Success - Who Gets the Glory?

Success is rarely entirely due to an individual'sperformance? A mechanic can lose a race or
own efforts, no matter how solitary the activity.even a championship by failing to tighten a wheel
Outside factors always play a part. Talent alwaysnut properly. In the same way a computer
has to be nurtured and equipment refined toprogrammer can miss a comma in a computer
create that winning margin. There is a bigprogram and cost the business millions to severely
difference between being a winner and andent its profits or even jeopardise its existence.
also-ran. Yet the margins are tiny. For example,Why then should success be attributed to the
the average margin of victory in the Daytona 500executive?
and Indianapolis 500 races over 10 years was 1.54Of course it should not. And in a way, this has
seconds! Yet the runner up earned less than halfbeen partly recognised. Performance incentives
the winner! It hardly seems fair, does it?for executives are nothing more than the result
Yet these disparities are true in any endeavour,of the universal spread of performance related
not just sport, although they are perhaps morepay (PRP). They were born in the theory you can
noticeable in sport. And perhaps they are moremake a team more successful by rewarding
pronounced in motor sport than any other.individuals for improving their own performance.
Certainly it is unlikely that any other sport requiresThe idea is simply that if everyone performs
as many people to create a champion. In Formulabetter the team will do better as a result.
1 (F1) it takes a large, multi-skilled team to getUnfortunately, this plausible theory is logically
any F1 car onto the race track. And it takesflawed. In fact there are two areas where the
another large, multi-skilled team to get it roundlogic fails.
the track. Races are won, not by the driver'sFirstly, it fails to recognise the fundamental
performance, but by the team's. Often it is the pitprinciple that team performance is the result of
crew who determine the outcome of a closethe way the team performs. Thus tampering with
race. So who gets the glory? The driver!individual performance can actually have a
It is the driver who gets the millionaire life-stylemarkedly disruptive effect on the team. If you
and all the trappings of the jet set. Yet to whomwant to improve team performance then you
is that extra fraction of a second reallyhave to reward the team for improved team
attributable? Yes the driver risks life and limb toperformance. That has to be the primary rule.
become champion. But his team determine theSecondly, the inequity with which PRP has been
degree of that risk, and his championship placing.implemented and incentives awarded. First of all,
Yet for them there is little more than the thrill andthe fact that some people earn bonuses when
the pride and perhaps the shared glory of winningothers do not, breaks the above rule. This causes
the Constructors' Title.jealousy and creates conflict and division and
Of course some of this may be a legacy ofundermines the team ethos completely. It is
history: a carry over from the days when thetotally counter-productive. More than that, though,
racing drivers led "crash-and-burn" lives with thethe problem is exacerbated by the disparity in the
very real risk of death at any moment. However,incentives awarded. In other words even if
the sport has become so much safer these dayseveryone gets their promised reward, unless it is
that the risk, while by no means non-existent, isin the same proportion to everyone else, you will
no longer such a spectre. Even at the reducedstill get the same disruptive effect. The team will
level of risk, however, these modern daynever again operate at its previous equilibrium.
gladiators perhaps still deserve their high rewards.The problem becomes clear when you look at the
Yet, in few other arenas are individuals sodisparity between executive earnings and the
disproportionately highly rewarded for the resultsrest. Executive incentives have generally been
of others' efforts. The one glaring exception hassignificantly higher than those of their employees.
to be business.This has contributed to a greater pay differential,
Racing drivers' earnings pale into insignificance inthat has widened the gap between rich and poor.
comparison with those of some businessThis becomes a lightning rod for discontent and
executives. But, until recently, there has beenmay well be the single biggest cause of employee
very little challenge to such extreme executivedisengagement.
earnings. Yet there is perhaps greater cause toSome hypothetical figures will illustrate the point.
challenge both the rationale and the disparity.Imagine that you are earning an average income
Certainly the executive is taking nothing like theof 30,000 p.a. and you receive a 10% bonus. This
risks the racing driver does. Not only that, youmeans that your gross earnings have increased
can question whether the executive contributionto 33,000. Now imagine your boss is getting a
to success is any greater than that of the driver's500,000 p.a. basic salary. However, he gets a
to winning a race. After all business success is a20% bonus and his gross pay thus goes up to
team effort, perhaps even more so than in sport,600,000. This means that the difference in your
including F1. After all, come race day, the driver ispay has gone from a base 470,000 (500,000
the only one capable of getting the car round theminus 30,000) or 15.67 times (1566.67%) to
track, and that is a pretty significant part of567,000 (600,000 minus 33,000) or 17.18 times
winning the race, even if it is the 7 second pit(1718.18%). How do you think you will feel when
stop compared to the runner's-up 8 second stopyour boss asks you to improve your
that wins the race. What does an executiveproductivity? It is no wonder that employee
contribute that is comparably as personallyengagement is the major challenge it is. Action
significant?must be taken to reverse this or the problem will
Furthermore, the capitalist system underpinningnot go away and will only get worse.
business is premised on the philosophy that bigOf course one way to solve the problem is to
earnings are the reward for risk. On that basissimply do away with PRP. Certainly there is no
the driver is entitled to his reward for risking hisjustification to retain it. That, however, does not
life. What comparable risk does the executiveaddress the problem that PRP was intended to
take? In fact, one can actually argue that theirsolve - namely how to enhance team
people are the ones who bear the real risk ofperformance. Here too the solution is not difficult.
business. After all, they are the ones who loseIt simply entails finding a way to refocus energy
their livelihoods if the executive decides he needson the organisation as a single team. And what
to increase profits. And they are the ones whobetter way of doing this is there, than to make all
lose their livelihoods if the business fails. Even ifemployees co-owners of the business? This will
the executive faces the identical risks, there-create the sense of the organisation as a single
probability is that they will find alternativeteam, while sharing profits equitably amongst the
employment more easily than their employees will.employees will ensure that the pay disparity at
Admittedly an emphasis on performance hasleast stabilises. It will ensure that no-one gets the
done more to inflate executive pay than that onglory for success that they are not entitled to
risk. However, this is just as imbalanced, for whoand will go an awfully long way to eliminating any
is ultimately responsible for a team'slack of employee engagement.