Ethics on the otherside 1

[unclesyd]

This is a little information about a company with ethics.
The company I worked for was totally denuded by management on two occasions on the back to basics moves. The company was left holding the bag on all types of environmental issues on sites no even remotely connected to their business. The employee benefits were drastically reduced. The company was then taken over by a group that stripped every bit of the employee benefits on the pretense of saving money to pay the judgements on the environmental issues. They ended up with the company going into bankruptcy and as it came out it was sold to a team of investors for a song. The new owners essentially told the employees that if you make us some money will give you some, oh yeah!
The new owners have had the company since the first of the year and wonder of wonders they just announced that they were initiating profit sharing, 0- $500 based on performance along with restarting the 401K program. Each employee is to get $1000 seed money for his 401K and the company is going to match 60% of 6% contributions. They held to cost of the health insurance where there was only a small increase in premiums. The also gave everyone an accident insurance policy that pays for accidents anywhere. Everyone will get a raise in January.

 

[patprimmer]

Companies are run by people. You do get all sorts just like anywhere else.

The only problem is that there is often a filter or at times at least a perceived filter to remove open honest people from promotion lists on the grounds that they are:-

Commercially naive.
Lefty pinkos.
Not company men.
Not team players.
Have the wrong attitude.

I find that in small to medium companies that you are more likely to get paternalistic type management that cares for its staff.

Regards
Pat
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[unclesyd]

I forgot to add the new owners, two of them, are technocrats not bean counters. One of them is actually a ChemE that came up through the ranks in the same business, polymer. I was told that he has asked some very pertinent , sometimes embarrassing, questions.

 

[ScottyUK]

I thought your first paragraph was about ICI until I saw the 401k reference lower down.


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If we learn from our mistakes I'm getting a great education!

 

[jmw]

Business basically established to shaft the workers.
Pat nicely listed some reasons why good managers don't survive but the simplest reason of all is a legal one, the duty of the directors to the share holders.

There is no corresponding obligation to the workers.

Anything that can be good for the employees can almost invariably be projected as being bad for the shareholders. That's when we draw on Pats list to thin the ranks of managers likely to do something good for the workers.

The example given above is typical.... as the company goes into trouble, it isn't the share holders that are squeezed for money, e.g. asked to pay a premium on a per share basis (like a negative dividend).
Nope, it's workers pay, benefits and pensions that get taken away.

Now you have a problem. You have a new set of owners who have come in with a different mind-set.
You just have to hope they know enough about business to be able to make it pay off and aren't just well meaning but naive.



JMW

http://www.ViscoAnalyser.com

 

[patprimmer]

But the shareholders best asset is a competent motivated workforce.

Regards
Pat
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[IRstuff]

Shareholders rarely care about that. The majority are interested primarily in their dividends and seeing their holdings increasing in value. Even in bad times, they rarely get excited.

The sheer fact that most of the companies that fizzled last year didn't get all their execs and boards fired tells us so.

At those levels, it's an ol' boys club, and no one fires anyone unless there is some sort of public scandal. In the meantime, they still get their million-dollar bonuses and laugh all the way to the bank.


TTFN

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[unclesyd]

It may work as they only have a few people to satisfy.

patprimmer,
So far the moves by the new owners have got the employees attention. The moral certainly has been tweaked. Two friends, excellent employees, were recently talking about an early out are now talking staying the course.

ScottyUK,
The two companies were partners for awhile and essentially the same thing happened on both sides of the pond.
It is strange that after the somewhat tempestuous relationship between the two companies after we had a failure of a PSA vessel at our site and the first call our Chief Metallurgist made as a professional courtesy was to ICI Head Metallurgist as we knew they had the same vessels as ours'. Do bean counters do that?

jmw,
It looks like there is a possibility that this deal may work out to everybody's benefit. The Nylon business supported Monsanto for years as the cash cow. It's like when they quit feeding the cow the milk dried up. From what I understand the one of the new owners was favorably impressed when he realized that he had some very dedicated and talented employees who could make money with 1930's technology running on machines built in the 1950's.

Here is an article from Chemical and Engineering News about the deal. I hope this isn't just another one of those "Forward Looking Statements".

http://www.skcapitalpartners.com/system/files/Ascend Emerges - C%26EN Business Article_6-29-09.pdf

Addenda:
It is a very strong rumor that they have made their $50 million back since June 1st .

 

[ScottyUK]

unclesyd,

If they are back in the nylon business there's a duPont / Invista plant just closed on Teesside in the last few months which it would be very nice to see running again... the skilled workforce hasn't been away long enough for it to be irrecoverable.


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If we learn from our mistakes I'm getting a great education!

 

[ajack1]

Ethics actually work both ways.

For a shareholder, be that an individual, Pension Company or whatever they invest money and the return they get on that provides for them. For an employee they invest time and the return they get on that provides for them.

I do wonder if those that think the shareholders should expect no return or even have to invest more money for no return also believe that the employees should work for no pay or even pay for the privilege of having a job during bad times?

Is it actually any more or less ethical for shareholders to asset strip a company to maximise their return than it is for any employee to accept being subsidised during bad times and then moving as soon as someone else pays more money who has not subsidised their employees and just thrown them to the wolves?

 

[jmw]

I guess it is all about the rules of the game.

If you set up rules that are accepted over a big enough swathe of the economy, then the there will always be some one to make some money. The main reason for rules is to stop people doing things for short term personal benefit where it delivers a long term or more widespread harm.

