Home
News
In Focus
Business
Metro
Nation
World
Sports
Feature
Opinion
View more »Opinion Columns
Wan LixinOpinion deputy editor of Shanghai Daily
Forum emphasizes BRI cooperation between China and Arab countries
Rights to lower sleeper berths should be softened by empathy for fellow passengers
Sunday
- Subscribe
Related News
Home » Opinion » China Knowledge
Giving away the bank to all its employees
May 8, 2009, Friday
|
Print Edition
Print Edition
WHEN Leonard Abess sold a majority stake in Miami-based City National Bank last fall, he did something very unusual. He took US$60 million of that money and gave it out as bonuses to 399 current bank employees and 72 former employees.
Knowledge@Wharton asked Leonard Abess, who remains chairman and CEO of the bank, to talk about the motivation
behind his gift, leadership and the current economic crisis. Q: Can you explain in more depth exactly why you decided to distribute US$60 million to your employees?
A: I just never thought that I was solely responsible for the success of the bank. I owned the bank. I enjoyed the profits, the dividends. And I always realized that while there were 400-plus people doing the work, making it successful, the profits were going in one direction.... I felt, particularly based on longevity, that these people were owners. They acted like owners. They worked like owners ... I wanted to acknowledge that.
We had excellent compensation. Unlike many companies, we didn't just pay it out in huge ways to the top people. But I had a formula based on how long people had been there. No one really knows that formula but me. The longer you were there, the more money you got. In many companies, the people who stay the longest are closer to the bottom of the compensation scale. People near the top tend to move around a lot more.
Q: Some people worked at the company for an incredibly long time - 39 years, 43 years, 51 years. How do you explain that longevity at a time when many employees expect to stay no more than three to five years at a job before they move on?
A: I do think that (faster turnover) is truer today, (but) many people who entered the workplace 40, 50 years ago, did hope to stay at one place and retire there. Over the years, I never really liked separation, unless I instigated it. So I would always encourage people to stay ...
We have multiple generations there, multiple members of families, people who have met at work and married. And then their children have come to work there.
Q: In broad terms, you think that top executives frequently say their employees are their most valuable asset, but then act in ways that don't back that up?
A: I do believe that in many companies, especially larger ones, (thanking employees) is perfunctory. I think that senior management is removed from the day-to-day people and has lost touch with what goes on. I think they all have lunch together, dinner together, live in the same neighborhoods, come to work and flip out something nice to somebody as they pass by them.
But I think that at the end of the day, it's head count. And at the end of the day, often, the employees are the ones - especially those who have worked very hard - who suffer.
We have never had a layoff. We have paid a bonus to every employee, every year. We have never raised the cost of insurance. Today, the employee's cost is the same as it was 20 years ago ...
I tell young CEOs that before you cut anybody's compensation, before you fire anybody for economic reasons, you deal with yourself.
Your perks go, your bonus goes, your salary goes. I am very surprised when I see huge amounts of money that go to the people at the top (even) as there are massive layoffs, especially when they accept government money.
Q: Do you think that's going to change?
A: I think that there's a change happening right now in America - in corporate America. I hope it's sustainable. I (worry) that when the economy takes off again, we (will) return to the old ways ... It's not enough to go in there and bail it out and save industries. Some of these industries - or the businesses in them - should not be saved.
Q: You have an undergraduate degree from Wharton. Do you think that ethical issues - including how you treat employees, how you compensate yourself - can be taught in school?
A: I think we get them at home, at the dinner table, in the community, at church or temple, or wherever we go for spiritual guidance.
And I think ethics can, must, be talked about in the schools. It's a combination of all of the above. But I've never really felt the schools are responsible for teaching ethics or morality. I think they're responsible for enforcing it. But I think it has to be learned at home and in the community.
Q: From your perspective, what caused today's financial crisis? And when will it be over?
A: I got a D in money and banking when I was here at Wharton.
In the old days, you would gather deposits in the community and then reinvest them through loans to help businesses. Citibank came out and said, "Look, you need to leverage your capital. There are other forms of capital." Which I call debt...
So rather than go out in the community to get people's savings, you can manage your liabilities by borrowing money from the Federal Reserve, the home loan bank.
That was the beginning of really leveraging up in the financial industry. There wasn't much leverage before that. I got a D because Wharton was teaching that at the time. It was the theory of the day.
