As a company you have 2 choices. Pay the same per head, and reduce the head count, which hopefully keeps the head count high enough to keep up with the remaining workload, which if not then the department tanks anyway. Choice 2, reduce the per head pay, keep more heads, keep the work flow caught up, and keep that wing of the building open. You're a evil capitalist either way, so just pick one. Cut jobs, and eventually lay everyone off later, or cut pay and deal with nightmare PR for the duration.

Bingo.

Which is why, given the relevance of these folks' jobs, and the current state of the economy, that their demands are unreasonable.

The average citizen doesn't comprehend all this. They just see "big bad corporation" cutting benefits and the CFO driving a Benz.

...then they get on NICO and type some irrelevant nonsense about the "history of labor relations" from their La-Z-Boy.

....oh and the CFO driving the Benz.....lets see these 37/hr techs wear the CFO pants and keep the business afloat. There may be a limited amount of people that can operate phone equipment, but theres damn sure alot fewer that can operated a multi-million dollar company. And stress enough comes with. Put the CFO on the techs salary like a good libby would do, and the CFO wont be the CFO anymore.

Right.

We've already estalished that there's not one person picketing who takes issue with athlete salaries. Yet the CEO's are the "high priced athletes" of the business world. Without their capital investment, vision, leadership and intelligence, the company wouldn't exist - Ergo, no jobs.

But what do I know, I'm a "sucka$$".

I don't think it's a legitimate generalization that liberal-minded people would want everyone to earn the same pay regardless of job title.

I also don't think it is accurate to say that the C-Level executives are the reason companies exist. I could point out an enormous number of examples where the company exists (or continues to exist) DESPITE the actions and "vision" of those executives. And in many cases, that reason involves taxpayer dollars.

E, you're right, only one thing. Expendability. Its true it takes each job in an organization to function, or the job wouldn't exist in the organization. But contrast the percapita of each position. Percapita plays into value alot. If one person is the CFO, he's suddenly alot less expendable than the person doing the same job as 3000 other people. Even if both jobs are equally vital to the livelihood of the business, both positions do not carry the same value. The supply and demand way much heavier the lower the percapita of a position.

Oh, I have no illusions that in certain cases, their capital investment may have been ill-gotten, their vision may be nearsighted, their leadership suspect and their intelligence below-average.

But the company doesn't exist without SOMEONE (with something that the free market wants) at the helm.

AZhitman wrote:Oh, I have no illusions that in certain cases, their capital investment may have been ill-gotten, their vision may be nearsighted, their leadership suspect and their intelligence below-average.

But the company doesn't exist without SOMEONE (with something that the free market wants) at the helm.

Absolutely and unequivocally correct.

Even true in Socialist or Communist ("equality for all") Dictatorships.

Z

This would be a great topic for a new thread. Actually "Business and Economics" sounds like a great new forum, apart from Politics.

FWIW, you (Z and Greg) are claiming an absolute causal connection. I disagree and say that the connection is absolutely correlary and only circumstantially causal.

Not I. Who starts a company?

Even if it IS founded by two yahoos who decided that stringing two cups together between trees allowed them to talk to each other over a long distance, THOSE guys eventually become the CEOs.

Go back to my "toy boats" example. As a CEO, I can outsource, I can offshore, or I can train people to make toy boats. But if I don't do the CEO work, no one has a reason to make boats.

So my point is, the threat from the workers (without us, there's no company) is false. Sure, there may be some impact, and it may be devastating in some instances. But it's not an absolute.

In the examples I think you're alluding to, Chad (and I'm apparently too dense to catch it the first time), even if the CEO is ousted, someone is acting as the CEO in the interim, even if it be shareholders, collectively. Or, when a bailout occurs, the Administration appointed a "czar" to oversee the functions at that level.

AZhitman wrote:Even if it IS founded by two yahoos who decided that stringing two cups together between trees allowed them to talk to each other over a long distance, THOSE guys eventually become the CEOs.

Not necessarily. I wonder if that isn't even the exception.

Could be. My point was, SOMEONE rises to the top to drive the train.

A mob of workers does not a corporation make.

AZhitman wrote:...perhaps Verizon was really looking out for these guys by offering them to retain the entirety of their work force, with an admittedly small concession required?

