Since the 1970s, CEO pay has risen dramatically in an effort to inspire a similar rise in performance. The evidence, however, suggests that pay and performance are only loosely linked, if at all.
If people are motivated by pay, and pay is tied to job performance, then increased pay should lead to improved performance—but over the past few decades, the evidence has failed to support this conclusion.
Photo by Fotolia/Mariusz Blach
Michael B. Dorff investigates the consequences of tying CEO pay and performance in "Indispensable and Other Myths," finding that very little empirical evidence supports the widespread belief that better performance is motivated by better pay.