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Why bosses should be careful when using performance-related pay

Why bosses should be careful when using performance-related pay

May 25th 2013 |From the print edition

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OF ALL a firm’s inputs, its workers’ effort is perhaps the oddest. It is as vital as land, factories or machines, but much harder to control. It is often impossible even to measure. A manager can gauge the firm’s output, but not the effort people put in, beyond crude gauges such as the time they spend on the job. Employees have the informational edge, knowing their own effort, output and skill level. This asymmetry makes it hard for managers to distinguish, for instance, between the low-skilled but diligent and the skilled but lazy. Monitoring schemes to reward hard-working employees and punish slackers can boost effort, but they can backfire badly, too.

What should firms do? A good place to start is with the worst kind of behaviour: crime. In a paper published in 1968 Gary Becker, of the University of Chicago, set out the factors which policymakers should consider when deciding on what resources they should devote to detection. In his model criminals calculate the risks and benefits of bad behaviour, taking into account the possible monetary reward, the probability of being caught and the subsequent punishment. To cut crime authorities must increase the probability of being caught, the severity of the punishment, or both. This approach can also be applied to less extreme forms of bad behaviour, such as slow or sloppy work: firms may have to monitor individual workers, and then reward the good and punish the bad. Read more of this post

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India is considering letting its business houses run banks. It should think twice

India is considering letting its business houses run banks. It should think twice

May 25th 2013 | MUMBAI |From the print edition

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BANKING in India is a vast problem and a huge opportunity. Only 35% of adults have formal accounts. A grim reminder of the risks for the 600m-odd unbanked folk came in April. A multi-billion-dollar, barely regulated, “chit fund” in Kolkata collapsed, destroying the savings of hundreds of thousands of poor people. Up to a dozen committed suicide, one by immolation. Precisely because the banking market is so underpenetrated, it should offer lots of growth. Although there are 196 domestic banks, a majority are state-controlled and stodgy. Lending margins are high. So when new licences for private players are granted, fortunes are made. The last two permits, awarded in 2003-04 when the industry was recovering from bad debts, have helped make $10 billion for their backers. Now the Reserve Bank of India (RBI), the central bank, plans to issue new licences. Applications are due by July 1st and a frenzy is building. Vikram Pandit, the Indian-born ex-boss of Citigroup, an American bank, has teamed up with a local outfit. There could be up to 100 entries for perhaps ten licences, reckons a banker.

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Why Myanmar’s military rulers are giving power to the people; Why investors still need to proceed with caution

Why Myanmar’s military rulers are giving power to the people

May 25th 2013 |From the print edition

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MYANMAR’S TRANSITION HAS been a top-down affair. This, more than anything, distinguishes it from other recent upheavals such as the “people power” revolutions of the Arab spring, the fall of communism in Europe and the toppling of Indonesia’s President Suharto. At crucial moments the threat of mass protests hurried the process along. Government advisers concede that in 2011 they were afraid of an Arab spring on the streets of Yangon. The army had mercilessly oppressed protests such as the aborted “saffron revolution” in 2007, led by monks, and the pro-democracy uprising in 1988 that had first propelled Miss Suu Kyi to national prominence. Those 1988 protests led to elections in 1990 which were won by the NLD but annulled by the government. For the main part, though, Myanmar now stands as a rare example of an authoritarian regime changing itself from within. Read more of this post

Do Shilajit, Other Rock Extracts Boost the Immune System?

May 27, 2013, 5:21 p.m. ET

Do Shilajit, Other Rock Extracts Boost the Immune System?

By LAURA JOHANNES

The Claim: Minerals and acids taken from rocks, including shale in the U.S. and tar from India, are good for your health. Rock ingredients vary, but can include fulvic and humic acids, and dozens of metals and minerals including iron, zinc, gold and silver, scientists say. Proponents say these ingredients soothe inflammation, boost the immune system and act as an antioxidant. A well-known rock-based treatment is shilajit, (pronounced shil-a-jeet), a tar-like substance scraped from rocks in the Himalayas.

