What Does The Value Of A £963K Bonus Look Like?

The controversy over Royal Bank Of Scotland Chief’s £963K bonus hit the headlines this week.

As you might have seen there has been a range of reactions broadly along a spectrum from ‘he deserves it’ (the bank, and UK Financial Investments) to ‘he doesn’t deserve it’ (politicians and outraged members of the public).  Clearly the debate hinges on what people consider to the value of Stephen Hester’s contribution to the business.

People can get very ‘green eyed’ over the rewards other people achieve, and in my commercial past I enjoyed business performance bonuses. So as a general principal I don’t have a problem with people who make a positive difference to an organisation and who face risks and responsibilities getting additional rewards.

Stephen Hester’s bonus get’s me wondering though. Wondering especially about what innovative and insightful difference he has made to RBS. The sort of difference that would leave ordinary people like you and I slapping our foreheads and saying ‘you know, I wish I’d thought of that!’

From the outside it seems he is clearly a ‘safe pair of hands’ and this reputation has obviously been well earned. My question is this…is being just a safe pair of hands enough to justify a massive bonus?

Tell me if I’m wrong, but being fortunate to have the senior job post and then overseeing some rather obvious tasks that most final year undergraduate business students would identify as necessary in the context of RBS hardly seems worth £963k. A bonus yes, but £963k for re-balancing a business that needed re-balancing, and the obvious move of cutting costs? Where are the bright ideas? the new value propositions? the game changing ways of working?

There is the argument that the bonus is relative in the context of the vast sums of the banking world and the competition for talent in a global market place.

Stephen Hester a Lionel Messi? I can’t really say. Mind you if the remit was ‘to get it sorted’ and he has done that then he probably deserves the bonus because there was always the possibility he might not have! It’s just that it seems for alot of people there was a very low probability of Stephen screwing anything up because it was so bad in the first place.

We are told “the bonus reflected Mr Hester’s work towards rebuilding RBS”. What do you think?

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Realistic Business Engagement Advice For Business Schools

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There is a fine line to be trod between customer orientation and customer worship. This presents a real challenge for a business school.

Surely a key aspect of a university business school’s value proposition is not just a claim to research independence but also an independent advisory voice that can express things without fear or favour.

Once again my author of the week Michel de Montaigne offers insight. In his essay on the role of ambassadors (chapter xvi) he also summarises the key purposes in society for clerics, soldiers, merchants, and courtiers.

Courtiers have special responsibility for ceremonies and manners. They are close to the Patron and this seems to be a very fortunate position. I don’t think it is too much of stretch to see a business school in the role of courtier. However in chapter xv de Montaigne points out the problem of being a courtier…

“A man that is purely a courtier, can neither have power nor will to speak or think otherwise than favourably and well of a master, who, amongst so many millions of other subjects, has picked out him with his own hand to nourish and advance; this favour…”

Is it feasible to avoid the ‘courtier trap’ as business school I wonder?

Realistic Brand Management Advice

I’m still reading Michel de Montaigne and if he was good enough for Shakespeare he’s good enough for me.

This time the following quote in an essay that discusses how we should be educated got me thinking about Branding:

“Such as have lean and spare bodies stuff themselves out with clothes; so they who are defective in matter endevour to make amends with words

One of the key principles of marketing is distinguishing between what something ‘is’ and what is ‘does’, in other words the benefit rather than the feature, a concern with the solution to the problem. I certainly go along with that.

A classic example of this way of thinking was the radio interview with the executive from Louis Vuitton who was asked how long he had been in the hand bag business.  Dismayed he retorted, “the handbag business? we’re not in the handbag business…we’re in the business of selling dreams!”

Now I’m all for the idea of conveying an idea, and sure Brands make use of associative thinking to give meaning. I’m a Realist too (see Andrew Sayer for more details) and that’s why Michel de Montaigne’s observation captured my attention.

If Branding experts think that their role is changing reality by merely changing meaning through words then the organisations they work for are in deep trouble. As Andrew Collier (Critical Realist) said, we might as well solve the unemployment problem by re-describing people as employed!.

My suggestion would be that Branding experts should concentrate on expressing the true Value Proposition (See Ballantyne, Vargo & Lush et al)  of the product or service, and yes that might be something intangible as ‘happiness’, but mucking about by being manipulatively smart with meaning insults the customer and totally misses the point of the purpose of a Brand.

The Brand should reflect what the product actually does for the customer not be an exercise where organisation executives “stuff themselves out with clothes”. If products and services do not satisfy the needs of customers and deliver the real benefits they seek then Brand Managers should be tackling that issue rather than pretending that something is what it is not through the invention of spurious meanings.

 

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Relationship & Service Marketing Advice From The 16th Century

Way back in the 1500s Michel de Montaigne wrote a series of fascinating essays on life, the universe, and everything.

This passage caught my eye:

I have been present when, whilst they at the upper end of the chamber have been only commenting the beauty of the arras, or the flavour of the wine, many things that have been very finely said at the lower end of the table have been lost and thrown away. Let him examine every man’s talent; a peasant, a bricklayer, a passenger: one may learn something from every one of these in their several capacities, and something will be picked out of their discourse whereof some use may be made at one time or another”

I reckon this is sage advice for any of us who consider ourselves to be marketing ‘experts’, and a reminder of the value and importance of the insights co-workers can have no matter where they work in the organisation.

Hubris is a danger faced by anyone who finds themselves in a position of authority and power.

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