Last week in “The Magic Marketplace can be malevolent” I wrote that the marketplace for labor is not always a benevolent mechanism. This week I would like to consider some cases where companies have ignored value for price and where companies have put value ahead of price.
Management of a large electronic chain decided to fire all their high-paid floor employees and let them reapply at a lower pay level. The company ignored the fact that the high-paid employees had gained considerable experience and were providing exceptional customer service. Unfortunately, many customers lost their favorite go-to employees and found the remaining help unsatisfactory. And this attitude spread rapidly, years before social media. The company rapidly declined and has become a textbook example on how not to treat employees. Remember Circuit City?
Sometime ago I read a letter in a newspaper complaining about firefighters going for groceries with a fire truck. The writer questioned why they didn’t take a smaller vehicle. Did the writer consider the increased response time of a crew returning to the fire station to get the big rig? If the crew returned to the fire station to get the big truck, how much more value would be lost in a burning house?
“If you can read this, thank a teacher!” But too many begrudge teachers the salaries they get, using among other wild-eyed statements “greedy teacher unions”. After he resigned, Nevada Superintendent of Schools James Guthrie said the top tier of teachers should be paid $200,000. This would give teachers a salary commensurate with other skilled professionals. Do those who decry the lack of qualified workers see any connection to their unwillingness to pay sufficient taxes to educate future employees?
Some of those who grouse about teachers’ or others’ pay keep pushing their own pay up. Many CEOs and board members are getting pay far in excess to the value they give to shareholders. They often play games about comparing salaries “with comparable companies”, but it is the board or if the board is hand-picked by the CEO, it is the CEO who determines his or her own salary. Doesn’t sound like the marketplace is determining salaries. Sometimes they get the boot; sometimes they run the company into bankruptcy. Many CEOs groused about a law that strove to let shareholders have a say in executive pay; it was watered down so that the vote was non-binding. See “Time to Make CEO Pay Match Shareholder Performance”, Suzanne McGee, The Fiscal Times, 2015-05-01. She wrote that often the pay of the CEO is inversely related to the performance of the company. Interestingly, a proposal was made by the Securities and Exchange Committee to make corporate top executive pay more transparent to shareholders. It was voted against by the two Republicans on the committee. Could it be that Republicans aren’t business-friendly but CEO friendly?
As an example of the inverse relation of pay of the CEO to the performance of the company consider Walmart, Target, and Costco. The CEO of Costco gets a hefty pay package but it is far less than those of the CEOs of Walmart and Target. The Motley Fool published an interesting comparison on five measures of company strength. I haven’t fully understood it yet, but the Fool’s conclusion is that Costco is a far better long-term investment than either Walmart or Target.
Costco pays its employees about $20/hour compared to a third less for the other two. It has only about four percent of its employees as part-time. On the other hand, Walmart has one-half of its employees as part-time. Part-time is great for students, but it is lousy for people who have to support families.
Speaking of part-time, as a college student, I was getting $1.74 an hour for around 14-16 hours a week at Kroger. I did stocking, cashiering, and bagging. According to PayScale, Kroger pays its cashiers $7.26 to 11.99 an hour. Assuming an inflation rate of three percent, then somebody with equivalent experience should be earning about $10.88. I’ll let you play around with various inflation rates; for example, do these same calculations with the actual inflation rate for each year.
But average inflation doesn’t tell the whole story. Some things are a lot cheaper relatively than in 1958. Somethings are a lot more expensive.
When our daughter was born in 1962, I was a graduate student earning $75 a week. School insurance paid most of the cost. I do remember the room cost was $10/night and the obstetrician cost was about $700 total. At three percent inflation the room cost should be less than $50/night. In 2010, the average cost of a hospital stay was $1,600 to $2,000/night.
We bought our first new car in 1963, a Ford Falcon. Its cost was about $2,200. Assuming the average inflation it would cost over $10,000. You would be lucky to get a two-year old car for that price now. Of course, the cars of today are packed with comfort and safety features that were only dreams in 1963.
