What performance is AIG rewarding? Is that the performance it wants to be rewarding? Yesterday, Bloomberg.com reported that after much harsh criticism from Senator Max Baucus, Senator Henry Waxman, Representative Elijah Cummings, and presidential candidate Barak Obama, the new CEO of American International Group, Inc. announced the cancellation of recognition and education events like the $440,000 meeting of 100 independent insurance agents at the St. Regis Resort in Monarch Beach, California held after AIG received an $85 billion bailout from the U.S. government. The excuse given by people in the finance and insurance industries for these kinds of posh events is that this is how they reward and inform their sales agents and executives, and, they say, “If it didn’t work, we wouldn’t be doing it.”
I understand that sales meetings are intended to reward people for their hard work, fire them up to do more selling for the company, and inform them about any strategic and product changes. And I don’t have a problem with a company spending $4400 per person for a week-long meeting…if that meeting gets the results the company needs in order to be successful over the long term. However, from what I understand about the situation, AIG, along with many other financial services companies, has been guilty of greed and excess that was not sustainable and would have resulted in bankruptcy if it had not been bailed out by U.S. taxpayers. It is clear that their sales meetings have been rewarding the wrong behaviors on the part of their agents and executives. If you could build a house of cards in these companies, you were put on a pedestal.
All companies should examine their sales meetings in light of corporate values, goals, and intended results. Are they achieving what is intended? Is this the best way to use resources? If the intent is to reward high producers, then they need to ask if increasing sales is all they care about. Are there other goals, more in line with the values of the organization, for which employees and independent agents should be held accountable? Are there better ways to achieve these goals?