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Paula Marshall's Blog

The musings of a female CEO, trying to change the way business is done.

Tag Archives: compensation

Stay tuned for more Vlogs about de-linking Pay and Performance.


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It has reached the far corners of the globe. The news that American CEO’s had been taking bonuses upwards of $20 million, while their companies took huge losses. Many times, these bonuses are being paid by the American people through government bailouts and increased taxes.

It has come to the attention of the public that these merit based bonus systems have gotten out of control. But we don’t feel there’s any other way of doing things. It’s all we know, we say to ourselves. We can’t abandon this system that has made ordinary people rich beyond all necessity. We fear ridding ourselves of this system, because it eliminates our own selfish possibility of reaching that ever growing pot of gold.

Upper level management has got to step back and restructure compensation systems so that all members of an organization can feel valued. Currently, mid- and lower level employees just feel as if they’re schlepping paper so the big guys can take home millions. How can people function as a team when there is a pot of money to be competed for? This mentality is based around the idea that the “big guy” was once a mid-level person too. He worked his way up, and so can I. This competitive drive pits employees each other, preventing any real progress from being made. And who suffers? Customers, workers, and suppliers of these crazed
companies…(have you been put on hold for hours on end lately while some “customer service” hourly worker takes care of your problems?)

Where can we go from here? Do we just go home at 5pm, and enjoy our lives outside of work and take home a paycheck? This is the “work to live” mentality. Or do we buy into a system that only really works for 1% of society, and that 1% is supposed to make us believe that we can do it too. Well, mathematically, we can’t all do it too.

These two paths are the fork in the road where most American workers stand. And sad to say, it’s left American companies with uninspired workers, who are checked out and who under produce. Happy workers, with a sense of themselves and where they’re
going, get more done, are less distracted, and are absent less. How do we get our people to feel fulfilled?

My mentor, W. Edward Deming, states that companies must create a new system in which leadership, not supervision, rules. We must empower our employees, not nitpick them. We must begin to realize workers have little power to change things. The
power to change belongs to management!

  • Who designs equipment? Management.
  • Who buys equipment, and supplies? Management.
  • Who writes (often outdated) training materials? Management.
  • Who decides where capitol will be spent? Management.
  • Who prices products? Management.

We must break down inter-department barriers, so that employees can know and understand everyone’s role, and its importance to the whole of the product and the company. All employees must work as a team to improve the product. Keep in mind the product can be anything, it is what you’red elivering to your customers. If the sole focus is on improving one’s bank account, instead of improving things for customers and team members,  then American Business can just be shipped off shore. (Does this sound familiar?)

At Bama we have a special compensation system which is not incentive based. Our executives do not take home bonuses built on the backs of their lower level employees. Our company is a private company. This is just one factor which stands in the way of public companies implementing a team-based compensation system. It’s called meeting shareholder’s
unrealistic expectations. What organization do you know that can have ever growing and ever increasing earnings over a period of time, quarter by quarter, without ever having a “down” cycle? These are the expectations of today’s shareholder. The message to top management is “continue to increase profits.” This creates an un-realistic state of being in today’s public companies. According to Deming, variation must be understood. It is unrealistic to expect that profits will continue to rise forever. To think that a company can report annual gains every year is preposterous. If that was true, there would be no risk. Everyone would invest in everything because as we expect, everything will continue to improve. This cannot continue.

Shareholders must be taught to understand that business has natural  variation. Bama does not make the same profit quarter after quarter, year after year. We do not allow the accountants and the lawyers to “cook our books”. If we need to take write offs, we do it. If we need to post gains, we do it.  We do not allow “smoke and mirrors” accounting.

By removing these un-realistic expectations then companies can implement a more consistent approach to the business and the people. In a more compassionate workplace, where everyone is valued, leaders will grow and all employees will feel empowered. They will be empowered in a real sense, not just the false power that comes from moderating others mistakes.

And as for the $23 Million bonuses’, we must stop this practice.  We must reject this greed. Who in the world needs this much? This ego driven need to accumulate “stuff”,  is just a way of evading yourself. I mean c’mon, can you really sleep with all that money?


More on this topic soon!


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