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Thread: Obama Tells Companies to 'Step Up' and Hire Workers

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    Re: Obama Tells Companies to 'Step Up' and Hire Workers

    Quote Originally Posted by MrVicchio View Post
    This is what's wrong with Obama. He doesn't understand what makes businesses tick, economies grow. The man's ignorance is damned scary.
    Then you must have been terrified and in shock during the Bush rein. LOL! To believe he is any more than a parrot for his economic czars would be naive, but I agree they must be living in wonderland to think Capitalism can save this nation.
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    Re: Obama Tells Companies to 'Step Up' and Hire Workers

    Quote Originally Posted by theplaydrive View Post
    Excessive profits are the kind that enable CEOs to make $15 million dollar salaries instead of hiring people who actually need money.
    Before I begin, let me make clear that many CEOs are overpaid relative to the value they bring their companies. But that overpayment is the fault of shareholders who accept such compensation even as it erodes their wealth. People aren't always rational. The dynamic there is not very different from the dynamic at play where the public wants the nation's debt situation addressed on one hand, but on the other doesn't want any changes to the major entitlement programs that are important structural drivers of the long-term fiscal imbalances.

    Having provided the above disclaimer, the CEO is typically a company's most valuable employee so to speak. He/She is responsible for setting and pursuing its strategic direction. That direction plays a key role in determining whether the firm realizes its opportunities, overcomes its challenges, and creates the kind of returns shareholders expect. If he/she is providing returns that consistently exceed shareholder desires, he/she is valuable and worth all of his/her compensation.

    All hiring decisions should be consistent with the company's competitive situation, resources/capabilities/needs, opportunities, etc. Hiring people simply because they need the money is a social welfare function. Such functions may not be compatible with a company's business position. If not, then the company is undermining its position by making decisions that are not consistent with its competitive situation.

    Sometimes there can be compatibility. For example, if a company is hiring workers with select skills based on its competitive needs, and then it chooses to give added weight to whether a worker possessing the skills "needs" the income the job would provide (in theory, such workers would have a greater incentive to remain with the firm providing it with lower employee turnover), that's a fair decision. But the decision needs to be justified by competitive needs. Hiring people when the competitive need does not justify such hiring only adds risk exposure vis-a-via a higher cost structure.

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    Re: Obama Tells Companies to 'Step Up' and Hire Workers

    Quote Originally Posted by theplaydrive View Post
    I agree, they have the right to do what they want just like teachers/police officers and unions have the right to fight for whatever salary they can get. Neither of these rights, however, has any bearing on people's different ideas of what people should or should not sacrifice. Moreover, neither of the rights has any effect on the fact a CEO who takes $15 million instead of hiring 300 people also contributes to the 9% unemployment rate.
    So your upset that people turn a profit while others are unemployed? Or is it that you think that people's profits should be limited? How much money is the CEO of a company allowed to make?

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    Student TheGreatSandeno's Avatar
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    Re: Obama Tells Companies to 'Step Up' and Hire Workers

    Quote Originally Posted by theplaydrive View Post
    Only if said firm hires irresponsibly.
    If you're hiring when you don't have to be then it could easily be labeled as irresponsible.

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    Re: Obama Tells Companies to 'Step Up' and Hire Workers

    Quote Originally Posted by PeteEU View Post
    Actually he understands it far more than you do it seems.
    Really, let's hear more.
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
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    Re: Obama Tells Companies to 'Step Up' and Hire Workers

    Quote Originally Posted by donsutherland1 View Post
    Before I begin, let me make clear that many CEOs are overpaid relative to the value they bring their companies. But that overpayment is the fault of shareholders who accept such compensation even as it erodes their wealth. People aren't always rational. The dynamic there is not very different from the dynamic at play where the public wants the nation's debt situation addressed on one hand, but on the other doesn't want any changes to the major entitlement programs that are important structural drivers of the long-term fiscal imbalances.

    Having provided the above disclaimer, the CEO is typically a company's most valuable employee so to speak. He/She is responsible for setting and pursuing its strategic direction. That direction plays a key role in determining whether the firm realizes its opportunities, overcomes its challenges, and creates the kind of returns shareholders expect. If he/she is providing returns that consistently exceed shareholder desires, he/she is valuable and worth all of his/her compensation.

