You think the decision is dumb. But for them the decision to reduce staff headcount probably improved the company’s bottom line at a crucial moment when their performance-related bonus was being calculated. And it also opens the door to sideways promotion.
e.g. Twatty McBallbag Ltd:
profit with loss prevention staff = 10 million
profit the first month after all loss prevention staff were fired = 12 million
profit the sixth month after all loss prevention staff were fired = 6 million
After the first month, they claim responsibility for the increased profit of 2 million (as a result of reducing staff costs) and get their performance related bonus. They also get to write “While CEO at Twatty McBallbag Ltd, I increased profit by 20%”, on their CV and move on to a new, bigger company with profits in the 100s of millions.
You’re assuming new companies don’t do due diligence and still hire these CEOs who hollow out their companies; but the reality is “line go up” is all anyone cares about in late stage capitalism.
In a true buisness sense its stupid because they stress short term make stock number go up instead of long term sustainable growth. That being said it seems with both agree that CEOs dont operate on fuck everyone but me
I’ve worked with some of these guys and it’s absolutely all about them, their targets, their bonuses.
One of the Goldman Sachs bosses once came up with the term ‘long term greedy’, and had his staff apply it as a principle. Basically it means ‘do the right thing by your clients and don’t screw them over’. Better to have a 20 million dollar a year client for 10 years than to screw them out of 50 million in the first year and lose them. That sounds great, but then he could afford to think that way because he knew he’d still be there, with his stock/share options, in 10 years, profiting from that long term greed.
The younger guys are absolutely, 100% motivated to make as much as possible on day one and not give a shit about the long term view. How else are they going to afford the Porsche, Rolex, summer house in the Hamptons, etc. So they’re much more interested in screwing a client over for a fast buck, or shitting on the company’s long term well-being for this year’s bonus.
I’ve been thinking about this for quite some time. Short-term thinking is the one big bad effect of modern turbo capitalism. Since we cannot have nice things, and are stuck with the current shitty system, could we at least come up with a way to make people in positions of power interested in the long term? Like, monthly payment in stocks that they are forced to hold for ten years or so? You can get a credit against those stocks, but at the end of the day, you would need to care that the company still exists and has worth in ten years.
Shifting the bonus compensation to long-term performance instead of “this year or even this quarter” is surprisingly very difficult. People are trained to game the system. It’s how sales forces operate in most companies.
It doesn’t matter what system you implement, somebody is constantly attempting to figure out how to maximize their profit at the cost of everyone else.
The more money involved, the more convoluted the games are.
You think the decision is dumb. But for them the decision to reduce staff headcount probably improved the company’s bottom line at a crucial moment when their performance-related bonus was being calculated. And it also opens the door to sideways promotion.
e.g. Twatty McBallbag Ltd:
profit with loss prevention staff = 10 million
profit the first month after all loss prevention staff were fired = 12 million
profit the sixth month after all loss prevention staff were fired = 6 million
After the first month, they claim responsibility for the increased profit of 2 million (as a result of reducing staff costs) and get their performance related bonus. They also get to write “While CEO at Twatty McBallbag Ltd, I increased profit by 20%”, on their CV and move on to a new, bigger company with profits in the 100s of millions.
You’re assuming new companies don’t do due diligence and still hire these CEOs who hollow out their companies; but the reality is “line go up” is all anyone cares about in late stage capitalism.
In a true buisness sense its stupid because they stress short term make stock number go up instead of long term sustainable growth. That being said it seems with both agree that CEOs dont operate on fuck everyone but me
I’ve worked with some of these guys and it’s absolutely all about them, their targets, their bonuses.
One of the Goldman Sachs bosses once came up with the term ‘long term greedy’, and had his staff apply it as a principle. Basically it means ‘do the right thing by your clients and don’t screw them over’. Better to have a 20 million dollar a year client for 10 years than to screw them out of 50 million in the first year and lose them. That sounds great, but then he could afford to think that way because he knew he’d still be there, with his stock/share options, in 10 years, profiting from that long term greed.
The younger guys are absolutely, 100% motivated to make as much as possible on day one and not give a shit about the long term view. How else are they going to afford the Porsche, Rolex, summer house in the Hamptons, etc. So they’re much more interested in screwing a client over for a fast buck, or shitting on the company’s long term well-being for this year’s bonus.
I’ve been thinking about this for quite some time. Short-term thinking is the one big bad effect of modern turbo capitalism. Since we cannot have nice things, and are stuck with the current shitty system, could we at least come up with a way to make people in positions of power interested in the long term? Like, monthly payment in stocks that they are forced to hold for ten years or so? You can get a credit against those stocks, but at the end of the day, you would need to care that the company still exists and has worth in ten years.
Shifting the bonus compensation to long-term performance instead of “this year or even this quarter” is surprisingly very difficult. People are trained to game the system. It’s how sales forces operate in most companies.
It doesn’t matter what system you implement, somebody is constantly attempting to figure out how to maximize their profit at the cost of everyone else.
The more money involved, the more convoluted the games are.