Management Overhead is Killing RIM

June 16 2012, 12:10 PM  by The Head

Some interesting factoids came out of Waterloo this week regarding what the old guard of Mike Lazaradis and Jim Balsillie would be pulling away from the company this year. All combined, the pair will be sharing about $23 million dollars in bonus and severance payments. Let that sink in for a moment. This is the management team that saw their company's worth shrink about 16 times from it's value just 5 years ago. This is the management team that was completely and utterly unprepared for the advent of the iPhone and Android. This is the management team failed to react, at all, to a quickly changing market and decided that pure brand loyalty would allow their product to remain viable.

Added to this, the new CEO Thorsten Heins will be pulling in about $10.2 million this year. Which is great because his track record of... um... well... having not done a whole lot as of yet clearly shows he deserves this.

So we have the previous management whose lack of vision has plunged the company into incredibly dire straits where they are rapidly losing North American market share and are in danger of losing the remaining world markets where they have managed to hold some semblance of legitimacy, along with the new CEO who has of yet actually put together any sort of plan other than "BB10 is great" bringing home over $30 million this year.

With rumoured job cuts in the area of 6000 coming this Summer, this highlights how this company has managed to fail over the past five years. Zero innovation, coupled with the inability to identify market trends, and terrible talent acquisition and retention. Five years of being behind, not understanding why they were losing, and not acquiring the people they needed to change their inefficiencies. Five years of losing to companies that were executing way better, and picking up the best and brightest in the industry to do so.

So RIM is rewarding the utter failure of the old guard, as well as a man who has yet to prove his ability. Whilst pinning all of their hopes on an unreleased product and contemplating cutting away the people that did what little they could with no support from their leaders. Wonderful.

This isn't a rant about CEOs being paid too much. That's actually a different topic. This is a rant about rewarding failure or compensating before the fact. What's the incentive to excel here? Why isn't the board of directors at RIM putting together a compensation package that rewards results? Why are they throwing money around, money they don't have, to a small group of elite people, instead of taking that money and re-investing it in the company as a whole? Invest it in acquiring new talent, rewarding the performance leaders they have, and having a workforce that is capable of being competitive in an industry where they are the clear underdogs.

The sad part is that BB10 looks great. It looks like it could be an utterly amazing OS with a brilliant workflow and a truly innovative user experience. But none of that is going to matter, because thus far, the execution has been abysmal. RIM has the tools to become competitive again. They might need to be a bit of a niche company, or try their hand at strategic partnerships, but they have the ability. But they are bleeding money in terrible ways, are positioning themselves with unproven leadership, and are at a genuine risk of losing key talent to their competitors.

Enough is enough. This company needs to flush out this incredible management overhead, or they are as good as finished.