Maybe they were, in their eyes. But that's not their job at the bargaining table; the union does that. And that the union is disagreeing ought to tell you that maybe it's not as simple a situation as Verizon makes it out to be. Yesterday's NPR interviews out of Boston suggested that part of why Verizon workers struck is because Verizon didn't respond to union requests to narrow down the scope of negotiations - it was either 75 or 100 bargaining points on the table, and each one was to be, in some cases, wholly renegotiated. The IBEW wanted that narrowed, and the strike ended when Verizon agreed to do that. Not when it conceded to certain union demands on benefits, but when they conceded to union demands on how to talk about the contract. Apparently, that's what the strike was really about.

AZhitman wrote:And that the alternative would have been a wholesale layoff?

Maybe not a wholesale layoff, but that's not the point: the IBEW isn't standing in the way of Verizon cutting costs if it needs to.

AZhitman wrote:And that their rejection and subsequent bad-mouthing of the company thereafter really looks like blatant disrespect?

I'm not sure exactly what you're referring to, here.

IBCoupe wrote:the IBEW isn't standing in the way of Verizon cutting costs if it needs to.

They certainly didn't encourage the workers to take the increase in healthcare contributions.

Encryptshun wrote:FWIW, you (Z and Greg) are claiming an absolute causal connection. I disagree and say that the connection is absolutely correlary and only circumstantially causal.

I am not sure what you are saying here, so please elaborate if I don't get it.

If I was not clear, what I meant (and agreed with Greg, I think) was that there is always a person who has to make the final decisions (if there is divergence of opinion) in any successful company. Period. Operating a company by general consensus is almost guaranteed to fail.

Because there can be more than one point of view and until there is someone who is ultimately responsible for picking one of the ways to proceed on any given judgment call, you will not make progress.

I have started (or been involved with the startup of) seven companies (also counting the "internal startup" model pioneered by 3COM years ago), and we always had a CEO (or Senior VP in the case of the internal model) who had the final say - one company, I was the CEO, and other times, it was somebody else.

You have to have somebody who is responsible for strategic and operational decisions - that is the role of the CEO, or the Chairman of an active Board (note the word "active" - this is critical, since many Boards delegate that task to the CEO) or a COO.

Z

AZhitman wrote:Could be. My point was, SOMEONE rises to the top to drive the train.

A mob of workers does not a corporation make.

Absolutely true. I'm not opposed to there being a wage disparity between executives and workers. But consider these:

As of June, 2008, in Germany, the average CEO made 20x what the average worker did. In Sweden and Switzerland, it was 19x. In the United States, it was 39x.

Think those countries are less productive? The only European Nation that comes close is the UK, where it's 32x. Everybody else is hovering between 18x and 25x

AZhitman wrote:Could be. My point was, SOMEONE rises to the top to drive the train.

A mob of workers does not a corporation make.

Exactly - on both points!

And, while I agree with IBCoupe - a founder may not necessarily be the CEO (they are often hired later too) - there has to be a single CEO who has the authority to make the decisions.

He/she is generally hired/chosen by the Company Board and answers only to the Board - but not directly to the Shareholders (the Board represents them).

Z

AZhitman wrote:Not I. Who starts a company?

Even if it IS founded by two yahoos who decided that stringing two cups together between trees allowed them to talk to each other over a long distance, THOSE guys eventually become the CEOs.

Go back to my "toy boats" example. As a CEO, I can outsource, I can offshore, or I can train people to make toy boats. But if I don't do the CEO work, no one has a reason to make boats.

So my point is, the threat from the workers (without us, there's no company) is false. Sure, there may be some impact, and it may be devastating in some instances. But it's not an absolute.

In the examples I think you're alluding to, Chad (and I'm apparently too dense to catch it the first time), even if the CEO is ousted, someone is acting as the CEO in the interim, even if it be shareholders, collectively. Or, when a bailout occurs, the Administration appointed a "czar" to oversee the functions at that level.

No need for self-deprication (unless that was tongue-in-cheek -- sometimes your deadpan delivery is pretty hard to see through) -- I frequently don't do a good job of articulating what's rattling around inside my head.

Now, I'm betting it's semantics, but what caught me is the usage of certain terms in your assertion. There is a BIG difference between being a LEADER and being a MANAGER. Ideally, the people at the top are both. But again, it's not causal, it's coincidental. Those who build, grow, and develop a company are traditionally leaders. However, a company can survive just fine with people at the top who just know how to manage. When someone at the top is a leader but not a manager, the business can easily fall to ruin unless the workers prop it up by self-managing. When someone at the top is a manager but not a leader, the business can easily fall to ruin unless the workers prop it up by innovating.

