Federal employees COLA slashed

[Benton]

(02-17-2020, 10:03 AM)michaelsean Wrote: In the end, does it matter what the CEO makes?  I assume we are pretty much talking about Fortune 500 companies.  If we distribute the difference between what a CEO makes, and what we think they should make, will it make much of a difference?  I think it's stockholders more than CEO pay.

Matt already addressed the bigger picture aspect, but I'll add that sometimes it does.

Look at Hostess a few years ago. After several years of consecutive raises for upper management and their CEO, the teamsters went on strike the second (or third?) year that they were asked not to negotiate a raise for members. Profits were up, upper management was receiving significant raises, but they didn't want employees to have a cost of living adjustment. When the union said "no" to two years of flat salaries, the management tried to paint it as 'evil union thugs are stealing your Twinkies!' 

[GMDino]

(02-17-2020, 11:20 AM)Benton Wrote: Matt already addressed the bigger picture aspect, but I'll add that sometimes it does.

Look at Hostess a few years ago. After several years of consecutive raises for upper management and their CEO, the teamsters went on strike the second (or third?) year that they were asked not to negotiate a raise for members. Profits were up, upper management was receiving significant raises, but they didn't want employees to have a cost of living adjustment. When the union said "no" to two years of flat salaries, the management tried to paint it as 'evil union thugs are stealing your Twinkies!' 

100% this.



The same happens when the "venture capitalists" come in to "save" a company.

They pay themselves huge amounts, get concessions from the workers to "keep their jobs", drain the profits and then declare bankruptcy and close up and leave the employees hanging.  

[*michaelsean*]

(02-17-2020, 11:20 AM)Benton Wrote: Matt already addressed the bigger picture aspect, but I'll add that sometimes it does.

Look at Hostess a few years ago. After several years of consecutive raises for upper management and their CEO, the teamsters went on strike the second (or third?) year that they were asked not to negotiate a raise for members. Profits were up, upper management was receiving significant raises, but they didn't want employees to have a cost of living adjustment. When the union said "no" to two years of flat salaries, the management tried to paint it as 'evil union thugs are stealing your Twinkies!' 

So is it more of a "how it looks thing"?  If we took away the raises and distributed it, would it make a difference in giant corporations?  

[Benton]

(02-17-2020, 11:41 AM)michaelsean Wrote: So is it more of a "how it looks thing"?  If we took away the raises and distributed it, would it make a difference in giant corporations?  

I'm not so sure it's that easy to boil down. I don't think it's just optics. 

The last company I was with was a family owned Corp. When the long time CEO died, it went to shit. The upper management (all family) started giving themselves raises from about 2005-2015 (and probly beyond, but I'll get to that). I knew the comptroller for 2000-2015. She said every other year, those upper management people nearly doubled their salary. And every single one of those years they had layoffs. That's why she eventually quit, she couldn't stand what was going on.

During that same time, there was a hiring and rate freeze. I made more, but only because I got promoted through the company (until they eventually got rid of my positions, too). So if you started in 2005 you made the same thing in 2016 (at least) unless you got promoted. Meanwhile, guys went from making in the low six figures to millions.

And the board? They didn't really care, because their shares went up. The raises were offset by the annual layoffs 

That's the world we live in. Now, the company is going broke and last I heard will likely sell out in the next few years. But upper management already made their money so what do they care?

FYI, the average starting salary was $11 for a non management employee. So $11 in in 2005 dollars compared to 2015 dollars, yeah, it would've made a difference to get just a 2% raise, let alone what management was making (100% every other year).

[oncemoreuntothejimbreech]

(02-17-2020, 10:03 AM)michaelsean Wrote: In the end, does it matter what the CEO makes? I assume we are pretty much talking about Fortune 500 companies. If we distribute the difference between what a CEO makes, and what we think they should make, will it make much of a difference? I think it's stockholders more than CEO pay.

Executive compensation usually includes stock options so they are shareholders who also benefit by keeping labor costs down.

[Dill]

(02-17-2020, 12:01 PM)Benton Wrote: I'm not so sure it's that easy to boil down. I don't think it's just optics. 

And the board? They didn't really care, because their shares went up. The raises were offset by the annual layoffs 

That's the world we live in. Now, the company is going broke and last I heard will likely sell out in the next few years. But upper management already made their money so what do they care?

FYI, the average starting salary was $11 for a non management employee. So $11 in in 2005 dollars compared to 2015 dollars, yeah, it would've made a difference to get just a 2% raise, let alone what management was making (100% every other year).

Wait, I saw that movie back in 1987.  WALL STREET staring Michael Douglas.

I think a lot of people forgot that after season one of The Apprentice.

