A READER WRITES:
Dear Dr. Fisher,
Lee Hindery, former CEO of AT&T Broadband, agrees with you about corporate fraud.
B
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DR. FISHER RESPONDS:
Thank you for the reference. I listened to the video which is listed at the end of this missive. It stimulated some thought to put this in perspective. Although this is a bit of a rant, it has currency with our present economic climate.
Not only are CEOs of Fortune 500 companies on average making 400 times average workers, some are making a 1,000 times more. He traces this to the Reagan years of "trickledown economics.” But again, he is too specific as this banality of fraud has been evolving since WWII through many presidents and generations of Americans.
The management class was essentially a new idea in 1941, but WWII brought the idea to fruition. Evidence is what management accomplished between December 7, 1941, when Japan bombed Pearl Harbor, killing thousands while destroying the nation's 7th Fleet, and thereafter.
David Halberstam writes in "The Fifties" (1993) that the nation mobilized its industrial mite in a matter of months so that by the beginning of 1943, the United States was out producing all its Allies, as well as the Axis Powers in planes, tanks, jeeps, merchant ships, guns, bombs, destroyers, battleships, submarines and aircraft carriers. This was management's grandest hour as it directed a sleepy nation out of its slumber and into maximum production.
WWII would not have been won without the confidence, competence and control demonstrated by management on the home front during those war years.
Once the war was won, the world decimated in the aftermath, only the United States remained fully intact. This period (1945-1959) produced such leaders as Eisenhower, Dulles, Oppenheimer, MacArthur, Hoover, Nixon, and yes, entrepreneurs Ray Kroc (MacDonald's) and Sam Walton (Wal-Mart).
Academics would come out of the woodwork to explain this success with theories and paradigms: Douglas McGregor (The Human Side of Enterprise," 1960), Frederick Hertzberg ("Work and the Nature of Man," 1966), Robert Blake and Jane Mouton ("The Management Grid," 1964), Rensis Likert ("The Human Group: Its Management & Values," 1967), Paul Hershey and Kenneth Blanchard ("Management of Organizational Behavior," 1972), Abraham Maslow ("Motivation and Personality," 1970), Peter Drucker ("Management: Tasks, Responsibilities, Practices," 1973). There were many others, but this is representative.
These efforts remind me of the infallible authority of encyclicals from the Pope of the Roman Catholic Church. These authors unwittingly and inadvertently celebrate the infallible authority of management, while suggesting a kinder and gentler approach to that authority.
Leaders tend to rise in crises and many such leaders rose during and immediately following WWII. But as Lord Acton has reminded us, "Power corrupts, and absolutely power corrupts absolutely."
The corruption that Hindery alludes to is quite banal because it rises out of mediocrity, and is based on accumulated wealth, alone, which cannot fathom much less fashion corruption of any other kind. There is no transformative wisdom here, only the capacity of getting and getting and getting some more.
There is no George Marshall to manage the Marshall Plan or Harry Truman to authorize the Truman Doctrine that saved Europe from communism and accelerated Europe's economic recovery. These were sage moves that had a bit of humanity to them, but that did not detract from their sagacity.
On the military management front, my sense history will be extremely kind to the United States through the efforts of General Douglas MacArthur, who allowed the Emperor of Japan to remain on his throne, as he orchestrated Japan's postwar recovery. MacArthur supported by the president and Congress turned Japan from an enemy into an ally, and eventual genuine competitor. Can you imagine if such sagacity had been shown in Iraq or now in Afghanistan?
These are splendid moments in our American management history. But like all good things, they, too, have a short shelf life.
Moving into the 1960s when I was a young man, and many like me were the first generation in our families to have a college education, opportunity was beyond imagination for those willing to study and work hard. Coming out of the Great Depression, this generation knew nothing about security blankets or golden parachutes. If they failed, they knew there would be no one to pick them up, no government hand out. They were on their own, which meant they were in charge. They were free. They would be the last generation ever to know such freedom.
