Unconscious Sabotage

[rmitz]

I was reading this article in my RSS reader this morning, and a thought occured to me.

Dropped Call Earns Ousted Sprint CEO $55.3 Million in SeverenceIt is a matter of fact in many mergers like this, that many of the people helping to integrate the merger are going to lose their jobs following the merger. This clearly means that it is in their

Comments

[rmitz]

First, regarding management: I've found those particular issues easier to come up to speed with than many others. It's a different kind of skill, sure, but the management shouldn't be the most directly relevant issue in a merger, which is what I'm addressing here. Some is, of course, in terms of merging the two hierarchies, but those aren't generally the issues which drag on...the ones which fail to get resolved are more technical.

Second, "those people" are not paid to leave, they are paid after the job is done as a motivation for getting the job done in a timely fashion. Otherwise, they have little incentive to do so. It is not directly related to retention. The bonuses would be paid out of funds that would otherwise be spent by the company as the merger dragged on and on with no results--so comparisons to shareholder equity are irrelevant--it should not cost any more, the goal is to make it cost LESS. Just because more of the funds are directed at employees rather than consultants should not change the dynamic.

Stock options--as an investor, I wish no company ever used stock options. If there is a performance bonus, it should be paid in cash, period. I find your comment as to "I don't see how a direct cash bonus plan..." to be somewhat strange in this regard...obviously it makes more sense to evaluate a person based on individual goals and then give them money in a non-dilutive way than the other way around? There are many factors in a stock price that have little to do with the individual. If the fail to do a good job with the merger, though it does get completed, and other division in the company do very well causing the stock price to go up, what hand did they have in that? Is it really tied to their performance? No, probably not, particularly not in large companies. And I'm not suggesting that the bonus would be in the same in all cases, my point in saying a year was to get a ballpark number and to indicate it should be a significant sum, and that it should be targeted at people actually involved with merger work, such as technical people responsible for merging the networks, people they are dependent on, etc.

Your third point seems to disregard human nature in general and question the entire premise of what I'm pointing out, which is fine, but means the rest of the discussion is irrelevant. It has nothing to do with ethics, it has to do with motivation. People can be making "progress" for long periods of time with nothing effectively being done in large organizations. If you haven't seen how this is more the norm than the exception, I envy your work environments.