You think you know what went wrong at AIG? You think it’s because they’re a bunch of greedy jerks who took bonuses, financed by a taxpayer bailout, while other people were scrounging around under their couch cushions looking for grocery money?
Nope.
The problem with the AIG bonuses wasn’t the mere fact they were given, nor was it that they came after the bailouts. The problem is, the bonuses were given for the wrong thing.
A “retention” bonus is giving someone extra money simply for not quitting. But you’re already giving them money for not quitting. They get it on the 15th and the last day of every month. It’s called their paycheck.
Ah, you say, but you really, really want to be sure this person doesn’t leave. So you’re willing to give them an extra paycheck of gigantic proportions, provided they’re still employed with your company by a specified date.
Fine. Let’s consider two scenarios. Under the first scenario, the person is perfectly happy working for you and satisfied with his or her paycheck. In this scenario, the retention bonus is completely unnecessary.
Under the second scenario, the person has had it with working for you, but knows that he or she is due for a retention bonus on June 1. That’s 10 weeks away. Guess what the next 10 weeks are going to be like. The employee you want so badly to keep is going to drag himself or herself to the office every day, heart not in it, and do a passable job of keeping on top of tasks while keeping one eye out for job opportunities—or possibly even making an arrangement to secure one with the understanding that availability comes two weeks after June 1.
June 1 arrives, you write a very fat check. June 2 arrives. “Hey Bob, can I talk to you for a second?”
Uh oh.
That’s the problem. Retention bonuses are stupid. What AIG needed to do was pay the bonuses for better reasons. If your bonuses are tied to something the business needs, people won’t scream about them so much. And if the reasons you pay the bonuses are also entertaining, well, so much the better.
What AIG needs to do is eliminate its retention bonuses and try these:
The goatee elimination bonus. Good grief, it’s been at least 15 years since these face mullets began afflicting the American workplace. Enough already. Some of us have figured out that you goatee-wearers are just lazy and you’re trying to avoid shaving the trickiest parts of your face. Anyone who shaves off a goatee—their own or someone else’s, using force if necessary—gets $5,000.
The cliché-spewing colleague humiliation bonus. Does someone in your company openly boast that he “thinks in matrices”? Does someone refer to your market segment as your “piece”? Do the rest of you roll your eyes whenever these clichés start rolling? Who takes action? Stand up and humiliate this substance-starved jerk, and you, my friend, are the proud new owner of $4,000.
The input skipper bonus. You have an idea. You know exactly what you want to do. But do you do it? No. You seek “input” from 50 people. You want to get their “buy-in.” By the time everyone has given their input and granted their buy-in, the idea looks nothing like your original. You started out planning to create a paper-shredder that would recycle the shredded remains into gift wrapping. Interesting! By the time you received all the “input” you wanted, you found yourself organizing the homeless to scuba dive for refuse in the company retaining pond. Yeah, the idea evolved just a tad, thanks to the input of all the “stakeholders.” First person who comes up with an idea and just does it without asking anyone gets $10,000!
The clever competitor disruption bonus. One of the best things about the Internet is that all privacy in America has been eliminated. Why is that good? Well, it’s good for me, because I don’t care about privacy and I like to annoy people. You know that corporate blog your competitor just started? Every time the CEO posts an entry, you do realize that anyone who reads it can comment. This is an opportunity for hee-larious hijinks. Register to comment on your competitor’s blog using the name Yercompany Sucks. Now simply have at it. Make inane criticisms. Ask dumb questions. Ask the CEO out to lunch. Ask for a job as a waiter. Never mind that the company manufactures control panels. Keep its CEO so busy, he’ll wish he’d never started the darn thing. That’s worth at least $5,000 in my book.
The community board mystery solver bonus. You know how people are always telling you how beneficial it is to serve on volunteer boards and commissions? You know how people clamor to get on these boards? You know how, once you get on one of these boards, you dutifully study your board packet for days before the meeting, then dutifully go the meeting, offer your expert input and finally leave, wondering how you’ll ever get caught up on all the work you just got behind on? I’d like to offer a bonus to the first person who can actually find someone who experienced a business benefit from serving on one of these boards. I will pay $9,000 for this. I am 100 percent certain no one will ever collect.
The doing your job as it was intended to be done bonus. This is the one where you work hard, complete your assigned tasks, help your coworkers and cause the company to earn handsome profits. This is the one where you continuously improve your skills, become more versatile and generally increase your value to the company. The bonus for this one? $0. These things are the reason you get a paycheck!
D.F. is a former business journalist who has owned his own small business for more than six years. He loves capitalism but thinks capitalists have a tendency to act weird. Contact him at dfkrause@northbaybiz.com.
