#39 Modern Economics (2000)

All Rights Reserved © 2000 Thomas W. Day

In the 1950's overstuffed corporations, managers were made to be the factory floor's enemy by design.  Any manager who was appreciated by the people he managed was denigrated as being "soft" and inefficient.  Nothing changed much through the 60s, except that we began giving up industries to Japan because management was so busy, patting itself on the butt for its lousy performance, that the ruling class didn't notice the water circling in the economic toilet. 

In the 1970s, bad management was usually blamed on the fact that technical folks who were being promoted to managers were not "people-people."  The good ole' boys laying this blame were non-technical managers who were not particularly skilled in any activity, except office politics which is only marginally a people-skill.  Entrenched management certainly wasn't skilled in personal relations, or any people-oriented activity other than sucking up to the next level of power.  Still, technical skills were generally turned into management liabilities and the powers that be kept on being what they'd always been. 

By the early 80s, management began to notice that the country had been in a recession for nearly a decade.  (That's the kind of mental acuity that comes with good breeding and higher education.)  Not that noticing the disaster caused them to reconsider their basic anti-labor assumptions or to accept any part of the blame for the recession, but it was a start.  Mostly, the nation's awful execs blamed business failures on "inefficient American labor" and went hunting for cheaper labor overseas.  That seemed like a successful tactic until Japan moved some of its manufacturing here and discovered that American labor was equal to any, including Japanese.  So equal that several Japanese manufacturers produced the best Japanese products in the U.S. 

Japanese managers walked around so much that they sometimes got in the way of the production line.  And the Japanese managers were very technical, mangling another MBA myth.

The American management solution was to focus attention on increasing middle management productivity.  Since upper management can rarely spell "productivity," this was a clever tactic.  The answer to our shriveling economy turned out to be painfully simple.  It was especially painful for the people who did the actual work.  What happened was that middle management became a two-for-the-price-of-one position.  Once again, middle managers were selected for their technical skills but there was also a minimal effort made to encourage development in the person-to-person aspects of management.  Labor managed to cut its own throat, politically, so that management was able to crank up productivity demands while reducing actual labor costs.  More than a decade of Republican-owned law-making helped push this management "advancement" along pretty brutally, too. 

Now, we're reaping the rewards of having let management pay itself in seven-figure denominations for four-figure competence.  Even the rich can only vote themselves rich for so long before the house of stocks and bonds collapses in a light breeze.  I keep hearing about the stalling economic recovery and Wall Street's confusion regarding why that recovery is moving so slowly (if you can find signs that it's moving at all).  There's nothing confusing about any of this.  The spread between the rich and the rest of us is measured in light-years.  If the government were to stop propping up the few profitable industries that still attempt to produce real products, the economy would fall flat on its face. 

April 2000

#107 An Impossible Dream (2004)

All Rights Reserved © 2004 Thomas W. Day

Bobby Dylan sang, in "Talking World War Three Blues," that "we're all havin' that same dream."  Dylan was talking about being the last person left on earth after the final war.  Management's dream is that execs can screw off and their low paid employees will take up the slack for them.  It's a dream because it doesn't make a lick of sense and, on the rare occasion that it appears to be working, it won't last. Like a good night's sleep, this pipedream comes to an end way too soon.  The simple fact is that corporate motivation is directed top down and when the leadership's flow of activity, energy, and ideas stops flowing, the business is heading for bad times. 

While it's possible to convince people to work harder than their bosses for a short time, it only makes sense that the people receiving the most benefit should do the most work.  When that isn't true, there better be a clear, available, and direct chain of succession or the most productive people will look for other opportunities or put their energies into more interesting activities.  In business, survival of the fittest often looks like rats leaving sinking ships.  There is no low-level fix to inactive management, so anyone with the skills to be somewhere else is likely to start shipping resumes when it becomes obvious that management isn't on a temporary vacation. 

For everyone else, the company becomes a place where the goals are incredibly simple.  If the execs aren't working, they have no effective way to know that no one else is working.  "Looking busy" isn't a difficult task in an organization that has minimal management.  On the rare occasion that management is in the vicinity of activity, it only takes a little ass-kissing and random motion to convince inactive management that something is being done.  It may not be work, but it looks like work to someone who isn't familiar with functional activity.  If you've been employed, you've experienced this traditional American phenomenon.  Most large companies generate much more random activity than directed, functional work.  Unfortunately, way too many small and mid-sized companies sink themselves imitating dysfunctional Misfortune 500 disaster zones. 

As consumers I think we've come to expect lethargy and incompetence from the management of companies with which we do business.  My home town recently acquired a new grocery chain, ALDI, that specializes in low cost, no-name-brand, bulk stock groceries.  The store doesn't accept credit cards or personal checks.  ALDI stores don't even provide free grocery bags, plastic costs 10¢ and paper is 5¢.  The result is that most items in the store cost a fraction of our local "bulk" grocery's prices.  Even more dramatic, though, is the difference between the two store's management styles. 

Recently, I was standing in a long line of ALDI shoppers waiting for my chance to pay money and escape the store.  One of the folks in front of me "discovered" (regardless of dozens of signs all around the store) that his credit card and checkbook weren't going to be accepted at the checkout counter.  The line came to a halt while he meandered toward the ATM.  A light came on next to the register and I began to consider pushing my cart to the side and leaving.  I'm not a great fan of standing in line.  Apparently, the light was a request from the checker for backup.  In a few seconds a manager appeared and opened a second checkout line.  Big surprise, management doing work!

An even bigger surprise was yet to come.  Not only did the manager know how to work the register, he was a lightening fast checker and the folks who'd moved to his line (including me) practically ran through the line with their groceries.  Our local ALDI's checkers are famous for being efficient, but this guy was easily twice as fast as his employees. 

At the other end of the management equation is the Cub Foods management; the other bulk grocery in our neighborhood.  I have never seen Cub's managers run checkout and I'd be amazed if they are capable of doing anything that technical.  I have seen Cub's managers watch, disapprovingly, as their employees struggle with moronic customers and malfunctioning equipment.  They didn't lift a finger to improve the situation, but they do take every opportunity to work on their Scrooge facial expressions.  As a result, the Cub store is consistently filthy, disorganized, and the general attitude of its employees could be summed up with the word "disinterested." 

To take the inactive manager motif to the extreme, you could look to our current Commander in Thief.  G.W. Bush is the laziest, most uninvolved President the nation has seen since Reagan or Eisenhower.  In his first year of office, one of the most catastrophic in the nation's history, GeeWiz was on vacation more often than he was "working."  However, when he's working he's mostly on vacation.  The status of the current executive summaries is something slightly less sophisticated than a series of "where's Waldo" illustrations.  Whether Bush is intellectually incapacitated is unknown, because he's so lazy that his capabilities are completely untested.  Bush has tossed his responsibilities off on a variety of subordinates, none of whom are equipped (technically, ethically, intellectually, or psychologically) to handle the job.  As a result, the nation's national security experienced it's worst failure since WWII and the worst ever failure to protect civilians.  The economy has stumbled from a booming, energetic, and creative high to a malaise nearly equal to the mess that Reagan's corrupt mishandling created for the early Clinton years.  And, maybe worst of all, the nation is practically perfectly polarized; unequalled since the years leading to the Civil War.  We have two, nearly equally populated sides that absolutely, totally hate each other.  Bush and the Neocons have turned the country so completely against itself that we ought to rename ourselves the Disconnected States. 

Typical of what happens when a corporation is experiencing this kind of failure of leadership, many of the nation's best and brightest are contemplating jumping ship.  Fortunately for the world, this happened when Hitler's Germany was misled by a similarly lazy, incompetent, and uninvolved "leader."  Without an intelligent, moral, and aware top executive, the marching morons took charge and drove Germany in so many foolish directions that the nation's energy was misspent far more quickly than it would have been if there had been executive planning and guidance behind the mischief.  Lucky for us.  If Germany had retained its best and brightest, they would have had the atomic bomb years before us and their missile program would have been capable of delivering that bomb to our continent. 

Bush's amoral 30% majority is a similar crowd.  They are mostly out for themselves, taking on an occasional distraction like school vouchers, abortion, and pointless wars against third world nations.  They're uneducated, unscientific, uncreative, and selfish.  In the end, the Bushies will dissipate our national resources, international respect and power, and convince many of the most intelligent and talented citizens that America's time has come and that it's time to move to a more hospitable and dynamic country. 

Uninvolved leadership always self-destructs.  You'd think the free market advocates would be a little concerned about this fact.

#68 Management by Hiding (2002)

All Rights Reserved © 2002 Thomas W. Day

Back in the decade of constantly changing management techniques, David Packard, of Hewlett-Packard, wrote a book called "The HP Way."  In this business biography, he took a bit of credit for "inventing" the "management by walking around" style.  Sam Walton gets a lot of credit for popularizing the technique, too.  If these managers actually walked around some, that's a good thing.  As for their having invented a style of management, that's bull.

In fact, this is ancient, common sense stuff.  Walking around management is the basic tactic of nearly every successful from-scratch start-up manager.  Mostly because the manager is the managee and he has to do the walking around, and do the work, to keep things moving.  Good managers keep walking around until they sell the company to someone who has a burning desire to kill or stagnate a successful business. 

