Golden Oldies: Mine’s Bigger Than Yours
by Miki Saxon
Poking through 11+ years of posts I find information that’s as useful now as when it was written.
Golden Oldies is a collection of the most relevant and timeless posts during that time.
It’s said that money is the root of all evil, but there are plenty of evil people with no money and lots of wealthy people who do enormous good. I think it’s more accurate to say that greed is the root, since people will do anything to satisfy it. And often, what they do is perfectly legal — but legal doesn’t mean either ethical or moral.
Read other Golden Oldies here.
I’m no happier about the AIG and other bonuses paid to screwed up Wall Street banks, but I’m not sure why any of us are surprised.
“In the largest 25 corporate bankruptcies between 1999 and 2002, while hundreds of billions of dollars of investor wealth and over 100,000 jobs disappeared, the Financial Times found the “barons of bankruptcy” made off with $3.3 billion.”
Giant compensation packages, guaranteed bonuses and platinum parachutes are excused by Boards and executives as necessary to attract the “best and brightest,” but here’s what’s really going on.
The ‘names’ demand outsize compensation/stock options/guaranteed bonus/etc. in order to validate their ‘brand’.
Those responsible for hiring not only meet the demands, but even exceed them in an effort to attain or sustain the company’s reputation as a better home for ‘stars’ — the more stars you have the greater the bragging rights — mine’s bigger than yours in high school locker room talk.
Now let’s consider the folly of this attitude.
Those hiring often seek a name brand in the mistaken belief that the brand comes with a warranty that guarantees good results.
But no matter who you hire you’re actually paying for their past performance, which is always influenced by
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- circumstances—boss and company positioning in its market and industry
- environment—culture and colleagues;
and let us not forget that minor factor
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- the economy.
The hiring mindset is that everything the brand accomplished was done in a total vacuum and dependent only on the brand’s own actions, therefore changing every single surrounding factor will have no impact on performance.
Put like that it sounds pretty stupid, doesn’t it.
This is one of the prime reasons that so many CEOs bring their ‘own team’ over when they move, as do managers all the way down the food chain—they know they didn’t do it alone.
CEOs aren’t like movie and rock stars whose very names draw consumers into spending money—nobody ever bought a product from GE because Jack Welch was CEO, nor do they carry Jobs iPods—so why pay them that way?
Moreover, assuming that performance occurring during an expansion is a valid yardstick for performance in general, let alone a downturn, is sheer idiocy.
You have only to remember the difficulties faced by people whose management skills were honed between 1991 and 2000, the longest expansion in our history. When the recession hit in March of 2001 they had no experience whatsoever of how to drive revenue or manage in a down economy.
That recession and the previous one in 1990 lasted only 8 months each. The longest recession we’ve had was 2 years, January-July 1980 and July 1981-November 1982, and that one had a 12 month break in it. This means there are a very small number of managers with any actual experience managing in anything even close to what’s happening now.
The current recession officially started in December 2007, so it’s already 15 months old and the end isn’t in sight.
What experience makes these folks the ‘best and brightest’ for today’s world?
Just why the hell are companies still guaranteeing oversized compensation and exorbitant exit packages when now is definitely the time to pay for future performance—no guarantees.
Image credit: flickr