In his TED talk “Separating Leadership from Pay,” Stephan Hostettler reflects on his own succession experience and years of consulting to show why traditional performance management systems and bonus payments often fail.
He demonstrates how money is not an effective motivator for cognitively challenging work and how bonus structures undermine trust, collaboration, and employee engagement.
Hostettler explains that employees expect three core forms of appreciation: feedback, development, and pay. Yet most companies have bundled these into one flawed process built on three myths: everything is measurable, performance can be rated with scores, and ratings become more effective when linked to money. The result: demotivation, unhealthy competition, and weak cultures.
As a solution, he proposes to separate leadership from pay. Leaders should provide feedback and development without linking it to financial rewards. Instead of individual bonuses, organizations should move to success sharing at team, department, or company level — measuring not just profit, but also quality, sustainability, customer impact, and innovation.
With this perspective, Stephan Hostettler shows how separating leadership from pay enables companies to build trust-based, agile cultures that foster true collaboration and sustainable performance.