
I froze the salaries of my executive team to benefit other workers - otikik
https://www.theguardian.com/commentisfree/2019/may/15/executive-pay-salaries-carecentrix-senior-team-employees
======
Miner49er
It's amazing this article even needs to be written. You'd think the executives
pulling in these crazy salaries would be competent enough to know that paying
their "team members" next to nothing is going to result in high turnover and
be a bad business decision in the long run. This article frames his choice to
actually pay his employees as some big discovery, but it's not. The fact is,
execs already know, but they put their short-term greed over what is best for
their employees, the company in the long term, and their communities.

~~~
mywittyname
It's more that they are out of touch, IMHO. They have absolutely no concept of
how far $7.50/hr goes so they just say their employees need to budget better.

Perhaps if senior executives received minimum wage paychecks for two months
(and no bonuses), they might gain some empathy.

~~~
ohaideredevs
You can't gain empathy when something is temporary. Most of the stress of
being poor comes of worry about how to handle long term problems / the fact
that life has no point except slaving away. That cannot be replicated without
genuinely taking everything away from a person.

~~~
gremlinsinc
They need a show like undercover bosses, but instead the CEO must live on 7.50
for an entire year, and work as their own employee they have 0 access to
savings, they cannot use credit either, and they are given 1 suitcase of
clothes, a cellphone, laptop, and some feature comforts for their tiny
apartment like a 32 inch tv.

~~~
c0vfefe
30 Days Season 1 Episode 1

[https://www.youtube.com/watch?v=wmSGEGOVI34](https://www.youtube.com/watch?v=wmSGEGOVI34)

------
petercooper
I was thinking the math didn't work out, but it does. If you ignore taxes and
say a raise of +7.50 an hour for a working week comes to around $14500 extra a
year, over 500 employees that's about $7.3m. If that were split into 20
executive bonuses, that'd be $365K each.

~~~
locklock
And if you're getting a $365k bonus you are likely already so rich that the
money is only going for luxury things while for someone making $7.25 it's
quite literally the difference between living in a car or not. I wonder if you
could apply this to the rest of American society...

~~~
bigred100
Yeah indeed. I wonder why more rich Americans don’t feel shame and
embarrassment at such purchases.

~~~
systemtest
Most Americans have smartphones worth about as much as a monthly salary in
Europeans countries. Should people feel embarrassment about that?

~~~
CalRobert
I think most Americans have phones that are used, and not Apple, and not
flagship. Europe is pretty divers so I don't know if you mean Greece ~€1000 or
Norway ~€4000 but it still seems like a stretch

[https://en.wikipedia.org/wiki/List_of_European_countries_by_...](https://en.wikipedia.org/wiki/List_of_European_countries_by_average_wage)

When I lived in the US I thought more Europeans lived in gorgeous architecture
and had excellent public transport. Living in Europe, I find a lot of people
think Americans are wealthier than reality (though if they're thinking of tech
salaries, they're probably right - that EU/US disparity is enormous).

~~~
systemtest
There are twelve countries in the European Union with an average net income of
less than 1000 euro. The two poorest ones (Romania & Bulgaria) are at 515 euro
and 406 euro. So it's not that of a stretch that Americans have phones worth
more than a European monthly wage.

~~~
vonmoltke
It _is_ a stretch to say _most_ Americans do, though.

Also, your original post needs a qualifier on the scope of "European
countries".

------
rayiner
I wish redistribution to the very bottom was a bigger part of the political
debate. Our politics is currently focused on redistribution from the very top
to the middle class. (Stuff like free college or universal healthcare would
primarily benefit the top half, because those folks are the ones who are in a
position to be accepted to and attend college, and aren’t already covered by
Medicaid.) The math of that is tough, because 70% of all income is earned by
households in the 50-99% income range (between $40,000 and $480,000 household
income).

But the bottom 50% earns just 11% of all income, a little over $1 trillion.
You could really improve their standard of living with even modest
redistribution of the $9 trillion earned by the top 50% to the bottom 50%. But
unfortunately middle class taxation is a complete non-starter in the US, even
though that is how almost all European countries pay for their welfare states.

~~~
whytaka
That’s interesting. I’ve always seen the promotion of free college and
universal healthcare as one of promoting equal opportunity to all.

While the lowest income groups have historically had low college
participation, I saw it as a reflection of a class of people not even daring
to dream an impossible dream, as it would cost too much. Making it free would
of course change the idea around it.

