"It pains me to fire you" (What a crock !)

Mitt Romney said Saturday night that it pains him to fire workers in order to make a company more profitable, responding to criticism from Newt Gingrich, who cited a New York Times story on one of Romney’s ventures. That is such a load of crap that I need to get out the thigh level boots to help me wade through it.

This weekend I watched a movie called “The Company Men” with a lot of stars including Ben Affleck, Tommy Lee Jones and Kevin Coster. The movie is about three different executives who get pinked slipped and how their lives change as a result.

Craig T Nelson plays the CEO of the shipping company that is continually letting people go (firing them) to ensure the stock price stays high. When Tommy Lee Jones recommend that they sell the company jets, sell the new luxury office building with showers and great view offices for executives and that the CEO take a pay cut from his $2 million salary instead of letting people go he is met with the anger and disappointment because “we work for the stockholders now”.

I am a realist and understand that capitalism is not always kind to employees but I also know that too many executives continue to take huge pay packages and golden parachutes with perks while letting people go. Nobody wants to be guaranteed a job they just want to know that when they are laid off that it is the absolute last resort.

The Wall Street Journal, aiming for a comprehensive assessment, examined 77 businesses Bain invested in while Mr. Romney led the firm from its 1984 start until early 1999, to see how they fared during Bain’s involvement and shortly afterward.

Among the findings: 22% either filed for bankruptcy reorganization or closed their doors by the end of the eighth year after Bain first invested, sometimes with substantial job losses. An additional 8% ran into so much trouble that all of the money Bain invested was lost.

Another finding was that Bain produced stellar returns for its investors—yet the bulk of these came from just a small number of its investments. Ten deals produced more than 70% of the dollar gains.

Bain likes to use a term called “creative destruction” to rebuild businesses. This usually means firing most of the employees and hiring them back at lower wages while leveraging the company to the hilt to squeeze every last dollar out of them.

The real question is can a CEO lead employees while making shareholders happy ? To this I say “yes” they can but they have to be careful because you can’t serve two masters. I’m not going to quote study after study that shows that happy employees provide better ROI to the companies they work for because to do so is an exercise in futility if you question that statement.

Employees want a stake in the company and brand they work for; they want to feel wanted and needed but more importantly they want to feel that they contributes to the companies success so they can share in the results. Too often what we see are bad decisions that are made at the top and lower level people who have to pay the price for these bad decisions. Until that don’t expect any CEO to think twice about laying off people.