Highlights of GM's new restructuring plan

[Penthos]

Originally Posted by wescoent

Ok... I'll use a personal example from my job. Let's say I approach the General Widget Co. with a proposal, in which they buy the Main St. Widget Co. for 1.5 billion. Myself and my team of 20 or so work for a month on this buyout, and when it goes through, we get paid a bonus. The fee for the buyout was 5%, so my company gets a $75 million fee. From that, my team gets a 10% cut of the fee, of which I get 25%, which works out to about $1.8 million as a bonus for my one month of work.

Is this fair? Our efforts brought $75 million in revenue to our company, yet I think anyone would say that to earn $1.8 million in a month is ludicrous.

Fair? My opinion is if there are 20 people why should one get 25% of the take?

[wescoent]

Originally Posted by Penthos

Fair? My opinion is if there are 20 people why should one get 25% of the take?

Because I'm their boss, and the one who brought in the deal

It's not 25%... I was using overly simple numbers, but it is a percentage higher than the rest of the team.

My point is, percentages aside, is it fair for my team to be compensated as such, even though one might consider the gross earnings to be ludicrous for one month's work?

[Penthos]

Originally Posted by wescoent

Because I'm their boss, and the one who brought in the deal

It's not 25%... I was using overly simple numbers, but it is a percentage higher than the rest of the team.

My point is, percentages aside, is it fair for my team to be compensated as such, even though one might consider the gross earnings to be ludicrous for one month's work?

I agree that leaders, supervisors, whatever there should be a scale in which their positions earn more, but not out of control. The American way is make money, I won't fault that.

My only qualm is that the balance currently employed in businesses (be it privately owned, publicly traded or a sports teams) these days is not justified. Why did executives at Delphi get bonuses while in bankruptcy? I firmly believe compensation and a companies success be more in balance. I wish more people were more interested in making a company more successful than just trying to pocket extra money.

[Maetrix66]

I would say that the problem with the United States economic structure is that

10% of the country accrues 90% of the wealth.

I make 35g a year, and bet that I work as hard or harder than alot of people that make over 150k/year.

Every time I hear somebody say that they "earn" their money, it always sounds like they are implying that most everyone else isn't.

People complain about the union, and the union is a contributing factor to the current problem with GM, but I think a big part of that is that many are angry that they work just as hard, or harder, and make about half of what the average union worker is.

Jealousy perhaps, but justified I think to a certain extent. If the CEO's made 50% less, and the rest of the country made 20% more, I think that the current economic crisis wouldn't be an issue. People can't afford to live the lives that they should.

There are people in this world that are not worthy of making more than minimum wage, and they exist in every company, in every state. But the vast majority are willing to put in the effort to make things better for themselves with the hope that working harder will make them more money in the long run.

And for a long time, it hasn't (proportionally to the rest of the country).

So if someone can get 60g a year for a job they work hard at, then good for them. I think the new two-tiered structure is a good move. The unskilled laborers shouldn't make as much as people that went to college or trade school. They should, however, receive incentive to train up for the skilled positions.

The current trend of downsizing is almost done. I think GM is reaching the point where it is going to be structured properly to "move forward" and properly attack Toyota.

Long Live GM, and Long Live the USA!

[wescoent]

Originally Posted by Maetrix66

I would say that the problem with the United States economic structure is that

10% of the country accrues 90% of the wealth.

I make 35g a year, and bet that I work as hard or harder than alot of people that make over 150k/year.

Every time I hear somebody say that they "earn" their money, it always sounds like they are implying that most everyone else isn't.

Jealousy perhaps, but justified I think to a certain extent. If the CEO's made 50% less, and the rest of the country made 20% more, I think that the current economic crisis wouldn't be an issue. People can't afford to live the lives that they should.

There are people in this world that are not worthy of making more than minimum wage, and they exist in every company, in every state. But the vast majority are willing to put in the effort to make things better for themselves with the hope that working harder will make them more money in the long run.

And for a long time, it hasn't (proportionally to the rest of the country).

Long Live GM, and Long Live the USA!

What you earn isn't a matter of how hard you work. How hard you work is a part of it, for sure. What matters is how much money your work is making the company. I can drive metal poles using a sledgehammer into my lawn all day long, and be working pretty hard, but I won't get paid, since I'm not contributing to profits or creating value.

We can both sit at a desk for 60 hours per week using a computer, and one might say we're both working just as hard. However, while you may be typing up reports, I'm structuring and negotiating a deal that will bring $80 million in revenue to my company... should we both get paid the same since we're both working just as hard?

Paying middle-class workers more than their value-contributions is distinctly uncapitalist, but neccesary for a functional society.

