Letter to the Editor via e-mail
The ongoing fall from grace of some financial and IT corporates’ and their response thereto makes one wonder about the relevance of some executives. The corporate trigger(s) include a cocktail of cautionary announcements, reporting disastrous results, investment disposal(s) at astronomical loss or accounting skeletons coming to light. With the bottom-line having hit rock bottom and the share price doing a hypnotic snake dance, the response by some executives is uninspiring…
The typical response starts the transformation (or should that be merely concluding the disaster?) with a board shakeup and/or firing the CEO/MD/FD under the guise of ‘resignation’. Notwithstanding the corporate governance landscape, concrete decisive action being taken against the executives responsible for the disaster maybe sidestepped on the basis that it is best left to the past and/or attributable to external factors. Maybe this is the meaning of the ‘pay for performance’ mantra that eludes the average employee!
The next step is to quickly relegate the past antics to the dustbin – whilst consumers are often sold on the basis of past performance, shareholders and employees are hyped to concentrate on future performance. Besides, the new team readily point out that such misfortunes occurred before their time even if they were indirectly involved in the decision making, operational or management thereof.
Notwithstanding the avalanche of business information, insights and best practices available, the ‘best’ that the new team comes up with is the cost trio of ‘cost cutting’, ‘cost containment’ and ‘cost savings’. So much for innovation or creating competitive advantage in the new economy! Of course these initiatives may be appreciated if the organisation produced a comprehensive report reflecting how they slashed operating costs across the board such as entertainment and procurement. Instead the familiar retrenchment dragon rears its head with x employees equals R cost savings. The relationship between these employees and the financial woes is usually obscure.
The contribution of some executives to this exercise is to maintain or secure ‘low’ increases on their packages. Why not afford employees the same contribution instead of rolling heads? Other internal imperatives that may accompany the process will include corporate communication to the work force about upholding sacred company values, riding out the storm and working harder. This is meant to be “teamwork’ and “transparency”, talented employees respond by individually leaving in a non transparent manner.
Amidst the anguish of the above to employees and shareholders one will readily find the very same organisation marketing its brand with a utopian touch. If only the advertising could inspire the people behind the company wall.In subsequent years, the transformation may be followed by other executive shattering decisions such as re-employing talent (at premium rates) that was lost during the cost cutting process.
Given the ease with which some executives can ‘perform’ by destroying shareholder value plus get fantastically remunerated for it, perhaps their (ir)relevance should be extended to employees. All employees from the tea lady to senior managers should have ‘executive’ added to their job title. It may protect them from the risk of ‘not meeting expectations’ on their performance appraisal and promise massive payouts in the event they ‘resign’ (fired or retrenched). As for those employees that continue to slog, they can also take the business decisions of the calibre previously reserved for executives. Popular “executive” employee decisions are likely to be ‘cost reduction’ measures (retrench your boss in favour of self management) and investing in absurd projects. In the event that it fails, at least the organisation would have saved a packet on paying the executive to achieve the same, if not worse results.