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Japan Airlines' CEO pays himself less than the pilots, takes the bus to work
- mbateman 16y agoWhile a lot of what he does is admirable, I find it reprehensible that he pays himself so little (assuming he's not compensated in some other way). Either he is actually worth that little, or he's pretending to be worth less to make people feel better. If it's the former, the airline should hire a new CEO. If it's the latter, it's a petty pretense aimed at petty people. And a self-respecting "ordinary" person who has a sense of the value of her time would consider it a slap in her face if her boss doesn't see fit to apply the same sorts of standards to his time.
- Luc 16y agoThat's all very good and well, but since you gave your opinion freely and without compensation, it is therefore worth nothing.
- dpapathanasiou 16y agoHe's also going against a basic economic motivator: "The ugly truth is that your boss is probably overpaid--and it's for your benefit, not his. Why? It might be because he isn't being paid for the work he does but, rather, to inspire you. In other words, we work our socks off in underpaying jobs in the hope that one day we'll win the rat race and become overpaid fat cats ourselves. Economists call this 'tournament theory.'" http://www.forbes.com/2006/05/20/executive-compensation-tournament_cx_th_06work_0523pay.html http://www.forbes.com/2006/05/20/executive-compensation-tour...
- Nobido 16y agoI've heard this theory again and again and as someone who works in a (non-tech) industry where it is the norm for people at the bottom to work very hard for very little,while the bosses travel the world and live in huge beautiful homes, this does NOT seem to be the case in reality. Myself and my colleagues find it hard not to become bitter about it and to stay motivated to work hard. I only graduated 6 months ago but about half of my class has already become so discouraged by this system that they are thinking about - or already have- switched careers. On the other hand, in my previous job the boss paid us As much as he could afford to ($17/hr, not bad for retail) and in his life was by no means rich at all. He drives a beat up car and wears second hand clothing. We all respected him so much and felt much more motivated to do well, and also felt like we were an actual part of his company and took it personally how well the company was doing. In my position now, and my colleagues agree, we feel totally cut off from the company and have no interest in how well a collection does (I work in fashion.) Basically I feel like this theory only works if the CEO is overpaid and the workers are fairly paid. But in the end I think feeling part of a team is better for the company than feeling like you are in a tournament. I would also like to add that 90k is hardly embarrassingly low. That is quite a comfortable wage that many people will never see in their life.
- dpapathanasiou 16y agoYou're right, it only works if you believe in the possibility, i.e., you see your peers get promoted to those positions or start their own lines, etc. A tech startup analogy is: a company issues an IPO or gets acquired. You know it's a fairly rare event, and it may not happen to you, but you believe it's possible, so you're motivated to keep going.
- reinhardt 16y agoAn important factor is how much you feel in control of your fate (whether the control is real or imaginary is less important). Tech startups feel it's much more up to their skills and creativity to make it than a lowly employee working for the Man in a big bureaucratic multinational, even if statistically they have about the same chance. It's similar to why most people are more afraid of flying than driving, even though the former is much safer statistically.
- icco 16y agoYour post reminds me of some statistical data I saw a while back that says that Americans have a very poor view on the actual economic status of those around them and the rest of the country. link: http://blogs.berkeley.edu/2010/09/30/wealth-and-an-american-paradox/ http://blogs.berkeley.edu/2010/09/30/wealth-and-an-american-...
- HaloZero 16y agoI would still prefer not to be in a company that ran economic motivation in this way even if it did encourage my employees. It seems like a bad company culture to be in.
- maxxxxx 16y agoThis theory is one of the most self-serving (for overpaid executives) arguments I have ever heard.
- bmelton 16y agoJapan Air's profits haven't been amazing, and in fact, they filed for Chapter 11 in January 2010. I presume (with no actual knowledge) that if the airline were doing very well, he would pay himself significantly more. However, in a world where banks in America have to be bailed out while their CEOs give themselves raises, this is, I think, the preferred way to go.
- kjhghj 16y agoEvery airline is always under chap11 - it's standard operating procedure. It's like Hollywood claiming all the blockbusters make a loss
- powertower 16y agoAirline unions usually negotiate the payout contract to between 95% to 98% of the expected airline's profits (what is the airline going to do? shut down?). When the airline does not make the expected revenue, by numbers, they end up having to borrow money and pay out a sum that ends up being over 100%. Collective bargaining rules. Hence the ever bankrupt airline industry. http://philip.greenspun.com/flying/unions-and-airlines http://philip.greenspun.com/flying/unions-and-airlines
- kjhghj 16y agowith all those nasty unions stealing all your money it's amazing that the executives want to carry on running the airline - it must be the pure love of flying that keeps the CEOs in the job
- borism 16y agoEvery airline is always under chap11 - it's standard operating procedure. not JAL's main competitor - ANA.
