Thursday, June 8, 2017

Doug Ducey, CEO

Posted By on Thu, Jun 8, 2017 at 1:15 PM

So, there's this corporation with 60,000 employees who work in manufacturing plants scattered around Arizona. The plant workers are unhappy. Their pay is lousy, far lower than the national average for people doing similar work, their buildings are in disrepair and their tools and equipment are outdated. Meanwhile, the corporation complains the workers aren't producing a quality product and has begun outsourcing some of its work to other factories which claim they can turn out a better product for the same amount of money.

The corporation's CEO, Doug Ducey, recognizes he's got a problem on his hands. He knows that despite the outsourcing, 95 percent of the company's production still comes from the plants it owns. There's a growing sense among stockholders that the workers may be right to complain about their pay and working conditions. Ducey knows things could spin out of control if he doesn't look like he's doing something to fix the problem. Worst case scenario, if he isn't able to tamp down the discontent, the corporation could vote him out and put a new CEO in his place.

So Ducey tells the employees, "You're right, there's a problem, and we're going to address it. I'm on your side. Improving the lives of my workers is priority number one. So I've developed a plan. It won't take care of all your concerns right away, but it's a strong start. "

CEO Ducey makes a public display of working with the board to look for ways to invest in improving workers' incomes and working conditions. A few months later he declares, "I've succeeded. The board has decided to increase the amount we spend on employee-related issues by $163 million. It'll be used for raises, bonuses for our best employees and building improvements."

It all sounds good until you look at the details. Less than a quarter of the money, $34 million, will be spent on a one percent raise for everyone. But 15 percent of the employees, those who work in specialized plants producing the company's most valued items, will get bonuses amounting to 8 percent of their salaries on top of the one percent raise. They'll also get brand new, state-of-the-art computers along with other improvements to their work places. Their bonuses will turn into permanent raises, as will the money for workplace improvements, if their work stays at a high level. Total cost of the benefits to the fortunate 15 percent: $38 million.

That's $72 million down, $91 million to go.

The amount of work at some of the plants sharing in the $38 million in bonuses and improvements has increased to the point that they've outgrown their facilities. Six new facilities will be built at those sites, at a cost of $64 million.

Now $136 million is accounted for, $27 million to go.

Taking care of the overdue building repairs and upgrading the worn out, outdated equipment at all the company's plants would cost hundreds of millions of dollars, and there's not nearly enough money for that. CEO Ducey decides to allot $16 million to cover a fraction of the necessary repairs and replacement. Plant managers will write proposals, and the board will decide who will receive the limited funds.

We're down to the last $11 million.

CEO Ducey decides to scatter the remaining money over a grab bag of feel-good programs. Day care centers at a few plants will take care of some workers' young children. Some families with school-aged kids will be selected to receive grants to purchase internet connections for their homes. The corporation will create a few evening education classes to help workers improve their skills and get their GEDs. A little money will be used to pay for workers' community college tuition. These are token efforts to fund programs to help employees, but the CEO happily adds them to his resume, mentioning them regularly in his speeches and press releases to let people know, "I care."

Ducey takes to calling himself "The Worker's CEO" and patting himself on the back whenever he's talking to a reporter or speaking to a crowd, bragging that his employees are his highest priority. He gets great press in business journals and kudos from chambers of commerce. Some reporters in local dailies and weeklies are taken in by the nonstop public relations campaign and praise the CEO for his efforts to better the lot of his employees. But the workers and their families aren't impressed. The only benefit most of them will see is a one percent salary boost that amounts to a quarter of the $163 million outlay, an insignificant raise which leaves them at the bottom of the national pay scale. A few workers will have their plant walls brightened with a little paint, a few selected sites will have their leaky roofs patched and their bathrooms fixed so all the toilets and sinks work. Some workers will receive a few perks which will help them a little, but they could afford to pay for the benefits themselves if they received the salaries they deserved. Only the top 15 percent of the employees will reap significant benefits.

The business community and some reporters wonder why the employees aren't more grateful. They got $163 million, didn't they? What more do they expect?

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