In my book, good communications is vital to sound decision making in business. Trying to separateÂ business management from corporate communications and public relations is like a surgeon removing a vital organ without caring to find a replacement. It kills companies as surely as a botched transplant will kill a patient. And like incompetent doctors, CEOs and other executives that continue to lead their companies without regard to how they communicate their strategies and actions deserve to be fired… immediately.
Take AIG for a particularly egregious example.Â Over the past few days, the company has been pilloried for its decision to pay out $165 million in bonuses to employees despite the fact the company is currently on life support thanks to taxpayer-funded bailouts. Compounding this incredibly wrong-headed move is that some of the bonuses apparently went to the derivatives traders who almost single-handedly reduced the former insurance heavyweight to a welfare case.
Anyone with an instinct for public relations strategy could tell you that the decision to pay the bonuses was a bad one. Anybody with an understanding of how corporations need to interact and communicate with people today would have instantly recognized the folly of proceeding with the payouts. If something smells this badly from a communications perspective, it’s almost always a bad business decision.
Good businesses act with integrity. When good businessesÂ speak, they do so honestly with a view to enhancing their reputations. What good businesses do in the face of difficult circumstances reveals the character of their management teams.
If AIG were a good business with a good management team it would have found another way.
This isn’t a matter of upholding contracts. Insurance companies routinely challenge policies on flimsier grounds than congress is currently challenging these bonuses. It’s a matter of doing what’s right and managing the business for the many (the shareholders, the customers and the employees), not just for the privileged few.
I think AIG’s true character has been revealed. Time to break up the company and let someone else run the show.