A better way to say it is that 10% of the country creates 90% of the wealth.

[Michael_S]

Originally Posted by wescoent

We can both sit at a desk for 60 hours per week using a computer, and one might say we're both working just as hard. However, while you may be typing up reports, I'm structuring and negotiating a deal that will bring $80 million in revenue to my company... should we both get paid the same since we're both working just as hard?

A better way to say it is that 10% of the country creates 90% of the wealth.

I think your conclusion is based on a superficial examination of the situation.

The $80 revenue deal undoubtedly involves an exchange of an estimated $80 million worth of services, products, labor, intellectual ideas, communication, and so forth. So even though you may be negotiating the specifics, you are not creating any more wealth than anyone else. You're just involved in bigger transactions.

For two years, I was the only software developer at our company. I could take the attitude that the company would cease to exist without me or someone else in my place, and I am most important and deserve the highest compensation. The sales manager could consider himself the most important, because if no one purchased our services then the software I write is irrelevant. Our researchers could consider themselves the most important, because if they didn't design the medical business logic in the software that I write no clinics and hospitals would have reason to use it. Our system administrator could consider himself the most important, because a spectacular web application doesn't mean anything if it's inaccessible to clients, security is compromised, or we have server failures. And of course, the president sits at the top making all of the pieces work together.

All of the pieces of the puzzle are necessary for profitable enterprise, so stating that our salesman or our president make 90% of the wealth is absurd.

[wescoent]

Originally Posted by Michael_S

I think your conclusion is based on a superficial examination of the situation.

The $80 revenue deal undoubtedly involves an exchange of an estimated $80 million worth of services, products, labor, intellectual ideas, communication, and so forth. So even though you may be negotiating the specifics, you are not creating any more wealth than anyone else. You're just involved in bigger transactions.

For two years, I was the only software developer at our company. I could take the attitude that the company would cease to exist without me or someone else in my place, and I am most important and deserve the highest compensation. The sales manager could consider himself the most important, because if no one purchased our services then the software I write is irrelevant. Our researchers could consider themselves the most important, because if they didn't design the medical business logic in the software that I write no clinics and hospitals would have reason to use it. Our system administrator could consider himself the most important, because a spectacular web application doesn't mean anything if it's inaccessible to clients, security is compromised, or we have server failures. And of course, the president sits at the top making all of the pieces work together.

All of the pieces of the puzzle are necessary for profitable enterprise, so stating that our salesman or our president make 90% of the wealth is absurd.

It is oversimplified, yes. In human resources, the science and art of determing compensation is a FASCINATING process. In my example, I'm backed up not only by my loyal and hardworking team, but by nearly 1,000 other employees in operations, technology, finance/accounting, and legal. Hence, of the 80 million in revenue that comes into the company, I'm entitled to only a tiny sliver of it, while the rest goes towards everyone else.

My sliver IS larger, however, than the individual pieces paid to everyone else, by merit of the fact that I originated it, and I was the primary manager of the process.

[T-Type]

Originally Posted by wescoent

What you earn isn't a matter of how hard you work. How hard you work is a part of it, for sure. What matters is how much money your work is making the company. I can drive metal poles using a sledgehammer into my lawn all day long, and be working pretty hard, but I won't get paid, since I'm not contributing to profits or creating value.

I don't necessarily agree with that. For example, generally engineers who develop a great new product don't normally reap the rewards of their work (outside of a steady salary and in rare cases a bonus). Salesmen on the other hand can make a ton of money off a great product. Finance guys make a ton of money for essentially just having basic math skills. It's not just how much money you make the company, it's also how close you are to the money flow.

[wescoent]

Originally Posted by T-Type

I don't necessarily agree with that. For example, generally engineers who develop a great new product don't normally reap the rewards of their work (outside of a steady salary and in rare cases a bonus). Salesmen on the other hand can make a ton of money off a great product. Finance guys make a ton of money for essentially just having basic math skills. It's not just how much money you make the company, it's also how close you are to the money flow.

That's a big part of it as well, albeit unofficially.

Ouch on the finance part... that's like saying NASCAR drivers get paid tons of money for being able to make a left turn

[Michael_S]

Originally Posted by wescoent

That's a big part of it as well, albeit unofficially.

Ouch on the finance part... that's like saying NASCAR drivers get paid tons of money for being able to make a left turn

With all due respect, the finance part tends to be overcompensated. Your skills are far more than basic math. You have to understand tax codes and plan budgets and at higher levels effectively be as versed at portions of business as a good business lawyer.

You deserve as big a piece of the pie as anyone... but often you get the largest piece by a good margin.