Walking around management is still a popular topic of conversation, even if it doesn't get applied all that often outside of small businesses.  I found about 1,400 hits on the subject in a recent Yahoo search.  The phrase is live and well, regardless of the condition of the actual practice.  Lots of execs like to think of themselves as being a hands-on manager because even the lamest of the breed knows that anyone who isn't hands-on is useless.

However, most managers claim to be walking around when they're mostly hiding.  MBA-style managers in large companies are too busy keeping their backs to walls to do a lot of walking around. When you step onto the production floor, or anywhere where work gets accomplished, you bump into people who could use a little management assistance.  That distracts the MBAs from their primary task of promoting themselves to their equally clueless (and even more immobile) superiors, which derails the all-important promotion schedule.  The last thing a modern manager wants to do is to be useful to the people he manages.  In the never ending quest for stock bonuses and outrageously huge salaries, messing with people who do work is an unrewarding enterprise.

This immobile and distorted perspective isn't something that MBA factories have changed or created. (I'm probably not going to live long enough to see an original idea spawned in the MBA academia.)  They're not to blame for something that has been around for as long mismanagement.  In my 40-year working life, the most common work-related complaints I've heard (or produced) have been about lazy and incompetent management.  A good manager is hard to find.  Sounds like a country-western tune, doesn't it? 

It's a courage thing.  Walking around involves being seen, becoming expected to accomplish something useful, and having to take an occasional position regarding actual work and working conditions.   This would amount to an endless pile of issues and activities that are better left untouched by an ambitious exec.  Any manager, even a CEO, who does those things has courage and is about as rare as an honest politician.  Being accessible means you have to make and explain decisions, provide (or withhold) resources, and you have to manage. 

And you thought becoming a manager put an end to all the hard stuff?  Don't worry; nobody expects anything significant from management.  We're used to gutless, brainless, pointless, clueless edicts from the void.  We'd just get confused (and productive) of you did anything beyond the norm.  Sleep little exec, sleep.  Mamma will wake you when the bankruptcy court convenes. 

November 2002

#7 Training, Who Needs Training? (1998)

All Rights Reserved © 1998 Thomas W. Day

Thirty years ago, I worked for the City of Dallas (Texas) Water Department. That was my first "professional" job. I was a meter reader. For two weeks, a senior meter reader and I hiked my routes. He showed me how to find meters, how to read them, how to avoid angry customers who thought I was going to shut off their water, and how to protect myself from dogs. When he set me free, I was ready to do the job. For the next 2 1/2 years, I read an average of 350 water meters per day and averaged under 3 "errors" (valid customer complaints) a month. Looking back, I think that was the first, and last, adequate job training I've received from a business. And it was a city government job.

Since then, I've been a technician, an engineer, a supervisor, and a manager in a half-dozen industries and a about that many companies. Each of those industries and companies had some sort of "training department." Several of those companies had training procedures that attempted to describe job tasks. Not a single one of those companies put together anywhere near the quality of training they needed. Most of the training programs were nothing more than half-hearted, butt-covering games whose purpose was to fool OSHA, FDA, customers, or some simple-minded executive.

In an economy that claims to be begging for a skilled and educated labor force, you'd think someone would be making a serious effort to build and keep that sort of labor in the company. Not many are. Why the heck is that?

For one, it's expensive and, for two, it requires management planning. Since most businesses are wasting piles of money fooling around with training, Number One can't be the hold up.
But Number Two is pretty much an oxymoron. Management Planning. It's almost impossible to imagine those two words in the same sentence, paragraph, or book. The usual substitutes (management scheming, management manipulating, management abuse, management incompetence, etc.) don't do the job. Training that has a purpose and has to meet real requirements takes a load of planning. Short and long range planning.

Short Range: You have to decide what kind of skills you want your employees to have at the end of the training program. You have to figure out who can teach those skills. You have to sort out who will be able to accept and learn and retain the skills you want to have taught.

Long Range: You have be smart enough to know that a percentage of your labor force will be in training and not available for labor. You have to decide how to make training attractive so that people will want to let go of their daily tasks and work for new skills. You have to figure out where your company is going and what kind of skills it will need when it gets there.

And so on.

Absolutely none of the above is taught in an MBA program. For my money, absolutely no management skills are part of anyone's MBA program, but that's another issue. The first requirement for sorting out those questions is an understanding of the company's technology, the company's markets, and the company's future. There's that damn leadership thing, again. It's pretty easy to see why it's in such short supply.

Just for kicks, I did a search on the word "training" on my company's intranet. Not a single hit. A company with nearly 2,000 employees doesn't have a single active, advertised, on-going training program. Sure, there is a lot of window-dressing, remedial training going on. There are a few technical classes offered to a few engineers. Human Resources always seems to be treating itself to off-site classes in "How to Screw Over the Most People with the Least Effort." Since company networks never work and managers can barely find their computer power switches, IS "professionals" can always convince Management that they need more training. But, for the most part, my employer is a mirror of my business education experiences of the past.

So what all these execs are whining for is not trainable employees, but pre-trained employees. Ideally, self-trained employees. Perfectly, self-trained in the exact tasks needed employees. What they get are a few people who are self-motivated enough to teach themselves skills that will enhance their personal opportunities; and a lot of people who learn enough to get by. The first group won't be generating any loyalty for the company with their efforts. The second are too busy getting by to think about what happens after lunch.

For employees, the key is to get into one of the minority fields that management thinks is worth training. Attract just enough attention to get yourself into regular, general purpose classes that will make you a more valuable employee to all employers. Avoid any sort of "job training" that will make you an expert in your company's most obsolete functions (never, never, ever learn anything about IBM's System 36). And be sure to list all of the industry training programs you've attended in your resume. You never know when some idiot executive will be looking for a free lunch.

February 1998

#175 Back to Quality

When I first started the Rat's Eye View, I mostly wrote about business and the decline in management capability I, personally, experienced in business. While the last couple of years have been more about politics and the rapidly down-breeding human race, I still think about business concepts and management. It just doesn't seem as important as the destruction of  democracy in the United States, the establishment of an ignorant theocracy in place of constitutional government, or my government's attempt to colonize North Africa for international oil corporations.

There appears to be no fix for the Rise and Fall of Great Nations, so for the moment I'm going to return to business and the concept of customer service and quality. Everything good in business comes from these two concepts. Some writers have considered the two as separate and, maybe, equal, but I think they are inseparable. Without a culture of service to the customers of the core business, there is no motivation for pursuing quality. Without the concepts of quality management, the tools for serving customers are insufficient.

Quality and service are hard concepts for the current breed of manager to grasp. Like professional athletes, the kind of people who gravitate into management, especially those who have inherited the position, tend to believe they possess some inherent capabilities that allows them to rise above the mundane problems of their business and customers to see the "bigger picture." There is no bigger picture. The problem with the real picture is that it is complicated, technically challenging, and constantly changing. The more simple view found by overlooking the problems of service and quality has nothing to do with the survival of the business or providing value to the business; it's just daydreaming disguised as management.

Recently, a couple of local, pointedly obvious experiences reminded me of how management can snatch defeat from the claws of success. When I first moved to Minnesota, I stumbled on a new multiplex theater in Oakdale, Minnesota. I only discovered this out-of-the-way theater because it was near a store I like a lot, Fleet Farm. The theater is about 5 miles from my home and there were several closer, equally well-equipped theaters near my home at the time. However, the Marcus Oakdale Theater became my default place to watch movies because on my first visit I found the seats to be comfortable, the screen to be acceptably large, the sound system to be well-tuned, and the popcorn to be edible. Not an overwhelming endorsement, but good enough to stop my unmotivated search for a better facility. Over the last decade, I've probably watched a hundred or so movies at the Marcus Oakdale. I'm usually with one or two other people, so we're talking about a couple thousand dollars in ten years. Not a spectacular expense, but not insignificant.

This year, I convinced a friend to watch a western with me, 3:10 to Yuma. It's an Elmore Leonard story and I"m a dedicated Elmore Leonard fan. My friend wasn't either a fan of westerns or particularly interested in Elmore Leonard. I was hoping to make a convert. He wanted to pass an afternoon escaping from life's problems.

From the moment the projector fired up, an irritating black line appeared on the left side of the screen. My friend noticed it immediately. The line was sometimes joined by lesser lines, but the big black line remained on the screen for the entire showing; from popcorn commercials through the previous all the way to the end of the movie. My friend never stopped noticing the line, I could sometimes forget it was there because I'm a nutso western fan, but it was too often obvious to me, too.

The next day, I wrote to the theater's management, describing our experience and disappointment. A few weeks later, I received a letter from the theater's management apologizing for the bad experience and explaining that the theater had received a defective print from the distributor and it took several days for the distributor to provide a replacement. "It's not our fault," or something equally lame was the explanation. A couple of guest passes accompanied the apology.