~~~
DuskStar
> Making it free would of course change the idea around it.

For every good private college I know of (and almost every good public school)
prices are free or enormously close to so for people in the bottom quarter of
incomes. Making it free for everyone might change the psychology, but not the
reality for lower-income people today.

------
chmod775
Why does a company with only 500 regular employees even _have_ 20 executives
in the upper bracket?

Are they just overpaid sales people?

If the upper 5% at my company earned enough to double the wages of the other
95%, I'd be pretty damn mad about those leeches.

Especially if the company is already struggling.

~~~
the_mitsuhiko
What they have on the website:

    
    
        * Chief Executive Officer
        * Chief Medical Officer
        * Senior Vice President, Human Resources
        * Chief Customer Officer
        * Chief Legal & Strategic Solutions Officer
        * Chief Financial Officer
        * President and Chief Operating Officer
        * Chief Compliance Officer
        * Chief Technology Officer
        * Chief Growth Officer
    

In addition their board has 8 members.

~~~
pdimitar
What the hell is even "Chief Growth Officer"? Asking for real.

Growth is either achieved organically or you are just forcing your way to a
lucrative exit without bringing any value. Artificial and forced growth is
toxic for the economy at large.

The rest of the roles mostly make sense although I believe some of them can be
merged so further savings can be accomplished.

~~~
shalmanese
"Growth" is one of the most misnamed and misunderstood roles because, as you
correctly noted, everyone in the company should be responsible for growth.

I explain to everyone about my role that it's not the responsibility of the
Growth team to deliver Growth, it's our responsibility to put Growth more
under the companies control. We act like a team of scientists to empirically
try and understand what drives our growth and then build out systems, tools
and processes to measure & improve those factors.

YC has a good guide on what kinds of roles a Growth team is responsible for
and what good Growth people do: [https://blog.ycombinator.com/growth-
guide2017/](https://blog.ycombinator.com/growth-guide2017/)

~~~
pdimitar
What you say softens it a little but IMO growth still should be organically
achieved first and foremost and not chased after to please investors.

Bringing real value for customers should weigh much more than the approval of
a bunch of golfers.

"Growth" in the terms you describe should be more like "marketing": what other
market niches can we fill, are our prices reasonable, can we expand to country
X, etc.

------
dhx
> My HR staff suggested that we re-think our recruiting and training – which
> made sense – but I thought that we could do more. I thought we needed to
> reconsider how we supported and paid our team.

Sounds like a situation right out of Yes, Minister. HR staff not being
forthcoming with the obvious answer of increasing pay to lower attrition rates
from 30-40% due to the attitude of the board/CEO and anticipation of their
negative response.

~~~
BioMeditate
I've always wondered if companies even need a HR? Especially when they are
huge separate departments.

~~~
SketchySeaBeast
At some point every company needs someone to handle those duties. Payroll &
benefits, recruiting, onboarding & offboarding, these sort of things don't
just sort themselves out on the side and quickly become full time positions
that require dedicated individuals.

------
allworknoplay
This is insane -- paying a $7.25/hr minimum wage to people you call
"teammates" and expecting them to stick around is preposterous. In anything
but a terrible economic downturn, minimum wage says to employees that you just
want a body doing a job right at this moment, but aren't willing to invest any
further in them.

Why would anyone stick around, or care to do more than the most basic job
requirements? These jobs are totally disposable to employees, just as the
employees are disposable to the company. If you don't want your employees to
leave, don't treat them as disposable, and don't belittle them by pretending
you're a team.

This guy thinks he stumbled on some grand new lesson, and it's hilariously
terrible.

~~~
SketchySeaBeast
I was watching a sitcom called Superstore a little while ago, features the
employees in a Wal-Mart like store, and the protagonist got a promotion to the
head of the store. There was a whole plot line about how her wage was now in
the 6 figures, and I was incredulous until I did a bit of research - Wal-Mart
store managers can absolutely make that much money while their employees live
in poverty.

How you could make that much and expect loyalty and sacrifice from your staff
who make a fraction of that, I won't ever know.

~~~
lotsofpulp
Supposes employer A chooses to pay their employees more than other employers.
Employer B chooses to pay their employees less. Both employers are selling
products or services that the purchaser finds the same, i.e. they have no
preference for who they buy it from.

