Wednesday, February 18, 2009

Motivation, Efficiency, and Corruption

Ben Stein raises some good points about the "excesses" displayed by leaders of various companies in America:
We all want efficiency and frugality. But banning highly productive means of travel such as private planes is simply misguided. We all want people to work. But keeping them from having face time at large gatherings with their colleagues -- in essence, keeping them from being well-informed -- is a step away from productivity. And kicking the towns that accommodate these meetings is just plain cruel.

I hadn't thought about it from that angle where the automakers were concerned, but making Wells Fargo cancel its Vegas retreat for its top loan officers struck me as heavy-handed--and clueless about how business works. Did anyone stop to consider how much money those being rewarded made for the company in proportion to how much was being spent on rewarding them?

While I'm sure that level of productivity has its own rewards, I'll bet the yearly Vegas trip was at least part of the movitation for a lot of them. Take that away, and chances are they're not going to work as hard next year. How does that help the bank? How does that help its investors? How does that help its depositors?

I'm willing to bet that the amount of money they would have spent on the retreat is less than 10% of the value of the loans these people wrote. And yet if they're 5% less motivated to perform next year? In a year when people are less motivated to take out loans? It could spell the difference between survival and bankruptcy.

Let's not forget that these people are the TOP money-makers. Not only do these people make money for the company, their example (and the subsequent rewards) also serve as a motivation for the other loan writers who didn't make the cut this year--but could next year if properly motivated. Cutting the rewards for the top loan-writers doesn't just demotivate them, but the entire company.

I'm against wasting taxpayer money as much as anyone. But micromanagement of bailed-out companies--by some of the most notoriously bad money-handlers in history--is not the way to economic recovery.

Such political witch-hunts are counterproductive. It also keeps attention away from the real perpetrators of this mess: the government. Every time we start figuring out who the real enemy is they simply point at Wall Street and yell "There's your enemy! Not me! They're wasting millions of dollars!"

And then they sit down to add billions more pork into the Stimulus Bill to help stimulate their next campaigns. And take retreats to Virginia and the Caribbean.

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