Since then, I've seen three or four movies. I haven't used the guest passes yet. There is a new complex of theaters in my neighborhood and, when I wanted to take my grandson to a movie I decided to check out one of the new theaters. The seats were comfortable, the screen was pretty large, the sound system didn't blatantly distort, and the popcorn was edible. I have a new favorite theater and, when I visit Fleet Farm, I drive by my old favorite theater, remember that I have some free passes and wish I'd remembered to put them in the car in case I was in the area with some time on my hands.

The distain the manager demonstrated toward his customers, me, in continuing to show a damaged film with no warning, reduction in price, or acknowledgement that we might be intelligent enough to notice a defective product was enough of a de-motivator that I'm just not inclined to spend my own money to try that theater again. Burn me once, shame on you. Burn me twice, shame on me.

In the college where I work, we have a coffee shop. From first hand observation, I'd suspect that the original concept for the school's coffee shop first started as an afterthought. It appeared to be something to do with a large room on the top floor of the building. The room didn't seem to fit into the school's classroom plan, but it would be wasted space if nothing went in that space. The initial facilities were almost laughable. The original manager, Ben, was a recent school graduate and was driven by unseen, unpredictable forces to make the coffee shop a hangout for students and instructors. He seemed to be particularly focused on making instructors happy, maybe because we were the only predictable customers he'd have; students being temporary customers at best. Ben offered better-than-cafe coffee, went through a variety of pastry suppliers until he found a decent bakery, and worked hard to encourage kids and instructors to patronize the coffee shop. It became a success, in spite of management's ignoring the facility and Ben's requests for more equipment and more comfortable furniture. Ben had no nearby competition, but he tried to make an impression anyway.

Eventually, the school's mismanagement decided that Ben wasn't a "professional" manager and he was replaced by a lady who claimed she had managed cafe's "in the real world." She lasted a couple of months and disappeared. Since then, we've gone through a collection of managers, each equally disinterested in the regular customers, providing more than the minimal service, and each imprinting absolutely no character on the facility.

For a few years, that worked. Then, a cafe opened across the street. It's a hassle, comparatively, to go outside, cross a busy street, wait in line with many more customers, to get a cup of coffee, but the service and coffee is significantly better. I've not only found myself surrounded by fellow instructors across the street, but the school's management is regularly over there, too. We are so used to indifferent service from our own facility that we automatically switch allegiances to a better service provider, even when we are the competition. How screwed up is that?

My turnaround came when I bought a cup of coffee and had the cup dissolve on me, spilling hot coffee on my hand, causing me to drop the cup, and waste a few minutes cleaning up after myself in class. When I bitched about it, my students all said they'd had the same experience. I took my complaint to the cafe manager and was told that he'd received a shipment of defective cups and it would be a couple of days before the supplier could replace them. He wasn't even slightly embarrassed that he'd been caught providing crappy product, that he knew would dissolve before his customers could naturally empty the cup. He just smirked at me for being foolish enough to think he cared. I started bringing coffee from home the next day, until I discovered that other instructors were going across the street for better service. On the rare occasion that I don't manage to brew my own coffee and don't want to walk an extra block for coffee, I bring my own cup to our coffee shop.

Ben has moved on to become a "professional" facility manager for a successful local club. I was reminded of Ben when a student came by my office to tell me that he was working for Ben and that he had asked the student to invite me to his club. Ben is still driven to extend exceptional service and I'm sure the quality naturally follows.

This all reminds me of an old (badly paraphrased) saying, "It takes $50 in advertising to convince a customer to try your product. 5 seconds of poor service will lose that customer and it will take at least $5,000 to bring that customer back again." Quality service takes constant attention and unwavering focus from management. Anything less is a lot less than the current breed of management imagines. 

December 2007

STP–The Canaries in the Coal Mine

Back in 2014, when we first moved to Red Wing, we joined the local YMCA. It’s a fairly nice facility for a small town and it seemed to be welcoming. That was typical of my experience with Minnesota Twin Cities (YMCA of the North) organizations. I had been a downtown St. Paul YMCA member, transferred to the Roseville facility, since we moved to Minnesota in 1996 and, as of 2013, my Medicare health insurance Silver Sneakers benefit began to pay for my membership. So, it seemed logical to transfer my membership to my new residence. The paperwork went smoothly and in late November we began to enjoy our new facility . . . for about a month. In late December, the Red Wing YMCA quietly announced (louder for those of us who were effected) that it would no longer accept Silver Sneakers payments and even acknowledged that it was the only YMCA in the state to make that move.

At least in our situation, the only real benefit to the Red Wing YMCA was the swimming pool. We have a small gym in our basement, complete with an excellent treadmill, stationary bicycle, weights, and resistance bands. We have no reason to leave our home for those things, which I discovered by transferring my Silver Sneakers membership to the local Anytime Fitness where I used it a couple of times and let it lapse.

For a bit, I attempted to carry on a dialog with the Y’s management (Tom Burke, Martha Harris, and Mike Melstad) and a member of the board (Barb Haley) who all claimed to have a solid, demonstrable financial reason for the Silver Sneakers decision, but were all completely unable or unwilling to produce any of it. I suspect when they learned I have a background in manufacturing accounting, ROI justification, and quality management they decided to keep their “secret calculations” secret. I was supposed to believe they’d done a thorough financial analysis which had provided justification for their decision. I am rarely inclined to trust any kind of management decision logic, based on my long history with incompetent, lazy, uninformed, overpaid, and mostly-useless management types.

This past December, the Red Wing YMCA management decided to re-evaluate and reverse their Silver Sneakers decision. They were pretty quiet about it, but I lucked into the inspiration to ask on January 1, 2023 and discovered they’d be allowing Silver Sneakers compensation starting the next day. While I was either getting registered, watching my wife get re-enrolled, or watching a half-dozen other old farts get signed up under the new policy, I heard the same pool-schedule spiel fed to each of us: the best time to swim and to avoid crowds was between 2PM and 4PM. So, I’ve been taking advantage of my new membership fairly regularly for the last 3 weeks. Yesterday, I showed for for my routine and discovered, thanks to a tiny sign printed on the door to the pool (after changing and showering) that the pool hours would be limited 4:15 to 8:30PM. I wasn’t the only surprised bait-and-switch victim, as there were two other new members in the dressing room who were at least as pissed as me.

I thought about bitching about yet another snow-job experience from the Red Wing YMCA, but I decided it is no longer worth it to me. Mrs. Day and I have been discussing the pros and cons of staying in Red Wing and Minnesota for the last couple of winters and I’m just going to put the local YMCA in the “cons” category and let someone else worry about it. “Fixing” systems, organizations, and processes was my career for 50+ years. I’m retired and don’t care enough to fix much of anything now.

This all reminded me of a conversation I had with the Washburn quality manager in 1991, during my 30-day moment of unhappy employment with that company. I wrote about this in a 2015 essay titled “Quality in A Disposable World” after a similar conversation with a Red Wing Southeast Technical College instructor. In that essay, I wrote, “Like a lot of small business people, my instructor was under the delusion that customers will naturally complain if they are disappointed with service or product quality. Many larger companies are equally happy to pretend that they are getting 100% ‘compliance’ from dissatisfied customers. The fact is that most customers simply log their dissatisfaction and tell themselves they will remember to never buy that particular company’s product or service again. Most company executives are perfectly happy with that outcome.”

The Washburn service manager explained to me that the company’s complaints system dealt with customers fairly ruthlessly (efficiently?). He said, “the company shipped product with a known 50% defect rate, based off of the internal random inspection data from a few years back (Since they quit inspections after a few months, product quality had probably gotten worse.). From a suspected 50% defect rate, about 1% of the company’s customers complained, expecting some sort of warranty response. If they stonewalled that first complaint, about 1% of the first 1% would come back for more abuse. No special inspection was done for warranty replacement instruments, so at least 50% of the replacements were also defective out-of-the-box. According to the manager, that 1%-of-1% routine applied to warranty replacement complaints.” So, with a known 50% defect rate, Washburn only provided some kind of warranty service (the first time) on 0.5% of shipped product.

In a similar vein, someone who was once involved in Red Wing’s city management explained how the city’s civil service bureaucracy blew off citizen comments and complaints with an acronym, "STP = same three people.”  The arrogant, simple-minded idea was that the few members of the public who contested or complained about the top-down city management decisions could be dismissed with this delusion. Red Wing is a very small town, 16,000 people and steadily shrinking (especially in average incomes), with a huge budget and a voracious appetite for insane growth through mindless annexation (41.41 square miles, so far). Minneapolis, with 425,000 residents, is contained in 57.51 square miles. Red Wing city management also has an outsized view of the “value” of city employees, based solely on what the city employees can get away with (often by ignoring the STP). Xcel’s Prairie Island Power Plants are the city’s main property tax contributor and those plants are likely to be phased out in the next decade. Eventually, that unrestrained spending will result in exorbitant local taxes and a rapid Atlantic City-style evacuation of the area by everyone who can afford to take a loss to find a more secure place to live. (Remember the rule, the first rats to leave the ship are the ones who can swim.)

