Monday, October 5, 2009


I have always found it quite interesting that for the past 20 years, top management for larger bankrupt companies require handsome retention and success bonuses for getting a company through a bankruptcy.

Here is an article from the NY Times setting the stage for the Chicago Tribune bonuses. The Tribune is in bankruptcy as the newspaper industry fights going the way of the slide rule and the typewriter. The theory of these bonuses is that people have to work very hard and they should be rewarded. And if they don't get a bonus, the good people will leave.

While some bonus may be appropriate to retain people, the total situation should always be considered. For example, yes, the people have to work hard. I am unaware of many jobs where you don't have to work hard. And yes, they need to rewarded for their efforts. Yet many people have had their wages frozen or reduced due to the lack of profitability afflicted thousands of companies.

And, yes, the good people will leave. Although, who is hiring in the newspaper industry? My experience is that the really good people may leave anyway. For them the issue is not the golden handcuff known as a retention bonus. For them the issue is the certainty of having a job. Put aside whether anyone has employment certainty anywhere these days.

So, retention bonuses for large groups of managers who were at the helm when the ship was grounded? You could bring in an outside firm to run the company or augment the team. But then, that may or may not be the best bargain either.

Cheers, Mike

1 comment:

  1. I can understand why you'd fork over more to keep people motivated and/or around. It's all a matter of whether you're doing that foolishly and across the board or if you're targeting the folks who aren't responsible for the tailspin but who do offer a chance at fixing problems.