Sunday, December 27, 2009
The Talent Myth
During the past decade, there was a belief that talents are important for the future of a business or a country. Common sense and practical experience were discarded in the "war for talent". Talent was richly rewarded at the expense of the ordinary workers. Here is an interesting story about a well known company that pursued this strategy to an extreme. It brings useful lessons of people who belief in this strategy.
Talent and fat bonuses
For the past decade, there was a prevailing thinking that talented people cerated wealth and should be remunerated handsomely with fat bonuses and share options.
There was no distinction between the type of wealth and how they were created. In many cases, the wealth was created on top of a big asset bubble in properties and shares. The "talents" in the property and financial sector earned huge remuneration and bonuses.
When the asset bubble burst, these are the sectors that had to be bailed out. But, the fat bonuses are kept by the so-called "wealth creators".
The sad fact is that we are now going back into another asset bubble, with the low interest rate and bailout using taxpayer's funds. This will not be sustainable, and the world is likely to face another financial crisis - unless the asset bubbles can be reined in. But, that would be very difficult, given the low interest rate in the world today. In the meantime, the business leaders will continue to take the fat bonuses.
Tan Kin Lian
There was no distinction between the type of wealth and how they were created. In many cases, the wealth was created on top of a big asset bubble in properties and shares. The "talents" in the property and financial sector earned huge remuneration and bonuses.
When the asset bubble burst, these are the sectors that had to be bailed out. But, the fat bonuses are kept by the so-called "wealth creators".
The sad fact is that we are now going back into another asset bubble, with the low interest rate and bailout using taxpayer's funds. This will not be sustainable, and the world is likely to face another financial crisis - unless the asset bubbles can be reined in. But, that would be very difficult, given the low interest rate in the world today. In the meantime, the business leaders will continue to take the fat bonuses.
Tan Kin Lian
A good settlement mediated by FIDREC
An investor told me that the FIDREC mediator was able to get the financial institution to buy back 50% of the Lehman mini-bonds at full value (less interest received). He retained the remaining 50% of the investment.
In my view, this settlement is fair and is in accordance with my suggestion that both parties (i.e. the distributor and the investor) should share the loss equally. Actually, the investor suffered a larger loss as the capital sum had been invested for a few years without any return.
Anyway, the investor was glad to receive this settlement and thanked me for advising him to go to FIDREC. I hope that the other financial institutions would make a similar offer to their investors.
Tan Kin Lian
In my view, this settlement is fair and is in accordance with my suggestion that both parties (i.e. the distributor and the investor) should share the loss equally. Actually, the investor suffered a larger loss as the capital sum had been invested for a few years without any return.
Anyway, the investor was glad to receive this settlement and thanked me for advising him to go to FIDREC. I hope that the other financial institutions would make a similar offer to their investors.
Tan Kin Lian
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