Friday, January 8, 2010

Time to raise Jan Forsberg's salary!

I read recently that Jan Forsberg’s salary has increased something like 60% over the last five years. (Jan Forsberg is the CEO of SJ - svenska järnverket - Sweden’s rail transport company.) Yet trains in our area, Mälardalen, run as poorly as ever.

As I thought about this paradox, I realized we’ve been looking at the problem of CEO salaries and company performance all wrong.

It’s common wisdom that poorly paid workers, or people who feel underpaid, care less about their work than those who believe their financial compensation is commensurate with their efforts.

It appears that Forsberg feels undervalued. The trains in our area are chronically late, when they show up at all. And the least bit of cold weather brings the system to near collapse. As I see it, poor train service is indicative of Forsberg’s job dissatisfaction and that SJ is not paying him enough.

The trick is to get Forsberg to care about his work. This means his salary should not be linked to performance (i.e. the better the trains run, the more he earns). He should instead be paid what he thinks he's worth to motivate him and to keep him happy.

We must get Forsberg to care about his job. That’s why whenever there’s a problem with train service, I say it’s time to raise Forsberg’s salary! Only when he truly feels valued will we see better train service in Sweden.

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