The document was prepared on January 2, 2021 人力资源管理薪酬管理外文翻译论文外文文献 The Fatal Flaw in Pay for Performance Many corporate boards, responding to shareholder and public pressure, are designing pay-for-performance plans to hold CEOs accountable. But there is often a crucial flaw in such schemes: They don’t pay for performance with integrity. The omission—evident from compensation committee reports in top companies’ proxy statements—is striking. Corporations, after all, face unceasing pressures to make the numbers by bending the rules, and an integrity miss can have catastrophic consequences, including indictments, fines, dismissals, and collapse of market capitalization. Furthermore, performance with integrity creates the fundamental trust—inside and outside the company—on which corporate power is based. A board should explicitly base a defined portion of the CEO’s cash compensation and equity grants on his or her success in handling the foundational task of fusing high performance with high integrity at all levels of the company. Why don’t boards do that They may be uncertain about the meaning of integrity and how to assess its integration into financial performance. Step one, then, in designing pay for performance with integrity is using the following definition: Integrity is a uniform corporate culture with three elements—robust adherence to formal rules; adoption of ethical standards that are in the company’s long-term enlightened self-interest; and employee commitment to honesty, candor, fairness, trustworthiness, and reliability. Step two is for the board to assess whether the CEO has infused high performance with high integrity. The board can do that by answering the following questions, using hard analytics as well as the board members’ own judgment. Has the CEO established company-wide performance-with-integrity principles for which the firm’s leaders are responsible and accountable Examples of these include demonstrating committed and consiste
