I’m a big fan of linking compensation to business outcomes … as long as the amount of compensation isn’t vulgar and the right kinds of outcomes are part of the formula. So I was intrigued by a recent article about Ethics and Executive Compensation .
Ed Konczal , writing about over at Corporate Eye , (a website that tracks best practice in online corporate communications) noted that executives are rarely evaluated on their ‘ethics’ track record, and thus executive compensation is all too rarely linked to an executive’s influence on corporate ethics.
Ed’s post made me wonder:
What would it be like if executive compensation was based in some part on the effectiveness of their efforts to keep the organization authentic?
Remember Steve Kerr’s classic "The Folly of Rewarding A While Hoping for B"? It’s clear that in organizations we get the behaviors that we reward people for. And, we cannot expect people to pursue outcomes that we don’t reward. Thus, we can’t "hope for" leaders to pay attention to ethics or authenticity — we have to reward people when they lead the organization to act ethically and authentically.
Would rewarding executives for leading the organization to be authentic be hard to do?
The building blocks of a process to evaluate authenticity-sustaining efforts include (1) a clear & explicit missions and (2) concrete values-based goals. So, it may be that evaluating an executive’s authenticity-sustaining efforts is already possible, and would not depend on generating a whole new category of evaluation.
Some organizations, like B Corporations, already have explicit goals that link their outcomes to their values-based self-definition. For these organizations, the only thing that theywould have to create is the explicit link between
(1) how well these goals have been achieved, and
(2) the amount of compensation the executive receives.
Many top-level executives are already evaluated on their ‘soft skills’ as well as on non-financial, subjective criteria such as the executive’s pursuit of the values-based corporate mission,
In organizations that do not have a clear & explicit missions and concrete values-based goals, they could use the challenge of creating a link between the corporate mission & identity with executive compensation to build awareness of what it would mean for a given organization to be authentic.
Linking Compensation and Authenticity would take 3 steps.
First, organizations could start with the 3 Basic Identity Questions :
1. Who do we believe we are as an organization?
2. How do we present ourselves?
3. What do we do and how do we do it?
Then, organizations could move on to the "3 Questions for a Quick & Dirty Assessment of An Organization’s Authenticity ", to consider:
1. How do our actions as an organization reflect our beliefs about ourselves and the claims we make about ourselves to others?
2. How do we express our beliefs about ourselves as an organization in our claims and in our actions?
3. How do our claims about ourselves as an organization reflect who we believe we are and what we do?
Finally, organizations could consider how to evaluate a given member’s contributions to:
(1) keeping a clear sense of identity, and
(2) creating organizational processes that demonstrate the organization’s identity.
Just setting up a process for that conversation would lead the organization’s members to think about how to align the behavior of the (parts of the) organization that they are responsible for with the values and characteristics that they collectively want to have define the organization.
We design organizations to get the results that they get.
If we want organizations to strive for authenticity, we need to design systems that help all members clarify who they collectively are and how they want the organization to behave.
Then, we reward organizational members — at all levels — for their efforts to have the organization demonstrate these qualities.
I am an organizational consultant, change advocate, and organizational identity/reputation scholar with a PhD in leadership & organizations. I research, write about, and consult with organizations on the relationships between organizational identity, actions, and purpose. I teach Technology Management, part-time, at Stevens Institute of Technology.
My current research focuses on how social technologies in the workplace can drive organizational change, generate meaning, and catalyze purpose. See the 
