So Hubby attends the big company meeting

[Ilsa]

Last edited Thu May 15, 2014, 03:30 PM - Edit history (1)

in the city. Not a very formal event, but a hundred or so employees, mostly non-administrative, are in attendance. These folks are the techies that produce the product, service it, sell it, support it, create new products that have made the owner a hundred-millionaire (by our estimation). They are all degreed, many with post-grad degrees. They make a decent living, pay a lot of taxes, try to save for retirement, and they support their communities.

A fairly new CFO is consolidating his power in this privately-owned high tech company. Hubby overheard him snarl about their salaries being too high. Now raises are being held to cost-of-living for exceptional performers who put in about 60 hours a week. The rest, who do their jobs well, are left to falling behind economically.

This company is doing quite well, but they are determined to squeeze the life out of everyone. They could afford to keep employees rewarded, but instead they leave them demoralized. There is no telling what innovations they could imagine but won't now.

I know there are many, many others who would love to trade places with these employees. I'm not asking for pity for them. I am, however, commenting on how greedy and belligerent management is with its producing employees. To me, this is one more example of the big divide between the 1% and everyone else.

[randys1]

1. If they can make him do the work of two people, they will, if it kills hiim, that is good for the co

as many are in line to take his place

[cantbeserious]

3. Yes - And At A Lower Wage

eom

[Fumesucker]

7. You forgot the insurance policy the company has on the employee

Direct financial motivation to work you to death.

[Swede Atlanta]

17. Not to mention that many companies take out

life insurance policies on their employees with the company the beneficiary.

WalMart is notorious for this.

So they not only get all this work out of someone so they eventually keel over with a heart attack but they then collect a few cool millions when he dies.

[hobbit709]

2. Welcome to life in the 21st century

All peons get is peed on. If you're not a boss then you are just a replaceable cog.

[Louisiana1976]

27. +1

[reformist2]

57. How true. Most of these engineers and scientists can't admit that they are cogs, though.

In a way, it's their own greed - and pride - that allows the executives to take advantage of them all. What they ought to be doing is unionizing, but I suspect many of them would be insulted by the mere suggestion.

Sadly, they are going to be ground into the dirt by the boss-man, until they realize what they are in this capitalistic system.

[Bonhomme Richard]

4. I wouldn't be surprised if the new CFO is planning.....

to take the company public and is looking to show larger profits off the backs of the employees.

[Ilsa]

6. Good point. I wonder if that solves

Tax issues with inheritance and stuff?

[antigop]

12. or making the books look good to sell the company and cash out. nt

[Ilsa]

16. I wouldn't mind this if employees had first

Right of refusal to buy it at a fair price.

[antigop]

20. precisely why unions and worker co-ops are needed. K&R

[okaawhatever]

21. I believe it does. I think if the kids don't sell the stock they won't have to realize the gain.

If they inherit the "company" as in private company they have "gained" all the company is worth. If the receive stock they don't realize a gain until it's sold. I'm sure someone knows better than me, but I think that is how it works. Most 1%ers have all that tied up in a trust. The father could be getting ready to sell in the next year or two. That is another reason to get your Profit and Loss in order. If the kids don't want to takeover the business he might be selling it. Of course, he also could be planning on retiring.

[Phentex]

5. Greed is a strange beast...

I have seen this at a much lower level than what you are talking about. First, the people in charge start out by working hard and taking no pay and putting in the long hours themselves. Stressed all the time. Then it starts to pay off and they are able to hire others to do more of the work. The paychecks come in and get higher and higher. And somehow, it's never enough. And they distance themselves from the long hours and day-to-day and start looking at the bottom line or the end of year bonus and the numbers MUST get higher and higher or somehow they are failing.

The disconnect gets bigger and there's no going back.

[Fumesucker]

9. Money is amazingly addictive, a huge endorphin rush with that first big check

But the next check has to be even bigger or the endorphins don't flow the same way.

And we all know where it ends up..

[bettyellen]

40. hey, where did you get the pic of me playing poker?

Good times!

