News Bob Iger outlines the need to transform the Walt Disney Company resulting in 7000 job losses and $5.5 billion in cost savings

[drizgirl]

Incentive-based compensation is how you make sure that the executives are personally invested in the company's performance. When executive compensation consists primarily of guaranteed salaries instead of bonuses, they're encouraged to phone it in and just collect their paychecks.

Also, 7,000 employees with salary and benefits is something like a billion dollars, with a "b." If the entire C-suite compensation was cut to zero, it wouldn't come anywhere close to billion, with a "b."

Eh, I don't believe they're cutting anything from their bonuses. But I'm pretty sure they'd still be motivated with a few million less.

 

[Sirwalterraleigh]

I think I’m so over the dripping cynicism.

Covid was real. It really had many different kinds of effects on businesses. Every day counts in business when you have to hit your numbers. There is a fine line between “things are running smoothly” and “things are going down the drain.” It can turn on a few months.

If some extra stuff got cut “for covid reasons” which *maybe* were already eyed for cuts before, guess what - nobody here is some great detective and this is not “gotcha.” This is standard, run of the mill, dog-eat-dog, kill or be killed business.

And frankly, with the internet, people have become privy to information to which they are not entitled, and able to offer opinions with zero basis in expertise or experience - just “feelings.” “I think I know theming better than imagineers.” “I think I should second guess my surgeon’s cuts because mommy told me I’m special and my opinion is valid.” “I think everybody should keep their entry level jobs for double the salary and prices should come down.” “I think it should never rain but crops should grow, anyway.”

This board has often led me to wonder whether the thing that leads us here (love of Disney) more often indicates some of us haven’t grown up.

I’m not disputing the seriousness of it…or downplaying the inpacts.

I think Disney has mismanaged their labor…and they used the Covid excuse and it never really washed

 

[CaptainAmerica]

LOL, so true. I don't believe it either. But every now and then it just has to be said.

No it doesn't. Cutting executive compensation is a great way to end up with incompetent executives who run the whole company into the ground and then a lot more than 7,000 people are going to lose their jobs.

If you need brain surgery to save your life do you shop around for the best bargain? Or do you seek out the best surgeon you can find and pay him or her whatever he or she wants?

 

[alphac2005]

I think I’m so over the dripping cynicism.

Covid was real. It really had many different kinds of effects on businesses. Every day counts in business when you have to hit your numbers. There is a fine line between “things are running smoothly” and “things are going down the drain.” It can turn on a few months.

If some extra stuff got cut “for covid reasons” which *maybe* were already eyed for cuts before, guess what - nobody here is some great detective and this is not “gotcha.” This is standard, run of the mill, dog-eat-dog, kill or be killed business.

And frankly, with the internet, people have become privy to information to which they are not entitled, and able to offer opinions with zero basis in expertise or experience - just “feelings.” “I think I know theming better than imagineers.” “I think I should second guess my surgeon’s cuts because mommy told me I’m special and my opinion is valid.” “I think everybody should keep their entry level jobs for double the salary and prices should come down.” “I think it should never rain but crops should grow, anyway.”

This board has often led me to wonder whether the thing that leads us here (love of Disney) more often indicates some of us haven’t grown up.

I really appreciate your post. I first started visiting WDWMagic in 2000 and it's interesting to see the experts that reside on the boards and the internet for that matter. I've been the owner of a company for twenty five years and I've served on non-profit boards. It's simply incredible to see how the world is now filled with keyboard warriors who are experts in everything. It belittles the expertise of those who have such in any given area or field. That's quite the personal pet peeve of mine. I just had a conversation with a really good friend of mine that served on a board with me and even in that situation, it's incredible to see unqualified people in important roles make decisions based on emotion rather than logic and what is best for the organization. The bottom line is that on this executive committee, we had someone that wanted things done regardless of the fiscal impact to the organization. The board voted against her every time and she would go ballistic. On our board, it included two extremely well qualified folks in finance including a director, board member, and vice president at a major regional bank. The expertise that they possessed was literally priceless, but someone being in their feelings brought chaos. It reminds me of much of the commentary from people today who have no idea of what they're speaking of.

While I as a consumer can view the pricing structure at the Disney theme parks as out of bounds or too extreme, I with my business hat on understand that the division is highly profitable, and it is now the core engine of the company to help cover for areas that are bleeding such as over the top video along with a legacy broadcast model that is in decline.

 

[DopeyRunner]

Reading all these executive statements you’d think this was a company on the brink of financial collapse making the hard decisions to save itself, not a company bringing in billions in revenue every month.

I enjoy D+ but if it’s negatively impacting the companies bottoms line this much it may be time to say screw it, close up shop, and go back to licensing content to Netflix and Amazon for an easy profit rather than continuing to lose billions and sink the whole company.

