People Over Profit

What is a CEO's "sacrifice" really worth? Nothing. Let me explain. Sure, a CEO makes millions of dollars in salary and other perks. But here's the thing; you have to consider how many people work for the company. The CEO's salary, while large, is really just a drop in the bucket when it comes to overall revenues and profits. But most people don't understand this because they can't read a balance sheet and understand it. Let's take profits first. A business' purpose is NOT to employ people. That has to be made clear. It's PRIMARY AND ONLY function is to make a profit for its shareholders. Period. End of story. BUT, companies DO employ people, of course. But it's a byproduct of making a... PROFIT. Therefore, a company MUST put profits before people, always, and in EVERY SINGLE situation. If the company is profitable, it can hire people to help meet its needs. If the company grows, it can hire more people. If it falters... It needs less people, and the only thing that's practical to do to save the company and save jobs is to...FIRE PEOPLE. This is usually done, although most people don't know this, AFTER other cost cutting measures have already been made such as becoming more efficient, increasing prices where they can, or negotiating down the cost of raw materials and other costs of doing business. Trimming staff not only makes sense, it's the right thing to do. Granted, you might ask the fired employee, and he will have a different opinion. But he's not considering the needs of the business. He's only considering his own needs. If the business cannot be profitable and take cost cutting measures, including trimming staff, eventually the employee will be fired anyway because the company cannot print money to keep him employed. It can only make a PROFIT to do that. Now, going back to the salary part of the discussion. Let's take Walmart and its CEO, Doug McMillon. He earns roughly $26.7 million a year. Walmart has 2.1 million employees. If Doug was generous and did what Haruka did, and slashed his salary by 60%, and let's say he gave it to each of the employees—now granted, this is a bit outside the scope and point of your post, but I think it's important to illustrate what a CEOs salary really looks like in dollars and cents and what it's overall worth is. That's $16,020,000. Each employee would receive a one-time check for $7.63. If he was feeling really generous and said, "Hey, I've got tens of millions already in the bank," and gave up his entire paycheck, each employee would get $12.71. This isn't going to change lives. It isn't going to save jobs. It isn't going to fix underlying financial problems within the company. It's not even going to touch debt service, and again, the actual cost savings of the slashed salary really doesn't do anything at all. It's noble. Sure. But does it do anything? Not at all. It just makes the employees feel good. But that doesn't do anyone any good ultimately. I'm not discounting what JAL's CEO did. It was noble. But it also isn't practical for most companies. In other words, it's not scalable. All I am doing here is pointing out certain things that some people get confused with, such as...what the purpose of a company even is. Again. It's not to hire people, and profits HAVE to be put first, because the only way a company exists is by being profitable. The only way anyone with deep pockets will invest in a company, and invest in any expansion efforts, is if there will be a return on that investment. There's no other reason to invest. I'm not saying the CEO did anything wrong. Good for him. But if anyone thinks this is putting the employees first, being a guy who understands business, it didn't do anything at all for the employees, and it didn't do anything significant for the company either. Did he do other things to shore up the finances? I am sure he did. Did his sacrifice look good? Sure. Was it noble? Yes. As a shareholder in a business, I hire a CEO for one thing and one thing only. To run my company and make me money. I pay him very well for that for a very good reason, and every employee under him should be happy that 1) he is being paid well and 2) that the investors have enough confidence in his abilities to BE paid that well because, if he does his job and does it right... EVERYONE will make more money. Including the employees.

Haruka is setting a fine example for his employees that he cares about his employees enough to take a pay cut instead of dismissing employees so he can stay rich.

Well Japan has always been forward-thinking when it comes to their people.

Forbes says it's not too unusual. This article is two years old. I'll agree it's not the norm here, or anywhere else on the planet, but it's not unique to this CEO or Japan. It's a good move for companies in trouble. I wish more companies did this.

He is an exceptional CEO. There aren't any CEOs now these day at least in India. In India CEOs cheat the employees and show savings for the company.

Aye. Noble indeed. But noble doesn't put food on the table Profit does

That is a good example for other CEOs to follow May not be much but it helps

In term of the board of directors' perspective, he will not be liked and they will likely to get rid of him in the first opportunity.

He blessed his workers.

Never here. They have even asked employees to take a cut in pay and then gave the ceo's a bonus. The employees should have got the bonus for making the sacrifice.

A country that understands people count and should come first,