I had a meeting with a management team that is in clean up mode. Ideas one and two; not so good. Idea three, well, that's another story. This idea I like. This idea, two other VCs like.
So, we are rolling down the due diligence path and we hit the 2007 budget.
Line item: Bonus 315,000 accrual.
Line item: Severance $41,000
I pop my head up and ask, "What's the bonuses for, aren't you the team that tried ideas one and two?"
The response was something along the lines of:
<cough> well, we have lots of downsizing, staff reductions, and execution to do and we believe when we are done with all this, we will have a great company with lots of prospects, so we naturally (via the board) think a reward structure is appropriate.
Hmmm...
So, I say something to the effect:
I don't think so. I think you had a shot, you blew it but we believe in idea 3 so and you've now got some battle scars, what the heck, let's take a shot. However, during the course of trying idea 1 and 2 (and failing at both), a whole bunch of people are going to loose their jobs, stress out their families and generally have a sucky -at a minimum- few months.
I think these two lines should be reversed. I'll pay you a little for having to deal with people loosing jobs and sticking around to take a shot at idea 3 but if your board and your current VCs are hot to part with 300 grand, cool, give it to the people that you are bouncing; they believed and, well, seems fair. Then, I'm good to proceed.
I was trying, obviously, to make a larger point about doing the right thing, etc. In general, I'm not happy with this sense of entitlement surrounding bonuses. Just not the way it should be. And it sets tone. $41k represented the simple minimum the company could get away with, not the culture I'd want to nurture.
I got blank stares, of course.
Sounds like they just got through reading the World according to Tom Peters. You know, downsize, rightsize, outsource, and thanks for all your hardwork, but there are no plastic times watches in the budget in today's competitive environment.
P.S. please do not slam the door on your way out, we want to get our security deposit back.
you are in a really really weird business....
Posted by: alan herrell - the head lemur | March 19, 2007 at 12:05
Amen, Alan, amen. Weird doesn't even begin to cover it.
>R<
Posted by: Rick Segal | March 19, 2007 at 13:08
You're now 2 for 2 with your posts. I hope the other VC's and entrepreneurs are reading and listening.
Peter
Posted by: Peter Cranstone | March 19, 2007 at 16:09
I agree 100% with your post. Where does any company get to without the trust and hard work of a team? NOWHERE. And yet all too many managers are quick to congratulate themselves on a job recently well done, while ignoring the mistakes they made in the past.
In a previous job, I had to downsize the division I ran. Did I have some responsibility for the business failing?? Of course. Was I entirely to blame? No. There was a rats nest of interlinked reasons why things tanked. But my choices were to (a) abdicate responsibility and see my team get screwed by an HR automaton, or (b) face the music (and my team) and fight for the best severance I could get for everyone.
I chose (b), and it was painful. But after 6+ months of wrangling, I placed 14 out of 25 staff in another division, secured raises for the ones staying and 2 weeks of severance for every year worked by any employee being laid off. That was the deal for everyone from the top down (even the guy who had only been there 6 months got a week).
A wise man once told me "when faced with something shitty, get through it the best you can, and do it so that when you look back 5 years from now, you have as few regrets as possible". Of course I regret that the business failed, but I know I got the best deal for everyone affected. A relatively clear conscience is worth far more than a quick undeserved bonus...
Posted by: fewquid | March 20, 2007 at 02:43
So, I take it no deal? Glad to see someone's willing to stand up to such actions.
Posted by: Investoid | March 20, 2007 at 22:56
is this not the same mentality of the F500 groups ?? They downsize , give out a serverance package , yet their top EXO get bonous\. Now, this bonus is equal to or more then the net net salaries of ALL the employees that we downsized.. !!
This is plain greed.. Walked that pathway seen that dimension !!
Posted by: /pd | March 22, 2007 at 18:55