Like the Washburn quality manager and the Red Wing YMCA management, the Red Wing city bureaucrats labor under the delusion that the 3 or 4 citizens who regularly comment and/or complain about the city’s services, expenses, or decisions only represent themselves. In fact, that small group is very likely representative of at least half of the local residents. They are consistently the “canaries in the coal mine.” The poor treatment they receive from the bureaucrats likely keeps the rest of the locals from voicing their opinions, until they vote with their feet and give up on the city. Red Wing’s growth has been anemic, at best, for the entire 163 year life of the city, falling far behind the national population growth and that of the state’s major cities. That failure isn’t for lack of natural resources,opportunity, or even representation in state and federal government.

#61 Old and In the Way (2002)

All Rights Reserved © 2002 Thomas W. Day

A lot of companies are really misplacing a lot of trust into HR's systems of "evaluating" employees. The state-of-the-business HR-PC term for the current boondoggle is "ranking."  Ranking has become a popular MBA-kind of thing to do, especially in the cubes of the misFortune 500-5000.  An interesting side-effect is that companies (like Ford, Microsoft, Goodyear, Conoco, and GE) are finding themselves in court, a lot, for the way ranking works in the real world. 

The theory is that if the performance of one employee is compared to other employees, management can find a true value for the output of each individual cog in the wheel.  It's a lovely theory and like most of the weirdness that comes from the minds (applied loosely) of MBAs, it's flawed.  Mostly, because it depends on the competence and fairness of the manager doing the comparing.  Talk about a system that was doomed from conception!

To apply a sports comparison, ranking is very much like valuing a player based only on his stats. Lots of players, especially in the severely screwed-up pro-sports gangland, have found that it's a lot easier to generate impressive personal stats than it is to make a useful contribution to the success of the team.  Since most team owners come from successful careers in corporate backstabbing, the stats-first players have become very rich from this economic discovery.  Players who haven't learned this lesson are coming up to speed quickly and fans are noticing the difference in their favorite teams a lot faster than the owners are catching on.  As usual, management is the last to know what's going on, if it ever figures it out.

One of the consistent outcomes of ranking is that older, more experienced, sometimes more expensive employees seem to rank lower than their younger coworkers.  You might suspect that this is a sign that management is trying to weed out older and more experienced talent, but I suspect you'd be over-estimating the management's cleverness.  Mostly, this seems to be a symptom of management's unfamiliarity with how teams work. Not being team players, it shouldn't be surprising that MBAs don't know much about being contributing members of a team. 

I think the real reason many older employees are getting low ratings is that they've either failed to adapt to the new idiotic rules or don't feel compelled to do so, for personal reasons.  The most valuable team contributors, like their sports counterparts, make everyone around them better.  If a group is really going to shine brighter than the sum of its individual points of light, something has to happen to focus the electrons.  That "something" is usually an internal leader and almost never management.  It's possible that a team-oriented player could come from youth, but it doesn't seem to happen all that often.  Usually, it's experience that creates teamwork and experience isn't usually a characteristic of youth.  So, in MBA-think's usual anti-wisdom, ranking is cutting the guts out of the thing it's trying to optimize. 

It's also true that management, in its eternal battle to take credit where credit isn't due and turn silk purses into sows' ears, is snatching defeat from the mouth of victory.  The only companies that can afford stupid practices like ranking are those who have resources to waste.  In other words, companies that were successful in the past.  In paring away the company's experience and history, companies are setting themselves up for failure and inefficiency.  What ranking might accomplish, in the long run, will be to provide start-up companies with experienced, talented, team-oriented employees who may be specially equipped and motivated to do damage to past employers. 

We can only hope.

July 2002

Is Bean-Counting A Profession?

Now that the economy is crawling back to life (in spite of the best efforts of the Teabag congress and the hopes of the 1%’ers who’d hoped to totally crush the middle class), people are job hunting and hopping again. (Read the ShouldIQuit test;  the questions are important, you don’t need to actually take the test. 7 Reasons Why You Hate Your Job will also give you a fine grip on why so many people hate their jobs. ) The reason most of us hate our work is because management sucks the life out of the job and the people in it. The reason management is so awful is because the skill set they have is insufficient for the job. The only thing MBA clones know is simple data manipulation; bean-counting. As anyone who has ever performed an inventory knows, that ain’t rocket science. Supposedly, the big lesson in a Harvard MBA program is learning the valuable skill of “pushing blame down and pulling credit up.” That is, also, not rocket science, brain surgery, or useful anywhere outside of a spoiled brat’s fraternity or the upper floors of a Misfortune 500 corporation.

While statistics show the American worker has become dramatically more efficient and productive. damn little of that output is due to management. In spite of mismanagement’s general incompetence, engineers, technicians, clerks, sales people, and everyone else are motivated to do a better job with modern tools (tools that are generally beyond management’s capacity to comprehend or use). The simple fact is that people with even the slightest amount of freedom and talent are driven to do a better job. That’s not something management can claim credit for, it’s just human nature.

The tools MBAs acquire for management are intimidation, whining, and the rest of the manipulation skills typical of 13-year-old girls. Accounting is still a valuable skill and a respectable profession. But bean-counting at the remedial level of MBAs is not even worth considering beyond its comedic value.

What Works and Who Doesn’t

A friend of mine--along with a few dozen past acquaintances, several relatives, and people I’ve met on the road—has wasted a lot of precious fresh air trying to convince me that some parts of government bureaucracies are staffed with hard working, conscientious, high-skilled workers. Every once in a while I see some evidence that might be true. Mostly, I experience proof that the counter-argument holds all of the cards. That does not mean, by the way, that I believe the mythical and magical free-market could do those jobs better. Honestly, I think groups of humans larger than a dozen are incapable of competence. What it does mean is that government, even local government, is mismanaged by the same class of moron who drove manufacturing out of the United States and who is now trying to squeeze the last drops of value out of this country before they jump ship and head off to whatever continent they will mangle next. Like corporations, the 1% are in no way loyal to or remotely committed to any particular country. They go where the easy money is.

Back in my manufacturing engineering days, I was a huge believer in independent quality inspection systems. In retail, that means the “secret-shopper” system, but only if flaws found are blamed where they belong, on management. The higher up the fault gets pushed, the better. For starters, it’s almost impossible to find a manager who can’t be replaced with a more effective person from the ranks of the managed. There probably isn’t more than one MisFortune 5,000 CEO whose job couldn’t be more effectively performed by practically any other employee in the company. Until you dip below the director-level of manager, that statistic pretty much holds true in the same proportion. The usual problem with secret-shoppers is that whatever system or performance fault is found is blamed on the person nearest the shopper at the moment of impact. Regardless of corporate “empowerment” bullshit, most system problems are the fault of management: including lazy or surly or incompetent employees, poor inventory management, ugly store displays, and dirty bathrooms.

State park systems are particularly well-suited to this kind of quality control system. Most states either employ or encourage non-state park employees for many of the park maintenance and management tasks. In New Mexico, for example, the state employees often do practically nothing while everything from managing the visitor centers to cleaning the camp grounds to designing the camp entertainment and recreational areas gets done by the hosts and volunteers. Adding a few unidentified roving secret-campers to the state’s park budget would be an incredibly cheap way to quickly identify the poorly performing camp managers and employees. To put some teeth in the system, it wouldn’t be hard to sell a “three strikes” program that would allow the state park bureaucracy to purge poor performing employees and management. These are all jobs with a huge backlog of qualified potential replacements for practically any state job, but state park jobs are probably the easiest of all jobs to fill.

In my opinion, the states that most need an aggressive state park quality control system are (in order of our poor experience from worst to best): Texas, Iowa, Oklahoma, Missouri, and New Mexico. My bet is that pretty much every state that has a park system is in need of quality control. Because the first experience many people have with a state is through the state parks, I think any state suffering from economic problems (Which aren’t?) should look hard at the performance of their park system. We met at least a dozen technical skilled, well-off couples on our travels through the southwest this past year who were looking for a new place to settle. Obviously, problems in the state parks wouldn’t be a total deal-breaker, but if you start off with a bad feeling about a place making a sale is an uphill battle from there on. I think this is a bigger deal than most state bureaucrats pretend.

Looking for a Perfect Market for Software?

Since the earliest days of the Rat's Eye View (#34, 2000), I argued that "The Rat's Eye Business Rule #1: No business is more than necessarily smarter than its customers." One of the best examples is in business software. I do not mean Quicken's Home and Office or Quicken Books or Microsoft Office or any one of the mass marketed programs that are intended for professional use but are sold to all of us. I mean the specialty software software designed for the biggest suckers in business: businesses. The bigger the business, the dumber the customer.

I've experienced this several times in my business career. The first time went back to the days (1967) of punchcards and hardwired business computers. That was followed by suffering with college computer systems in the 70's, Gerber and HP's godawful CAD systems in the 70's & 80's, the horrendous misery of IBM's quality management software with two medical devices companies (1990's), and most recently I'm all the way back to my own beginnings having to use the POS software that colleges buy. This past week, I heard exactly the same story from a middle manager in Minnesota's state government.

