BoilerPilot2007

Some food for thought... I'm sitting on ready, so I've been reading the forum all morning and noticed a trend: CEO/Management bashing... what a surprise.

Did we all forget that the sole purpose of a (publicly-traded) company is to create wealth for it's shareholders? Management is in it for the shareholders (and often themselves). If they can create a profit, or the potential for future profits through growth, they will... at almost any expense (ie, the RAH and Midwest fiasco).

Is this "fair" to the labor groups? No, but it's not about fairness. We (pilots) are labor, pure and simple. We can be used an abused by management (within the legal context of our contracts) so that they can further their goals. That's the whole idea... and yet, we rant about how horrible it all is. And it is. But it seems that we forget that we're working for companies that work to create shareholder wealth at any expense.

Now, some companies have realized that they can treat their employees relatively well AND succeed. Look at SkyWest, or in the majors, Southwest (although there are other reasons they are so successful as well).

However, for the most part, we can bicker all we want. But sometimes it helps to look at the big picture and realize that most of us work for companies where the goal isn't to treat everyone fairly, but to create shareholder wealth - and we're bound by our contract (if we have one).

This doesn't excuse astronomical Executive bonuses, of course. It doesn't excuse unnecessary furloughs or contract violations. It doesn't excuse greedy management, or arcane management tactics.. but its a perspective that needs to at least be acknowledged by a lot of the people on the forum. Hopefully I didn't come off too pro-management... that was DEFINITELY not my intention.

rickair7777

That worked OK, with some caveats, back when senior management had already spent 30 years at the company before being put in charge and had a vested interest in the long-term health and well-being of the company. The trickle-down concept provided jobs and capital appreciation for those who invested.

Nowdays, we have managers with an average tenure of 30 months, no knowledge or interest in the company or it's business, and only one goal: drive up stock prices, catch the crest of the wave, exercise options, bail when it all comes crashing down, and move on to the next victim. Employees lose, long term investors lose, and the nation as a whole loses when once-viable businesses are dismantled and offshored.

The concept of "shareholder value at all costs" is flawed, and was never wholly acccepted in industry...it is the battle-cry of the worst of the sociopaths and villians. Besides, what exactly IS "shareholder value"? Short-term manipulations in support of insider trading? Or long-term real capital growth?

Shareholder Value is not one of the ten commandments, nor is it a constitutional concept. If it does not benefit our society, maybe it's time to revise or eliminate it...

I like the idea of corporations having a formal duty to employees and society in general, in addition to shareholders...actually I see that as a win-win, since workers who are treated well and have a personal stake in the enterprise make much better employees than bitter clock-punchers.

If pilots, doctors, military officers, etc have rigorous selection and background requirements, so should officers of large companies...they should need a LICENSE to do that job. It would be based on mandatory education (under and post- graduate) in relevant fields, and specific experience requirements, including leadership at smaller companies before you get to fly the big iron. No ex-cons or high-school gym teachers running corporations valued in the billions!

BoilerPilot2007

Rickair, thanks for the expansion. Didn't know much about the history. Thanks.

ChickenFlight

Ironic that you bring up shareholders as the end-all, be-all motivation for corporations. As the financial sector collapses, many are quick to blame governments, homeowners, ceos and the lot for the collapse but much of the blame goes to those shareholders and their own irresponsibility. Shareholders pushed companies to take great risk hoping for great returns and the Bear-Stearns of the world obliged and the risk didn't pay off. Now we all get to pay that off. To draw a paralell to the industry look at UAUA stock a couple of weeks ago. It became painfully obvious that the bulk of UALs investors are short-term day-trader types that are only in it for the quick buck and will sell IMMEDIATLY the second any bad news is reported. SCARY.

To attract responsible investors (the ones you want), you need a better business model that represents long-term steady growth. The ONLY airline to achieve this growth is Southwest. Yes you can point to smaller airports, cherry-picking profitable routes, clever marketing and sassy flight attendants but the real reason Southwest has been so successful is Herb's greatest single statement (loosely quoted):

"There are three groups of people a business needs to take care of: First, the Employees, if you take care of them, they will take care of your Customers. If the employees and customers are taken care of, the Investors will inhearently be taken care of."

