Peter Block On Corrupt Compensation

Leadership, Legacy, Life


This is a quote from People Matters by Peter Block — one of my favorite thinkers on how to create more meaningful work. It starts focused on HR, but quickly blossoms into a vision for reinventing the whole corporate structure for the good of… well, everyone.

Wow, I love this.

HR is a player in the question of corporate and societal ethics. Most unethical or corrupt behavior starts from the HR/Management philosophy of compensation and rewards; they think that money motivates people and they also believe that variable pay is the way to motivate performance. The extreme version of this is including stock options as a serious component of executive pay. This philosophy creates a context of excessive short-term orientation where unethical behavior is more likely. If companies link payment to stock prices, they are creating a false god. Then CEO will not be incentivized to invest in the long-run, they will be incentivized to cut costs, maximize short-term profits, and postpone development.

What is interesting about this compensation philosophy, especially at the executive level, is that companies are not rewarding for commitment and long-term alignment of these managers but actually creating conditions to encash compensation and leave the organization.

It is not only a question of compensation and motivation philosophy, it is a question of purpose. Leadership needs to look at their business with a larger purpose than shareholder value. Leaders focusing on just making money will not build companies or the country. Asking oneself what is the larger purpose of the organization is the ethical question that managers should pose to themselves. Pay fair salaries to avoid bribing, make salaries transparent and even publish them to avoid excessive focus on compensation. The systems already exist to prevent unethical behavior, more checks and balances will not help. When controls do not work, adding more is madness. What is needed is more internal and external transparency. Whistleblowers also will not lead to systemic change, because the case just appears to be an exception. Board of Directors again cannot help as most of the times they do not know enough details to find questionable practices until something blows up. It is the coming together of corporate leadership, business schools, citizen groups and government to call for a shift in pay practices and purpose. The purpose of companies should be for the common good.

This is possible because it is in human nature to do the right thing. I believe that given a choice, most people will choose a larger purpose. Unfortunately, our western economic system is based on the assumption that men are driven by self-interest and the most valuable things are those that are scarce. This is not true, it is just popular. We need to break this assumption. We are cast under the spell of conservative, last century economic thinking. Luckily, that is not working well in the west.

It is not correct that the entire universe around the individual today is going wrong; what is going wrong is the narrative; we need to change the conversation to change the reality. As long as we continue the problem narrative that people are selfish, government and leaders are corrupt, more control is needed, and the west is the model for our future, nothing will change. The new narrative is about abundance, those who act on higher purpose, and the possibility of the common. It is close at hand, we just do not think it is news.

(Emphasis added by me.)


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2010: Year In Review



As encouraged from afar by my invisible mentor, Seth Godin, I am compiling a list of things I achieved and accomplishments I am proud of from 2010. As Seth mentions, this is not an easy thing to do, because first, we don’t like to feel like we’re peddling or hawking our “stuff.”

I suspect it’s also that we don’t want to come across with too much braggadocio — but a list like this isn’t really about that, is it? By taking a look at what we actually got done, it helps us to benchmark our progress, to see where we’re coming from in order to remind us where we’re going. By posting it for the world to see we add an extra layer of accountability to keep producing, which, in these increasingly self-motivated times, isn’t a bad thing either.

Here are a few of the things I am proud that I “got done” in 2010:

  • Completed my MBA and graduated with a 4.0 GPA (this actually happened at the end of December 2009, but close enough)
  • Helped organize and initiate a new PCMA chapter in Pasadena
  • Launched completely redesigned website and blog at
  • Completed manuscript for The Mosaic Mind (my new book)
  • Secured agent to pitch book to major publishers
  • Completed book proposal, sent to initial wave of publishers
  • Created and launched my consulting firm, Strengths Doctors
  • Helped produce and performed in the world premiere previews of Group: A Musical at the Powerhouse Theatre in Santa Monica
  • Adapted content from The Mosaic Mind into a visual presentation and presented it to an ASTD special division group

Forward-focused goal-setting is important, but while creating this list it occurred to me that the above kind of list might be just as important. Here’s why: if you’re any kind of “achiever” personality (like I am), it’s very easy to let a year go by without realizing or recognizing the progress that was made and the goals that were met. Before writing the above items down, I would’ve regarded 2010 as a very “unquantifiable” year for me — but, it turns out, I accomplished a great many of the things I set out to do.

Looking forward, I have a few simple goals for 2011:

  1. Secure publishing arrangement with a major business book publisher
  2. Average one speaking engagement per month
  3. Build Strengths Doctors into a viable consulting firm (doubling 2010 revenues)

If you’ve created a list like this, please post it in the comments so we can share in your success!


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