Then bob would have to admit he was wrong and the huge investment and losses up to this point would verify that. He is incapable of admitting he was wrong, so he will “reorganize” the company to shift the books and make it look like Disney+ is doing better because of all their new content (which mostly seems to be unpopular).

I like D+ but cancelled it after my initial D23 buyin because the content just isn’t worth it. I think it would better if they went back to licensing their content, to the other streaming players.

 

[Tha Realest]

Then I wish they'd find less trite and more intentional ways of telling their own company's story.

It's easy to call yourself a storytelling company - most movie studios do it to some extent. The problem arises when your actions chronically reflect that isn't actually much of a priority outside putting positive spin on what you're really invested in.

It’s a way for non-creative people to give themselves an attribute that doesn’t exist.

“My job is to tell stories.” No ma your job is running sales reports against demographic data to tell your bosses when they should release the next toy line.

 

[drizgirl]

No it doesn't. Cutting executive compensation is a great way to end up with incompetent executives who run the whole company into the ground and then a lot more than 7,000 people are going to lose their jobs.

If you need brain surgery to save your life do you shop around for the best bargain? Or do you seek out the best surgeon you can find and pay him or her whatever he or she wants?

Mostly I agree with you. But is there a limiting principle to this?

Honestly, I'd probably be OK with the second best brain surgeon if it didn't bankrupt my family. Truth is I wouldn't even have access to the best. I'd do my research and find the best one in my insurance plan's network. But I wouldn't pay whatever it takes to get the best in the world, regardless of cost. There are limiting principles. And in this example, it's a matter of what my family could afford. Most people can't afford to get the best surgeon regardless of cost.

 

[GimpYancIent]

No it doesn't. Cutting executive compensation is a great way to end up with incompetent executives who run the whole company into the ground and then a lot more than 7,000 people are going to lose their jobs.

If you need brain surgery to save your life do you shop around for the best bargain? Or do you seek out the best surgeon you can find and pay him or her whatever he or she wants?

Incompetent executives hmmmmm, cutting executive compensation would be beneficial for Disney. Plenty of demonstrated incompetents within the organization some streamlining would be a good thing.

 

[Tha Realest]

When Iger recently visited WDW it was smiles and photos ops. No one probably had a clue that layoffs would follow.

Many of those CMs and cheerleaders online were calling Iger and Josh “daddy” - I hope this doesn’t give them daddy issues

 

[JD80]

I really appreciate your post. I first started visiting WDWMagic in 2000 and it's interesting to see the experts that reside on the boards and the internet for that matter. I've been the owner of a company for twenty five years and I've served on non-profit boards. It's simply incredible to see how the world is now filled with keyboard warriors who are experts in everything. It belittles the expertise of those who have such in any given area or field. That's quite the personal pet peeve of mine. I just had a conversation with a really good friend of mine that served on a board with me and even in that situation, it's incredible to see unqualified people in important roles make decisions based on emotion rather than logic and what is best for the organization. The bottom line is that on this executive committee, we had someone that wanted things done regardless of the fiscal impact to the organization. The board voted against her every time and she would go ballistic. On our board, it included two extremely well qualified folks in finance including a director, board member, and vice president at a major regional bank. The expertise that they possessed was literally priceless, but someone being in their feelings brought chaos. It reminds me of much of the commentary from people today who have no idea of what they're speaking of.

While I as a consumer can view the pricing structure at the Disney theme parks as out of bounds or too extreme, I with my business hat on understand that the division is highly profitable, and it is now the core engine of the company to help cover for areas that are bleeding such as over the top video along with a legacy broadcast model that is in decline.

Amen to this post.

 

[Tony the Tigger]

I’m not disputing the seriousness of it…or downplaying the inpacts.

I think Disney has mismanaged their labor…and they the Covid excuse and it never really washed

I can’t really speak to their management of labor. Much bigger picture: there has been a cultural shift that has pulled the rug out from under them and most other employers, and it again was borne of no expertise, just populism: the “right to” a $15+(++) per hour minimum wage for a category traditionally known as “unskilled labor.”

Guests received much better service from $10 (and less) per hour CMs than from $16 per hour CMs *who have been taught to think they are underpaid.* What changed? Mindset. That had zero to do with Disney.

Anecdotally, the CMs I know personally very much wanted to keep their jobs. Some were unhappy getting moved to another position; one was finally laid off after a long time being paid to stay home. Within a couple of months, she was asked back in a different position and made the best of it. Now, all are back “where they belong.”

Personally, if we retire up that way (we have family about 35 minutes away) I would take a bartending job at WDW for no base pay. Any bartender worth anything makes their money on tips, and those little paychecks are just for tax purposes.

