“(”gee, why didn’t we think of that sooner?”)”
I was the engineering manager for an $80 million per year defense company. I wrote an extensive report to the President on potential calamities that could have put them out of business. (For example, they had only one paper copy of each drawing and no backup copies of their database.) I had a solution with costs for each one. The costs were miniscule in comparison to the potential disaster. The President poo-pood the whole thing and they were lucky in that none of those things happened before what finally did put them out of business; a single bad decision by the President.
The point is, if moving the IT room cost, say, $20,000 including down time, that money would come off his profit. That reduction in profit might trim a percent or two from his bonus. I had a boss once who cost the company about $200k to protect approximately $250 dollars on his bonus. The $200k was not his, but the $250 was his. It’s astonishing that people with a fiduciary responsibility to protect the business instead protect their own bonus.
YUP A bonus is a nice incentive but can lead to short-term decisions that hurt the company.
I had reservations about the out years of a new customer contract and the company president tells me not to worry because neither of us would be working there when the margin problems showed up.
Luckily a higher up at our parent company asked to see the deal and killed it
Now that is sad. "Penny wise (when it is MY penny) and pound foolish", right?
Too often, Integrity is a forgotten element of character which is ESSENTIAL to leadership. We, as a culture, have forgotten Integrity, Honor, Commitment.
We are paying the price for these omissions.
As a youngster, I worked in the payroll department at a major regional bank. When we changed our computer system, it changed the way that numbers were rounded, and so some VP got exactly $0.01 less than usual. He got in a huff about it, and demanded that we cut him an extra check for $0.01, every 2 weeks, forevermore. We did... but the time and expense and salary and even materials involved in getting him that penny each pay cycle probably cost the bank about $1.50... 150 times as much.
Being the young smartass that I was, when I delivered that first $0.01 check to his office, I left a quarter, out of my own pocket, on top of his desk as well. I could have done that once per year (on his birthday maybe), and he would be a penny AHEAD each year (plus the float time that could have the quarter earning another penny or more over the course of the year!!), AND I would be saving the bank about $36 per year.
As you note: it IS astonishing how those whose duty is to protect the assets of the company care more about their own first... thankfully not one single solitary of our Congresspersons in our history have ever been like that with the $4,000,000,000,000 they get their hands on each year!
Ever read “In Search of Excellence”? A must read classic of the eighties that points out that when executives focus on profit, loss will result.
Profit is a metric of how well you are treating people. Specifically, 2 groups:
#1 focus must be not on CUSTOMERS - but EMPLOYEES. Why? Because it is employees who interface with and represent your company to your CUSTOMERS. Selecting the best employees must be a company’s top priority, then treating them well - and this is not mean a focus on salaries & benefits - but relationships.
#2: The goal of #1 is of course that CUSTOMERS are treated superbly. How you treat them will determine your profitability. But to treat them well, you must hire and retain only the best employees. Satisfied customers always bring new business.
Yes, you need good bean-counters and good financial management - but that goes back to #1.
former corporate CEO......