[OriginalGeek]

51. Most of my poker games

end up with me pantsless too.

[bettyellen]

53. LOL

[Purrfessor]

24. This is exactly how hedge funds operated in the decade leading up to the 2007/08 financial collapse.

When yearly profits of 40% and higher dropped to 20% or 25%, hedge fund managers ratcheted up their already extraordinary risk by increasing leverage in order to pump profits back to 40% and higher range.

The collapse of CDOs set off a chain reaction that nearly took the entire global financial system with it.

This is the typical result when greed is combined with arrogance.

[leftyohiolib]

8. i wonder if the cfo feels HIS salary is too high

[Sunlei]

10. sucks to have that kind of stressfull job.Know that things change very fast & the job is gone.

May not seem like a formal meeting but with those kind of jobs it is very formal and takes good acting skills to remain employed.

[JohnnyRingo]

11. Back in the late '60s GM flatly refused a UAW pay raise.

The company insisted that they would only grant pay increases based on the cost of living, and in exchange for benefits the UAW went along with that seemingly unfortunate formula. At the time, a new Camaro cost $2,000 and hourly pay was a then decent $6 an hour.

Needless to say, what was known as COLA, or cost of living allowance, soon became a big part of every hourly worker's paycheck, and it was itemized as such on the paystub. By retirement 13 years ago, I was making $25 an hour with at least a third of that listed as COLA. Never mind that their new Camaro grew to a bottom line of $25,000, a tenfold increase, the $25 an hour was still considered a living wage, much as $6 was in 1970.

I understand your point and the greed behind corporate's decision, but it may backfire on them if they're contractually committed to using a COLA formula. If, on the other hand, the company can just move the pay target at will, that just figures in today's Corporate America. I'm sorry for you and your husband.

[Ilsa]

15. It was just a policy decision, or at least

that's what they told the supervisors. No contractual obligation exists for increases.

Thank you for understanding our point of view. We are surviving and know we are doing better than most people, so we help others, including family. But I'm trying to save more for our kids who won't have the same opportunities we had for a cheaper higher education, etc.

[JohnnyRingo]

38. I'm sad for you...

..because I'm sure once the cost of living rises more than expected, and it always rises faster than expected, the company will move the goal posts. Suddenly, they'll back it up and devise another formula to keep pay increases at a minimum or a complete standstill while handing themselves a reward for innovative management.

Good luck.

[alfredo]

13. History shows that if the ruling class doesn't give a little, they will lose it all.

They need to fear us more than they love their money and power.

[antigop]

14. precisely why unions and worker co-ops are needed. K&R

[JayhawkSD]

18. How many times does fear manifest as something else?

"A fairly new CFO is consolidating his power in this privately-owned high tech company."

Let's parse that sentence a moment. I don't know the players, of course, but...

#1 He's the new guy in a company full of people who have been together for some time. I have been in that position and as a worker it's scary; as a person near the top it is absolutely terrifying. He walked in the door on day one knowing that everyone hated him.

How many people made him welcome? Not just polite words in a cold tone, or followed by turning away to continue conversation with a coworker who is a long time pal, but actually made him welcome?

Your statement, "that write the programs, produce the product, service it, sell it, support it, create new products that have made the owner a hundred-millionaire," makes it pretty clear that none of them did.

#2 He's in charge of finances and, while you say the company is "doing quite well" how do you know how well he is meeting the expectations of those who are his bosses? He is not the CEO, he is the CFO. He takes orders, and your statement suggests that you do not actually know what the company's financial performance really is. He may be under pressure that you are unaware of.

Maybe the company has been doing well but has hit some headwinds that are not yet reflected in its performance, and the CFO knows of these factors.

#3 your assumption may be exactly correct.

I don't know the facts, but I try not to judge until I do know the facts, even when appearance leads me to think that I know the facts. Appearances can be decieving.

I know one time I was talking with a therapist and he said that I would would not recognize depression in myself, would never describe myself as depressed. I said that would be a bit dangerous wouldn't it, to be depressed and not know it? He said that I would manifest it as anger. He was right. I had been living with quite a lot of anger, and when I started resolving my depression, the anger went away. Behavior is a funny thing, and we often misintrepret the actions of others.

