Fixing Ireland: stock options for civil servants

In the late eighties, they were was seen as the perfectly managed
company, the epitome of corporate America. Less than ten years later,
they were losing billions of dollars and had only 100 days of cash left.
The story of IBM is uncannily similar to Ireland’s fall from Celtic
tiger to Euro stray. Before Lou Gerstner arrived to save the day, IBM’s
plan was to break the company up and sell off the pieces. Gerstner threw
out this idea. Unfortunately Ireland still thinks that selling off its
assets will turn things around. What’s the alternative?

Although this notion is about as novel as merchandise for a royal
wedding, Irish debt must be tackled. If Ireland was a company, the
balance sheet would immediately be restructured to make it viable. I’d
leave it to my former classmates and lecturer
(now expert economists) to figure out what exactly that should look
like, and then I’d hire Goldman to go and make it happen. Critically,
I’d ensure it’s done with a fee structure based on actual debt reduced.

Back to the IBM story. When Gerstner took control, he did two
critical things to save the company. Firstly he laid off a huge number
of people who weren’t mission-critical and cut related costs. The second
action was simple: he made sure that all the people remaining in the
company were awarded stock options, keeping them motivated and
incentivized.

One of the tricks for a turnaround is to ensure your management team
is motivated after the inevitable cuts. This is where Ireland is missing
a critical piece of HR management. We need the equivalent of a stock
option packages for all our (remaining) civil servants. The government
should step in with a national GDP performance program where civil
servants (of all pay-grades) are granted ‘Ireland stock options’ so that
if they get the country back on track, they stand to make MUCH more
than they might have on just a salary. Similarly, pension entitlements
should be linked as well.

Yeah, you heard me. I want a stock option system that will make millionaires out of civil servants IF the country performs.

This is NOT index-linking to inflation or wooly concepts of
productivity. This is about motivating people with material rewards
measured on unambiguous country performance (GDP). If Ireland was a
company, this is exactly what the management team would be doing and
what shareholders would be supporting.

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