Could Redwood City Salary Increases Really be Hush Money?

Executive and staff compensation are delicate issues. As Dan Cable, professor of organizational behavior at the London Business School (LBS), and Freek Vermeulen, Associate Professor of Strategy and Entrepreneurship at LBS, have written in the Harvard Business Review: "Abundant evidence shows that people – including top managers – will in fact start to behave differently if you make a large proportion of their remuneration dependent on some measure of performance. But it will not be in a way you want them to behave."

Dan Arielly, James B. Duke Professor of Psychology and Behavioral Economics at Duke University and the founder of The Center for Advanced Hindsight, and his team conducted a study on compensation and wrote about it in the Oxford Review: "To test whether very high monetary rewards can decrease performance, we conducted a set of experiments in the U.S. and in India in which subjects worked on different tasks and received performance-contingent payments that varied in amount from small to very large relative to their typical levels of pay. With some important exceptions, very high reward levels had a detrimental effect on performance."

Now we find out that the City of Redwood City that just recently claimed it didn't have money to hold local elections, has plenty of money to hand out in raises and pensions (will be a subject for a different post.) Given that a vast amount of research has shown that when you claim to want to motivate people to deliver certain results, they will in fact act in ways that are not conducive to positive and improved outcomes, we have only to wonder if instead this is hush money that is being handed out.

As Mayor Seybert put it, an employee's "ability to handle unique challenges" was the reason that one such employee should be given a substantial raise. However this was a City Manager, and what but "unique challenges" does a City Manager have to deal with. Especially in an area that is growing this fast; this is an essential duty in the executive management position itself not a reason for a raise.

Moreover this is happening in a city where the City Manager and City Attorney did not understand their own City Charter. They assumed that there was no difference between an action being handled by an independent board or commission, in this particular case the Port Department, or by the Council of Redwood City thereby allowing a local attorney to threaten the city's general fund and receive a massive settlement.

It is also worth mentioning that according to the City Charter the City Manager is required to become a resident of Redwood City. The Charter reads: "Residence shall not be a qualification for his appointment; but promptly thereafter, he shall become and thereafter remain an actual resident of the city." Presumably this requirement was written into the City Charter to ensure that a City Manager would always make decisions that would benefit city residents. Given that we are now 15 months into the appointment, no raise should be allowed until such a time as this requirement has been confirmed to the residents of Redwood City as having legally been met.

The other stated reason was to bring the City Manager's salary in line with other local city managers. However the reality is that one of the examples used by the Mayor was the Palo Alto City Manager who has been a city manager off and on for over twenty years and has been in Palo Alto alone for over eight years. In comparison, the Redwood City City Manager has just recently been hired, as in 15 months ago, to her first ever position as city manager.

As Google puts it hush money is "money paid to someone to prevent them from disclosing embarrassing or discreditable information." Maybe it is time for city employees to come clean about why they really are being paid these extra benefits and awarded these raises. If not it is time to really clean house.