No it doesn't. Cutting executive compensation is a great way to end up with incompetent executives who run the whole company into the ground and then a lot more than 7,000 people are going to lose their jobs.

If you need brain surgery to save your life do you shop around for the best bargain? Or do you seek out the best surgeon you can find and pay him or her whatever he or she wants?

Mostly I agree with you. But is there a limiting principle to this?

Even given everything I’ve said on the subject, a bit of a “correction” in executive compensation wouldn’t be unreasonable and wouldn’t bother me when cuts are being made across the board.

 

[Casper Gutman]

7K layoffs of a team of 200K cast members makes bigger news than Yahoo recently announced layoffs of 20% of company.

Disney is one of the three or four most recognizable brands on the planet. It’s the worlds childhood. Most people think Yahoo died a decade or so ago. OF COURSE Disney is bigger news, and if the company’s executives didn’t expect it, they’re fools.

 

[drizgirl]

Even given everything I’ve said on the subject, a bit of a “correction” in executive compensation wouldn’t be unreasonable and wouldn’t bother me when cuts are being made across the board.

Yes, that's where I am with it.

 

[Casper Gutman]

Incentive-based compensation is how you make sure that the executives are personally invested in the company's performance. When executive compensation consists primarily of guaranteed salaries instead of bonuses, they're encouraged to phone it in and just collect their paychecks.

Also, 7,000 employees with salary and benefits is something like a billion dollars, with a "b." If the entire C-suite compensation was cut to zero, it wouldn't come anywhere close to billion, with a "b."

What a brutal depiction of high-level executives. Unlike the vast majority of employees who receive little, if any, yearly bonus and yet are expected to work hard for the good of the company, execs are greedy, devious, disloyal layabouts who need to be constantly incentivized to do thier basic job. Man, you really hate those guys, huh?

 

[CaptainAmerica]

Incompetent executives hmmmmm, cutting executive compensation would be beneficial for Disney. Plenty of demonstrated incompetents within the organization some streamlining would be a good thing.

Are you under the impression that the 7,000 reductions won't include a significant number of executives?

 

[lazyboy97o]

Disney is one of the three or four most recognizable brands on the planet. It’s the worlds childhood. Most people think Yahoo died a decade or so ago. OF COURSE Disney is bigger news, and if the company’s executives didn’t expect it, they’re fools.

Disney is also not really doing this out of serious need (and this coming from a guy who complains plenty about Disney's bloat and bureaucracy). Disney is doing layoffs largely because there is just this expectation out there right now that company's cut costs and jobs. It's not based in need and often is a strategy that does not meet its intended goals. The parks are making money, lots of money but they're still expected to make cuts to their operations.

 

[CaptainAmerica]

What a brutal depiction of high-level executives. Unlike the vast majority of employees who receive little, if any, yearly bonus and yet are expected to work hard for the good of the company, execs are greedy, devious, disloyal layabouts who need to be constantly incentivized to do thier basic job. Man, you really hate those guys, huh?

*Everyone* is a greedy, devious, disloyal layabout who needs to be constantly incentivized to do their basic job.

Workers are supervised by managers. Managers are supervised by executives. Executives are supervised by boards of directors, but boards of directors aren't there every day because they're off running their own organizations. Boards of directors are supervised by shareholders, who are ultimately the highest authority in the company. Because the boards of directors are not actively involved in managing the business, they design executive compensation packages to align executive self-interest with shareholder self-interest.

The best way to make management care about the shareholders is to make managers shareholders.

 

[Tony the Tigger]

I really appreciate your post. I first started visiting WDWMagic in 2000 and it's interesting to see the experts that reside on the boards and the internet for that matter. I've been the owner of a company for twenty five years and I've served on non-profit boards. It's simply incredible to see how the world is now filled with keyboard warriors who are experts in everything. It belittles the expertise of those who have such in any given area or field. That's quite the personal pet peeve of mine. I just had a conversation with a really good friend of mine that served on a board with me and even in that situation, it's incredible to see unqualified people in important roles make decisions based on emotion rather than logic and what is best for the organization. The bottom line is that on this executive committee, we had someone that wanted things done regardless of the fiscal impact to the organization. The board voted against her every time and she would go ballistic. On our board, it included two extremely well qualified folks in finance including a director, board member, and vice president at a major regional bank. The expertise that they possessed was literally priceless, but someone being in their feelings brought chaos. It reminds me of much of the commentary from people today who have no idea of what they're speaking of.

While I as a consumer can view the pricing structure at the Disney theme parks as out of bounds or too extreme, I with my business hat on understand that the division is highly profitable, and it is now the core engine of the company to help cover for areas that are bleeding such as over the top video along with a legacy broadcast model that is in decline.

