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<blockquote data-quote="SRBeef" data-source="post: 665309" data-attributes="member: 7509"><p>These "Heritage costs" and many other problems of General Motors and many other US Companies are the direct result of focus on SHORT TERM profits and stock price and resulting bonuses rather than thinking long term as some of the import companies, especially Japanese, have done.</p><p></p><p>If you look at the ratio of the top salary to the average factory worker in Europe or in Japan it is in the range of maybe 3, 4 or 5 to one. In an American company the ratio of the top guy to the average factory workers wage in their company may be 20, 30 or 100 to one...</p><p></p><p>The guy on top is looking out number one for himself, number two for the share holders and board of directors. He is only looking out for customers to the extent it helps the interests (= short term $$$) of the first two. This has been a good system for the guy that will only be in the job for a few years and then will pass the mess he leaves on to someone else.</p><p></p><p>The guy on top is not completely at fault in that Wall Street, shareholders and the board of directors all demand immediate results - and big ones.</p><p></p><p>How many times recently has a company announced a reasonable earnings increase only to have the stock just hammered because the increase "was less than analysts expected"???</p><p></p><p>Then the shareholders start calling the board members asking for his head on a platter....</p><p></p><p>It doesn't take too long for the guys on top to realize how this game is played and then just go with it...short term stock price is all that matters.....</p><p></p><p>Look at the CEO of AIG. Came in last Sept (08) and now says he's leaving..... How can you have a stable company when leaders change as soon as their pockets are full?</p><p></p><p>As far as union wages, I think it is a result also of this short term thinking. The guy on top would rather give in to the union demands rather than risk a strike or other unpleasantness which affects his short term bonus and the stock price. Rather than create an environment where the employees and management are in there together, the vast difference in compensation and short vs long term thinking and operation creates an us and them combative environment.</p><p></p><p>The key question is how do we break this cycle in large public companies caused by short term thinking and actions?</p><p></p><p>Maybe the markets have started the process already....</p><p></p><p>jmho. Jim</p></blockquote><p></p>
[QUOTE="SRBeef, post: 665309, member: 7509"] These "Heritage costs" and many other problems of General Motors and many other US Companies are the direct result of focus on SHORT TERM profits and stock price and resulting bonuses rather than thinking long term as some of the import companies, especially Japanese, have done. If you look at the ratio of the top salary to the average factory worker in Europe or in Japan it is in the range of maybe 3, 4 or 5 to one. In an American company the ratio of the top guy to the average factory workers wage in their company may be 20, 30 or 100 to one... The guy on top is looking out number one for himself, number two for the share holders and board of directors. He is only looking out for customers to the extent it helps the interests (= short term $$$) of the first two. This has been a good system for the guy that will only be in the job for a few years and then will pass the mess he leaves on to someone else. The guy on top is not completely at fault in that Wall Street, shareholders and the board of directors all demand immediate results - and big ones. How many times recently has a company announced a reasonable earnings increase only to have the stock just hammered because the increase "was less than analysts expected"??? Then the shareholders start calling the board members asking for his head on a platter.... It doesn't take too long for the guys on top to realize how this game is played and then just go with it...short term stock price is all that matters..... Look at the CEO of AIG. Came in last Sept (08) and now says he's leaving..... How can you have a stable company when leaders change as soon as their pockets are full? As far as union wages, I think it is a result also of this short term thinking. The guy on top would rather give in to the union demands rather than risk a strike or other unpleasantness which affects his short term bonus and the stock price. Rather than create an environment where the employees and management are in there together, the vast difference in compensation and short vs long term thinking and operation creates an us and them combative environment. The key question is how do we break this cycle in large public companies caused by short term thinking and actions? Maybe the markets have started the process already.... jmho. Jim [/QUOTE]
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