Doing good by paying right

Money-Gift1I was pleasantly surprised to read that, when it came to year-end bonus time, GM decided not to penalize factory workers for the mega mistakes made over the past 10 years by top executives, engineers and lawyers. In fact, since the workers were not at fault for any of the 30 million vehicles that have been recalled in recent years, CEO Mary Barra actually gave the 48,000-strong union workers a bonus greater than their contract called for. And, how often does that happen?

The bonuses were also a smart business decision considering GM and union leaders begin contract negotiations later this summer.

The bonuses also provided a much-needed image and reputation boost for the beleaguered brand. Thanks to the oversized bonuses, GM now has a great feel-good story to tell, both internally and externally.

Barra’s decision is rare among the ranks of CEOs running large, midsized and small companies. Case in point, I once reported to the CEO of a midsized integrated agency who was notoriously tight-fisted. At the end of one year, he called the CFO and yours truly into his office, shut the door, and said: “Look, our numbers are really crummy so let’s just the three of us take year-end bonuses, OK? We’ll tell everyone else they’ll get coal in their stockings.” And, then he laughed. I must admit I was too intimidated by the guy to speak up at the time. But, I learned a valuable lesson that has served us well at Peppercomm. Beginning on day one, Ed and I always rewarded the best employees, regardless of how good or bad our financial performance had been. And, we’ve also been the first ones to step up and not take a bonus or, if necessary, put some of our own money back into the business.

Like Ms. Barra, we see it as doing good by paying right.

4 thoughts on “Doing good by paying right

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  2. This excellent post actually goes to the heart of the question: what is the purpose of a business? The obvious “maximize shareholder value and that’s it” answer misses the point that by focusing only on maximizing shareholder value you sometimes minimize shareholder value. There are other stakeholders — most notably, customers, and, oh yeah, employees. Without the loyalty of these two groups, shareholders can end up with nothing.