There has been a debate among business experts of late about whether or not pay-for-performance works or not. Competing articles published by Harvard Business Review (here and here) last month make the argument for and against paying executives (CEOs specifically) based on the performance of their companies.
They both point to similar studies from various social sciences which all but proves that performance-based pay only works for routine tasks. For creative tasks, performance-based pay has actually been proven to hurt performance.
So why are most executive pay packages so heavily skewed toward incentives?
I’m not the one to argue that. But I can weigh in on whether or not marketers should be paid based on performance.
If you take the studies mentioned above into account, you have to lean toward eliminating performance-based pay for marketers. Marketing is not a routine task. And so performance-based pay should not work to improve performance.
A marketer who is good at his or her job, who values the work they are doing and is committed to providing maximum effort should expect to perform as well or better without payment incentives.
But can we really say all marketers fit the description above? Might payment incentives help you recruit and retain better marketers? And doesn’t basing part of a marketer’s payment on performance help companies limit their own risk?
My opinion, knowing full-well that’s all that it is, is that marketers should be paid for performance. Marketing is the department within organization where the company’s performance is most directly related to the job done. And so marketers should have a little “skin in the game”. When the company does better, the marketers do better.
This might sound like an obvious argument made by a marketer looking to make more money. But I think this strategy makes sense from a business standpoint as well.
For one, I think this strategy will help business recruit and retain the hungriest marketers available. And two, by basing a large part of one’s pay on company performance, you create a win-win scenario. If performance is not there, the company’s obligations will be lower.
What do you think? Share your opinions in the comments below.