4 ms·

It's great to see a founder CEO (Hamdi Ulukaya) making a bold ethical move like this to support his employees. It's not flashy or earth shaking, but it's very r

by mjfern 10y ago

It's great to see a founder CEO (Hamdi Ulukaya) making a bold ethical move like this to support his employees. It's not flashy or earth shaking, but it's very real and it will definitely change many lives for the better. This story reminds me tangentially of the time when Hewlett and Packard, when faced with a downturn at HP, decided to cut pay across the board so the company could avoid layoffs. Once HP recovered, I'm assuming they reinstated previous salary levels and then some. HP then benefited from a highly committed and skilled workforce who deeply respected their leaders and company. Unfortunately, these stories reflect the (very rare) exception and not the rule. Today, we're much more likely to see CEOs and executive teams earning (multiple) millions in salary and options, all the while they are outsourcing jobs, implementing layoffs, converting full-time jobs to contract and part-time jobs, and so on. These CEOs are extracting as much wealth as they can, at the expense of their employees. We desperately need more ethical, bold leaders like Ulukaya, Hewlett, and Packard who are going to shape the future of business; a future that is kinder, compassionate, and community-minded.

subpixel 10y ago
Interestingly, I recall reading a story suggesting that the CEO was on his way out of the company less than a year ago, when the whole Idaho plant expenditure looked like a failure. The turnaround is a nice reminder that running a business sometimes requires ignoring the people whose job is to second guess and critique your every move.
existencebox 10y ago
I agree, however, I don't see the incentives that would motivate change to the current system. Where is the mass employee outrage and "voting with our feet" for the wage suppression some of our largest employers supported? We can all have high minded ideals but at the end of the day our options are often VERY limited, as few would willingly take a massive pay cut for their ideals, especially given the inherent commons problem in that many people would need to do so simultaneously for the powers that be to "Feel" it. How do we actively motivate this change when most of the power and incentive dynamics are _not_ in the employee's favor? (I mean this as an honest question, I don't see any easy answers)
morgante 10y ago
> This story reminds me tangentially of the time when Hewlett and Packard, when faced with a downturn at HP, decided to cut pay across the board so the company could avoid layoffs. It mystifies me that cutting pay instead of getting rid of deadweight is seen as noble or honorable. If I were working at HP, I would have quit the second they decided to cut my pay just so they could avoid needed firings.
- maxxxxx 10y ago
  For some people and at certain times it's not that easy to find a good job immediately after quitting. If this had happened in 2001 good luck finding a job!
- jagtesh 10y ago
  I think the key here is motivation. When cost cutting is the motivation, managers are told to remove X number of people from the department, even if they all perform their jobs well. This is more common than you think.
- mooreds 10y ago
  > If I were working at HP, I would have quit the second they decided to cut my pay just so they could avoid needed firings. I sympathize with your viewpoint, but I think it depends on whether you see dead weight. If you are on a great team with no dead weight, a pay cut to keep everyone together would be far more palatable.
  - eru 10y ago
    Especially, if you get backpay later, or get at least more equity to make up for the pay. Even if that equity is depressed in value for a bit. `Bailing-in' creditors is actually a common technique for financially struggling companies. Employees are a kind of creditors.
- SilasX 10y ago
  I strongly suspect that they did experience this sort of "evaporative cooling" of workforce quality when they made that decision (or quietly reversed the paycut with targeted "raises"). Ditto for GM when they offered all union employees the same (formula for) buyout from their contracts -- the best ones take it and leave because they'd get the money and the new job; the poor performers know they can't last anywhere else and stay on.
mrbgty 10y ago
"Once HP recovered, I'm assuming they reinstated previous salary levels and then some." No way this happened.
eru 10y ago
I agree with most of what you say in terms of valuable strategy to keep your employees happy and loyal. From an ethical point of view, outsourcing is great. It provides jobs for people in poor countries.
- downandout 10y ago
  >From an ethical point of view, outsourcing is great. It provides jobs for people in poor countries. I disagree. Even in today's global economy, the country in which a business is based seems to have a significant effect on its prospects. In 2014, 19% of US households with children were food insecure , and 46.8 million people were in poverty [1]. Given the widespread poverty right here in the US, is it ethical for US companies - that benefit to at least some degree from being based in the US - to export jobs to other countries? [1] http://www.feedingamerica.org/hunger-in-america/impact-of-hunger/hunger-and-poverty/hunger-and-poverty-fact-sheet.html?referrer=https://www.google.com/ http://www.feedingamerica.org/hunger-in-america/impact-of-hu...
  - eru 10y ago
    Not all companies are based in the US in the first place. People worry about outsourcing in other countries, too.
  - aetherson 10y ago
    Yes. Your two arguments appear to be: 1. There is poverty in the US. Of course there is. But there is much worse and much more widespread poverty in nearly every other country in the world. 2. Companies "benefit to at least some degree from being based in the US." They also benefit to at least some degree from the economic participation of hundreds of other countries. Even if "that poor person in Asia hasn't done anything for me, so I'm gonna give my money to someone ten times richer" were moral (which it's not), it's not even true that that person has done nothing for you.
    - sooheon 10y ago
      To your point 1, some could argue: Yes, outsourcing employs poor people elsewhere, but at 1/100th the cost. So the overall transfer of wealth is reduced, and global wealth gap increased. Also, given the intricacies of economic development, it is debatable whether an influx of outsourced jobs and factories (which may feed workers, but hinder formation of local industries) is better for the poor of that country. Just pointing out that it's not so easy to make a claim that outsourcing is categorically better for poor people anywhere, all things considered.

