Excessive pay, justified by talent
Christopher Swann had an interesting commentary in Reuters Blogs yesterday, arguing that: “Excessive banking pay is a social ill. The sector has long sucked in far too much of society’s brightest graduates — putting them to tasks which often have little social value and at worst are parasitic.” These are fighting words, but Mr. Swann is not alone in making the argument that societies benefit little from the bloated and risk-driven financial sector, which tries to justify its compensation by so-called exceptional talent.
Many have questioned whether exceptional talent justifies high compensation. Robert Reich, for example, has this to say about talent in his recent post: “I needn’t remind you that over the last several years Wall Street has exhibited a truly astonishing lack of talent.” (Italics are mine.)
I came across an amazing piece by Malcolm Gladwell, via a guest article by Chris Bones, dean of Henley Business School, in the Economist. Mr. Gladwell’s wrote his piece in 2002, based on a book called “The War on Talent,” published by Harvard Business School Press. The book was written by three McKinsey & Co.’s consultants who headed a project with one objective: to find out what made the best performing companies great. They concluded that the very best companies had leaders who were obsessed with the talent issue. The book also provides valuable advice to leaders that want to make their companies exceptional: “Don’t be afraid to promote stars without specifically relevant experience, seemingly over their heads.”
It seems that not everybody benefitted from this newfound obsession with talent. One company that embraced the talent gospel with a vengeance was Enron. The company was billed $10 million a year by McKinsey & Co. and Jeffrey K. Skilling, Enron’s CEO, was once a McKinsey partner. “The only thing that differentiates Enron from our people is our people, our talent,” said Enron Chairman Kenneth Lay in The War on Talent book. And Mr. Gladwell finds one more priceless gem in the book: “… as another senior Enron executive put it to Richard Foster, a McKinsey partner who celebrated Enron in his 2001 book, Creative Destruction, ‘We hire very smart people and we pay them more than they think they are worth.’”
If you still believe in the talent principle, this is what you do. First, promote stars without specifically relevant experience, seemingly over their heads. Second, hire very smart people and pay them more than they think they are worth. What you may get is another Enron or another Wall Street meltdown.
Corporate communications is due for a reset
No company has ever gone under because of bad corporate communications. For those who think differently, please read a recent book by Jim Collins, How the Mighty Fall. I challenge you to find one instance where corporate communications caused a business to fail, and I doubt that it will ever happen in the future either.
But the function may be fatal for senior executives. And that’s true now more than ever before. In most cases, corporate communications has been treated by organizations as a nice-to-have department, rather than a must-have, strategic part of the business. I believe three factors are going to change this view, and transform the modus operandi of corporate communications.
1.) The economic cost of the recession – The crisis is not a typical downturn to be followed by a quick recovery, as we saw with recessions from the last few decades. This is serious. Third-quarter results may finally bring home what the recession is all about. Communicating how the crisis is shaping your corporation’s business strategy is no longer an exclusive purview of investor relations or your yearly social responsibility report. And don’t assume that senior executives are unaware of the problem facing their communications in the next few years. As one CEO told me last week, “we have to do better to understand and communicate what our business objectives are in this economic crisis and how we are relevant to our society.”
2.) The social cost of the recession – It absolutely behooves me how little attention we are paying to the consequence of millions and millions of unemployed. We read every day about the great depression and stimulus packages introduced by FDR. What we have missed in these history lessons is how radicalized social and political opinions became back then, once the unemployment rolls hit 20 percent and more. We may not be at the 25-percent mark but, in real numbers, there are more unemployed people in the US today than at the height of the great depression. In 1932, there were 12.83 million unemployed. According to Bureau of Labor Statistics’ June 2009 report “the number of unemployed persons (14.7 million) and the unemployment rate (9.5 percent) were little changed in June.”
