Private sector strike

W1

Jez mon wrote:

What should the unilever staff do then, all leave their jobs and re-train?

If it's that bad, surely yes?

Then Unilever might actually need to amend their benefits to attract staff. But the reality is, with unemployment as it is, they could probably re-fil those jobs without making any new concessions - evidencing that the "market price" for the job is already acceptable, and those on strike need a bit of a reality check.

W1

neiltb wrote:

W1 wrote:

neiltb wrote:

not on anyone's side, but the workers seem upset that their company is readying to shaft their future pension at a time when profits are up 20% on the year and the CEO is getting huge bonuses (I like how he takes payment in lieu of not having a company car and then gets access to a chauffeured car, I guess he has to take his own car out at the weekends).

They have the benefit of organised labour, our plant does not.

Bless them - I'm pretty sure, if they aren't happy, they can leave? Or have Unilever locked them all in and forced them to work?

http://4.bp.blogspot.com/_upYWpj40RO8/TG2OrMNgFDI/AAAAAAAAAig/3H6hcH9Uq6Q/s1600/slopshop.jpg

lazy gits, they should think themselves lucky to be out of their slum and working in yours

Who said anything about a slum? If they're so unhappy, they can bleat and strike, or they can leave and find something else. Anyone employed at the moment should be thankful for a job - there are plenty of people who don't have one.

Stevo_666

bails87 wrote:

Stevo 666 wrote:

current financial realities

Financial realities=soaring profits.

Good try Bails, or did you just not check the facts first and assumed that this was the case? The last published financials for Unilever show a different story, with 2010 profits below what they posted in 2008. Or maybe you have a different definition of 'soaring'? ;-)

rjsterry

W1 wrote:

Jez mon wrote:

What should the unilever staff do then, all leave their jobs and re-train?

If it's that bad, surely yes?

Then Unilever might actually need to amend their benefits to attract staff. But the reality is, with unemployment as it is, they could probably re-fil those jobs without making any new concessions - evidencing that the "market price" for the job is already acceptable, and those on strike need a bit of a reality check.

So employers should exploit the scarce jobs market to improve their bottom line by reducing employment terms?

Stevo_666

rjsterry wrote:

So employers should exploit the scarce jobs market to improve their bottom line by reducing employment terms?

In the same way as in the boom times when unemployment is low, employees exploit the booming job market to secure good pay rises/improved benefits. It's all part of the economic cycle.

W1

rjsterry wrote:

W1 wrote:

Jez mon wrote:

What should the unilever staff do then, all leave their jobs and re-train?

If it's that bad, surely yes?

Then Unilever might actually need to amend their benefits to attract staff. But the reality is, with unemployment as it is, they could probably re-fil those jobs without making any new concessions - evidencing that the "market price" for the job is already acceptable, and those on strike need a bit of a reality check.

So employers should exploit the scarce jobs market to improve their bottom line by reducing employment terms?

Yes, or sack some people. Which would they prefer?

This pensions fiasco is a complete joke - the public sector simply don't get it, most of the private sector do - and have had to put up with it.

I wonder if these Unileve employees did anything against Gordon Brown when he raided private pensions? Or did their union leaders conveniently forget the issue as it was "one of theirs" in charge at the time?

It's what a job "market" is - supply and demand.

rjsterry

W1 wrote:

rjsterry wrote:

W1 wrote:

Jez mon wrote:

What should the unilever staff do then, all leave their jobs and re-train?

If it's that bad, surely yes?

Then Unilever might actually need to amend their benefits to attract staff. But the reality is, with unemployment as it is, they could probably re-fil those jobs without making any new concessions - evidencing that the "market price" for the job is already acceptable, and those on strike need a bit of a reality check.

So employers should exploit the scarce jobs market to improve their bottom line by reducing employment terms?

Yes, or sack some people. Which would they prefer?

This pensions fiasco is a complete joke - the public sector simply don't get it, most of the private sector do - and have had to put up with it.

I wonder if these Unileve employees did anything against Gordon Brown when he raided private pensions? Or did their union leaders conveniently forget the issue as it was "one of theirs" in charge at the time?

It's what a job "market" is - supply and demand.

Way to miss my point, but anyway...