Herb put employees first and it worked. Other CEOs should pick up Nuts, Hard Landings and The Southwest Way if they want to learn how to run an airline.

BoilerPilot2007

ChickenFlight, You're spot on about Southwest. They got it right. Herb's philosophy works, you remember how brainwashed I was a year ago after spending 5 months drinking that Kool-Aid... it still tastes good. Ohhh Yeah! Why can't this be directly applied to other airlines? Well, I think its obvious that employees upset with management already are not going to change their attitudes unless they leave (look at Tilton). UAL will drive itself into the ground unless he leaves (or drastically changes his ways), and the CULTURE changes. Then, passengers will notice, revenue will increase, shareholders will be happier. Although, I think there's enough animosity towards Tilton that regardless of what he does, United is looking at self-inflicted bankruptcy until he leaves. I don't agree with the argument that the majority of United's shareholders aren't "stable" and are "day traders." An announcement of bankruptcy often has the exact same result -- killing the share price, regardless of the types of shareholders. Thanks for the input!

mccube5

You go on that whole rant for several paragraphs telling your fellow pilots to basically quit complaining then in you last paragraph you list the exact reasons there is so much malcontent amongst the majority of the pilot groups.

If the guys up top were doing the responsible and ethical things, abiding by CBA's and not paying astronomical bonuses to people who have only damaged the long term viability of a business, then the people below (pilots, FA, mechanics) wouldnt have to constantly complain.

If the execs followed the basics they learned getting there BS about ethics and such there would not be nearly the ill-feelings we as pilots have towards them. So long as they keep treating us a just another expendable piece of the puzzle feelings will not change.

Rickair, that was a great post. The unwavering idealist in me still has hope for a day the corporate culture in this country changes and we get on with the american dream. Looking out for thy neighbor and recapturing the old forgotten values of integrity and professionalism, thats what got this country to where it is.

stoki

Hear hear!

DeltaPaySoon

And let us not forget that management types are not about to go without "theirs". After 9/11 stock options were for $#@# and that is where the futures were for those people. When the stocks went south, they were not about to accept a model where they would not get paid off big. They had to "work" real hard to manipulate;

Government Approprations
Congressional Hearings
Labor Leaders
State and Local Legislators
Board of Directors
Shareholders
Potential Investors / Investors
and.......employees. (I'm sure this is just the "A" list)

What is absolutely amazing to me is that there has been ZERO upside to investing in any airline over the last 5 years (The multi-uniform shops were a good concept pre-bancruptcy but I don't see a future for many of them post bancruptcy for those that haven't gone through it yet), however here comes all of these financing / investment solutions in the tens of millions for nearly every airline. Frontier, Mesa, USAir when they went through their second bancruptcy. Just mind boggling.

I agree with all opinions above. I think the idea of having a licensed management staff with a TRUE oversight comittee is BRILLIANT.

Rightseat Ballast

Corporations were once charters that could EASILY have their charters revoked if they engaged in unethical or malicious practices. Corporations had a lot to lose if they did not abide by the law and the conditions of their charter. Nowadays, their is little accountability for corporations (when was the last time you heard of a charter being revoked?), and these legal fictions can just dissolve conveniently in the face of impending legal issues. Corporations were once recognized as being inherently less valuable than human life, and therefore did not enjoy all the rights and protections that a citizen had in terms of accountability and public/civil conduct. Nowadays, corporations have more rights and less accountability than our citizens in court, and are often let off the hook for major crimes. When did you last hear of a corporation facing criminal charges for using immigrant labor, for defrauding the public, for false advertising, for failure to meet civic duties such as tax liabilities? Today corporations face relatively benign civil (monetary) penalties for such heinous acts as knowingly polluting, for failure to comply with federal and state safety standards, for health violations, for discrimination, etc.

The free market and capitalism were never designed or intended to be free from oversight or free from legislation that provides checks and balances. Checks and balances are one of the most fundamental building blocks of America. Don't let some business friendly politician tell you that lawlessness and unchecked markets are the ideal basis for our economy. If you believe that, you might as well just give all government powers to one of our three branches of government.

