Posted on 02/23/2011 9:37:23 PM PST by Nachum
NHS bosses in charge of hospitals being forced to sack thousands of staff have seen their pay soar by up to 50 per cent in the past five years, it has emerged. The chief executives at trusts facing the worst cutbacks are now on lucrative salaries far higher than the Prime Minister’s, with some earning more than £200,000. And most handed themselves comfortable pay rises last year even though hundreds of their own staff were being made redundant to reduce costs.
(Excerpt) Read more at dailymail.co.uk ...
The lead paragraph is written as a typical Marxist drivel: "Why does X get more than Y? We should all be paid the same."
I have not read any further, of course.
What's wrong is that like in all bureaucracies it is those who know the least and produce the least who make the rules and control the money. Hospitals could run just fine without a stable of bureaucrats (nuns have proved this point over and over), and if you are sick the bureaucrats alone can't help you.
When you are in a situation in which treatments are denied to patients because they are too expensive and the NHS doesn't have the money to pay for them, why should bureaucrats be getting raises while those who provide care are being let go?
When we’re talking about government sinecures, it’s not quite the same thing as a free market in private enterprise.
It used to be that English bureaucrats complained that the socialists paid German bureaucrats to kill Englishmen.
Now, the socialists pay English bureaucrats much more to kill Englishmen, bypassing the German bureaucrats altogether.
This is the government equivalent of private enterprise "eliminating the middleman".
I wonder if they are making as much as Michelle made back at her hospital job in Chicago.
Because management (bureaucrats, in your world) is (i) needed for those patients that remain and (ii) worth what the labor market dictates.
Consider a less tearing-at-the-heart situation. Company XYX is not doing well. It missed the opportunity to switch to a new technology, suffers from the entry of new competitors, and subject to more regulation of the government. It's not doing well as a result and must reduce its worker count from 10,000 to 5,000 to survive. It's CEO, who was paid $1M/year is no longer suited for the job: he was good at maintenance but now you need to reform the business. An new CEO, a turn-around specialist is hired. There are fewer of those on the labor market, the job is more complex, so he is paid $1.3M /year.
The new CEO slashes the payroll from 10,000 because the company has no money to pay them. But the CEO expense went up from $1M to $1.3. Is there any contradiction? Of course not.
Similarly in the preceding example: the number of patients may go down and yet the cost of management (needed for teh remaining patients) can easily go up.
These two things live on completely different planes; you see a connection where there is none.
Here is anther way to think of it. During the Great Depression, people went to the movies more than before (and the movies were more upbeat than they are now). Someone could've asked the same thing: how come you complain about the lack of food and yet waste your precious pennies on a movie? What would you say? It is quite clear to you that, whatever hardships a person encountered during the Depression --- and especially because of those hardships entertainment expense was necessary to channel the remaining energy and resources into search for a job, support of the family, etc. Going to the movies is not always a perk: it is also a resource.
The seeming contradiction you described appears as such only because you view management as sort of a perk: when we have the money, we keep them, and when we don't we should kick them out. This is a typical view of those who do not understand what management actually produces. The premise is false, however: management is not a perk but a resource just like the rest of employees --- doctors, nurses and technicians.
You've got to be on a lookout for such things: as a rule of thumb, whenever you hear raw emotions about managers, capitalists, CEOs, Jews, fatcats, financiers --- socialism went on the attack. Watch out.
“The seeming contradiction you described appears as such only because you view management as sort of a perk”
No offense, but management often is a perk, especially when the number of people in management/administration expands without a commensurate increase in need. Your supposition that market forces are the raw engine that drives the growth of management is not true in many instances. Sometimes, when people come up through the ranks, it is those who are least capable at doing the job at hand (e.g. physician, engineer, sales etc.) who focus their efforts on climbing the administrative ladder. Would you want the person who didn’t know how to design and build a good bridge to be the manager of your engineering company?
I have respect for everyone, and certainly have respect for hard working managers/administrators. However, in too many instances bureaucracy appears to be the best description.
That's where we disagree, I am sorry to say. I know of no instance where the board of directors would think along the lines, "We had a good year; let's have a nice Holiday and hire some more managers --- we can afforded it this year." No company thinks of managers as a perk.
... especially when the number of people in management/administration expands without a commensurate increase in need.
With all due respect, but you cannot determine that need merely by working for an organization: you have to see the accounting books and be part of discussions by senior management. Driving a car for decades does not bring you an inch closer to understanding how and why it works: studying engineering and physics, respectively, is needed for that. And, even when you know both, you still have to see the data for a specific car to judge whether or not that particular car works properly. Same with management: one needs to know something about business/public administration and to have contemporaneous data to judge whether a particular decision was optimal.
