Daniel Gross follows up an earlier column on dumb corporate cost cutting measures with a collection of items sent in by readers.
The desire to cut costs by saving or recycling paper clips aroused the most incredulity and anger. Former Bear Stearns employee B.B. recalls being given a bag of paper clips on his first day “with the explanation that the firm would never buy paperclips … This was on the direction of [legendary gazillionaire CEO] Ace Greenberg, and the company seemed almost proud of this inane cost-cutting measure.” A former Bank of America investment-banking analyst recalls that the megabank “once told its employees to use paper clips instead of staples because paper clips could be re-used to save money.” According to one correspondent, managers at a data center of a different firm were asked to “keep a listing (on a piece of paper) of each clip that we used, and the reason for the use!”
Ugh. There might even be an LBO signal here. When a corporation is uncreative enough to seek savings by denying employees things like paper clips, it’s probably a good sign that management needs to go. If there’s any underlying value in the company, get rid of the guys eliminating the post-its—and their corporate cars too.
If you’ve got a good story of idiotic cost cutting, send it our way. Tips (at) DealBreaker (dot) com. We won’t tell anyone you told us. More Idiotic Corporate Penny-Pinching Measures [Slate.com]
Floyd Norris writes today about the Los Angeles Times standoff with the Tribune Company, which has demanded layoffs at the paper. Unfortunately, Floyd Norris’s blog is buried behind the Times Select firewall (you know, that weird system in which the Times jams its own signal so that no one can find out what some of its most interesting writers are saying).
Fortunately, Romenesko today provides some choice excerpts. Our favorite is the claim that “Companies that follow [Wall Street's] advice, and still do not produce results, are treated far worse than those that produce results after ignoring Wall Street.”
This strikes us as fitting into the category of probably true. We haven’t seen any studies on it—it’s hard to figure out how to even begin to quantify something like “following Wall Street’s advice—but it makes sense. If a company balks at the Street’s advice and continues to have trouble, well there’s probably still some value left in the company just waiting to be unleashed by better management (ie, management that will listen to Wall Street). If a company follows the Street’s advice and still fails, well you might just have a broken company on your hand.
“Trying to keep Wall Street happy did little for Tony Ridder” [Romenesko]
By the time we arrived on the scene, “conglomeration” was a dirty word and talk of “synergies” was usually treated as nonsensical magical thinking. So reading about the excitement of the days of conglomerates is educational in the sense that the conventional wisdom and standard business model has often gone very, very wrong. Maybe one day people will ask how we all thought we could keep making money through taking companies private, down-sizing and installing star managers.
On LewRockwell.com today, University at Buffalo finance professor Michael S. Rozeff looks back at the age of conglomeration.
Remembering the Conglomerates [LewRockwell.com]
When we were toiling in the corporate world, we began to suspect that the various diversity and anti-harassment training exercises were intentionally designed to be inappropriately funny, daring the trainees to laugh aloud. This makes sense. If trainee could withstand a barrage of hilarious racial and gender stereotypes without cracking a smile, then clearly the diversity training had worked. All normal human humor functions had been successfully suppressed.
We guess things haven’t changed. Today a reader sent along some fantastic quotes* from a diversity training course at Morgan Stanley.
[Morgan Stanley diversity jokes after the jump.]
*We haven’t seen the materials, so we have no idea if they are really this funny. But we hope so.
Jeff Matthews describes his encounter in his local Greek diner lunch spot with a hospital worker looking for investment advice. Since we find ourselves in similiar situations, we really like his response: play psychologist.
She: “Which fund should I buy?”
Me: “Which fund do you want to buy?”
She: “I’m not sure. Which country should I buy?”
Me: “Which country do you want to buy?”
In their next encounter, the hospital worker informs Jeff she’s selling everything. His natural response: does this mean it’s time to buy?
The last time we got asked for investment advice was over brunch at the new West Village spot Ditch Plains. It went like this.
Her: What should I be buying?
DB: Try the lobster roll.
Her: That’s not what I meant.
DB: If you’re not hungry, then just go with the shrimp salad.
Her: Are you always like this?
DB: Usually. At least until we get our first bloody mary. Panic at the Greek Diner [Jeff MatthewsIsNotMakingThisUp]