Remaking the Union model.

Discussion in 'The War Room' started by MikeMcMann, Aug 23, 2019.

  1. MikeMcMann

    MikeMcMann Gold Belt

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    Thoughts from the Bernie Union thread.

    -----

    The current Union model is broken. It is an adversarial model where the Host (Corporation) and Workers interests (Union Members) are not aligned and it becomes a battle of sharing gains only thru leverage almost always at odds with the long term viability and strength of the company.

    It promotes short term interests only often at the expense and competitiveness of the Corporation which the workers should have as much incentive to see do well as the Owners and Community do.

    Currently a Union is incentivized to boost membership numbers regardless of cost to the employer, and regardless to the impact on competitiveness and even if they cause such bloat that people have little or no work to do. They will still push for 'more', ever more, regardless.

    Similarly many owners short term focus on profits at the expense of long term competitiveness and viability contributes just as much to the problem often causing a lose/lose situation.

    It does not have to be that way. I, a sherdogger, can fix the Union model to the benefit of both the corporation and the employee. I am the chosen one.

    [​IMG]

    First off lets recognize and agree that the long term viability and profitability is critical to the company staying in business which is a benefit to all its stakeholders, (shareholders, employees, community).

    So here is the fix.

    The Union model gets changed to a direct 'Profit and Benefits Share' model where they get X% of the corporate profits divided up amongst the membership. Company makes any profit they automatically get X% to direct as they want to allocate to expanding benefits and paying out bonuses.

    So now suddenly profits = good, increasing profits = better, maximizing profits = great. Employees and Owners and Community all agree. Interests aligned.

    Further more you break that down by incentivize each unit in the company to drive towards maximizing profits, by tying their specific share of that bonus to benchmark productivity goals. Every industry has them and they set what is an efficient department, average department, or under performing department compared to the peer companies. If you do not do that one department may choose to bloat and coast at the expense of the others being efficient.

    You have a department that wants to bloat up with extra employees so each person can do less work, that would raise the cost side of their ledger, and reduce their per person profit share. If they try to cut man power simply to horde more money for less people, that would impact the productivity side of the ledger. Both would diminish their share of the profit share and push them to a well balanced work force, optimized to maximum output with the required number of people, but no more. Investments in technology, innovation and other best practices now become incentivized for all.

    Every Union member would be happy because, lets be real, they don't care about 'more bodies', what they care about is 'maximizing their personal remuneration' and this does that.

    Owners would be happy as they know they have a motivated work force always pushing to optimize the Labour V Productivity issue.

    And the last stakeholder, the community would be happy as this is the best way to ensure long term viability of the corporation as an employer in the area.

    The above would have been the best long term way to protect the viability of the US auto market, and prevent its collapse.



    There you have it sherbro's I have given a blueprint to fix the Union V Owner problem and to create a true kumbaya moment for all and you can all now heap praise on me for this bullet proof easy solution that I know has been mirrored in certain jurisdictions but somehow tends to evade the bulk of industry.



    [​IMG]

    Now try to punch a hole in the above, if you dare.

    <{cum@me}>
     
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  2. panamaican

    panamaican Senior Moderator Staff Member Senior Moderator

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    I have 2 thoughts.

    1) Socialism. Those stinking union members didn't share in the start up risk...blah, blah, blah.

    2) It should be a percentage of gross revenue to protect the union from GAAP games.

    Thought #1 isn't a serious thought and can be ignored.
     
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  3. Javelina

    Javelina Black Belt

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    unions are there own worse enemy. bunch of fucking douche bags fighting for douche bags

    i support unions tho, although i'd never be a part of one
     
  4. PainIsLIfe

    PainIsLIfe Gold Belt

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    Sorry bro, a lot of companies alread have or had profit/goal sharing.

    I recall having it in the early 90s in the garment industry (and non union) and all those companies went south of the border.
     
  5. Liquid Smoke

    Liquid Smoke Great artists steal™

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    /thread
     
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  6. Phr3121

    Phr3121 Red Belt Platinum Member

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    The Bernie Confederate thread was better...
    [​IMG]
     
  7. MikeMcMann

    MikeMcMann Gold Belt

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    1) it is a serious thought as I do think that point would be valid if we got into too much gov't forcing of Unions. If a gov't is going to mandate anything like i say, or make it hard to avoid a union, then yes profit sharing should be tied to 'risk' sharing, If the company loses money the same employees chip in. I know none would accept the risk of chipping in so then the answer would be don't ask for the profit share then.

    But I am assuming this is voluntary negotiations between a company and its workers seeking to unionize and proposing a structure I think neither would object to, and all sides would benefit the most from.

    2) I could not accept that as no one should benefit from revenue not tied to profitably. I would counter with the Union getting meaningful Board representation, with a member on the Audit committee to ensure the lack of games.
     
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  8. MikeMcMann

    MikeMcMann Gold Belt

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    I've worked for a company that had profit sharing plans. That is not the key aspect. The key aspect is to incentivize the employees to efficiency with only the appropriate amount of labour required. Not padding or cutting.

    A simple profit sharing plan does not stop the unions from trying to load up each department with employees prior to pull as much of the revenue to their side of the ledger before profits are split. Particularly if they think Management is playing games with the profit as Panamaican alluded to up thread.

    What we all too often now is a race to squeeze out and carve up the golden goose out of greed and fear that the other side will grab a disproportionate share if we don't do it first. My plan fixes that.
     
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  9. panamaican

    panamaican Senior Moderator Staff Member Senior Moderator

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    1) No one outside of the founding shareholders are part of the "risk" sharing. Everyone else is purely profiting. That's why I don't take that thought seriously. CEO's aren't sharing in any new business risk, the Board isn't. Almost no one is recouping an initial investment.