All I'm saying is that it's NOT a sure bet that the people at the top are really the ones who are ultimately responsible for the success of a company, though they are ALWAYS responsible for its failure. Yeah, that's not fair, but that's the role of the CEO. And that's why their compensation and incentives are not even on the same planet as others within the company in most cases.

One of the ways that unions have been successful is to bring a sense of ownership over the success of the company down to the employee level. So if you don't, for whatever reason, have a particularly visionary CEO, growth can continue. Maybe I'm misunderstanding you, but it's not like the executives are the only ones capable of making decisions regarding what's good and what's bad for the future of the company. The folks making the toy boats take those toy boats home to their kids and come back with what their kids think of them. Outsourcing them to China and then having to recall them all because the "cheaper" manufacturing approach includes lead-based paint is something that would not have happened if management had been paying attention to the workers when the workers talked about what their customers want and what quality standards should be kept.

Hopefully that's not a big rambling mess, but my head's full of supplier risk management and cash flow improvement process designs right now.

Makes sense.

I am not the CEO at my present company, but as CTO, I am the "Technical Leader".

Ultimately, any divergence or disagreements (we are a friendly company ) on my technical decisions are either ratified or changed by our CEO/Chairman who I report to ... he is the "Business Leader".

Z

Yes, absolutely. Someone always has to "sign off" (ie "be accountable"). But in an increasingly-growing number of cases that sign-off is done without any real understanding or challenge on behalf of the executives (who then throw up their hands and say "hey, don't blame me"). Executive accountability is dwindling and from a remunerative standpoint is almost moot. For the fortune 500, severance clauses in executive comp contracts, even when the termination is on grounds of poor performance, is by most standards a sum big enough to retire on. And it really doesn't matter in the long run, because there will always be a company that is so focused on hiring from that pool of "experienced" CEOs that they don't even care if their new captain is a conestoga or an albatross.

I get your point, but I am not sure if I would generalize that far on all the Fortune 500 companies.

Z

Average actual paid-out compensation for 2009 was (and down, yet again, no less) $8 million for CEOs in the Fortune 500.

I could work for one year, be terminated, and retire (CEOs are rarely fired during a fiscal year, as it shakes investor confidence in the Board's ability to control the executives).

Encryptshun wrote:Average actual paid-out compensation for 2009 was (and down, yet again, no less) $8 million for CEOs in the Fortune 500.

I could work for one year, be terminated, and retire (CEOs are rarely fired during a fiscal year, as it shakes investor confidence in the Board's ability to control the executives).

I am not sure if that sttat means anything per se. Yeah, CEO's get paid higher than others ...

Plus, with all the new SOX regulations, it is not realistic for any CEO to expect no accountability any more.

BTW, separately, in at least one case, I can positively state that our employees - including our CEO - are "At-Will". No contracts and no guaranteed compensation. Our previous CEO left (retired) a couple of years ago ... he did not walk away with any deal. Plus, the ratio of his compensation to the lowest paid employee was probably around 5X at best ... frankly, I am not even sure it was that high.

Z

Kinda sounds like pro athletes.

If a sports franchise is dumb enough to sign a bad contract with a player, they deserve what they get. I love watching pro football, but honestly I am disgusted by the whole business. But that's another topic.

I feel exactly the same way about a Board who is dumb enough to sign a bad contract with a CEO.

The difference is that when a CEO farks up, a lot more hard-working people usually suffer.

*edit -- yes, I'm aware that my avatar is a pro football logo. No, the irony is not lost on me.

And remember, my last one was a flying cat with the body of a pop-tart sh*tting a rainbow. So seriously, is this really a step down?

The people who hung their hats on Ryan Leaf jersey sales would beg to differ.

Encryptshun wrote:I feel exactly the same way about a Board who is dumb enough to sign a bad contract with a union.

They're not powerless in this regard, either. They deserve what they get.

Encryptshun wrote:So seriously, is this really a step down?

Depends on if "Good Rex - Bad Rex" has been expunged from your memory.

AZhitman wrote:The people who hung their hats on Ryan Leaf jersey sales would beg to differ.

Some kids on here might need to Google him to get the joke. I still remember his draft day quote: "I'm looking forward to a 15-year career, a couple of trips to the Super Bowl and a parade through downtown San Diego". I can remember a few of us in Bloomington being worried that the Colts were going to pick Leaf.

Manning was the good twin, that's for sure. I gotta feel bad for Leaf, though - he sounds like a guy who was always told he was better than he was.