Your CFO looks like he is being greedy? Maybe he is, but...

[laundry_queen]

22. A good CFO

Will not cut salaries first thing unless he's in it for the short term. The initial gain in profits usually comes at a long term cost to the company. It's possible his remuneration isn't properly structured which can lead to him concentrating on short term increases in profits to pad his own pockets, while weakening the company as a whole. This is a common error with upper management. Of course, sometimes it's by design if they want to bleed the company dry for their own gain.

[JayhawkSD]

30. Lot of assumptions there

"Will not cut salaries first thing" is easy to say when you do not know what the salaries are or what revenue is available to pay them. If he was hired because the owner realized that he was himself a poor manager and was overpaying his staff, or because his revenue falling to the point that he could no longer pay those salaries and he wanted someone else to be the fall guy, then cutting salaries might be a very good move. It might, in fact, be precisely what he was hired to do because conditions demanded it.

"The initial gain in profits usually comes at a long term cost to the company." Except when it creates long term gain because the company was overpaying its employees and had become noncompetitive.

"This is a common error with upper management." Which doesn't mean it's happening with the OP's company.

And that is the point I was trying to make. It's common that companies try to screw their employees, se we will assume in every case that the employees are being screwed because.... It's easier than actually looking into the situation to see what is really going on. It fits our preconcieved ideas, and so we can write it off without having to think about it. We can say "see here's another case of evil capitalism" without knowing if such is actually the case simply because that is what "is usually the case."

I'm not saying that the OP's company is not screwing its employees. It may be doing so. I don't know. But there were things in her post that suggested to me that she did not really know herself and that she might be making some assumptions. "The company is doing quite well" is a generic phrase that suggests she doesn't really know what its financial performance actually is, for instance. As I suggested in my comment, it looked like the company insiders might have antagonized him by treating him as an outsider; not a very clever thing to do when he controls your salaries.

Some things are not as simple as the seem

[laundry_queen]

39. I think you assume a lot as well

I didn't get the whole antagonize thing at all. Your assumptions are no more valid than mine.

[JayhawkSD]

43. What assumptions did I make?

What is "the antagonize thing?"

I am asking that one think beyond the obvious. To not prejudge. How is that "making assumptions" and why would that "atagonize" anyone?

Am I perhaps, antagonizing because I am not agreeing with your generalizations about what "most companies" do? Am I creating anger because I am suggesting that we not assume that a particular CFO is doing evil simply because "most CFOs are evil?" If so, I apologize. I am not doing it for the purpose of making anyone angry, but rather in the hope of stimulating a kinder, more gentle way of thinking; of asking that we avoid pre-judging without knowing the actual facts.

It would appear that I have failed, but I tried.

[Ilsa]

34. Please clarify this:

Your statement, "that write the programs, produce the product, service it, sell it, support it, create new products that have made the owner a hundred-millionaire," makes it pretty clear that none of them did. 

It's clear that the owner started the company with his new innovations. That doesn't mean that the engineers aren't doing that for him now.

True, there is much I don't know and cannot know. I don't know how well he's treated by other senior and executive managers at HQ or if he even gives a shit about that.

I don't get to go to the meetings or see detailed financials. And you're right: I don't know what his boss' expectations are. Maybe the extraordinary profit is "under-performing". My spouse knows more about their P&L than I.

But we have seen this before, where the original owners semi-retire and turn their company over to the numbers people. The objective turns to greatest possible profit versus continuing to create an exceptional product that returns a good profit. It isn't long before total bottom-line orientation creates a miserable work environment and a less ideal product.

Thank you for your input. I'll give your comments additional consideration.

[JayhawkSD]

44. Clarification

The statement, "that write the programs, produce the product, service it, sell it, support it, create new products that have made the owner a hundred-millionaire," carries an implication of a following, "and he is a newcomer who is a debeat who is simply overhead and contributes nothing." I have been there many times, on both sides. I'm not proud of being on the "producer" side.

