Skip to main content

TIME FOR SOUL SEARCHING

The present US Financial crisis was bound to happen. Only time will tell whether we have learnt something from it or not. Today, US president Obama blasted CEO’s who are still trying to get bonuses in this crisis time. I think (may be wrong) that the present system of bonuses for making short term profits is one of the major reason for so much greed in the executives across the globe. What we have observed that people get bonuses for their annual performance and then move on. The company is normally not able to assess the long term impact of the short term performance of its employees. It is high time that HR professionals look into the whole compensation process with a holistic attitude that can be beneficial for the organization in the long term.

CEO’s and executives of large companies took their bonuses (some by cheating……Madoff.) and they are the people who are responsible for the current crisis. In the War situation also many people lose their job, companies shut down, economies destroyed and people are distressed. Responsibility is fixed and guilty are brought to book. But this is a strange situation, where nobody is found guilty and whole world is suffering.

Comments

Post a Comment

Popular posts from this blog

RBI PROPOSAL ON BASE RATE

The timing of recent proposal by RBI to introduce base rate mechanism for lending activities could not have been better. Taking the experience of global financial crisis in which Indian Banks remained more or less unscathed, there must be a transparency in systems followed by the Banks to lend money prudently. Banking is a business, where safety of depositors money is of utmost importance. By lending below the average cost of the Bank, the bank jeopardise the safety of depositors fund as well as start a rate war among the lending institutions, that may be beneficial for the Bank as well as immensely beneficial for the borrower in the short term, it may be harmful for the banking system as a whole. The basic question is why should banks lend money at less than the cost of the fund to the bank? If strategically lending is done to select customers at rates below cost of funds, this has to be cross subsidised by higher rates for many more borrowers. There starts a disparity among borrowers...
Post a Comment
Read more

SERIOUS LESSON LEARNT FROM THE CRISIS

Last 6 months in the market is so turbulent that I had to unlearn whatever i have learnt from ny experince as an investment management professional as well as a student in the B-School. All the theories about risk free securities, equity risk premium, efficient market hypothesis, risk management systems have not worked in these turbulent times. Even the regulators are totally confused. Only in the second quarter of 2008-09, inflation was considered to be serious threat to the economy and crude oil pricees were soaring high and expert analysts were talking about crude going to USD 200. In a bid to save the Indian economy, RBI decided to solve the problem through monetary tigtening as the textbooks on economy suggests. Banks were worried about their profit margin due to treasury losses. I as a trader in bond market was also making losses on my trading positions. But came September 2008, that will be remembered by all the people who are not even directly interested in Financial markets.In...
1 comment
Read more