>Date: Tue, 19 Jan 1999 18:30:56 -0500 >> >How Paul Tellier got to be CEO of the year >~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ >Globe and Mail Thursday, January 14 > >by Rick Salutin > >I'd like to look at how the business media have treated our economy in >recent times, by focussing on the Financial Post's 1998 choice for CEO of >the year: Paul Tellier of Canadian National Railway. It says a lot. >Actually, "Financial Post's choice" doesn't put it properly, since the pick >was made by "a select group of businessmen," not by Financial Post >journalists. But this is consistent with a key technique in financial >journalism: you phone up employees at Bay St. and Wall St. firms and print >what they say. It's the flowthrough approach to reporting. > >So why is Tellier a significant choice? He's the man who went from top spot >in the federal civil service to being head of CN in 1992. He saw it through >privatization and made CN, says the Post, the "richest and most successful >initial public offering in Canadian history." It "drew numerous U.S. >investors" after Tellier "quelled their doubts." (I'll get to how.) "Shares >have jumped" and "Profit has increased year after year." > >Tellier, then, is a hero because that's how the stock market sees him, and >the business media as a matter of course revere the market's judgments. But >how credible are those judgments? This week, the markets rated the Internet >server, America Online, with 10,000 employees and sales last quarter of >$858 million, as worth more than GM, with 600,000 employees and sales of >$34.4 billion. They ranked Yahoo, with 673 workers, about equal in value to >Boeing, with 230,000. I know the markets are just taking a fit about the >Internet: that's the point. They're always throwing a fit, then abandoning >it and throwing another. If you never have another economic thought, look >at those figures and ask yourself if it makes sense to let these hysterics >set the benchmarks for economic judgments and heroes. > >How did Tellier raise profits and the price of CN shares? He "slashed the >number of jobs by a third." Then this fall, perhaps encouraged by being >chosen CEO of the year, he slashed 3000 more. He's down to half the 36,000 >jobs he began with. American writer Doug Henwood calls this the bulimic >approach to management. It's become the main route to higher profits, >rather than improved technology or productivity - despite how those terms >hover in the media ether. New technology is no more prominent now than in >previous eras, and productivity is in a trough. So you fire many and those >that remain, you work them harder and pay them less, and they'd better >accept it or they could be gone too - like the Bell operators about to >lose their jobs to cheaper workers in the United States. That's the secret >of success like Tellier's. > >He's CEO of the year because he sucks up to the stock market and beats up >on his workers - and that's what business leadership is all too often about >today. I suppose not everyone will agree with this description but one of >its virtues for me is it helps explain a major mystery of public life in >the last decade: the panic over deficits. > >I confess I've never understood it. People like the Globe and Mail's >Jeffrey Simpson kept saying "we can't just go on piling up deficits." But >why not? Other eras saw worse deficits but no one panicked and they righted >themselves. When current deficits began to drop, it happened mainly because >the economy improved or interest rates fell. > >Deficit panic had one clear result though. It was the excuse for shredding >the social safety net working people relied on: unemployment insurance, >welfare, medicare etc. Those programs weren't responsible for high >deficits. Unemployment and interest rates or even, in Alberta's case, >subsidies to business, were much more at fault. But scaling the programs >way down made workers far more vulnerable to the strategies and goals of >CEO's like Tellier. "Nothing boosts the freedom of maneuver for non-elites >like a hospitable safety net," writes Henwood in his book, Wall St. With >the net shredded, it's far harder to hold out against raids on your wages, >conditions and benefits- not to mention your job- carried out by the >Telliers under the approving gaze of the markets. You pretty well have to >take any job under any conditions, because a job is the only safety net you >and your family have left. If governments restore some of the net now, the >message has still been sent; workers won't ever feel as secure again. >Intimidating the workforce by busting social programs, I'm saying, was the >real agenda behind deficit panic, and a CEO like Tellier, with the markets >in mind and his workforce in his gunsights, counts on that. > >It makes you wonder why the Telliers of the past let a social safety net be >created in the first place, during the years after World War Two. The >answer, I'd say, even if this sounds like it's coming out of left field, >was the threat implicit in the existence of the Soviet Union then: that >businesses might simply be expropriated en masse by a workers' movement if >they got mad enough. It was a thinkable thought in those years and >sufficiently scary to create a little momentum for change. The Soviet Union >had a lot to answer for but one good thing you can lay at its feet is >putting the fear of God in people like Paul Tellier and those who named him >CEO of the year. God only knows what it would take today. >