In particular, my own most resent misery has been caused by, first, the disorganized coding disaster produced by SonisWeb followed by an even bigger catastrophe misnamed CampusVue from Computer Management Corp. Both of these companies have done a fine job of targeting the function that most "educational institutions" are most concerned with: income management and customer/student tracking. However, these programs completely neglect the primary function of an educational facility; classroom management. From recording attendance to administering, scoring, and storing exams and final grades, these programs appear to have been written by a first semester, computer science student no more recently than 1975. Even worse, every "upgrade" blows away more useful features, blocks instructor access from classroom information, and adds more keystrokes to instructor's interaction with the already cumbersome and incompetent software.

You might wonder how such poorly written software can find customers? Easy. Administration buys the crap and administration has no clue what goes on in the classroom. You can't get a dumber customer than one who doesn't use the product or know what it's used for. What passes for "management" in today's dysfunctional organizations is so busy packing its pockets with "performance bonuses" for awful performance that nobody has an eye on operations or the bottom line or the future. That is pretty obviously a formula for disaster.

#13 If I Can't Do It, It Must Be Easy (1998)

All Rights Reserved © 1998 Thomas W. Day

The title of this piece, "If I Can't Do It, It Must Be Easy," seems to the strongest of all modern management beliefs. A zillion years ago, good managers said things like "I'd never ask anyone to do a job I wouldn't do myself." Not anymore. Or maybe, and more likely, there aren't any good managers left to say things like that. Today's managers usually don't know what they would do themselves, mostly because they aren't capable of doing much of anything. More often than not, they're proud of this characteristic.

The new pack of MBA-de-educated, fast-tracking managers believe everything from performing a useful function to leading a meeting is a task unworthy of their "skills" (a term left totally undefined in MBAville). If nothing else in our current economy tells us that we're living beyond our means, the vacant lot of management abilities in American companies ought to do the job. It's zombie-land in the offices with windows. A decade ago, we complained about bosses without people-skills. Today, it's tough to find any sort of skills in the executive suites.

Where is Lee Iacocca now that he might actually be useful? Man, I never thought I'd be saying that!

Which reminds me, what do you get when you glue a pair of shot glasses to an executive's ears? An overpriced, unrepeatable Hubbell telescope.

Most companies could lose all of their management staff in a plane crash and not know they were missing for months. The outside world's first clue that the business was unhelmed would be the company's rapid increase in efficiency and profitability.

The perfect beauty of the MBA-to-Management fast-track is that it takes absolutely no ability or experience or any identifiable quality to make the big bucks (other than being tall, attractive, and having good hair). Buy a degree from a prestigious MBA factory and you're on your way to an executive lifestyle, regardless of the disasters you create along your way. In fact, I've seen a few of these dweebs completely hose up a company and get hired and promoted (for a job well done?) to another company in the same industry. What an awesome example of the phrase "poison pill."

In mismanagement's simple world, there is no downside to simple solutions for complex problems. Need to cut costs? Whack out a budget with smaller bottom line numbers. Need to shorten production times? Slash the schedules. Management's blissful ignorance is the total lack of consequences to impossible demands. Someone will either "make it happen" (in the words of the ultimate MBA'er, Captain Picard of the Failed Enterprise) or convince the dim-bulb execs, on the next rung up, that it did happen.

Finally, a side effect to this low-road route to success is that someone has convinced these New Age Mismanagers that any skill they don't have isn't worth having. If God is in the details, these fools are the ultimate atheists. As a dean of Harvard's School of Business once said, "Details? We don't need no stinking details."

The mass of today's executives seem to believe that the difficult part of every task is saying "make it so." These corporate wood worms believe that "seeing the big picture" is some kind of special skill inherited only by the ruling class. "Bring me your poor and wretched ideas, so that I can wave my arms over them and blessed they shall be." Once the arm waving is done, it's back to the golf course, the three-martini lunch, the Waikiki sales branch inspection, or a ten day quality seminar in Paris.

Sometime between ten minutes and a week after making the grand pronouncement, the doofus with the good hair will be back wondering why it "isn't so." The time period has more to do with his recreation schedule than the complexity of the project. No excuses are acceptable. It doesn't matter if you don't have the tools, training, human-power, or time. Since Mr. Corner Office thinks he has performed the hard portion of the task, in his mind the rest of the task is simple grunt work. And you are the grunt.

In a Priority Mail(TM) ad, the Postal Service said it all for me, "The smartest executives all have something in common. They love a no-brainer."

And the rest of us know why.

March 1998

#31 Unions, Double Failure (1999)

All Rights Reserved © 1999 Thomas W. Day

[In retrospect, I have misgivings about this Rat Rant. I don’t disagree with the general proposition that the existence of a union is a sure sign of mismanagement. However, I do disagree that unions are unnecessary. All human activity is corrupt, so there is no special information contained in the idea that unions are often corrupt.]

A sure sign of a mismanaged business is the presence of a union. Union membership is also a sure sign of a mismanaged career. Here's what the existence of a union says to me:

1. This business is so abusive that the people who work there need Jimmy Hoffa to "protect" them from mismanagement's idiocy.

2. The lives and careers people of who work at this place are so screwed up that they need Jimmy Hoffa to keep them off of the unemployment line.

The recent foolishness in Seattle, the protests of the World Trade Organization meeting, gives us a great picture of the capacities of the second group. Pretty much every one of our great unions was represented in the protesters. While an occasional speaker provided some useful information and analysis, too many were self-serving and simpleminded. In particular, the union speakers were pointedly simpleminded. Their speeches were full of the same "common man" drivel that they've spouted for the last 75 years. Sooner or later, you'd think one of those guys would get tired of being called "common."

A union leader from the American Federation of Teachers was especially proud of that organization's turnout. (Which made me wonder who was minding their classrooms?) Speaking in a pre-riot interview with a NPR reporter, this union representative convinced me that there are far too many teachers in today's classrooms. Students would be much better off spending their days with comic books and video games. Babbling about solidarity against everything from the "unfair" prices for farmers' produce to the loss of minimum wage, unskilled manufacturing jobs, the AFT bureaucrat proved to me that she had absolutely no comprehension of market forces and economics. Without the protection of a union, this particular "educator" would be asking us if we "want fries with that" for a living. It's scary to think that anyone would believe hiring more "teachers" of that caliber would improve public education.

My father was a high school math teacher for thirty years. A big part of the reason he didn't protest his mandatory retirement was due to the declining quality of people he had been surrounded by in his last decade of employment. Even worse, for him, he had predicted this would happen twenty years earlier when the teachers in his school voted to join the union.

In the debate over the arrival of the union, one of the most incompetent high school teachers ever to grace the long lineage of incompetent Kansas teachers had said something like, "When the teachers of this institution join this union, the standards of education will improve. I will stake my professional reputation on that." In my father's finest moment as a professional, he stood up and said, "I'll put my reputation against yours, anytime, and I'll guarantee that, once this school system is unionized, the schools will belong to the teachers, not the students." And he was right. Since that time, the sole focus of the education system has been on those who are employed by that system.

And that's the way it goes for everything that's unionized. From the perspective of a customer, it makes sense to avoid anything that's been touched by union labor. The presence of a union tells a consumer at least two things about a company: 1) the management was so incompetent and arrogant that the employees were driven to join a union to get the minimally fair treatment that unions provide, and 2) now that the company is unionized there is no chance the company will ever get a functional quality control system in place or find a way to convince employees that customers should be treated differently than serial killers.

The usual spiel about unions is "they had a purpose in their time" or "they're a necessary evil." The purpose was supposed to be protecting unskilled labor from the whimsically brutal hand of management. In most cases, what actually happened was another brutal hand was added to management, union management. From a consumer and competitors' perspective, the purpose has turned out to be to protect unskilled labor from losing their jobs to skilled labor and automation, and, if there are any spare resources, from the usual management idiocies. Unions have become a self-serving refuge of the incompetent and, otherwise, unemployable.

Sometime, in the near future, I'm going to write a Rat Rant about how we can determine which occupation will be automated next. One of the indicators is the presence of a union in that occupation.

December 1999

#57 Enron Blues (2002)

All Rights Reserved © 2002 Thomas W. Day

In the same mournful vein that the media has used to describe the "death of innocence" on September 11th, we're now learning that many Americans may be losing confidence in the stock market because of the fall of Enron.  I'm sure that my readers were just as surprised to learn that some executives may be incompetent, greedy, unethical, and seedier than G.W. Bush.  It's new news to me, for sure.

One of the Rat Rants I really regret not writing was the inspiration I had, at the beginning of the Bush II Administration.  GW's crew began government "reorganization" by laying off 56 SEC investigators and accountants.  I thought, "here we go again."  Reagan started his eight years of carpet bagging by sandbagging the FDIC field force, laying the groundwork for the eighteen trillion dollar S&L rip-off.  George I stumbled around looking for a bright, shiny object to distract us from Neil Bush's involvement in Silverado S&L and he found Iraq and Desert Storm.  The Clinton years gave us a little break from government intrigue.  Now, we're back to business as usual.

I will always wonder at the logic of a country that hates a President who does a good job for the nation, while boinking an intern or two, and loves a President who is impotent, but puts the shaft to us all.  Darwin was wrong, "survival of the species" is not a primal drive.  Personally, I don't care where the President stuffs his cigars, as long as I don’t get stuck with a share of a multi-trillion dollar debt.  I guess I'm morally-challenged, but I'd rather he screw one or two Americans rather than doing it to us collectively.

