Stop these modern-day robber barons

In late 19th century America, several entrepreneurs rose to become famed industrial and financial tycoons through unethical means, such as questionable stock market operations and exploitation of labour. They were quickly labelled robber barons.

This week NewsDay published startling revelations in two reports – the first by the Zimbabwe Congress of Trade Unions (ZCTU).

The ZCTU has established that most company executives in this country earn an average of
US$8 000 per month, excluding allowances and other benefits, while subordinates take home a paltry $200 – this in a country not yet out of the woods after completely discarding its own currency because of hyperinflation caused by speculative behaviour which became the order of the day in the wake of the Bacossi-driven explosion of corruption which resulted in the implosion of the economy.

The numerous benefits which executives get include cellphone allowances of between $250 and $950 a month and school fees allowance of between $1 500 and $2 500 per child per term for up to three children.

Now, is there reason or rhyme for this when almost all of the companies they lead were on the verge of collapse until recently? When production had fallen? When they were retrenching massively?

And after failure, they get million-dollar exit packages which has perverted their managerial task of driving the company forward to look after themselves only and no one else?

Legendary management expert Peter Drucker likens such executives to “pigs gorging themselves at the trough”.

There is certainly a crisis in leadership. It has become rare these days to find a major firm where workers feel that their employer has their best interests at heart.

Said United States President Barack Obama in 2009 in setting stringent conditions for government bailouts after the financial meltdown of 2008 caused by corporate greed:

“This is America. We don’t disparage wealth. We don’t begrudge anybody for achieving success. But what gets people upset, and rightfully so, are executives being rewarded for failure, especially when those rewards are subsidised by US taxpayers.”

The second revelation, from Industrial Psychology Consultants’ All Industries and Consolidated Salary Survey Report, advised that balance should be struck between salary increments and sustaining companies.

Read the report: “Salary adjustments must be linked to productivity. It does not make economic sense to award salaries that are not sustainable as this may lead to reduction in staff or company closures.

The only sustainable salary model at the present moment is that of awarding your staff competitive salaries and supplementing this with productivity-related payouts that are self-funding.” Not on the backs and sweat of workers, as is happening in Zimbabwe.

Do these executives have their moral compass pointing in the right direction? Or they just are plainly amoral?

The majority are busy working while a miniscule minority is busy raking in thousands of dollars for doing practically nothing.

These executives haven’t made it – they are mere exploiters who use their positions to commit white collar crime.

The unfairness of it all is plain for all to see. Workers are equal stakeholders, they operate the machines, they make and sell the products and they balance the books etc, only for someone sitting in some cushy office to grab the lion’s share of the income.

The main – or only – difference between these company executives’ conduct and that of street criminals is that no violence is involved, but criminals they are!

White collar crime is not considered with the same gravity as other offences, even when a person has damaged beyond repair the lives of others – this is totally wrong.

Many companies need to take a hard look at their policies towards employees. Benefits are shrinking, pensions are non-existent.

Unhappy employees in turn have an impact on customer service and customer loyalty – that’s the vicious circle which keeps on narrowing until a company disappears altogether or goes to the brink in the manner of Lobels Bakery, ReNaissance Bank and the moribund Air Zimbabwe.

We need laws along the lines of the “honest services” statute in the US, which makes it a crime for public officials and business executives not to act in the best interests of their constituents or employees.

But then, there is policy inertia largely because decision-making is too centralised in the hands of a few powerful individuals in government.

This is compounded by institutional collapse – there is no differentiation between the private/personal and the public. An element of State complicit arises.

Zimbabwe has become a caste-like society where the same political elites dominate in business whether directly or through proxies and fronts. In such a scenario, there is hardly ministerial responsibility and accountability.

This becomes clear in view of the fact that bosses at State-owned companies (SOEs) are earning an average of $11 540 per month whereas they have been getting bailouts for decades and are barely delivering any services.

SOE bosses reportedly extend financial and other favours to relevant ministers so as to have their contracts extended and boosted.

At one SOE, workers had their pay delayed because management had reportedly diverted the money to fund the Zanu PF congress.

In return, such bosses get political protection from the minister: their jobs become secure and their are shielded from investigation and prosecution for any financial and other improprieties. It’s a quid pro quo situation.

Energy minister Elton Mangoma, as an outsider, could well be a victim of this embedded system for daring to do things in a different way. In 2009, Obama imposed a cap on senior executive pay for the most distressed financial institutions receiving government bailouts.

Americans, he said, “are angry at executives being rewarded for failure”.

“For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste, it’s a bad strategy, and I will not tolerate it as president,” Obama said.

But the political leadership here is heavily compromised. Workers have become a vast “herd of cattle” that the rich, powerful – and political – “feed on”. Warned Drucker: “This is morally and socially unforgivable – and we will pay a heavy price for it.”

It’s time to stop these modern-day robber barons.

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