Computer maker Dell has asked employees to consider taking up to five days of unpaid vacation and is offering voluntary severance packages, according to Reuters. Dell has also instituted a global hiring freeze. Chief Executive Michael Dell announced the moves in an impersonal email to employees Monday.Here are some interesting details I found regarding Michael Dell’s compensation for 2007. Keep in mind, I’m just too lazy to see what his compensation package looks like for the current year, though I’d gather he’s still making his mortgage payments.
In 2007, after Michael Dell re-took control of the day-to-day operations of his company, he brought home $4.5 million in pay from his Round Rock, Texas-based company. But he failed to qualify for incentive-based bonuses, which would have considerably raised his income. Dell’s $4.5 million compensation included $950k in salary in addition to company-paid security and option awards, according to the PC maker.
Now let's do some hypothetical’s.
Let’s pretend the average Dell employee is making $70k a year, which I realize is probably on the high side but humor me here. That equates to roughly $1,342 per week. Paradoxically, if Michael Dell took one week of unpaid vacation based on last year’s earnings, it would equate to $86,538, which is nearly $16k more than the yearly base salary of the “typical” employee I’m talking about. If 3,353 employees took a week of unpaid vacation, it would equate to Michael Dell’s compensation for 2007. I realize the argument would be Michael Dell is paid accordingly to the service he provides. After all, he runs one of the largest computer makers in the world. But I pose this question to you, my friends: Should Michael Dell forego his entire salary, including any bonuses, when the company is suffering disastrous losses which promptly sparks its leader to layoff 8,500 employees and ask its remaining employees to take unpaid vacations?
8 comments:
Maybe he should just shut it down and they can all find new jobs with a more humane company, while he gets rid of the headache of running a business?
Well, it's certainly one approach, but I'm unsure if it's the best approach. I guess this is quite possibly a new business model: "If you like your job, and you want your job, then you're going to have to sacrafice." On some levels it makes sense.
However, I suppose if any of these employees participated in a profit-sharing program -- or any program where they reaped the rewards of the company's success -- then I think there's no question they should BE FORCED to take a week without pay. After all, if you enjoyed the good you should have to endure the bad.
A valid point, about the profit sharing. The bottom line is, the employee doesn't take the risk to start up the business so they don't really have a leg to stand on. Somebody else will come in and do their jobs if they don't like it. It may sound harsh but it's true.
Your point is valid, too, but Michael Dell already made enough money to live on the rest of his life in the event Dell Computers eats a dirt sandwich. Unfortunately, for those who are going to lose their jobs, they probably have not made enough to live comfortably for the rest of their life, and these very well could be people who were standing beside Michael Dell when he opened the doors of Dell Computers. Anyway, risk and reward; I do get it. Still, Michael Dell is running the company and his employees put faith in him that he'll run it in a way in which their best interests are looked out for. Anyway, I feel bad for those who might lose their jobs or who might have to go a week without a paycheck. It’s never a good situation, especially in this economy. Thank goodness there’s unemployment and government assistance programs for those unfortunate hard workers who might (or did) lose their jobs.
I tend to believe that most employers are pretty fair or even generous to their employees during any economic times.
There's a difference between people like you and me and Michael Dell. He took a huge risk and it paid off...would we be brave enough to take a risk like that? I'm going to say no, we live/work in a safe and content environment. Think of the commitment and sacrifice it took to build Dell to what it is. I would never think I would deserve the same benefit as a Chief Executive because I would never be motivated enough. Sure I have stress at work, but would I want his stress. NO WAY. We go to work, do our job...and for the most part, don't think about it when we are not there.
He's taking an approach to try to save jobs and preparing for a very ugly period. We are in economic hell and Dell has lost revenue because their customers have had lay-offs or completely shut down (think financial institutions for starters). It's a chain reaction...and of course it's going to trickle down and affect Dell. This ugly period is going to affect all of us at some point. I know we are very aware of the possibility at our home.
Well, certainly we can agree that Michael Dell has enough money to never work again. I for one believe he deserves it, even though I voted for Obama Mr. Diesel. The situation is really just simple economics. When demand drops, supply must also. As human resources at Dell we build computers, and servers, or we provide a service. When our customers cannot buy as much from us, we must contract and cut costs comensurate with the revenue drop. It sucks for sure but that is the capitalist system that has served all of us in this country very well. I certainly don't want to lose my job, but if I did I would look at my time with Dell and be happy that they treated me well both financially and professionally.
What would I do if I ran the company? Well, I would do things a little differently. I would ask everyone in the company to take a temporary pay cut, say 10 - 15%, and promise to pay the cut back after the economy improved. Logically this could be done to everyone's benefit, the employees keep their jobs, the company saves the money needed to keep the company profitable, the company benefits further by having an equal level of talent as other firms are losing talent, and employees become more loyal because the company was loyal to them. When the economy turns around the company pays back the pay cut as a bonus back to the employees 401k so it is pretax. Think of it as a short term loan provided to the company by its workers. It seems to me that everyone would be better off with this approach. Since I still have a few more years before I'm running my own company I'll probably just take a week off without pay and work anyway just to support the cause.
Here's to "the man." Twiggy.
Twiggy, there's only one problem with your plan. What if things keep getting worse and worse and worse? What happens if the doors shut. I'm guessing there's no sort FDIC insurance rider on this plan, right? And at what point is 10 percent turned into 35 percent, ala Northwest Airlines? I guess this is just another form or risk/reward.
Post a Comment