Seriously, though, how can anyone be surprised at the lack of ethics in executives?  How could anyone expect anything else?  The executive offices of the Misfortune 500 is nothing more sophisticated than a collection of wolf packs, with an occasional shark when there's enough water to support truly amoral behavior.

Enron is the tip of the ice planet.  The SEC doesn't have a small percentage of the resources or motivation necessary to investigate large corporations.  Investment brokers and market analysists have their fingers in the pie so deeply that they take breaks to keep breathing.  If you believe that a Board of Directors offers some protection from executives cleaning out the company piggybank, it's a wonder you haven't pulled all your teeth, put them under a pillow, and called that a "retirement plan."  Directors are just other companies' executives, spreading the wealth among the wealthy.  There is too much to gain and too little to lose for executives in modern corporations, so don't expect enlightenment or revolution from that well fed 1%.

Money and stock investments are acts of extreme faith.  Each time we accept scraps of paper for our weeks of drudgery, we're cooperating in a fantasy of faith.  When we ship those scraps of paper to a New York Stock Exchange broker to swap our money for shares in a company, we've stepped into the realm of the Twilight Zone.   But as long as we all believe in the same fantasy, the system, mostly, works.  The aspect of those fantasies that presses reality to the breaking point is the hope that the ruling class will act in our, and its own, best interest.  When we start to notice that the ruling class is inbred, short-sighted, greedy, and stupid, an economic depression happens almost the moment a critical mass faces reality.

Modern management and economics is working hard to bring us to terms with the real world.  Management, as usual, isn't doing this intentionally, but it's happening as a byproduct of the usual mismanagement incompetence.  Modern management has the tools and the incentives to completely upset the economic apple cart.  They don't have the good sense to realize that they're sitting in the cart with the rest of us apples.

The nearly universal practice of giving execs buckets of short-term stock options (or stock, outright) for practically any minor success is one of the things that is going to tear the economic playhouse down.  This practice isn't even a well intentioned concept gone wrong.  It is a stupid, lazy, ineffective way to motivate execs to do their jobs half-competently.  Extravagant salaries and more perks than royalty ever dreamed of aren't enough to motivate back-stabbing, ineffective corporate zombies.  Fear of prison and poverty would do better.

Enron demonstrated what a little Mafia-style, money-laundering accounting could do to a stock value; and to executive off-shore bank accounts.  Companies that don't actually produce a product have limited opportunities for gang-banging the stock holders.  Companies that do produce products have a wide collection of modern quality management tools to abuse plus the usual suspects in accounting manipulation.  Modern executives' basic compensation packages are the equivalent of a bank stuffed with unmarked bills in an unlocked safe.  Modern execs make Bonnie and Clyde look like petty shoplifters.

The very tools that moved Japan into the position of product quality leadership, in the 1970s, are providing executives with the ability to scam stockholders and skate around the SEC.  The same tools revived American manufacturing in the 1990s.  The design principles in TQM (Total Quality Management) gave us the ability to design products to precise criteria.  With moderately competent engineers and a reasonably alert quality assurance system, a company can plan, design, produce, and predict products' to exacting specifications; including MTBF (Mean Time Before Failure) specs. 

I

n many industries (medical devices, computers, transportation, and energy, for examples), one or two breakthrough products can light a fire under a stock price.  The failure of those same products, at a time further into the product lifetime, will douse that fire and put out the sparks of future successes.  The short-term planning aspect of executive stock option incentives practically begs for abuses of this sort.  With only the very unlikely threat of a whistle-blower tossing a monkey wrench into the money machine, executives are encouraged to take advantage of the short term at the expense of the long term. 

It's not particularly difficult to build an amazing product that doesn't work as advertised, is unreliable, and costs more to build than the selling price.  Fooling the media, regulatory agencies, and the general public is so easy that I suspect P.T. Barnum didn't account for population increases, because 21st Century suckers are born a lot more often than every minute.  Reliability is, mostly, a reputation statistic.  A CEO who is willing to sacrifice a company's reputation for millions of dollars in options can afford to squander a company's good will.  After all, he won't be around to worry about rebuilding the reputation. 

Accounting is pretty much a shell game.  Enron has shown us just a few of the dozens of ways that accountants can hide negative cash flow.  Stick around.  We're going to learn that a lot more companies possess this kind of management creativity.

January 2002

#44 The High Cost of Overpriced Management (2000)

All Rights Reserved © 2000 Thomas W. Day

If you didn't see this one coming, you haven't read a single Rat's Eye, ever. I'm nothing if not not-subtle. (While my past English profs would have a field day slashing red lines through that double negative, I'm leaving it in because of its irritant value.) In my 35 years of employment, I've worked for companies that were:

• small and totally unprofitable,
• large and going bankrupt at the speed of sound,
• small and bagging money like a New York drug dealer, and
• huge and listed on every Fortune 500 list ever cobbled together for the purpose of misleading investors.

I think I can apply way too much personal experience to the cost of overpriced management. In fact, I can provide examples of actual companies that lived and died in the real world. Of course, the names will remain slightly disguised in the interests of protecting the incredibly guilty.

Unfortunately, the toy I'm using to do the math for this Rat Rant is Microsoft's Excel 97. For those of you not cursed with this piece of software, I apologize. For those who have found various marginally legal or totally illegal ways to "find" this program on your computers, I recommend that you play with the numbers and experience the many ways that you've been screwed over by management salaries. (Yes, there are macros in the file and if you don't enable them you'll have to figure out your own company salary distributions.) Just to make this toy as simple as possible to understand, I put together a quartet of examples for you to play with. However, you can enter your own information into the shaded cells and play with the calculations. Here is the spreadsheet: salarygame.xls. [Sorry, I don’t know how to put a spreadsheet on Google’s Blogger, so the tool is gone. Email me if you want a copy to play with.]

The first example (Small & Bankrupt) is of a company I worked for in the late 1970's. It would be a mistake to assume that the pack of execs who mismanaged this company cared about profitability or the company's survival, but the example demonstrates how simple a turn-around would have been. The company had gross profits (before salaries) of $425,000 on a gross income of about a million and a half. Because the execs were executing a slash-and-burn game with the company's assets and products, they stripped off all of the "excess cash" for themselves, to the tune of $150k salaries for each of the "owners." (The company "owned" nothing, because these guys were experts at leveraging nothing into yet another quarter-million dollar loan.)

Like most small businesses, even 20 years ago, this company had a hard time attracting talent and labor. The bottom line was almost a quarter of a million in the hole, which finally sunk the company about six months after I abandoned ship.

Obviously, the management of a company with this kind of history doesn't deserve anything resembling top dollar for its performance. These guys paid themselves like they were winners, but they couldn't have hit the ocean from a life raft. Dropping their salaries 60%, to $60k a year, could have radically changed the complexion of the company. If that money were simply put into the bottom line, the company would have shown a $49,880 profit. If that money were equally distributed among the rest of the employees, the two middle managers would have been making $57,210, the three engineers would have made $52,443, and the assemblers would have earned $15.49 an hour. All good wages for 1980. For that kind of money, there would have been no issue with finding talented people for the company's positions.

The next example (Small & Profitable) was a company that had struggled for almost 15 years to break even. During the early years, the execs/owners limited their salaries to reasonable numbers because they recognized that their contribution to the company's success was marginal, at best. But when the company suddenly stumbled on a successful product line and the bottom line flipped polarities, they started doing "equivalent salary" searches to justify making themselves instantly rich. In less than a year, they tripled their take-home and followed that with similar (but smaller) increases for other management people. Instead of sharing the wealth with the folks who made it possible, a very dedicated hourly work force, the execs hoarded the company's good luck to themselves. The end result was steadily declining growth and market share and a decade of complaints about the quality of the workforce. Within five years, the average tenure of their assembly workers declined from ten years to eleven months, and the quality of the product followed.

This example shows that if the company had held the management salary line during the first year of profitability. The constant complaint was "we can't keep good people on the assembly lines." At $8.50 an hour that was a problem, at $14.50 (what we could have paid if we'd have put all of the excess exec salaries into hourly wages) we'd have had people standing in line to apply.

My loser big company example (Big & Brain-dead), managed to gross huge numbers for a few years while producing a net loss for its conglomerate owner. The salaries and bonuses it paid to executives were so huge they were obscene. The company was part of a group of like small-minded corporations that constantly petitioned to the federal government for higher technical green card quotas because of a non-existent "skilled labor shortage." Hit the button for this company and see how much they could have been paying engineers ($176,229) if they'd have cut back their non-productive executive costs and plowed that money straight into technical positions. Somehow, I'm pretty certain that plenty of talent would have been found for that kind of money. Unfortunately, money doesn't often equal talent when it's spent on executives.

Finally, I pick on one of the companies that is regularly found on Fortune Magazine's many lists of top companies. This is yet another company constantly whining about the lack of technically skilled employees. If you look at their corporate statement, you'll find that they pay their top execs an obscene average of $11M in salaries and bonuses and stock options. This is a company that averages $13.50 an hour for assembly workers and $80k a year (including bonus and benefits) for technical employees. How serious do you think their employee problems would be if they paid $27.60 an hour for assemblers and $163,565 a year for engineers?

