Redesigned mip

[interested]

Let's address these. There are some very important points that you have brought up here, New steward.

1- Not knowing how things are done is common anytime you start a new job. We would have to surmise that the people being brought in to fill a specific position have the qualifications necessary to learn the job. Otherwise, it would be folly to hire them. I was a new supervisor from the outside and while the culture was different from any I had toiled in prior, I had no trouble learning the ropes.

2-Unrealistic ideas. Ideas coming into a culture that has had very little exposure from the outside can only serve to help our organization right now. It is not nearly as crucial that we entertain a "bad idea" these days- as it is for us to change the culture that we can begin to entertain any new idea at all, good or bad. We simply are too top heavy right now to have many ideas, if any at all, come from our existing people, much less from outsiders. That hurts us every day.

3-I'll grant you that labor skills will be something that is going to require a new management person to have a higher learning curve. However, it is unfair to assume that a new incoming management trainee will automatically become anti-union. Don't forget when you do your diligence and higher experienced, educated, talented people from the outside, you will get dedicated, intelligent professionals who have honed their skills in other competitive arenas. It could be that their fresh outlook on a situation and their aquired skillset could change the poor relations in a center or a building.

4- Long term schooling. Little or no communication skills, don't know how to talk to people. We are talking about bringing in qualified, experienced and talented outside management people to fill specific key positions. You cannot make a sweeping generalization about their communication skills or their ability to talk to people. If you are going to draw paralells between new management people who are recent college graduates and inexperienced in business, and experienced UPS people of a similar age bracket who are not educated, I would not hang my hat on the young UPS person having better communication skills. College is all about communication-Social, educational, civic- etc. You spend much of those years, reading, writing and discussing issues with a wide variance of people from different families and backgrounds. You still have a lot to learn, but the opportunities to hone your writing, reasoning and verbal skills are far, far more numerous than exist in every day business.

5-This is a huge sticking point. We are in a damn competitive business, you should not be in any job in UPS unless you are the most qualified for that job. Your tenure should be a miniscule factor in that decision and no more. If you are there twenty - five years and UPS brings in an experienced outside person who is thirty years younger than you, and twice as qualified, tough snot. It happens every day all over the world. We have people in management positions who have no business being there. We need to address that issue, if it hurts someones feelings, too bad, this is an adult world.

 

[tieguy]

there goes the neighborhood. We have the best service bar none in the industry. We now per interested wish to bring outsiders in who have absolutely no loyalty and who have not learned our service ethics to come in and learn our service ethics. In the process we bump out someone who knows our company and knows our ways. Why because the person we bring in has an impressive sheepskin which we are hoping will translate into good results once this talented individual learns our business and assuming he actually develops some loyalty towards us and stays awhile. Yep great system.

 

[trickpony1]

That's OK, tieguy, all he needs is the "script" you spoke of in another thread.

 

[interested]

Good points all Tie-Let's chop this up.

I am not sure what you mean by service ethics, If you are intimating that it is adhering to a specific set of performance criteria, rest assured there are more than enough talented people out there used to being held to strict performance requirements. If you are referring to the high level of service we provide in our package operations, I don't think that we would hire someone who didn't have a proper set of expectations of what the job entailed. Don't forget, There are many, many skilled operational people out there who have nothing to do with UPS, FedEx or any of our other competitors. We have all been in large pick and pack operations, and witnessed the incredible technology that is out there. There are legions of well trained, capable and accomplished folks out there with great records of ethics, achievment and leadership. It is wrong to assume that they could not hold our standard of service. It is also narrowminded to think that there are not people outside of this organization who could not come in here and effectively manage a specific indicie of our business. It may be advantageous to have driven a package car before you become an account executive, but it is not nearly as crucial to your success in sales at UPS as having outside sales experience and understanding the skills required to effectively sell our services. That same paralell can be drawn for many aspects of our business.

Let's not limit ourselves to operations. Business development, Human Resources, IE, there are many different areas of mangement where we may see contraction and could use transfusion of new blood. The bottom line is that we need to start preparing ourselves for change in UPS. There very well could be an overhaul of how we do things and who we get to do them.

The bottom line is that the onuss is on us, the current management, to think outside of the box and utilize all the opportunities we have at our disposal to change our spots and try and grow with the company. If not, you could be on the outside looking in.

Wall Street doesn't care about anything but results, part of the process of reporting to the analysts is to instill confidence in the management ranks. The stock analysts don't care about promte from within, they want results. Many a comapny has restructured based on shareholder confidence.

