4 ms·

The company and its income is for the benefit of the shareholders, not the employees. Maybe the argument can be made that they should pay more money to certain

The company and its income is for the benefit of the shareholders, not the employees. Maybe the argument can be made that they should pay more money to certain people to improve their future income, but that has nothing to do with how much money they make.

TensorPoint 3y ago
Freezing salaries for all employees doesn't seem like a sustainable way to save money in the long run and the second order effects would probably destroy shareholder value not create it
- danaris 3y ago
  Ah, but in the long run, they'll have already cashed out the shares or options they wanted to juice the value of, so who cares?
huijzer 3y ago
Unhappy employees have a way of making shareholders unhappy in the long-term. Having said that, the decision probably involved more than the shareholders point of view.
slg 3y ago
Capitalism really breaks people's brains sometimes. It isn't about who owns the profit. An employer/employee relationship is a business agreement. That includes an implicit (and sometimes explicit) agreement to regularly reevaluate employee compensation based off a combination of employee and company performance. This decision severs that connection. Now there is no level of employee performance which can yield better compensation. There is also no reason to believe this will change in the future because this decision is not motivated by a lack of money. It is motivated by the desire to increase profits. That desire isn't going to go away in the future. And if we must truly take the perspective of the shareholders, this is a stupid move because that link between performance and compensation is the primary motiving factor for many employees to put actual effort into their job. Why should any Microsoft employee put in anything but the minimal effort at this point? Is personal pride the best remaining reason?
- itsdrewmiller 3y ago
  >Now there is no level of employee performance which can yield better compensation. This is only true if Microsoft is also freezing promotions. I doubt that is happening.
- blackoil 3y ago
  > That includes an implicit (and sometimes explicit) agreement to regularly reevaluate employee compensation based off a combination of employee and company performance. It ain't a 2 variable equation, like all resources it is also driven by market. If Meta/Goog/industry is hiring at 20% higher the salaries have to go up to match or you'll see huge attrition.
gamblor956 3y ago
Is there some sort of bizarre political campaign on HN to try and redefine why companies exist? Companies are legal constructs that were created to provide investors in business activities limited liability with respect to their investment in a mutual business activity. And that's it. For their first several hundred years, companies were expected to provide benefits to their employees and the localities in which they operated in exchange for that limited liability. (And see what happened to Lloyd's of London's shareholders to understand why that is a more than fair exchange.) If companies want to be all about "benefit for the shareholders" and to hell with everyone else, then its about time we take away the limited liability.
dangerwill 3y ago
Fiduciary duty was not always the end-all-be-all of corporate decision making. This has been a see-saw battle between employee wellness, customer satisfaction, and shareholder returns, and we are at the apex of shareholder dominance currently. But that does not mean this is set in stone. General Electric explicitly put employee wellness and customer satisfaction above shareholders in the their business documents as late as the 70s.
UncleMeat 3y ago
We’ve broken our society to think this. Shareholders should be third, after customers and employees. Or at the very least we need to ban the phrase “job creators” for the rest of time if employers are just supposed to stomp on their employees whenever possible.
- readthenotes1 3y ago
  Herb Kelleher (Southwest Airlines cofounder) wrote that employees were #1. Good and happy employees make for repeat customers. Shareholders come third because they will drop you for minor swings and stock price.

TensorPoint 3y ago

Freezing salaries for all employees doesn't seem like a sustainable way to save money in the long run and the second order effects would probably destroy shareholder value not create it

danaris 3y ago
Ah, but in the long run, they'll have already cashed out the shares or options they wanted to juice the value of, so who cares?

huijzer 3y ago

Unhappy employees have a way of making shareholders unhappy in the long-term. Having said that, the decision probably involved more than the shareholders point of view.

slg 3y ago

Capitalism really breaks people's brains sometimes. It isn't about who owns the profit. An employer/employee relationship is a business agreement. That includes an implicit (and sometimes explicit) agreement to regularly reevaluate employee compensation based off a combination of employee and company performance. This decision severs that connection. Now there is no level of employee performance which can yield better compensation. There is also no reason to believe this will change in the future because this decision is not motivated by a lack of money. It is motivated by the desire to increase profits. That desire isn't going to go away in the future. And if we must truly take the perspective of the shareholders, this is a stupid move because that link between performance and compensation is the primary motiving factor for many employees to put actual effort into their job. Why should any Microsoft employee put in anything but the minimal effort at this point? Is personal pride the best remaining reason?

itsdrewmiller 3y ago
>Now there is no level of employee performance which can yield better compensation. This is only true if Microsoft is also freezing promotions. I doubt that is happening.
blackoil 3y ago
> That includes an implicit (and sometimes explicit) agreement to regularly reevaluate employee compensation based off a combination of employee and company performance. It ain't a 2 variable equation, like all resources it is also driven by market. If Meta/Goog/industry is hiring at 20% higher the salaries have to go up to match or you'll see huge attrition.

gamblor956 3y ago

Is there some sort of bizarre political campaign on HN to try and redefine why companies exist? Companies are legal constructs that were created to provide investors in business activities limited liability with respect to their investment in a mutual business activity. And that's it. For their first several hundred years, companies were expected to provide benefits to their employees and the localities in which they operated in exchange for that limited liability. (And see what happened to Lloyd's of London's shareholders to understand why that is a more than fair exchange.) If companies want to be all about "benefit for the shareholders" and to hell with everyone else, then its about time we take away the limited liability.

dangerwill 3y ago

Fiduciary duty was not always the end-all-be-all of corporate decision making. This has been a see-saw battle between employee wellness, customer satisfaction, and shareholder returns, and we are at the apex of shareholder dominance currently. But that does not mean this is set in stone. General Electric explicitly put employee wellness and customer satisfaction above shareholders in the their business documents as late as the 70s.

UncleMeat 3y ago

We’ve broken our society to think this. Shareholders should be third, after customers and employees. Or at the very least we need to ban the phrase “job creators” for the rest of time if employers are just supposed to stomp on their employees whenever possible.

readthenotes1 3y ago
Herb Kelleher (Southwest Airlines cofounder) wrote that employees were #1. Good and happy employees make for repeat customers. Shareholders come third because they will drop you for minor swings and stock price.