There are rules for insider trading, for example. Those rules attempt to discriminate between what is good and reasonable application of specialised knowledge and those who are taking unfair advantage.

So the rules that evolved regarding shareholders were primarily developed with a focus on the rights and expectations of shareholders.

Somewhere along the line there was a reasonably successful campaign about ethical business where pension funds, investment funds and some business groups were persuaded that investing in lucrative South African ventures, during apartheid, was "unethical". This didn't involve any changes in the law, just shareholders expressing what they wanted to see done. In other words, policy was what the share holders wanted and about how they wanted to make their money.

Of course, they had to stand up and say what they wanted and make it stick.

SO there are two possible paths toward improving the lot of the employee in a company. One is through shareholders expressing their views and the other is through legislation.
I suspect that when the dividend is threatened all those kindly thoughts about the poor workers will go down that toilet.

But I'd like to see a raising of shareholder awareness of the iniquities the system is capable of when manipulated by the worst of the modern CEOs.

We are, of course, long past the times of the Quakers who built Utopian villages for their workers or who on their own initiatives reduced workers hours at the cotton mills (with no lessening of their pay) to a working time that was less even than the government limit that was later set - and was rewarded, as it happens, by an increase in productivity... an important point.

In the Uk we did have some vague hopes, or ome people did, those who believe politicians campaign promises, that when Phoney Tony spoke about a "Stakeholder Economy" it was more than just campaign rhetoric.

I'm not after a communist utopia here, I just think there is plenty of scope for profitability to be maintained or even improved when employers and shareholders take into account the interests of their workers. I just think that when a company squeezes the workers till the pips squeak to use money that would have gone to workers in a profitable part of the business to prop up another part of the business and then sell that business for a fortune and pocket the money, that we are going beyond reasonable or fair.

I see that the US is considering that certain companies bailed out by the tax[payer may have rules imposed on bonuses that mean shares instead of cash... good idea.

Any worker ho has to give up his pay, work extra or whatever it is should have some entitlement to shares instead of cash.

Sadly, once elected, that was the end of Phoney Tony's "stakeholder economy" and Gordo would be the last person to expect something like this from given that it was he who raided everyone's pensions and as a consequence we now all have to work till we are 90 or something.

So, good to see that Unclesyd has new owners who may have a much better approach to running a business and they and the workers deserve to succeed. One reason is that it is that sort of model where the workers are considered stakeholders that could be held up to the rest as an example.


JMW

http://www.ViscoAnalyser.com

 

[jmw]

PS There are some good managers, there are some good shareholders and there are some good family companies and some good global companies.

I've known about two good managers, briefly, in 40 years (neither lasted).
I've worked for a couple of half way decent companies that were spoiled by bad management.

I can't say I have ever worked for a really good company really well managed, ever.

Good managers and good companies just seem few and far between and it often seems that management is something people do who are too lazy or inept to be outright criminals, and are saved from appearing complete morons by working to a management rule book that doesn't allow for innovation or imagination or deviation from previously devised strategies that have so far worked.




JMW

http://www.ViscoAnalyser.com

 

[ajack1]

That is the problem jwm the rules of the game these days seem to be greed and stuff you.

To reasonably expect any shareholders to subsidise employees during hard times you have to expect the employees to stay loyal to the shareholders and not jump ship the first time a better offer is on the table. BOTH parties have to look at the long term benefits and not just short term gain. How often does that happen from EITHER party these days?

You only have to look at the banks, is there an easier sector to make a sustainable profit in? To see what happens when greed becomes the driving force, from both those lending and those borrowing.

I really hope that things work out for Unclesyd and the new owners and that they honour their promises and the staff remember this when times are not so good, it might even be the start of a better society that others follow, but I somehow doubt it.

 

[jmw]

The question is, what makes people loyal? Is it fashion, social change or what?
Is loyalty necessary? Or is it respect? If loyalty means remaining with your employer through thick and thin, then it's a one way street.

When I started work the company I joined was still considered a Family company despite, by then, being owned by GEC and having previously been owned by Crane.
The company was 200years old that year. The last of the family to own it, was remembered with respect by the workforce. Many of the workforce had been with the company man and boy with time off only to serve during the war.

They were not the best paid workers, rather less so after two ownerships by "Large Corporate" owners each of whom was there (as someone said) to milk the cow but not to feed it , but these were people from the shop floor to middle managers who were from that generation where you expected to work for a company for life.
There was a "family feel" to that company that made working there enjoyable (but meant I for one stayed too long) I expect would have been found in any similar company.

Right or wrong? Good or bad?
I think there was a lot to be said for that attitude in terms of satisfaction respect and reward.

But there were also problems with that situation, it bred a serious resistance to change, to new working practices and to innovation. And there was a dead mans shoes attitude that meant you expected to progress in the fullness of time; by seniority rather less than on merit.

On the other hand, there are many benefits to employees and to employers when employees transfuse themselves from one employer to another such as the bringing in of new ideas.

So I wouldn't want to confuse loyalty with long term subservience.

JMW

http://www.ViscoAnalyser.com

 

[plasgears]

Ethics today does not necessarily describe 'ethical behavior' in the highest sense. It's what a group agrees to do for their mutual benefit. Some misguided groups claim that an engineer is not a titled engr unless he has a PE.

 

[patprimmer]

I find the ethics as laid down by most professional associations to be quite unethical in some regards, especially with regard to protecting bad conduct of members, colusion and restrictive trading.

Regards
Pat
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