[JonathanCohen09]

Redjohn,

I agree with a lot of what you say in your post above although not all of it.

My main gripe is with Unions who threaten strikes unreasonably to take or try to take unfair advantage of certain situations. for example demanding more money not to strike during the Olympics or demanding triple pay and a day off to work on Boxing day. I certainly accept that they should receive higher pay for working on what would otherwiswe be a holiday for them but why triple pay and a day off as well. Is that not being a bit greedy?

[VintageKrug]

Unions play an important role in tempering the excesses of less enlightened employers, and especially so in cyclical lower paid industries when supported by Industrial law, properly applied.

However, too many Unions lack democracy, are secretive, lack transparency especially as regards financial disclosure, are overly politicised and don’t have the best interests of all their members at heart. Indeed many of the traits which lead to the crisis within the banks can be seen already embedded within many (though not all) Unions.

There are lots of Union people at the top (and indeed in the middle) getting fat of the backs of the very workers they are meant to protect.

When Unions make unreasonable demands, or become dysfunctional, it’s time for those unions themselves to take action.

Sadly, very few do and the militant intransigence which does so much to damage the Union movement is the result.

The concept of employees receiving a profit share is eminently sensible – this can be done via a share award (a one off benefit, plus a long term potential for capital gain, plus possible dividend income) or via cash.

It is unsurprising that some unions have resisted the move to employee share ownership vociferously, even when offered by their host firms – another example of Unions actively frustrating their members’ potential to become part-owners of the companies for which they work.

[Tete_de_cuvee]

The real problem starts at the top in companies

http://www.guardian.co.uk/business/2011/nov/22/high-executive-pay-corrosive-economy

Excutive pay has risen from 13 times the average pay in 1980 to 169 times the average nowadays!!

This is not based on performance, even when share values have halved, dividends zero, performance against sector and competition flat lining the execs still manage to award themselves double and triple inflation awards with multi-million pound bonuses – for negative performance

CEO X claims an increase as CEO Y has had one; CEO Y claims as CEO Z; Z claims as X has had one and the CEO salary escalator continues on and on. CEOs feathering their nests from shareholders and pension funds having done nothing to justify their enrichment. Is it any wonder employees, shareholders, customers feel aggrieved.

The awards are made by secretive committee.

Employees and Unions see this going on and want some of the action.

There are some really hypocritical CEOs out there, Walsh being a front runner.

When Walsh ran Aer Lingus the Irish Taoiseach Bertie Ahern described Walsh’s offer of an MBO as “a time when management wanted to steal the assets for themselves through a management buy out, shafting staff interests.”.

Walsh didn’t succeed with Aer Lingus though is having a good try again with BA.

[RichHI1]

There is merit in a lot of these posts but in a way I think the title is kind of right. In a downturn there is more discontent making union members easier to provoke, they also provide cover for unscrupulous management willing to risk their shareholders’ capital on pursuing other agendas and you have rise in protectionism and fortress europe type feelings. In such a situation, there have been many becore, a country needs a real leader. The 70’s came about as neither Heath nor Callagham were up to the job. My personal belief is that Cameron is not up to the job. Trouble is that even if you look across all the political parties regardless of dogma there are only a handful who have what it takes. These people by and large came into politics when the going was good and being an administrator who did not overcharge their expenses too much and did not rock the boat was enough. We need intelligence, economic and foreign policy awareness, dogged determination, political experience and charisma. If people can be shown a positive future then a lot of the troublemakers find it harder to cause disruption in industry, transport, finance and commerce.

[LuganoPirate]

I agree with you Tete. Most plc’s have remuneration committees usually ocomposed of exec and non exec directors. From personal experience and from friends who are directors sitting on the committees, it’s so often a case of you scratch my back and I’ll scratch yours!

Pay should be linked to results, share performance and dividends. This needs shareholder action but those shareholders are again often institutions who of course look to their own pay.

