Bloomberg reports that the largest banks have miserable reputations. As much as management may like to blame this on TARP or bad press, the truth is that satisfaction surveys have said this for years. Customer attrition rates say it. Despite huge production of bad assets, management has not changed its focus on production goals, short-term results, and “pay for performance” (Pay for Performance is carrots and sticks. There is a place for it, but when the incentive plan is the primary management metric, balance has been lost and management has degenerated to carrots and sticks. When management does that, many employees give them what they want, whether it is right or not. The advantage for management is that they declare victory based on incentive metrics, while the business leaks out the back or large magnitude losses mount but no one is accountable)
April 8, 2010
Why is this acceptable?