Executive Briefings | February 20, 2015
The Problem With Risk – Not Everyone Can Be Above Average
I’m a big fan of Garrison Keillor and his mythical Lake Wobegon. And, as someone who loves statistics, his description always brings a smile to my face – “Welcome to Lake Wobegon, where all the women are strong, all the men are good-looking, and all the children are above average.” Of course, that is statistically impossible.
This is one of the inconvenient statistical truisms that many executives overlook when considering pay-for-performance and risk-based arrangements. These payment arrangements are developed using some basic statistics that include a . . .