But, I kind of wish it was… USXpress, executive staff takes pay cuts. Where I work, the executive staff is composed of about 50% smart, hard-working people, and about 50 % dolts who wouldn’t know a good business practice if it bit them on the ass. I’d like to see some pay cuts for that second 50% (and for the other group, too – for putting up with this group). Instead, we get our 4th or 5th round of lay-offs in January, while the Chief to Native American ratio just trends higher & higher. Merry Christmas!
So, Alice, maybe your post started some people thinking.
But, I kind of wish it was… USXpress, executive staff takes pay cuts. Where I work, the executive staff is composed of about 50% smart, hard-working people, and about 50 % dolts who wouldn’t know a good business practice if it bit them on the ass. I’d like to see some pay cuts for that second 50% (and for the other group, too – for putting up with this group). Instead, we get our 4th or 5th round of lay-offs in January, while the Chief to Native American ratio just trends higher & higher. Merry Christmas!
A touchy situation.
First, everyone thinks that their executive team is comprised of a mixture of smart people & dolts. Goodness knows that my Fortune 500 company is no different.
Second, taking a pay cut is actually a sign that they’re trying to keep their jobs. ["hey, you can either take a 50% pay cut, or hit the unemployment line and find some way to pay your bills while affording COBRA....which will it be?" "Uh, pay cut". Not exactly heroic, but rather pragmatic. I was trying to do the same thing before I was last laid off post-9/11. Also see: CYA]
Third, “wage earning” layoffs during a receeding economy aren’t the fault of the people being laid off and, for the most part, aren’t the fault of management, it’s the nature of the business. If you’re making 10% fewer widgets, you may 10% fewer people on the production line making the widgets (a guesstimate, of course). You may or may not need fewer management personnel, depending on the situation….if each department loses one employee from its ranks, likely no managers will be laid off because someone still needs to run the department. But, when an entire department becomes unnecessary or if groups can become absorbed, well, all bets are off. As is with most everything derived from an economic conversation, the adage “supply versus demand” rears its head once more. Finding people who can work on a production line is less a hurdle to cross than finding people who can design or manage a production line.
The golden parachute thing, though, pisses off everyone except those passing along & getting them (of course, those passing them along are in line to get them when it becomes their turn). But, constantly retreating to the party-line mantra of it always being the fault of the “rich” folks is, once again, off base. The CEOs usually aren’t the problem. The execs usually aren’t the problem (emphasis on “usually”). In this case, aside from places like Fanny Mae, Freddy Mac, the auto makers, etc., the execs have a small role in what is happening. A sucky economy makes 18 month old decisions, that were based projections that were just rosy, look atrocious.
The execs aren’t safe, though. You know who REALLY has the safe jobs in a large company? Number one: diversity coordinator/manager. Number two: Human Resources manager. Interestingly enough, they contribute zilch to the ‘final product’, yet the hands-on folks who actually do the widget building are among the first to go.
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I just spent last night with someone, a new visitor to my church actually, who was a wage-earner making some rather big bucks due to all the overtime he was getting last year, but who recently was laid off & has since lost his home and is still unemployed and clueless how to provide for his five kids (one a foster child) & is currently trying to prepare for being accepted into the armed forces. Actually, he’s hoping to be accepted. Our church is in the process of trying to push a network for its members to participate in a “supply vs. demand” scenario where someone who might be looking for employees to look within the church and pick out someone in need for a possible position at their company/workplace. Yes, we’re trying, but right now there are darn few people who actually need to expand their work force at this time.
All I could tell the guy was “I know, buddy, I’ve been there. Was there in 2001-2002 and I know it sucks. May be there again if the economy doesn’t pick up”, but he responded much the way I did in ’01-’02: “Yeah, yeah, yeah, I hear you. Uh, got a job?”
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Personally, aside from some necessary tweaks put in place to stave off a depression, the market should be allowed to play this out (yes, there will be wounds). Like the dot-com bubble burst, when something is artificially inflated, it must be allowed to deflate lest you do nothing but place a band-aid – and an expensive one, paid for by others – on a gunshot wound (metaphor count alert!). Do nothing & let it play out? Nope, the situation is too dire. A few quasi-market steps that are obviously too logical when compared to bailout cash: for the auto makers, let’s say that the federal gov’t purchases X-thousand cars at market price, replacing every car that is over three years old. All those “old” cars are to be put up for open bid (the specs can be placed on the internet, preferrably having the sales take place on ebay or something like that) and the inlays from the sale of those vehicles are to be used to offset the purchase of the new vehicles. Net loss for the gov’t in the short term, but a small bump for the localized economy and a needed boost for the auto industry & its workers. If it’s a success, then some states could do the same thing. Which is better, that or handing over cash to the execs at the auto makers?
