From MRW Water Cooler:
Q: We were lucky enough to get quarterly bonuses for the last two years. This was in lieu of a hourly raise. When things in the company got tight, bonuses were cut. It wasn’t so difficult to adjust to, though, because it wasn’t money we were used to having every paycheck. It was BONUS. I’m thinking this is the way bonuses should be. – Terra
Hi Terra
Many people share your view, which makes me think a better term than “bonus” should be used to refer to these payouts. For many, a “bonus” is not an unexpected surprise. It is the motivating factor, and the only reason the working relationship exists at all. It is in other words, it’ the very essence of the deal.
Because these “bonuses” are not guaranteed, they are a reflection of an individual’s willingness to assume a certain level of risk that most salaried workers would go out of their way to avoid. Likewise, “bonuses” are the only way for highly competitive corporations to attract and compensate “top talent.” Arguing over whether the money in question is gross or exorbitant is beside the point and after the fact, in my opinion. So too, is the exact manner in which it’s earned. That’s between the employer and the employee, and governed by the terms of the deal. What really matters, is the workers conscious willingness to forgo a big guarantee, in favor of a potentially larger payout based on his or her performance. It’s an entirely different form of risk, that is the opposite of a weekly or monthly paycheck.
My Dad asked me this morning what I would do if I were an AIG banker who received a big bonus in this environment. Would I return it?
I opened my mouth to say “probably,” but what came out was “hmmm…”
To be honest, (perhaps too honest,) it got me thinking. Here’s where I am.
If, as a contracted employee who signed on for the sole purpose of making money, I did everything I was supposed to do to earn a payout of $5 million dollars, I would expect to be paid. I assumed a level of risk, and preformed as asked. A deal is a deal. The only circumstance that could justify a non-payment, would be the bankruptcy of the firm. (That’s the biggest part of the risk I assumed, working in a volatile and competitive industry.) However, if the company stays in business, or is not allowed to fail, I’d absolutely expect my money. And if I got it, and was then suddenly asked to return it because the government realized it looked politically stupid and fiscally foolish for subsidizing my big fat bonus with taxpayer money, I might be inclined to say “I’m sorry, but I’m a tax-payer too. If you didn’t want to pay me what I was legally owed, you should have let the company fail. My deal was with AIG, not you.”
This “bonus rage” would not be happening in a world that respected consequences, because in that world, those companies who can not afford to pay their bills would simply fail, the way they’re supposed to. Likewise, all citizens would live the lifestyle they can afford, the way they’re supposed to. Of course, that is not the world we live in. In fact, companies like AIG have prospered exactly because so many people now live beyond their means. The hard truth is, those big bonuses were earned because AIG got rich saying “yes” to millions of people who should have been told “no.” And because we’re all connected, we all get hurt.
AIG, and many companies like them, removed from the credit equation the time honored constants of “collateral” and “character.” We are now beginning to realize the consequences of doing that, and we’re scared. In fact, we are horrified by the prospect of letting it all unravel. So we are going to try and defy the laws of cause and effect. We will ignore for a time the consequences of greed, stupidity, and immediate gratification. Maybe, in the short run, we’ll succeed. But I wonder, what will be the consequences of that success?
Kathy asked in another thread I think, what I thought about the expression “too big to fail.” I think it’s perhaps the silliest expression I’ve ever heard. If history and physics tell us anything, it’s the guaranteed failure of all things, including companies, countries, people, and entire civilizations. (Packard? The USSR? George Burns? Rome?) No one and nothing is too big to fail. How dare we forget something so basic?
We are obsessed with the consequences of a world without AIG. We are scared to let them fail. Why aren’t we just as scared to keep them around? Why aren’t we more scared?
Pet Cemetery was on the other night. Remember that creepy cat? And that little boy, Gage? They were brought back to life, remember? That wasn’t supposed to happen. That’s cheating. Consequently, there was some rather serious fallout.
Yeah, that’s right folks. I just compared AIG to a reanimated zombie in a Stephen King story.
Because frankly, I’m not sure which is scarier.
Mike