The Difference Between Activity and Value Creation
Not all performance creates value, and not all motion deserves to be rewarded. In this episode of The Executive Compensation Podcast , Virginia Rhodes, Ryan Harvey, and Darren Moskovitz examine one of the most important distinctions in incentive design: the difference between activities that look productive and outcomes that actually create durable business value. The conversation explores why companies often default to measures that are easy to track, how activity-based goals can create the appearance of rigor, and when strategic milestones may still deserve a place in an incentive plan. The hosts also discuss leading versus lagging indicators, delayed outcomes, transformation periods, market practice, disclosure pressure, and the role of committee judgment when value cannot be measured neatly. For compensation committees, the challenge is not simply choosing measurable goals. It is determining whether the plan rewards what management completed or what the business actually gained. In this episode, you will learn: How to distinguish management activity from meaningful value creation Why easily measured goals are not always the most important goals When activity-based measures may still be appropriate How boards should evaluate delayed or long-term outcomes Why leading indicators may become more useful as data capabilities improve How market practice should inform incentive design without controlling it What committees should ask before rewarding progress rather than results The strongest incentive plans do not reward movement for its own sake. They reward the outcomes that matter.
