Delphi is closing 4 of its 5 local plants. The direct job loss is 5,500, the indirect impact is something for economists to take wild ass guesses about- but there is one group that guaranteed won’t suffer- the people who made the bad decisions that got Delphi in this mess.
If a small business owner/manager sets his prices too low, pays himself or his employees too much, or makes a poor quality product- he goes out of business and declares bankruptcy- losing much of what he owns. When GM’s managers make mistakes they still get paid millions. Would this fiasco be happening if everyone of them would have their personal property at stake?
When I talked to one of my clients about this (another small business owner- who used to work for Arthur Andersen) he suggested another liable culprit- all the shareholders who accepted dividends that were improperly paid while the company wasn’t meeting its pension obligations.
While Delphi is quick to point to the total wage and benefit cost to it’s unionized workers- and the high costs of negotiated pension benefits- where is it proven that paying anyone million dollar salaries makes a company better? Are CEO’s really in that short supply?
The big question is- if instead of closing the plants and laying off union employees- Delphi was forced to turn the plants over to the employees- could they make better decisions? International (the manufacturer of heavy trucks) was going to close a plant in Springfield MO some years back. The new plant manager, a recent MBA named Jack Stack thought the plant should be able to make money. He got the top managers to mortgage their homes and buy the plant- and then, realizing that the big corporate mechanism had subverted basic business principles â€“ the management team started teaching the workforce how to read the financial statements (the score card for business) so the workforce could see how to win. They also created an Employee Stock Ownership Program (ESOP) so that the â€œmonkeys running the zooâ€ (as one CEO famously said of his employees) also owned the zoo. Stack wrote about the turnaround in the book â€œThe Great Game of Businessâ€ which I highly recommend.
If this country is to survive- without having an open class war (witness the riots in France over lifetime employment contracts) â€“ maybe it’s time to start holding the robber baron’s of business accountable. My basic business 101 course taught me that â€œprofit is a return for riskâ€- where is the risk in running a company into the ground and getting paid millions? Believe it or not Mr. CEO- there are many people out there that could not only live an entire life on a million dollars, managed well- but also many more competent than you at building a business and growing it- providing jobs- and making our nation strong with start-up capital of less than what you take home in a year.
Until we tie the top salaries in public companies to the bottom salaries in the company (Ben & Jerry’s Ice cream used to not be able to pay the highest person in the company more than 7 times what the lowest person made) we are going to continue to see this kind of pillaging of the American workforce until there is no one able to buy anything â€“ made here or in China. These are radical proposals- but drastic times call for radical change.
If Mr. CEO wants to play with not only his peoples lives- but also those in the communities that his people live in- he needs to be held accountable. Either that, or he needs to be risking his own money- that’s right, if you don’t like the ratio between highest and lowest paid- take the company private- and see how long you can run your company while losing billions each year.
What do you think Delphi workers?