I realize that business school graduates run the corporations and small businesses of America. I also realize that they act on what they are taught, as do most professions. However, I do have one question: If you want to start solving the age-old problem of finding the brightest and best, when do you get your head out of your ass (and out of your wallets) and start thinking out of the box? To me this seems simple, I guess only an idiot can think this simply. Why not directly latch projects to profit? For example, if I create a product for a company why not have my bonus connected directly (a percentage of) recurring profit? I've been told: "I have a responsibility to investors and that is irresponsible". If that's so, I must ask why investors expect everyone to work hard (creating products for them, that they cannot do themselves) and not share in the profits? This seems impossible for business school graduates to fathom. They are trained to tow the line, and not think outside of the box. Typical close-minded retards in Corporate America. When a company steps up and makes it possible for what I've laid out to happen, they'll see sick returns on their investment. The brightest will flock.
A counter-argument to my argument is that the brightest that are the most capable start their own business. I don't disagree, but I do question whether they are the majority. There are few, very few, who start their own business that are capable and understand the way to build successful products. I realize that I'm just an idiot engineer, with no business experience, but I am that worker. There are many like me, who want a piece of the pie (but don't want to own the business and are not that type to begin with). Until the business school retards get a clue, and investors start to become more reasonable, they will struggle with mediocre help and no participation from their employees. Have fun making money when no one gives a shit!
Monday, March 23, 2009
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I too know nothing about business. I like your idea, but I don't think that people will ever go for it. The implications of this, at least on the surface, would be that the difference in pay between management and workers would be a lot less.
ReplyDeleteI think part of the American Dream is the inequity between the classes. I'm not saying that this is right or wrong, but the only reason people "tow the line" is so that one day they can be the one on top making more money than the workers below.
Unfortunately, the American Dream doesn't (and can't) come true for everyone.
Maybe I took this in a different direction than you were thinking, but it was the first reaction I had after reading.
Connecting compensation to performance and success makes sense and I agree with it as an incremental step. One problem with making "performance and success" equivalent to profit is that in some cases it can create short terms gains at the expense of long term sustainability. Take short-selling abuse for example: you can make a ton of money by driving a company into the ground, but there are only so many companies you can destroy before the global economy becomes unstable. Maybe that's a cynical example, but you get the gist.
ReplyDeleteAny direction is productive and can be thought provoking. I appreciate your input. I agree that's why most people tow the line. However, many of those who do are incapable and make it miserable for the rest of us. Also, there are many who are *happy* doing what they do. Why can't they do, their job better, and get compensation that's a function of revenue? For example, if I were to take it upon myself to develop a component for a product at work, on my time, why shouldn't I be given reoccurring compensation for something that the business benefits for on a reoccurring basis (assuming that its successful in increasing revenues). Its my idea and implementation.
ReplyDeleteSo, first response from me is that sales has always been structured this way. Guys or gals winning accounts will have personal revenue tied to how much business they can bring in. Its natural in that world, just not so much on the product development side.
ReplyDeleteThe better question to ask is adopting this mentality across an organization or functional groups.
The biggest barrier to entry I can see is you have to consider the corporate risk curve. So the company, or its founders and original investors are the ones taking all of the risk. They are the ones that provide the cushy place to work, tools to do it etc. I'm not saying you can't have some sort of structure of reward in place that works better than a blanket bonus, but that might be a limitation of the corp itself.
To me, all spoils are tied to risk period. If I'm taking the risk, then I want the reward. Of course you have to keep people happy...that's where things get tough. Its also why the notion of people staying at a company for 25 years is gone.
Kevin, I doubt the mentality (or idea) could apply across the company. If there were a way for a person in a business unit to improve, or create a product (positively impacting revenue) then the idea could apply. For example, someone in finance finding an error that saves the company 100K per year could apply. Another example, someone in marketing who comes up with a new scheme that sells millions of product more per year could also apply. I think a typical boss would ask: "isn't that them doing their job?".
ReplyDeleteYou're completely ignoring the role of RISK. If an employee expects x% of the profit from his idea and its implementation, would he also be willing to accept x% of the liability/expenses if it went poorly?
ReplyDeleteThis is exactly why people get "jobs" instead of start companies...they want to earn a salary without risk of loss, and companies are willing to provide that in exchange for labor.
And yes...every business worth working for would do whatever it takes to retain someone who is consistently contributing to the bottom line.
I don't think I'm ignoring risk. I understand that the shareholders take risk when funding a startup and should be rewarded. But there is an issue. There are many situations where adding to a product, or creating a new product would increase revenue (theoretically). The traditional work environment says, its your job to provide that information or implement that feature and allow the shareholders, managers, and executives benefit from the idea. Is this right? To me, no. The ability to add to bottom line, which results in reoccurring revenue, is not rewarded by a single shot in the arm. There seems to be two ways around this:
ReplyDelete1. Have an incentive program where some form of reoccurring revenue be provided to the employee.
2. The employee leave the company and challenge his former company by starting something new.
There is an issue with the second. Most employees file non-competes with their current company. This forbids them from challenging the former company in their business or with something related.
Adding to the product can also decrease revenue, or cause liability upon failure. Should the employee that adds the new widget to the car be on the hook for his entire life savings when that widget causes a wreck on the interstate?
ReplyDeleteThe risk is ongoing as well as the revenue.
Also, I'd never be scared of a non-compete, especially if my new business set out to do something that I had documentation of the old company rejecting.