The cost of transportation has become a big part of the budget of those with lower incomes. And as we have spread out more, public transit becomes less available and a car has become more of a necessity.
Meaningful discussion about these issues, as it has always been, comes down to point of view. We are right and you are wrong. Too many of us ignore our wrong choices and give too much importance to being in the right place at the right time.
It reminds of Pete Seeger’s tale of two slugs that fell off a shovel. One falls in the gutter and the other in a dead cat. After a few days of eating and eating, the lucky one goes looking for the other. When asked how he became so fat and sleek, the lucky one says, “Brains and personality!”
Many may dispute Mel's brains and personality, but he knows that a bit of pluck and a lot of luck helped.
Showing posts with label CEO. Show all posts
Showing posts with label CEO. Show all posts
Thursday, May 07, 2015
Monday, March 03, 2014
How many seconds in a minute?
According to Apple, there are ten seconds in a minute! Maybe even less.
Last week I downloaded and installed the latest Mavericks update on my Mac laptop. Near the end of the lengthy process, it displayed “10 seconds left” for some part or another. Twenty seconds later, the display was “10 seconds left” (or was it remaining?) And again at thirty seconds on up to sixty seconds. I don’t remember how soon after that time was displayed I started tracking the time, and I don’t remember how long after I had noted sixty seconds had passed before I stopped tracking.
But whatever, is this the lauded corporate “efficiency” that government supposedly lacks? Whatever else is going on in the operating system that is inefficient. I do know that Microsoft products have been getting slower to load. I can almost go downstairs to pour a second cup of coffee while waiting for a spreadsheet to open. This is even true of spreadsheets that don’t have a lot of data.
And of course, there are all the user complaints that seem to go on for years without resolution.
I do know from personal experience that not all problems are resolvable and that some take a long time to get enough data to solve. In the sixties at Univac I was part of the small team that maintained the FORTRAN compiler. We had a user report (number 498, I think) that we never solved. Our main problem was trying to figure out what had happened on a computer we had no direct access to and not enough information to ask the right questions. We never had another user report with the same problem.
On the other hand, I see complaints about the same problems year after year in the support communities for Apple and Microsoft.
What is the critical mass for these problems such that the big corporations will put enough resources into resolving these issues?
Here’s a radical idea! For every unsolved problem a company has, the CEO should have his or her pay docked ten dollars per day. Let’s be generous, and only count weekdays that are not holidays. Would these problems go away sooner?
What about docking the CEOs pay for every day that false advertising is present. Apple has made downloading Mavericks free to encourage people to move away from older operating systems. Supposedly Numbers, Pages, and Keynote are free. These are competitors to Microsoft’s Excel, Write, and Power Point. These three Apple products are listed in a Top Ten Free downloads in the App Store. However, if you place the cursor next to them, “$19.99” appears rather than “Free”.
Many users have complained about this for three months or more! Is this another case of Adam Smith’s warning about trusting those who live by profit and have deceived and oppressed the public?
Last week I downloaded and installed the latest Mavericks update on my Mac laptop. Near the end of the lengthy process, it displayed “10 seconds left” for some part or another. Twenty seconds later, the display was “10 seconds left” (or was it remaining?) And again at thirty seconds on up to sixty seconds. I don’t remember how soon after that time was displayed I started tracking the time, and I don’t remember how long after I had noted sixty seconds had passed before I stopped tracking.
But whatever, is this the lauded corporate “efficiency” that government supposedly lacks? Whatever else is going on in the operating system that is inefficient. I do know that Microsoft products have been getting slower to load. I can almost go downstairs to pour a second cup of coffee while waiting for a spreadsheet to open. This is even true of spreadsheets that don’t have a lot of data.
And of course, there are all the user complaints that seem to go on for years without resolution.
