How does the risk of buying your company’s stock compare with not going to work tomorrow, or any other day, because you’ve been laid off?
In my last job, I spent a lot of time figuring out how much money my company would save by moving hundreds of American jobs to India, or Bratislava, or Egypt , or wherever labor was cheap. I got to watch folks in my department get laid off, or hundreds in my division get a lovely 2 week unpaid vacation in the middle of summer. All while we NEVER missed a dividend, and could set aside a few billion dollars in cash to buy back stock for our owners.
Perhaps that experience has colored my opinion a bit.
In the first I am risking losing my investment. In the second I am not making an investment. Getting laid off tomorrow does not create any new risk for me.
When I’ve undertaken obligations, the various possibilities associated with not being able to meet them were baked in from the start. Any of those adverse events happening is expected. Which ones, and when, is uncertain. But the risks are all there from the start and can to some degree or another be mitigated. They’re not created when they happen.
He’s right- you assumed the risk that you’d be laid off* when you were hired.* Getting laid off just means that the coin finally flipped and your bet is now due.
You may be worse off after being laid off, but you didn’t necessarily create new risk merely by being laid off.
Look at it this way- if you’re betting on a craps table, and you make your bet, then the guy with the dice waits 10 minutes before rolling the dice and you lose, you weren’t somehow at MORE risk at the end of that 10 minutes when the dice were rolled, than at the moment you placed your bet.
You seem to be assuming a binary definition of risk. Sure you assume a risk of being laid off when you take a job, but how big a risk?
You assume risk of losing your investment when you make one. But do you think the risk is increased if the company does not report its financial situation? Do you think the risk is unchanged if the company stops reporting, or lies about it?
Risks change over time. Most companies do not honestly report layoff risks to their workers. Or even information that could allow the calculation of the risk. There is good reason for that, but it still happens.
Okay then, chart the levels of risk an employee faces over his or her term of employment.
Many companies don’t break out P&L by division, which is fine for investors since a loss at the division won’t affect the whole company very much. But it would have a gigantic impact on people in that division - who also mostly don’t see P&L.
So should privately held companies, of which there are significantly more of, than publicly traded companies, be required to share their financials with all employees?
No. I noted that there were good reasons not to do so. The point is that employees face risk without the kind of information investors demand. Public companies give info to everyone, so employees get it (even if internal messages about quarterly results are spun all to hell) but privately held companies don’t give it out. But clearly if you give information to employees you give it to the world.
Investors in private companies get this info, or don’t invest.
In my last job I had access to information that made it clear that our division did not have much of a future. Most of those in my division did not have access to this, and I certainly couldn’t publish it. I was close to retirement so I just asked to be laid off first if it happened. It did, but not for a year or so after I left.
Sharing financial information with employees will just confuse most of them. Most people are in no position to understand such things.
Same thing with sharing salary info. I have no objection to it, but it will cause freaky issues with people because they don’t have good context to understand it.
The people I worked with designed microprocessors - I think they could have understood sales and expense figures pretty well if broken down further than the official SEC filings demand.
As for salary, I’ve done salary administration so I understand the issues. The salaries of government workers are published, I think they understand them. I’ve seen serious inequities in salary not just from race or sex issues but from the company not providing enough money to balance things. (When inflation was over 10% it was much easier to come out with something reasonable.)
It ain’t going to happen, but not because workers can’t understand.
Yep, they’re published. And everyone gets how it works. In practical terms, they have pay grades and then people are assigned a salary within that pay grade. Typically everyone with the same job title has the same pay grade and starts out with the same salary, more or less. So if someone has a higher salary within the pay grade, it’s because that person has been there longer racking up the COL raises, or because they’re some kind of rock star and got performance increases.
What you don’t seem to have is that situation where Joe-Bob was hired as a Accountant II in 2015 at 50k, and Betty Sue was hired 2 years later at 65k for the same job. That sort of shenanigan doesn’t fly when everyone’s salary is known, but it is sadly all too common when they’re not.
It can have an impact on, say, my ability to pay my mortgage. But my interaction with that uncertainty occurred when I took out that mortgage. Not tomorrow. I’m hardly risking anything by going into work tomorrow.
Going into work tomorrow might in some cases be riskier than going for an interview with a company not on the brink tomorrow.
How much riskier is going to be unknown to you for the reasons I mentioned.
Or Betty Sue got hired at 45K because women don’t really need the money, having husbands and all. That kind of crap would be hard to justify if salaries were published.
I don’t think that’s a given. Lots of people have information about privately-held companies’ financials and it generally doesn’t get out because NDAs have teeth.
If employees wanted to demand information about potential employers finances before taking a job, then employers would start handing it out more, just like they do to investors. Hard to have a company if people won’t work for you because they think there’s too much risk you’ll go under.
I don’t know what you mean by lots of people. I’m talking about all employees getting the information, which is more than lots of people. Think of how often internal memos (marked proprietary) get leaked. Management would assume that the information would get out, and management would be right.
I took lots of internal classes on information security. We had several levels, and financial info was the highest, with access restricted to need to know.
That’s actually a good idea if one interviews with a private company, but it ain’t going to happen. You’d need an NDA, and given the much worse things companies do to candidates, anyone asking this would be shown the door. Unless they were unicorns.
My dad was an electrical engineer. My mom was a banker. I think my mom had a better chance at designing a circuit than my dad had at balancing a checkbook.