Chris Matthews often interviews Chris Mathews

When I have the opportunity, I often enjoy watching Hardball with Chris Mathews, but his interviewing style often drives me nuts. Ultimately, my issue is that I am a stickler for the “unwritten” rule of questioning – person A (in this case the host) asks person B (the guest) a question and then the person B answers the question. If necessary, person A asks a follow up question to probe deeper or to clarify person B’s previous answer.
Well often Chris asks a question and then answers his own question, often talking over the guest. The guest then stops talking to listen to Chris Mathews, who at times will also stop talking creating a very unnatural momentary pause or they both talk simultaneously and you can’t hear either clearly. I respect Chris Mathews experience in politics and enjoy hearing his unique perspective, even though I often do not agree with him. Maybe one of these days, I will grow accustomed to the fact that he will often answer his own questions before he allows the guest to answer.


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Obama to cap executive pay for those who receive public funds

Responding to outrage over reports of Wall Street excess, President Obama announced plans to cap executive compensation at $500,000 for those firms that accept significant federal assistance moving forward. Well, not surprisingly, a number of interested parties immediately began to point out that capping salaries on Wall Street is a mistake. For example, Heidi Przybyla and Christopher Stern of Bloomberg report:

Efforts to curb executive pay may backfire, said Scott Minerd, chief executive officer and chief investment officer of Guggenheim Partners Asset Management, who helps oversee more than $30 billion in stocks and bonds.

The Obama measure is “too draconian and too arbitrary, and doesn’t take into account free-market forces,” said Minerd. “Companies that need the most talented people to fix their problems won’t be able to pay them.”

Many white collar workers have bonuses – to a greater or lesser degree – as a part of their compensation package. Most of these same workers understand that if the organization isn’t successful then your bonus is negatively impacted. Hell, it is safe to say that many white collar employees did not receive bonuses this year due to the economic downturn.

So it is no surprise that the typical non-Wall Street white collar worker would be appalled that employees of “unsuccessful” Wall Street firms would receive nearly $18 billion in bonuses (6th highest total in Wall Street history), when nearly every firm received tax payer funds.

When your firm is on life support and is receiving public funds due in large part to your executive teams greed and very poor decision making, then the argument that limiting pay will cause brain drain rings hollow. It is difficult to believe that the firm has the best and the brightest who are deserving of extraordinary pay when the firm is in a ditch. In fact, those responsible for the firms decisions should be thankful to have a job because based on their performance they should be unemployed.

Ultimately the decision is simple. If your firm is confident in your team of rain makers that clearly is worth millions and can not live with pay caps, then don’t accept the funds and make them earn their pay. Use their extraordinary talents to pull the firm out of the ditch. We wish you luck and great success. However, if you need public funds in order to survive, then you need to tighten your belt and figure out how you will survive on $500,000 until your firm can pay back the public funds.


Filed under CEO Pay, Executive Excess, Executive Pay, Financial Services, Wall Street

The cesspool syndrome

I’ve read and re-read the Arthur Bedeian and Achilles Armenakis article, The cesspool syndrome: how dreck floats to the top of declining organizations. In my opinion this article is worth the time to read. At its core it talks about how their research shows that unlike in successful organizations where the cream rises to the top, dreck often rises to the top of unsuccessful organizations. They argue that largely this is due to the fact that the more successful and desirable employees have greater opportunity to leave an organization that is on a decline. Whereas the less talented and desirable employees do not have the same options and stay with the organization and ultimately work their way to the top. Ultimately, the authors are suggesting that organizations need to do a better job of identifying valuable employees and putting programs and incentives in place to retain them.

I believe that this is incredibly important because an organization does not need to be in a full blown decline to experience this phenomenon. Many of our organizations go through lulls or short-term declines. In addition, I would also point out that the uncertainty that is created during a merger or acquisition can easily create an environment in which your best employees leave for new opportunities or more “stable” environments.

Read this article and treat it as a cautionary tale.  Lastly, ensure that your organization has programs in place to further develop and retain your best employees.

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Mounting losses…here’s a raise?

I was reading the Beck and Fordahl article, “CEO pay climbs despite companies struggles” when three sentences leapt off the page at me.

Rick Wagoner, CEO of General Motors, (GM) announced this month the company had to close four plants that make trucks and SUVs because of lagging demand as fuel prices soar. That followed the posting of a $39 billion loss in 2007, a year when its stock price fell about 19%. And Wagoner? His pay rose 64%, to $15.7 million.

Did I read that correctly? GM posted a $39 billion loss in 2007 – well actually $38.732 billion but who is counting – and that is after posting a $1.978 billion loss in 2006 and $10.567 billion loss in 2005. The company is also closing four plants, which is expected to affect approximately 2,500 employees – while some may be able to transfer into positions vacated by approximately 19,000 employees who are expected to accept early retirement and buyout offers. And while GM and its employees struggle through a very tough time, Rick Wagoner’s pay rose 64% – a truly amazing figure, particularly in light of the current state of the company.

And while, Wagoner announced that the plant closings, transition to smaller and electric cars and other cost-saving measures will save the company close to $15 billion a year, those savings are not expected to be realized until 2010. While those changes may have a dramatic impact on the business, the company’s recent performance does not warrant an increase in pay for Wagoner – surely not a 64% increase.

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Does short-term management pay?

