Archive for October, 2010

Digging a Little Deeper On the Subject of Wall Street Bonuses

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Expert Perspective by Grahall’s OmniMedia Editorial Board

There has been a flurry of articles recently on the expected bonuses to be paid to Wall Street employees.  The record breaking number for this windfall is as high as $144 billion (with a B) despite the tireless efforts by Messers. Dodd and Frank (and our other elected officials) to reform Wall Street while protecting Main Street.  But then Dodd–Frank Wall Street Reform and Consumer Protection Act was only signed into law in July a mere 3 months ago (the eye blink equivalent for “rule-making”).  Seriously, did anyone think that Congress could focus on reform and protection with mid-term primaries and November 2 elections before them?  It would have taken a bit more than even Christine O’Donnell’s “old black magic” to get than done!

Anyway, with Wall Street year-end bonuses looming (large) and no regulations to help determine what might constitute an “inordinately large payout”, other than from William Alden’s October 17, 2010 article in the Huffington Post Wall Street May Break Pay Record – Again) where “Federal Reserve general counsel Scott Alvarez [is quoted as saying]: “It’s very nuanced… There is no number.”  It seems, to borrow a phrase from Potter Stewart, once Associate Justice of the Supreme Court of the United States, “we’ll know it when we see it”.  Leaving the real question to be: Do we see it with $144 billion?
What is going on here?  That is a question we asked just a couple weeks ago in our blog Of Banks and Bonuses where we said that there were a couple of things at play.  That was an understatement – there are many things at play, and without tweezing them apart and thoroughly examining them – it is hard to say if $144 billion is obscene or not.

Yet theories abound. Here are some of our favorities. 

Perhaps with financial services restructuring, the remaining folks (a smaller group than before) all must work harder and the cost of compensating and retaining the “High” Q individuals is increasing in the market.  This is due to the departure of “process based” jobs, leaving banks and Wall Street with many more intellectually demanding jobs requiring judgment and decision making.  And the people in these tough jobs maydeserve to be better paid.  

Or maybe since Wall Street stocks are up in value (at least over last year if not over last month) and the hard working executives who have turned around these struggling entities (some with the help of taxpayer support) deserve to get some credit or at least some cash.

Perhaps with Dodd-Frank regulations still “in the can” and a chance that favorable tax rates will be repealed in 2011 financial services executives want to cash in now.

And, finally, maybe Wall Street is simply looking to recapture what they ”lost” in bonus payments last time around. 

More likely it is all these things and many, many more.  Remain assurd,  though, that regardless of micro economic, macro economic, global, local, political or any other issues at play, Wall Street has and looks to continue to take care of themselves.

Contact edie.kingston@grahall.com

Filed under: Expert Perspective - Rewards



HR Leaders: Are you Managing a Business or Managing a Budget?

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Expert Perspective by Grahall’s OmniMedia Editorial Boaard

The fourth calendar quarter of the year is busy time for Human Resources.  The iterative budget process is coming to a close and the final effort to lobby for funds, justify expenditures and rationalize programs is at full throttle.  For those HR leaders who manage a budget, this is the essential occupation, this is their craft and their trade.  As important as securing funds for HR programs may appear to be to these HR “administrators,” the real work of HR has changed.  As we said in our blog Who Are You? HR Roles Have Changed, Have YOU?: “HR programs in themselves don’t add value to the enterprise.   It’s not what you will do (i.e. run a training program), it is WHY and HOW these programs deliver value to the business.  HR needs to be a business partner and, perhaps more importantly, HR leaders need to operate their department like a business as well.  

HR needs to transform its thinking from a “cost center” mentality (where success is measured by how big or small the budget is) to a business mentality (where success is measured by effectively allocating scarce resources to achieve critical strategic intent).  
Continue reading “HR Leaders: Are you Managing a Business or Managing a Budget?” »

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Redefining Jobs Helps Companies Survive a Recession and Prosper Afterwards

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Expert Perspective from Grahall’s OmniMedia Editorial Board

There can be advantages to a recession, though not for the laid off worker, of course, or for the manager delegated the difficult task of making those layoffs, or even for the retained workers needing to do more work in the same workday.  But the company as a whole can benefit from tough economic times. 
Continue reading “Redefining Jobs Helps Companies Survive a Recession and Prosper Afterwards” »

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The Business of Business is Business

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Expert Perspective from Grahall’s Editorial Board

A couple of points in Gary Hamel’s sales pitch (for Umair Haque’s new book, “The New Capitalist Manifesto: Building a Disruptively Better Business”) disguised as a treatise on the threats to capitalism (Capitalism is Dead. Long Live Capitalism, September 21, 2010 Wall Street Journal) caught the attention of our Editorial Board. 
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Dodd Frank – Do You Know What You Need to Know?

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Expert Perspective from Grahall’s Garry Rogers
 
The Dodd-Frank Wall Street Reform and Consumer Protection Act is aimed dead center at the heart of the financial services industry and contains substantial changes regarding the determination and reporting of executive pay and corporate governance.   These changes will impact all public filers.
 
