Stumbled upon this very sensible blog the other day (click here).
The author suggests that there is a certain logic behind the recent melt-down - and that a phenomenon like this would happen again - sooner or later.
It's the decoupling of risk and reward. CEO's today have a higher degree of professional security - which also implies that CEO's (the decision makers) are almost sure to go unpunished even if one of their decisions wrecks the company, or even the market. Infact, CEO's make a lousy fortune in terms of compensation!
So - why wouldn't a CEO plunge into the unknown waters and, like the article suggested, do a Carly Fiorina (who acquired Compaq while at HP and screwed both the companies)? Eventually, Carly was fired, and she walked away with millions of dollars in compensation.
The solution: companies need to relate any risk to a reward - and to a punishment too. However, this is not simple, methinks. Punishments in the corporate world are not easy to do. For example, have you ever heard of a de-bonus if the salesman underperforms ... or a reduction in salaries for the coming 6-months ...?
Perhaps it's right - melt-downs will happen again.
The bitterness of poor quality remains long after low pricing is forgotten!!!
Leon M Cautillo
