[evilgenius]

This morning reading the news three things struck me more than anything else. Those three things were; the closing down and laying off of workers at Blue Bell Ice Cream, the denial of a woman's attempt to use her phone to reply to a suicide message from her husband by Southwest Airlines flight attendants and the ongoing problems concerning cost overruns at the new VA hospital being built in Denver, CO. I can see a common thread running through each of these. That thread is a lack of understanding about the role of management within an organization.

In the first instance, that of Blue Bell, they have been hit by a listeria outbreak. People have died. Blue Bell has had to furlough almost half of its workers. They are spending a lot of money to try and assess their production process, while they are at a complete production halt. Trouble is, they knew something was amiss. They've been having this issue for at least two years now, which is clear they knew about because of test results from as far back as 2013 they didn't tell regulatory agencies about.

Secondly, Southwest has gotten into the news because a woman who was on board a plane that was about to take off suddenly got a text message from her husband. It was a kind of suicide note, but he hadn't killed himself yet. The flight attendants, seeing the woman's desperation to return the message and attempt to persuade him not to kill himself, or maybe to call the police, decided to enforce the rules about turning off your devices. For two solid hours the woman was crying on their flight. It was only when the plane touched down that she was able to call police in her city. They found him dead at that point.

Lastly, the VA is embroiled in controversy in Denver because a hospital project there is undergoing cost overruns, severe overruns. It turns out that much of it is because of mismanagement and bickering over control. Bids weren't properly done, such that companies to which those bids were submitted refused to respond. There appears to have been a general atmosphere of lack of cooperation between the VA and the general contractor concerning the project. There may also be a discovery of the general contractor's take it or leave it attitude toward what kind of economic equation they were willing to operate under. Normally, they would have been able to manhandle their sub-contractors, but they weren't able to this time.The subs would not work for the money on offer because of two things, apparently. Those complications being slow pay by the VA and the uncertainty they could see about being paid period due to the obvious conflict between the general contractor and the VA. Otherwise the general contractor could have done the usual thing, and made the subs all eat the price difference. Somehow, probably because of the public nature of it, that became too obvious to the subs and they proceeded to act as if they were organized or something. They probably weren't organized, but rather all under the sway of a situation common to them.

All of these things have happened, I propose, because of management practices that have gotten away from humanity and striven to appease some financial agenda. When I was going back to school recently one of the things that really struck me was the teaching concerning management I heard there. They advocated a management style of empowerment, saying that was far more effective than nut cutting. There were many case studies presented to back that up. The thing is, looking at the real world that isn't so much what you see. Most companies continue to operate under the idea that management is about nut cutting. The perception is that people are all lazy and don't want to work. They need to be compelled by rough means sometimes. Rough management is acceptable. That whole empowering thing costs too much at the point of impact. It's cheaper to let any problems present themselves and then deal with them when they do. It's cheaper, that is, until those problems are inherent to the nature of the management philosophy, then when they present they might be too expensive to continue.

When everything is about the moment, and not the bigger picture, and the moment is designed to come with too heavy costs should it necessitate slowing down and taking a look at the bigger picture, then the risk of doom to an operation is higher. That risk may materialize as an actual event or trend, the workers will do it to you, and they will be carrying out the expectations you have set for them, or it may not. If you encourage it those people may act also to prevent these kinds of things, maybe making less real-time profit but enabling better the concept of the going concern. I find it strange that companies, however, can't see that this kind of risk exists.

This is a complex topic. I guess I bring it up for the obvious opportunity to criticize the actions of those who had to perform under each of the systems, as well as any examples people might know elsewhere. There is also an element of this going on within the framework of the app economy, and its severe cost cutting atmosphere which may potentially be driving people to make similar decisions in the context of how they cooperate with it. I also want to give conservative minded business people a chance to rebut this, so that they can argue their form of Capitalism. That's what I think it is, a form of Capitalism. It's the most successful form to date, I think, but possibly about to undergo a change. If it(modern empowering management) isn't a potential groundswell, because the pace of it might be too slow, it may be a kind of issue that does come up and influences the flavor of business decisions going forward, hopefully for the better.

[Pops]

Thanks evil.

It is an adversarial system of capital vs labor and capital vs capital at the base level isn't it? Aren't your examples typical of the marketplace?