3.) The impact of technology fueled by a phenomenal growth of social media – This is not your father’s PR anymore. Worry less about information you send out and pay a lot more attention to what comes back. Formulate your strategy and engage your critics in a meaningful dialogue. Here’s an example on how not to do it on the age of social media: Goldman Sachs’ response, quoted in the New York Times, to Matt Taibbi’s article The Great American Bubble Machine, published in the Rolling Stone magazine. “[Taibbi's] story is an hysterical compilation of conspiracy theories. Notable ones missing are Goldman Sachs as the third shooter [in John F. Kennedy's assassination] and faking the first lunar landing.” Not a likely winner in starting a meaningful dialogue.
Another example to prove my point is an interesting paper about the changing role of corporate communications, posted in the Economist’s Management section, called “Corporate affairs, speaking with an authentic voice.” Written by A.T. Kearney, it explores the failure of corporate communications to align its objectives with business strategy and recommends a new reporting structure to improve its effectiveness. I may not agree with all of its recommendations, but it’s right in its conclusions – we’re due for a reset in corporate communications.
This is Not Funny Anymore
Jon Stewart’s rant about CNBC last night must have been his funniest show ever. But when the laughter died, it left me with an uneasy feeling about the future of the financial network.
In less than ten minutes, Mr. Stewart took CNBC apart and also confirmed our worst fears – there is something not right with some mainstream media. They’ve changed their focus from information to infotainment and are now becoming micro-infotainment as each “talent” (they’re not journalists in the traditional sense) becomes his or her own commentator/stand-up comic. Or, as one of my print journalist friends calls them, bingo caller.
The micro-infotainment may be taking the whole concept of personal brand to an extreme, but that’s exactly what is expected of TV talent these days. Perhaps the micro-infotainment is a symptom of our consumerism. Viewers want their news packaged in small, cute pieces, funny or outrageous, and, above all, colorful. Media are desperate to retain audiences and are therefore only too happy to keep the customer satisfied. Unfortunately, the product isn’t ultimately satisfying, so that programs that deliver it may become irrelevant. Or, as happened to CNNfn less than five years ago, gone entirely.
This presents an interesting dilemma for media relations: where are the stakeholders we’re trying to reach? How do we reach them? Which media are still relevant and credible? I know that trying to book your CEO on the Jon Stewart show may sound like a lunatic proposition, unless he/she wrote an amazing book and can tell a joke without looking like a funeral director doing pole dance.
Social media consultants like to think that blogging and twittering is the answer. But only a miniscule number of bloggers reach large audiences and, if you know of a CEO’s blog that is read by the same size audience as the Economist, please let me know. We need extended media relations, capable of maximizing every media channel. (And please, don’t call it Media Relations 2.0, or some other dumb number.) We need to make well-performing senior executives relevant again and that may take more creativity and brains than a year ago.
In the meantime, let’s hope that CNBC can get its act together and make itself relevant again. We need a decent business program, because The Daily Show cannot replace it.
Social Media for Executives
You wouldn’t believe who is on Twitter these days. According to an article in today’s Economist, members of the US Congress are now twittering happily to each other and their constituents.
Everybody and his neighbour is blogging and one hears complaints about too many professional social networking websites like LinkedIn. Even the most skeptical naysayers agree, social media are now ubiquitous and an integral part of business communication channels. Frankly, I’m glad we’re past the acceptance stage when evangelists hyped social media almost as much as they did the Internet in the late 90s.
I recently asked a social media-savvy corporate lawyer, “Would you let your CEO write his own blog?” “About as much as we would let him write his own speeches and press releases,” she answered. You may argue that the need for disclosure would make CEOs’ blogs less “personal,” but the same argument may apply to their speeches. Most CEOs spend time with their speechwriters to make sure that they actually talk their walk.
What is even more critical for businesses is social media monitoring. Nothing can organize your customers and adversaries as effectively and quickly as social media. Company boards should be especially advised of any changes in the online chatter because they have been increasingly targeted for perceived transgressions.
By the way, the Economist article also notes that Republicans twitter more than Democrats. I called my friend in California to get her take: “Twitter can only take 140 characters. When they expand it to two pages, dems will take over.” Right.
