► UK Switzerland Germany
► Luxury Pharmaceuticals
► Swiss Banks
► Contact for detail info

Obermatt news 3-4 times a year

► What they say
► What we say

Perhaps the most widely adopted application of value-based management theory into actual management practice has been in the area of incentive compensation, or performance pay.  Directors have long seen the wisdom of motivating executives with a variable compensation component based on performance.  But these bonus systems often only loosely or ineffectively align the financial interests of managers with those of owners.

This section reviews some of the more common approaches to incentive compensation and their drawbacks, including competitive compensation, value-based incentives, the idea of the bonus bank, and the Beyond Budgeting movement.

The subsequent section about Obermatt's method of indexing operating performance presents detailed information on how indexing to measure relative performance as Operating Alpha can greatly improve all of these approaches to performance pay, and solve one if its most intractable problems.