Browse by Tags

CEOs of bankrupt companies have received millions of dollars. That doesn't seem fair since employee jobs and benefits are cut. Yet, if a company is in bankruptcy, CEO compensation is subject to the requirements of the Bankruptcy Code . Tom Horton, chairman and chief executive officer (CEO) of AMR Corp. and American Airlines , Inc. isn't allowed under the federal bankruptcy code to receive a severance payment of nearly $20 million when AMR merges with US Airways Group Inc. A judge cited a section of the federal bankruptcy code passed in 2005 that limits the CEO's bonus to 10 times the bonuses for the employees. Any party in a bankruptcy case can protest pay plans. But, only the U.S. trustee of the Justice Department objected to Horton's severance. They said the payment was too large in relation to the average severance that AMR employees were getting .The unions and other creditors had approved Horton's compensation. At Horton's rate, the severance of the AMR worker would average $2 million. There's no evidence that employees will receive that severance! Why do you think the unions approved the CEO's severance? What do you think the new airline after the merger will pay Horton? What type of bonuses should managers whose companies go into bankruptcy receive?

A JPMorgan management task force just released a 129-page internal report about a trade on credit derivatives that cost JPMorgan Chase more than $6 billion. The report found that traders acted on their own, concealing losses while managers seemed in the dark. The Wall Street Journal reported that the board said in a statement that the chief executive officer (CEO) "bears ultimate responsibility for the failures that led to the losses." As a result, CEO James Dimon 's pay was cut by 50 percent for 2012. It is $11.5 million, down from $23.1 million the year before. Javier Martin-Artajo, a manager who oversaw the trading strategy from the bank's London offices; Bruno Iksil, the trader known as the London Whale for placing the outsize bet; and Achilles Macris, the executive in charge of the international chief investment office are no longer with the company. Compensation issues stir up a great deal of controversy. JPMorgan Chase had no risk management control in place . The traders were influenced by compensation - the promise of huge profits. Massive pay packages for CEOs are a corporate governance issue. For example, good corporate governance would be a straightforward compensation policy which is in line with a company's actual performance. How did profits hide all concerns? Could this happen again?

Barron's reports that a mall Santa makes about $8,000 during the month of December. Barbara Marquand of Insure.com says that Santa's yearly rate is around $135,000 in " Santa Index 2012: St. Nick's efforts worth about $135,000 this year ." She compares Santa's job to similar ones listed in bls.gov , the hours per day worked, and the days per year worked, as seen in Santa's Index 2012 below. Santa's job BLS occupation used Hours per day Days per year Mean hourly wage Annual earnings Manufacturing executive (workshop) Industrial Engineers 8 364 $38.39 $111,792 Professional shopper Sales and Related Workers 8 15 $19.19 $2,303 Wrapper Packers and Packagers, Hand 12 14 $10.81 $1,816 Labor negotiator (with elves) Labor Relations Specialists 0.5 365 $28.31 $5,167 Letter reader Correspondence Clerks 1 100 $17.04 $1,656 Company representative in mall Customer Service Representatives 8 21 $15.92 $2,675 Investigator (knows if you've been good or bad) Private Detectives and Investigators 1 30 $23.37 $701 List checker (checking it twice) Bookkeeping, Accounting, and Auditing Clerks 1 30 $13.38 $401 Taking care of reindeer Farmworkers, Farm, Ranch, and Aquacultural Animals 1 365 $11.60 $4,234 Snow plow driver Highway Maintenance Workers 0.5 360 $17.47 $3,145 Pilot Airline Pilots, Copilots, and Flight Engineer 10 1 $56.76 $568 Going down chimneys (chimney sweep) Building Cleaning Workers 10 1 $13.89 $139 Cookie & milk taster Agricultural Inspectors 10 1 $20.25 $203 Deliveries via sleigh (distributor) Shipping, Receiving, and Traffic Clerks 10 1 $14.65 $147 Announcer ("Merry Christmas to all, and to all a good night!") Public Address System and Other Announcers 0.01 1 $19.17 19 cents Total: $134,944 Wage source: Bureau of Labor Statistics What do you think? Is Santa worth more or less? Explain.

Citrix, recently conducted a study on work/life balance with Wakefield Research to get a glimpse of modern office life. One of the top frustrations identified by more than 1,000 employees surveyed was "a boss that takes credit for our work." In order to avoid the boss, 30 percent planned their own vacation time opposite their boss' vacation to maximize time away from their manager. Obviously, some employees are dreaming about working for a new manager. When asked about TV bosses, office workers would most like to work for Gibbs from -NCIS‖ (20%), Miranda Bailey from -Grey's Anatomy‖ (15%) and Buddy from -Cake Boss‖ (14%). Workers care about their work, with 72 percent saying they would respond immediately to an urgent work email while on vacation. They are willing to work outside the office, with 64 percent of workers who have never worked remotely willing to give up at least one significant benefit in order to work from home just one day a week. Maybe people working at home do so because they can relax while on the job. Those that work from home dress casually. "Nearly half (49%) of those who have worked from home say they're most likely to wear jeans and a t-shirt when on the job - on the couch." (See more results from the survey in the attached file.) Which TV boss would you most like to work for? Why? Gibbs from -NCIS Miranda Bailey from -Grey's Anatomy Buddy from -Cake Boss‖