[Ilsa]

46. Okay, got it;

I'm not saying the new managers contribute "nothing". They bring fresh ideas and expertise in certain fields of management. I'm suspect that many of this man's ideas pay his salary many times over.

But I question his judgment in making snarky remarks about salaries in front of those employees whose expertise actually generate income, and whose devotion and time commitment averages-down their salaries by 25-35%. I doubt anyone wanted to bother staying late after hearing that.

[JayhawkSD]

49. I won't disagree with that.

Discussing salaries other than one-on-one in private is always, at best, in poor taste.

[TlalocW]

19. Similar

This turned out longer than I thought... I guess I just felt like venting.

I worked as a programmer for First Data in Tulsa. One year, our bonuses/raises were tied to meeting goals as a group as well as individual goals. I think we were already exceptional, but we worked our asses off to get a giant project done in an impossible amount of time (that was part of the group goal), and this was after one of the managers went to the programmer who would be the lead and asked how long it would take to properly do a project. Based on the scant evidence, he was told 1 year (programmer was assuming a normal work week and that manager wasn't an idiot even though there was plenty of evidence to the contrary), and he then turned around and told the client 6 months.

Well, through a lot of unpaid overtime that had many of us sleeping under our desks, we met our group goals, and everyone met their individual goals. Our big client was so happy, they threw us a party with food and an open bar and gave each of us a novelty radio in the shape of their logo where the client would call our names and what we did, and we would go up to get i and say a few words. My "twin" - a fellow coworker whose sense of humor and opinion of management matched mine - and I were called up at the same time, and I especially was forbidden by my team lead from saying anything other than, "Thank you." My twin and I had been keeping our table in stitches by making up snippets of a speech where the lost sleep, time away from friends and family, etc. were all worth it for a novelty radio.

Anyway, we got what was promised us in terms of salary/bonus, but it was given to us begrudgingly because the big boss essentially told us, "Apparently the goals were set too low this year if everyone was able to meet them. We'll have to up it next year."

Instant demoralization. Then because the company apparently spent too much giving bonuses and raises to the little people, the big guys didn't get enough, and there followed a round of layoffs, including me as well as a couple of programmers and low-level managers who really went above and beyond on the project.

Other than a couple of 3 month stints at two different companies as an onsite contractor, which just solidified my feelings, I've never worked, nor see myself working, for a big company again anytime soon. I contract from home for a small website shop that I used to be lead programmer for and then have been doing magic and balloon twisting as a side business as well, and that has kept me happy.

TlalocW

[JayhawkSD]

31. Oh ho, First Data

Now there's a company about which I am willing to make all sorts of assumptions. None of them good.

I had a merchant account, originally with Cardservice International, and then with them when they bought CI. I decided to quit accepting credit cards, and First Data was part of the reason for that, given that they billed me "annual fees" in addition to the monthly fees, in addition to the "discount fee" and a "penalty fee" if my monthly credit card charges dropped too low; none of which I had ever agreed to when I signed up with Cardservice International.

So I wrote them a letter to cancel my account. They ignored me and continued to debit my checking account for the fees. I called and talked to them; they said they would cancel but continued to debit my account. I wrote again and they continued to debit my account. I wrote three cretified letters, which they signed for, and they continued to debit my account.

I finally closed the account (duh, should have done that earlier) and the debit bounced. They sent me a letter demanding payment for the debit that bounced. I told them to go to hall. They turned the amount over to a collection agency. I thought about challenging it in court, but decided to pay it. At least I made them pay the collection agency fee on it.

[joanbarnes]

23. As seen in multiple other places.

[SheilaT]

25. Your story and the one told by TalalocW in post 19

sum up so much of what is wrong with companies today. Essentially it is that those at the top have generally never done what the rank and file do that got the company to where it is today.