I do know from personal experience that not all problems are resolvable and that some take a long time to get enough data to solve. In the sixties at Univac I was part of the small team that maintained the FORTRAN compiler. We had a user report (number 498, I think) that we never solved. Our main problem was trying to figure out what had happened on a computer we had no direct access to and not enough information to ask the right questions. We never had another user report with the same problem.
On the other hand, I see complaints about the same problems year after year in the support communities for Apple and Microsoft.
What is the critical mass for these problems such that the big corporations will put enough resources into resolving these issues?
Here’s a radical idea! For every unsolved problem a company has, the CEO should have his or her pay docked ten dollars per day. Let’s be generous, and only count weekdays that are not holidays. Would these problems go away sooner?
What about docking the CEOs pay for every day that false advertising is present. Apple has made downloading Mavericks free to encourage people to move away from older operating systems. Supposedly Numbers, Pages, and Keynote are free. These are competitors to Microsoft’s Excel, Write, and Power Point. These three Apple products are listed in a Top Ten Free downloads in the App Store. However, if you place the cursor next to them, “$19.99” appears rather than “Free”.
Many users have complained about this for three months or more! Is this another case of Adam Smith’s warning about trusting those who live by profit and have deceived and oppressed the public?
Thursday, January 17, 2013
A clever but off-the-mark sign
"Politicians are like diapers, they need changing often".
This sign has been on a signboard for a business on Woodland Avenue in Duluth for sometime. I'm not sure if the sign belongs to the auto repair business or to a small office that seems to be attached to the auto repair building. Google street view is a bit blurry on the details.
I didn't double check, but many references attribute it to Mark Twain with the added phrase "and for the same reason."
We could also apply this slogan to CEOs. They get entrenched and get the board they selected to give them larger and larger compensation. Boy, talk about a stinky deal!
The problem with this slogan is that it assumes that a frequent turnover of politicians will ensure new ideas. It might on occasion, but like all serious jobs, being a politician requires a lot of effort and learning. If we had the turnover as the sign implies, then the politicians would be at the mercy of their staffs or lobbyists. The degree that they do depend on these two groups is bad enough, but a greater number of new politicians would make the situation even worse.
Besides, we do get to vote against politicians. We have a hard time voting against CEOs. And we want neither our politicians or CEOs to be like diapers.
An afterthought! A complaint about politicians is a bit of elitism. The people get to choose the politicians; the plutocrats get to choose the CEOs. This phrase then implies that the people are ignorant and not to be trusted with governance.
This sign has been on a signboard for a business on Woodland Avenue in Duluth for sometime. I'm not sure if the sign belongs to the auto repair business or to a small office that seems to be attached to the auto repair building. Google street view is a bit blurry on the details.
I didn't double check, but many references attribute it to Mark Twain with the added phrase "and for the same reason."
We could also apply this slogan to CEOs. They get entrenched and get the board they selected to give them larger and larger compensation. Boy, talk about a stinky deal!
The problem with this slogan is that it assumes that a frequent turnover of politicians will ensure new ideas. It might on occasion, but like all serious jobs, being a politician requires a lot of effort and learning. If we had the turnover as the sign implies, then the politicians would be at the mercy of their staffs or lobbyists. The degree that they do depend on these two groups is bad enough, but a greater number of new politicians would make the situation even worse.
Besides, we do get to vote against politicians. We have a hard time voting against CEOs. And we want neither our politicians or CEOs to be like diapers.
An afterthought! A complaint about politicians is a bit of elitism. The people get to choose the politicians; the plutocrats get to choose the CEOs. This phrase then implies that the people are ignorant and not to be trusted with governance.
Saturday, December 01, 2012
What do Steve Jobs, Adam Smith, and Xenophon have in common?
They all understood that the whole requires many parts.
I thought of this while contemplating all the commentators who seemingly give full credit to Steve Jobs for all of Apple's innovative products, from the original Apple computer to the iPad. Sorry, but he needed the help of thousands of people to bring these products to market.
Let's start over two thousand years ago in Persia.
