Jack Brent versus Gord Nixon: What’s Wrong Today?

Only a few, older ex-IBM-Canada employees will recognize Jack Brent. He was the head of IBM Canada when it was an independent company. This blog entry is really not about Jack, or that company, but I am using them to convey my dismay at company heads and company practices, today. Jack Brent and IBM Canada were different.

Respect for the individual

Pursuit of excellence

Customer satisfaction.

Those were the stated principles of IBM Canada in Brent’s day. I know, I worked there. Employees were considered to be stakeholders. Customers were considered to be stakeholders. Excellence in products and services was the goal.

Jack Brent was accused (mistakenly) of not consuming the cafeteria food. (Actually, he sometimes had someone fetch sandwiches and ate at his desk.) When this was known, Jack made a habit of eating in the cafeteria from time to time. He would sit down randomly at a table with ordinary employees and question them about their work, working conditions, and challenges.

Jack considered the workers in his buildings to be stakeholders in his company.

I submit that no current CEO any of you out there can name has this attitude toward the ordinary, lowly workers who do the actual real work of their corporation. Instead, there is a we-they divide. The board of directors names the nominating committee for the board of directors; shareholders can only withhold their votes from candidates – a simple plan for perpetual control by the in group.

If you look at (disclosure: I get reports from CIBC and IBM as I am a retiree from both companies) company reports, you’ll notice how the compensation committees are set up. Employees are just an expense, whereas directors’ and upper-managements’ salaries and bonuses are managed by a separate committee.

Gord Nixon is CEO of Royal Bank of Canada, better known as RBC. This bank made something like $7.6 Billion dollars in a year. And, they decided to outsource 45 jobs to save money and increase profit.

Profit is a good thing. It can be plowed back into the economy (although Canadian companies have been accused of sitting on large quantities of cash). It can be distributed to shareholders. (This also benefits option holders, as it increases their options’ value.) It can be added to the bonus pool. It can even be used to increase the income of employees. Or it can be increased by choosing foreign workers over existing ones, or over new hires.

It is a bit unfair to single out Gord Nixon as the only corporate executive carried away by profit over the worth of his own employees. Mr. Nixon is just a convenient instance, and certainly not alone.

It is a bit unfair to single out IBM Canada in the past as the only corporation run with principles that included employees as stakeholders. Jack Brent was a special case, perhaps, but there were other companies run with similar values and a basic sense of decency toward employees.

Now for the dumb question: what’s wrong today?

The logic of corporate governance has, imho, run its natural course toward its inevitable conclusion. Corporations conveniently don’t go to jail. Corporations generally aren’t the subject of demonstrations, and certainly not of assassinations. Corporations are able to negotiate legal settlements without admitting wrongdoing. Corporations are run by insiders, many of whom are on the boards of directors of other corporations. The tenth of one percent has become an in-group, and they have lost their sense of common humanity with the rest of us.

I will end with a Jack Brent story. It was approaching Christmas. An individual was visiting from I think Edmonton, JH for the purpose of this tale. We two went shopping and came back late after lunch. I felt really guilty as I never did this. The IBM Canada Lab was at that time in the Headquarters building. JH and I walked up the ‘keyhole’ driveway to the front door. Behind us, a limo stopped and a man got our carrying a briefcase. We were walking fast, but this guy sped by us, yanked open the first door, and waited for us to pass him. Then he sped by again, yanked open the second door, waited for us to pass him, then disappeared at high speed down the hallway.

JH never believed me, but that executive, in such a hurry, but holding the doors for us, was Jack Brent.

Does Gord Nixon hold open doors for his lowly employees?

Jim Flaherty and Stephen Harper

Let me deal with Mr. Flaherty first.

I bring your attention to two statements by our federal Finance Minister. On November 13, 2012 Mr. Flaherty congratulated himself on Canada’s performance in the recovery. In that page you will find these words:

Compared with most advanced countries in the world today, we are in a relatively good position. Since our Government introduced the stimulus phase of Canada’s Economic Action Plan to respond to the global recession, Canada has more than recovered both: all of the economic output; and all of the jobs lost during the recession.

After this speech, businesses were given tax cuts while other spending was reined in – our Canadian version of Austerity – for individuals.

Fast forward to April 4, 2013. I thank Thomas Walkom for this article, in which Mr. Flaherty is quoted as saying, if our wonderful, recovering, stable banks get in trouble, he’d be quite happy to raid the deposits of ordinary investors.

I hope you find this as disturbing as I do. Write, call, or eMail your federal representative. Tell them in no uncertain terms that the recovery should be for the people – the 99%.

On to Stephen Harper. In a related move, our Prime Minister is reducing health care while planning outrageous (imho) military spending. I have covered the topic of military spending in this blog before. (Our LAVs, frigates, submarines, helicopters, and fighter jets all have problems, all are overdue, and all appear to be well over budget. Pretty impressive consistency, eh?)

To sum up: business is doing fine. Banks are doing fine. If there’s a problem, we’ll raid your savings. Health care is going to be cut. Meanwhile, jets that don’t fly yet are still on the purchase plan.

Again: write, call, or eMail your federal representative. Tell them in no uncertain terms that the recovery should be for the people – the 99%.