Reducing employment terms or making people redundant - it makes little difference which - is an easy way make the figures look good - look how much our payroll costs have gone down! Of course the corresponding drop off in performance doesn't kick in till later, or if the management are lucky, the remaining employees will just work the extra hours needed as unpaid overtime in the hope that their contribution will be noticed. I've seen it happen at a large PLC that my wife used to work at. Leaving staff were never replaced and positions were constantly re-shuffled so that manager X could show that their department had made £Y,000 'saving' and claim their bonus. Whether the department was performing well was of secondary importance.

W1

rjsterry wrote:

W1 wrote:

rjsterry wrote:

W1 wrote:

Jez mon wrote:

What should the unilever staff do then, all leave their jobs and re-train?

If it's that bad, surely yes?

Then Unilever might actually need to amend their benefits to attract staff. But the reality is, with unemployment as it is, they could probably re-fil those jobs without making any new concessions - evidencing that the "market price" for the job is already acceptable, and those on strike need a bit of a reality check.

So employers should exploit the scarce jobs market to improve their bottom line by reducing employment terms?

Yes, or sack some people. Which would they prefer?

This pensions fiasco is a complete joke - the public sector simply don't get it, most of the private sector do - and have had to put up with it.

I wonder if these Unileve employees did anything against Gordon Brown when he raided private pensions? Or did their union leaders conveniently forget the issue as it was "one of theirs" in charge at the time?

It's what a job "market" is - supply and demand.

Way to miss my point, but anyway...

Reducing employment terms or making people redundant - it makes little difference which - is an easy way make the figures look good - look how much our payroll costs have gone down! Of course the corresponding drop off in performance doesn't kick in till later, or if the management are lucky, the remaining employees will just work the extra hours needed as unpaid overtime in the hope that their contribution will be noticed. I've seen it happen at a large PLC that my wife used to work at. Leaving staff were never replaced and positions were constantly re-shuffled so that manager X could show that their department had made £Y,000 'saving' and claim their bonus. Whether the department was performing well was of secondary importance.

Please enlighten me as to your point. You asked a question, I answered.

Do you think having people on strike assists performance?

rjsterry

W1 wrote:

rjsterry wrote:

W1 wrote:

rjsterry wrote:

W1 wrote:

Jez mon wrote:

What should the unilever staff do then, all leave their jobs and re-train?

If it's that bad, surely yes?

Then Unilever might actually need to amend their benefits to attract staff. But the reality is, with unemployment as it is, they could probably re-fil those jobs without making any new concessions - evidencing that the "market price" for the job is already acceptable, and those on strike need a bit of a reality check.

So employers should exploit the scarce jobs market to improve their bottom line by reducing employment terms?

Yes, or sack some people. Which would they prefer?

This pensions fiasco is a complete joke - the public sector simply don't get it, most of the private sector do - and have had to put up with it.

I wonder if these Unileve employees did anything against Gordon Brown when he raided private pensions? Or did their union leaders conveniently forget the issue as it was "one of theirs" in charge at the time?

It's what a job "market" is - supply and demand.

Way to miss my point, but anyway...

Reducing employment terms or making people redundant - it makes little difference which - is an easy way make the figures look good - look how much our payroll costs have gone down! Of course the corresponding drop off in performance doesn't kick in till later, or if the management are lucky, the remaining employees will just work the extra hours needed as unpaid overtime in the hope that their contribution will be noticed. I've seen it happen at a large PLC that my wife used to work at. Leaving staff were never replaced and positions were constantly re-shuffled so that manager X could show that their department had made £Y,000 'saving' and claim their bonus. Whether the department was performing well was of secondary importance.

Please enlighten me as to your point. You asked a question, I answered.

Do you think having people on strike assists performance?

To simplify: either reducing employment terms or making people redundant are easy short term ways to make the figures look good (to justify bonuses or massage share values) and are not necessarily concerned with the long term financial health of a business.

A proportion of Unilever staff obviously think (rightly or wrongly) that the reason for the reduced terms is the former rather than the latter.

W1

rjsterry wrote:

W1 wrote:

rjsterry wrote:

W1 wrote:

rjsterry wrote:

W1 wrote:

Jez mon wrote:

What should the unilever staff do then, all leave their jobs and re-train?

If it's that bad, surely yes?

Then Unilever might actually need to amend their benefits to attract staff. But the reality is, with unemployment as it is, they could probably re-fil those jobs without making any new concessions - evidencing that the "market price" for the job is already acceptable, and those on strike need a bit of a reality check.

So employers should exploit the scarce jobs market to improve their bottom line by reducing employment terms?

