Double Dip Recession

But flatpack, like I said. It's all possible now. If the employee really does care that much about having a vote in the business, he/she can buy some shares and instantly be a shareholder.

Of course he/she would have to buy a hell of a lot of shares to own enough to control the company but I guess your point is that as a collective they can be empowered. Well if enough employees bought shares then you can have that already.

My company offers me shares through an employee scheme. You will find most large corporates already do this. It promotes exactly what you are suggesting. That employees have a stake in the business and interested in seeing the company succeed.

But I think what you were actually hoping for is some sort of system where the employees get the majority say in the business which i think would impossible in practice. Like I said, in a large corporate company like for example BT. Just how do you get 100,000 to agree on anything? All vote like an election? How many elections do you hold per year? On what decisions? And who decides what those decisions are which should be voted on and what the CEO/CFO/CIO can decide?

It's just socialist nonsense which has no place in the real world.

Unfortunately, where you don't have bureaucracy, you have other irritations, dangers, bad and unforgivable behaviours. A society without any bureaucracy would be absolutely wonderful if it weren't for the fact that people don't always behave with any decency. I should imagine most people would be happy with a world without bureaucracy, provided everyone behaved according to the personal standards of the person fantasising about a society without bureaucracy.

minimathsmouse It sounds like your business was a victim of bureaucracy as much as anything. With less employee protection who knows how many people your otherwise successful business would now be employing, how many other small businesses would be employing people or how many fewer people there would be sat rotting on the rock and roll.

flatpackhamster "I was thinking at a corporate level and not SME level." Inadvertently you've just made an interesting point. Once you have one set of rules for 'big business' and another for SME's the government need to appoint a quango to determine the point where a large medium sized enterprise becomes a small large sized enterprise. Bureaucracy will always beget yet more bureaucracy.

niceguy2

I was thinking at a corporate level and not SME level. It wouldn't work at SME level but it doesn't need to be done at SME level because the salary disparity doesn't exist. You don't have an MD earning £15 million and 5 employees earning £15,000.

Corporates have the HR infrastructure to handle such a project, and it's corporates that have this problem, not SMEs.

Should've been more specific. My fault.

What personal risks do chief executives of long established plcs actually run? The risk that they'll have to be paid a colossal amount of money on which they could retire forever in order to get rid of them?

As I said, niceguy2, your view only works with very small companies where the person who took the original risks still makes all the decisions, has all the risks still in his own name and owns all the shares. If he needs to borrow more money, he'll get more shareholders or banks involved and they'll tell him what to do and how much he can earn anyway - and with a small business, they won't be letting him earn the millions a plc chief executive taking no personal risks gets away with, nor will they always understand what is best for his business and may well end up being the orchestrators of his downfall (in his view at least). So where's the freedom in that? And where is the justice in the highest earners not being the ones who are taking any personal risks whatsoever? It's not as if he actually can pick and choose who is willing to lend him money any more freely than he can pick and choose his own employees, so he ought to be careful who he deals with and employs, regardless, because unless he wants to be a sole trader, he is at the mercy of a lot of people whether he likes it or not.

And to argue the employees of a plc actually ever hope to own enough shares in the company they work for to have any say whatsoever is ridiculous. We all know who owns the majority of the shares, and it's not the employees, unless unwittingly through their pension schemes.

Interesting... I was wondering whether Mr Lewis [when he decided with his father Mr Lewis to expand their draper's shop on Oxford Street] realized what socialist nonsense he was indulging in, and how it was doomed to failure. Also why our Government is holding up this socialist nonsense for their servants' pensions.

Could someone explain what place that has in the real world, please?

A few years ago I set up after school maths clubs, working in schools & pre-school maths classes. I had trouble finding people who were both available to work for just a few hours, (most wanted 16hrs+) suitably qualified and talented. My accountant said I had two choices, borrow money employ staff and double up on venues or take another 2 yrs to see a profit.

When I weighed everything up (I am very cautious) I concluded that one member of staff on maternity leave or on long term sick pay would totally finish my business.

