Friday, March 20, 2009

What Would Your Mother Say?

One of the features that ExecuNet members have and make great use of is our Roundtable discussion groups.

I still think that the most powerful learnings on almost any subject come from peers, and when I get my daily digest of these discussions it does nothing more but add to that feeling. It is just great stuff.

One of the topics a lot of members have been talking about, not surprisingly, was the AIG stuff and the perceptions thereof. Obviously it made most of us sick and for all the right reasons.

In reading through the discussion thread on our GM Roundtable, one of the posts struck me to the point where I wanted to reach out to its author and ask if I could share it here. Fortunately, member Bill Jackson told me it was okay and once you have read it, I hope you'll agree that what he had to say makes all kinds of sense.

First we have no idea what the contracts said. Were these retention agreements put in place years ago to keep people from bolting that guaranteed the payments regardless of performance? Were they performance based contracts? Were they earn outs as part of an acquisition? Since we don't know, we really can't comment.

That said, if I were running the place I would have taken every one of the people who were going to get these bonuses into a room and said the following:

"Look, I know you have contracts and you are entitled to these payments. I understand that you may have even based plans on these payments coming. In fact, I'm sure that you may even be able to legally force me to make these payments. But, if we pay these out we are going to create a firestorm in the public eye, congress and the political arena that none of us may survive.

It is in our best interest to not do this now. When we turn this thing around, I can ensure you that your decision to not take these payouts now will be rewarded in the future.

Thus, I've made the decision to not pay these bonuses. I hope you can support me in this, now let's get back to work to making this company great again."

Any good leader needs to understand both the legal and moral responsibility but also what the "optical" view of what you do. If it's not going to look right in the eyes of people who can make your life miserable, you need to deal with that. AIG didn't, and we're seeing the results.
It reminds me of the well known "light of day test" where if you need help in making the right decision just ask yourself "what would your mother say?"

1 comment:

John said...

Contracts can be renegociated at any time either upwards or downwards.