Many Greek mercenaries were in the service of Cyrus, brother of the Persian Emperor. Cyrus used the Greeks in a battle to overthrow his brother, but Cyrus was killed in battle. The Emperors forces invited the Greek generals to peace conference and slaughtered them all. The Persians thought this would demoralize the Greek mercenaries.
As usual, tyrants never understand democrats. The Greeks, having a democratic tradition, elected new generals and fought their way against much opposition back to Greece.
For more about Xenophon, see Wikipedia - http://en.m.wikipedia.org/wiki/Xenophon
Adam Smith opens "The Wealth of Nations" with
"The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniencies of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations."
In other words, the masters, the capitalists, the CEOs, or whatever name you give to those at the top of an economic hierarchy would not be able to do anything without a few dozen or thousands of people doing all the "labour" needed to bring an idea to market.
Many reporters are giving full credit to Steve Jobs for the iPhone and the iPad. Really? Could Steve Jobs conceived of every detail of these products all by himself? Could Steve Jobs have designed all the circuits or all the programs that make these products so useful.
Sure, he may have had a vision for these products. But don't you think that he had lots of discussions with others on how to design, manufacture, and market these products?
Let's go back to 1983 and before when the first Macintosh was being designed. I think about two dozen people were involved, some of them responsible for a single software project, like MacWrite and MacPaint. But these designers weren't cloistered in their cubicles, noses to the coding sheet until they finished. They collaborated with each other and Steve Jobs.
In short, success does not come about by the "hard work" of somebody at the top. It comes about by the hard work of people at all levels. If a worker doesn't set a switch properly at a certain time, the whole enterprise could come tumbling down. If a manager doesn't ensure the proper training, if a director doesn't ensure proper design, if a treasurer doesn't provide adequate funding for that design...
"For want of a nail..."
http://en.m.wikipedia.org/wiki/For_Want_of_a_Nail_(proverb)#section_2
I thought of this while contemplating all the commentators who seemingly give full credit to Steve Jobs for all of Apple's innovative products, from the original Apple computer to the iPad. Sorry, but he needed the help of thousands of people to bring these products to market.
Let's start over two thousand years ago in Persia.
Many Greek mercenaries were in the service of Cyrus, brother of the Persian Emperor. Cyrus used the Greeks in a battle to overthrow his brother, but Cyrus was killed in battle. The Emperors forces invited the Greek generals to peace conference and slaughtered them all. The Persians thought this would demoralize the Greek mercenaries.
As usual, tyrants never understand democrats. The Greeks, having a democratic tradition, elected new generals and fought their way against much opposition back to Greece.
For more about Xenophon, see Wikipedia - http://en.m.wikipedia.org/wiki/Xenophon
Adam Smith opens "The Wealth of Nations" with
"The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniencies of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations."
In other words, the masters, the capitalists, the CEOs, or whatever name you give to those at the top of an economic hierarchy would not be able to do anything without a few dozen or thousands of people doing all the "labour" needed to bring an idea to market.
Many reporters are giving full credit to Steve Jobs for the iPhone and the iPad. Really? Could Steve Jobs conceived of every detail of these products all by himself? Could Steve Jobs have designed all the circuits or all the programs that make these products so useful.
Sure, he may have had a vision for these products. But don't you think that he had lots of discussions with others on how to design, manufacture, and market these products?
Let's go back to 1983 and before when the first Macintosh was being designed. I think about two dozen people were involved, some of them responsible for a single software project, like MacWrite and MacPaint. But these designers weren't cloistered in their cubicles, noses to the coding sheet until they finished. They collaborated with each other and Steve Jobs.
In short, success does not come about by the "hard work" of somebody at the top. It comes about by the hard work of people at all levels. If a worker doesn't set a switch properly at a certain time, the whole enterprise could come tumbling down. If a manager doesn't ensure the proper training, if a director doesn't ensure proper design, if a treasurer doesn't provide adequate funding for that design...