I owned my business, I put my savings into it, everyone crowed about what a wonderful idea etc...... however it would have worked better as a co-operative because the risks/benefits would have been shared. It could have grown with very little extra investment and personal risk.

OK, let's say I started a company making widgets. I put my own savings into the company and borrowed from the bank using my house as collateral to get the company started. Two years later, I'm lucky enough to make this work and now I employ 10 people. Are you are now saying is that I should now give these 10 people the right to determine what happens to my business? That they should be able to decide how much I earn and what my companies priorities are?

Does my receptionist/cleaner even really understand the widget market and what our competition is doing so he/she can make an informed decision? I doubt it. So is it a good idea to let someone with little clue about my company and the market we operate in to vote? I would say no.

What happens if they get their collective decisions wrong and my company goes bust as a result? Who is going to be the bankrupted person? Me. Not the employee. I lose my house and my life savings as well as my 'job'. They can walk away and find another job and vote for the future of that company too. Brilliant.

Now if you say ok, only do it for larger PLC companies. Well we can do that already. Employees who really want a say in how their companies work can buy shares and become a shareholder. That way they can vote and their voice be counted.

It all sounds like the usually socialist nonsense to me which all works fine & dandy in theory but has no place in the real world.

Since when does an employee have nothing to lose if the company they work for goes broke?! And as for industries in which generations of families worked, it sounds even more silly to argue they didn't care whether the company was around in 10 years or not. Shareholders in general don't care (unless they themselves set up the business, it means a lot to them in non-monetary terms and they worked in it themselves), so long as they can get their money out (whether or not there is a recognisable business or employment for anyone left at the end of it). Employees have every reason to care for an employer that provides them with employment and a reasonable income and notices when they make a difference to the success of the company.

I disagree with flatpack's suggestions.

Workers often have no/little incentive in how the company performs nor do they care if the company is around in 10 years. They have no skin in the game other than the monthly pay cheque. They have no element of risk.

Shareholders on the other hand own the business and it's their capital in the business. So if the company goes broke, their shares cannot (as suggested) be sold since they are in effect worth nothing.

I think the concept of letting the 'people' control the destiny of a company which they don't have any real responsibility for is never going to work.

It may also be related to pack mentality. Major board appointments are almost always in the comfort zone of those choosing, hence reflecting their expectations and risk positions of the market - do you choose a tried pair of hands, how many of those hands are free at the moment, can you work with them, can they handle the politics, if you get it wrong but chose someone who anyone else would have chosen, that's ... etc Many similarities to senior public sector appointments, in fact. The remuneration gets swept along with all that. CEOs aren't necessarily trickier to dispose of, but expensive, yes! Double standards, possibly, but even with guidelines on senior public sector appointments, you can't avoid the dynamics, chemistry and politics. Murky stuff.

It's really just another case of double standards - those with the wealth and power work ceaselessly to reduce the wealth, security and power of those beneath them, whilst simultaneously justifying an increase in their own wealth, power and security.

I really don't see earning 100x the minimum wage as a disincentive to taking up a post on a board. Plus some people - generally the ones who end up in that position - just have such a high opinion of their own abilities that they really couldn't bear anyone else taking the position up, instead. Plus - what risk?! Chief Executives seem to be even trickier and more expensive to dispose of than any other employee.

I like hampsters, I would being a mouse.
Hand the power to the people who really care about whether the company's going to be around in 10 years' time YY

I think the workers very much care and it's often share holders, esp institutional share holders who don't give a fig. Workers care because they generally have less social/actual mobility, tend to want to put down roots because of housing and family relationships/schools etc.

In areas where businesses have closed and whole industries have died, people have often stayed put, they don't want to move, they want to stay in the community in which they feel safe and supported with family and community. So yes I think long term sustainability and job security actually means workers do act responsibly.

Shareholders on the other hand will jump ship for profit, have no real interest in the business. I guess that's why the asset strippers move in, there is always money to be made in efficiency, staff lay-offs and selling material investment such as buildings, often the share prices rise as a result.

