Industrial company executives perform better the more they are paid – but only up to a certain salary level – according to research by Groningen University and national statistics agency CBS.
The research, which involved 433 companies and CBS statistics, found that the quality of the management was connected to salary, but only up to €600,000.
Once a boss was paid over €600,000, there was no significant difference in his or her perceived management capabilities than with executives earning €400,000 to €600,000, the researchers said.
Management quality also depends on the length of time an executive has been in the job, the study found. In other words, long-serving managers are less likely to be considered as offering high quality work, when compared to people who are relatively new to the job.
The research was carried out on behalf of the economic affairs ministry and is part of a global project entitled World Management Survey.
The project, which involves over 400 industrial companies in the Netherlands ‘shows there is a clear and significant correlation between overall management quality on on one hand and productivity, international expansion and innovation on the other.’
However, ‘there is no significant link between management quality and used benchmarks for profitability,’ the report said.
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