RSSSystems and the AIG catastrophe
I'm sitting here watching AIG CEO Ed Liddy testify before the House Financial Services Committee insisting that he had to pay out massive bonuses to a bunch of people who, rightly or wrongly, are widely seen as culpable for leading the company into the dire straits in which it is in today.
Liddy's justification for this is that these people, together with their questionable judgement, are necessary to the company in order to close out their books of business and get AIG out of the pit which they may have put it in.
I'm all for forcing people to correct their own mistakes, but I, like many Americans, am not thrilled that we are paying them bonuses for the privilege. Actually, I may be ahead of many Americans in understanding this, at least those who are relying on the news media for their information on the crisis… I understand that despite the widespread use of the word "bonus" that in fact if you are contractually obligated to pay someone an amount of money (as AIG seems to be) then in fact it's just "salary" albeit salary structured in a certain sort of way.
Still, whether it was legally prudent to withhold that chunk of money from those people or not, one had to wonder why the company didn't simply fire all the potential recipients rather than paying them off. Forget being worried about their departure: arrange it for them! Jobs in financial services aren't exactly abundant these days. Can 'em all and offer to hire them back, at much reduced rates.
Well, according to Liddy, not only is this approach apparently impossible, but so is simply withholding the money, even disregarding the legal arguments, because these apparently vital fools might leave before their work was complete.
This is the part where I tie this to the topic of this blog, which is IT management, because the error this exposes on AIG's part is that they have apparently constructed much of their business around individuals, rather than systems and processes. They've allowed the business to become dependent on a handful of people, who could depart, and destroy the company apparently. Instead of putting in place a solid, replicable process, with solid change management, knowledge transfer, and documentation, they're relying on the good will of individuals… individuals who have their own priorities and objectives, quite apart from those of the business.
How is this not a problem even during day to day operations? What sort of risk management has been exercised to allow so few people to have a chokehold on a company?
Now, how many IT departments do you know that operate that way? How many system administrators hold the key to the kingdom? How many programmers are indispensable because they are the only ones who know what's really going on deep in the bowels of custom software? The answer is: a lot… and unfortunately it apparently appears just as acceptable to many CIOs as it apparently is to Mr. Liddy and other executives at AIG.
Is there anyone in your organization who is "indispensable?" Given what we're seeing now, why?
Dear Scott,
I am not familiar with IT management but I think the point you’re making can equally apply to all business areas. As a change management consultant operating in Europe, I have seen quite a few individuals consciously or unconsciously putting themselves in a what you call an indispensable position. They do so because for one it is part of human nature to want to retain knowledge and because, as you say, the company doesn’t have the systems and processes in place, which is ultimately a management responsibility.
I firmly believe however that no one is indispensable; if someones thinks he is than that’s the beginning of the end for him. So I prefer to call this type of behaviour the knowledge retaining disease.
Knd Regards
Hi Christophe,
You may well be correct that this is a more general problem… the reason it jumped out at me immediately as an IT issue is that it has become an almost archetypical trope in the industry. Just days ago Slashdot, bastion of geek commentary, had a lengthy thread on the topic. Almost everyone has experience that “tech guy” who knows or claims to know everything about the company systems and keeps everything running behind the scenes. Sometimes this is intentional and sometimes it’s not, but it’s always a failure of the organization to keep it from happening.
While I agree with you that this is a self-limiting problem and that ultimately no one is indispensable, there is a lot of cost associated with the inevitable correction, so it’s no surprise that executives continue to see certain individuals as indispensable. Hopefully they will learn the lessons from others and correct the problems before they get to that stage.
Thanks,
Scott