GOP has a problem

[Dr. Shane]

Incentives work. Those that don't understand that simply don't have a grasp of managerial issues. Management is all about getting people to do what needs to be done. Regardless what the industry is, it is all about people. Incentives play a key role in management in many industries. Why should a waitress get a tip? Why should a sales person get a commission? It is all about incentives.

Big companies are divided into departments. They have to be in order to be managed. The company's profits are produced within the individual departments. In order for the company to stay profitable, the departments need to stay profitable. Consider General Electric for a moment. GE has an aviation division, a major appliance division, a small appliance division and they also own NBC and part of MSNBC. Let's say that Chris Matthew's program Hardball gets great ratings and brings in the biggest share of advertising dollars for MSNBC. However the appliance divisions of GE are losing so much money that NBC and MSNBC's revenues are not enough to make up for the losses. So GE is losing money. Since GE is losing money does Chris Matthews lose his bonus? David Letterman? Tom Brokaw? Of course not! If their division is producing a profit they deserve that bonus which serves as an incentive for them to keep producing a profit.

Quote:

Shouldn't bonus be used when you exceed reasonable expetations?

When I dine out, if my waitress does a good job I leave her a 15% tip. If she doesn't do such a good job I will leave less. If I am unhappy with the service I will leave nothing. If she exceeds my expectations she will get more than the standard 15%. Bonuses work about the same way.

[rudywoofs (Pam)]

But back to what Neil was saying...... bank CEO's don't need to get bonuses if their banks are failing. Where did all the bail-out money go that Congress gave to the banks? Out the window, down the toilet, and down the drain....and probably into the pockets of the CEO's of the banks.

I don't know of one bank that has helped someone who really needs help by way of the money that Congress gave the banks. There's a lot of sinking people out there who need the help...

[Dr. Shane]

I agree that the banks need to be held accountable. Regardless if it is government funds or private funds. All businesses need to be held accountable. The bail-out money doesn't change that. Each major department of a business has a CEO. Just because the entire business is losing money doesn't mean that every department within the business is losing money. If a CEO's department is making money, that CEO should get his bonus even if the company as a whole is losing money. That is only fair.

Imagine this, A restaurant is losing money so the waitresses don't get to keep their tips until the restaurant starts making money again. Would that be fair? How about the furniture store that is losing money tells all its sales people that they don't get paid their commissions until the store starts making money again? Is that fair?

[Bravus]

Part of the problem, of course, is that the people who get the bonuses typically have a large role in deciding how big they should be, or at least a strong influence on the board members who make that decision. If there were some transparent process of metrics that determined the bonuses, it would be fairer. And if the 'little people' actually doing the work were receiving bonuses too, it would be fairer.

[Dr. Shane]

If the little people are unionized, that pretty much takes care of their bonuses. Many companies do have profit sharing for the little people, which is a type of bonus. Many companies also give Christmas bonuses which are often based on the company's profits rather than individual efficiency.

[phkrause]

Absolutely Bravus I agree with you. Like I mentioned before and it was ignored, I know of a number of companys here in Mass that kept giving all the management and there CEOs bonuses and kept laying off there work force because of a lack of money. Besides why should upper management get thousands of dollars of bonuses when they already make millions, and when its there work force that's making the company all the money that they keep giving to the CEOS and upper management. Obviously as they kept laying off there work force they had less and less people doing the actual work and the companies went out of business. To me it seems give the workers the bonuses and get rid of the 500 managers that really don't do anything, but push papers around. Why have 5 managers to 3 workers, etc. Sorry CEOs and upper management do not need bonuses.

pk

[Dr. Shane]

Management create jobs. Those that believe managers don't do anything cannot grasp the issues being discussed here. If managers didn't do anything companies wouldn't have them. The purpose of a company is to produce a profit for the owners or stock holders. A company is not going to employ someone that doesn't do anything.

[phkrause]

First of all, I don't believe that management creates Jobs! How much people want your product or what your selling will create how many people you need to work for a company. I grasp the issues very well, I do not need someone telling me what I grasp and not grasp. I have worked longer than some have lived. I have seen many managers who did absolutely nothing. Nepotism is a real issue in many companies Period! I have seen a number of companies go under because of nepotism, by getting rid of usefull employees, who did most of the work, and keeping the relative, who did nothing. I have also seen many departments in companies that did much better and were more profitable after they got rid of a useless manager. I'm not saying that managers or supervisers are not needed. But when a company has five workers and a manager to manage another manager who manages other managers to manage the 5 workers, I think you have a company that is top heavy. So basicly I don't agree with your statement.

pk

[rudywoofs (Pam)]

pk

Hoo, boy...I have seen exactly what pk described, and I agree with his assessment completely. Absolutely.

[Dr. Shane]

I don't believe that management creates Jobs! How much people want your product or what your selling will create how many people you need to work for a company.

Products don't create themselves.

Products don't sell themselves.

This is how a company starts.

1. A person has an idea and decides to market that idea. It might be to produce a gadget, to start an auto shop or a medical office. Whatever it is, someone has the idea.

2. That person secures financing to move the idea into reality. That may be using his or her life savings, may be getting a loan, may be getting investors. However it comes, the idea needs to be funded.

3. Next the idea needs to be marketed. The person with the idea and with the financing now needs to get the word out. That may mean advertising, word of mouth, holding meetings with perspective clients or just posting a sign. However it is accomplished, the new business needs to draw clients.

4. Once clients start demanding the products or services the person with the idea now must see that the products and service are provided in such a way that the demand continues or grows. This becomes complex and varies from business to business.

5. As demand continues the person with the idea will need to keep the books balanced so all the bills get paid and the credit lines stay open. Without the needed cash flow the business will choke regardless of how good their products and services are or how high the demand is for them.

So clearly business do not start all by themselves. Products and services do not come into existence by themselves. Nor do these products and services market themselves. It takes management. From the time a business starts to when it booms it takes management. Products do not create jobs. Services do not create jobs. Management creates products and services. Management then creates a demand for those products and services. Jobs are thus created by management.

Are there lazy managers? Of course there are. They normally lose their jobs or their businesses fail. Many managers work hard and put in overtime with no extra pay. It is illogical thinking to judge all managers based on a few lazy ones. If all managers were lazy we would have few, if any, successful businesses.