Rewarding Incompetence – What the Sears IS going on?

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Sears Canada recent promotional banner
(Photo credit:  durhamradionews.com)

In the face of insolvency, Sears Canada has had to ask for court protection from its creditors. The problem, besides the obvious, is that the people that hold the keys to the executive washrooms have given themselves bonuses in the midst of laying off thousands of workers without a severance package.

Companies usually pay bonuses as an incentive to do good work, or they are paid as a consideration for a job well done. Leading a company to bankruptcy is not the definition of good work or a job well done. If the average worker does not perform well, he or she could see a decrease in the amount they receive as a bonus or no bonus at all. If an executive does not perform well, why is it that he or she be allowed to get a bonus? If everyone rewarded incompetence, our nation would go broke. It does not make sense.

We have seen this scenario before, most infamously with the collapse of the housing market started by our neighbours to the south, which had a devastating ripple effect throughout the world. In that case, bank executives, charged with fraud over the subprime mortgage fiasco, were still given millions in bonuses. Many of these companies (and don’t doubt for one second that banks are not companies in business to make a profit) say they need to pay out bonuses to executives to get or retain the best executive staff. How can these people be the best at anything when they are in effect the worst the world has to offer? What Sears Canada is doing to its employees and former employees is morally reprehensible. They happily walk away with their bonuses acutely aware that people at their feet are drowning.

These bonuses are not a paltry amount either. In the case of Sears Canada, 43 executives and senior managers and 116 general managers will receive $9.2 million dollars for leading the company to bankruptcy. Good Job! That is an average of just over $57,800 for each person if Sears distributes that amount equally. The truth of the matter is no matter how the company distributes the money it is people within the upper echelons of the corporation who will receive the benefit; no clerk, cashier, or sales associate will see a penny.

If Sears Canada had chosen to distribute these funds to all concerned, including the 2,900 employees currently on the chopping block, they would each get about $3007 each; that is certainly enough to tide most people over until they work out their next move. I am also positive that if Sears Canada had taken this route, they would have more than enough employees to work throughout the “transition” – a euphemism for the state of bankruptcy the company has found itself.

Managers and executives complain when Millennials quickly move on to their next job, screaming, “There is no loyalty anymore!” Perhaps Millennials have it right. Look what dedication has brought the employees of Sears and other companies who see fit to put their loyal and dedicated employees through the ringer without a second glance.

It doesn’t take rocket science to see that this is not the way to ensure employee loyalty and retention. The 65-year-old company has a reputation of standing behind every product they sell. The company executives and management should also support and stand behind their employees by paying their severance packages; it would be the right thing to do.

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