The Verdict: “There is no known benefit of shilajit or other rock extracts” and they haven’t been adequately tested for safety in humans, says Philip J. Gregory, a pharmacist at ConsumerLab.com., which does independent testing on dietary supplements. Composition of rock-based therapies may vary from sample to sample, so it’s hard to be sure exactly what you’re getting, he adds.

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Blk Enterprises’s Blk mineral-infused water sells for $2.49 for a 16.9-oz. bottle, while Pure Shilajit, a Himalaya tar-like resin which can be mixed in a liquid, sells for $380 for 90 grams.

The idea of consuming the nutrients in rocks for health benefits goes back thousands of years, says Dhaval Dhru, acting chairman of the department of Ayurvedic Sciences at Bastyr University in Kenmore, Wash. In ayurveda, or traditional Indian medicine, a small amount of shilajit is taken in warm milk, he says, to improve libido and treat a range of health problems such as diabetes and anemia. Read more of this post

A Better Way to Treat Anxiety; For Teens, Therapy Turns Parents Into ‘Exposure Coaches,’ Not Protectors

May 27, 2013, 5:42 p.m. ET

A Better Way to Treat Anxiety

For Teens, Therapy Turns Parents Into ‘Exposure Coaches,’ Not Protectors

By LAURA LANDRO

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Getting up the nerve to order in a coffee shop used to be difficult for 16-year-old Georgiann Steely. Speaking in front of classmates was unthinkable.

The high-school sophomore overcame a crippling case of social anxiety as a patient in the Child and Adolescent Anxiety Disorders program at the Mayo Clinic in Rochester, Minn. Therapists there use an innovative approach early in treatment, gradually exposing children to things they fear most and teaching parents to act as “exposure coaches” rather than enable their children to avoid things and situations as a protective measure.

When parents help children to escape from feared situations, anxiety symptoms may worsen and children frequently become more impaired, says Stephen Whiteside, a Mayo pediatric psychologist. Read more of this post

New York rolled out a long-awaited bike-share program, an effort dubbed the city’s first new public-transit option in 75 years with $95 annual membership fee, $25 weekly passes and $9.95 day passes

May 27, 2013, 9:06 p.m. ET

Bike Share Gets Rolling Across City

Mayor Bloomberg Rolls Out Bike-Share Program With a Ding of a Bicycle Bell

By JOSH DAWSEY

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Toby Miller returns a bicycle to a bike-sharing kiosk on Monday. Straddling a bike but never pedaling, New York Mayor Michael Bloomberg rolled out a long-awaited bike-share program with a ding of a bicycle bell on Monday, an effort dubbed the city’s first new public-transit option in 75 years. A signature Bloomberg administration initiative, Citi Bike—named for its main sponsor, a financial-services company—made its debut with more than 6,000 bicycles available at 330 stations in Manhattan and Brooklyn for about 15,000 people who paid a $95 annual membership fee. Starting Sunday, others who don’t have annual memberships can buy day passes for $9.95 and weekly passes for $25.

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Indonesia’s Weak Institutions Spark Nostalgia for New Order; power abuse by elites and uneven growth has left people yearning for Suharto

Indonesia’s Weak Institutions Spark Nostalgia for New Order

A jurist and an economist say power abuse by elites and uneven growth has left people yearning for Suharto

By Ezra Sihite on 8:55 am May 27, 2013.

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President Suharto’s image can be found on posters around Indonesia in increasing numbers, as people seek the stability that his often-brutal leadership brought to the country. (JG Photo/Ali Lutfi)

Many Indonesians believe that life in the New Order era under President Suharto was better than today and that social elites dominate modern politics and law, according to a senior former jurist.

Speaking at a forum in Jakarta, former Constitutional Court chief justice Mahfud M.D. said that Indonesia is blighted by an oligarchy of elites that prioritize their interests over the public interest and do not abide by social rules, causing disillusionment and a lack of confidence in the law.

“Don’t be surprised to see people today wanting to see the military back [in power] because of oligarchic [conditions]. In Yogyakarta, you see stickers on cars with picture of a smiling Suharto reading, ‘Wasn’t it good during my time?’ ” Mahfud said. Read more of this post

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