by mjfern 10y ago

subpixel 10y ago

Interestingly, I recall reading a story suggesting that the CEO was on his way out of the company less than a year ago, when the whole Idaho plant expenditure looked like a failure. The turnaround is a nice reminder that running a business sometimes requires ignoring the people whose job is to second guess and critique your every move.

existencebox 10y ago

I agree, however, I don't see the incentives that would motivate change to the current system. Where is the mass employee outrage and "voting with our feet" for the wage suppression some of our largest employers supported? We can all have high minded ideals but at the end of the day our options are often VERY limited, as few would willingly take a massive pay cut for their ideals, especially given the inherent commons problem in that many people would need to do so simultaneously for the powers that be to "Feel" it. How do we actively motivate this change when most of the power and incentive dynamics are _not_ in the employee's favor? (I mean this as an honest question, I don't see any easy answers)

morgante 10y ago

> This story reminds me tangentially of the time when Hewlett and Packard, when faced with a downturn at HP, decided to cut pay across the board so the company could avoid layoffs. It mystifies me that cutting pay instead of getting rid of deadweight is seen as noble or honorable. If I were working at HP, I would have quit the second they decided to cut my pay just so they could avoid needed firings.

maxxxxx 10y ago
For some people and at certain times it's not that easy to find a good job immediately after quitting. If this had happened in 2001 good luck finding a job!
jagtesh 10y ago
I think the key here is motivation. When cost cutting is the motivation, managers are told to remove X number of people from the department, even if they all perform their jobs well. This is more common than you think.
mooreds 10y ago
> If I were working at HP, I would have quit the second they decided to cut my pay just so they could avoid needed firings. I sympathize with your viewpoint, but I think it depends on whether you see dead weight. If you are on a great team with no dead weight, a pay cut to keep everyone together would be far more palatable.
- eru 10y ago
  Especially, if you get backpay later, or get at least more equity to make up for the pay. Even if that equity is depressed in value for a bit. `Bailing-in' creditors is actually a common technique for financially struggling companies. Employees are a kind of creditors.
SilasX 10y ago
I strongly suspect that they did experience this sort of "evaporative cooling" of workforce quality when they made that decision (or quietly reversed the paycut with targeted "raises"). Ditto for GM when they offered all union employees the same (formula for) buyout from their contracts -- the best ones take it and leave because they'd get the money and the new job; the poor performers know they can't last anywhere else and stay on.

mrbgty 10y ago

"Once HP recovered, I'm assuming they reinstated previous salary levels and then some." No way this happened.

eru 10y ago

I agree with most of what you say in terms of valuable strategy to keep your employees happy and loyal. From an ethical point of view, outsourcing is great. It provides jobs for people in poor countries.

downandout 10y ago
>From an ethical point of view, outsourcing is great. It provides jobs for people in poor countries. I disagree. Even in today's global economy, the country in which a business is based seems to have a significant effect on its prospects. In 2014, 19% of US households with children were food insecure , and 46.8 million people were in poverty [1]. Given the widespread poverty right here in the US, is it ethical for US companies - that benefit to at least some degree from being based in the US - to export jobs to other countries? [1] http://www.feedingamerica.org/hunger-in-america/impact-of-hunger/hunger-and-poverty/hunger-and-poverty-fact-sheet.html?referrer=https://www.google.com/ http://www.feedingamerica.org/hunger-in-america/impact-of-hu...
- eru 10y ago
  Not all companies are based in the US in the first place. People worry about outsourcing in other countries, too.
- aetherson 10y ago
  Yes. Your two arguments appear to be: 1. There is poverty in the US. Of course there is. But there is much worse and much more widespread poverty in nearly every other country in the world. 2. Companies "benefit to at least some degree from being based in the US." They also benefit to at least some degree from the economic participation of hundreds of other countries. Even if "that poor person in Asia hasn't done anything for me, so I'm gonna give my money to someone ten times richer" were moral (which it's not), it's not even true that that person has done nothing for you.
  - sooheon 10y ago
    To your point 1, some could argue: Yes, outsourcing employs poor people elsewhere, but at 1/100th the cost. So the overall transfer of wealth is reduced, and global wealth gap increased. Also, given the intricacies of economic development, it is debatable whether an influx of outsourced jobs and factories (which may feed workers, but hinder formation of local industries) is better for the poor of that country. Just pointing out that it's not so easy to make a claim that outsourcing is categorically better for poor people anywhere, all things considered.