Year end stories

As an information junkie and recovering librarian, I live for these. Especially the science "break throughs." They almost always confirm my own 6-day creationist beliefs, whether they are micro or macro. "In the beginning God. . ." But here's an interesting sociological "year end" bit of research--about how people might perform to win that end of the year bonus.

Judi McLean Parks and co-author James W. Hesford had a hunch that compensation packages had something to do with the rising tide in fraud, estimated to total $994 billion annually in the U.S. Specifically, they suspected the type of compensation plans--contingent versus non-contingent--(and the form of that contingency, as a bonus or penalty based on performance), might be related to fraudulent reporting and the misappropriation of assets.

To test their hypothesis, McLean Parks and Hesford conducted a controlled laboratory study using a random sample of students who were paid for solving anagrams according to one of three different compensation plans, although in all cases the expected value of the compensation--regardless of the form of the compensation--was identical. The students self-scored their work and in half of the cases signed a statement attesting to the veracity of their reported results.

� Participants receiving a 'flat salary' for their work were the most honest about reporting their scores.

� Many participants who received a performance based bonus cheated when reporting their results.

� Participants who were penalized based on low performance not only cheated but also stole the nice pens that were to be returned at the end of the study!

McLean Parks believes the study's results have implications for CEO compensation plans and the financial difficulties many companies are experiencing today. "All I have to do is look at Enron, Fannie Mae, Freddie Mac to know that this does happen. And now we've demonstrated the causal link to contingent pay." Fraud uncovered at Fannie Mae alone from 1998-2004 has been estimated to be in excess of $10.6 billion."

So a fair salary with no year end bonus, even for the big wigs? Could it stop corruption? From clerk-in-the office to CEO, I suspect no one will buy it. Even the secretaries in Dreier's law firm were making $200,000 a year. That's a huge temptation not to blow the whistle and go back to $40,000.

There's too much common sense in this research. Let me count the ways--they too are all Biblical. Greed, envy, and pride; lying, cheating and stealing; waste, sloth and addictions; anger, hate and licentiousness. Full news release at Science News Daily.