The world of human resources is getting more complicated each year. Ways of motivating employees that had been thought to work for years are being struck down by research. Types of bonuses that were once thought to be the best way to increase the bottom line are now being shown to actually reduce it. One of the biggest arguments that still remains is the performance-based pay programs that give employees and executives bonuses depending on how the company performs.
This debate is centered around one fundamental question. “Will giving employees bonuses based on company performance encourage them to help increase the company’s income, or will it only encourage them to cut corners and sacrifice the long-term goals of the company for short-term gains?” More and more people are starting to agree with the latter portion of that statement. While research has shown that companies with performance-based bonuses have higher overall performance, it does not take into account that the higher performance in one year might be affecting the performance of the firm in years to come. Some argue that executives are more inclined to put off large capital expenditures that are needed by the company because it will reduce the amount of income the company receives, thus affecting their bonus. Executives might also be inclined to give false impressions of sales and even make fictitious sales in order to grow the income statement. Learn more: https://www.crunchbase.com/person/jeremy-goldstein#/entity
For all of the companies going through this debate, Jeremy Goldstein and his firm Jeremy L. Goldstein & Associates is there to help. Goldstein has worked for several years in compensation and corporate law, and he has seen all different kinds of pay plans and bonuses. He has worked with several executive compensation committees to help find the line between paying employees for their hard work and giving employees money after they have sacrificed the long-term goals of the company. He knows there is a middle ground.
For the debate on performance-based pay, Jeremy Goldstein has found a solution that all parties are happy about. He has suggested that employees should be paid well if the company is doing well, but that all of the executives and decision-makers need to be held accountable for their actions. Namely, compensation committees should put provisions in their compensation agreements to make sure that large projects and expenditures are not sacrificed, and that all decisions made by the executives are ones that are for the good of the company, not just their pocketbooks.