- pyre 16y agoHollywood doesn't claim that the blockbusters make a loss. They can't get that creative with their accounting to make millions/billions of dollars vanish from the IRS. What they do is shuffle the profits around between their sub-companies. Say you sign a contract with Universal Pictures to get 20% of the profits of the movie. Now Universal Pictures takes a loss on the movie by moving all of the profits to Universal DVD Distribution or some other company under the "Universal" umbrella. So that other corp has record profits, while the one you hold the contract with reports a loss. [ The money can be 'moved' between companies by just charging exorbitant prices for their services rendered. E.g. Universal DVD Distribution charges huge amounts of money to Universal Pictures for the DVD production. ]
- parasubvert 16y agoThere was an old Peter Drucker adage that the top executive should only be at a 20-to-1 compensation ratio from top executives to entry level positions. In the U.S., this is now around 260-to-1. (http://thedx.org/2011/02/turning-up-the-heat-on-ceo-pay/ http://thedx.org/2011/02/turning-up-the-heat-on-ceo-pay/) In short, there's a limit to most people's tolerance for inequality in pay, especially in the face of it being mostly decoupled from performance. The question is whether there that matters, and what the consequence is.
- deleted 16y ago[deleted]
- mbateman 16y agoMy logic was definitely relying on the premise that how much someone is worth to a company isn't or at least shouldn't be unrelated salary. As other other people have already said, it may be the case that this was actually the boss's value to the company (given its low profits and eventual bankruptcy). This would make it a lot better, but it's not how the motive comes across in the article.
- ugh 16y agoBut why? The salary should certainly be lower than what someone is worth for the company but I can’t think of any reason why it could be too low if the employee has no problem with it.
- gambler 16y agoMaybe he just understand the concept of "enough", something many CEOs fail to grasp. $90/k is a decent salary, at least in US. What if he simply believes in his company and wants to put more money in developing it, rather than let it stockpile in some Swiss account? Does that decrease his "worth" as a leader? I don't think so.
- ErrantX 16y agoWell... he is the boss so, yes, at the top of the responsibility ladder. BUT the article says he is paid less than the ''pilots''. Flying a plane is not necessarily a dangerous job, but is has risk, requires skill (with reasonable initial investment in training etc.) and comes with a ''personal and immediate responsibility for a number of lives''. So when you balance the job descriptions; who should get paid more?
- _delirium 16y agoHas anyone written a good book on Japanese corporate/management/business culture? I hear a lot of tidbits about it, both good and bad, mentioned in recurring news articles like this one. They're intriguing enough that I'd like to read something deeper and well-researched, but I can't seem to find anything that looks like a good overview book. The only books I can find seem to either be of the "teach Westerners how to do business in Japan" variety (not my interest), or very specialist academic books and paper anthologies on narrow aspects.
- dpapathanasiou 16y ago"A Primer for Japanese Business Success" by Masami Atarashi is probably meant to be the former type of book, but it was refreshingly free of stereotypes and "it's a Japanese thing--you won't understand" attitude.
- parasubvert 16y agoAs I mentioned in a reply below, Japanese business culture (the good side of it, anyway) was heavily influenced by Peter Drucker in the 60s, and carried it forward decades, long after he became a sort of side show in the U.S.-business-mogul ratrace. For example: http://www.economist.com/node/16481583 http://www.economist.com/node/16481583 A book like "The Toyota Way" or "Product Development for the Lean Enterprise" I'd recommend to understand Lean (which isn't pervasive in Japan, but of course is known to have originated in a couple of automakers).
- xiaoma 16y agoSome of Peter Drucker's famous books about business and management dealt with Japan extensively.
- Bjoern 16y agoI wonder if a book can really capture the dynamics and differences which they have here in Japan. Depending on the company the "rules" can vary greatly. I have been here since years now, but I still struggle with this. Even after reading many books on japan and studying various cultural background of Asia.
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- ajcc 16y agoI posted this a week ago and it never got looked at.. fuck you HN
- chollida1 16y agoYou user account says that you didn't.
- ryanwaggoner 16y agoYou are exactly the right amount of upset about this.
- kamechan 16y agoFWIW, i saw it a week ago when you posted it.
