For the economy, a shortage of workers might be great news. Hopefully, businesses will finally open their eyes and appreciate their employees’ efforts. While many frontline employees produce value for their company, some CEOs accept outrageous salaries while destroying its value. CEOs pocketed huge bonuses while thousands of employees were laid off during the pandemic. Even when several businesses filed for bankruptcy, their CEOs still managed to steal millions in bonuses.
There is a severe lack of available workers, so businesses are competing to bring on everybody they can. Signing bonuses have been offered by several companies, such as McDonald’s. When the pandemic broke out in Canada, both Loblaw and its competitors offered out bonuses to its frontline employees. After three months, they decided to halt the promotion alongside their rivals. In response to official inquiries over this alleged cooperation, they stated it had occurred without their involvement. How puzzling! It’s the equivalent of discovering your three-year-old sneaking cookies from the cookie jar and hearing her exclaim, “Mom, Cookie Monster did it!”
Employee Turnover Caused by Poor Working Conditions
I can’t stand when Loblaw acts like that. Earnings increased dramatically throughout the bonus time period. There is no issue there per se. For-profit businesses have my vote. Certainly, I oppose a system whereby the government takes a cut of corporate earnings. Employee bonuses during a pandemic shouldn’t be contingent on financial success, though. Everything was perfect. In the meantime, my wife and I shopped at a Loblaws, where the staff continued to provide wonderful service despite the company’s insult.
Managers should remember that frontline employees are the firm’s backbone and treat them accordingly, rather than as interchangeable parts used to generate CEO pay raises. Employees disengage when they are treated by their employers like interchangeable parts. Gallup claims that they and other researchers have discovered a strong correlation between engaged employees and business success over the course of several decades. Still, the business world won’t accept this. However, surveys reveal that there are some exceptions to the rule and that companies like Cisco, Apple, Accenture, IBM, and FedEx treat their employees with dignity and respect.
The success of companies depends on their financial results in the coming quarter.
As a result of focusing on the following quarter, companies are willing to take advantage of their employees and manipulate their stats. I cannot stress this enough: I do not support the government imposing taxes on commercial enterprises. Despite the potential lack of impact on share repurchases, I support the Biden Build Back Better provision to tax buybacks that the House passed and is now before the Senate. Companies should not spend billions on share repurchases while simultaneously exploiting their workforce.
Businesses need to give shareholders the chance to vote on how the company should spend buyback money at annual meetings. There is room for negotiation, and potential outcomes include those associated with using buyback cash to give bonuses to front-line employees. Potential strategic investments should also be communicated to shareholders. There is also the possibility of delaying buy-backs for five years following a round of layoffs. Bonuses for executives shouldn’t be given out for the five years following a round of layoffs. Exploitation of workers for the benefit of CEO bonuses must end.
Lack of Stakeholder Capitalism at the Business Roundtable
For some reason in 2019, the Business Round Table (BRT) had an epiphany and realised that maximising shareholder value is not the only reason a company exists. That 1980s metrics is incorrect, it argued. The BRT, I had written back then, “came up with wonderful clichés about looking after stakeholders then immediately dropped it and returned to their selfish ways.” Over the course of the epidemic, they maintained their distance from those bromides.
Let there be a continued lack of workers! It could be the catalyst for replacing ineffective, self-serving CEOs who are tunnel-visioned in their pursuit of personal gain. Undoubtedly, the scarcity will cause disruptions in supply chains and other areas; yet, if given the chance, inventiveness on the part of workers will find ways to overcome these obstacles. The question everyone wants answered is: Can we expect a critical mass of companies to finally give up the quarterly race and instead focus on creating sustainable enterprises?