    2) I think for this work on the Union's side, it has to be gross. You can make the number exceedingly small if necessary. Otherwise you run the risk of management creating losses that benefit the corporation and the share price but leave minimal "profit". Like Amazon did for years. Pour all the money in R&D and have no profits for the union to share out. The union couldn't question the spend because spending for growth is important so how does the Union argue that they should still get their incentive? Meanwhile, the people compensated with stock options will still be getting benefits to their compensation.

    The union would immediately recognize the inequity of that.
     
  10. MikeMcMann

    MikeMcMann Gold Belt

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    1) Everyone who buys Ownership whether at founding or later is sharing in the risk. If I buy a stock in a mature company today and that company loses money and the stock falls I have lost my Capital. You, the employees, want to rightly claim responsibility for the profits when the company is winning, then accept responsibility for the losses when it losses. When I buy stock I have no control. I am making an investment in you and what you represent to me as the employees, management and board as a team.

    So no, no one should ever get one side of the ledger only. I only share in the wins but have no risk or share in the losses.

    2) Amazon always did make a profit or margin before you looked at re-investment for growth, so I would accept some type of tie to that metric instead.

    But i fundamentally say no to any tie to simply revenue. I've seen all sorts of businesses actually lose money at every level pouring mass amounts of investor capital in to try and build a market. Think Amazon but without the positive earnings before re-investment to growth. Its just a sink hole until it hits a certain volume level and it then it never gets there. Do the employees deserve a pay cheque along that rode, yes. Do they deserve something akin to a profit share, which is basically a success metric, for a company that has not achieved success and is just burning cash, largely on the employees themselves, hell no.

    Rewards should only be doled out once the company is successful. Not just for trying. Especially if you are paying those rewards out of the investor capital, the same people already paying the salaries. Rewards come from the money coming in, not the money going out. A
     
    Last edited: Aug 24, 2019
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  11. PainIsLIfe

    PainIsLIfe Gold Belt

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    Ok, but the company does the hiring so it isnt really like the union can load up on workers.
     
  12. MikeMcMann

    MikeMcMann Gold Belt

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    Unions do load up on workers thru negotiation. They demand all sorts of concessions and rule that allow departments to run bloated and over staffed with everyone working basically part time but getting paid full time. Its very harmful to the company, taking money away from productivity,reinvestment and other, ultimately hurting its competitiveness and ultimately putting at threat the jobs. Lose/lose/lose, outside with only the union bloat (membership) being a winner.
     
  13. lilelvis

    lilelvis Double Yellow Card Double Yellow Card

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    Robots union incoming.
     
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  14. Liquid Smoke

    Liquid Smoke Great artists steal™

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    Unions take note: the only thing worse than having a job is not having one.
     
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  15. JonesBones

    JonesBones Excuse my contraflow

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    Your initial sentence is ridiculous and patently false. People buying stock aren't taking risks? lol Everyone is just "purely profiting". Jesus fuckin Christ.
     
    Last edited: Aug 24, 2019
  16. PainIsLIfe

    PainIsLIfe Gold Belt

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    That sounds more like the problem the auto industry was having. Most companies dont hire more workers simply because the union asks for more help.

    What I have seen is companies talk about expansion being tied to a contact passing.
     
  17. JonesBones

    JonesBones Excuse my contraflow

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    Greater revenue also shows demand. I was just watching a Steve Jobs interview and he said that take care of the top line and the bottom line will take care of itself. I'm undecided and don't think any one metric works but I am towards sales over profit. Amazon and Tesla are the same. Amazon just expands, building its market share. Profit comes later.



    Jobs also almost went bankrupt pouring money into Pixar. It worked though. He took risks.

     
    Last edited: Aug 24, 2019
  18. Gandhi

    Gandhi War Room Deep State Platinum Member

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    Nice idea and it’s workable but not without its problems.

    1) Many companies already do something like this in the way of options. The ones that don’t do it, don’t because they don’t see the cost / benefit, ie the dilution to existing investors vs motivational impact.

    2) Result is you still have a trade off if this is forced, because other companies in other jurisdictions don’t have to do this. So you have lower returns to capital and/or gaming to avoid this. You can move work to other organizations / contract out / etc.

    3) You will need some arbitrary formula to decide how to divide the profit, again gaming and / or reduced competitiveness.

    4) You are not solving the problem. Winners and losers are still created based on who makes into which company.

    I think markets should govern how companies work and governments should redistribute to all via taxes and minimum incomes, the less micro management of the market system, the better.
     
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  19. MikeMcMann

    MikeMcMann Gold Belt

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    No. It is a problem that plagues all LARGE companies or industries that have unions. In particular gov't.

    Once a company becomes large, the Unions realize they have a very powerful leverage. They can put the owners to an untenable question by striking and that question is 'how much value do you want to see destroyed in a strike and how much are you willing to give us beyond what is justified to prevent that?'

    So Unions, especially in large mature successful companies can often extract more than is deserved based on their contribution asw a short term fix because it is, in the short term cheaper than the work stoppage, but long term these incremental uncompetitive concessions are cumulative. They keep adding up and up to a point now where the Company is at risk of being uncompetitive in their industry. And even if the Union management sees it, and sees the moral peril to the company they can do nothing about it. You simply will not get the job as a union leader if you say 'you know what, we are more than fairly compensated so we are going to stop pushing'.

    Yes this in large part is what eroded the Auto industry along with some toxic crony capitalism.
     
  20. panamaican

    panamaican Senior Moderator Staff Member Senior Moderator

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    No. They're not taking start up risk, which is what we were talking about. Read the conversation starting with post #2.

    People who buy on the secondary market are not sharing in the start up risk.
     

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