Posted by Seth Godin on March 23, 2009
The failed bankers on Wall Street have been whining that if they have to cut bonuses and salaries dramatically, they'll be unable to recruit great talent, and they need great talent to fix the situation.
And for years, boards have been claiming that they need to pay CEOs $50,000,000 salaries in order to recruit the very best for their companies.
Jamie Dimon at Chase said, "It's possible someone's going to walk in my office and say, Jamie, I have a family. I can't afford to live that way."
This, of course, is nonsense.
After a million dollars or so in salary, the absolute amount that a person is paid has no real impact on their life. They can't eat more meals in a day or wear more shoes. What matters to the manager is the relative amount. How much more would I make over there? Why does that company pay its CEO more than my company pays me?
(Aside: should the guys who drive an armored car that carries millions of dollars in bonds get paid more than the guys that drive an armored car that only carries thousands of dollars in cash? Does the amount of money handled change the difficult of the work?)
Twenty years ago, financial industry salaries were a tiny fraction of what they are today. Did lesser people do the work? Did they try less hard? Think smaller thoughts? Of course not. The reasons salaries are high is that the number is a signaling mechanism, a very expensive marketing campaign.
Law firms went through this cycle twenty years ago. The top firms competed with each other to recruit a too-small pool of talent from the top law schools. Unable to muster up even a mite of marketing insight, they chose to compete on only one axis: salary. So, 24 year olds were given jobs at $120,000 a year, when their peers from college were making 20% of that. The firms could have found great people at half the price, except that with only one axis, they had to be at the top if their peers were.
If you were a law student, the choice was easy. Either you got a job at a firm that proved its worth by paying a lot or you didn't. You didn't have to know anything about the firm, apparently, other than the fact that they were top tier, and the way you knew that was because they paid a lot.
Hence the current situation with CEOs and bankers. There's no real effort made to market the jobs, just to race to the top (or the bottom, depending on your point of view) with the easiest marketing signal of all. Price. Yes, it's exactly the same as a retailer trying to improve business by being the cheapest.
In addition to this being a huge (!) waste of money, it's also provably false as an accurate portrayal of what's necessary to recruit. For every great job at Goldman Sachs, there are still 1,000 totally qualified applicants waiting for that job. So, when demand is high and supply is low, the power goes to the supplier. Lower the salary until you get just a few qualified applicants, right?
This moment in our economic cycle is a great opportunity for shareholders and taxpayers to let the organizations we own and support know that wasting money on this sort of marketing is silly. Just as an industry-wide gas standard would have actually helped Detroit twenty years ago, an industry-wide tax and trade salary cap will actually help these organizations. They'll be forced to recruit with useful marketing techniques (I'd rather work at an innovative, fast-moving, respectful company, given the choice...so the companies would have to make a better 'product,' not just pay a lot as a result of financial engineering).
[I think performance pay is great, risk should be rewarded and stock options are just fine. I also think it's fine for risk-takers and skilled pros to make a ton of money. I'm mostly talking about guaranteed bonuses which aren't bonuses at all, just a bribe to sign on and stay on.]
Sometimes markets get stuck because there is a disconnect between what something costs and what you get. It costs the individuals on the board of a public company nothing to pay more, they get bragging rights and a CEO who is focused on money. And that works until the next board leapfrogs them. The boards themselves should be lobbying to end this practice, but they won't because... guess what... the folks on the boards are the CEOs of other companies. It's stuck.
If you are a relentless free market believer, more power to you. If your company is private, pay yourself a trillion dollars a year, fine with me. In fact, we need more private companies that innovate and pay their staff a ton. But if you're owned by shareholders or bailed out by taxpayers, wasting trillions of dollars because you don't have the guts to market your jobs properly is silly.
Monday, March 23, 2009 at Monday, March 23, 2009 Posted under
Posted by Seth Godin on March 23, 2009
Wednesday, March 18, 2009 at Wednesday, March 18, 2009 Posted under
18 March 2009, 12:44 PM. By Cindy Casares
An employee in a Tulsa, Oklahoma Whole Foods grocery store found a Brazilian Wandering Spider–the world’s deadliest spider–on some bananas. Our first reaction is: They have a Whole Foods in Tulsa? Oh and, yikes, that sounds dangerous.
Living up to at least half of its name, the Brazilian Wandering Spider apparently wandered over on a shipment from Honduras. The employee was able to capture the little guy in a glass and it was handed over to University of Tulsa Animal Facilities director Terry Childs who says, “This type of spider kills more people than any other.” He also says a bite will kill a person in about 25 minutes and, while there is an antidote, he doesn’t know of any in the Tulsa area. Yet another reason to move from Tulsa.
Whole Foods says spiders are routinely found on produce which is why they inspect their shipments and that is how this one was found. This is totally making us reevaluate the health benefits of keeping produce in our diet.
at Wednesday, March 18, 2009 Posted under
Mar 17, 2009, 07:00 AM | by Jennifer Armstrong
Seems moms across the Internet got all whipped up about a new tween Dora the Explorer doll, mostly based on a "teaser silhouette" that Nickelodeon and Mattel released early to generate excitement about the new product. Oops: While there was plenty of excitement, it was more of the "How dare they turn our beloved-if-squeaky heroine into a little hussy?" variety. Yes, from the mysterious outline, the little gal known for her bowl cut and talking backpack appeared to have sexed up quite considerably between the ages of six-ish and 10-ish, with tons of long, flowing hair and a micromini.
But now the kids' channel and toy company have assuaged the masses with a fully detailed rendering of the doll (pictured), complete with tunic and leggings. Turns out that's a long shirt as opposed to a short dress. Phew. (Her hair really is fabulous, but a girl can't help what she's got, can she?) Furthermore, the corporate powers reassure us that our gal (who connects to a computer USB port for interactive games) "will expand into the world of solving mysteries that have overt and relatable pro-social themes -- like volunteerism, water conservation, or planting trees to help the environment." If she's really going to do all that, we can't help but like this idea. (In fact, we're kind-of reevaluating what it is we do with our free time....) And here's to hoping she stays away from those tarty Bratz dolls -- you know that's really what had all these moms so jumpy.
What do you think of the new Dora the Explorer? Is she too grown up or a perfectly good role model? And more importantly: Do you like her leggings?
Via Entertainment Weekly.