The Balanced Budget Strategem

termination

The conversation was light and joyful.  One time co-workers who had not seen each other in some time happy conversed about old times, old jokes, and some people they had in common.   Wayne, the organizer of the event, looked over the sea of faces at the table and smiled.  This was just what he needed.

He told a few people at the table his reason for this get together was because, when he walked down the halls of their once common workplace, he didn’t recognize anyone anymore.  There were so many new faces at the workplace that he felt a bit alone.  It was jarring for him, as the workplace had always been known as the place where people never wanted to leave.  Now, it seemed, people were beating a path for the doors.  Why were all his old co-workers leaving so rapidly?

“I have a few thoughts on that”, Mitch said.  With that, several heads turned.  Mitch had been content enough just listening to others during the gathering, making the occasional reply or comment, but generally keeping to himself.  So, when he made that pronouncement, people tended to listen.  They urged him to go on.

“Now, before I say anything, all this is speculation.  The facts I have fit the scenario, and the suppositions I make aren’t outrageous, as I think you will agree.  We all have to understand this before I go on.”, he said.  More heads turned.

Mitch started. “You recall when the CFO began making the same speech to whomever would listen?”  A few heads nodded, which Mitch expected.  The CFO was not the most dynamic speaker, so even if he was invited to speak at a gathering, he didn’t rivet the audience’s attention to him.  For those who didn’t remember, Mitch summed up what the CFO of the company had said.  Simply put, the company was spending more money than it was taking in.

This fact in itself didn’t surprise many people.  They knew from their days at the company that almost every major project had cost overruns, simply because the stakeholders had to have their ideas incorporated into it, and the executives in charge of the projects didn’t have the fortitude to tell them ‘no’.  It was easier to go along with the stakeholders and worry about where the money would come later.  Add in the vanity projects that each of the executives needed to have to highlight themselves, and you had a mess of a financial situation.

What Mitch followed this up with was more of a surprise.  He had found out from a reputable source, verified by an executive of the company, that the CFO, seeing nobody really listening to his plea to save money, had imposed a 1% cap on departmental budget increase requests.  This posed a problem.

The biggest part of any budget is the staff of the department.  Those staff will expect raises.  In a poor economy, you can defer those raises as many will not leave simply to have a job.  In a good economy, they would leave in droves to the competition.  Since the company was not known for its generous salaries in the first place, this could really be an issue.  How could you give raises of 2% to 3% when you could only have an increase of 1%?  Nobody wanted to lay off any staff, as they had fought too hard to grow the department and their influence.

Mitch let this settle with the group for a minute while preparing the next piece of evidence.

“How many of you who have left the company were there more than 5 years?”  Several hands raised. “10?”  Several hands raised.  “15 or more?” Several hands raised.  “How many of you know employees there who have been at the company as long, or longer than you?”  Many hands raised. “Are they the majority of those people you knew at the company?”  Many nodded.

He continued. “The company we worked at and some of you still work at”, he said with a nod to Wayne, “used to boast that it had a long tenured workforce.  It was a recruiting tool.  ‘Look how happy our people are…they never leave!'”  Nobody contradicted him.

“Now, the longer you are with the company…”, Mitch started, and Wayne finished for him. “…the higher your salary is.”  Mitch smiled at the flicker of awareness that was dawning upon the faces of those assembled.  To those whose face still registered, ‘I don’t get it’, Mitch continued.

“You don’t want to get the reputation or the lawsuits that mass firing will do.  You need to keep your budget increase at 1%.  You are in self-preservation mode.  What do you do?”  Mitch paused.

Several people jumbled together an answer, “You target the longer term employees.  Some you fire.  Some you make their lives so miserable that they quit.  You then bring in younger employees or people who will work for less money, and your budget problems are solved.  The work gets done and, aside from a possible flicker of conscience of the executive of the department, the fallout is minimal.”

“Fits what you have heard from others who have left the company, doesn’t it?”, asked Mitch.  Each person at that table had a story of them personally being harassed by their superiors or knowing of those who were harassed until they no longer could stand it and left the company.

“The defense rests”, said Mitch, to laughter. Wayne was a bit shaken up by this, but quickly recovered, at least for the sake of the gathering.  He would worry about Mitch’s suppositions and what it might mean for him later.  For now, it was time for friends.

He raised his glass.  “To friends, no matter where they are, or how they got there”.

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