Yes, or sack some people. Which would they prefer?

This pensions fiasco is a complete joke - the public sector simply don't get it, most of the private sector do - and have had to put up with it.

I wonder if these Unileve employees did anything against Gordon Brown when he raided private pensions? Or did their union leaders conveniently forget the issue as it was "one of theirs" in charge at the time?

It's what a job "market" is - supply and demand.

Way to miss my point, but anyway...

Reducing employment terms or making people redundant - it makes little difference which - is an easy way make the figures look good - look how much our payroll costs have gone down! Of course the corresponding drop off in performance doesn't kick in till later, or if the management are lucky, the remaining employees will just work the extra hours needed as unpaid overtime in the hope that their contribution will be noticed. I've seen it happen at a large PLC that my wife used to work at. Leaving staff were never replaced and positions were constantly re-shuffled so that manager X could show that their department had made £Y,000 'saving' and claim their bonus. Whether the department was performing well was of secondary importance.

Please enlighten me as to your point. You asked a question, I answered.

Do you think having people on strike assists performance?

To simplify: either reducing employment terms or making people redundant are easy short term ways to make the figures look good (to justify bonuses or massage share values) and are not necessarily concerned with the long term financial health of a business.

A proportion of Unilever staff obviously think (rightly or wrongly) that the reason for the reduced terms is the former rather than the latter.

Well indeed, but that is rather speculative. Paying for people to sit around doing nothing isn't good for the health of the business either. Nor is paying above market rate for your people or materials - you'll be out of business if your employees hold you to ransom for more dough or for long enough.

Striking when unemployment is rising is daft, and will ellicit little sympathy.

notsoblue

Stevo 666 wrote:

To pre-empt your likely response that it's not always that easy, well that's life and sometimes life isn't fair - or just seems that way if there are lots of other people with similar skills.

I'd suggest that people's opinion on this issue depends largely on how much they agree or disagree with the above statement.

rjsterry

W1 wrote:

rjsterry wrote:

W1 wrote:

rjsterry wrote:

W1 wrote:

rjsterry wrote:

W1 wrote:

Jez mon wrote:

What should the unilever staff do then, all leave their jobs and re-train?

If it's that bad, surely yes?

Then Unilever might actually need to amend their benefits to attract staff. But the reality is, with unemployment as it is, they could probably re-fil those jobs without making any new concessions - evidencing that the "market price" for the job is already acceptable, and those on strike need a bit of a reality check.

So employers should exploit the scarce jobs market to improve their bottom line by reducing employment terms?

Yes, or sack some people. Which would they prefer?

This pensions fiasco is a complete joke - the public sector simply don't get it, most of the private sector do - and have had to put up with it.

I wonder if these Unileve employees did anything against Gordon Brown when he raided private pensions? Or did their union leaders conveniently forget the issue as it was "one of theirs" in charge at the time?

It's what a job "market" is - supply and demand.

Way to miss my point, but anyway...

Reducing employment terms or making people redundant - it makes little difference which - is an easy way make the figures look good - look how much our payroll costs have gone down! Of course the corresponding drop off in performance doesn't kick in till later, or if the management are lucky, the remaining employees will just work the extra hours needed as unpaid overtime in the hope that their contribution will be noticed. I've seen it happen at a large PLC that my wife used to work at. Leaving staff were never replaced and positions were constantly re-shuffled so that manager X could show that their department had made £Y,000 'saving' and claim their bonus. Whether the department was performing well was of secondary importance.

Please enlighten me as to your point. You asked a question, I answered.

Do you think having people on strike assists performance?

To simplify: either reducing employment terms or making people redundant are easy short term ways to make the figures look good (to justify bonuses or massage share values) and are not necessarily concerned with the long term financial health of a business.

A proportion of Unilever staff obviously think (rightly or wrongly) that the reason for the reduced terms is the former rather than the latter.

Well indeed, but that is rather speculative. Paying for people to sit around doing nothing isn't good for the health of the business either. Nor is paying above market rate for your people or materials - you'll be out of business if your employees hold you to ransom for more dough or for long enough.

Striking when unemployment is rising is daft, and will ellicit little sympathy.