"For want of a nail..."
http://en.m.wikipedia.org/wiki/For_Want_of_a_Nail_(proverb)#section_2
Friday, June 29, 2012
Greedy CEO Unions
The mantra of "greedy teacher unions" or "greedy unions" or "greedy overpaid government workers" appears in letters to the editor, blogs, and even in articles by people who should be more objective. These phrases have the same nebulousness as "paying fair share". "Fair share" generally means "more" but little thought goes into why some should pay more taxes.
"Greedy unions" generally comes from those who not only don't want to pay more taxes, but they don't want to pay more wages to their employees. And guess what they form to advance their agenda? Unions!
They aren't called unions, but they are in the sense of coming together to advance an agenda. These include Chambers of Commerce, American Legislative Exchange Council (ALEC), numerous "conservative" think tanks, and many, many trade associations.
Like every other group, they work more to advance their short-term interests than to advance the public good. They want government off the "people's backs", but then they rush to government for contracts or laws favoring one industry over another.
Like every other group, they purport to represent all like them. As the Occupy movement claims to represent the 99%, these CEO unions claim to represent all businesses. But the large corporations do not all have the same interests, and the large corporations do not have the same interests as smaller businesses. McDonald's does not represent the interests of all restaurants, and Walgreen's does not represent the interests of all pharmacies.
Organizing to promote a special interest is the American Way. It was going on before the ink was dry on the Constitution. We just have to be vigilant in our reading to look for hidden agendas and slogans over careful thought. It's a hard job being a good citizen and voter.
"Greedy unions" generally comes from those who not only don't want to pay more taxes, but they don't want to pay more wages to their employees. And guess what they form to advance their agenda? Unions!
They aren't called unions, but they are in the sense of coming together to advance an agenda. These include Chambers of Commerce, American Legislative Exchange Council (ALEC), numerous "conservative" think tanks, and many, many trade associations.
Like every other group, they work more to advance their short-term interests than to advance the public good. They want government off the "people's backs", but then they rush to government for contracts or laws favoring one industry over another.
Like every other group, they purport to represent all like them. As the Occupy movement claims to represent the 99%, these CEO unions claim to represent all businesses. But the large corporations do not all have the same interests, and the large corporations do not have the same interests as smaller businesses. McDonald's does not represent the interests of all restaurants, and Walgreen's does not represent the interests of all pharmacies.
Organizing to promote a special interest is the American Way. It was going on before the ink was dry on the Constitution. We just have to be vigilant in our reading to look for hidden agendas and slogans over careful thought. It's a hard job being a good citizen and voter.
Tuesday, October 25, 2011
Bankers - Foxes guarding the chicken house
I have seen the first name of James Dimon, CEO and Chairman of the Board of J.P. Morgan Chase & Co. sometimes spelled Jaime or Jaimes. While reading a Wall Street Journal article on how banks' profits falling, I saw James Dimon mentioned. I decided to check how is name was spelled on the J.P. Morgan Chase & Co. web site. This eventually led me to the names of the board of directors.
How do all these people paid highly by other companies have the time to run another company (or even more)? The list at http://www.jpmorganchase.com/corporate/About-JPMC/board-of-directors.htm includes the CEOs, presidents, or chairmen of the board of Springs Industries, NBCUniversal, Honeywell, American Museum of Natural History, GrayLoeffler, Clear Creek Properties, Yum! Brands, and Johnson & Johnson. The only retired executive in the bunch is a former CEO of ExxonMobil. Many of these people also serve on the boards of yet more companies at $100,000 per year plus for showing up at five or so meetings a year - nice work if you can get it.
The real kicker about foxes is that James Dimon is on the Board of Directors of The Federal Reserve Bank of New York. I thought the Fed was supposed to regulate the banks.
How do all these people paid highly by other companies have the time to run another company (or even more)? The list at http://www.jpmorganchase.com/corporate/About-JPMC/board-of-directors.htm includes the CEOs, presidents, or chairmen of the board of Springs Industries, NBCUniversal, Honeywell, American Museum of Natural History, GrayLoeffler, Clear Creek Properties, Yum! Brands, and Johnson & Johnson. The only retired executive in the bunch is a former CEO of ExxonMobil. Many of these people also serve on the boards of yet more companies at $100,000 per year plus for showing up at five or so meetings a year - nice work if you can get it.