For the hurting retail market: sales tax weekends. We have them for school supplies in GA and they’re a tremendous boost for the malls/markets. [but what about the missing tax revenues for the states? They're tempered by the increased economic activity allowing the shops to have more income & thus more income taxes at the end of the year] Liberals & conservatives alike agree that the best salve for a shrinking tax base is economic activity. Well, right now a big part of the problem is folks hanging on to their cash (and I raise my hand, since we began to squeeze tightly beginning in August; it was necessary, trust me).
Let the market do its work & only tweak when absolutely necessary. Look at what happened when gas prices went to $4/gal: people in the USA stopped driving so much. We didn’t need regulations or legislation, the market solved the problem. Now, SUV sales are declining rapidly & folks have adjusted their routines so that they’re using less fuel. The auto makers are going to take a hit because of the massive inventories of gas guzzling cars, but….let the market play itself out. Let ‘em sell the cars at a loss. If they get ‘free cash’, then they’re less likely to adapt to the market, which is screaming at them to make family-friendly cars that get better mileage. We don’t need increased CAFE standards, which they get around by making crap cars that get great mileage to offset the big sellers that get 15MPG; the market has done more than what any legislation could do. The gov’t purchasing some of the inventory would help, but the public forcing them to sell at a slight loss for the rest will solve the problem. And, let’s be honest, an overpaid exec making $150K managing a line of cars made by overpaid lift-truck drivers making $60/hr. has been a problem with American cars for quite some time. People buy Honda & Toyota because they’re slightly better, but usually a much better overall deal. I have no problem with Ford or GM products. I have a problem with paying 3% more for a product than the competition.
Not always, of course, but usually, the market is best. When you’re on the butt-end of the market, it sucks. But, it usually works out in the long run. {I say that while still paying off some of the debt accrued while being out of work 7 years ago. And, hey, what’s the deal with me using all those parentheses?}
Wow. That’s a lot of analysis.
Let me start by saying that on the one hand, our company’s hardships are *not* “mainly” the fault of the “rich people” (executive staff). Neither were those of USXpress.
I will repeat – and whether “everybody” says it about their own companies or not, I guarantee you that it is true with mine – we have several individuals in the executive staff who do a seriously, seriously poor job. People whose contribution is to spin their wheels, play golf, and act important without increasing profits by in the least.
No, the “market” (in this case the board) will not automatically correct this. From what I can tell about the board, they are not extremely responsive to problems when they can be given plausible explanations for failure that do not involve failures of leadership. Not to say they don’t put pressure on the leadership… just to say that it is a medium sized company with a large part of the board being seated with family members of the founding family. Other stockholders exist, but the pool is shallow enough that there is little pressue from investors for management to change direction.
The reasons may be unique to my company, but the fact is ubiquitous in America. There is a good-old-boy network of executives that do a good job insulating one another from stockholder pressure – at least as far as it concerns cutting their own benefits, pay, or jobs.
It’s true also that my company doesn’t have the grand disproportional pay scales that larger companies often do between wage-earners and executive staff. I will give them credit for that. Execs certainly make more than what is justified by their contribution, but it isn’t grotesque in this case as it often is in others.
Now, all that having been said: Layoffs for January have already been announced. And I honestly have lost count – I don’t know if this is the fourth or fifth round in recent years. I remember on one occasion the announcer said that “every department” would be affected… but on no occasion has any of the swarms and swarms of executive staff actually been affected. That’s despite the fact that many of these folks are part of a double or triple redundancy in their areas of respnsibility. Knowing as I do that losing person X would not only save the cost of three “wage-earners’” salaries, but would also create a more efficient and profitable company, I find this a shame. Predictable, but a shame none the less. Oh.. and as to how difficult it is to replace this type, compared to us “wage earners”… our CEO has a high school diploma. His startup was underwritten by his step-father who was in the business before. One of our best executives (now retired) came to us with a four year generic degree from UT and a few years as a grocery store manager. In other words – we ain’t doin’ rocket science.
Even if hardships are not the executive staff’s fault (when in actuality, they partly are), it’s no more true that it is the fault of the people who do wind up taking the tough end of it. The only reason that the executives at my company do not take cuts the way executives at USXpress are doing is that they don’t have to. They are protected institutionally. Furthermore, they don’t see value in taking a small sacrifice themselves in order to preserve the job of a valuable employee. I would say that this is poor corporate values, but in fact it is just American corporate values. There are some exceptions. Costco comes to mind (though they don’t operate in my area)… Alice mentions a couple of relatively good corporate citizens. Then, obviously, the news out of USXpress shows at least some sensitivity to these issues.
I only hope that someday Americans discover sustainable models of both consumption and of business planning. It is feasible.
Oh, by they way… We have no “diversity coordinator/manager” in our lily white office. If we did – no doubt they would be the first to go.