Contrary to what was posted earlier, it appears that Unilever's profits rose last year

Sarah Rainey of The Telegraph wrote:

The world's second-largest consumer goods group said pre-tax profits for the first half of the year soared to €3.23bn (£2.81bn), up from €2.98bn in the same period last year.

linky
The CEO has also taken a £1.45M bonus and a £300K contribution to... his pension this year. Another argument is that Unilever's pension fund deficit is more due to poor management in the 1990s, rather than that the final salary scheme being fundamentally unaffordable.

Stevo_666

rjsterry wrote:

Contrary to what was posted earlier, it appears that Unilever's profits rose last year

That's the 2010 half year you're looking at RJS and you'd expect a rise compared to the first half of 2009 given that 2009 was a pretty rough year for many companies - this was the first full year when the impact of the global financial crisis was felt. What I said earlier is correct - profits for the last reported full year (2010) are still below 2008 levels. 2011 has not yet been reported.

rick_chasey

This is why you need a reform to compensation decision making rules for large corporations.

rjsterry

Stevo 666 wrote:

rjsterry wrote:

Contrary to what was posted earlier, it appears that Unilever's profits rose last year

That's the 2010 half year you're looking at RJS and you'd expect a rise compared to the first half of 2009 given that 2009 was a pretty rough year for many companies - this was the first full year when the impact of the global financial crisis was felt. What I said earlier is correct - profits for the last reported full year (2010) are still below 2008 levels. 2011 has not yet been reported.

Fair enough, although they're not exactly broke are they? All the more reason to question the CEO's increased remuneration if things aren't going very well.

W1

Some more unjustifiable strikers considering blackmailing their employer:

http://www.bbc.co.uk/news/uk-scotland-16620288

W1

rjsterry wrote:

W1 wrote:

rjsterry wrote:

W1 wrote:

rjsterry wrote:

W1 wrote:

rjsterry wrote:

W1 wrote:

Jez mon wrote:

What should the unilever staff do then, all leave their jobs and re-train?

If it's that bad, surely yes?

Then Unilever might actually need to amend their benefits to attract staff. But the reality is, with unemployment as it is, they could probably re-fil those jobs without making any new concessions - evidencing that the "market price" for the job is already acceptable, and those on strike need a bit of a reality check.

So employers should exploit the scarce jobs market to improve their bottom line by reducing employment terms?

Yes, or sack some people. Which would they prefer?

This pensions fiasco is a complete joke - the public sector simply don't get it, most of the private sector do - and have had to put up with it.

I wonder if these Unileve employees did anything against Gordon Brown when he raided private pensions? Or did their union leaders conveniently forget the issue as it was "one of theirs" in charge at the time?

It's what a job "market" is - supply and demand.

Way to miss my point, but anyway...

Reducing employment terms or making people redundant - it makes little difference which - is an easy way make the figures look good - look how much our payroll costs have gone down! Of course the corresponding drop off in performance doesn't kick in till later, or if the management are lucky, the remaining employees will just work the extra hours needed as unpaid overtime in the hope that their contribution will be noticed. I've seen it happen at a large PLC that my wife used to work at. Leaving staff were never replaced and positions were constantly re-shuffled so that manager X could show that their department had made £Y,000 'saving' and claim their bonus. Whether the department was performing well was of secondary importance.

Please enlighten me as to your point. You asked a question, I answered.

Do you think having people on strike assists performance?

To simplify: either reducing employment terms or making people redundant are easy short term ways to make the figures look good (to justify bonuses or massage share values) and are not necessarily concerned with the long term financial health of a business.

A proportion of Unilever staff obviously think (rightly or wrongly) that the reason for the reduced terms is the former rather than the latter.

Well indeed, but that is rather speculative. Paying for people to sit around doing nothing isn't good for the health of the business either. Nor is paying above market rate for your people or materials - you'll be out of business if your employees hold you to ransom for more dough or for long enough.

Striking when unemployment is rising is daft, and will ellicit little sympathy.

Contrary to what was posted earlier, it appears that Unilever's profits rose last year

Sarah Rainey of The Telegraph wrote:

The world's second-largest consumer goods group said pre-tax profits for the first half of the year soared to €3.23bn (£2.81bn), up from €2.98bn in the same period last year.

linky
The CEO has also taken a £1.45M bonus and a £300K contribution to... his pension this year. Another argument is that Unilever's pension fund deficit is more due to poor management in the 1990s, rather than that the final salary scheme being fundamentally unaffordable.

