Wednesday, 15 April 2009

Compensation

I used to really admire Alfred P. Sloan, but now I find myself wondering if he didn't instigate the destruction of civilization. It's complicated.

Another complicated thing is compensation. Obviously, the world has heard about all it can stand of Wall Street compensation this year. I'm firmly convinced that compensation is the root of everything that happened. Wall Streeters are famous for being perfect economic animals. If you paid them for kicking puppies, the world population of puppies would quintuple within weeks and there would be nary an unkicked puppy to be found. The cost to benefit ratio of dog food input cost versus kick resilience would be optimized within a month. They do what they get paid to do. Unfortunately for all of us, they were basically compensated for gaming the system in order to produce short term gains and maximize their compensation. We've heard the story.

Jim's post is once again a great coincidence with some stuff I'd been thinking about. It's well known that caddies get a 10% take of the purse that the golfer wins, and I assume this to be universal. While I watched Cabrera play the last several holes of regulation, I wondered about his caddy's compensation. If his caddy were a Wall Streeter, he might not ever have had a shot at winning or forcing a playoff. In strictly economic terms, once you've established second place and there is a knot of golfers close behind, you play for pars. Why go for the win when a slight screwup could net you 10% of the 8th place purse instead of 10% of the 2nd place purse? You don't. But for the golfer, the chance at a win is worth risking a safe second. The second place guy doesn't get hired to say "I'm going to Disneyland!" He gets no Green Jacket, no lifetime invitation to play in The Masters, no membership at Augusta. His endorsement bonuses are probably good for second, but not nearly as good as they are for first, not to mention a whole round of new endorsements. Probably most important to a sportsman, he doesn't get to write his name in history. So in strictly economic terms, the golfer and caddy's interests become disaligned when it's the difference between first and second.

I'm pretty certain that most caddy/golfer relationships have a fair amount of this worked out, and caddies are probably a lot more loyal and at least a little more smart than to play this for pure economics, but the point is made: compensating purely for the short term is frequently injurious to long term harmony.

You may be asking yourself what kind of idjit watches one of the most exciting tournaments in a long time and thinks about caddy compensation? I'm cursed with this kind of crap.

Currently setting up my TT stuff for Ephrata next week.

3 comments:

Fatguy Racer said...

I'm so glad I gave up golf 15 years ago. Too stressfull.

GamJams said...

Did you end up building up some aero wheels around those DT 240s?

Can you imagine what would happen if pro cycling mechanics were compensated at 10% of a racer's winnings? There would be no such thing as a pro mechanic, racers would be a lot better at fixing their own bikes, and manufacturers would actually manufacture stuff that doesn't break or need to be replaced within 3 weeks.

Chuck Wagon said...

Sadly, my 240 based build (Velocity Escape Tubular rim etc) was badly tweaked during the roadside merriment at Walkersville. Puppy kicking is a time consuming pursuit and I have not found time to perform the requisite repairs.

Being a pro team wrench must be one of the more hectic pursuits known to man. Full wash and tune of every bike every day, setting up climbing/tt bikes, setting up a workstation at a new hotel each day, etc. Probably a screaming case of hemorrhoids each year from all the windshield time. On top of all that, if you screw up a little bit, it winds up on the homepage of some web site and your rider winds up injured. All this for peanuts. Where do I sign up?

John - are you going to ref my race?