I'd grown up with a father who was livid about it, who just said, "No, you manage your assets." So I wrote a paper saying, "This is all wrong." I didn't have a teacher who appreciated dissent...
(Reproduced with permission from Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. Trustees of the University of Pennsylvania. All rights reserved. Shanghai Daily condensed the original article.)
Knowledge@Wharton asked Leonard Abess, who remains chairman and CEO of the bank, to talk about the motivation
behind his gift, leadership and the current economic crisis. Q: Can you explain in more depth exactly why you decided to distribute US$60 million to your employees?
A: I just never thought that I was solely responsible for the success of the bank. I owned the bank. I enjoyed the profits, the dividends. And I always realized that while there were 400-plus people doing the work, making it successful, the profits were going in one direction.... I felt, particularly based on longevity, that these people were owners. They acted like owners. They worked like owners ... I wanted to acknowledge that.
We had excellent compensation. Unlike many companies, we didn't just pay it out in huge ways to the top people. But I had a formula based on how long people had been there. No one really knows that formula but me. The longer you were there, the more money you got. In many companies, the people who stay the longest are closer to the bottom of the compensation scale. People near the top tend to move around a lot more.
Q: Some people worked at the company for an incredibly long time - 39 years, 43 years, 51 years. How do you explain that longevity at a time when many employees expect to stay no more than three to five years at a job before they move on?
A: I do think that (faster turnover) is truer today, (but) many people who entered the workplace 40, 50 years ago, did hope to stay at one place and retire there. Over the years, I never really liked separation, unless I instigated it. So I would always encourage people to stay ...
We have multiple generations there, multiple members of families, people who have met at work and married. And then their children have come to work there.
Q: In broad terms, you think that top executives frequently say their employees are their most valuable asset, but then act in ways that don't back that up?
A: I do believe that in many companies, especially larger ones, (thanking employees) is perfunctory. I think that senior management is removed from the day-to-day people and has lost touch with what goes on. I think they all have lunch together, dinner together, live in the same neighborhoods, come to work and flip out something nice to somebody as they pass by them.
But I think that at the end of the day, it's head count. And at the end of the day, often, the employees are the ones - especially those who have worked very hard - who suffer.
We have never had a layoff. We have paid a bonus to every employee, every year. We have never raised the cost of insurance. Today, the employee's cost is the same as it was 20 years ago ...
I tell young CEOs that before you cut anybody's compensation, before you fire anybody for economic reasons, you deal with yourself.
Your perks go, your bonus goes, your salary goes. I am very surprised when I see huge amounts of money that go to the people at the top (even) as there are massive layoffs, especially when they accept government money.
Q: Do you think that's going to change?
A: I think that there's a change happening right now in America - in corporate America. I hope it's sustainable. I (worry) that when the economy takes off again, we (will) return to the old ways ... It's not enough to go in there and bail it out and save industries. Some of these industries - or the businesses in them - should not be saved.
Q: You have an undergraduate degree from Wharton. Do you think that ethical issues - including how you treat employees, how you compensate yourself - can be taught in school?
A: I think we get them at home, at the dinner table, in the community, at church or temple, or wherever we go for spiritual guidance.
And I think ethics can, must, be talked about in the schools. It's a combination of all of the above. But I've never really felt the schools are responsible for teaching ethics or morality. I think they're responsible for enforcing it. But I think it has to be learned at home and in the community.
Q: From your perspective, what caused today's financial crisis? And when will it be over?
A: I got a D in money and banking when I was here at Wharton.
In the old days, you would gather deposits in the community and then reinvest them through loans to help businesses. Citibank came out and said, "Look, you need to leverage your capital. There are other forms of capital." Which I call debt...
So rather than go out in the community to get people's savings, you can manage your liabilities by borrowing money from the Federal Reserve, the home loan bank.
That was the beginning of really leveraging up in the financial industry. There wasn't much leverage before that. I got a D because Wharton was teaching that at the time. It was the theory of the day.
I'd grown up with a father who was livid about it, who just said, "No, you manage your assets." So I wrote a paper saying, "This is all wrong." I didn't have a teacher who appreciated dissent...
(Reproduced with permission from Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. Trustees of the University of Pennsylvania. All rights reserved. Shanghai Daily condensed the original article.)
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
