Pay for Performance or for Beauty?

It is common knowledge that attractive people get hired more often and paid more. Whether you like it or not it happens all over the globe. Beauty premiums exist in Holland, China and the US amount several other countries. So if we know this why do companies keep doing it. A recent study at Penn Institute for Economic Research found that correlations between height and income were most attributed to confidence. Surprisingly, they found adult income differences between tall men and women if they were not tall or attractive as children. So, the beauty premium only existed for individuals who were tall and attractive as children and as adults. The Journal of Applied Psychology pegs the premium at an extra $789 annually per inch of height. However, there was no actual work performance differences found across any of the studies. The researcher concluded that the beauty effect is similar to the placebo effect, where some real value actually does derive from nothing.

Vanilla

How would you feel if some say your company was “vanilla”? So often we equate vanilla with boring or bad but isn’t vanilla the most successful and longest lasting flavor ever? Paul Leinwand and Cesare Mainardi recently discussed just this issue in the June 2010 issue of the Harvard Business Review. Leinwand and Mainardi stress the importance of focusing intensely on what you (or your company) do (does) best. They call it the coherence premium. In general the coherence premium tells you to stick with your companies “vanilla” or what you do best.

Companies today are so focused on innovation and creativity that too often they lose focus on what they have done that was successful. They suggest that companies should create their strategy from the foundation of “what they do best” with the marketplace. They further illustrate that coherence in capabilities correlate strongly with greater profitability (as measured by EBIT margin). When you think of innovative companies you may think of Apple. But when you look with a “vanilla” eye you can clearly see that they have built off of their strengths (i.e., technology). Working off your organizations vanilla doesn’t mean being boring! To build a successful strategy there needs to be alignment between the people, organization and strategy. So start with vanilla, and build from vanilla.

Success is the new vanilla!

What do you think? Should companies stick with what they are good at or jump on the innovation wagon and create something new.