It's Not Luck - Eliyahu M. Goldratt [31]
“I don’t think that in my case,” I try to choose my words carefully, “it’s a matter of protecting a bad decision. I have nothing to protect. I wasn’t involved in making the decision to diversify. Still, I’m not sure that it is correct to sell my companies.”
“Why?”
“Because we are not dealing only with money. We are also dealing with people. Top executives, I think, have responsibility not only to our shareholders, but also to our employees.”
Maybe I just signed my death sentence, but what the heck, there is a limit to the extent I’m willing to play their money game. Let me give it to him in full. “Sometimes, from where I stand, it seems unfair to put the squeeze on the employees, who have invested their lives in the company, just so that some rich people will become even richer. . . . The goal of our company is make more money, but that’s not the whole story.”
Trumann doesn’t seem surprised. He has heard such things before, even though I wonder if he has heard it from one of his executives. Maybe from an ex-executive.
“Some rich people become even richer.” He repeats my words. “Alex, where do you think the money that I invest comes from? Rich investors? Banks? Don’t you know that most of the money invested in the market belongs to pension funds?”
I feel myself blush. Of course I know it.
“People save all their lives for old age.” Trumann explains the obvious to me. “They are saving now so that in twenty or thirty years they can retire peacefully. It is our job to make sure that when they retire the money will be there for them. Not dollar for dollar, but buying power for buying power. It’s not the rich peoples’ interest we are watching out for, it is the same people you are worried about—the employees.”
“Interesting cloud,” I totally agree.
Trumann looks disappointed. “Don’t dismiss what I’m saying. I’m not talking about clouds, I’m talking about facts of life.”
Rather than trying to explain, I take out my pen and start to draw the cloud. “The objective is to serve the stakeholders. Do you have any problem with that?”
“No. I only have problems with people who forget it.”
“To achieve it, we must make sure to satisfy two different necessary conditions. One is to protect the interests of our shareholders, and the other is to protect the interests of our employees.” I wait for him to object, but he nods his head in agreement.
“In order to protect the interest of our shareholders, you insist on selling the diversified companies.”
“Don’t you agree?” he asks.
“I agree that under the current circumstances, to protect the interests of the shareholders we should sell the companies. But that doesn’t mean that I agree we should sell them.”
“Alex, you sound like a politician. Do you agree or don’t you?”
“There is another side to this question; bear with me. We also said that we must protect the interests of our employees. But in order to do that we must not sell the companies.”
I am expecting that he will not agree, that he will claim that selling the companies has nothing to do with the interests of the employees. But he doesn’t say a word. He takes the napkin and examines the cloud.
“You have it easy,” I say. “To you it’s obvious that we should sell the diversified group. You look at the bottom line numbers, you look at the forecast, and they tell you the answer. Not enough money now as well as in the future—sell. No wonder, you look only at one side of the equation, as you should. That’s okay, it’s compensated for by the employees and the unions who also look at only one side. Only we, the executives, are torn. We are in the middle. We have to satisfy both sides. Put yourself in my shoes and try to answer your question, to sell or not to sell the companies. You