Other than not being sure what “over the top video” means (and suspecting we might disagree on that) we seem to have had similar experiences.

I own my own business. I have served on an advisory board to my City Commissioners and also on the board of a trade organization. Without getting too far off topic (I think this might help people understand) I’ve learned a few things from these experiences.

1. Well-meaning people can come to awful conclusions because they just don’t have enough information. (Example: something as inconsequential as our City was going to give a symbolic award to a company that had purchased an unsightly property and revitalized it into a nice shopping plaza. Before the award was announced, a hurricane damaged some things. The committee was going to withhold the award until repairs were made, and tell the property owner “to encourage them to make repairs faster.” Seriously? As the business guy of the group, I pointed out the obvious: the company was at the mercy of their insurance company, and nothing would hurry that. After a bunch of “Ooooooh’s” that idea was tabled.

2. A small group of people can be easily convinced of something. They can also “fully” hash out a topic and come to an agreement that seems fair to all - because not all were/can realistically be represented in the room. Once the decision “goes wide,” holes are easily poked and it looks silly.

3. Well-intentioned, unbiased and non-hostile members of the press get things wrong all the time. Their expertise is in writing, not [your business.] I have been misquoted and they have been mixed up more times than I can count.

While this is nothing like running one of the biggest companies in the world, the processes are still parallel, and I can see how everything that comes down from on high isn’t necessarily malicious, greedy, evil. Nor do you believe every word in the press, nor every disgruntled customer or employee (though many have valid points.)

 

[Casper Gutman]

I really appreciate your post. I first started visiting WDWMagic in 2000 and it's interesting to see the experts that reside on the boards and the internet for that matter. I've been the owner of a company for twenty five years and I've served on non-profit boards. It's simply incredible to see how the world is now filled with keyboard warriors who are experts in everything. It belittles the expertise of those who have such in any given area or field. That's quite the personal pet peeve of mine. I just had a conversation with a really good friend of mine that served on a board with me and even in that situation, it's incredible to see unqualified people in important roles make decisions based on emotion rather than logic and what is best for the organization. The bottom line is that on this executive committee, we had someone that wanted things done regardless of the fiscal impact to the organization. The board voted against her every time and she would go ballistic. On our board, it included two extremely well qualified folks in finance including a director, board member, and vice president at a major regional bank. The expertise that they possessed was literally priceless, but someone being in their feelings brought chaos. It reminds me of much of the commentary from people today who have no idea of what they're speaking of.

While I as a consumer can view the pricing structure at the Disney theme parks as out of bounds or too extreme, I with my business hat on understand that the division is highly profitable, and it is now the core engine of the company to help cover for areas that are bleeding such as over the top video along with a legacy broadcast model that is in decline.

OK, but why don’t those same executives bear any of the blame for the many parts of the company that are hemorrhaging cash, especially in ways that were completely foreseeable? Everyone in the industry, from Wall Street to the head office to the trade press, KNEW converting to streaming was going to mean huge losses every quarter for several years. It was discussed endlessly. Then, a few months ago, in a spectacular explosion of groupthink, the entire industry decided to panic about the thing they KNEW was going to happen. Now we have massive layoffs and an entertainment industry in more chaos then it has been since the advent of sound. Yes, bleeding the parks dry makes a degree of business sense, but it does so only because of a host of egregious mistakes in other areas.

As to respecting business executives and Wall Street gurus, that’s a bit rich. Over the last eight years American society has seen a very widespread, very dramatic dismissal of expertise. A host of once respected figures are now virulently despised by huge segments of the population - teachers, doctors, nurses (these three have been the most shocking), lawyers, judges, police officers, professors, reporters, intellectuals of every stripe - all are now viewed with a seething cynicism that borders on hatred. One of the only groups that has largely escaped this shift are high-level members of the business community, who are still broadly viewed as holders of secret knowledge and worthy of deference and respect. Given this broader context, it’s silly to bemoan cynicism directed at business leaders, one of the only groups still seen as “knowing what they’re doing” no matter how badly a company seems to be performing.

 

[Casper Gutman]

*Everyone* is a greedy, devious, disloyal layabout who needs to be constantly incentivized to do their basic job.

Workers are supervised by managers. Managers are supervised by executives. Executives are supervised by boards of directors, but boards of directors aren't there every day because they're off running their own organizations. Boards of directors are supervised by shareholders, who are ultimately the highest authority in the company. Because the boards of directors are not actively involved in managing the business, they design executive compensation packages to align executive self-interest with shareholder self-interest.

The best way to make management care about the shareholders is to make managers shareholders.

What a horrible, horrible view of humanity. Which side of this argument is being labeled cynical?

How, precisely, does that “supervision” at lower levels motivate all those greedy, lazy, devious employees?