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Rule 3 in Making It In America: Tell the Hard Truth

The Hard Truth: Rule 3 in Making It In America

Rule Three in Making It In America by John Bassett can be boiled down to give your employees the truths, the good, the bad and the ugly. And that's really the essence of the chapter and I won't belabor too much on it.

But the author does talk about the outsize salaries in American companies. Here's the initial salvo on this topic:

"I have a real problem with the way many of the America's top business leaders behave. An unwarranted sense of entitlement coupled with a refusal to reveal the whole truth has crept into the psyche of American business. The higher people rise in the business world, the stronger they seem to feel its destructive tug. They lose touch with their people." Making It In America, p. 75, hardcover.

He's getting at the rot in the midst of America's capitalistic system. There is a common statistic that CEO's now make around 300 times the average worker's pay whereas in the 60's the ratio was around 20 to 1. Today's CEO's offshore or automate the jobs and then pocket the huge savings.

"They've forgotten a basic tent of running a productive organization: Everyone has to benefit from the company's success." Ibid, p. 78.

"Are we really supposed to believe that today's C-suiters are that much smarter and harder working than the ones who built America into the most powerful economic force in the world?" Ibid, p. 78.

I just did some quick math with one of the larger companies listed on Forbes' listings of the world's largest public companies. For 2015, the first three were Chinese companies and then came Berthshire Hathaway and next JPMorgan Chase. I decided to try the math on JP Morgan. JPMorgan is probably one of the better run financial companies but it illustrates - somewhat - the concept of CEO to worker pay ratio. I don't have the company's average pay but I used some salary data from Glassdoor and compared against what the average salary would be relative to the CEO's salary (Jamie Dimon). Jamie Dimon makes around $20 million, so using 300 to back into the average salary I get around $67K. Then, in looking at Glassdoor, I see a range of $34 to $55K for a relationship banker, $43 to $99K for financial analyst, and $66 to $112K for an application developer. So instead of 300 times, the ratio may be around 250.

Jamie Dimon may be one of the better ones but one has to ask, is he really worth 250 times more than his predecessor back in the '60's? What is the additional value he is providing to society that we didn't get in the 60's? Is the world that much better with the services the bank provides?

I imagine people would say no.

The other thing I want to say is that the author believes that people can handle the hard truth. I'm not so sure about that. We have a huge swath of the population believing conspiracy theories that makes me wonder. Trump tells them that he is going to bring back manufacturing jobs but he is not telling them that the future of manufacturing is in automation. If the plants do come back to America, they will be fully automated. The Carrier plant, for example, will be retaining 800 jobs in the US instead of sending them to Mexico. But to induce Carrier to keep those jobs here in the US, the state will kick in $7 million (or maybe $16 million) for investment. The problem is the CEO admits that the investment will be towards automation so the 800 jobs being retained in the US is only temporary situation before the jobs go away.

Trump is also not telling the coal miners the hard truth about their jobs: eventually most of them will go away. Hillary Clinton did allude to them going away and the coal miners didn't take it well. They would rather believe Trump. Problem is right now the jobs are being decimated by the low cost natural gas business and those jobs are not coming back. In the future, climate change will force a re-ordering of values that such jobs will not be desirable. It's just the way the trends are heading. The coal miners don't want to hear that.

There is probably a lot of other things that Americans don't want to hear but those are the top ones in my mind. I just doubt Americans can handle the hard truth.

Other posts related to this topic:

Making It In America by John Bassett

Rule 1 in Making It In America

Rule 2 in Making It In America: Treat People Right

Rule 4 in Making It In America: Change



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