Performance-related pay does not work

'The evidence keeps growing that pay for performance is ineffective. It also may induce executives to take company-killing risks. There are other ways to motivate employees that yield better results at lower cost.'

WBS Distinguished Professor of Behavioural Science Bruno Frey and Professor of Management Science Margit Osterloh write in the current issues of Harvard Business Review and Singapore's Today Online.

They argue in their article Stop tying pay to performance that since the advent of performance-related pay schemes in the 1970s, the ratio of average CEO pay to average employee salary has increased dramatically while its weak correlation with corporate performance has not changed.

Read the full article on Harvard Business Review's website here (registration required), or on Today Online here.