    All hiring decisions should be consistent with the company's competitive situation, resources/capabilities/needs, opportunities, etc. Hiring people simply because they need the money is a social welfare function. Such functions may not be compatible with a company's business position. If not, then the company is undermining its position by making decisions that are not consistent with its competitive situation.

    Sometimes there can be compatibility. For example, if a company is hiring workers with select skills based on its competitive needs, and then it chooses to give added weight to whether a worker possessing the skills "needs" the income the job would provide (in theory, such workers would have a greater incentive to remain with the firm providing it with lower employee turnover), that's a fair decision. But the decision needs to be justified by competitive needs. Hiring people when the competitive need does not justify such hiring only adds risk exposure vis-a-via a higher cost structure.
    I recognize and agree with all of this to a certain extent. My point is that corporations (not small businesses to clarify) should take the risk (provided that the risk isn't too high) and hire people who can be used. I'm talking about corporations who can afford to hire without hurting themselves and where quality of service is down because they have too few employees and the company could benefit from hiring people at least as far as service is concerned.

    I understand that hiring people when the competitive need isn't there is not the ideal move of a corporation. However, neither is taking a pay cut the ideal move a teacher, neither is bailing out banks the ideal move of a government, etc. I think some corporations are taking advantage of the economic downturn and using it to justify keeping their employment lower than it needs to be for the personal gain of a select few at the top. They may not need to hire new people for competition, particularly, if their competition is doing the same thing, but this doesn't take away the potential ethical shortfalls of their selfish actions, which is the basis of my argument - business should be held just as responsible for their own role in contributing to low unemployment as government.

    I personally think that after the economy recovers, some business are going to suffer because they chose not to hire employees (for short term profit boosts) whose presence could improve their service while others did hire more people looking at the long term benefits of hiring more employees and not existing at the bare minimum.

    (You always make quality posts by the way.)

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    Re: Obama Tells Companies to 'Step Up' and Hire Workers

    Quote Originally Posted by TheGreatSandeno View Post
    If you're hiring when you don't have to be then it could easily be labeled as irresponsible.
    Sure, but that depends on the company. Businesses hire when they don't "need" to all the time.

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    Re: Obama Tells Companies to 'Step Up' and Hire Workers

    Quote Originally Posted by Whovian View Post
    What is a companies primary function? To make money for it's shareholders. All else is secondary. I am not saying that is good, or bad. I am saying that's the way it is.

    You can't change the nature of the beast by telling the beast to 'step up'.

    When companies need workers, they will hire them. When they don't, they won't. It doesn't get much simpler than that... and the President doesn't seem to understand that.
    Not all companies are publicly traded though.
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
    "Fly-over" country voted, and The Donald is now POTUS.

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    Re: Obama Tells Companies to 'Step Up' and Hire Workers

    Quote Originally Posted by muciti View Post
    So your upset that people turn a profit while others are unemployed? Or is it that you think that people's profits should be limited? How much money is the CEO of a company allowed to make?
    I suspect that the misconception involved is a misunderstanding that de-emphasizes the value a good CEO can provide for shareholders. Let's say a company has market capitalization of $5 billion. It's looking to hire a CEO for 5 years (timeframe just to keep the illustration simple). It is evaluating between two candidates: Candidate 1 who has a track record where market capitalization has increased 15% per year and another with a record where it has increased 5% per year. The first candidate will only accept the job for $20 million per year. The other will accept $5 million per year.

    If each candidate were to deliver results exactly consistent with his/her past track record, the company's market capitalization would amount to just over $10 billion (candidate 1) or just under $6.4 billion (candidate 2) after 5 years. Although the company would have saved $75 million in compensation from hiring the lower-priced CEO and the higher-priced CEO would have generated $50 in market cap per $1 of compensation vs. $56 in market cap per $1 of compensation for the lower-priced one, shareholders would be much worse off from having hired the lower-priced CEO. As a result, rational shareholders would choose the higher-priced CEO and they would receive $3.6 billion in added value from making that decision.
    Last edited by donsutherland1; 05-12-11 at 01:24 PM.

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    Re: Obama Tells Companies to 'Step Up' and Hire Workers

    Quote Originally Posted by muciti View Post
    So your upset that people turn a profit while others are unemployed? Or is it that you think that people's profits should be limited?
    None of the above.

    How much money is the CEO of a company allowed to make?
    They can make as much as they want. I'm talking about personal ethics.

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