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

[Riviera Rita]

I have been seeing ads for jobs at WDW on YouTube only in the last week. I know it won't be a popular view, but, I hope they find CMs who actually want to make the trip magical because on my last trip I have never encountered such rude for absolutely no reason CMs, they really did not want to be there and interacted with their fellow CMs rather than guests. Even the simplest request was met with disgust, I asked to go in the front half of GOTG because I found the back too rough and I thought the CM was about to hit me because he was so angry that I had the cheek to ask this. I would have been willing to wait for the next car. Then there was the guy at the donut cart at EPCOT, I've never seen a CM behave like that. I guess they had all just earned their ears and hadn't got the message.

I would like to add that there are lots of lovely, lovely CMs, but, we do tend to remember the bad experiences unfortunately. If you aren't happy in the role you are given then move on, don't spoil it for the paying customer.

 

[CaptainAmerica]

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

If people wanted to work, they wouldn't have to be paid to be there. That's why it's called work.

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

"Do your job well, or at least competently, or get fired. Do your job really well and get raises and/or promotions."

 

[Goofnut1980]

I just got back from a long weekend at the parks. I also received a survey about the experience. This time it went into detail about how much money I spent and then broke that down based on food, lodging, airfare, etc. It was pretty detailed. It also didn't like the fact I graded the experience lack-luster. Also about how the offerings were for the 50th. I ran out of space and had to remove some of the detail I added. haha. The parks overall were good but I almost wish they were a privately held company and not publicly traded. A lot more would happen without dealing with greedy shareholders.

 

[Casper Gutman]

"Do your job well, or at least competently, or get fired. Do your job really well and get raises and/or promotions."

Why doesn’t this work with executives?

 

[CaptainAmerica]

Why doesn’t this work with executives?

Uh, that's literally what I'm defending.

We're talking about incentive-based bonuses and stock-based compensation (which are often the same things but not always). That's exactly what "do your job really well and get raises" means.

 

[Goofnut1980]

I have been seeing ads for jobs at WDW on YouTube only in the last week. I know it won't be a popular view, but, I hope they find CMs who actually want to make the trip magical because on my last trip I have never encountered such rude for absolutely no reason CMs, they really did not want to be there and interacted with their fellow CMs rather than guests. Even the simplest request was met with disgust, I asked to go in the front half of GOTG because I found the back too rough and I thought the CM was about to hit me because he was so angry that I had the cheek to ask this. I would have been willing to wait for the next car. Then there was the guy at the donut cart at EPCOT, I've never seen a CM behave like that. I guess they had all just earned their ears and hadn't got the message.

I would like to add that there are lots of lovely, lovely CMs, but, we do tend to remember the bad experiences unfortunately. If you aren't happy in the role you are given then move on, don't spoil it for the paying customer.

I just got back from a solo trip last weekend. Going alone makes you stop and look around because you are not talking to someone. The comment about the CMs just chatting with each other. You are 100% accurate with that statement. In the 4 days I was on property, I found very few CMs that even looked at the guests for attractions. They just sat at the entrance talking about the weekend and what they were going to do. I could have walked by bleeding, and no one would have even noticed. It is kind of sad to be honest. Now I didn't encounter anyone being rude to me or anyone else, but they sure were not engaged with the guests. That shows me the lack of good management. Which means the managers don't care either. Where I work, I manage a team of managers and I am ultimately responsible for 37 employees. Even when I am not feeling it, my team doesn't know. I keep it positive because it rubs off on people.

 

[Sirwalterraleigh]

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.

Well labor was horribly underpaid prior to this. And they are 100% sure trickle down was never gonna work…

But it’s not the workers failure of “demanding” livable wages…it’s the retail markets.

Blame Publix, Duke energy, every crappy apartment complex…

This has been a reverse Robin Hood society for many decades. They price to stay ahead of any gains in wages..so workers lose. Pretty standard.

 

[Sirwalterraleigh]

Uh, that's literally what I'm defending.

We're talking about incentive-based bonuses and stock-based compensation (which are often the same things but not always). That's exactly what "do your job really well and get raises" means.

Which frankly doesn’t Work in practice. It encourages bad management tactics

 

[CaptainAmerica]

Which frankly doesn’t Work in practice. It encourages bad management tactics

Yes, I'm defending the principle, not every possible implementation thereof.

The goal of the management team should be shareholder wealth maximization, but it often goes wrong when it comes to the time horizon. Incentive comp should be structured to encourage long-term shareholder wealth maximization, but too often results in micromanaging the stock price quarter-to-quarter.

 

[Goofnut1980]

Does anyone else feel the management/execs are just stale in the company? They really need a complete overhaul. You need the fresh blood in an organization once in a while. Also get in touch with your audience. In the parks the guest experience team should not just be under an umbrella. They should be secret shoppers and looking how to improve the experience of the guest.

 

[Casper Gutman]

Uh, that's literally what I'm defending.

We're talking about incentive-based bonuses and stock-based compensation (which are often the same things but not always). That's exactly what "do your job really well and get raises" means.

In the post that began this discussion, you specifically said that if executives were limited to their (often enormous) “guaranteed salaries,” which presumably includes the possibility of raises to those salaries, they would not do thier jobs. Instead, they had to be constantly incentivized with bonuses beyond that salary.

 

[Drdcm]

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.


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.

I just want to say. I admire your capacity for independent thought. Even if we may not agree on some things, you do not appear to be someone who just automatically falls in line with what you are told to think and you are capable of drawing intelligent conclusions from your own experience. Just wanted to let you know it is appreciated.