- bmelton 16y agoI expected to read this as another '$1 a year salary' story, wherein the CEO was still _actually_ rich, but only brought in a meager 'salary', owing the rest to dividends. What I got instead was a story about what seems to be a brilliant boss. He lowered his own salary along with everybody else's. He's accessible. He actually rides his planes and lets people know he's the CEO of the airline. In short, he is accessible to both his customers and employees. In the startup world this probably isn't that uncommon -- when you have a staff of four or twenty, accessibility is easy to get. Wikipedia lists Japan Air as having over 30,000 employees. This is impressive to me, however, it's worth pointing out that despite this practicality and accessibility, the article linked was written in 2009, and Japan Air filed for Chapter 11 bankruptcy last year.
- link2009 16y agoI see your point and I agree with you. Look over the article describing the bankruptcy announcement, it states that "Some 15,600 jobs are expected to be cut." That is quite damaging for a company of such degree and the family of all those employees. I think the lesson here is that it's important to be close to your employees, regardless of how rich you _can_ be.
- ryanwaggoner 16y agoActually, I think the message is that it's more important to be competent than nice. Most of those laid off would have probably preferred an overpaid, aloof manager who kept the company afloat. Not saying you have to choose, of course. But being competent at management doesn't require you to be loved by all your employees.
- Silhouette 16y agoThis seems to be a classic example of correlation vs. causation. Airlines have been having a rough time in recent years. Against a background of people bashing them on environmental grounds and promoting alternative modes of transport, often hypocritically, they have seen major costs such as fuel going way up, their market suffering because a lot of air travel is a luxury that people aren't so willing to pay for in a depressed economy, and in many cases significant staffing problems due partly to the same economic conditions. We can't say whether Japan Air failed because of its CEO's apparently folksy style of management. For all we know, it would have gone to the wall two years earlier if he'd been claiming millions and not so aware of what was really happening from his customers' and staff's points of view.
- valjavec 16y agoKeep in mind that JAL is under chapter 11 bankruptcy, so it's not like JAL is full of cash. I like his attitude more than those bank executives that got bailed out and paid themselves multi millions at the same time.
- mgkimsal 16y agobut of course, you have to understand - they have to pay those guys millions, because how else would they attract the top talent? you know, that talent that led to untold numbers of wealth being systematically destroyed? You don't just find talent like that working for, say, $500k. You gotta pay millions to get talent that capable.
- bane 16y agoyeah, because they'd go work for the other investors who are making money hand over fist...you know...the other Wall Street...because there are so many and their skill set and salary requirements translates so well to other industries.
- mgkimsal 16y agonow you're on the trolley!
- true_religion 16y agoYou have to pay millions because other people on Wall Street are paying millions thus the best talent goes there. What you're implying is that we should have top-down wage controls (i.e. a command economy) or bottom-up wage controls (i.e. collusion). The first is an idea which is seductive, but historically a failure. The second is illegal under our current rules and should remain illegal lest you want every department store to collude to pay their workers minimum wage + 1 cent.
- bane 16y agoI'd argue that if the government (us) hadn't bailed everybody out, the firms would fail and then they'd make $0. If a small firm could afford to pull in some of the unemployed traders, more power to them, but then it's an employer's economy and the salaries (and bonuses) would be more reasonable. The market would more or less work itself out (though it could be painful in the short term).
- lwhi 16y agoCynically, I reckon this kind of behaviour is about manipulating morale, tax and dividends. I applaud his actions - but I'd be very surprised if he wouldn't have benefited from any increase in company profitability.
- Bjoern 16y agoDidn't Nishimatsu (JAL CEO) resign from his post?
- aboyeji 16y agoNot to be negative but he might be doing it to avoid income taxes. So many silicon valley CEO's do that. The real questions are what is compensation + stock options. The article does not provide that information. Nonetheless, its a good idea to appreciate people's value with good pay. When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others. - Francisco D'Acconia
- WorkingDead 16y agoThey canceled the common share in December and gave the company away to the top executives in a private stock offering. These are not the benevolent capitalists you are looking for. http://www.jal.co.jp/en/other/info2010_0831.html http://www.jal.co.jp/en/other/info2010_0831.html http://www.reuters.com/article/2010/12/27/jal-idUSSGE6BQ08C20101227 http://www.reuters.com/article/2010/12/27/jal-idUSSGE6BQ08C2...
- njharman 16y agoBut how many times did he get a taxpayer funded bailout / corporate wellfare? The real value of the american CEOs isnt that the run profitable business, it's that they get other peope to pay for their fuck ups.
- maxxxxx 16y agoIn the US he would get a boatload of money as retention bonus to stay on.
- dev_jim 16y agoThere's no nobility in poverty anymore.
- sunchild 16y agoJAL is my favorite airline. If I can, I always fly JAL. Sounds like bad ad copy, bu† it's true.