by Henry Oliner

The outrageous bonuses paid on and off Wall Street represent our belief that there are super talented people who merit super compensation to attract them.But this “talent” is often overstated and the influence of random events on the performance is often understated.

We are quick to assume that a CEO’s actions caused the results- good or bad. But we ignore another CEO whose same actions achieved different if not opposite results.We tend to believe in their talent because of their pay rather than justify their pay because of their talent. We want to believe that if he makes $50 million, then he must be talented. We do not ask if this executive has a talent that is truly worth $50 million. Rather than credit any of his company’s performance to random events, we assume it is because of his talent.

Yet this does not mean that our actions are meaningless. In fact accepting the reality of probability should cause us to focus on the enduring qualities such as integrity, humility, and wisdom which seem so absent from so many of the “talent” focused compensation packages.

It is the enduring qualities that build a corporate culture that survives shocks and trends. It is these companies that are left standing when the smoke and wreckage clears.

Talent counts, but without the enduring values and the understanding of the realities of probability, talent is ephemeral and illusory.