Actually, you do sound like a leftie, flatpackhamster - power to the employee and all that!

ah flatpack, I can only go by what you say...

Positions are merely relative, anyway.

IRL who is going to take up a Board post with only 9% rise? The risk involved demands more return. Who can judge if the loss made would not have been large enough to sink the firm, but for exec action? Or if the gains made were massively less than if better decisions were taken? Or that operational pay not be cut even if that is the only sensible market decision? For which exec pay should rise by 80%? Not all outcomes are accessible through common sense and simple hindsight. Shareholders may also not be pleased to fund employee happiness at their expense.

thirdhill

Haha, I love the idea that I'm a leftie.

Look, the way it 'works' at the moment is that the people who vote on executive pay don't have to deal with the consequences of that vote. They have the power but no responsibility. If a new MD arrives and fires 3,000 staff, the share price rises and the board vote themselves a pay rise and the shareholders back it. But if the company folds next year, the shareholders just sell their shares.

Hand the power to the people who really care about whether the company's going to be around in 10 years' time. People aren't unreasonable. If the company's doing well, execs will get their pay rises. But if I look in my pay packet and see 1.4% and then I see an exec pay rise of 9%, is it really unreasonable to say "What did you do so much better, and why isn't that reflected in salaries throughout the company?"

"The way that I would operate it is that the executive board is required to submit their yearly request for a pay rise or their bonus payments to a company vote All employees of the company have one vote. A simple 2/3 majority on the exec's pay rise and bonuses is what's required for that package to pass."

EEEEEEEK!
I knew 360 deg appraisals was the thin end of the wedge!

World is full of raving closed shop lefties!

Back to the

Owning a company isn't the same thing as having the faintest idea how much you should pay the chief executive, or indeed having the faintest idea how to make the company profitable, or how somebody else is managing to make it profitable.

What's the difference btw a chippy socialist and a socialist?

I think getting all employees to vote on executive pay is a good idea, a step in the right direction.

I agree in principle, MrPants, but I think that the whole responsibility/remuneration system is broken. Take the financial sector as an example. Most of the shareholders in a financial institution are other financial institutions. Those institutions mostly employ the same people who get moved around from one company to another every 3-5 years. There's no oversight because they're all mates.

The way that I would operate it is that the executive board is required to submit their yearly request for a pay rise or their bonus payments to a company vote All employees of the company have one vote. A simple 2/3 majority on the exec's pay rise and bonuses is what's required for that package to pass.

It takes it out of the hands of institutions shareholders (who have no interest in the company) and more importantly out of the hands of chippy socialists (who know nothing about business except how to ruin it). The execs are forced to consider the welfare of their employees, which is a good thing, and the employees will feel that they are being consulted.

"why should shareholders have so much say over everything"

Because they own the company.

"Is it really possible that someone on 200x the average salary really is that talented."

Middleagedwino suggested fixing the cap respective to the lowest paid, not the average salary which, obviously, would be a lot more. As for whether someone is worth the salary they are paid I've always liked the quote attributed to the legendary fire-fighter Red Adair "If you think it's expensive to hire a professional to do the job, wait until you hire an amateur. ? In other words, if paying someone 200x the minimum wage saves a company billions of pounds, it is still money well spent.

We could certainly agree that not all big bosses deserve the money they are paid but I think responsibility for that decision lies with the company?s shareholders and should not be decided by a one-size-fits-all rule drafted by chippy socialists.

the problem with this approach is that it sets a wage cap on the genuinely talented

Is it really possible that someone on 200x the average salary really is that talented. Do they not have a whole bunch of other people supporting them? Does Mr leahy make his own tea, run every store, stack every shelf, when he can multi-task that well, I agree he'll be worth every penny.

But Middleagedwino wasn't saying the top boss should ALWAYS earn 100x the wages of those beneath him, however crap the boss. Nor was Middleagedwino saying job security and pay offs should stay as they are. And why should shareholders have so much say over everything, when they do bugger all to ensure the company does well or badly, but want payouts either way where possible?