That ain’t working, that’s the way you do it, get money for nothing and your chicks for free.
Money for Nothing
I hope you guessed from the title of this post that I was going quote Dire Straits, and I hope you figured out that I am going to write about our current economic crisis. Regular readers may wonder why I would take on such a topical item that is way out of my range of expertise. For fun really, though there is little that is fun about the crisis.
I have some common sense thoughts that I’d like to put out there so they can be refuted or supported by people who know more about business than I do. To be completely open, I have not taken many business courses, and I have only worked in the not-for-profit sector. I do not own or run any business other than The Alder Fork related enterprises, which don’t make any money.
A couple of items that are on my mind. The first has to do with the many company’s that have lavishly thrown money at executives in both good times and bad. I wonder why shareholders and decision makers are so concerned with keeping “highly talented” people (by paying them loads of money) when most of these people failed miserably at their jobs. Wouldn’t you be better off paying someone else less to ruin your business? They certainly can’t do any worse.
That line of thinking leads me to wonder what are the best attributes for a CEO or other top executive. It seems that especially in recent years companies have sought out greedy folks whose many interest is making as much money as possible as fast as they can. Obviously, this is not true of all executives, but certainly seems to be the case with those who have created our current situation. In my uneducated view a business is first about survival. If I own or am a shareholder of a company I want to know that I can still derive income from it many years down the road. That enterprise is a security blanket for me in the future. Businesses, much like humans, rely on survival first and abundance second. We can get by in lean times, particularly if we are wise in rich times. I won’t even bother to tell you the story of the chipmunk and the grasshopper, or of Joseph’s adventures in the Bible. If I was going to hire an executive to run my company I would want someone who was first and foremost interested in having the business survive well into the future. I know that the days of a life long career with one company have mostly passed, but that is the kind of attitude that gets you to your 50th anniversary.
This leads to my next point, with companies floundering into bankruptcy and asking for government money, I think a decent place to start the rebuilding phase is making most if not all employees equal in terms of pay and benefits. I actually stole this idea in part from Mark Cuban who demanded that of the small companies he has been financing. Of course, I am suggesting this for much larger entities. I was quite angry when I heard that GM executives had suggested cutting benefits for all hourly workers while only giving themselves a 10% pay cut. So a middle class family can no longer afford to send their kids to the dentist or doctor, but an executive need only buy a slightly smaller house, or take fewer vacations to Europe? If they needed to prove that they deserved taxpayer money, I think they failed. The benefit of this idea is job saving. More people an work for less money, at least until the company is out of debt. It may not save everyone’s job, but it will likely save more than the current alternative.
My last point has to do with the illusion of knowledge. There have been many stories lately of Ponzi-like scams that have collapsed, Bernie Madoff comes to mind. In those cases the idea of “too good to be true” proved correct. But I also wonder what role perceived knowledge, in the form of education plays a role. Earning a degree means demonstrating knowledge and its application in a controlled setting under stressful conditions. Working requires using and adapting that information in uncontrolled and changing circumstances, particularly in the business world. There are thousands if not millions of companies in the world, each with their own culture and range of characters to interact with. Just earning a degree in any subject does not guarantee you are good at what you do. In fact, even demonstrating some success with another operation proves very little. Success is best judged by reflecting on recent and measurable acehivement. I think many owners/shareholders have been convinced that strong education is the most necessary credential to being a good business manager, when it is likely not. If I am running a company I want to know that my executives can adapt to my needs and the needs of the organization. Then we might be getting somewhere.
Please take issue with this post and let me know what you think.