The Emotional Slam Dunk
Taking a voluntary -- and perhaps temporary -- pay cut is both a moral imperative and a tactical necessity if you are a highly paid senior executive in an institution that is cutting costs, making hard decisions, laying off people, and otherwise struggling to adapt to the current reality,
You can argue with that moral imperative, especially when a character like University of Connecticut men's basketball coach Jim Calhoun brings fame and fortune into the institution he works for in good times and in bad. The critical factor in these circumstances is whether the institution is suffering, as most academic institutions are, with shrinking endowments and, for public institutions, public budgets under siege.
Calhoun would hardly notice a 10 percent cut, or deferral, of his reported $1.6 million compensation package (although my accountant tells me that at least one of his clients, whose net worth has gone from $8 million to $5 million, is close to suicidal.) But from a leadership perspective, the issue is, to use the vernacular from Calhoun's world, a slam dunk.
Modeling the behavior you expect from others is a critical element of leadership.
If Calhoun's university, or Pandit's Citibank or Patterson's New York State Government is asking for furloughs, cutting staff, tightening belts, and otherwise inflicting pain on people whose support and morale are crucial to their role in getting through this mess, then demonstrating that the people at the top are willing to take their own hits as well as dishing them out to others, is crucial.
What we are experiencing is as much emotional as rational. That's why Obama economic advisor Larry Summers was out there last week offering hope in his speech at the Brookings Institution. It was appeal to our below-the-neck anxiety, not to our brains. And the willingness of people at the top of institutions and companies to tangibly acknowledge the stress their people are experiencing is as central an element of sustained recovery as any other because it will have emotional as well as concrete consequences.
Sure Jim Calhoun and other highly paid folks work hard for their dollars and add value, and their compensation is determined by market forces. But part of what got us into this mess is self-absorption, individual aggrandizement, greed and unregulated markets gone wild. How can those people making huge amounts of money at the top expect less secure folks to commit to the future, do what it will take to help the organization thrive going forward, and pull their weight now if they are not willing to share the pain?
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