Every Saturday I spend 2 hours in a Recording for the Blind and Dyslexic studio narrating high-school and college text books and reference materials (if you live in a city with a studio, I highly recommend volunteering for this organization - it's extremely well-run and worth while). Sometimes I come across interesting material related to my field of work. This one was eye-opening. Even though I've heard this from Tony Mayo, it didn't resonate like it did after reading this (underlines are mine):
"Staw & Epstein (2000) studied the adoption of popular management techniques (PMTs) and their implications for (among other things) CEO compensation....Additionally, Abrahamson (1996) described the emergence and adoption of PMTs as fashion cycles. That is, at any given time, older practices tend to be viewed as deficient and newer practices tend to be viewed as better. Institutionalization theory predicts that adoption of PMTs will be motivated more by a need for legitimacy than a desire for efficiency....Studying the 100 largest Fortune firms in 1995, they gauged PMT usage through news articles on the sample firms. Their evidence showed that adoption of PMTs had no impact whatsoever on firm performance (regardless of the effectiveness of implementation). Further, CEOs of firms that adopt PMTs tend to be paid more, regardless of whether or not the adoption was linked to firm performance. Finally, the authors show that when press reports highlight PMT adoption, CEOs tend to be paid more, again regardless of the firm's performance or the effectiveness of the actual implementation of the PMTs. They add that the effects show up in short-term compensation, and their analyses clearly link the compensation effects to the adoption of PMTs, not to reputation increases or effective implementation."
From Strategic Leadership: Theory and Research on Executives, Top Management Teams, and Boards (Strategic Management Series) Oxford University Press, 2009