by JS O’Brien
I sometimes post opinions that I know will get my head taken off. This is one of them.
The media is wrong about AIG. The $400,000-plus retreat that has everyone so outraged was not for failed executives, but for top-producing salespeople. Events like this one are common across the US for top salespeople, and there’s a very good reason for it.
I’ve been around way too many salespeople in my life. They aren’t the most likable bunch unless your idea of a good time is hanging out with greasy gladhanders wearing outsized jewelry who’d sell their children into slavery for a $1.95 order of paper clips. But I don’t have to like them to understand that they are necessary to keep the money coming in, the economy humming, and the rest of us employed.
I have designed many, many sales incentive compensation plans over the years. You see, one really great thing about salespeople is that it’s easy to motivate them. Dangle enough money in front of them and they’ll crawl on their bellies naked through broken glass for you. It’s like waving a kibble at a starving Rottweiler. The funny thing, though, is that money, in itself, is not the primary motivator for them. Prestige, power within the company, and the reputation as a winner are the things they’re really after. Money is a means of demonstrating that to their peers, who understand this little game all too well (or else they generally get out of sales).
Like most firms, AIG understands that these sales reward junkets — where the company makes a big deal out of salespeople, lavishes praise on them, singles them out from their peers, allows them to hobnob with bigwigs who constantly tell them how important they are to the company — are far more motivating than cash. AIG could pay cash bonuses to them in lieu of a big get together at a fancy hotel and no one would bat an eye. But cash bonuses wouldn’t work as well, and AIG (and I) know it.
So, don’t blame AIG for continuing to do business the way business is done. Meetings like these are a cost of doing business. Hey, I’m all for firing AIG executives who got the taxpayers into this mess. But I’m not for firing anyone who understands how salespeople think and is trying to get them to sell more. Making them stop having these meetings will just force them to increase sales incentive compensation, which will fly under the media’s radar.
And that’s a stupid solution to a non-issue.