That doesn't really make any difference to the fact that paying more for your labour than the market allows will be unsupportable. Even if profits were up, a business isn't a charity - if they don't want to pay their staff more, or boost their pension pot, they are not obliged to and anyone who considers that is unfair is free to leave.

Stevo_666

If you look at what's actually being proposed, they are closing the final salary pension scheme - the same sort as these 'gold-plated' ones that many public sector employees get and are widely regarded to be unsustainable. Shell recently closed its final salary scheme if you remember, as have many other companies. Seems the pensions the Unilever people will get will still be very competitive compared to the contributory schemes that are the norm in the private sector.

Pension liabilities build up over the long term and in the longer term this final salary scheme would probably have a material adverse impact on the company's profits - so it appears management are looking at the long term financial health of the company by doing this. If you look at the problems that hobbled the like of GM a few years ago, one of the major factors was long term post-retirement benefit costs for employees - but not that long ago GM was a very large and profitable company...who would have predicted then that they would almost go bankrupt?

Re: controls over remuneration, that's a matter for the shareholders. IMO the powers are already there, the problem seems to be that shareholders don't exercise them enough for some people's liking. The question for you should be how to get shareholders to be more active. Not sure how it could work in reality through other routes?

rick_chasey

Stevo 666 wrote:

Re: controls over remuneration, that's a matter for the shareholders. IMO the powers are already there, the problem seems to be that shareholders don't exercise them enough for some people's liking. The question for you should be how to get shareholders to be more active. Not sure how it could work in reality through other routes?

Even the Tory party believes it should be reformed, since the current system has seen executive pay inflation of enormous proportions since the 1980s, with little or no correlation with actual company performance.

Anyone can see that's true.

Shareholders are inevitably incentivised by immediate profits and short term gain, which potentially can be against the long term interests, because shareholders can so quickly enter and exit. The behaviour of some private equity firms (particularly with private elderly care homes) illustrates that point. A significant and noticable proportion of shares in larger forms are held for less than a day in today's financial environment.

I'm not an expert on board level politics, but I know for example in Germany it's a legal obligation to have an elected representative of the staff on the board when remuneration is discussed.

I think the particular pay imbalance between executives and staff doesn't help relations. When staff see cuts and redundancies, yet executives are getting paid eye-watering amounts, even if it's down on previous years, they get disgruntled, especially when there is no proper downside for the executives for failing, but there is on staff.

Stevo_666

Rick Chasey wrote:

Stevo 666 wrote:

Re: controls over remuneration, that's a matter for the shareholders. IMO the powers are already there, the problem seems to be that shareholders don't exercise them enough for some people's liking. The question for you should be how to get shareholders to be more active. Not sure how it could work in reality through other routes?

Even the Tory party believes it should be reformed, since the current system has seen executive pay inflation of enormous proportions since the 1980s, with little or no correlation with actual company performance.

Anyone can see that's true.

Shareholders are inevitably incentivised by immediate profits and short term gain, which potentially can be against the long term interests, because shareholders can so quickly enter and exit. The behaviour of some private equity firms (particularly with private elderly care homes) illustrates that point. A significant and noticable proportion of shares in larger forms are held for less than a day in today's financial environment.

I'm not an expert on board level politics, but I know for example in Germany it's a legal obligation to have an elected representative of the staff on the board when remuneration is discussed.

I think the particular pay imbalance between executives and staff doesn't help relations. When staff see cuts and redundancies, yet executives are getting paid eye-watering amounts, even if it's down on previous years, they get disgruntled, especially when there is no proper downside for the executives for failing, but there is on staff.

The main thrust of the Tory proposal seems to be to push this up the agenda for shareholders, by giving them/obligating them? to have a binding vote on executive remuneration, so this is in line with making shareholders do their bit. The legal powers are already there for shareholders to do this if they wanted to. Seems there are some legal issues with this, so we'll see how it works out. So if not that, how would you do it better?

As for the continental model of employee reps, well good luck. I've worked in a few multinationals in my time and from experience getting things done where these employee committees are involved is a nightmare (not related to pay in the cases I dealt with but still relevant). Just over a year ago a project I was managing nearly lost out on a benefit worth tens of millions to the Groups profits because of problems with a French 'workers committee'.

rick_chasey

Ah perhaps. Like I said, I'm no expert. I just read the various arguments from all sides on the FT. The only thing they could agree with is that the current set-up doesn't work. Executive pay is being inflated at obscene rates, and there is no punishment for being sh!t.

