Tuesday, May 3, 2016

The "Benevolent" Boss

When I heard about the Chobani CEO giving out stock options to his long term staff, I was impressed, less so with the yogurt which I will not buy regardless.  I frankly do not like it and have found other brands that I prefer and our local so it is double win.

In my daily encounters with the MEMEs they are sure that there can be no local industry as they cannot compete.  Even the interesting case of Art Smith, famous ex chef to the Oprah, and his desire to transform his former hometown of Jupiter was met with disdain. The same with Jimmy Buffett and his Margaritaville empire.   I was unclear if it was because they are successful men or it had to do with Florida which seems to be a hot button for this MeMe but not one positive word came from this individual's mouth.

I thought why must the MEME's see everything in a dark light and not think that we are capable if not willing to change how we manufacturer, produce, trade and supply industry and in turn customers clearly has never read a history book but the irony is the sustainable mantra they advocate would mean that it is not only possible, but necessary.  

And why change is hard is hard because of money. The immense salary and perks that CEO and Executives have, the hedge funds that endlessly trump their ROI's and the fees generated from the endless next big thing contributes to the mindset and adage "think big you'll be big."  And therein lies the issue that CEO's have an immense need to please Wall Street and that is where the buck starts and stops.  CEO pay is astronomical and that is due to the corporate boards that continue to allow this and the corporate consultants who affirm this as standard.

I get anger but it has to have a purpose - to just let off steam or more importantly to inspire one to enact.  When you finally realize that change can come, you move towards that, or we would not have seen the end to Slavery, the Civil Rights Movement, the vote for Women and many other significant changes that have brought some good.

So when I read of the CEO of Chobani's stock options, I thought of as the CEO with the 70K salary here and the idea that there is some good in the best of intentions.  No one has mastered this better than the tech sector.  . The idea of stock options and the big payoff "some day" is what many of those who flock to the Amazon, only few make the 4 years needed to vest and even that pay day is still largely a candy bar.

The idea of unions or a collective the other perfectly legal manner in which to organize is fueling everything from car washeros to Uber drivers, an oddly symmetrical match.

I get that unions have become largely defacto lobbyists as a means to compete with lobbyists from the private sector, but the reality is that votes are the equivalent of cash and you can deliver those in the same manner. Why do you think the private sector using an astro turf organization under the guise of ed reform came up with Freidrichs vs the California Teachers Association.  

Remember there is no such thing as a free lunch. The same applies to stock options.  

Chobani and the Problem with Benevolent Bosses

(Photo:Jack Dempsey/AP)

(Compiled by Justin Miller—Edited by Harold Meyerson)

When a company does something decent for its employees, the news media (though not The Wall Street Journal editorial page) rewards the firm with grandiose headlines and praise. This storyline played out again last week when Hamdi Ulukaya, CEO of Chobani, the popular Greek yogurt company, announced that all 2,000 current employees will receive shares of up to 10 percent of the company’s value when the firm is sold or goes public.

“Greek yogurt is known for being rich in flavor and protein,” opined Washington Post columnist Jena McGregor. “Now some employees at Chobani could become rich themselves.”

The number of shares a person receives depends on the employee’s tenure with the company—the average worker would probably take home an estimated $150,000 payout. Veteran employees could receive more than $1 million in shares.

It’s not surprising that these feel-good stories go viral. Unfortunately, an employer who actually helps his employees is newsworthy—dog-bites-man news, in fact. But giving workers a monetary stake in a company’s future is a good idea because everyone benefits: Employees are more motivated to help the company prosper, and the employer sees reduced turnover and more productivity from workers who are more deeply invested in the company’s mission and goals.

Although no one has quite figured out how to close the yawning gap between CEO salaries and workers’ wages—and the burgeoning wealth inequality that this gulf produces—programs like Ulukaya’s are admirable (if not entirely altruistic). In fact, such profit-sharing systems are quite common in the United States.

“While Ulukaya’s gesture is unique in its magnitude,” Pacific Standard’s Dwyer Gunn explains, “the United States is actually an international leader in profit sharing and employee ownership programs, both of which fall under the umbrella of what economists describe as ‘shared capitalism.’” Gunn reports that 45 percent of private, for-profit employers in the country offer some sort of “shared capitalism” program, like profit sharing, employee ownership, or stock options.

However, as Gunn rightly points out, such programs are not “a cure-all for what ails the American economy.” Most of the programs offer token amounts of the company’s profits to their employees, and those programs that actually share the wealth tend to be concentrated in a few select industries. Silicon Valley start-up technology workers are far more likely to benefit from some sort of profit-sharing vehicle. Fast-food workers and other low-wage employees are unlikely to ever see this type of benefit.

Even so, shared capitalism won’t be a conduit for increased employee power unless those programs are paired with adequate pay, benefits, job security, and a real voice in company affairs. While unions have traditionally helped workers secure pay, benefits, job security, and political power, most employees do not belong to unions. Only 6.7 percent of the private sector workforce is unionized—an all-time low.

As The American Prospect’s executive editor Harold Meyerson frequently points out, Germany has built a solid and successful partnership between workers and their corporate bosses.  German union membership rates are much higher than American rates, and so union leaders are better equipped to wield power on corporate boards andworks councils,’ forums where employees and managers meet regularly to discuss working conditions and grievances.

But unless the U.S. goes back to the future and the post-World War II glory days of private-sector unions, American labor will probably not be able to match Germany’s industrial relations ethos. Today, improving the American workers’ lot can often rely on the whims of a benevolent boss. A unionization drive at the new media giant Gawker was successful in part because CEO Nick Denton openly supported it. Other successful online journalism unionization efforts have also succeeded because managers decided not to stand in the way.

But relying on the management’s good intentions is a risky strategy. 
But relying on the management’s good intentions is a risky strategy. When Volkswagen employees at the company’s Chattanooga plant indicated that they wanted to set up German-style works councils and unions, they believed that company officials would give them the green light. However, an initial factory-wide union vote failed in 2014 amidst tense political infighting. Then, as Volkswagen grappled with an international emissions testing scandal, the plant’s skilled trades workers successfully voted to unionize. But the company has thus far refused to recognize the union, leading union officials to say that company officials reneged its agreement to allow unionization. Talks between company officials and United Auto Workers union representatives regarding the creation of a works council have also failed.

Many low-wage workers have also called on their employers to voluntarily implement minimum wage increases, predictable scheduling practices, and guaranteed paid sick and family leave. New headline-grabbing worker rights movements like the Fight for 15 have persuaded more employers like the University of Pittsburgh Medical Center to voluntarily enact worker-friendly policies. These corporate decisions also demonstrate that some employers are beginning to understand that generous benefits are not incompatible with business success.

Nevertheless, relying on CEOs to share company profits with employees or to give everyone a $70,000 minimum salary is no substitute for the strategic influence that workers can wield within a firm using innovative worker-organizing strategies.

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