Posts Tagged ‘reward’

Key questions for business…

Tuesday, February 10th, 2009

Today, the Treasury Select Committee will be grilling the four men who headed the big banks that caused this current crisis live on TV.  It does have a little of the feeling of Justice being seen to be done about it and whilst I am sure it will be a less than pleasant day for these four gentlemen, I suspect that there might be a long queue at the door of volunteers who would willingly endure this if they could swap their financial position for that of these ex-bankers.

It does raise a number of serious questions for the rest of us though:-

  • Who do business leaders owe a duty of care to? 
    • Does it go beyond the shareholders? 
    • Their ordinary staff who are sharing the misery? 
    • Their customers who are also in turmoil now? 
    • Society as a whole?
  • How should we measure success in a business?
    • Short term profits?
    • Long term growth?
    • Contribution to the greater good?
  • How do we reward successful business leaders?
    • Shares?
    • Salary?
    • Bonuses?
    • Positive regard / respect / public acclamation?
    • Security of tenure?

If you are running a small business these questions may seem to be simple to answer or irrelevant for you, but I would suggest that truly understanding the relationship of your business with those it touches is a key loadstone for steering you towards safety and success in these turbulent times?

I’d be very interested to hear your thoughts on these questions and this big, big issue….

“I know only that what is moral is what you feel good after and what is immoral is what you feel bad after.Ernest Hemingway


The wrong incentives

Friday, January 23rd, 2009

I was listening to a prominent banker talking about the banking crisis and one thing was very clear to me.  One of the key drivers for this was the way that the banks defined and rewarded success.  They wanted to drive up profits, and rewarded the people who came up with more and more inventive ways of describing things as ‘profitable’.  They gave them big bonuses which meant that others saw this and emulated their ‘success’.  In other words, they created a financial feedback loop and those of you who have stood near a speaker stack which is feeding back know how damaging this can be when it is amplified!

It is the job of leader to take a balanced view of what is going on.  They have to encourage innovation, and pushing the envelop but also to ensure that excess is avoided and the voice of prudence is heard.  This was a classic case of the Emperor’s New Clothes, but we were the poor schmucks who are paying for them!

“Pleasure is the greatest incentive to evil.”  Plato