Posted on 12/27/2005 9:03:05 AM PST by Old_Mil
Message From United Management: Let Them Eat Cake Now That Your Pension's Gone...
United Airlines senior management just announced another part of its grand Chapter-11 exit plan. It seems that when the company emerges, 400 select members of United Airlines' executive and senior management team will be awarded 15% ownership of the carrier, worth a tidy $285 million - or more.
From The Marie Antoinette School of Management... Nice compensation. Royalty does have its privileges and perks, you know.
And, why not? Now that United's employee rank-and-file saved their airline via double-digit pay and benefit cuts, not to mention having their pensions trashed, United's management, naturally, sees fit to reward itself, with a stock deal that will almost certainly make at least some of them - if not all of them - a whole lot richer.
Forget the fact this this is the same wonderful team of brilliant thinkers who have made United a million-dollar playground for who-knows how many lawyers and other outside "advisors" who dreamed up vapor-brained and vapor-results ideas like Ted. Or, how 'bout the deal early on, according to news reports, where this same management team had to pay some outside company $1 million a month to tell them how to re-structure the United Expressmarx1.JPG (24989 bytes) system. Funny, if this management team is worth the better part of a third of a billion bucks in exit-rewards, how come they couldn't figure stuff like this out for themselves? It's probably yet another indication of just how hands-on this UA senior management team must be.
Meanwhile, Out In The Provinces... But while United's senior leaders are probably planning how to use this eventual wonderful windfall - maybe a nice condo on Longboat Key, or a college fund for the kids, or maybe just a new Porsche Cayenne Turbo-S, the scene among the rank-and-file might be a little bit different.
How's this for starters - as a direct result of the cuts they gave to save their company, some current and retired employees are finding it necessary to materially cut back in their own lifestyles. Some are actually selling their homes because that pension they worked so hard for is now essentially a bargain-basement monthly check from the PBGC. With pay cuts of 25% or more, Christmas this year was no doubt tough on a lot of United families.
But not, apparently, on the key leaders at United - some of whom were the very people in charge when the airline sank into bankruptcy in the first place. There is nothing wrong with valid management compensation. But under these circumstances, a "reward" that averages something like $710,000 per executive has a real nasty odor to it.
Sure, there's two comebacks to this. One that it's to "keep good talent in place," which is an argument that they'd probably best not bring up. The second is that, hey, it's not cash, just stock - probably stock they can't sell for a couple of years. Right - so these guys can depend on the rank-and-file to work hard at their new, lower salaries to make sure the value of the shares goes up even more.
It all has a nasty resemblance to the stuff a nineteenth century crackpot named Marx used to babble about.
"Generally it's easier to do without low-end people than accountants and other professionals, so the little guys get cut first."
That's just common sense, and I think even low-end people would admit that. Everyone knows a companie's first priority is to make money. If they don't do that, there won't be a company.
What is objectionable is rewarding bad management. Managers and executives in a public company are still employees. Why are they being rewarded for bad management? It looks like the old boy's club at the shareholder's expense.
Another thing that's objectionable is the attitude of some freepers. You seem a bit more reasoned, so I'll present it to you. They see workers as less than human. I realize workers are commodities, and the business doesn't exist just to provide jobs. But people should be treated like people. Respect.
If I go out to dinner, the wait staff is working for me. I can treat them as equals who happen to be doing a service for me, or I can treat them like low-lives who had better toe the line if they want a tip. If I treat them well, they will most likely be attentive, and in general it will be a pleasant experience. If I treat them poorly, they get stressed, I get angry, and it all goes downhill, (not to mention what they will likely do to my food).
Naturally, as with all things to do with people there are exceptions. But I think it's a valid comparison. I was always taught that I should respect people unless/until they prove they DON'T deserve it. Not disrespect them until they earn respect.
PS- almost forgot;
As for what they are teaching in business school, it's no longer sound economics. The best example would be the "X+Y=Z" theory (which is the basis for PeopleSoft and other 'management' tools.
The basis for this is that X number of workers, working Y number of hours per week, should produce Z units of work. This works fine in, say, industrial settings, but how do you apply this to other fields?
For example, I'm an IT manager. My people write programs. They attend meetings with other departments to co-ordinate the creation of new projects or merely to maintain what already exists. They spend a lot of time on the phone with vendors. They are routinely awoken at all hours of the night to take care of program issues (since we maintain 80 data centers around the planet, but still administer all of them from the United States). They work weekends and holidays because that's the only time we can get to make changes or repairs without interrupting daily business.
