Bullycide in Zurich?

CFO Note Reportedly Blames CEO

Anyone who doubts the seriousness of workplace bullying should read the Wall Street Journal’s  coverage of the suicide of the chief financial officer of the Swiss insurance behemoth, Zurich Insurance Group.

Zurich Board Chairman Josef Ackermann, 65, and CFO Pierre Wauthier, 53, engaged in public conflicts and disputes after Ackermann was appointed in 2012.

Last week,  Wauthier committed suicide at his lakeside home outside Zurich, Switzerland, leaving behind a wife, children and a typed note that reportedly blamed Ackermann for creating an unbearable, pressure-cooker working environment and for treating colleagues disrespectfully.

When a suicide is related to workplace bullying it is often called “bullycide.”

Ackerman , who is one of Europe’s premiere financiers, resigned the next day after reading the note to the board.  He released a public statement that said some people (reportedly Wauthier’s family) held him responsible for Wauthier’s death. He rejected the allegation.

Whether or not Ackerman, described as a hard-charging chief executive,  bullied Wauthier, it appears that Wauthier felt bullied.

There is overwhelming evidence that bullying potentially severely affects a target’s mental and physical health.   Bullycide is a word that entered the American lexicon in recent years to describe a suicide resulting from depression due to bullying.  There are other reported cases of  work-related “bullycide,” though there usually is no  definitive way of  assigning blame in such circumstances.

The United States lags far behind other industrialized countries in addressing the problem of  workplace bullying, which affects one in every four workers.  Most industrialized countries, including Europe, require employers to provide workers with a work environment that is free from emotional abuse and harassment.

Perhaps this tragedy will encourage corporate leaders in the United States to address the issue of  bullying and abuse in the workplace?

Meanwhile, Zurich‘s board is reportedly reviewing whether employees in Zurich’s finance department were subjected to excessive pressure from higher-ups.

Ray Dalio: “Firing People is Not a Big Deal”

You gotta give this guy some guy credit.

Ray Dalio, the founder of Bridgewater Associates, LP, a global investment management firm, lets you know what to expect if you want to or if you do work  at the firm.

 Don’t expect much in the way of human kindness.

 Dalio has published a 123-page document  entitled “Principles” on the firm’s web site outlining his management beliefs.  To put it kindly, Dalio’s principles reflect the outsized ego of a captain of industry who seems to have little patience for any human frailty that might get between Bridgewater and a buck.

What is particularly interesting about the document is Dalio’s obvious disdain for Human Resources personnel.  One  might imagine some hapless HR Director, long since fired, suggesting that Dalio’s management principles could be… uh … more humane.  (“Sir, Mr. Dalio, Sir …  might I suggest that firing people is a big deal to the people being fired?”)

There’s no doubt that Dalio’s principles work for him. According to Forbes he is the 44th richest person in America and the 88th richest person in the world with a net worth of $10 billion as of March 2012.  But God help you if you are an employee who happens to be a single mom with urgent childcare demands; a worker whose ‘game’ is thrown off by divorce, sickness, death of a loved one; or if you just can’t take the stress of being evaluated like a micro-circuit board on an assembly line.

 So on this Labor Day 2013, it is without pleasure that I present some excerpts from  Ray Dalio’s “Principles”:

  • Evaluate people accurately, not “Kindly.” 
  • Maintain “baseball cards” and/or “believability matrixes” for your people. Imagine if you had baseball cards that showed all the performance stats for your people: batting averages, home runs, errors, ERAs, win/loss records … You can and should keep such records of your people … . I use ratings, forced rankings, metrics, results, and credentials.
  • Remember that convincing people of their strengths is generally much easier than convincing them of their weaknesses … At Bridgewater, because we always seek excellence, more time is spent discussing weaknesses. … . This is great because we focus on improving, not celebrating how great we are, which is in fact how we get to be great. For people who don’t understand this fact, the environment can be difficult. 
  • Don’t collect people. Firing people is not a big deal—certainly nowhere near as big a deal as keeping badly performing people, because keeping a person in a job they are not suited for is terrible both for the person (because it prevents personal evolution) and our community (because we all bear the consequences and it erodes meritocracy). 
  • When people are “without a box,” consider whether there is an open box at Bridgewater that would be a better fit. If not, fire them. Remember that we hire people not to fill their first job at Bridgewater nor primarily for their skills. We are trying to select people with whom we’d like to share our lives. We expect everyone to evolve here.
  • It is your job as a manager to get at truth and excellence, not to make people happy. For example, the correct path might be to fire some people and replace them with better people, or to put people in jobs they might not want, etc.
  • It is far better to find a few smart people and give them the best technology than to have a greater number of ordinary and less well-equipped people …  Usually it is the person’s capacity that limits the scope of his understanding and control.
  • A higher percentage of the population than you might imagine will cheat if given an opportunity, and most people who are given the choice of being “fair” with you and taking more for themselves will choose taking more for themselves.
  • Use “double-do” rather than “double-check” to make sure mission-critical tasks are done correctly. When people double-check someone else’s work, there is a much lower rate of catching errors than when two parties independently do the work and the results are compared. Double-doing is having two different people doing the same task on the same job so that two independent answers are derived.
  • I  often hear people say, “It’s getting better,” as though that is good enough when “it” is both below that bar and improving at an inadequate rate. That isn’t good enough.  Everything important you manage has to be on a trajectory to be “above the bar” and headed for “excellent” at an acceptable pace.
  • Don’t try to please everyone. Not everyone is going to be happy about every decision you make, especially the decisions that say they can’t do something.

And Don’t Listen to HR!

  •  Watch out for “department slip.” This happens when a support department, such as HR or Facilities, mistakes its responsibilities to provide support with a responsibility to determine how the thing they are supporting should be done. An example of this sort of mistake is if  … people in HR think they should determine what our employment policies should be …  While support departments should know the goals of the people they’re supporting and provide feedback regarding possible choices, they are not the ones to determine the vision.
  • Assign responsibilities based on workflow design and people’s abilities, not job titles … .For example, just because someone is responsible for “human resources,” “recruiting,” “legal,” “programming,” etc., doesn’t necessarily mean they are the appropriate person to do everything associated with those functions. For example, though “Human Resources” people help with hiring, firing, and providing benefits, it would be a mistake to give them the responsibility of determining who gets hired and fired and what benefits are provided to employees.

I became aware of Ray Dalio’s management principles in a recent story by Rachel Feintzeig in the Wall Street Journal, about the cost of incivility in the workplace.  The article notes that networking-equipment company Cisco Systems Inc. in 2007 estimated the cost of incivility in its organization topped $8.3 million annually. Costs include account turnover, employees’ weakened commitment to the company and work time that was lost to worrying about future bad behavior.

 

Corporate Greed v. American Worker?

Note: Shortly after this story was written, the Caterpillar workers ratified a six-year contract that contained almost all of the concessions demanded by Caterpillar.  The contract doubled workers’ healthcare premiums, eliminated pensions, froze wages for some workers and diminished seniority rights. The strikers acted against the recommendation of the leaders of their union local – PGB

 

Many people say unions are passé these days but one does not have to look far to be reminded about why unions arose in the first place – to provide a voice for workers in the face of corporate greed.

Caterpillar is making record profits and has raised executive compensation while insisting upon a six-year wage freeze and a pension freeze for most of the 780 production workers at its Jolliet, IL, factory.

In April, the International Association of Machinists voted 504-116 to reject a six-year pact that Caterpillar offered. The union charged that the deal lacked raises, increased health care costs for employees and undercut union seniority rules.  Workers went out on strike on May 1, 2012.

The company, which earned a record $4.9 billion profit last year, recently announced second-quarter profits had climbed 67 percent. Meanwhile, the total compensation of Douglas Oberhelman, Caterpillar’s chief executive officer, last year rose 60% to $16.9 million. Five other top executives got raises averaging about 7%.

According to the New York Times, Caterpillar has been a leader in devising new ways to cut labor costs, such as two-tier wage scales and higher worker contributions for health insurance.

This time around, Caterpillar appears to be using a version  of generational warfare.

Caterpillar is insisting upon a wage freeze for its top-tier workers, those employed seven years or more; they average $26 an hour, or $55,000 a year before overtime. For the junior third of the workers who typically earn $12 to $19 an hour, Caterpillar has hinted it might raise their wages based on local market conditions.