It's amazing how many problems can be solved by cutting back expenses for the most unproductive workers in a business. If you have an example you'd like to have added to this spreadsheet, let me have it maybe we'll start a revolution. Like that will happen in my lifetime..

October 2000

#142 Fools are Us (2005)

All Rights Reserved © 2005 Thomas W. Day

So, which came first, the chicken or the egg?  Or, in regards to the subject that I am developing here, did our national business model create our national foreign policy or did the foreign policy come first?  My bet is on the business model.  I suspect that our cut-throat, amoral corporations and the execs that squirm within created the mess that the rest of the world sees as the United States. 

As a nation, our "leaders" have often acted as if the rest of the world, especially the third world, is populated by complete idiots.  Our current government is particularly arrogant in its expectations of the rest of the world, but they are just the logical extension of a long history of overconfident, under-skilled  politicians and bureaucrats.  Ever since the United States began to formulate a foreign policy, that policy has been directed by the assumption that everyone else is an idiot and we are so clever that they won't see through the thin veneer disguising our national purposes.  The fact that our politicians and their henchmen are as transparent as fine crystal has never occurred to arrogant American lunkheads from John Adams to G.W. Bush.  They simply see their malevolence as being so complicated and intricate that no one outside of their inner circle could possibly sense their motives. 

We haven't had a sophisticated Executive, Congressional, or Judicial branch since the early 1960s.  And the intelligent leaders didn't amount to more than a hand full of fingers before that.  Cats can predict the motives of the overwhelming majority of human politicians.  A pigmy child extracted from the depths of the most remote area of Africa could, in seconds, size up any of our federal or state bureaucrats and anticipate their actions.  Our national motives are as simple and impure as those of any villain ever dreamed up by Marvel Comics, "'We want your natural resources, all of them, and we will pay bottom dollar to get them.  We'd prefer to wreak your culture and crush your dreams in the process."  Even if the rest of the world was completely populated by morons, that message wouldn't be subtle enough to fool anyone who doesn't drool a in Texas accent.

Our management class is a carbon copy of our government class.  These "elites" stumble through company meetings, delivering foolish platitudes and grade school ultimatums, assuming that no one foolish enough to be employed by a company so disorganized as to hire them for management could detect deception if it were printed in a frame surrounded by flashing "lies, all lies" signs.  If anyone in the room is stupid enough to accept anything they say as worthwhile, that person is clearly management material.  They lie and cheat and stab each other, and the rest of their countrymen, in the back over power and wealth.  The difference between our executive class and Mafia dons is so minimal that the two swap positions without skipping a beat.  All the while, they assume the rest of us are too stupid to do anything about their crass manipulation and gross corruption.

In a way, they are right.  We take far too much abuse from the 1% who own 90% of our country.  Third world terrorists are quicker on the uptake than US voters.  The average man living on the streets of Calcutta knows more about what goes on in Washington D.C. than does the typical American voter.  It's incredibly embarrassing to admit that my own country appears to be the world's most universally hated and feared villain, but it's better to acknowledge that and fight against the inbred self-proclaimed royalty that owns the United States than it is to pretend crimes are not being committed in our name.  You can't fix anything until you recognize it needs fixing.  A startling majority of Americans seem to be too stupid to know when they ought to be asking for a little lubrication with their shafting. 

It's not like the execs are stunningly clever.  These are not people who are bright enough to learn from history, books, mathematical simulations, or remedial tutoring of the sort provided to the ruling class through their Ivy League institutions of slower learning.  They do not realize that eliminating freedoms, driving the middle class into poverty and servitude, terrorizing the third world, and acting as the planet's corrupt Chicago Police force is a sure formula for mass riot and individual violence.  When people do not have political outlets for their grievances, they are forced to resort to physical outlets.   You can bottle beer, but you can't hold your thumb over progress.  The human race is progressing, regardless of the efforts of the current administration, the U.S. military, or mismanaged multinational corporations. 

From the mismanaged side of the equation, the perception is anything but confused.  Most employees think management is overflowing with idiots.  Decisions are handed down without even the slightest clue as to the cause, effect, or purpose.  Every word uttered by mismanagement seems to be designed to demotivate, irritate, confuse, disorganize, or incite riot among the employees and alienate customers.  As I have written before, in every company I've ever worked, if the top management were to contract a disease that caused them to vanish, instantly, in their offices, it would be weeks, months, or years before anyone noticed they were missing.  Universally, the thing that would instigate a search for the missing execs would be a sudden increase in profitability, efficiency, and morale improvement beginning the moment the dead weight vanished. 

Abusing and destabilizing the countries from whom we depend upon for natural resources has been a terrible, vicious, failed experiment.  New York on September 11, 2001 suffered for all of our sins in that regard.  Allowing ourselves to be similarly abused at work and in our communities has resulted in the depersonalized, culture-of-one society that appears to be so susceptible to degenerative "life style marketing." 

Many of us have resorted to looking for a pill that will counteract our national low self-esteem and non-existent sense of community and purpose.  Pills won't help.  Treating the symptoms only works when you treat the right symptoms.  The cure is revolution in the voting booth.  We'll find a cure when the majority of citizens are taking part in the political system with an educated, motivated, outraged purpose.  Until we are "mad as hell and we won't take it any more," we're going to be stuck in crappy jobs, mismanaged by inbred idiots.  Until we want to honestly respected as "the leader of the free world," we'll be ordered about by fourth generation political hacks who only serve international corporate masters and have no interest in the fate and future of this country.  We either stand up and act like citizens of a free country or fall down and serve as floor mats for the ruling class.  There is no middle ground.

September 2005

#168 Just Lucky, I Guess

To start the new year off, the goofy head of the University of Minnesota's Athletic Department, Joel Maturi, fired football coach Glen Mason. I suspect that most college football fans outside of Minnesota don't even know that Minnesota had a University of Minnesota football team. Mason's overall record was 64-57. His conference record was 32-47. Even more hilarious was his record against Top 25 teams: 5-27.

The chances are pretty good that any half-decent high school coach could drop into the Minnesota program and do as well as Mason, at a tiny fraction of the cost. The cost is the issue, here. Mason was grossly overpaid, $1.65 million a year, and will continue to be a cash drain to the state, $4 million in other payouts after being fired for incompetence. Minnesota's state college system, like most state college systems, has become unaffordable to anyone but little rich kids, who only go to schools

I guess this is more of academia following in the foolish footsteps of business. Executives regularly get rewarded for incompetence. In fact, there is no way to connect business success to any action or activities of executives. Corporations pay the giant, wasteful salaries of CEOs and other white collar criminals because nobody tells them they shouldn't, can't, or will go to jail if they do. Jail is exactly where a board of directors should be sent when they sign off on a huge paycheck for non-producing executives. "Non-producing" means non-inventing, non-manufacturing, or non-sales producing. A manufacturing company that pays an accountant or lawyer CEO millions of dollars is wasting money on a non-producing executive. A technology company that does the same is pretending that bean counters inspire innovation. That is simply bullshit and everyone in these companies knows it is bullshit.

Glen Mason was a boring, predictable coach who inspired mediocre performances from his organization. Anyone who watched more than two Minnesota games could guess what play Mason would call in a given situation. Most of his opponents were able to anticipate his habits, which resulted in his mediocre record. Mason's only saving grace was that many of his opponents were the same kind of overpaid, underachievers.

My wife, upon hearing the morning news of Mason's firing and the money waterfall that he would enjoy as a result of his failure, asked "what do you have to do to get one of these jobs?"

That's one hell of a question. I've sat in board meetings, surrounded by million dollar salaries and powerful men, and wondered exactly the same thing. I saw no evidence of superior intelligence, exceptional management abilities, brilliant intuition, or incredible math skills. I mostly heard middle aged men worry about how various business problems would affect their stock options and bonuses. The intellectual level of the discussion was depressingly low. Business or technical insight was totally absent. Simple, base self-interest ruled the meetings and I have a hard time imagining that many companies are different than the companies I experienced. The people are the same, sometimes exactly the same people who crush one company move on to destroy another, so why would their motivations change?

Luck has a lot to do with who gets the big bucks and who is paid less generously. The best thing a corporate exec can do is to avoid work. Real work (research, invention, design, manufacturing, project management, and, even, sales) involves risk and failure. Fake work (accounting, legal council, marketing, sales management, and administration) appears to be accomplishing something practical, while avoiding risk and failure. Accountants simply count the beans others grow. Lawyers forever "practice law," so any mistake they make they can blame on the ambiguous character of the legal system, while claiming any accidental successes to their own brilliance. Marketing departments are often a simple waste of air. Watch television for a couple of hours for all the evidence you'll need to prove this argument. Sales management and administration are non-service providing organizations that expand to fill the available space, but they rarely provide value to the people they pretend to serve and never take the blame for organizational failures, since they don't produce anything that is directly related to the organization's success. Characters from these areas of an organization often rise to the top, simply because they've been lucky. They've never been identified with a project failure, they've never directly lost the company money, and they take credit for every project that has succeeded in their general area.