I also think employee’s should receive a share of profits by way of a bonus. When I implemented this policy in my business in Holland in the 80’s we saw profits rise exponentially and more than paid for the profit share.

Unfortunately the Dutch government saw fit to (unfairly) tax these bonuses at a much higher rate than the basic rate so it has since become a bit of a disincentive.

[CallMeIshmael]

Ironic but fact – there is no empirical evidence that the level of bonus payments to senior management/executives has an impact on performance.

If Walsh’s bonus were doubled would that result in higher performance? Likewise if it were half the level would his performance be any less?

Senior Management/Executive bonuses have more to do with bragging rights than company performance.

Business leaders, these are well worth your time viewing….

http://www.ted.com/talks/dan_pink_on_motivation.html

http://www.youtube.com/watch?v=u6XAPnuFjJc

.. and the book

http://www.amazon.co.uk/Drive-Surprising-Truth-About-Motivates/dp/184767769X/ref=sr_1_1?ie=UTF8&qid=1324474108&sr=8-1

[LuganoPirate]

Trouble is VK, it’s not in the Unions interest to see employee share ownership. If employees can have direct access to a company via shareholder meetings etc . then there is no real need for the union, so it’s not members and brothers first, but the unions own fatcat wellbeing.

Interestingly just watched on Sky News the CEO of John Lewis being interviewed. What a business model they have and they are up 10% on the year.

[VintageKrug]

Indeed. Now there’s a good model; compulsory share ownership, provided by the employer in addition to salary, for those in lower paid roles.

John Lewis is an excellent model, though of course is a more stable business model than an airline.

[Hippocampus]

A business so capital intensive and exposed to external shocks as an airline isn’t really suited to an employee ownership model.

Hardly surprising some seize on the opportunity to have a go at WW. If you actually compare salaries of various groups of BA staff against the market it’s not the senior management that is overpaid.

[RichHI1]

I am very pleased that on a forum where we often divide politically rather than uniting to find a solution, this thread has produced a superb idea.
I think issuing voting shares to all employees and management as a feature of employment would do a lot to increase accountability and performance across the company. Postal votes and proxies would remove the need for lost days due to gm’s.
I would allow for differing amounts of share issue depending on grade and role but make it mandatory to hold on to those shares during employment at the concern.
Second I would make remuneration annual increases require GM approval whether for factory staff and union agreement or for CEO. I think Shareholders (especially the large funds) should be given anrecommended performance reward structure to use. So if a production line or a brand team deliver better results they get better rewards if a division loses share and margin then the president of that division gets less or nothing.
In the allocation of such shares the positions of existing shareholders should not be adversely affected. I think giving all members of the company a voice and increasing transparency for workers and shareholders alike will drive performance as inadequacy and risk will be harder to hide without criminal behaviour such as false reporting.

[VintageKrug]

If certain unions used their 2m per annum subs to purchase shares and get a seat on the board, rather than donating it to political parties, this could be a winner.

[Cedric_Statherby]

This may be very brave, or very foolish, but I am about to try to make the case for bonuses.

I work in a volatile industry. It is not the airline industry but it is as volatile – my company’s revenue can vary by 25-30% from one year to the next. To reflect this, management and senior management pay consists of base pay, shares and a cash bonus, and the base pay is really quite a small element of the total package.

Those who disapprove of bonuses as an article of faith can sharpen their pencils here – fat cats creaming it in bonuses etc. But the reality is slightly different. A couple of years ago, my company had a dreadful year – revenue down over 30% compared to the year before. Management responded with the CEO taking a 92% pay cut, senior management around 80%, middle management around 50% and even junior management chipped in. As a result no shopfloor employee was asked to take a pay cut and there were no redundancies that year.

Maybe the solution for the airlines is to give everyone, down to the most junior employee, substantial bonuses – in the good years. And then when a downturn hits, the company will have the flexibility to pay everyone less and keep everyone employed.

Would the airline unions find this acceptable?

[Author]

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