Stop Paying Executives for Performance (2016)

In my experience, it's better to use your full range of objective and subjective facilities to select a good manager, and then trusting them until it's time to re-evaluate (using the same means but now with more evidence of their performance).

An organization that runs on extrinsic motivations can only ever be mediocre at best (and often worse), and there's very little that kills intrinsic motivation more than putting people into systems designed reduce a human's potential to a number (or several numbers in the case of your balanced scorecard).

"Widgets that sold and had no returns logged" is better than "Widgets that passed QC" is better than "Widgets completed" is better than "Widgets started" for a widget assembly line worker.

Perhaps even better is "long-term profit and sustainability of Widgets, Inc" but that is harder to tie back to the individual widget maker. (A possible metric for the last is "arithmetic average of the share price of Widgets, Inc measured between 9 and 15 years from now", but that's hard to use to motivate someone to make more/better widgets this week.)

If every employee gets a bonus based on the organisational performance then there is a greater incentive for team work and cooperation within the organisation.

I previously worked in a company with this policy. It meant the receptionist got the same bonus as the Principal Engineers. That policy might make some people unhappy if they think they deserve more compensation because they are more educated / smarter / experienced in a specialty. The thing is, the admin ans support staff worked hard to make the place run smoothly. The engineers were almost completely unburdened with flight, accommodation or training bookings. IT equipment was procured and commissioned in days, not weeks/months. If someone was roadblocked, the organisation worked to remove the roadblock.

It was the best company I have ever worked for. Sadly, the company was acquired and the cooperative culture died after a few years.

Other places I have worked are in contrast much more mercenary. Individual performance is measured and used to determine compensation and promotion. Individuals and internal teams actively compete with each other resulting in significant inefficiency. Internal politics dominate business making decisions.

You can still measure performance against KPIs but not tie it to individual compensation. Instead use the metrics to analyse where there might be opportunities for improving efficiency through restructuring / training.

Whether 13 weeks of paid parental leave or this healthcare plan vs that one or this change to the telecommuting rules that they advocated for is irrelevant. Did the company succeed and thrive and serve its stakeholders?

One measure that I've seen recently (and like) is "compounded growth rate, over 6-10 years, of the 3 year moving average of stock price" from grant to payout date, subject to minimum thresholds [so you're not just paying for ordinary market growth].

That measure is also imperfect, but it seems less imperfect than others. (Disclosure: the company I work for adopted such a plan last year, so we won't know how it really plays out for at least 5.5 more years. Edit: program summary here: http://ir.cimpress.com/mobile.view?c=188894&v=202&d=3&id=aHR... )