Jag Venugopal's Blog

March 14, 2011

Wisconsin Explained

Filed under: Project Management — Jag @ 8:21 pm

BigCompany is a large and rich enterprise with a number of workers and multiple levels of management. BigCompany’s governance rules have a quirk though… managers are elected by a combined body of shareholders and workers.

 Now, it so happens that the workers decided they wanted to improve their lot. So, they got together to form an organization, and started to pay dues into it. This organization would then fund managers’ elections. The rest of the shareholders were a diverse bunch, and did not vote as a bloc for their managers.

 The managers were a smart bunch. They were up for re-election every few years. And campaings for re-election were expensive. The money paid by the workers’ organization came in handy. And they wanted the money to continue.

 The managers were responsible for negotiating with the workers to set their conditions of employment, wages and pensions. The managers were theoretically the agents of all shareholders and were supposed to act in the best interests of all shareholders.  However, to preserve the flow of money they received from the workers, they would negotiate especially good deals on pension and benefits for the workers, even at the cost of reduced dividends for the rest of shareholders, or even running the enterprise at a loss.

 A new CEO noticed this state of affairs and wanted to put in changes to curb the favoring of one small class (workers) at the cost of all other shareholders. Especially, he decreed that workers would not bargain as a group with managers whose elections they funded. This caused howls of protest among the workers. But some shareholders too, thought that the CEO was exploiting the workers. Their solution? Pay fewer dividends to the “rich” shareholders, and pay the workers more. After all, the “rich” shareholders had plenty of money and would certainly not miss a few extra dollars.

However the CEO of this enterprise stood his ground and ultimately, workers who paid for managers’ elections could no longer strike sweetheart deals with the managers they elected.


Leave a Comment »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

Create a free website or blog at WordPress.com.

%d bloggers like this: