Sorry, it’s Monday and I feel like doing a little ranting and raving.  I know I normally keep that for “Rambling Wednesdays (the anagram of which “A Bad Mingled Wryness” comes from), but sometimes I just can’t wait.

Tucked inside an article about the Fannie Mae and Freddie Mac bonuses written by James Hagerty of the WSJ on Saturday was this little ditty…

“Freddie’s retention-bonus program involves 4,057 employees, or about 80% of the total head count, while Fannie is making the payments to 3,545 employees of 61%.”

If you have read some of my other blogs about retention bonuses, you’ll know that I really don’t have a problem with them, they do exactly what they are supposed to do… keep great employees from selling their talents and services to other organizations, often times competitors.  However the article goes on to say that Fannie Mae and Freddie Mac reported losses of $108,000,000,000 (that’s$108 billion bucks). With roughly 11,000 employees working for the two companies, each of the employees was responsible for roughly $10,000,000 of the combined loss…

OK, that is silly math, but it does bring up a point.  Bonuses of any type are designed to reward the employees who contribute most to the success of the organization, those that are responsible for ensuring customer and financial success.  If two-thirds of the combined employees are deserved of those bonuses (200 of them will be receiving more than $100,000), shouldn’t the losses be just a touch smaller than $108 billion?

The pareto principle works.  Eighty percent of the contributions to a company’s success normally come from twenty percent of the employees.   My third book talks about that philosophy.  I’m all for making sure that the best employees receive the greatest rewards and recognition.  But listen to this comment from James Lockhart, director of the Federal Housing Finance Agency:

“It is not realistic to expect that experienced and highly skilled employees will indefinitely continue to work as hard as they have if we do not provide reasonable incentives to perform.  The company needs skilled and experienced staff to manage safely their more than $5 trillion in debt and guarantees of mortgage securities.”

You’d hate to think of how much money would have been lost if the 7,500 employees weren’t “experienced and highly skilled who were working as hard as they could”.

And you wonder why the american people are so upset.