RE: Request to remove Information
> From: Tom Allison [mailto:tallison@tacocat.net]
> Sent: Tuesday, November 15, 2005 4:12 AM
> To: sethg@GoodmanAssociates.com
> Subject: Re: Request to remove Information
>
>
> > Top management of our largest companies, usually lawyers
> > or accountants today, personally believe that technical
> > personnel DO NOT DESERVE the same compensation as managers
> > because they are not as important to the success of the
> > enterprise. The results of that view works against their
> > own economic interest, but like most prejudice, it is
> > neither borne of knowledge nor wisdom.
>
> I've heard this implied many times in the past from a wide ranging
> variety of personnel, articles... But I'm kind of struck that no one
> would really be this niave to think that the entire base of technical
> personnel in a company do not deserve compensation.
>
> What do you base this conclusion on?
(The above private message is quoted with permission of the author.)
Personal experience combined with that of my peers. Aside from the
anecdotes I related in my post, which are right to the point, some of
the jobs I've held have required me to make regular presentations to a
board of directors. Getting to know these folks over the years, you
gradually learn how they make decisions and a pretty clear pattern
emerges.
There was also a period in the 1980's when it was fashionable to have a
"dual career ladder" within a company. My recollection is that HP was
the first to promote this publicly, and it became all the rage in
management circles. The idea was that good engineers would not have to
become bad managers in order to advance their careers. I worked for one
company that had implemented this system, and it turned out that the two
"career ladders" were not even remotely comparable. The "technical
track" had only three levels, with around 85% at the lower two levels.
Compensation and benefits for each level were far lower than that of
"management track" employees with equivalent education, experience and
responsibility.
The primary "benefit" of the technical track was apparently peer
recognition. Management had correctly identified that engineers were
motivated by things other than money, but they forgot the aspect of
human nature that strongly reacts to perceived unfairness among groups.
When company profits dipped in the recession of the late 1980's, layoffs
were almost exclusively from the technical track, starting at the top.
All the members of the top rung were laid off, as were all but one or
two in the middle rung. No top managers got the axe, although they had
squandered the company's profits by hedging foreign currency futures (we
did a lot of international business).
That layoff did tremendous damage and the company never did recover from
it, measured by stock price. A few years an several layoffs later, the
company was broken up and sold in pieces to larger companies. Rather
than attempt to save money by other means, such as temporary
across-the-board pay cuts, forcing people to use accumulated vacation or
other means that people viewed as fair, management let their bias get
the best of them and they decimated the technical ranks while leaving
their own peers unscathed. More than anything else, it was the
perceived unfairness of the sham "technical track" along with
management's handling of the layoffs that caused the remaining technical
staff to either look for work elsewhere, or decrease their efforts.
This strong reaction to unfairness is very deep in people and recent
studies show that other primates exhibit similar behaviors. When food
was offered as a reward for a task to two monkeys in each others view,
with one monkey being offered a much more desirable reward than the
other for the same task, the monkey offered the less desirable reward
eventually refused to perform the task. This shows that our sense of
fairness is not just an intellectual construction, it is part of our
basic nature and probably "hard-wired". While no one suggested that a
monkey would allow itself to starve to death, the affect of perceived
unfairness is very strong and interferes with the realization of greater
effort for greater reward that the capitalist system is based on.
Steve Lamb has correctly pointed out that people shouldn't whine when
the system operates exactly as it was designed to. I would like to
point out that part of what people are whining about is not the expected
consequences of our capitalist system, but the apparent unfairness as to
how one group can game the system to its great advantage. As others
have pointed out, there is no structural reason why management cannot be
outsourced or "guest workers" brought in to do their jobs. With their
salaries being so much greater than the technical staff, the savings to
the enterprise would be much greater. The reason this doesn't happen is
that management is empowered to make financial decisions, technical
staff is not and stockholders have not yet demanded it. It is
essentially a failure of corporate governance.
Management will not cut their own throats, even if it is better for the
company. The inherent management bias that technologists are a
commodity, along with their desire for self-preservation, has prevented
our capitalist system from realizing the ultimate implementation of
outsourcing. That is, the entire enterprise, especially management,
would move to India or China. Only capital and the end market would
come from the U.S., and not for long. In other countries, not only are
salaries lower, but the ratio of the highest to the lowest paid employee
is also significantly lower. Thus, companies in other countries are not
nearly as top-heavy as those in the U.S. More resources go into work
than administration compared to a similar-sized company in the U.S., so
the companies are far more efficient economically. They also do not
suffer as much the burden of perceived unfairness, so their employees
are happier.
Efficiency, measured by profits, is the holy grail of investors and
economists alike. For society as a whole, that is not necessarily the
sole factor that we choose to maximize. However, we have elected
leaders who choose to maximize corporate profits above all else and we
have no one to blame but ourselves. This explains such bone-headed
initiatives as NAFTA, where we pretend there is a level playing field
and allow market forces to sort things out.
The playing field is far from level, and a biased market does a poor job
of allocating resources. How do you take into account that some
countries have strict environmental controls while others have
practically none? Some countries subsidize housing and provide their
citizens with health care, while others leave that entirely to the
private sector. Some countries provide free post-secondary education to
those who qualify, while others require students to pay their own way.
Until we can come up with a system that takes these differences into
account, pretending that we can engage in "free trade" is nothing more
than a short-term gift to large corporations which we will all
ultimately have to pay for.
--
Seth Goodman
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