It is annual meeting time and with annual meeting notices come those figures on executive compensation. Johnson & Johnson cut its CEO’s bonus from $3.6 million in 2009 to $1.98 million for 2010. Let’s recap – it would be easier to list the products J & J did not have to recall than to list the ones it did. The company had to settle up with the FDA for quality problems in many of its over-the-counter products. The recalls hurt sales and tarnished the company’s longstanding good reputation. Executives had to resign. Congressional hearings on the recalls and quality problems were just plain ugly.
When the Barometer worked as a waitress (the term in those 70’s years), tips helped pay her law school tuition. The work was rough and the work ethic training the best available. It was simple – if you hustled and did a good job with the customers and smiled, they came through and rewarded you well. However, when the order was wrong or the service slow, there were no tips. In fact, customers complained about both to the grumpy head waitress. Rewards came only with results, as perceived by customers, whether they be right or wrong in their perceptions.Â
The Barometer’s mother also had advice when you were a guest for a meal – don’t order the most expensive thing on the menu when you are someone’s guest. It ain’t your money. Mark J. Ohringer, general counsel at Jones Lang LaSalle, has written about these phenomenon, “Don’t Order the Most Expensive Thing on the Menu When Someone Else is Paying.†He makes the case for shareholders taking a hard look at those executive compensation packages and pulling back. He had an epiphany: You may not want to have an executive working for you who would quit over compensation issues, i.e., expects the most expensive thing on the menu. Take someone else to dinner.
These simple rules! How they resolve seemingly complex issues for us! What the Barometer wouldn’t give to have a grumpy head waitress handling the CEOs’ complaints about no tips (no bonus). Her grumpiness would simply say, “Did you earn the tip? Did you get results? Were they satisfied?â€Â I always got paid for waitressing – how much I earned was entirely in the hands of the customers. And their compensation was entirely within my control – getting results for them. Somehow that concept has eluded bonus and incentive plans. Tips for poor service seem to be a pattern.