Your supposition that market forces are the raw engine that drives the growth of management is not true
But neither you nor I ever said such a thing. You posed a question about managerial compensation, not the size of the management team. I pointed out that salaries are determined just like in all other cases --- by supply and deman in the labor market for managers. I also tried to explain that the issue of company size is completely unrelated to compensation: these two are determined by completely unrelated factors.
Sometimes, when people come up through the ranks, it is those who are least capable at doing the job at hand (e.g. physician, engineer, sales etc.) who focus their efforts on climbing the administrative ladder.
I completely agree with your observation but see nothing wrong with it: management requires completely different skills and knowledge than producing the product. Most certainly, I would not want a home building company to be run by a stone-cutter or carpenter.
Your view is a common one among specialists (I know, I held it myself in my early twenties :) Engineers often think that it is bad engineers and ars-kissers that get promoted. Well, thatnk goodness, that is true: as I said earlier, different skills and personal qualities are required.
Would you want a great driver to be promoted to an engineering position at a car company? Would you want a great nurse to be hired as a doctor? Probably not: "Go to a medical school, you'd say." It is often possible to rise to middle manager without schooling but hardly further. In the past, to be sure, one could become even a CEO that way --- especially if you have a considerable innate talent for that. Nowadays, people realize that it is easier to hire someone who knows something in business administration.
In any case, there is nothing wrong in that many managers are not great engineers, doctors, etc. I would be more concerned that they know something about accounting, finace, marketing and organizational behaviior, that they have descent interpersonal skills, etc.
Would you want the person who didn’t know how to design and build a good bridge to be the manager of your engineering company? Yes. In case you did not notice, the CEOs who was hired to redesign IBM was hired from... Pepsi Cola. He knew absolutely nothing about computers. But he completely redefined IBM in the early 1990s, when many people were predicting its complete demise. Please observe that one cannot achieve that result without having respect of the middle managers and the rest of the company. I am sure there were many skeptics who said the same thing: "He knows nothing about computers and high technology; we are not producing soft drinks." He (i) made them understand that , in what he personally does, that is unimportant, and (ii) deferred to experts in technical matters.
Since we are talking about this, incidentally, this is why CEOs are paid so much more than even middle managers: it requires talent to run a company, and much of it cannot be taught. Engineering, accounting, programming and other skills can be hired en masse. Both the essence of their jobs and the compensation of sentior managers are more close to basketball and movie stars, TV personalities, etc. It is a mistake to compare them to engineers.
However, in too many instances bureaucracy appears to be the best description. Of course it does.
Just go to the nearest university and walk into an of office of a theoretical physicist or mathematician. You'll find that (s)he is doing... "nothing" most of the time --- not even writing. In actuality, these are one of the most hardworking people you'll ever find, working --- thinking with an extreme and exhausting level of concentration --- 12-14 hours a day, seven days a week. But, if you are not familiar with the essence of their work, it will lool like they are doing nothing at all. [ Even simpler: how many times have you heard how overpaid professors are: "They just go to class twice a week for an hour, and get a ton of money." Of course, if you don't know what they do with the rest of the time, you'd think that they are overpaid lazy bums. ]
The point is that, when we are uninformed, many jobs seem unfairly compensated.
Precisely my point. I'm a physician. I have many, many, many years more experience and education than 99.9999% of hospital administrators (17 years of education after high school, and a ton more experience after that). That's just a fact. I've done the science. I've treated the patients. I've been there at 3am, and 4am etc. when administrators were sleeping. The administrators are the ones ‘driving the car’. They're hired to do the busy work that's necessary to keep the infrastructure intact, get the billing and paperwork done, and negotiate for the best prices etc. on equipment and supplies. The product is good medical care, and everyone has their part in that process. Applying the CEO, Steve Jobs at Apple, type of analogy to hospital administrators is just totally inaccurate and off base. Sorry, but that's the truth of the matter, and I've seen it from all sides, including administrative.
You started with quite disparaging remarks about management in general. Now it appears that tacitly switched to a much more narrow topic: hospital administration. The claim has also changed: that management principles don't simply do not apply to hospitals. Well, this is a very different but valid hypothesis. Unforuntealy, you don't even attempt to support it. "That's the truth of the matter" --- merely 'cause you said so. Surely you'd not accept this kind of dictatorial "argument" from another scientist.
Sorry, I don't see how I can contribute to this discussion further.
Thank you for the exchange.
“Surely you’d not accept this kind of dictatorial “argument” from another scientist.”
No, I wouldn’t, but as Mark Twain is quoted as saying, ‘Where a man stands depends on where he sits’. You and I both obviously have dogs in this fight. My bet is that if we sat down together for a beer, or whatever your beverage of choice is, we’d do just fine.
Thanks to you as well for the discussion..
I have no doubt about that. And, besides having fun, we'd find great many things in common.
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