Today’s super-bosses get salaries, of course, and very large ones at that; but they also receive ‘performance-related’ bonuses of great size, plus even more magnificent stock options and other wonderful rewards, from massive pensions to mighty perks.

These sometimes obscene elements are all supposed to be linked to performance.

Even though the cost of stock options can no longer be hidden, shareholders are exceedingly unlikely to protest about the packages, unless the management manifestly fails to deliver adequate performance.

That proposition sounds fair enough. Under a little examination, however, it falls apart. First, what is ‘adequate’ performance? The classic answer is a share price that outperforms the sector. The sector may be a meaningless concept; outdoing a mediocre bunch of competitors with sub excellent figures is no great achievement; and the share price, anyway, is hardly more under management’s control than the performance of the national and world economies. The only virtue of the share price is that the number is unarguable - for a specific moment in time.

The basic principle of incentives, from the shop floor upwards, is that the more you give, in theory, the more you get. The bald statement, however, ignores the way in which effective incentive schemes work. They work by altering behaviour and, in a well designed scheme, by aligning that behaviour with the needs of the organisation.

But incentive schemes can also skew behaviour in the wrong direction, the most famous example being sales incentives tied to turnover, but not to profit. What you get is a great deal of unprofitable business.

Dishonesty extends across the whole range of performance indicators. If doubtful numbers are going to boost management’s personal rewards, they have every incentive to gild the lily - or disguise the poison ivy. This pernicious tendency may be no more heinous than turning a blind eye to the dishonest. After all, you have to trust your finance director, don’t you?

‘Leadership’, not management, is the flavour of the times. It is, of course, a crucial component in optimising the effectiveness of organisation. But effectiveness – to which management pundits have devoted their teaching and preaching – may no longer be the Holy Grail of the top manager. The change that I see is a switch to maximisation: and what’s being maximised is personal reward.

This shift in values has been seen coming from along way off. CEOs and their cohorts began paying themselves larger and larger sums year by year long ago. The severe consequences for management are already clear.

The more the misuse of corporate funds for private enrichment becomes the rule, the more the long-term health of business must suffer as successful long-term, all-round management is sacrificed for short-term gain.

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