No-one broadly pro-capitalism (as I am believe it or not) begrudges high pay if the performance and responsibility reflects that. But where is the downside for executives now?

Furthermore firms are no more profitable now executives get paid a fortune and shareholders own them than they did before the boom in 'shareholder capitalism'. I don't believe the model is as remotely efficient as its supporters claim it to be. I think it supports and benefits a narrow bureaucratic elite at the top at the expense of everything else.

I would also suggest that some level of staff representation on the board would help dampen issues such as this unilever one.

The '80s, '90s, and '00s were a triumph of consumers and investors over workers and citizens. That ultimately needs to change.

Stevo_666

Rick Chasey wrote:

and there is no punishment for being sh!t.

There is - same as for sh1t employees - they get sacked.

Rick Chasey wrote:

No-one broadly pro-capitalism (as I am believe it or not) begrudges high pay if the performance and responsibility reflects that. But where is the downside for executives now?

See above - it also seems that the rewards are increasingly becoming geared towards stock that vests overtime, aligning mangement rewards with the shareholder interests and reducing the value of the reweard if company performance dips in subsequent years. Seemed to work in the last place where I worked (a FTSE 250 company).

Rick Chasey wrote:

Furthermore firms are no more profitable now executives get paid a fortune and shareholders own them than they did before the boom in 'shareholder capitalism'. I don't believe the model is as remotely efficient as its supporters claim it to be. I think it supports and benefits a narrow bureaucratic elite at the top at the expense of everything else.

Like I said, suggest a better way. It's all very well saying things have to change, but to what?

Rick Chasey wrote:

I would also suggest that some level of staff representation on the board would help dampen issues such as this unilever one.

My experience tells me otherwise.

Rick Chasey wrote:

The '80s, '90s, and '00s were a triumph of consumers and investors over workers and citizens. That ultimately needs to change.

Nobody said capitalism was perfect but in practice it seems to have worked a damn sight better than other models that have been tried.

Jez mon

W1 wrote:

Some more unjustifiable strikers considering blackmailing their employer:

http://www.bbc.co.uk/news/uk-scotland-16620288

Surely this is a completely different issue, the guy pulled a sickie to watch a football match, I don't think anyone could argue he does not deserve to get disciplined in some form.

Back to the matter in hand.

As Rick says, it's a pretty much indisputable fact that top line management salary has risen sharply in recent times, without much correlation with performance. When times were good, this matter could be hidden, to an extent. To top it off, since the economic crisis, it's seemed that those at the top have managed to keep their level of wealth or increase it, whilst those further down are really noticing the recession bite.

Hence, the way the unilever staff feel is understandable imo.

Linking pay to performance, is IMHO more difficult than it sounds, define business performance, share price? A rather fickle and imprecise tool. Profit for the year? Well, it's not beyond the wit of man to do things which harm the long term good of the company but enhance profit. Growth? of what? market share, virtually impossible for some companies, but that wouldn't necessarily mean the manager was doing a bad job...

I'm not suggesting you don't link rewards to performance in some way. Just that I don't think it's as simple as it sounds.

W1

Jez mon wrote:

W1 wrote:

Some more unjustifiable strikers considering blackmailing their employer:

http://www.bbc.co.uk/news/uk-scotland-16620288

Surely this is a completely different issue, the guy pulled a sickie to watch a football match, I don't think anyone could argue he does not deserve to get disciplined in some form.

Back to the matter in hand.

As Rick says, it's a pretty much indisputable fact that top line management salary has risen sharply in recent times, without much correlation with performance. When times were good, this matter could be hidden, to an extent. To top it off, since the economic crisis, it's seemed that those at the top have managed to keep their level of wealth or increase it, whilst those further down are really noticing the recession bite.

Hence, the way the unilever staff feel is understandable imo.

Linking pay to performance, is IMHO more difficult than it sounds, define business performance, share price? A rather fickle and imprecise tool. Profit for the year? Well, it's not beyond the wit of man to do things which harm the long term good of the company but enhance profit. Growth? of what? market share, virtually impossible for some companies, but that wouldn't necessarily mean the manager was doing a bad job...

I'm not suggesting you don't link rewards to performance in some way. Just that I don't think it's as simple as it sounds.

