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Another example: There is powerful evidence from scholars such

as Frederick Herzberg that the primary motivators for managers are

opportunities to grow, to achieve and learn, to be an important and

recognized player on a team, and to make a difference in an important

cause. These are the factors that create within us an intrinsic willingness

to work and sacrifice for the good of the organization that gives

us those opportunities. These researchers have shown that financial

compensation is, at best, a hygiene factor. It’s important not to mess

compensation up, because inequities in compensation create disgruntlement.

But financial incentives don’t create that deep willingness

to sacrifice for the good of the organization. In the face of that evidence,

isn’t it interesting how many executives are obsessed with designing

bullet-proof incentive compensation schemes? It is as if their

hope is to embed within a compensation formula a carrot here, a

nudge there, and a kick in the rear end on occasion, so that the people

thereby incentivized don’t need to be managed. So many “managers”

want to abdicate to a formula those things that are the essence

of management—creating opportunities for our people to succeed at

important, challenging responsibilities.

Here’s a third illustration. We bemoan the short pay-off horizons of

many executives when considering investments to create new growth

products and businesses. We assert that companies would be much

stronger if only executives could take a longer view—and we blame the

demands of financial markets for truncating managerial vision at the end

of the current quarter. Then we turn around, however, and create for the

most promising of the future leaders of our companies career paths that

entail moving from one responsibility to the next every two years. In

many ways the blame for our inability to invest for the long term ought

not be laid at the feet of Wall Street analysts. Rather, the cause is rooted...