Our CEO's are the creeps they are because we have fostered a downright criminal environment where the biggest rewards go to those who pull off the biggest heists. CEO's are basically free from legal responsibilty, so long as they don't bet on themselves too early (insider trading). No exec has been punished for robbing millions and even billions of dollars from their workers in the form of guaranteed pensions, or faced retribution for not fulfilling contractual obligations. They have run companies into the ground, violating the trust of many; they have taken endless REWARDING and STIMULATING jobs from our economy, and no one has faced the music. Our business friendly government (both parties) excuses these actions, and allows the process to continue. WE THE PEOPLE are part of this checks and balances system. We need to reassert our influence . Listening to talk radio is not being active in the system. Voting for a certain political party because they claim to be labor friendly is not enough. Vote locally for the least business oriented candidate you can find. Trickle down does not work for the economy any more today, and it does not work for government either. To rebuild decency in our government, and eventually put morality and ethics back into business law, we need to start at the bottom, and install local leaders who can best represent the local needs, and stand up to the corrupted leaders above them. Defiance is the most American of traits. Lets push change up from the bottom, and erode the bases of the highest leaders who stand by and let our middle class disappear.

In November, make sure you have put a lot of thought into who you vote for. The President of the US is not the only box to check on our ballots. We can go all day hoping to get a knockout headshot on our highest leaders, but 12 rounds of body shots will pay off.

milky

Seriously? You are basically asking for socialism.

Shareholders own the company whether you like it or not. Without them seeking to make a profit on their shares of your company, you have no job. Businesses do not exist to serve the 'common good.' They serve to make a profit.

With that straight, let's talk about CEOs. CEOs get paid exactly what the shareholders are willing to pay. The job is a very difficult job. If a company that is not doing well needs a new CEO, they have to be willing to pay a large sum to attract what they believe will be a CEO that turns the company around. With the higher chance of failure, talented CEOs are not going to come to a company without high compensation packages. It's all contracted. The 'greedy' CEOs do not come to the company and then write their own packages. So, your beef is with the shareholders who hire the CEO, not the CEO. But, refer back to the beginning of this post. You work for those shareholders. Without their desire to make a profit, you do not have a job.

The ignorance about corporations serving the public good is just Marxist ranting. Free market capitalism has proven to be the most efficient for the exact reason that everybody works in their own best interest. Nobody has your interests in mind better than you do. So, all the stakeholders come together with their own interests and the system works:
Shareholders: hire the best employees for all the jobs that produce the most wealth for the company. Any employee that you pay more than they effectively bring in in revenue is a loss to you. Pay too many people more than they are worth monetarily to your company, and you will eventually go out of business. So, the desire would be to hire the most effective people who produce the most revenue for the company for the lowest price which you can get them to do the most work
Labor: From the CEO down to lowly pilots in our example here, your interest is primarily to get the most compensation with the highest QOL. Notice that your primary interest is usually in direct competition with that of the shareholders.
The competing interests work to form a balance of supply and demand forcing the workers to only charge as much for their services as the market dictates while the evil corporation has to pay at least the amount that the market bears for the labor. If you ask for too much compensation, by definition somebody as equally qualified as you will do the job for less, so the company should hire that person. If the company offers too little compensation, then that means there is another company out there that will seek to take your valuable skills away for a higher price. Over time, these back and forth actions of employees and employers keep the market price of labor at the market price.

Lastly, there is no need to have licensing for CEOs. It's all described above, but basically, the shareholders have the desire to pay a CEO exactly a little less than the value he brings to the company. Likely, those shareholders will not hire somebody not qualified for the job if they desire the company to stay in business. If they make bad decisions and choose the wrong person for the job, it will decrease the value of the company. Too many bad decisions will cause the business to fail. Since a failing business would not bring value to the shareholders, we have to assume that they will not seek to do this. So, in their own 'greed,' the shareholders will always seek the most qualified person that they can afford that they believe will take the company where they think it should go (profits).

The scariest part of your post is that ignorance is a very scary thing. Your obvious lack of education on basic economic principals is the exact reason that liberals can rally support saying Marxist things about evil corporate profits. Did you know those evil profits are the basis of most of our retirement funds? Without the hope of high profits, there is no incentive for businesses to come to market and try their hand. Without those businesses, we have no jobs. Without a job, the only thing you will have is something new to bi%$h about.