I write about this generation -- with some amazement -- in A GREEN ISLAND IN A BLACK SEA (2014).
My boss and I were trained lab rats, he of a fawning disposition and I of a more aggressive nature. He picked me out of a bunch of comers because together we made a complete man. He was the velvet glove to my iron fist; he was tentative and I was not. In another time, he would have remained a brilliant chemist and I a failed one. But it was the 1960s and companies had no choice but to promote people like us into jobs we never dreamed of having.
Coming from the working class, and seeing how my da had been treated all his life, I never felt comfortable when I made 5 to 10 times what the average worker made, which grew to 15 times -- as Hindery points out -- in the 1960s.
As does young Seamus "Dirk" Devlin in A GREEN ISLAND IN A BLACK SEA, I retired in my mid-30's because life made no sense to me, not in terms of the money I was making, the duplicity I encountered my work, or the clash in values that was making me go mad.
My retreat was to write, it was also my therapy. I was not successful, and so what did I do? I went back to school like tens of thousands of others like me. That got me into consulting, which I found as legitimate as the traveling medicine man of yore. But consulting did get me back into the corporation in 1980. There I witnessed and then joined the gravy train Hindery chortles about, the gravy train that he now calls "executive pay a CEO fraud."
I got back into the gravy train more by serendipity than anything else. The corporation was my laboratory as an OD psychologist, and that work brought attention to me, as work as a chemical sales engineer a generation before had done so in a previous life. This second opportunity confirmed many of my theses developed earlier, and provided fodder for ten books and some 800 articles published in the vernacular of Hindery's rant.
He blames cronyism and greed and fraud, and all obviously apply when CEOs are making on average of 400 times what working stiffs in the trenches are making, but to blame Reagan? Come on!
In my books, I blame it on “executive creep” and not on "trickledown economics." This phenomenon started after WWII when managers justified raises and perks by the number of people reporting to them. Managers, no idiots, found ways to inflate their staffs, as academics have found ways to inflate grades and develop curriculums that have no efficacy as our collective culture tailspins into the river, Styx. A quarter century ago, I pointed out the problem in Work Without Managers (1991), and you would have thought I was advocating mortal sin.
And as bad as CEOs are, they cannot touch Wall Street. There are people on Wall Street who make 10,000 times what the average worker makes in New York City. Hindery mentions that 10 percent control 50 percent of the nation's wealth of a workforce of 156 million, half of whom are underemployed or unemployed, and no longer looking for work. He doesn't mention that one-hundredth of one percent (0.01%) earners exceed the bottom 90% (New York Times February 12, 2014) in income.
As you know, I have no political ax to grind. I am not into protecting workers, who are now mainly professionals, or into bad mouthing managers for the exercise. I am into pointing out that our economy fluctuates between being lopsided and upside down as if we have too much of a buzz on to know what’s happening. We are not structured to get better only structured to get worse.
Capitalism and the status quo of business as usual practices can be traced to Pope Leo X's Roman Catholicism. Luther’s rant was about the church’s failure to focus on its mission, not on the draconian practices of feudalism. Luther rose in the Information Age of his time with the movable type of the Gutenberg press. This allowed the printing of the Bible to be disseminated to the masses, spawning languages and nations with feudalism giving way to capitalism, and individualism.
Calvin took up the gauntlet and made “the Elected,” those of property and not poverty. Capitalism has been riding that train ever since.
Now corruption is not in the selling of indulgences, but in the buying and trading of indulgences. Now is the new Information Age with the banality of corruption on its last leg. Make no mistake. The age, which I call one of mediocrity in all its pursuits, is ripe for an authentic intercession. And a reminder. It will not come from the money classes, not from management, but from the most modest among us, as Martin Luther was a peasant priest with no authority, no credentials, only a burning heart for justice.
Jim
PS Listen to Lee Hindery’s rant by clicking here:
http://www.huffingtonpost.com/2014/02/13/leo-hindery-ceo-pay_n_4784162.html
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