It has long been a held belief that to fully motivate executives, they need to have a financial commitment to the business. For example, private equity investors will often require that the menagement team make a significant personal investment in the buy-out that they are backing. This may be in the form of re-mortgaging the family house or other sizable commitment. The reasoning being that in order for us to back you, we need to see some form of tangible commitment. How does this impact on innovation and risk taking?
There has been a lot written about loss aversion, particularly Nobel Laureate Daniel Kahnemann has been at the forefront of this idea that
The research has focused on single transactions, however what happens when we look at how loss aversion can affect decision making on an ongoing basis. What is the cumulative impact of high status and high pay on executive decision making?
When we look at decision making inevitably we
Lower pay (e.g. Zappos)
When do we get to the point in the minds of executives where the fear of losing what they have built up outweighs the potential for future gains? Take for example the role of incentivisation in start-ups.
Should senior executives be crowdsourcing key decisions?