Employer B takes the money they save by paying employees less, and invests in
newer, better facilities or R&D or whatever. Now employer B is selling a
better product than employer A. Who will customers choose to purchase from?
Who will lose business, and end up having to fire employees?

To be a successful business, compensation decisions can't be based on people's
feelings. You have to consider when a new store or hotel or restaurant will
come around and put them out of business, and stay ahead of the curve. You pay
what you need to to get the job done. There are some good examples like
Costco, but there are only so many people with sufficient disposable income
who can afford to shop at Costco and similar stores, and they're not competing
with Walmart/CVS/Dollar Store or other bottom tier vendors.

~~~
toss1
True, but Employer-B now has employees who DGAF about anything in the
business, and often have an adversarial, even 'eff them! attitude to the
business.

Employer-B's customer service and general care of its facilities & inventory
will suck, and they will have much higher turnover costs, even if they have
better products.

So, what is the relative advantage?

Moreover, the article was specifically about the tradeoff in executive pay vs
low-end pay, and how a small sacrifice at the top made huge differences both
for the low-level employees and for profits overall

~~~
lotsofpulp
There’s a reason Walmart and Dollar General are crushing others, and it’s
because either their customers can’t afford good customer service or they
don’t care for it and choose to shop there anyway. The proof is literally the
fact that mom and pop stores and others like Sears went out of business,
customers preferred saving $5 over good customer service.

As I prefaced above, this is true for business where customers aren’t
differentiating between vendors except on price.

~~~
mcguire
Don't know about Dollar General, but isn't Walmart successful because they're
big enough to dictate terms to their suppliers and simply squash their smaller
competition with convenience?

~~~
lotsofpulp
They started small at some point, and there are many factors contributing to
their ability to offer the lowest price.

------
WrathOfJay
I think it's great that this company did this, but this article is a puff
piece. There's no real data here. He just states that the `business tripled`.
What does that actually mean? Did it triple in revenue? How did increasing the
entry-level pay result in that? And how did your non-entry level employees
handle the lowest wrung earning far closer to their own pay? How many
executives decided that the freeze wasn't in their own best interest and left?
You can't just sacrifice and redistribute and expect it to be all roses. The
details matter, especially if you're trying to convince resistant minds that
it's a good thing.

~~~
mgbmtl
It's a newspaper article, the aim is to raise awareness. People should read
this and wonder if/how it applies to their company.

It's easy to forget how the lowest-paid in a company are often key people in
having operations run smoothly. If they have trouble paying their bills, often
on sick-leave, etc, it can have an impact on everyone else (causing delays,
quality issues or security issues). Ideally, you invest in fixing both the
technical and the underlying social issues.

~~~
WrathOfJay
With something this important, I'd expect something more substantial than the
equivalent of "I stayed on this diet for a year and it worked! I shrunk by
1/3rd!"

------
mathattack
If you take this at face value, those top 20 execs must have been extremely
highly paid if freezing their wages allowed this to happen. (As math done by
others shows - giving 25 people a 15K raise is ~350k. That means those top
people were expecting raises of that much. Implies a crazy base)

I suspect there is more to the story. Either the raises paid for themselves
via lower attrition, or perhaps came with added productivity. If you look up
the company on Glassdoor, there is a lot of negativity towards management.

------
rjf72
I don't understand something from this article:

 _" Our margins had declined and our revenue growth had stalled. ... I was
becoming increasingly worried about our team and our turnover numbers. We are
a people business and in some divisions we were losing 30 to 40% of our
teammates within a year.

My HR staff suggested that we re-think our recruiting and training – which
made sense – but I thought that we could do more. I thought we needed to
reconsider how we supported and paid our team. For our entry level jobs –
where turnover was the highest – we paid the federal minimum wage of $7.25 an
hour (or less than $16,000 per year).

...

I took my concerns to my team. After many tough conversations, it became clear
that we could not simply raise wages and hit our budget."_

This just doesn't make any sense whatsoever. Recruiting and especially
training has a very real cost for non-trivial jobs. Why would they pay minimum
wage when they seem to be acknowledging that not paying minimum wage would
increase their profits? This is something companies learned in the early 20th
century. Henry Ford was the first employer to institute a higher minimum wage
for his employees (doubling the average pay of the time). He didn't do it
because he was a nice guy, he did it because he found that increasing the
minimum wage reduced turnover which meant less spent on training and a general
increase in productivity and profits. The same reason he would also go on to
standardize what we now consider the normal 8 hour work day / 40 hour work
week.

