Anti Anti-AIG

Mar 21 09

Anti Anti-AIG

Paul Weinstein

There has been quite a to-do about AIG’s payment of employee bonuses over the past week. Much of the to-do I would characterize as “angry mob” which has galvanized the U.S. House of Representatives into passing a bill requiring “repayment.”

Nate Silver, over at FiveThirtyEight, has taken a more pragmatic avenue to the discussion, noting the legal and business questions that have arisen since the news gained “mainstream” traction.

Alas, so much of politics is gut and emotions, as this instance clearly demonstrate. So here’s my “emotional” reaction to why forcing AIG employees to pay back their bonuses is wrong-headed:

Imagine you’re an employee at a large corporation. Ok, maybe you already are an employee for a large organization, so let’s say you’re a software engineer for a large video game company.  You’ve worked hard to get to this point, a respected game programmer for an industry leader. You and a few compatriots are working on a genre defining, first-person shooter and as part of the project your department head has presented everyone with an incentives program. It’s a mix packaged based on meeting your deadlines and sales performance. Your product launches and in its first year does well. In fact it does quite well; it’s well received by “casual” and “professional” gamers alike, becoming one of the top selling games for the year. You and your co-workers within the department are congratulated by the company with not only your promised bonuses but with a new task: develop the killer sequel.

Energized by your success you all put extra effort into the sequel, late nights programming and long days of meetings. Even so you meet all of your deadlines and release a genre-bending sequel. The company goes all out in marketing the game, but the gaming market is flooded with knocks-off of your original game, saturating the market. Your company, feeling good about the overall video game market in an effort to retain everyone, “do right” and keep everyone focused, offers everyone bonuses at full value, despite the sequel missing its sales goals.

But then the video game market as a whole crashes, it gets so bad the company needs to sell part of itself, a majority stake in fact to get a needed cash infusion. The new owner, wishing not to scare anyone off, tells everyone not to worry. The company as a whole is fine, the market will pickup, everyone just needs to weather the down turn. Some changes, really just some very few changes are needed. Just some touch ups, a little reorganizing here and little cost-cutting there. All the promises a new management makes to keep people from bailing.

Rumor has it that the company considers asking for your bonuses back, cost cutting after all. But after a qucik review of all outstaniing obligations, the new owners make good on the previously agreed full bonus payout.

Then a new story breaks, your first-person shooter is blamed for a teenager getting shot. Then more reports of violence being linked to your game. Obviously you and your department are to blame for the increase of violence. An increase in teenage violence and you got a bonus?!

Soon you hear the company really is planning on rolling back your bonuses, a shareholder drive has been enacted to force the Board of Director to cut team members pay, to make up for the “lost funds”. After all you really didn’t deserve all of it. It fact if the company hadn’t paid your bonuses they might not have gotten in trouble financially – never mind that the company was in red-ink by millions and team’s bonus was only a few thousand dollars. You are to blame for failure of company. You are called out as scum, the worst of the worst the reason why the whole industry is in free fall.

How do you think you’d feel? What did you do wrong exactly?