The problem is, as pointed out above, that shareholders already have the power to decline executive salaries. So it's not lack of empowerment that is causing the problem, it's lack of shareholder activism. And it is patently absurd for the government to force shareholders to be active - it is not the business of government to dictate how the owners of companies should pay their employees (or, rather, it is a very very slippery slope that none of us would benefit from going down).

If shareholders don't like the salaries being paid, they can sell their shares. If enough object, the share price will fall and the company will be forced to reconsider. However if the majority are content, who is to say that the minority of shareholders should be given additional powers? How is that right?

rick_chasey

Stevo 666 wrote:

Rick Chasey wrote:

and there is no punishment for being sh!t.

There is - same as for sh1t employees - they get sacked.

Rick Chasey wrote:

No-one broadly pro-capitalism (as I am believe it or not) begrudges high pay if the performance and responsibility reflects that. But where is the downside for executives now?

See above - it also seems that the rewards are increasingly becoming geared towards stock that vests overtime, aligning mangement rewards with the shareholder interests and reducing the value of the reweard if company performance dips in subsequent years. Seemed to work in the last place where I worked (a FTSE 250 company).

Rick Chasey wrote:

Furthermore firms are no more profitable now executives get paid a fortune and shareholders own them than they did before the boom in 'shareholder capitalism'. I don't believe the model is as remotely efficient as its supporters claim it to be. I think it supports and benefits a narrow bureaucratic elite at the top at the expense of everything else.

Like I said, suggest a better way. It's all very well saying things have to change, but to what?

Rick Chasey wrote:

I would also suggest that some level of staff representation on the board would help dampen issues such as this unilever one.

My experience tells me otherwise.

Rick Chasey wrote:

The '80s, '90s, and '00s were a triumph of consumers and investors over workers and citizens. That ultimately needs to change.

Nobody said capitalism was perfect but in practice it seems to have worked a damn sight better than other models that have been tried.

#1 - if executives get sacked they a) have enough to live off for a while, due to their pay, and b) they inevitably have significant redundancy packages. Fred the shred wasn't the only one.

My experience with bankers with heavy deferred pay doesn't suggest that they change their behaviour because they are now stock-holders. These firms are so big that (unless you're a rogue trader obviously) your actions won't really affect the value of your stock. These guys just accept that their pay will be deferred at 'roughly' whatever it was paid in as. The RBS bonuses for senior staff mentioned this week for example go up and down depending on what day it s because it's all deferred. They'll still get it.

The solution? Like I said, a representative. German companies do much better on indices re worker happiness, productivity, shareholder satisfaction etc. Your experience with the French, I would suggest, is perhaps more of a French cultural issue than a board issue.

They are certainly just as profitable.

There's no positive in the executive pay inflation we've seen, and it makes things like Unilever more likely.

If staff feel they have no say other than to walk with their feet, they are left with few options. Although W1 would argue otherwise, just because you strike, doesn't mean you don't care for the firm. You may feel very strongly for your firm, but cannot articulate your issue with the problems in any other way. In big corporations, staff are what make the company successful, and make it function. That fundamentally important role should be represented, and not just from a 'human resources' perspective.

#2 I'm not saying that capitalism isn't the answer. It is. But 'free-market' light touch capitalism clearly doesn't work as well as it should.

You only need to look at China to see that heavy regulation isn't a particular barrier to growth. There are plenty of other examples if you want to go looking for them.

rick_chasey

W1 wrote:

Jez mon wrote:

W1 wrote:

Some more unjustifiable strikers considering blackmailing their employer:

http://www.bbc.co.uk/news/uk-scotland-16620288

Surely this is a completely different issue, the guy pulled a sickie to watch a football match, I don't think anyone could argue he does not deserve to get disciplined in some form.

Back to the matter in hand.

As Rick says, it's a pretty much indisputable fact that top line management salary has risen sharply in recent times, without much correlation with performance. When times were good, this matter could be hidden, to an extent. To top it off, since the economic crisis, it's seemed that those at the top have managed to keep their level of wealth or increase it, whilst those further down are really noticing the recession bite.

Hence, the way the unilever staff feel is understandable imo.

Linking pay to performance, is IMHO more difficult than it sounds, define business performance, share price? A rather fickle and imprecise tool. Profit for the year? Well, it's not beyond the wit of man to do things which harm the long term good of the company but enhance profit. Growth? of what? market share, virtually impossible for some companies, but that wouldn't necessarily mean the manager was doing a bad job...