I was an airline ticket agent at National Airport in Washington DC from 1969 through 1979. When I started, every airline out there was either still being run by the guys who'd started it, or by the guys who were the founders' immediate successor. And most of those successors had themselves started at the bottom, either as pilots or as ramp agents. But starting in the mid '70s the third generation of management took over, the guys with MBAs who'd never worked for an airline until they got hired to run one. That's when things started to change very much for the worse. Oh, and Deregulation didn't help at all.

I've taken a few business classes, and I think one of the scariest things about that field is that it teaches people that if you can run one business you can run any other one. Previous experience not required. Which is exactly why there is only emphasis on the bottom line and not on employee morale or well being, not on a fair sharing of the profits.

It was when we had strong unions who essentially demanded that profits be shared, and when top salaries were taxed in a way that helped companies realize they may as well pay the rank and file their fare share, that was when the middle class and the unionized working class were at their strongest. But forty plus years of demonizing unions and of glorifying the 1% have changed all that almost beyond recognition.

[JayhawkSD]

32. Magic words, music to my ears.

"It was when we had strong unions..."

[Ilsa]

41. I think alot of these businesses are started by

People who did the hard work, built the business, then focused on the executive management stuff and eventually, retirement. From what I've observed, it's the hired guns (MBAs) that come in later and make everyone miserable, outsource, layoff the people with good salaries that actually know what they are doing. Maybe it's to get these companies ready for public trading. Maybe it's estate planning. But they can ruin these good companies if they don't understand how they turn out good products.

[winter is coming]

42. "it teaches people that if you can run one business you can run any other one"

What makes it even scarier to me is that when I was in college, "business administration" and "political science" were the majors people changed to when they couldn't make a go of their original majors. It may not be that way at every university, but it's not comforting to see how much of this country is being run by the less-than-ept.

[Larkspur]

26. Sounds like the lead up to outsourcing jobs to India

or bringing in H-1b visa contractors from India to replace American workers.

Best of luck to you and your husband.

[Ilsa]

35. Some of that has already happened. nt

[madville]

56. They're probably lobbying hard for immigration reform

So they can bring in plane loads of lower wage workers.

[benld74]

28. The fairy new CFO isn't worth thecost f the toilet paper he uses,,,

trying to get the most bang for his buck will stifle the growth of the company in the long run. YET CFO only cares abou getting his, NOT HOW he gets it, and HTAT is the main problem. He doesn't KNOW who does what only in cutting costs.
Best idea in cutting cost? GET RID of the CFO!!!!

[Ilsa]

36. I can't support your statement entirely.

This person will help the company's overall performance. My fear is that, like we've seen before, employee opportunities for advancement and promotion will disappear, and the product will suffer. We've seen "tightening up" turn into misery and the best talent leaving.

[Ilsa]

37. I should also say that the

CFO's comment really did demoralize a lot of people, though.

[Louisiana1976]

29. Excellent post. K&R

[uponit7771]

33. The CFO will push for outsourcing and the quality of work will fall dramatically

[Skittles]

52. yup - they lower the standards to accommodate workers who would not last two weeks in America

it is sickening

[uponit7771]

54. The bigger issue to outsourcing like they do is they don't last 2 weeks overseas either not because

... of skills but somewhat the opposite; once they grab a set of skills from shop A then then go to shop B asking for higher salary and they do it within months so ALL.. ALL design work has to be kept on shore.

If not domain knowledge and context goes out the door with the person asking for higher salary.

The churn overseas is so high it's forced the US engineers to be better designers and documenters and the shops who learn the hard way grind their operations down quick.

[Skittles]

55. they have the opportunities we used to have

it's hilarious seeing people I know suck very badly being promoted

[Uncle Joe]

45. Kicked and recommended.

Thanks for sharing, Ilsa.

[Ikonoklast]

47. How old is the founder now? If he is getting up in age, he might be looking to cash out.

Hire a shark to cut salaries, demoralize long-termers enough to leave, pump up the percentages and sell out before the shit hits the fan because they strangled the goose that laid the golden egg.

Dangerous time to be employed by a sole proprietor.

[roody]

48. Workers should own their own companies.

[BootinUp]

50. I think you summarized the current state of the US quite well there.