Timothy O’Brien, president of International Association of Machinists Local Lodge 851, which represents the strikers, told the New York Times that  Caterpillar wants to push longtime workers into retirement and replace them with $13-an-hour workers. The union says Caterpillar also is demanding higher health care contributions from its workers, up to $1,900 a year more.

Caterpillar contends the workers are paid more than equivalent workers elsewhere,and the cuts are needed to keep the company competitive.

The workers receive about $150 a week in strike pay from IAM and free groceries.

The Wall Street Journal reported last week that more union members are crossing the picket line as they deplete their savings. Caterpillar said 95 of the IAM workers members had returned; the union says 79 have returned, which is up considerably from the dozen or so that had returned about two months ago.

The Caterpillar plant continues to churn out hydraulic components and other systems for Caterpillar loaders and mining trucks. The company is busing in replacement workers and using managers and union members who have crossed the picket line to run the company during the strike.

Observers say the showdown is being closely watched by corporations and unions across the country because it involves two often uncompromising antagonists — Caterpillar and the International Association of Machinists.

Caterpillar has already shown that it is deaf when profits are at stake.

Caterpillar locked out about 450 workers at its locomotive plant in London, Ontario last winter and then closed the factory after the Canadian Auto Workers rejected its demand to cut wages by 55 percent.  Caterpillar pulled the plug just three days after Canadian Premier Dalton McGuinty went to London and called on the company to “come to the table and demonstrate some flexibility.” The Canadian government gave Caterpillar a tax break to induce the company  to locate in Ontario in 2008.

How the Justice Dept. Gets Away With It

 The U.S. Department of Justice is advertising for experienced, licensed “volunteer”  attorneys to work for a year or two without pay alongside Assistant U.S. Attorneys, who earn a starting salary of more than $75,000.

If such an  advertisement was placed by a private employer, it would raise questions of legality? How does the Justice Dept. get away with blatant exploitation of workers?

The Fair Labor Standards Act (FLSA) requires employers to pay workers the minimum wage and overtime except in a few limited circumstances – those who volunteer for religious, charitable, civic or humanitarian non-profit organizations and (you guessed it) individuals who volunteer to perform services for a state or local government agency.  The only time a for-profit employer can get away without paying a worker is when the worker is a so-called “intern,”

All of this comes at a time of high unemployment for lawyers, particularly graduating law school students.

The Wall Street Journal did a story on Sept. 2, 2011 stating there currently is less than one opening for every 100 working attorneys. Unemployment is a serious problem for attorneys, just as it is for every other occupation right now.  The unpaid “volunteers”  displace regular employees. Also, there is just something downright hypocritical about the situation. How can federal prosecutors go after employers who violate the FLSA with a straight face?

Finally, there is a great deal of “classism” in our society. We bemoan the immigrant farm worker who is cheated by the big farm corporation but it’s OK for some reason to exploit attorneys?  Is it some kind of misguided vanity that allows the bar to look at a situation such as this and fail to see the problem?

Without the  FLSA exemption, the use of unpaid Special Assistant U.S. Attorneys (SAUSA) would clearly violate the FLSA.

The SAUSA does not qualify as an intern because training is not the primary purpose of the SAUSA; because the government derives benefit from the SAUSA’s work; and, the SAUSA is doing the work of a regular employee and replaces regular employees.

The SAUSA is already a trained, licensed, experienced professional.  In fact, they have to have “outstanding” academic records and “superior” research and writing skills.   The SAUSA works alongside paid Assistant U.S. Attorneys doing legal research, drafting briefs, conducting hearings and trials, and attending judicial proceedings .  The “volunteer” gets nothing except the dim, uncertain hope of future employment.

Imagine a situation where a SAUSA, who is working for nothing, prosecutes a for-profit employer for failing to pay just wages and overtime.

The DOL issued a “fact sheet” last year listing the circumstances that dictate whether or not an intern must be paid. Essentially, a for-profit institution does not have to pay an employee whose work serves only his or her own interests.  The DOL listed six criteria to determine whether a worker is a bona fide intern:

  1. The internship is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

There is little question that a SAUSA does not qualify as an “intern” and that is probably why the SAUSA is not called an intern.

Ironically, the Justice Department advertisements assure that it is an “Equal Opportunity/Reasonable Accommodation” employer.

(Note: this is Part II of a story written on Sept. 7, 2011, Justice Department Seeks Law-Unteers)