Bold Exec

The General Motors of States--California

Many people have railed about General Motors management over the years, including me. Their management sins,however, pale beside those of the state of California. Try these on:

• __________________________________________________

• What if the UAW contributed millions of dollars each year to the personal account of the GM CEO, and/or to the personal accounts of the CEO candidates, right before contract negotiation season? (jail time) Yet the California prison guards union does exactly that. They contribute--to candidates for Governor--millions of dollars per campaign, and then that Governor negotiates their labor contract. Wonder why the pay and pensions for prison guards are double (triple?) what they should be? Wonder why the cost of the prison system in California is one of the many budget breakers?
• There's more; read on:

The Final Ingredient

Even after what most people thought were the ingredients of potential success in the GM bankruptcy scrubbing, I wasn't ready to "buy in" (of course there's nothing at this point to buy in literally, as there are no publicly traded shares). Why wouldn't all these decisions give GM a significant chance of success--namely the large reductions in:

• pension funding
• corporate debt
• dealers
• brands
• labor costs
• AND a brand new, from the outside, Chairman, CEO, and board     ?????

Dead on Arrival

Do you set targets for bonus plans, incentive compensation that is, on an annual basis? Why?

"Well, that's what we've always done."

Today's business pace-of-change is such that objectives and bonus plans based on a 12 month period are interesting antiques. Such a process is antique, and the objectives are antique by the time they're realized. If you simply use bottom line financial performance as your only metric (a rather lazy bonus-setting approach) then you can get by, I suppose, with annual targets and payouts. But if you set specific, establishing targets for those items that set the stage for future growth then a much shorter fuse is appropriate. See the follow-on for such objectives.