Natalie Mizik and Robert Jacobson wrote an article entitled, The cost of myopic management for the July/August edition of the Harvard Business Review in which they explored the costs paid by the organization (and ultimately investors) when they become too focused on short-term revenue targets and begin inflating their earning by cutting expenditures. During their study executives would cut discretionary spending, which often included R&D, in favor of more impressive looking earnings. Mizik & Jacobson tracked over 400 companies and found that those firms that practiced “myopic management” would often have very impressive returns in the short-term, but long-term performed miserably. In order to begin to correct this behavior, firms need to begin to penalize executives for losses, not just reward them for gains. In addition, a portion of their compensation package should be tied to tenure, long-term growth and brand strength. Once an executive’s compensation is tied to long-term goals and objectives the myopic behavior will change as well.



Filed under CEO, CEO Pay, CEO Salary, Executive Pay, Harvard Business Review, Leadership, Management, Natalie Mizik, Robert Jacobson

The business environment has changed more rapidly than Middle management

Stephanie Armour in her USA Today article, “Who wants to be a middle manager?,” discusses the challenges facing today’s middle manager, and that a growing population of Generation X & Y employees do not view a move into middle management as a desirable career move.  The Gen X or Y managers that she interviewed discussed their challenges with work-life balance, struggling with increasingly wide-spread employees, pressures of managing the output (and the interpersonal issues) of employees while counterbalancing that against the objectives of senior management.  The article indicates that the role of the middle manager has dramatically changed over the years – becoming a less desirable role.

Some of the primary issues the article references are:

  • Lack of flexibility in work schedule – often there is a need to be available nearly 24×7

  • More demanding work and technology have forced managers to multi-task

  • Generational differences between the Baby boomer senior managers and the Gen X & Y middle managers and front line employees – who often have different views on company loyalty, career paths and job security

  • Work flexibility and security are perks that the middle managers do not get to take advantage

She finishes by pointing out that some organizations, like IBM, are attempting to offer executive-like perks to middle managers in the hopes of making the positions more attractive to employees.  Some companies, she points out, are being more flexible with valued middle managers.  One such company allowed a middle manager to retain her position, supervising a largely US-based team, when she relocated to Europe.

A few questions that occurred to me as I was reading this article: Has middle management changed more so than the work world?  Haven’t there always been employees – regardless of generation – who understand the additional commitments that management requires and would rather not have the additional responsibilities?  Are there a percentage of Gen X & Y managers who share similar views as Baby Boomers?  If so, how large is that group?  If Gen X & Y employees are wired differently than Baby Boomers, what ways will the business world need to change to accommodate this change once the Baby Boomers begin to retire from the workforce?

I believe that the work world has been and continues to change at an incredible pace.  Today you have companies that are less than 25 years old – that are among the most successful entities in the world (i.e. Google, Cisco, Microsoft, eBay, Dell, Lenovo, Yahoo).  My point is that there will be a company that starts in someone’s garage or basement tomorrow that may be a global brand within 5 – 7 years.  Those types of successes place an enormous amount of pressure on established businesses in many industries.  In addition, there is a greater amount of competition globally which has forced many organizations to face fierce new competitors.  And if that was not enough, businesses have additional focus on financial reporting – due to the misdeeds of senior mangers from organizations like Enron, Adelphia, WorldCom, etc.

All levels of management are facing enormous amounts of pressure.  Can you remember a time in which new CEOs were given such short amounts of rope before they were replaced?  So with senior managers facing a tremendous amount of pressure, it is understandable for middle managers – those who are tasked with implementing the organizations strategic plans – to feel incredible pressure as well.

I have known a number of Baby Boomer first-line employees who no desire of being in management.  The belief that this is a phenomenon that is owned by Gen X or Y employees is a myth.  You will always find that a fair number of employees do not want the additional responsibility that comes with being in management.  Every generation produces individuals who are driven to be the best that they can be, not every generation takes the same path to success, but Gen X & Y is no different in their drive.  If anything there is probably some truth in Gen X & Y wanting to move farther at a faster rate.  Not wanting to wait and “pay dues” over an extended period of time.  Some of this is due to the “peer pressure” of witnessing peers launch successful companies.  As a result they will increasingly look for opportunities of upward mobility outside their present organizations.  So while some Gen X & Y employees want to take charge of an organization, generally, they don’t want to wait 15 or 20 years to do it.


Filed under Baby Boomers, Corporate Culture, Dell, Gen X, Gen Y, IBM, Leadership, Management, Microsoft, Middle Management, Stephanie Armour, USA Today

Workplace Stress

Jenna Goudreau wrote an interesting article in the August 6th issue of BusinessWeek on stress in the workplace. I was particularly impressed with the way in which one organization handled an overworked and stressed out manager. Based on the amount of time that he was working, the organization proactively stepped in to offer some assistance. Unfortunately, most organizations are not proactive when it comes to worker stress. Instead they tend to react only after there is a major, and sometimes (very regrettably) deadly, circumstances.


It is easy for a leadership team to only focus on bottom-line results, but through taking steps to reduce stress, they could greatly improve the overall efficiency of the organization. Think of all of the colleagues who we have lost due to feeling completely and totally overwhelmed. More often than not, they have brought the issue to the attention of their superiors, but the issue was never addressed. This, as we know, leads to the employee leaving the organization. If you think hard, you can probably think of two or three colleagues who currently fit this description.


Many companies start out by helping employees repair the work-life balance. General Mills (GIS ) provides a range of personalized services while employees at headquarters work so they can spend more time recharging with their families and less time running errands on the weekends. Want your hair colored? An in-house stylist will do it. Car need an oil change? A mechanic will do it on your lunch break.


Given the amount of time that employees spend working – being on call nearly 24 hours a day – providing services to employees to allow them more time to unwind with family and friends in non-work hours is a major step in the right direction. But, so is listening to employees, and providing them with the assistance that they need. As the article stated, sometimes it is as simple as additional headcount.

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Filed under BusinessWeek, Human Resources, Leadership, Stress