This seems very much like a story of a very poorly managed company. A minimum
wage is appropriate when it's appropriate. When you're losing 30-40% of your
employees, likely in meaningful part due to wage, and it's costing substantial
amounts to replace and retrain for their roles - it's not appropriate. It
seriously seems like at times that MBAs should be relabeled to masters of
business annihilation because that's invariably where these incredibly myopic
views on labor:costs:revenue seem to come from.

\---

edit: confirmed. Here [1] is their board. And indeed it's just an MBA pack.

[1] - [https://www.carecentrix.com/about-
us](https://www.carecentrix.com/about-us)

~~~
pcurve
I used to work for some of those guys (very indirectly) when they used to work
at Medco as senior execs making millions. They are smart guys that don't need
$$$ at this point. In their defense, operations/call center leaders are very
metrics and cost-driven at most companies. 50% annual attrition rate is
business as usual. Driving down call volume, average handle time, and
increasing first-call-resolution are name of the games. Call centers are
viewed only as cost center at most companies. This trend has been changing in
the past few years, so I'm glad they are also in the right side of the fence.

------
jordanpg
Relevant:
[https://en.wikipedia.org/wiki/Bullshit_Jobs](https://en.wikipedia.org/wiki/Bullshit_Jobs)

See also: [https://www.amazon.com/Bullshit-Jobs-Theory-David-
Graeber/dp...](https://www.amazon.com/Bullshit-Jobs-Theory-David-
Graeber/dp/150114331X)

~~~
asdff
What a find! There are a lot of jobs that are complete bullshit, especially in
finance and tech. That hot new app or device isn't a necessity, its
decoration. Things got done before slack existed, so why are some brilliant
people wasting their time and life working tirelessly to optimize slack?
People might get promoted and pat themselves on the back for reworking some
aspect of the snapchat back end, for instance, but are you gonna put that
accomplishment on your tombstone? Will your project ever come up in university
CS lectures, or even see the light of day to be cited by other researchers?
The iPhone Xs doesn't do anything fundamentally different than the first
iPhone, and people buy new ones every year to do the same emailing, texting
and calling, and web surfing they've always done since their first smartphone.
There are people who are striving daily to make missiles more lethal,
advertising more addictive, consumption more rampant, the environment more
polluted, and shareholder profit more exponential.

A lack of fulfillment in the majority of straight out of undergrad private
sector career paths is what got me interested in grad school, to spend my time
and effort working on a topic that's explicitly _not_ bullshit.

------
brianpgordon
> last year we broadened profit sharing to all levels of the company

So... do executives think this means something to people? This incentive seems
comically out-of-touch. I guess because CEOs live and breathe stock valuation-
based bonuses they naturally assume that everyone gets motivated the same way.
But it seems like a stretch that strains credulity to think that someone
making $15/hr and getting a microscopic slice of revenue would develop a sense
of motivation from the fact that their personal call-center interactions might
_maybe_ increase their share of revenue by a few pennies a week through
slightly happier customers.

------
anon4lol
I really hate articles like this. The company provides home health visits,
requiring a nurse. Nurses don't work for $7.50 hour. Reading closely, it was
for entry-level positions, probably in a certain department. Skilled positions
would require market rates.

Translation: in an economic down turn they killed the bonus, raised the pay
for customer service reps, and are now claiming a moral victory as if the
growth was caused by paying people more.

------
Circuits
This seems like the equivalent of a man walking up to a homeless person,
kneeling and handing the man $5 while his wife takes a picture of the
action... Oh! You have an ounce of humanity left in your slowly freezing
heart, you want a cookie jackass? Had the top 5% cut their salaries in half
and disbursed it equally to the bottom 5% then I might have been impressed but
anything short of that and you aren't going to get me to bat an eye.

------
golergka
And this is exactly how wage rises should work: business-driven decision
without any government intervention. Good job.

------
huxflux
That's called being an startup, any other news?

------
omgwtfbbqhihihi
me thinks the shitty 7.25 an hour is to blame.

