Thursday, October 22, 2009

The positive aspects of incompetence

I blogged last night about Washington's stupid policy decision to institute pay cuts for the top paid 25 executives at seven of the companies that received government money.  If you're unsure that this is a horribly bad idea then go read that post first....

Washington didn't think this policy through.  I pointed out that they clearly don't understand the actual consequences of this policy, if it is enacted.  The other thing that they didn't think through is how easy it would be for these companies to get around the policy.  I went to sleep thinking about that last night, and I found so many options for subverting this policy that it's now clear to me that it won't have any real effect at all.

If the company is well and truly screwed already, then the best strategy might just be to obey the letter of the policy and leave.  Let the government call in some bureaucrat minders to take the blame for sinking the ship.

I would like to see at least one of these seven companies just follow the letter of the law and let their company fail.  Please.  Give Washington what they want.  Then when Washington has to take the company over we can point to this policy and explain how Washington did this with their stupid meddling.

If the company is worth saving then there are several tactics that you can use to obey the policy and still save the company.

I'm going to outline several tactics.  I'm sure there are others that I'm not thinking of.  Use all of these plus any others you can think of.  You have 25 positions to deal with.  Scapegoat a few.  Demote a few.  Outsource a few.  Etc.  The reason for this is that Washington will respond to whatever you do.  If you only follow one tactic then Washington will be able to form a narrative around that and counter you.  They might call you in for an inquiry about why you did what you did.  Or they might pass another policy ruling against that.

If you implement five or ten different tactics then Washington is disarmed.  They can't form a coherent narrative to describe how you subverted the policy when the subversion is too complicated to follow.  Simply assert that you obeyed the policy and then had to make some corporate adjustments to work around the holes that formed in the organization as a result of the policy.  As long as the adjustments are complicated Washington will have little choice but to move on to something else.

The net result of these tactics is that you will have to end up with 25 (theoretically) highly-paid vacant positions at the top of your company.  You just make sure that these are empty shell titles that the company can operate without.  You will have to run some nominal job search program for these positions, just don't offer the positions to anyone.

All of this is temporary.  You can clean up the org. chart again once the policy is rescinded or the company pays the government back.  It's a pain, but it's not fatal.

We will have to see the actual written policy before we can actually design the correct work-around strategies.  The following are all hypothetical until we see the policy.  If anyone at these seven companies wants help developing their real strategy for evading this policy please give me a call.  I'll be glad to do a little contract work on this one.  I could start the management outsourcing company that I outline below, and then just take a small cut for my services.  :-)

* Scapegoats
Fire a few people.  For each person that you release you will have to leave a position vacant.  But you don't have to fire the people who are currently in the positions that you choose to leave vacant.

Give these people reasonable severance and contracts that stipulate that they cannot go work for your top competitors.  That contract is the reason why you don't just cut their pay and let them leave, unless they are truly incompetent--I'm assuming that you don't have any truly incompetent people in your top 25 compensated executives.

For instance, Fire the VP of Global Marketing.  Move the VP of Global Sales over to that Marketing position.  (You still have to follow one of the following tactics to fix the VP of Global Marketing position.)  But leave the VP of Sales position vacant.  That's 1 of the 25 vacant positions you need.

* New Super-Positions
Add a new layer of bureaucracy to the top of the organization.  Form a Board of Presidents on the org chart, above the existing VP levels.  Put the pay plans for these mythical positions into the top 25 of the company, and leave them vacant.

So, following my example above, the VP of Global Marketing position could slide out of the bottom of the list of the top 25 positions because of the new positions that were inserted above it.

Please include government interaction in these positions.  Washington needs to get the message that these positions are only in the org chart to appease them.  I'd be tempted to include quotations from Atlas Shrugged in the job description, or to make reading Atlas Shrugged a requirement of the position.

* Demotions
Add another new layer of bureaucracy just below the existing top 25 positions.  Pay those new positions the same as the existing positions above them.  And then increase the salaries of the existing positions.

Then demote the people in the existing positions to the new positions.  The old positions go vacant and the new positions slide out the bottom of the top 25 list.

* Figureheads
Pick some people from the middle of the company and give them title-only promotions.  You can be creative with this.

Some of them should just keep doing exactly what they were doing, and end up taking home exactly what they were taking home before--give them a new title and raise to the ranks of the top 25, and then cut their pay back to what they used to take home.

Some of them should actually move to the C-Suite and sit in on some executive meetings.  They are getting a vacation and a taste of executive work, but the organization should just work right around them.  It will make a bit of a mess on their resumes, but anyone who understands what really happened will recognize the badge of honor that this really is.  Only do this with people who really could make it to the C-Suite someday on their own.  And expect them to leave the organization when this charade is over.

* Outsource
Form an external management company and pay them a lump sum to fill your top-level vacancies on a temporary basis.  Give some of your top 25 positions the pay cuts that Washington mandates, and then let those people quit and go to work for the management company.

* Employee swap
There are seven companies that will be doing this.  Not all of them are direct competitors.  I'm sure that GM and GM Capital both have marketing or sales people in their top 25 executives.  Those redundant positions are the ones you should consider moving out to the new management company.

Companies that are not competitors should work together and use the same management companies.  Then GM and GM Capital's marketing directors can swap positions.  They will probably need to do this several times.

* Juggle
Washington's policy won't likely have a clear provision for making sure that the top 25 positions in the company are currently staffed.  But if you leave the top 25 positions vacant for a long stretch then Washington will be able to spot that and make a narrative from it.  So you will have to keep juggling the positions and moving people around.

You will probably end up with 30 or more positions in the mix.  Every month you will need to move someone from this position to that one.  The important thing is that you can't leave the same titled positions vacant for too long of a stretch.  Add more positions and subtract others.  Move people around, at least change their titles.  You will have to have a few people actually holding a few of these top 25 positions once in a while.  But you can use the excuses of moves and compensation plan changes to help offset the dings that these people will take.

The point of juggling all of this is to keep Washington and the media from getting a clear picture of who is in what position and whether or not anyone is actually suffering a pay cut right now.  The official line needs to be that the pay cuts caused chaos at the top of the organization and that the company is doing anything it can to keep skilled people running the company, but that many people have suffered these pay cuts--just don't mention that no one suffered for too long.

* Raises
You might not want to run this tactic, because it will be a lightning rod for controversy.  But if you have someone who is truly deserving of every penny (a rainmaker), and you want to use them as an example case to demonstrate the stupidity of this policy, then give them a 90% raise before you give them their pay cut.

* Lobby
All of these companies have lobbyists in place in Washington.  Those lobbyists need to get dinged for letting this policy get through.  And now they need to redouble their efforts to get it quietly canceled.  I might suggest a 10% pay cut for the lobbyists until they get the policy rescinded.

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