Over the next few weeks we will highlight some of the more interesting, unusual and controversial issues in the legislation.  For example, “Say-on-Pay” is now mandatory for all public filers.  Changes are effective on January 21, 2011 (6 months from the date the Act was signed).  Did you know that Dodd-Frank will require that institutional investment managers be required to report no less than annually how they voted on the Say On Pay proposal, even though, starting in 2011, shareholders at most public companies will determine whether the advisory vote is to occur annually, biennially, or triennially. 
 
For a fuller discussion of Dodd-Frank’s new rules with respect to pay and governance read Grahall’s Regulatory Client Advisory DODD-FRANK FINANCIAL REFORM LAW CONTAINS SIGNIFICANT COMPENSATION CHANGES POTENTIALLY AFFECTING ALL PUBLIC FILERS.
 
For more information on Dodd Frank and how you may be impacted contact Garry Rogers at garry.rogers@grahall.com

Click here to access other important information for CEO’s.

Click here to access other important information for executives.

Filed under: Ask the Expert



Unintended Consequences: Could McDonald’s Demand for Reduce MLR Launch a Public Option?

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Expert Perspective by Grahall’s OmniMedia Editorial Board

Of course we all know there is no requirement that employers offer their employees heath care insurance or pensions or any of those once imagined “entitlement benefits”.  McDonalds, for all they might be contributing to the obesity epidemic in our country is a company that takes care of its restaurant workers.  The fact that they provide health insurance to restaurant workers is remarkable especially since their workforce tends to be transient.  
Continue reading “Unintended Consequences: Could McDonald’s Demand for Reduce MLR Launch a Public Option?” »

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Which is Better: Making Smart Hires or Hiring Smart People?

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Expert Perspective by Grahall’s OmniMedia Editorial Board

The Editorial Board enjoyed reading Roland Smith’s article for the Wall Street Journal (Five Rules for Making Smart Hires).    His list of “five ways to make smart hires and avoid costly mistakes” is spot on and addresses those areas that, although perhaps it seems obvious, are often overlooked in the selection and on boarding processes. 

We’d like to add a “Grahall spin” to these topics.  The best way to make smart  and to hire smart people is first to do a thorough “self reflection”.  That is to really understand the organization and articulate this understanding. 
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Filed under: Expert Perspective - Organization Development



Of Banks and Bankers Bonuses: Is the News Good, Bad or Neither?

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Expert Perspective by Grahall’s OmniMedia Editorial Board

So what is going on in Financial Services anyway?  One day you read that bankers will get their bonuses early (Newsweek: Banks May Dole Out Bonuses Early).  Then things sound grim when on another day the news is about Wall Street bracing for layoffs and lower bonuses (Huffing ton Post: Wall Street Braces For Layoffs And Lower Bonuses).  Then still more information comes out about the new banking rules and how they will reduce bank profits and therefore reduce bonuses based on profits (Wall Street Journal: New Bank Rules Good for Everything—Except Bankers’ Bonuses).

So is Wall Street suffering like Main Street or not?   There are a couple things at play here.
Continue reading “Of Banks and Bankers Bonuses: Is the News Good, Bad or Neither?” »

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Citi’s Board Thinks Their CEO Deserves More Compensation

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Expert Perspective by Grahall’s OmniMedia Editorial Board

The decision of Citi’s Board in 2011 to  “…compensate Vikram commensurate with the job of CEO of Citi” left our Editorial Board wondering if the Board is intent on communicating a “back to business as usual” message to shareholders and regulators.   According to Matthias Rieker September 20, 2010 article in the Wall Street Journal  (Citi Chairman Intends To Revive CEO’s Pay In 2011) “Pandit had pledged last year to accept only $1 in salary and bonus until Citi returns to profitability. Citi reported a profit for the first and second quarter this year, but Pandit still declined compensation above $1 for this year…”

But Pandit’s commitment to Citi seems not to be shared by his fellow executives, many of whom, we imagine, were involved in decisions that led to the decline of Citi’s stock from well over $50 per share in 2007 to its low of $1.03 in March 2009. 
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The Power Play: Employee Engagement May Not Be Relevant at All Levels

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Expert Perspective by Grahall’s OmniMedia Editorial Board

We think that Katherine Ratkiewicz missed the mark in her article Replacing Rahm.  Ok maybe  Ratkiewicz is just trying to “engage” some HR folks into attending the Engagement & Retention Conference.  But to suggest that Rahm Emanuel is leaving the Obama administration because he is “…feeling disengaged” is just silly.   As Obama’s Chief of Staff, Mr. Emanuel is one of the most important figures in the Obama administration.  He holds significant power: granting or withholding access, helping Obama determine priorities, etc.   To draw a parallel to the business word, Emanuel is an amalgam of C-Suite Administration and Operations executives with a healthy dollop of a “gate keeping” Lead Administrative Assistant.  
Continue reading “The Power Play: Employee Engagement May Not Be Relevant at All Levels” »

Filed under: Expert Perspective - Organization Development