Citibank makes the next chess move

Citibank has announced it will offer 50% raises because the government rules will limit bonus pay to its bonus eligible employees. Citibank must pay a competitive total compensation package to attract and retain key people. It used to make sense to "pay for performance". But now since performance metrics cannot be trusted in banking, according to the government, bonus pay can also not be trusted. So Citibank has taken the only natural step, pay for showing up to work in order to comply with the rules. I am sure that was not the government's intent when the limit on pay was implemented. Yet how could the next step for Citibank have been different? Of course a more balanced approach would be to fix the metrics and make sure sound risk-taking and decision making become the rule for paying bonuses. A prudently run organization with properly designed incentive plans could have been a better solution. But that wasn't an option in this case. Funny that Chris Dodd said the people running Citibank "just don't get it". Be careful what you wish for, Senator Dodd and others concerned with the banking compensation, because you just might "get it".

Don't exclude the professionally licensed health insurance expert

I support the Obama-Biden health plan proposal. While not perfect it is based on elements that would improve the U.S. healthcare system. Most would agree that we have too many uninsured Americans--80% of them are working but either cannot afford to pay for the benefits or are not offered employer based healthcare. It is tough to argue with the systemic inefficiencies that add to the cost of healthcare. And lastly, I personally have been a big believer in improving population health to decrease costs and make the system less "clogged".

The Obama-Biden proposal recommends investments in health technology and electronic medical records (probably a tough sell to family practioners with cabinets of paper), improving prevention and disease management, including care integration, decreasing catastrophic incidents, transparency on costs, and improving the quality of care (through incentives, standards, research, care equality, and medical malpractice oversight). Most employers would be mandated to provide coverage for their employees (look for those companies to pass on their increased costs to consumers). The last piece involves increasing competition among and with drug and insurance companies; busting monopolistic practices and limiting profits would be the approach.

Yesterday, the Senate Health, Education, Labor, and Pensions committee came out with a draft bill on the new healthcare system. Cost savings seem to be focused on lowering reimbursements to providers. As in the President's proposal employers would be mandated to provide health coverage to their employees and insurance company profits would be capped. And with all this "newness" and complexity, the draft opposes the inclusion of professional, licensed insurance agents and brokers from participating in the reformed healthcare system. The players that encourage competition among plans and provide valuable advice to individuals would be eliminated because HELP doesn't seem to understand their contributions. The cost of these advisors to the system is under 0.2% of the healthcare spend.

As with everything, "the devil is in the details", but someone needs to be there to aid the healthcare consumer in those details. I strongly believe people and companies will need help and advice when the new system is finalized. Shutting out valuable resources and advisors, who add value in the purchasing decision and in resolving ongoing issues is the opposite of what is needed to take good ideas and turn them into good results.

An unbalanced recovery

When the recovery starts, the economy won't improve for everybody. There will be winners who emerge more quickly. And their ascent will be exponential. The laggards will be victims in a couple of ways: either as those gobbled by the fast recovering firms or who will continue to lose share and continue their desperate measures of survival. The key is to be in the first round of success. Recognizing how to operate efficiently (and not just with an embattled "leaner" staff), redesign process and harness and reengage talent will be critical to being one of the winners.