The CEO of IBM, Ginni Rometty announced that senior management, as well as herself will be forgoing their bonuses this year. IBM has had declining top line and bottom line revenue this past year. Moreover, their efforts to expand in emerging markets have been met by bad timing as developing economies have experienced lower growth, and thus lower demand for IBM's goods and services.
Senior managements' decision to forgo bonuses sheds a more positive light on corporate America. Many other fortune 500 companies have laid off hundreds (if not thousands) of workers due to falling profits, but management still maintained the same level of compensation. This article shows that maybe corporate America does have a heart and soul, and that senior management at IBM understand their role as agents to shareholders, as well as leaders to thousands of employees.
Senior managements' decision to forgo bonuses sheds a more positive light on corporate America. Many other fortune 500 companies have laid off hundreds (if not thousands) of workers due to falling profits, but management still maintained the same level of compensation. This article shows that maybe corporate America does have a heart and soul, and that senior management at IBM understand their role as agents to shareholders, as well as leaders to thousands of employees.
3 comments:
I agree with Mainza as the bonus stipulation in their compensation packages, is a clear example of a material incentive. The fact that senior management and the CEO, Ginni Rometty declined to accept their bonuses shows they understand they are in a service industry and with consumers demanding their goods; they would not be in business for very long.
If I am an employee of IBM who potentially could have been laid off, I would have a moral incentive to the organization to work harder. Upper level management showed they their sole concern is not maximizing shareholder wealth, but adhering to their vision that includes "trust and personal responsibility in all relationships." This is evident by senior management's decision to build relationships throughout its employees and have a more profitable year.
To be honest, I'm really not surprised that there are executives out there that are giving up their bonuses. Not all companies and their leadership act the same. Each have their own "personality" if you will. As such some will give up their bonuses to improve their public image, as they hear that giving up bonuses reacts well with the public. Other companies might be greedy with their bonuses, however will make themselves appear generous in other ways. Now whether or not these actions are genuine presentations of a company's goodwill is up for debate. However,you cannot deny that each action a company makes can affect their profits--either negatively or positively. Giving their bonuses might potentially lead to some increase in profits. Customers might see IBM as a company for the people, so might choose IBM computers (or whatever they're famous for nowadays) as their brand of choice.
Post a Comment