University of Chicago labor economist Sherwin Rosen wrote an article, " The Economics of Superstars ," to explain that high salaries for superstars are consistent with the workings of our economic system. Workers who generate a lot of revenue get high salaries. Rosen contends those top athletes, movie stars, musicians, authors and television personalities command huge salaries because their products can be sold to millions of customers at the same time. "When athletes and entertainers perform, they are reproducing at no cost for each customer," he wrote. (See attached paper.) By definition, service workers' products cannot be separated from their two hands. Physicians and beauticians can sell their services to only one person at a time. Their income depends on the amount customers will pay, multiplied by the number of times they perform their service during a workweek. Technology continually enlarges the market for the athletes or entertainers who possess exceptional skills, making their performances more valuable. Images and sound are reproduced and the size of the audience expands to millions and even billions of people. Before broadcasting, a game could only reach the 50,000 or so fans that sat in a stadium. In the 1930s, radio brought the audio portion of the game to those who weren't at the stadium. Television in the 1960s, cable networks in the 1970s, satellite dishes in the 1990s, and the Internet expanded the number of people who could watch. Even if each consumer pays just a few dollars or a few cents to watch or listen, it can generate enormous revenue. Top managers are not superstars, but their compensation has risen for similar reasons. Information technology gives companies a bigger customer base. As companies become larger, top management decisions measured in terms of profits are more important. Competition for top management jobs becomes more intense and their pay rises. Should top managers be paid like superstars?

Apple joined the Fair Labor Association (FLA) in January 2012 and in February, FLA inspected Foxconn , an Apple supplier with factories in China. Three Chines factories, two in Shenzhen and one in Chengdu, were inspected. Two parts to FLA's investigation at the three Foxconn facilities were: (1) An assessment of the treatment of workers and of working conditions in the factories, which seeks to identify root causes of workers' rights violations. This assessment analyzes information from several sources, including document review, physical observation, management interviews, and onsite and off-site interviews with workers. (2)Onsite, anonymous surveys to hear directly from the workers about working conditions and how they are treated in the factories. In its report , FLA found excessive overtime and problems with overtime compensation. Employees were found to work more than 60 hours per week and sometimes 11 or more days in a row. Foxconn, headquartered in Taiwan, has promised to cut hours worked, not salaries paid. By July 2013, no Foxconn worker will labor for more than 49 hours a week. This is the limit dictated by Chinese law. China isn't the only country with unpaid overtime. In the United States, fair wage cases are investigated by the Labor Department , and most cases investigated are for unpaid overtime . The Fair Labor Standards Act (FLSA), passed in 1938, delineated between manager, hourly employee, administrative worker, and the outside salesperson. It established the eight-hour workday, the 40-hour workweek, and time and a half pay for the workweek over 40 hours. Exceptions to the law are exempt employees: executive, administrative, professional, and outside sales employees. (See attached for overtime pay requirements.) Managers need to know the law. Employees on the employer's premises, under the employer's control, using the employer's tools are working and should be paid for that time. One type of overtime abuse is misclassifying employees as exempt. For example, some companies designate workers as supervisors or managers, but they don't supervise other employees and don't have authority over work schedules. Another type of overtime abuse is having workers perform job duties off the clock, such as working while taking less time for eating lunch or not compensating properly for travel time to run errands before or after work. Employees can work flexible hours, telecommute, and be attached to electronic devices to perform their job duties anywhere, anytime. How can managers keep up with the number of hours that people work and when they work?

When I can, I watch the television show " Undercover Boss ." In the show, a top manager, usually the CEO goes undercover as someone changing jobs, entering a new profession. Employees are told the camera crew is shooting a documentary. In the end, the undercover boss rewards the hardworking employees, usually with money to pay for college, rent, transportation, or a vacation. In general, the employees on the show s seem to have financial problems. So, it came as no surprise to me to read the results of a survey "Financial Education Initiatives in the Workplace" by the Society of Human Resource Management (SHRM ). (See the attached.) Human resources (HR) managers were asked, "In the past 12 months, have employees been more likely to dip into their employer-sponsored retirement savings plans, compared with previous years?" A majority (72 percent) of those surveyed agreed. HR managers reported that personal financial challenges have an impact on employee productivity in their organizations. Employees struggling financially, have trouble focusing on work and feel stress. The top financial challenges were lack of monetary funds to cover personal expenses, medical expenses, and saving for retirement. More than half (52 percent) of organizations represented in the survey provide financial education to their employees. Education might include financial planning, budgeting, paying for education, debt reduction, credit card use, homeownership, and taxes. Some offer financial counseling and resources. What are some good business reasons (besides improving employee productivity) for managers and employees to focus on financial education and counseling programs?

Zappos, an online shoe and apparel shop, wants motivated employees. At headquarters, employees dress up in costumes on a regular basis; have a nap room, phenomenal company benefits, and many more perks. Tony Hsieh, chief executive, told ABCNews.com , "One of our core values is to create fun and a little weirdness. We really recognize and celebrate each person's individuality, and we want their true personality to shine in the workplace." To keep high-quality employees, Zappos offers new employees $4,000.00 to quit at the end of their training session. Zappos does not want employees who are only working for a paycheck; Zappos wants employees who want to be at work. Two to three percent of new employees take the $4,000.00 at the end of their new employee training session. The classic article on employee motivation is Frederick Herzberg's, " One More Time: How Do You Motivate Employees ?" The idea is to enrich jobs. Employees gain an enhanced sense of responsibility and achievement and are motivated to do their best work. How does Zappos enrich jobs? If you were offered $4,000.00 at the end of your new employee training session, would you take the money and go, or would you stay? What do you think about offering new employees any type of severance to leave?