Years ago the computer technology was developed for computer assited drawing-CAD. Architects prior to that technology, were trained in the traditional techniques and practices of table drawing. As the CAD technology developed, a whole generation of Architects was left in a crossroads. Unlearn everything you have known and retool or find a new career. Thousands of professionals were left out in the cold just refusing to believe that their business could ever change.

 

[gb]

REDESIGNED MIP PROMOTES MANAGEMENT RETENTION???

Maybe, but ask yourself, do you want the manager or supervisor sitting next to you at work only there because they have the golden handcuffs on? The very fact that they acknowledge that anyone who decides to move on "leaves something on th table" indicates that the UPS mgt committee is fine with having a management person that would rather be doing something they don't dread if they could cash out and move along...Seriously, is this the motivation (demotivation) they are looking for??? Frankly, it suprises me that they are knowingly employing this tactic. Having been in management several years I have seen several mgt people collect their MIP and move on to something that is a better fit for them (not terrible losses for the company). It was nice to see the system reward the departure of these "partners". Now we are ensuring their "retention", leaving them in our departments to deal with (and around)until retirement.

 

[tieguy]

Interested all good dialogue but it still comes down to your taking a chance on someone with an impressive resume and hoping that resume translates into good results. We already hire managment trainees from the outside. Many of them don't understand the system and never quite get it. They definitely do not understand the job from a package handler or drivers perspective. Theres a time and a place for outside hires but it should be a very selective process.

 

[tieguy]

"That's OK, tieguy, all he needs is the "script" you spoke of in another thread."

Expand on the comment if you wish. I hope your not suggesting we should have 30,000 management folks all pulling in different directions? The "script" keeps everyone working towards the same business goals.

 

[air1]

The largest negative impact will be on those nearing potential retirement. The "deferred" compensation is not available to them for hypo or other use until received. Therefore, many will have to wait an additional 5 years to begin acquiring what they will need in retirement.

I'm sure the planners figured out that there is a large number of UPS management that fit within that category and represented a lot of stock.

I am certain that this was not done for the financial benefit of UPS management. My guess it was to help "defer" the expense of teamster and IPA projected increases over the next 5 years.

 

[interested]

Let me clarify. I am not talking about young inexperienced management trainees. I am suggesting that we look to hire experienced management personnel for specific responsibilities. Sales management, engineering , automotive, human resources and yes, even some for package if need be.

Learning how UPS operates is not the point of my discussion, anyone can come into UPS and figure out how it works, we do it constantly. We introduce new part timers of every age, race and socioeconomic background to our culture every day. Most leave , some stay, a few go on to high level management jobs. Most over the years have had little education, but they were able to "get it" Why you believe that someone who is experienced, educated, and already an accomplished manager wouldn't "get it" is beyond my pale.

Let's not overcomplicate how "difficult" it is to learn the UPS system. Is there a learning curve-Yes! Is it a larger learning curve than most professional jobs, I didn't think so. I feel that I am qualified to make that comparison because I have have had three other professional management positions with three different companies prior to UPS. Management who come to UPS from the outside and chafe at the experience often do so because the culture is very different, not the challenges and responsibilities of the work. Part of that culture challenge is interfacing with a new peer group who has never ever had to make a commensurate job switch in their professional career. It is easy to sit back and look at a new person and say-"they will never make it, they just won't be able to get it" Anyone can do that. It's hard, especially for our culture, to say, " What were your experiences prior to UPS and could you look at this problem, you may be able to see it in a different light and offer some insight" That is not to say that having had only one management job with one company is a bad thing, but you must admit it does not provide you with a solid reference point to compare new ideas and different experiences that could help increase productivity in a work area.

It certainly does not make for an organization that is open to change.

Again, it is about trying in infuse some life into the culture and change the entrenched mindset of UPS management. Getting people to buy into a new set of rules, ideas and paradigms is crucial to the continued growth and development of any organization. Right now, I think we would all agree that we need to change some things.

 

[upscorpis]

Interested,

I don't totally agree with this assertion:

"That is not to say that having had only one management job with one company is a bad thing, but you must admit it does not provide you with a solid reference point to compare new ideas and different experiences that could help increase productivity in a work area.

It certainly does not make for an organization that is open to change."

Individuals can close their minds regardless of their experience. Individuals can recognize that a new idea is worthy without having a broader experience base. That behavior is about an individuals mind set. An open mind can be brought about by experience but I posit that if someone becomes more open minded due to experience, they will do that getting experience at any job, including UPS. They are predesposed to that maturation process. Conversely, a closed minded UPSer would more than likely be closed minded in any setting. They are predesposed know-it-alls.

