LETTER TO THE EDITOR:

It’s time for a new corporate model

Paul Gwin, Las Vegas

Sunday, Jan. 11, 2009 | 2:04 a.m.

After a hundred years of war between management and labor, isn’t it time someone invented a new corporate structure? This strife is costing workers pay. It costs management in loss of good will, efficiency and net income. It makes customers pay more for goods and services.

Corporate chief executives blame labor, but there is plenty of blame to go around. Management caused the forming of unions when it cut costs by working children and women in sweatshops. Adults unionized and stopped that practice and struck for fairer wages for all workers. They began to get the upper hand by the mid-20th century.

It can be argued, with some logic, that unions pushed costs of wages and benefits so high that the least-efficient companies couldn’t compete in world markets. On the other hand, the movement created a huge middle class of consumers in the U.S.; in fact, the whole world found the United States to be the best market for manufactured goods.

Then management regained the upper hand. They sold Congress and the public on fictional “right to work” laws. They also turned to importing foreign workers, then to building factories in foreign countries with cheap labor. This has spelled disaster for the United States.

Unemployment rose and few jobs are left that provide sufficient family income. We go to giant stores such as Wal-Mart and Costco, searching for bargains to stretch the budget. This causes small businesses to lose customers.

Can’t someone with the “Yankee ingenuity” we are famous for come up with a profit-share design for corporations? Why shouldn’t everyone in a company share in its profits (or losses)? Wouldn’t that put everyone on the same team, working on the same goals? Are super-wealthy chief executives even necessary? Could a corporation be run like a democracy?

President-elect Barack Obama is a charismatic orator with a brain. He has surrounded himself with a Cabinet of brilliant people, all determined to bring about change. They are asking and listening for new ideas. Now is the time to join their search for innovations.

Discussion: 4 comments so far…

By lvsundog

1/11/09 at 5:30 a.m.

Suggest removal

I don't think that one specific model will work for all corporations. We have seen, however, the insidious rise of blatant greed among executives of some of the bigger companies. Abatement of the culture of greed, along with execs not being rewarded for driving the company into the groud, are necessary ingredients.

A change in perception of those who buy stock is another necessity. Usually, when a company announces massive layoffs "to cut costs" the stock goes up. That is wrong.

When I notice massive layoffs I know that any interactions I have with the company will be more difficult, more inconvenient for me, and I will likely get inferior goods or services. In my estimation, the company loses value.
By Houstonjac

1/11/09 at 7:23 a.m.

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This is a very nicely worded letter.

Boy, I wish there was some way to develop the perfect corporate model for business.

I think the answer is that we are going to have to keep plugging away at it. In the 70's and 80's we started to see some light when the Japanese reintroduced Edward Demings to us.
Companies started to "reinvent" themselves. The idea of "paradigm shifts" rocked the corporate scene. "Continuous improvement" in work processes begin to play a part in work ethic in most businesses. "Focusing on the customer" became a significant factor in most businesses.
We have slowly drifted away from these dynamics.

Companies like SAIC and Parsons have created Employee Stock Ownership(ESOP) entities in which employees actually own a beneficial interest in the company--both companies have been extremely successful over the years. I actually worked at Parsons in Pasadena California, for almost 25 years under the ESOP concept. It was a great business model initiated there by CEO/Chairman William E. Leonhard. An ESOP trust actually owns the company, a global engineering business.

But the author of the letter is correct in my opinion in calling for a return to innovation in creating business models in which the cultures make workers and management partners in the business.
By Sunvisitor

1/11/09 at 9:28 a.m.

Suggest removal

Some great ideas here. It certainly would be great if the battles between managment and labor would cease and our country could be more productive. With all the labor fights, everybody loses.
By KillerB

1/11/09 at 10:01 a.m.

Suggest removal

Good and bad and uninformed, all in the same letter to the editor.

First: "Management caused the forming of unions when it cut costs by working children and women in sweatshops." Not really. Read Marx's "Capital" and you can see the need for unions. In the name of profit entire communities were devastated to the point people were eating bread made from sawdust just to have something to eat. The central concept was labor if organized is not only a necessary part of any enterprise but a force to be recognized and reckoned with.

Next: "We go to giant stores such as Wal-Mart and Costco, searching for bargains to stretch the budget. This causes small businesses to lose customers."

Giant stores only give the public what they want, cheap goods, and mostly made in China, the only large Communist government still in power. When have you ever seen their parking lots not full? We as a people are doing it to ourselves. Until we the people make it profitable to Buy American again, don't blame the marketplace for only giving "us" what we want.

Next: The "Yankee ingenuity" you referred to has been regulated out of existence. Talk to anyone who's come up with exactly that and you'll find, more likely than not, he/she was forced to deal with the regulators -- all the way up from municipal to federal. All with their own requirements and demands for compliance. No matter to comply with one is to be in conflict with another. Example: under Nevada law to form a simple private corporation, that simple one-page form is attached to 64 pages of law and traps the applicant with far too many technicalities and regulations.

Next: "Why shouldn't everyone in a company share in its profits ..." You're suggesting just because you are hired you're entitled to profits? The people who put up the funds to run the company, the stockholders, are the ones entitled to the profits, not the employees, unless the company is set up differently. And yes, corporations are like democracy. Anyone who buys stocks and shares is entitled to a voice and a vote.

Last, President-elect Barack Obama isn't going to save us along these lines. The feds don't charter state-based domestic corps (and you don't want them to). Mankind has been buying and selling and bartering, generally engaging in commerce and trades, since the beginning. Better to check the history of commerce for business structures that work with the maximum of freedom and minimum of technicalities/regulations. Self-incorporation -- business trusts -- is one time-tested (500 years) form.

Laws aren't created in a vacuum. If you don't like the laws, exercise your near-absolute right to peacefully assemble and petition your elected representatives with your grievances and change the laws accordingly.

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