We're all angry about the bonuses at AIG and on Wall Street but I say, "Enough about the bonuses!"  Going back to the day several weeks ago when Wall Street announced $18B in bonuses, we've been listening to the outrage and feeling more and more angry.  Remember when Obama called those bonuses "irresponsible" just a couple of weeks into his presidency?  Well, AIG then announces bonuses of $165M this past week and we've reached the tipping point.

Well I say, enough already.  This debate is topical and we all can relate to it, but that's exactly why it's been blown out of proportion.  In the grand scheme of things, these bonuses are small rounding errors in the whole mess, but it really puts things in perspective.  When the news is dominated by multi-billion dollar bailout packages nearly every week for one thing or another, the money starts to lose it's meaning.  How many zeros are in a trillion?  So when we think about some executive at AIG or some Wall Street firm bringing home a $5M or $10M bonus, we get angry.  Why should they get paid when their companies got us into this mess?

What we should really be angry about is that Congress has been acting just as irresponsibly, and in the name of fixing things!  How can Congress honestly get on their high horse and grandstand when they didn't even take the time to read the bill that gave AIG the discretion to determine the amount of these bonuses?  You can't have it both ways.  Regardless of your political leanings, Congress is being exposed for how irresponsibly they spend our money.  It's really that simple.

The bottomline from my perspective is that we need continued action by Treasury and the Fed to fix the financial system.  Let's keep Congress out of the spending business and allow our companies to make their own decisions on how to allocate capital.  Executives in financial services make a lot of money.  Unless the government plans to nationalize the banks (and they don't), we're just going to have to let great CEOs like John Mack and Jamie Dimon make those decisions.  Quite frankly, I'd rather have those two guys making more decisions, and I hope this uproar over bonuses doesn't empower Congress to really screw things up.

What do you think?  Do you think that capping bonuses or having AIG executives pay them back will make any positive difference?  Could it actually have huge negative consequences?

While the previous recession and stock market correction is now almost a distant memory, technology and the internet were the story as "irrational exuberance" drove stocks through the roof.  What followed was a massive sell off of internet, telecom and technology stocks while other sectors of the market performed much better on a relative basis.  2001 and 2002 were tough, but the manufacturing, consumer and service industries pulled us out of the mud.

Today, the recession is global and cuts across all sectors with no one left untouched.  Unlike the previous downturn, this recession is not isolated to a few industries and the stock market has sold off across the board.  But what may be lost in all of the gloom and doom is the story of productivity gains and how far we still have to go.  Just ask the executives at HP, IBM, Oracle, SAP, Cisco and EMC and you'll hear about the story that is very much in process.  During the past few years, companies have invested heavily in ERP solutions as CIOs, systems integrators, and offshore developers have been working flat out.  While virtualization and on-demand solutions improve the CIO's ROI, lasting productivity gains stem from the business integration and change that ERP enables.

This is the good news as CIOs were in the middle of large scale IT transformations driven by CEO expectations of improved productivity.  Today, these productivity gains are showing up in the results of companies across many industries, but the spending on IT and team building was shut down due to the severity of the recession.  Just as the CEOs of technology companies selling to CIOs suggest little visibility into when CIOs will start buying again, CIOs tell us they don't know when their CEOs and CFOs will release the purse strings.  But importantly, both tell us that when it comes back it will likely come back with a vengence.

As executive recruiters and advisers with deep expertise in technology, we see it.  The supply of business-oriented IT leaders hasn't magically increased in spite of the impression that we are in a buyers market for talent.  The translators who are the key to engaging with business leaders and driving the adoption of new technology enabled processes are in short supply.  Nearly every CIO in the country doesn't have the expertise they need in this area, and when CEOs and CFOs feel comfortable spending again they'll aim their investments where they can improve productivity.  As a result, technology will lead us out of this recession and companies well positioned for the spend will benefit first.

What is your view on how technology drives productivity?  Do you see technology spending returning in 2009 or 2010?

After experiencing another challenging week with seemingly no end in sight, I asked myself, "What can we learn from all this?"  As an executive recruiter and adviser to leaders, I'm expected to have a perspective gained from exposure to so many people asking themselves this very same question.  Aside from the big picture related to the financial system and the political environment, everyone is being impacted by this recession in meaningful ways and there is much to be learned from how leaders are reacting to this crisis.

First of all, I'm struck by how consistent the issues are from one company and one leader to another.  In previous recessions and downturns, the impact was felt much more significantly in one industry versus another and some seemed untouched and strangely detached from the challenges others were facing.  Not this time - to a person everyone is directly impacted by this reset.  Secondly, the reaction is the same - tighten the belt and spend money on only those things that are absolutely necessary.  Regardless of how strong one company may appear on a relative basis, leaders feel a responsibility to reign in unnecessary spending.  As you would expect, this means that almost everything is "on hold" waiting for some time in the future.

So, what can we learn?  Interestingly, it is during times like these when we learn the most.  In these inflection points where change is occuring very rapidly we see businesses as they are.  As unnecessary spending is eliminated, we see what is absolutely necessary.  We see those products and services that each business can't live without.  As going concerns, these are the basic elements that will never go away, and the related business opportunities bring clarity to the key value that each of us bring to the party.  In my business for example, the three things that never go away are: 1) executive coaching; 2) C-level searches for leaders who absolutely must be replaced; and 3) due diligence on behalf of a company attempting to hire a leader on their own. 

Think about your own experience and the demands on your business.  While you are likely involved in a multitude of activities, the key indicators of how you can best add value as a leader or a business are best seen in times like these.  What is your value proposition and how can you improve your career or business by focusing on the necessary things that will never go away?

During a recent meeting with a CFO the other day, we gravitated to the topic of the financial system and what needs to be done to fix it.  Seeing that I was listening to a highly quantitative and analytically oriented CFO, I expected a "Greenspan-esque" discussion of capital ratios and esoteric analysis of mark-to market accounting, but instead we talked about the stock market and the psychology of the markets.

He went on the say that he really didn't see a clear solution of how to fix the financial system or how best to deal with the toxic assets, but he did say that the flow of credit was the key.  I asked him if he had any difficulty funding his business and whether he was satisfied with his banking relationships, and he said, "We've actually reduced our outstanding debt and my lead bank has made it clear they'll give us the credit line we may need in the future."  Of course, he wasn't asking his bank for credit today, but he was primarily expressing the need for others to get credit more easily.  We then discussed the fact that most CFOs and individuals are de-leveraging if they can, and that it's really the marginal credits who can't get the loans.

Isn't that what's supposed to happen?  Wasn't it the easy availability to credit that got us into this mess?  In any event, he thought that the most important factor to consider in getting credit flowing again is consumer confidence.  And guess what he thought was the most important factor impacting consumer confidence - that’s right - the stock market.  "By the way, how is the market doing today?"  I think we can all relate to that.  Don't we feel more confident when the market goes up 300 points one day and another 250 points a couple of days later like it did this week?  Don’t we all feel like we shouldn't be so worried; that everything will be alright; especially when the market does well?  And then during those weeks when the market went down 10% in a single week, haven't we wondered just how low can it go and could we be completely wiped out?

The CFO went on to say, "I really don't care what Geithner does as long as he does something and the markets like it.  When the markets come back, consumer confidence will come back; and so will spending and the flow of credit.  All we really need is a few good days and weeks in the market and then everything will begin to turnaround." 

Wow!  Thank goodness it's all just based on how the Dow does today.  The market went up almost 10% this week…everything must be OK now.

Are we too focused on the market?  Is it really just about our portfolios and consumer confidence?  Let us know what you think.