The real kicker about foxes is that James Dimon is on the Board of Directors of The Federal Reserve Bank of New York. I thought the Fed was supposed to regulate the banks.
Monday, June 07, 2010
Source for Carly Fiorina and the "real world"
The article I referenced in "Carly Fiorina, get real!" was the Huffington Post, "Carly Fiorina Gets the Demon Sheep Treatment From DSCC, California Democrats", Sam Stein, 2010-05-06.
She ran a "Demon Sheep" spot against her opponent in the Republican Senate primary for California, Tom Campbell. Campbell was the architect of Gov. Arnold Schwarzenegger's budget.
I got it backwards that she was running for the Governor of California; she's running to oust Democrat Barbara Boxer from the Senate. Meg Whitman, another über-rich former CEO (EBay) is running for Governor of California.
The Democrats produced their own campaign video, "Demon Sheep II". In it, they have have a clip of Carly Fiorina saying, "Those of us who do live in the real world…" See "Demon Sheep II" in Sam Stein's article above.
Many of us may be envious of her "real world" with millions of dollars in the bank and the power she had as CEO of Hewlett-Packard, but I think most of us prefer our own "hum-drum" "real world".
She ran a "Demon Sheep" spot against her opponent in the Republican Senate primary for California, Tom Campbell. Campbell was the architect of Gov. Arnold Schwarzenegger's budget.
I got it backwards that she was running for the Governor of California; she's running to oust Democrat Barbara Boxer from the Senate. Meg Whitman, another über-rich former CEO (EBay) is running for Governor of California.
The Democrats produced their own campaign video, "Demon Sheep II". In it, they have have a clip of Carly Fiorina saying, "Those of us who do live in the real world…" See "Demon Sheep II" in Sam Stein's article above.
Many of us may be envious of her "real world" with millions of dollars in the bank and the power she had as CEO of Hewlett-Packard, but I think most of us prefer our own "hum-drum" "real world".
Saturday, June 05, 2010
Carly Fiorina, get real!
Carly Fiorina, former CEO of Hewlett-Packard, is running for governor of California. I saw a snippet of one of her ads, on The Huffington Post, I think. In it, she says something like politicians should join the real world.
Come on, Carly, when were you last part of the real world? Your first year at HP you had compensation of over 69 million dollars. Is that a real-world salary? That's over a thousand times what many people wish they could make in a year.
A few years later, you were fired from HP with a severance pay of 22 million dollars. A lot of people in the real world aren't making one thousandth of that every year and when they get laid off they get zilch.
Now you're trying to buy your way into being the CEO of California. Are you going to arrange to buy Nevada like you bought Compaq?
Sadly, the so-called capitalist system as run by CEOs and their crony boards is getting worse than what I wrote about ten years ago in "Talk about Boards with Conflicts of Interest", Reader Weekly, 2000-04-26. One thousand teachers in Duluth were trying to get a two-year raise that was one-tenth for all of them of what you got in a single-year.
Come on, Carly, when were you last part of the real world? Your first year at HP you had compensation of over 69 million dollars. Is that a real-world salary? That's over a thousand times what many people wish they could make in a year.
A few years later, you were fired from HP with a severance pay of 22 million dollars. A lot of people in the real world aren't making one thousandth of that every year and when they get laid off they get zilch.
Now you're trying to buy your way into being the CEO of California. Are you going to arrange to buy Nevada like you bought Compaq?
Sadly, the so-called capitalist system as run by CEOs and their crony boards is getting worse than what I wrote about ten years ago in "Talk about Boards with Conflicts of Interest", Reader Weekly, 2000-04-26. One thousand teachers in Duluth were trying to get a two-year raise that was one-tenth for all of them of what you got in a single-year.
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