Category Archives: Robert Jacobson

Does short-term management pay?

Natalie Mizik and Robert Jacobson wrote an article entitled, The cost of myopic management for the July/August edition of the Harvard Business Review in which they explored the costs paid by the organization (and ultimately investors) when they become too focused on short-term revenue targets and begin inflating their earning by cutting expenditures. During their study executives would cut discretionary spending, which often included R&D, in favor of more impressive looking earnings. Mizik & Jacobson tracked over 400 companies and found that those firms that practiced “myopic management” would often have very impressive returns in the short-term, but long-term performed miserably. In order to begin to correct this behavior, firms need to begin to penalize executives for losses, not just reward them for gains. In addition, a portion of their compensation package should be tied to tenure, long-term growth and brand strength. Once an executive’s compensation is tied to long-term goals and objectives the myopic behavior will change as well.

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Filed under CEO, CEO Pay, CEO Salary, Executive Pay, Harvard Business Review, Leadership, Management, Natalie Mizik, Robert Jacobson