 

[Casper Gutman]

Yes, I'm defending the principle, not every possible implementation thereof.

The goal of the management team should be shareholder wealth maximization, but it often goes wrong when it comes to the time horizon. Incentive comp should be structured to encourage long-term shareholder wealth maximization, but too often results in micromanaging the stock price quarter-to-quarter.

Is a management teams ONLY responsibility “shareholder wealth maximization?” Do they have ANY obligation to consumers or employees? Isn’t the focus on “shareholder wealth maximization” itself the problem, since it inherently encourages a focus on short-term growth over long-term health, rather then that focus being an aberration - after all, aren’t executives with stock-based compensation very incentivized to ensure a company grows in the short-term and not penalized if it dies in the long term? What incentive does Iger have to make sure the company is healthy in 15 years, especially if that goal clashes with immediate, quarter-over-quarter growth?

 

[lazyboy97o]

What incentive does Iger have to make sure the company is healthy in 15 years

To be fair, the old man might still be there in 15 years, still trying to find a replacement so he can retire.

 

[el_super]

Does anyone else feel the management/execs are just stale in the company?

Not really.

Is a management teams ONLY responsibility “shareholder wealth maximization?” Do they have ANY obligation to consumers or employees?

Maximizing shareholder value directly creates the incentive to satisfy consumers and employees. You can't have one without the other.

What incentive does Iger have to make sure the company is healthy in 15 years, especially if that goal clashes with immediate, quarter-over-quarter growth?

Iger isn't the only person running Disney. There are hundreds of Executives and VPs with decades left in their careers that still want the company to do well for the future. They're the ones actually running the company.

 

[CaptainAmerica]

Is a management teams ONLY responsibility “shareholder wealth maximization?”

Yes. Executives are fiduciaries of the owners and are obligated, legally and morally, to act in the owners' interest.

Do they have ANY obligation to consumers or employees?

Sure, in the sense that "if you mistreat your customers and employees, retention will go to hell, you'll bleed talent and loyalty, and this will ultimately be bad for shareholder wealth maximization."

Isn’t the focus on “shareholder wealth maximization” itself the problem, since it inherently encourages a focus on short-term growth over long-term health, rather then that focus being an aberration - after all, aren’t executives with stock-based compensation very incentivized to ensure a company grows in the short-term and not penalized if it dies in the long term?

Some executive compensation is just a grant of stock, which is not ideal. But lots (most?) stock compensation is in the form of options with a vesting period of, say, 5 years. If you're given options with a 5 year vesting period, your goal is not to maximize today's stock price, your goal is to maximize the price 5 years from now. So then the debate becomes whether or not you consider 5 years to be "long-term."

What incentive does Iger have to make sure the company is healthy in 15 years, especially if that goal clashes with immediate, quarter-over-quarter growth?

I've never seen the terms and conditions of Iger's compensation package and neither have you.

 

[Casper Gutman]

Yes. Executives are fiduciaries of the owners and are obligated, legally and morally, to act in the owners' interest.


Sure, in the sense that "if you mistreat your customers and employees, retention will go to hell, you'll bleed talent and loyalty, and this will ultimately be bad for shareholder wealth maximization."


Some executive compensation is just a grant of stock, which is not ideal. But lots (most?) stock compensation is in the form of options with a vesting period of, say, 5 years. If you're given options with a 5 year vesting period, your goal is not to maximize today's stock price, your goal is to maximize the price 5 years from now. So then the debate becomes whether or not you consider 5 years to be "long-term."


I've never seen the terms and conditions of Iger's compensation package and neither have you.

I think it would be very hard to argue that 5 years is “long-term” in the life of a company like Disney. If it is, that company is in severe trouble.

I’m sure you are aware, but it’s worth repeating that your idea that “shareholder wealth maximization” is the be-all and end-all of management responsibility is a relatively new one with a very clear historical lineage dating back to the 70s. It is not some unquestioned Truth handed down from the ancients, although it is often treated as such. In the early days of the republic, for instance, corporations had to serve some public good (building a canal, etc.) and could not form if this were not their primary function.

 

[CaptainAmerica]

I think it would be very hard to argue that 5 years is “long-term” in the life of a company like Disney. If it is, that company is in severe trouble.

I’m sure you are aware, but it’s worth repeating that your idea that “shareholder wealth maximization” is the be-all and end-all of management responsibility is a relatively new one with a very clear historical lineage dating back to the 70s. It is not some unquestioned Truth handed down from the ancients, although it is often treated as such. In the early days of the republic, for instance, corporations had to serve some public good (building a canal, etc.) and could not form if this were not their primary function.

If you start a company and hire one employee, what is that employee's duty if not to make you as much money (legally and ethically) as possible?

The corporate form of ownership is no different than that, it's just blown out on a larger scale.

 

[Tony the Tigger]

Well labor was horribly underpaid prior to this.

That’s one opinion.

 

[Tony the Tigger]

If you start a company and hire one employee, what is that employee's duty if not to make you as much money (legally and ethically) as possible?

The corporate form of ownership is no different than that, it's just blown out on a larger scale.

Today people think the obligation is the other way around: the company exists to fully support an employee with every modern comfort and no distress, plus their family with a roof over their heads, 2 cars and 10 streaming services. Oh, and that calculated dollar amount still applies to a 16 year old living with mom, because…some reason.