I see capitalism as an adversarial system where the worker bargains with the owner over who gets what portion of the value of the worker's labor. The worker would like to get as large a portion of what his labor is worth as he can, and of course the owner has the same goal, to get as large a portion of the worker's value as possible. What's left over after paying for the means of production and the labor is the owner's profit.

I guess there is a spectrum from worker ownership to worker empowerment to nut-cutting. Currently the forces of nut cutting and corporate personhood sure seem to be on the upswing. Money and so, power are trickling up, viva Reaganomics.

--
I've just started reading Capital by Piketty, the intro goes like this:
We all know what Malthus thought: too many people and not enough food: pitchforks.

Ricardo (pre- early- industrial economics guy) thought the ownership would acquire all the land and too many people and land scarcity would drive the rent so high that: pitchforks.

Marx modified that when industry and monetary capital replaced land as the profit producer but stayed with the idea capitalists would accumulate all the profit until: pitchforks (though he thought profits might fall and become concentrated enough that it might be capitalists w/forks)

Piketty seems to blend both Ricardo's scarcity and Marx's accumulation in his formula (r>g). He mentions peak oil (in so many words) by page 6 in the introduction to "Capital." Saying

"...in principle... if real estate and oil prices rise, then people should move to the country or take to traveling by bicycle (or both). ... [but then] Landlords and oil well owners might well accumulate claims on the rest of the population so extensive that they could easily come to own everything that can be owned, including rural real estate and bicycles, once and for all.
[then adds]
As always the worst is never certain to arrive."

IOW: Walking and Pitchforks

None of which is to say that I know of a better basic system than markets to organize production. But if I read you right, unfettered markets maybe not so much because they are only interested in the one thing.
.

[evilgenius]

My biggest concern was how, in each of these cases, if management had run their organizations in a different way they could have prevented the problem. Pushing an organization to operate at the lowest cost and to maximize revenue is not always the best way. Sure, you do have to work toward that, but maximizing that to the exclusion of all else can result in the kinds of problems that kill companies.

Blue Bell, for instance, could have come clean a while ago. They would have had to admit to a listeria problem, but it wouldn't have meant a total shut down. Instead they pushed it until they killed people. Southwest could have told their flight attendants that they have enough autonomy to hold up a flight when a person has the kind of emergency that the woman had. They didn't need to encourage efficiency above humanity. Now they are probably going to lose a lot of money in a lawsuit, and deal with the bad rep they will get for it. Both of those companies pushed at a kind of risk that they should have been able to see they were leaving themselves open to, of losing everything. Blue Bell, especially, is on the bubble.

Perhaps the VA needs to learn how to focus on people too. Everything they've done has been to make bad decisions look good, until they piled up so high they couldn't be hidden. The general contractor operated disingenuously as well. No doubt the decision by the VA to manage in order to make political brownie points rather than admit mistakes was the biggest problem, but there seems more than enough blame to go around.

[evilgenius]

If you need a more clear cut example, Lumber Liquidators may be the one for you. Sixty Minutes excoriated them, and the CEO got on TV and denied it. Oh, he knew the truth was somewhat different than his denials, but he managed the business in order not to look bad. They didn't even try to do the Blue Bell style fix. Everybody there looks like they will wind up resigning. The stock price may hit close to, or zero.

Take this point another way, though. Look at successful people who wall themselves off from the rest of humanity. They are acting the same way as these business leaders when they live in gated communities and seek to separate themselves from the great unwashed. Perhaps this is most evident in places like India, where the gated community thing comes with a more elaborate security, lifestyle and structural difference than in the West? Common to both, though, is a lack of understanding of noblese oblige, that there is an inherent connection the refusal to recognize does not make go away. I'm not saying, 'here, let me be poor so that the poor can have their level raised up just that little bit more.' I am saying that success is one thing and the game that surrounds it quite another. Why deny obvious truth because the game must be played your way? Isn't that sort of selfishness the same thing as a CEO brazenly denying the truth simply because it makes them look like they are down a few points in the game. Isn't it what various small minded world leaders do all the time when they deny the state of things in their own countries? Isn't it what so many Muslim men do when they claim that there are no homosexual Muslims, that homosexuality is somehow a plague that runs in the West because of its corruption?