In a rational world (business, political, or academic), big mistakes would carry big penalties. If a professor at the UofM lost the college a few thousand dollars, he would surely be fired almost instantly. Joel Maturi made mistake after mistake with Mason, including upping the scumbag's contract when Mason shopped himself to other institutions while still under contract with the UofM. In the end, Maturi spent $5.6 million of the state and university's money on a non-performing, then fired, coach and there is no sign that Maturi will pay any price for his incompetence. This kind of irrational behavior happens all the time in business, which probably explains why an MBA isn't ridiculed as being a "gimme degree" like FizzEd or Communications.

Money, like water, apparently flows downhill. The lower the institutional value a person represents, the more money is attracted to that person. The key to becoming grossly overpaid, and rewarded for gross failure, is to begin your career being useless and to perfect that quality. And be very, very lucky.

January  2007

The Mess We're In

In 1980, Ronald Reagan ran a campaign based on repeating "there you go again" whenever Jimmy Carter brought up the spectre of reality vs. Ronny's "magic of the market" mantra. Reagan won and Americans headed down the path of consistently choosing fantasy over reality any time the option was presented. A nation of ostriches with our feathered necks stuffing our heads into the sand on practically every vital issue that presented itself for the next 28 years. I hate to consider the possibility that my country may be mostly populated by cowards and fools, but 8 years of Reagan and 12 years of Bushes presents a lot of evidence. Maybe "mentally lazy" would be a more generous label, but generous or not we probably don't want to spend a lot of time looking into the mirror. Our outsized porportion of supertitious types is a sad indicator, too. The things we, as a culture, believe in are indications of our deterioration.

Belief in or a desire for magic, for example, is always a bad sign.

A lot has been made of the dying of the "traditional media." It appears that newspapers and even the major networks have lost their means of support; advertising and readership. We are told that this is a disaster for our democracy. The real disaster occurred about 28 years ago, when Reagan and his FCC Commissioner, Mark Fowler, set out to deregulate the communications media under orders from the robber barons who wanted to consolodate the national media into the hands of a few huge corporations. They got what they wanted, every one of those characters walked away with wealth and power beyond belief, and the country got an advertising-based, public service and investigative journalism-free, media that lost its value to the democracy and trivialized itself into Faux News values.

I think it is safe to say that any business that forgets its core purpose is doomed, eventually, to history. The reason the media exists is to provide vital information about important issues to the society. When media becomes simply entertainment, it also becomes disposable.

GM, GE, and a host of once-great American manufacturing companies fell to the same short-term thinking. They saw easy money in finance, especially unregulated finance, and tossed off their core business in exchange for a fast buck. Since minimal skill was required for the fast buck, their expertise withered to accounting and legal functions, leaving them to blow in the winds of luck and ignorance. Luck always runs out and ignorance is a poor defence. Characters like Jack Welch ran their companies into the ground, stripping off functional portions of the business to prop up the phony finance business, until the company was down to its birthday suit and it was impossible to hide the invisible quality of the king's new suit.

Why are today's businesses and business "leaders" so much less prepared for reality than the very same companies of a few decades back? Competition, mostly. Once, our lazy, incompetent corporate management class could exist because nobody did that job better. In the 1970's, Japan showed up with hard-working, quality-driven, technically competent, humane management and we thought the world was ending. One world was; the American manufacturing world. Kicking Europe's ass was easy, because as bad as our management class had become Europe's was even worse. After the Japanese invasion into the world of manufacturing, the clock was ticking on the demise of American leadership in the practical world of building products.

The only manufacturing areas where American companies could still compete were socialized; munitions and medicine. Without the assistance of the taxpayer, American manufacturing had to be shipped off-shore to compensate for over-priced, untalented American corporate management.

The solution was magic; magical finance and magical marketing.

As usual, this was a short-term solution. For magical finance to work, the financial system had to be "deregulated" (the politispeak word used for "let the buyer beware"). Rules that had kept the banking mobsters in check since their last swarm of corruption in the 1920's had to be quietly eliminated. The regulators who kept a thumb on the games finance swindlers love to play had to be intimidated into retiring or silence. Entire departments, especially in the SEC, were downsized until they were impotent. Twenty years later, we see the result but we don't see that the people who created this system were rewarded and are perfectly happy with the system they have created and the culture they may have destroyed.

As for marketing, the first thing out the window when times get tough is unproductive marketing activities. No other department in a business has less connection to profitability or a closer connection to waste. After 40 years in business, I'm still waiting to see my first bit of confirmation that any activity by a marketing department justifies the expense of that department. After 20 years of shifting the purpose of television news services and newspapers to the sole function of marketing products, those industries are discovering that pointless fluff is an unnecessary luxury. In hard times, luxury doesn't even get a seat on the bus.

#168 Just Lucky, I Guess

To start the new year off, the goofy head of the University of Minnesota's Athletic Department, Joel Maturi, fired football coach Glen Mason. I suspect that most college football fans outside of Minnesota don't even know that Minnesota had a University of Minnesota football team. Mason's overall record was 64-57. His conference record was 32-47. Even more hilarious was his record against Top 25 teams: 5-27.

The chances are pretty good that any half-decent high school coach could drop into the Minnesota program and do as well as Mason, at a tiny fraction of the cost. The cost is the issue, here. Mason was grossly overpaid, $1.65 million a year, and will continue to be a cash drain to the state, $4 million in other payouts after being fired for incompetence. Minnesota's state college system, like most state college systems, has become unaffordable to anyone but little rich kids, who only go to schools

I guess this is more of academia following in the foolish footsteps of business. Executives regularly get rewarded for incompetence. In fact, there is no way to connect business success to any action or activities of executives. Corporations pay the giant, wasteful salaries of CEOs and other white collar criminals because nobody tells them they shouldn't, can't, or will go to jail if they do. Jail is exactly where a board of directors should be sent when they sign off on a huge paycheck for non-producing executives. "Non-producing" means non-inventing, non-manufacturing, or non-sales producing. A manufacturing company that pays an accountant or lawyer CEO millions of dollars is wasting money on a non-producing executive. A technology company that does the same is pretending that bean counters inspire innovation. That is simply bullshit and everyone in these companies knows it is bullshit.

Glen Mason was a boring, predictable coach who inspired mediocre performances from his organization. Anyone who watched more than two Minnesota games could guess what play Mason would call in a given situation. Most of his opponents were able to anticipate his habits, which resulted in his mediocre record. Mason's only saving grace was that many of his opponents were the same kind of overpaid, underachievers.
My wife, upon hearing the morning news of Mason's firing and the money waterfall that he would enjoy as a result of his failure, asked "what do you have to do to get one of these jobs?"

That's one hell of a question. I've sat in board meetings, surrounded by million dollar salaries and powerful men, and wondered exactly the same thing. I saw no evidence of superior intelligence, exceptional management abilities, brilliant intuition, or incredible math skills. I mostly heard middle aged men worry about how various business problems would affect their stock options and bonuses. The intellectual level of the discussion was depressingly low. Business or technical insight was totally absent. Simple, base self-interest ruled the meetings and I have a hard time imagining that many companies are different than the companies I experienced. The people are the same, sometimes exactly the same people who crush one company move on to destroy another, so why would their motivations change?
Luck has a lot to do with who gets the big bucks and who is paid less generously.

The best thing a corporate exec can do is to avoid work. Real work (research, invention, design, manufacturing, project management, and, even, sales) involves risk and failure. Fake work (accounting, legal council, marketing, sales management, and administration) appears to be accomplishing something practical, while avoiding risk and failure. Accountants simply count the beans others grow. Lawyers forever "practice law," so any mistake they make they can blame on the ambiguous character of the legal system, while claiming any accidental successes to their own brilliance. Marketing departments are often a simple waste of air. Watch television for a couple of hours for all the evidence you'll need to prove this argument. Sales management and administration are non-service providing organizations that expand to fill the available space, but they rarely provide value to the people they pretend to serve and never take the blame for organizational failures, since they don't produce anything that is directly related to the organization's success. Characters from these areas of an organization often rise to the top, simply because they've been lucky. They've never been identified with a project failure, they've never directly lost the company money, and they take credit for every project that has succeeded in their general area.

In a rational world (business, political, or academic), big mistakes would carry big penalties. If a professor at the UofM lost the college a few thousand dollars, he would surely be fired almost instantly. Joel Maturi made mistake after mistake with Mason, including upping the scumbag's contract when Mason shopped himself to other institutions while still under contract with the UofM. In the end, Maturi spent $5.6 million of the state and university's money on a non-performing, then fired, coach and there is no sign that Maturi will pay any price for his incompetence. This kind of irrational behavior happens all the time in business, which probably explains why an MBA isn't ridiculed as being a "gimme degree" like FizzEd or Communications.
Money, like water, apparently flows downhill. The lower the institutional value a person represents, the more money is attracted to that person. The key to becoming grossly overpaid, and rewarded for gross failure, is to begin your career being useless and to perfect that quality. And be very, very lucky.

January 2007