Beliefnet hit the skids in early 2002 when the dot.com bubble burst. We were out of money and not earning nearly enough money to support our staff. We were a bankrupt, dot.com focused on religion - not exactly a great magnet for new investors. And --dang -- it didn't even occur to us to get a government bailout.
So we did something unusual. We told the staff that if they worked for minimum wage until we could get back on our feet, we would treat the difference between what they earned and what they should have earned as if it were a cash investment in the company. The employees got stock, not options, but actual stock in the company.
I became CEO of Beliefnet at that point and immediately cut my salary to minimum wage, too, as did the other senior managers. Over the course of a few months, I gradually raised all our salaries up (though not to their original levels). Because of the sacrifices we made to help save the company, employees ended up owning a substantial portion of the company. In Chapter 11 and in the subsequent years, we turned Beliefnet around and the employees benefited when we were acquired by News Corp a year ago this month.
Why don't the auto companies do that? Management and workers could agree to substantial pay and benefit cuts with each dollar earning them stock in the companies. This would provide a huge short term cash savings to the company and give workers a permanent stake in ensuring that the company is managed for success and innovation, not just for job preservation.
p.s. This piece by Jeff Leonard in The Washington Monthly is the most clever solution for the auto industry crisis that I've seen.
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Beliefnet, this id stuff sucks. CEOs need to take massive paycuts
I mentally juxtaposed this post with 1)the image of the one Big Three CEO -- can't remember which one -- who, in the first round of hearings, when asked if he would take a pay and benefit cut, smugly replied that he was happy with his current compensation package; and 2)the news piece I heard on public radio a few weeks ago about the Big Three's deliberate self-sabotage of their own hybrid vehicle programs, featuring a smug auto-industry spokesperson's dismissal of alternative-energy vehicles; and 3)the infamous private jets conveying the auto execs to DC.
I live in Michigan...Ground Zero for the auto industry crisis. But it's hard to feel sympathy for a corporation whose management is this arrogant and clueless. I think one of the bailout conditions should be removal of all the current upper management.
That's a good idea except maybe the workers can't pay their bills at minimum wage. One idea is that all their foreign competition is first of all not doing all that well either. Second, those foreign auto makers get government subsidies. And third, they have nationalized, single payer health care. Those factors, especially two and three, make a big difference as the Big 3 here don't have those two advantages.
Wages are only 10% of cost of cars. Bad ideas are the cost paid buy the workers
This is a good idea, selling it to the excesutives and workers is another thing. If everyone in a company realized that they could save the company and agree on realizectic wages, they might have a chance. Too many people would not want to give up anything to save the company because so many American workers think that they are owed a job. The exectives make way too much money for what they do and even some plant workers make too much money. As far as paying their bills, many people bought too many things and now are stuck with the debt. This problem doesn't have any easy answers because we're all to blame. I do think that everyone of us should as God for help and think before we buy that 60" plasma TV that costs as much as a house. I gave away my TV two years ago and feel liberated. So what if I can't sit around and talk about silly probrams. TV will destroy your mind. Try reading a good book and exercise your mind.
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