I was going to skip this post because it involves the reader watching a third-party video, but I've realized that some of the points I'm about to make are valid regardless of whether you watch the video or not, and, more importantly, this guy makes me so angry that I just want to bash him anyway. So without further adieu, here we go:
...So, before you read this, check out this idiot (sorry, some adieu spilled over into this paragraph). Daniel H. Pink presents the case that big bonuses don't mean big results. His presentation/speech actually doesn't center on the finance industry, but it's pretty clear that he's targeting us (I'm going to sand in solidarity with my fellow targeted financiers). He uses a series of "proven scientific experiments" to show that incentive compensation doesn't work. And he makes a few fine points. When people are blinded by the incentives they often restrict their vision and are less able to solve the problem. Fine. Here's what I have to say:
1) I’m not quite sure Mr. Pink understands how people are paid in the finance industry. Yes, some people are paid on commission, but the biggest reason for the large bonuses is as an incentive to stay. Here’s how it works: a very skilled trader (call him Joe) generates lots of revenue for Bank A and also satisfies all the bank’s clients. Trader Joe is a valuable asset. Investment Bank B offers to pay him a higher salary than he is earning in order to come work for them, because it knows he is talented. Therefore, Bank A pays him lots of money, in order to retain him. He is getting paid because his proven ability to generate revenue is worth something to the firm. So to use the candlestick analogy, once Trader Joe has figured out the puzzle and tacked the container to the wall faster than everyone else, Bank A recognizes his genius and pays him to stay and tack other things to the wall.
I'm going to start the bashing now.
2) Doesn't he just look like a bitch?
3) Like any professor would tell you, do not ever use Wikipedia as a source… for anything, including shitty analogies. It will always come back to haunt you. While it’s true that Wikipedia has had much higher viewership and put Encarta out of business, Wikipedia also happens to be FREE. Are you serious Daniel Pink?? Do you really think that the reason for a free online encyclopedia’s success over an expensive DVD-format encyclopedia is the method by which its employees are incentivized? Also I think if you’re going to compare the two, you should really compare the encyclopedia itself as opposed to the public’s opinion of the encyclopedia. I for one believe that any encyclopedia in which Stephen Colbert can change Earth’s elephant population is clearly inferior to Encarta. Honestly did Daniel Pink ever do a high school history assignment in his life? Wikipedia clearly doesn't have all those awesome pictures.
4) If you’re going to give a speech and talk about people using emotions rather than common sense in making decisions, please try to refrain from being EXTREMELY EMOTIONAL while doing so. Not only does it take away from your point, but it makes you look like one of those whiny indie bands that bash all the popular indie bands for selling out.
5) What the fuck is this man bitching about? If you were trying to pitch me on using other forms of incentivizing for situations in where I force people to do dumb shit and time them, then yes, you’ve done a good job. But any sort of analogy on how this is relevant to the financial industry is completely lost. What the hell else are we supposed to compensate bankers with… a warm sense of self-accomplishment? Freedom to trade whatever they want? To what end?? Our dear Mr. Pink seems to have overlooked that the only reason anyone would be a trader/investment banker/underwriter/other-more-obscure-function-of-an-investment-bank-that-gets-hella-paid is because IT PAYS VERY WELL! Do you think it brings joy to anyone’s heart to see electronic documents that represent pieces of paper which represent ownership in corporations that don’t exist exchange hands between people acting on behalf of corporations that don’t exist? NO! We do it for the money, you jackass.
[catching breath]
More.... bash..ing.... it's not surprising he [cough] didn't do well in law school....
[catching breath]
[changing title of the post from "big results mean big bonuses, and not the other way around" to something really immature]
Mo out.
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