What drives compensation and job security?

Compensation is driven by enterprise owners and executives

Shareholders and boards of directors have made it clear that compensation and job security are based on short-term goals that assure investor wealth. That is an incentive system that can have a very corrosive effect on organizational values and consequently organizational behavior. Self-interest and the drive for personal wealth have become the intrinsic motivators. Loyalty, ethics, and trust are being sacrificed daily for the new reward incentive.

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Impact on Corporate Culture

All organizations have a corporate culture. Culture is a display of collective behavior of the individuals in the organization. It is influenced and shaped by interaction between employees, management, and their environment. The result is a set of norms and values that determine how people will behave and relate to one another in a particular setting. The neural pathways that facilitate the development of these traditions are the same as religious faith. The result is people who are not related are able to work together much like a clan. Acceptance though, is based on unwritten and unspoken rules which are driven by the core group of the enterprise.

Good intentions, high values, and ambition are great employee attributes, but they will be battered and reshaped by organizational culture. So, what a person brings to the workplace will not prevail over the long-term unless the enterprise has many qualities in common with the newly arrived individual. Cultural pressure enforces conformity.  If the employees do not conform there will be continual tension, probably isolation, lack of advancement, and ultimately the nonconforming individual will leave the organization.

Unfortunately, in today’s business environment with its focus on shareholder or owner wealth, cultural values have shifted from broad-base potentials where innovation, customer service, and excellence were desirable virtues to short-term financial results. The driving force has become quarterly and semi-annual figures without equal pressure on long-term growth, community service, and benevolent renewal.

Author: Victor Janulaitis

M. Victor Janulaitis is the CEO of Janco Associates. He has taught at the USC Graduate School of Business, been a guest lecturer at the UCLA's Anderson School of Business, a Graduate School at Harvard University, and several other universities in various programs.