No More Executive Bonuses

Mintzberg, H., (2009). No more executive bonuses. Retrieved February 21, 2010 from: http://sloanreview.mit.edu/business-insight/articles/2009/5/5151/no-more-executive-bonuses/

This article, posted in the Business Insight section of MIT’s website, was written by Dr. Henry Mintzberg, a professor at the Desautels Faculty of Management at McGill University in Montreal. Dr. Mintzberg writes that executive bonuses should be eliminated all together and they should be compensated with just fair salaries instead. He states that the bonus systems are rigged and that the companies CEOs get bonuses regardless of whether they succeed or they fail and that the bonus systems are beyond repair because they rest on the flawed assumption that financial measures are the sole barometer of a company’s health. He further states that long-term measures of success need to be used but even then it is a flawed system that can hide problems for a long period of time. This article is good for managers to read and if Dr. Mintzberg is right, many managers may lose their bonus pay. It’s also important to know because if some companies practiced a ‘no bonus’ system but others did not, it could affect the quality of managers a company would have and affect the other stakeholders as well.