0The Last Refuge of Scoundrels

It used to be said that patriotism was the last refuge of scoundrels. Now that patriotism is being viewed with more irony than honor among a certain portion of Americans, I think the "last refuge" has become the bashing of "fat cats." My evidence is a recent spate of articles on how President Obama, who is polling rather poorly these days, is once again going after Wall Street bonuses. There is no surer way to get heads nodding again when you speak.

I nod, too, but for a different reason. I continue to be astounded by the idea that banks had been managing the well-understood "trader's option" problem for decades, then suddenly lost the ability to do so in the mid-2000s, and crash goes the financial system. This explanation simply doesn't hold water. Neither does the idea that bankers suddenly became "greedy" in the mid-2000s, and crash went the financial system. No. If one wishes to develop a cogent theory about "what went wrong," one must identify distinguishing characteristics, not common, long-imbedded ones.... Read more

 

May 30th blogThe hidden risk of "at-risk" pay

On Monday, Staples, Inc will try to win its "Say-on-Pay" vote with ISS recommending against approval the executive compensation plan. ISS made its recommendation based on its usual arbitrary, micro-managing concerns which are not the subject of this post. Here, I want to highlight the problem Staples created for itself, without anyone's help, and unintentionally revealed in this pair of sentences:

The [Compensation] Committee ... recognized the need to address retention of key talent and to continue to motivate associates in light of the fact that we did not pay any bonus under the Executive Officer Incentive Plan or Key Management Bonus Plan in 2013 and 2012... Read more

 

April 28th blogYes, it can be this simple

If I were a wheelwright, I would probably raise an eyebrow at stories like "Philadelphia man invents the wheel." Since I create organizational incentives for a living, that was my initial reaction to this story, via the NYT:

In August, I wrote about the design and implementation of a profit-sharing plan for my business. I decided to try this because my company has a long history of producing poor (or no) profits.... Read more

 

May 27th blogThe Ford "buy their own product" myth

Whenever minimum wages are being debated, as they are once again, we can count on someone bringing up the old story about Ford's $5-a-day gambit. It goes something like this:

Ford Motor founder Henry Ford revolutionized the industrial landscape when he doubled his employees' wages to $5 per day in 1914. The pay increase allowed his workers to buy the Model T cars they assembled every day on the factory line...  Read more