There are ways to gain different viewpoints and experience for long time UPS managers. That's especially true for staff functions whose jobs are not so specialized to UPS or transportation. Reading trade mags, books, training, et al can give UPS managers the experience they need to seed new approaches and ideas. Relying on experience garnered only at UPS is not going to cut it for staff and senior managers that need to act more strategically. The front line supervisor or manager is often asked to act more tactically so this is perhaps less crititcal in those roles. We cannot be so arrogant as to thing we do everything better than everyone else.

In my experience with managers new to UPS, "getting it" is about the culture. It's about the partnership vs. politics. It's about the partnership vs. personal fifedoms. It's about the working together vs. dictating. Many other companies don't do things that way UPS espouses things to be done. Many companies don't have a policy book to guide them and as a result, their management people create their own policies and carry them to UPS. Outsiders that succeed at UPS are willing to become partners.

I'm sure many are snicikering at my above description of UPS. I assure you that if your experience is different with your management team, that's a problem with the individuals, not the company. The policy book is in place and it is meant to be followed. It is the "script" we all should be acting out.

I couldn't agree more with your prior assertion:

"The bottom line is that the onuss is on us, the current management, to think outside of the box and utilize all the opportunities we have at our disposal to change our spots and try and grow with the company."

If we're not doing this, we're letting our partners down.

 

[upscorpis]

Another aspect to the deferred plan is that it will force people to be invested in the company. With the queued up retirements ready to happen, it's imperative that the newer managers are invested in the company. I think it's more common place for newer management to sell their stock. If they are to be tomorrow's leaders they need to be engaged in the partnership. I still remember wanting to sell that stock when I first got to full time management. The peer pressure to hold the stock kept me from selling. I'm glad it happened today but without that pressure, who knows if I would have been as sage. Somehow I doubt it. This program will force younger and new management to be partners and perhaps 5 years into it they will "get it". Just another of many angles on this....

 

[brownmonster]

An outsider would say, why don't you drive 3 blocks out of your way to give this customer a morning delivery to get potential pick-up volume. An insider would say, we could save 3 blocks by delivering this customer in the PM instead of the AM.

 

[revenuerecovery]

"Therefore, many will have to wait an additional 5 years to begin acquiring what they will need in retirement."

If they can't survive for 5 years without that stock, they are pathetic.

"My guess it was to help "defer" the expense of teamster and IPA projected increases over the next 5 years."

Not likely. Do you think the IBT and IPA increases are going to stop in 5 years? I understand that it would increase our profits for the next 5 years....but then what? Another decline? I would like to think the executive management is more foward thinking than that. Unless....they need to build up capital internationally. Hmmmm..there's a thought. Does anybody think that domestic volume may eventually lose it's clout of being the lion's share of our revenues?

 

[onetoofar]

To upscorpis -
"it's imperative that the newer managers are invested in the company. I think it's more common place for newer management to sell their stock."

As a 'new' manager (since 1999), I am more likely to sell my stock. Tpay for UPS is 30-40 K below market value for nearly all IS mgt positions compared to other NJ/NY companies. There is no way to afford a house or payments in the NE without selling your stock; the median house price is $300K. When the stock was private, you could borrow against it and be reasonably sure you wouldn't default on your loan. Now the stock loses 10% of its value b/c some joker in Atlanta set lousy estimates.

So what do I think? The new MIP is little more than attempt to keep 'young' managers in the company. It's a good thing that I can now get 1/2 of the MIP in cash or I'd be looking for another job. I understand your statement about being invested in the company - my investment in living in NJ & taking 40K less than I can get in NYC. I do this of freewill because I believe in UPS and its future but I'm not betting my family's future on public stock; I'd be a fool to do so.

 

[upsdawg]

OneTooFar---thank you for your honest perspective on the Enhanced MIP.......campaign. I would like to hear from some other "NEWER" Management people to get their perspective n this.

 

[interested]

I am with Upsdawg, this is a great discussion. I want to add to the points that upscorpis and Onetoofar have made. I don't think it is any secret that UPS salaries are well below industry standards in many of our disciplines. It has always been the overall compensation that made up for that shortfall.

For years and years, those elgible for the MIP saw a good chunk of their compensation given to them in stock. Management almost never touched this stock. Secondly, the stock would go up year after year after year. Anytime you put away a chunk of your compensation and it compounds annually, (sometimes as much as 20%)-You are going to save some dough. Add a 401k to the mix-you maybe talking about putting away almost 30% of what you make every year. The trade off? You are living on a much smaller stipend than many of your contemporaries in similar fields. But you are a UPS'er. Living under your means and planning for a wonderful retirement is in the bloodline, and having come up in the system, you are acutely aware of the pot at the end of the Rainbow.

