by Charles Simmins

Created on: October 10, 2008   Last Updated: May 27, 2009

Most business decisions come out of meetings. From two guys yakking at the water cooler to PowerPoint laden meetings with the suits in boardrooms, decisions get made. Business decisions can be right or wrong, or they can be both. You see, you can do the wrong thing for all the right reasons.

This type of decision can be termed "It sounded good in the boardroom". Some ideas can capture the crowd in a meeting but turn in to utter nonsense as soon as the meeting ends.

AIG, the insurance giant, was rescued from collapse by the U.S. government. By the taxpayers. This change in ownership and the financial crisis we are all still dealing with calls for some reorganization and reconsideration by AIG management. Lots of work, lots of strategy, lots of putting things back together.

When this happens, the normal business solution is to get the managers together off site, away from their desks. The thinking is that a neutral site will inspire fresh thinking and working together in a way that couldn't be done in the office.

AIG followed that line of thinking:

"And just last week, about 70 of the company's top performers were rewarded with a week-long stay at the luxury St. Regis Resort in Monarch Beach, Calif., where they ran up a tab of $440,000.

At a House committee hearing yesterday, Rep. Henry A. Waxman (D-Calif.) showed a photograph of the resort, which overlooks the Pacific Ocean, and reported expenses for AIG personnel including $200,000 for rooms, $150,000 for meals and $23,000 for the spa.

"Less than a week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation," Waxman said in kicking off an angry hearing of the House Committee on Oversight and Government Reform. "We will ask whether any of this makes sense.""

Waxman is right on this issue. For all the right reasons, AIG made a decision that was incredibly stupid and short sighted.

AIG could have other reasons for the program at the resort. None of them make any sense given the firm's economic situation.

It sounded like a great idea in the boardroom.

The moral of the AIG tale:

Every decision made in the boardroom will be tested by reality after the door opens.Management should devote some time to testing crowd pleasing ideas against reality before opening the door. The decision process should contain a final check on the decision before it is set in stone.

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