I'm not suggesting you don't link rewards to performance in some way. Just that I don't think it's as simple as it sounds.

The problem is, as pointed out above, that shareholders already have the power to decline executive salaries. So it's not lack of empowerment that is causing the problem, it's lack of shareholder activism. And it is patently absurd for the government to force shareholders to be active - it is not the business of government to dictate how the owners of companies should pay their employees (or, rather, it is a very very slippery slope that none of us would benefit from going down).

If shareholders don't like the salaries being paid, they can sell their shares. If enough object, the share price will fall and the company will be forced to reconsider. However if the majority are content, who is to say that the minority of shareholders should be given additional powers? How is that right?

The failure of multiple shareholder firms, banks, GM motors etc, is indicative that shareholders can't be trusted to run companies in a way that is most beneficial to the wider economy. As I explained above, they do not have the required incentives to do so. Therefore regulation must be put into place to compensate.

Stevo_666

Rick Chasey wrote:

The failure of multiple shareholder firms, banks, GM motors etc, is indicative that shareholders can't be trusted to run companies in a way that is most beneficial to the wider economy. As I explained above, they do not have the required incentives to do so. Therefore regulation must be put into place to compensate.

WTF!?
You said you were capitalist above but have just contradicted yourself big time. It's the old socialist 'we know whats best' school of thought - so we'll tell shareholders how to run their own businesses to get the result that we think is best. Bit patronising really, as well a massively sweeping generalisation...

rick_chasey

Stevo 666 wrote:

Rick Chasey wrote:

The failure of multiple shareholder firms, banks, GM motors etc, is indicative that shareholders can't be trusted to run companies in a way that is most beneficial to the wider economy. As I explained above, they do not have the required incentives to do so. Therefore regulation must be put into place to compensate.

WTF!?
You said you were capitalist above but have just contradicted yourself big time. It's the old socialist 'we know whats best' school of thought - so we'll tell shareholders how to run their own businesses to get the result that we think is best. Bit patronising really, as well a massively sweeping generalisation...

It's not anti-capitalist. It's anti-shareholder.

There are many different types of corporate governance.

I'll point you to 'thing 2' in Ha-Joon Chang's 23 thing's they don't tell you about capitalism. In short, he says that shareholder capitalism has a detrimental effect on the long term benefit of a company to the wider economy because ultimately, shareholder run companies, due to their makeup of their incentives, are run for short term gain only.

W1

Rick Chasey wrote:

Stevo 666 wrote:

Rick Chasey wrote:

The failure of multiple shareholder firms, banks, GM motors etc, is indicative that shareholders can't be trusted to run companies in a way that is most beneficial to the wider economy. As I explained above, they do not have the required incentives to do so. Therefore regulation must be put into place to compensate.

WTF!?
You said you were capitalist above but have just contradicted yourself big time. It's the old socialist 'we know whats best' school of thought - so we'll tell shareholders how to run their own businesses to get the result that we think is best. Bit patronising really, as well a massively sweeping generalisation...

It's not anti-capitalist. It's anti-shareholder.

There are many different types of corporate governance.

I'll point you to 'thing 2' in Ha-Joon Chang's 23 thing's they don't tell you about capitalism. In short, he says that shareholder capitalism has a detrimental effect on the long term benefit of a company to the wider economy because ultimately, shareholder run companies, due to their makeup of their incentives, are run for short term gain only.

Remind me - what obligation does a company have to the wider economy?

Are they charities? Government organisations? Publically owned?

I know you're going to mention banks here, but as 99.9999% of companies are not banks, can we ignore them for a little while?

Stevo_666

Rick Chasey wrote:

It's not anti-capitalist. It's anti-shareholder.

Erm - shareholders, these are the people who own and provide the capital for businesses and without which there would be no businesses to employ people.

Rick Chasey wrote:

I'll point you to 'thing 2' in Ha-Joon Chang's 23 thing's they don't tell you about capitalism. In short, he says that shareholder capitalism has a detrimental effect on the long term benefit of a company to the wider economy because ultimately, shareholder run companies, due to their makeup of their incentives, are run for short term gain only.

A massive generalisation and IMO wrong for the majority of companies - think of all the privately owned and family run type businesses out there - do you honestly think they are only in it for short term gain? And do you really think that larger quoted companies are so short sighted that they cannot see that long term success is crucial to a company?

Again, my experience in both privately owned and publically owned companies is not in line with your (borrowed) theory.