Comments on: Why The Dike Leaks

By: Mark Chussil

Mark Chussil — Wed, 18 Mar 2009 21:46:25 +0000

Thanks, Jeff. I appreciate your comments, and I agree with you. Incentive compensation is a big part of the issue. We get what we pay for. I think that it's not so much high compensation that we object to; it is the combination of high compensation and poor performance. In other words, we have paid for but we haven't gotten. (Please see my blog post "What You Pay For.") Moreover, as you also said and with which I also agree, personal incentives may be at odds with corporate objectives. Finally, there's the problem that we humans use backward-looking metrics (e.g., profit trends) to gauge success, but those metrics may tell us little about forward-looking expectations. (See my blog post "It's Working!") Thanks again for your comments.

By: Jeff

Jeff — Wed, 18 Mar 2009 21:24:35 +0000

Mark,

While I agree with many of your ideas I think in this particular instance you are off the mark a bit. I agree that fixing executive compensation wont fix the problem. However, I believe that Incentive Compinsation strategy is a significant part of the crumbling dike. Key personnel (executives, traders, loan officers, etc.) are incented and driven to maximize their personal wealth and this does not always align with what should be the overriding strategy of maximizing and securing shareholder value.

By: Chris Holtom

Chris Holtom — Tue, 17 Feb 2009 10:35:51 +0000

Mark, how come this blog does not attract the wide debate it deserves? I have looked at several of your articles and its refreshing stuff, particularly at present. Decison making is tough and getting tougher because of lots of stuff buthaving too much data and information does not help, the immediacy of news panics the bosses, group pressure expects that there is a high tempo of response to do something….etc. Question is, did we ask for the data and information that is flying at us in the first place? Do we have a process of logic to capture information that is relevant, check it for accuracy, identify key “players”, assess their reactions and then review the possible consequences – good and bad (in the context of our intent) and finally measure the effect of actions as they become apparant.

I suggest there are ways to help us act in this information anarchy that seems to surround us. War games is certainly one tool, using the OODA (Observe, Orient, Decide, Act – Boyd) loop to manage ad hoc events helps, Orient requires relationship intelligence (CI) as a feed, “player analysis” in planning is another tool and finally accurate, shared situational understanding using simple visuals also helps. This is what the military do – trouble is none of their coalition fellow-travellers appear to use the same logic, and most unfairly of all nor do the enemy…… We have tried to apply some of the best bits of military thinking and delivery to business strategy and operational management (Some success in opil and gas in Nigeria!). I would like to share our ideas with you. Chris Holtom PS we are old kids on a new block so our rules are largely unknown yet!