Reality bites. It should.
Two stories heard virtually back-to-back on the radio this morning.
In the first, the reporter asked a small business owner how he was holding up. The guy said he had stopped paying himself, had eliminated all but essential expenses at home and in his business, but was near having to make a choice between letting employees go or closing the doors.
The second story concerned how some companies are considering pre-emptive layoffs in order to hoard cash. Just in case things get worse, you see.
Want to know why our economy is disfunctional and consumer confidence is non-existent?
Note to cash-hoarding ceos, their boards and shareholders:
For just a moment, look outside the door of your $1.2 million dollar office and past your next earnings release. Your survival depends on consumer confidence, and its collapse is a vicious cycle. If you have not taken every possible step to avoid laying off employees, do so now.
If you are still forced to get rid of employees, do so with a heavy heart and the realization that the actions you are taking may jeopardize the future of your organization.
Then remind yourself that you're not cutting overhead or "rightsizing" or eliminating FTEs. You are turning a person's life upside down. This person may not find employment for a long time. When he does, it will likely be a position that pays less.
He may lose his home. She will eliminate all but the expenses necessary to survive. Consider this before you bank your bonus check and ponder the profit forecast for company and its clever but ultimately nonessential product.
Then realize that the steps you are taking only add momentum to what are already very bad times. The FTE that walks out your door today is the consumer who will no longer be able to afford your product tomorrow.
Take a longer view. And show some humanity. It's in there, somewhere.
But Meanie, are you really saying there are enough good big guys? I guess I gave up hope a long time ago.
But a lot of the big guys are on their knees now and promising:
Oh I will not buy those big bad planes no more
Oh I will not give myself and my peeps all that bonus money
Oh from now on, I will show you what I do with all the money.
Hard kick in the ass is what they need?
January 30, 2009 11:41 AM | Reply | Permalink
Turning of the money spigot is what they need.
Time to reward the little guys and let the big ones take the hits they have coming. I'm a bit more sympathetic to our few remaining true industries such as the automakers, steel, etc. They are some of the last strongholds for organized labor.
January 30, 2009 1:37 PM | Reply | Permalink
Ya got my vote KGB
January 30, 2009 1:45 PM | Reply | Permalink
I'm more than a bit sympathetic. Their basic model is outdated and needs to evolve, but unions -- and the companies that partner with them -- may be our last bastions of economic sanity.
Obama's coming out so strongly and so publicly in support of unions made the pragmatist in me a bit uncomfortable. It took cajones. But he said something that needed to be said. You gotta admire the guy.
I guess you don't gotta. May not even wanna.
But I do, anyway.
January 30, 2009 2:01 PM | Reply | Permalink
I'm saying I'm not sure there are any good big guys.
Look at the small business owner. He has a much deeper relationship with his employees than the John Thains of the world. But he is already sharing the economic pain. His decision, ultimately, is a rational one. He knows what his workers mean to his business. He can quantify the economic consequences of losing them.
I'd love to believe that appealing to one's better angels could inspire a change of behavior. But it's fundamentally an economic issue. Financially and psychologically nuking the people that drive 70% of the spending in this country is bad strategy, plain and simple.
January 30, 2009 1:54 PM | Reply | Permalink
Come to think of it, we don't do strategy real well in this country. It's a shame.
January 30, 2009 2:03 PM | Reply | Permalink
I would like to think you can appeal to their better angel's as well. But yeegads! Look at Paulson's initial response to this crisis - wholly directed at pouring money into the banks without even a mention of how this would supposedly help Main Street. Paulson, Thain and all the rest have shown that this has always been about them and their colleagues. There are simply no other players in the economy of any importance.
January 30, 2009 2:40 PM | Reply | Permalink
It is staggering -- nearly unimaginable -- how out of touch those folks are with any meaningful reality.
A couple weeks ago I heard an interview with GM's big marketing guy at the Detroit Auto Show. He was asked how things had changed now that they'd let the federal government into their boardroom.
All he could talk about was flying commercial; staying in budget hotel rooms; no bonus; you get the drift.
The question, of course, was intended to get at how decision-making at the company had changed.
You just shake your head.
January 30, 2009 5:49 PM | Reply | Permalink
These guys have become so accustomed to seeing themselves as the big cheeses in the equation, they've forgotten who it is who buys their services/products at the end of the equation. Time to wake up and smell the coffee.
January 31, 2009 5:56 AM | Reply | Permalink
Agreed!
January 31, 2009 3:17 PM | Reply | Permalink
Meanie, last summer I found a job for my employee with a good customer and closed the business. By last summer I was down to just one employee and the business was out of cash to operate as the bank would no longer provide short-term credit for my operation. I was in the metal supply business and was heavily impacted by dramatic swings in commodity prices and the resulting near shut-off of demand. I could go no further with it and had stopped paying myself 12 months before. So, early retirement.
Retirement is great. Now I have all the time I need to look for work and decide if I need to go back to school and how I will pay for it since I have two in college that I am doing everything I can to help.
Everything I had was in that business and is now lost, though in that lose I have begun to discover a creative freedom that was pushed to the background when my third grade teacher made me go outside and play at recess instead of write stories and make pictures because that is what girls do.
I think our society is now captive of one great big learning moment....Where we were a short time ago was not a destination, it's always a journey.
January 30, 2009 4:00 PM | Reply | Permalink
mj, you have described what I think is one of the unrealized effects of this downturn - the significant contributions that either the retired or the unemployed/early retired can make in having time to write or do other political activities at this momentous time. Even many people who may have considered themselves lifelong republicans, once they lose a job and the security (and healthcare) they took for granted, may find themselves siding with Dems and Dem policies and programs. (We need to be ready to welcome them. I'm sure they're out there, maybe even checking out TPM>)
I'm sorry you lost your business. But I'm happy for you that in the process you've found a part of yourself, a part that was discouraged by a teacher long ago. And as you, and others, find voices or new ways to use them, I think this is going to constitute a huge force for good, a huge assistance to Obama's opportunity to change things that need changing.
Thanks for sharing a bit of your personal story. And for your contributions here. :)
January 31, 2009 9:11 AM | Reply | Permalink
That is a profound statement that needs much more investigation -- both in its meaning and its implications.
Thanks.
January 30, 2009 4:20 PM | Reply | Permalink