Let's not underestimate what that reward was. It was enormous, many, many people left millionaires-That's plural. $2-3 million, no debts, and a PENSION!!!, man! that is nice living. Any wealth mangement professional will tell you, living under your means during your career, means living well at retirement. Until we went public, that was a winning strategy, and you were a fool not to manage your career in a similar capacity.

Times have changed, We are now a publicly traded company. We don't set the stock price anymore, the market does that- and there are more theories than you can shake a stick at as to why the market fluctuates. If you enter into the ranks of mangement in UPS you will still face the old ideaology that says, leave your stock alone and you will be handsomely rewarded. That is no longer the case. Is the stock blue chip-Sure it is. Is it a solid investment-absolutely-as far as stocks go. If we have another work stoppage will the stock go up again, right after the work stoppage(as it did in '97, before we went public)-Not a chance!! Is it incentive for a new management person to have some of his compensation deferred for a period of time? Not if you are already compensated 30-50% under the current market value for your skillset-The situation is complicated if you have an education and even more tenuous if UPS paid for that diploma-because you are a real threat to leave the company. Brain drain is not a good thing when our competition is building their brand.

The Old school hangs on to the theory that the stock will again rise and hold steady, splitting along the way as it climbs ever higher. The new school recognizes that competition, our IPO and a more diversified professional career don't add up to putting all your eggs in one basket, and watching that basket over the next 30 years.

The restructuring of the MIP doesn't have near the effect on someone who already has twenty-five years in management.

This is a tough argument. We want to build shareholder value and confidence in our brand, a brand that has served many of us well over the years. We also want UPS to recognize that they are going to have to align salaries and compensation to keep and find the best possible people available to represent that brand.

I don't have all the answers, but I too would like to continue to hear from all management folks on this subject.

 

[yeah]

Why did the management committee redesign MIP without consulting the partners? Oh yeah that's right. Our mail now says ahareholders not partners. Would James Casey approve of these changes?

 

[my2cents]

An excellent thought-provoking post Interested. I'm wondering if this subject comes up for discussion in the first quarter conference call on April 21st.

 

[speeddemon]

So this is what all the supervisors and managers do during the day.............(couldnt resist).

 

[upscorpis]

It's refreshing to see a good discussion of this subject.

As for IT salaries in the Metro NY area, I certainly understand the situation, especially since I'm also in IT. However, I know there are many UPSers in that area that aren't selling their stock. The UPS compensation package does include a pension, which most other IT jobs do not. I'm sure other benefits and stability aren't a 1 to 1 match as well for all those other high salary jobs. We can debate the compensation packages but what each person feels is important will skew the weight of the different components of compensation packages so it's a fruitless debate. (If you haven't done so already, I suggest you look at Computer World's yearly salary survey to see where you stack up. You may be surprised.)

The fact that an individual can now get 50% of the award in cash is a positive for those who want the liquidity. They can now have the cash without the stigma of selling. It will help attract more talent than before since there is more cash to be had. It also allows those who feel the merit increases are not enough to give themselves what they feel they deserve. The 401k option allows people to diversify tax free or if you already max that out, the cash can go into IRAs or other investments for diversification.

I believe the UPS doesn't care if some folks leave as a result of this program. In fact, I bet that's just fine. The people that leave as a result of this are not comfortable with the culture to begin with. If this program flushes them out, then all the better since those that will be left believe in the partnership. UPS' business philosophy is about the long term. People that fit in with that philosophy more than likely look at their personal finances in the same manner. I've heard many times over the years that this policy or that policy will force those with employment options outside of UPS to leave which will leave behind only those without such options. While I agree that those with fewer options are less likely to leave, I disagree that the result will be all those that can leave will do so. This is just another of those sky is falling circumstances. Anyone who stays due to golden handcuffs will do so regardless of this change. They're there due to the pension benefits.

I also appreciate the issue of public vs. private. I'm about half way through my career with UPS so I've got a "substantial" investment in the company but still a long way to retirement. There are ways available to hold the suggested amount of stock but still diversify if so inclined. I agree it ain't the sure thing it used to be.

This program will ensure that managers minimally have a five year investment. That's better than a zero investment that may well result if nothing was done to prevent newer management from selling. Once in the habit of selling, it will be very difficult to stop. This program now will force the five year investment and potentially enoucourage further investment as it breaks the selling dependency.

To me, it's about keeping the management team aligned with ownership for the long haul. It's a move for the long term so that 20 years from now, managers still own the company. As well, it creates a greater sense of urgency to grow the business instead of resting on our laurels. Too many time companies lose their edge and succumb to hungrier competition.