[oncemoreuntothejimbreech]

https://finance.yahoo.com/news/why-performance-bonuses-merit-raises-173310077.html

Quote:Why Performance Bonuses and Merit Raises Don’t Work
Fortune Anne Fisher February 24, 2016

In theory, it sounds like a no-brainer: Come up with a compensation system that rewards and encourages topnotch employees with bonuses and other short-term incentives. Fund it, without blowing up the overall pay budget, by giving mediocre (or worse) performers tiny raises, or none at all.

In practice, though, it's a different story.

Senior managers at 150 large and midsized companies in a new Willis Towers Watson study admit their incentive pay plans don't actually work. Barely one-third (32%) of the executives polled think their programs are "effective at differentiating pay based on individual performance."

Only half say annual incentives, like bonuses for top employees, make any difference in how well people do their jobs. Least effective of all: Merit raises, which managers are supposed to give (or not) to employees based on, well, merit. Just one in five (20%) of the executives surveyed thinks merit pay "drives higher levels of individual performance" in their companies.

This wouldn't matter quite so much if pay for performance plans weren't so popular. But, since reaching a record high in 2014, the number of companies counting on incentive pay to produce stellar results has kept on rising. "Companies are spending hundreds of millions of dollars a year on these disappointing programs," observes Laura Sejen, global chief of rewards at Willis Towers Watson. "If this were any other business process, certainly we'd all have moved to improve the ROI by now."

So what's the hold-up here? The biggest reason incentive pay so often doesn't deliver results, it seems, is that individual managers don't stick with the program.



That's especially true when it comes to merit raises. "The traditional annual raise has become so ingrained in U.S. companies that every employee over age 30 has 'grown up' with it and expects it," observes Sejen. "Now companies are saying, 'OK, from now on, not everyone gets a raise every year.' They're relying on managers to keep some salaries flat so they can pay larger salary raises and bonuses in critical, targeted areas."

Those managers, however, are the ones who face difficult conversations with unhappy subordinates who don't get pay hikes. So most often, bosses are still handing out annual "merit" increases, regardless of how individual employees perform. Not only that, but 26% of companies in the study have paid bonuses even to "employees who fail to meet expectations."

It would probably help if there were more cash to go around--that is, if companies fully funded their projected bonus pools. The study notes that has happened only twice since 2005, adding that "average projected bonus pool funding levels for 2015 were only 87% of target."

When combined with that shortfall, managers' tendency to chicken out on conflict with mediocre or underperforming team members means that "even top performers receive a lower bonus than called for in the plan design," says the study. In the current market for talent, a skimpy payout may look pretty unappealing next to the signing bonus a competitor is offering.

Even the executives who are invested in you believing the bullshit about these so called merit raises don't believe they work.  Also, in case you missed the bold text near the end, the companies who have implemented merit raises don't even fully fund their own programs which means that some people who deserve to get a raise by the company's own performance metrics aren't receiving the raises they deserve.  And did you see the part where only half of the executives believe annual raises make any difference in performance and only 20% believe merit raises work?  That applies to the executive pay, also.  Paying executives 127X or 278X the employee's pay doesn't make a difference in executive performance, either.

And what did I say previously about labor costs?  If you keep the labor costs down that helps increase profits which in turn goes to the shareholders which includes the executives that aren't fully funding these programs.  But, hey . . . keep drinking that Kool Aid . . . once it trickles down to you, of course.

Oh, and I received a merit raise in January of 1.85% which is less than the rate of inflation.  The person who did my performance review isn't qualified to do my job so I'm not sure how they can determine if I did a good job or not.  Also, off the top of my head I can't tell you the metrics used to determine if I deserve a merit raise or not, but they're pretty subjective instead of objective.  And lastly, the metrics to determine if I deserve a merit raise really don't deal with how well I do my job (such as did I get the diagnosis correct, did I prescribe the correct medication, was there a good outcome or a bad outcome, did I order a bunch of unnecessary tests, did I follow the standard of care), but rather deal with how much income I generated.  When my job involves taking care of sick and injured patients, should my merit raised be based upon how much the patient is charged? I don't think so, but that is basically what it boils down to.

[oncemoreuntothejimbreech]

https://www.washingtonpost.com/business/2020/02/24/this-chart-is-best-explanation-middle-class-finances-you-will-ever-see/






Do you see the black line on the graph? That represents your wages with the merit and cost of living increases for decades.  Notice how it doesn't even keep up with expenses?

[Dill]

(02-17-2020, 11:27 AM)GMDino Wrote: 100% this.

The same happens when the "venture capitalists" come in to "save" a company.

They pay themselves huge amounts, get concessions from the workers to "keep their jobs", drain the profits and then declare bankruptcy and close up and leave the employees hanging.  

It's called "harvesting" profits.  You make it sound bad.

[JustWinBaby]

To be honest, they should be grateful for their unnecessary job...