X=Y=Z doesn't exactly work for this does it? Yet, my company will spend $6 million this year in licensing fees to use this software. The MBA's say it's an effective tool (it's always about having more tools, isn't it?),and that's that. They sold management on it. AT the end of the day, they can point to a chart or a graph, which ALWAYS reflects the truth (/sarcasm). Numbers, after all, don't lie.
This is but one (small) example of this stupidity.
"Numbers, after all, don't lie."
As I was taught in statistics 50 some years ago, it's a course in how to lie with figures or how to make figures lie.
Airline management gave in to the unions more than they should have to avoid a strike that could very easily have ruined their business and their careers. To say that the people who run airlines are cowardly however, requires a total lack of understanding about what it takes to run such a business.
Management always gave in to the pilots because they belong to the same country clubs.
Yeah, that's why they did it. Because there has always been so much love between the pilots and management. LOL! It didn't take long for your class warfare argument to surface.
..and all the rest of the failing American industrial machine
Yet, our economy remains the envy of the world. We make and export more now than at any other time in our history. GDP growth is robust, employment is high and our household net worth has doubled in just the past decade.
History may show that on unbridled capitalism, Marx was right, if for the wrong reasons.
Marx was wrong about everything as are the people who still believe he said anything worth remembering.
Companies are no longer run by entrepreneurial founders, like Ford or IBM's Watson, or PanAm's Trippe, but by greedy bankers, lawyers, and MBAs who are only looking to their stock options and buy outs..
I guess you must have missed silicon valley and the rest of the tech industry revolutionizing the world economy.
Like I said, much of this has to do with the nature of the business. Financial Services is one area that could easily experience a higher cost structure to pay for their benefit programs. Federal and local government regulations will also impact this percentage. However, if you look at American business as a whole, you will find that benefit costs average about 35-40% of salary and wage expenses -- nothing near the 300% you suggested in an earlier post.
Rising healthcare costs will place upward pressure on that percentage as workers continue to receive a greater proportion of their total compensation increases in benefits rather than wages.
Maybe he hasn't but I have and I am here to tell you that the workers are the backbone of any company. The reason Unions started in the first place was because everyone in this country was getting screwed constantly, there was no place to go. Leave your job? There was nothing better available.
While Unions have their bad points there are good points( or there used to be) about them. The uniions are mostly dead now with the results that people like you can shit all over their employees and say that you are justified because you own the Co. I owned two and never treated my employees like crap and still had viable businesses(Electronis stores)that turned a profit. My people never thought about unions because I treated them fairly.
Yes, this would probably be appropriate for manufacturing management but do you have any idea just how many concentrations you can choose from in MBA programs these days? There are concentrations in Accounting, Consulting, E-commerce, Economics, Finance, Management, International Business, Marketing, Entrepreneurship, Manufacturing Operations and many many more.
The MBA's say it's an effective tool (it's always about having more tools, isn't it?),and that's that. They sold management on it. AT the end of the day, they can point to a chart or a graph, which ALWAYS reflects the truth (/sarcasm).
Workers better develop their skill sets and be as productive as possible to create value for the company. If they don't continuously create value they are going to be replaced by automation or by another person who will. We've recently implemented new systems within our manufacturing plants that have caused our employees to do nothing but complain. They never believe the charts and graphs proving that we've become more efficient and, therefore, more competitive.
It's funny to me that they'll complain about the changes but always seem pleased when the value of their stock goes up dramatically because of our increased competitiveness. Why some people cannot connect the dots is a continuous source of frustration for management.
Numbers, after all, don't lie.
No, they don't. Some people attempt to lie with numbers which is why the math skills acquired in school are so important. Business school doesn't guarantee the smarts to successfully run a business but I work with a lot of MBA's who are competent managers and continuously create value for the company and their shareholders.
"My people never thought about unions because I treated them fairly."
Thank you. This guy is a real piece of work. If he were an isolated example, I'd just ignore it, but sadly, there are many others who share the attitude. You don't have to have owned a business to understand the concepts. His declaration that my knowledge was zero was in itself a revealing statement. Given our sparse exchange, there is no way he could accurately quantify what I know. BUT... he's a business owner, so he knows all, and anyone who isn't, is just an idiot.
You and I watch "A Christmas Carol" and see it as a story of redemption, and hope. This guy, and those of his ilk watch it, and see the story of the persecution of a good businessman!
Merry Christmas to you and yours. Good to know there are people who are Christian here.
"America works best Union Free"
Treat people well, unions will either dissolve or become reasonable. Treat them poorly, they'll unionize. It's a simple equation.
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