Monday, March 16, 2009

New Obama Poll Numbers, What Bonuses Are Supposed to Be For

Obama Poll Update

The still young Presidency of Barack Obama is a mere 56 days old (it sure feels like he has been in office a lot longer than that, but that is really all -- I double checked!), but 3.8% of his elected term, but we have tons of polls available to track the composites.

So, what are the polls telling us? More of the same from last week. President Obama continues to enjoy popularity far in excess of his margin of victory (+31.4% favorable in my latest composite average), but it continues to erode a little every week. After a 5% slide last week, the President slowed the rate of decline a little, losing just under 2% this week. He still has the wind at his back, but that wind is slowing down.The typical pattern with new Presidents is for them to enjoy a bit of a halo for their first 100 days. Starting day 101, they are generally on their own. But the early numbers also tend not to be that indicative of a President's ultimate popularity. Bill Clinton was rapidly becoming unpopular after his first 100 days as was Ronald Reagan. In both cases, their parties lost control of at least one body of congress in the midterm elections, but ultimately both easily won re-election. On the flip side, both Bushes enjoyed very strong popularity throughout their first year and the elder Bush lost re-election with an absolutely anemic 38% of the vote, while the younger Bush won a very close re-election battle with what was, by all accounts, a weak challenger in John Kerry.

So what do these numbers mean for President Obama? Just short-term political capital. He has his long-term prospects pretty well pegged -- if the economy is not significantly improved in 4 years, he will be out of work, if it is, he will likely look pretty unbeatable. But we also don't know what the critical issues will be by 2012 -- just a year ago, we all thought 2008 was going to be all about Iraq and it turned out to scarcely matter beyond the nominations.

Why Do Companies Pay Bonuses?
Bonus outrage is reaching an all time high, with President Obama today committing Treasury Secretary Tim Geithner to using all legal means possible to stop bonus payouts at AIG. I think the whole debate needs some perspective.

So let's start with why bonuses are paid. Companies pay bonuses as an incentive structure to appropriately reward the behaviors that they seek in employees -- it is a mechanism for aligning the interest of the employee with that of the employer. Any good compensation expert will tell you that the key to any meaningful bonus structure is that bonuses be tied to things that the individual receiving the bonus can control.

A typical bonus scheme in a well run corporation has multiple tiers for the multiple layers of the organization. Low level managers, who have far less control over the bottom line of a corporation, are rewarded based on intermediate metrics, such as departmental performance and individual performance. The higher up the chain you climb, the more your bonus is tied to the company's bottom line, because the more your actions and performance directly impact the companies performance. At the top, typically all of the bonus is based on company performance. I think this is fair -- an individual's bonus should be about what they control.

To that end, I have no issue with some lower level managers in AIG receiving bonuses. If there were individual standout performers or individual departments that were effective, they deserve to be compensated for that performance. Let's say for instance that the Account Payable Department reduced invoice processing costs by 30%. That department would deserve a bonus as they did their job very well and had nothing to do with sinking the ship.

What I cannot stomache is huge bonuses for top executives. Their ONLY job is to ensure the performance of the organization and they have failed about as badly as you can fail. For them to get bonuses makes a mockery of the whole system of compensation and sends the message loud and clear that for all the careful design that goes into a bonus structure, that performance doesn't really matter -- it's all about your job title and who you know.

So, go ahead, be outraged at CEOs getting golden parachutes, I know I am. But don't paint all bonuses the same -- there are probably some good people at AIG that actually deserve the money.

Site Update
Site traffic has been fairly stable. Since January 24th (when I started tracking), this site has averaged 10.9 visitors per day. Traffic was slowest in February at 8.4 hits per day, March month to date has been 10.1 visitors. The averages skew higher than this because our two busiest days since I started tracking were January 27th and 28th with 43 and 35 hits respectively.

Regrettably, one of the sites that I most enjoyed on the web,, appears to have shut down at least for now. This was (obviously from the name) a hard-left site, but they had a great database of political reference data, including the election projection database they kept of all electoral vote predicting sites. I hope that they come back, but since they haven't posted sincce January 24th, I suspect that they may not. If they do not return, I will attempt to assemble a database of projections for 2010 as we get closer to the mid-terms.

I highly recommend these other sites (I'm not receiving any endorsement dollars, these are just my personal favorites): -- a centrist site with good projection information and good basic political news -- a right-leaning site that does a good job assembling poll data and commentary stories (although mostly from the right) -- another right-leaning site, but one of the better electoral vote sites in election years

If you visit those sites, let them know that you found out about them here.

And if you like this site, don't let us go the way of -- check back often and tell your friends. And please continue to provide feedback, I really do value and try to adjust the site based on reader feedback.

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