring it all down.
    Bellison uncorked a flood of horrible profanity, which, translated, meant, "This is extremely unusual."

    Boy meets Grr

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    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by ygolo View Post
    The argument made by many is that the ridiculous compensation is required to motivate the best an brightest in the company.

    However, research has shown, consistently, that incentives often have detrimental effects on creativity (in particular, overcoming functional fixedness).

    http://www.ted.com/talks/dan_pink_on_motivation.html

    http://www.forbes.com/lists/2012/12/...n-12_land.html

    So what do you believe is the real reason some people get ridiculous amounts of money for what the "do"?
    Class struggles, the rich do it well. Or machavellianism, its much the same thing anyway.

    Its definitely got nothing to do with incentivisation because they've argued against pay rises in the public services or among their subordinates for long enough to convince everyone money isnt an incentive.

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