Tuesday, October 07, 2008

Incentive in failures

Just imagine that your friend was working in Lehman Brothers' India office. You came to know that Lehman brothers just filed for their bankruptcy. You just read this in one of the good explanations about the US financial crisis:

Firms, large and small, some young some as old as a 100 years have crumbled as a result of suing each other over the dwindling asset values. Lehman’s India operations, that employed over a thousand staff, is up for sale and many of the employees have been asked to leave.
The normal expectation is that you would give me a call and inquire about the situation, offer your best wishes and even try to set him up for a better option. Well, don't!

You couldn't have been more wrong. In what seems to be a mind boggling situation, employees of Lehman's Asia sections are not just going to retain the jobs, but also receive hefty hefty bonuses.

Now, I have known that people get bonuses in retention packages in takeovers/mergers all the time. What I do not expect is to do that for a bankrupt company, whose employees are anyway not going anywhere, and would be happy to be bailed out of the situation.

A week ago, I was feeling sympathy for Lehman's employees in Mumbai. Now I am just plain envious.

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