October 8, 2020

Disclaimer-I am not stating anybody’s opinion other than my own in this column. This is not an ECA position. It is a John Bly opinion that I hope you find provocative.

This is not a political Soapbox. I just found the decision by Southwest Airlines to be so refreshing, I had to talk about it. As we all know, everyone has been impacted by Covid-arguably, none more severely than the airline carriers. Part of what has been on the negotiating table between the Dems and GOP, has been another stimulus package that would have had major support to those airline carriers. For whatever reason, the two parties have not been able to get the stimulus package out. So, the airline companies, who have been publicly telling us that dire decisions are about to be made, have to act.

Both United Airlines and American Airlines warned over the summer that they would start furloughing thousands of workers on October 1 if that date passed without an extension of the federal aid to airlines that the government approved in April. That date has passed. No extension of federal aid to airlines has happened.

Now, you might support the idea of another airline aid package, and you might not.

But at Southwest, which lost $17 million each day during the third quarter, when revenue dropped 70 percent, CEO Gary Kelly did something a bit different. To read the article on what Gary Kelly proposed instead of layoffs and furloughs, click on the link here—

This week, Kelly recorded a video for employees in which he said Southwest will continue its streak of not having had layoffs or furloughs for its entire corporate history, at least until the end of the year.

After that, however, while Kelly would of course welcome federal aid, he said he’s no longer counting on the government. Instead, he wants Southwest to cut its own corners.

He’s starting with himself: Kelly says he’ll go without a salary until the end of 2021, and that other senior executives will take a 20 percent pay cut during that time.

Other non-union employees will see a pay cut of 10 percent, starting on January 1.

As a result, Kelly promised, there would be no layoffs through the end of 2021, for any non-union employees — and their salaries will “snap back” — meaning regain the 10 percent pay cut — after one year.

Now, comes the sticky point: Kelly said he’ll also be asking unions to match the pay cuts.

“My goal has been, and it remains, no furloughs,” Kelly said in the video. “If we fail to reach agreement on reasonable concessions quickly, that will have to be the last resort.”

Making this announcement, and basically putting the ball in the unions’ court, is an interesting move. Both of the unions representing Southwest Airlines flight attendants and pilots poured cold water on the idea of voluntary cuts.

The flight attendants union sent a statement saying that it had “made it clear to the company in previous conversations that our members are not interested in making concessions to a contract that took decades to obtain.”

And, the union representing pilots told The Wall Street Journal it had agreed to hold discussions with the company, but also told members in a letter: “Agreeing to discussions is very different than agreeing to concessions.”

So, what happens next? I guess it’s likely one of three things.

First, if the unions agree to the cuts, there are no layoffs, and Kelly keeps Southwest’s streak going.

Second, if the unions won’t agree to the cuts, Kelly moves ahead with furloughs — but he’s basically put the onus on the unions for the losses.

Finally, if somehow Washington does come to the rescue with a stimulus package after all, regardless of what the unions do, then Kelly is off the hook again–as the whole issue becomes moot, at least for now.

I’ve been wondering since the start of the pandemic which is the smarter course for companies facing temporary tough times–cut staff or ask everyone to take a pay cut to save jobs.

I think it’s one of the toughest decisions any business owner has to face, especially now. This hits pretty darn close to home as Mary and I have taken pay cuts rather than cut our job altogether and hope we come back to the ECA sometime in the future. We are very thankful to all of you who have responded to our “ASK” and helped out the ECA during these tough times where we have not been able to hold paying events. You all are the BEST!

Back to leadership strategies- What is the right way to do things?

Altruistically, it seems pay cuts might be best, but that happens to fly in the face of advice that Harvard Business School professor Christopher Stanton and some of his colleagues gave a few years ago. They say lay people off instead of cutting salaries; otherwise you risk your top performers moving on, leaving you with a demoralized workforce that sticks around only because they can’t get better offers elsewhere.

Of course, these aren’t normal times. So, if those are the normal rules, maybe they don’t apply.

So how do you feel about the two strategies? One is to have massive layoffs/furloughs, and the other is to ask for pay cuts but don’t ask your employees to take a pay cut without the top “brass” taking a pay cut as well.

I personally had to do this when I owned Kirkwood Bly back in the day. My experience is that when you take the pay cut in order to save someone’s job, that breeds one heckuva lot more loyalty than laying them off. What I totally disagree with is the union’s response that seems to say, “we are not going to accept any concessions”. That makes no sense to me. It is clear to me, that the CEO at Southwest cares more about those employee jobs than the unions do that represent them.

There you have it. An opinion piece that is mine, not the ECA’s. I do not pretend to speak for all of the ECA members with this Soapbox. Just speaking for me and I hope you find this provocative and you can examine your own firm and ask yourself what would you do?

That’s All Folks!

John Bly

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SUMMARY OF WHAT AND WHO ECA Endorses!!!!

Cotati: ECA Endorses Ben Ford, Laura Sparks, Susan Harvey

Petaluma: ECA Endorses Kathy Miller, and Mike Healy

Rohnert Park: ECA Endorses Jake Mackenzie

Sonoma: ECA did not endorse any candidate in Sonoma.

Sebastopol: ECA Endorses Diana Rich, and Evert Fernandez

Santa Rosa: ECA Endorses Jack Tibbetts, Chris Rogers, Jorge Inocencio, and Eric Christensen

Windsor: ECA Endorses Dominic Foppoli for Mayor

Healdsburg: ECA Endorses David Hagele, Ariel Kelly, and David Jones

Cloverdale: ECA did not endorse any candidate in Cloverdale.

State Ballot Measures:

ECA voted to OPPOSE California Ballot Measure Prop 15

Local Ballot Measures:

ECA voted to ENDORSE Sonoma County Measure DD

ECA voted to OPPOSE Sonoma County Measure O, County of Sonoma, Mental Health, Addiction and Homeless Services Measure Transactions and Use Tax Ordinance

ECA voted to OPPOSE City of Santa Rosa’s Measure Q, City of Santa Rosa, Sales Tax Extension

ECA voted to take no position on any other State or Local Ballot Measures

Bits and Pieces:

The website for Measure DD has recently been revised. It is up and running and we would appreciate you visiting the site, endorsing the Measure, and sharing the messaging on social media. www.gosonomaact.com

Sign locations: The Yes on DD Campaign, needs sign locations to mount “Yes on DD, Keep Us Moving” on private property. Specifically, frontages along Highway 101, Highway 12, and Lakeville Highway are desired. I know some of you have property along these roads. If you contact me, I will give you the information on where the signs are now. There are 4’x8’ signs available and 3’x5’ signs available. We did not make any small front yard signs. All signs are currently stored at Operating Engineers Offices in Rohnert Park. We ask that you pick up the signs, let me know how many you picked up, and where your sign locations are that you are mounting them at. If you have no means to pick the signs up and mount them, I can make arrangements to do that for you. Please help us help you!!

So far, I have heard from Ghilotti Brothers, Ghilotti Construction, Mark Soiland, Aaron Sykes, and Erik Fowler who have provided sign locations. We would like to hear from some others!!

Funding: The Campaign could use some funding. We have commitments or checks in hand from the ECA, Ghilotti Construction, Vulcan/Shamrock, BoDean, BKF, Operating Engineers Local 3, Ghilotti Brothers, Soiland Company, Inc., and the Sonoma County Alliance.

We have endorsements from many folks including, but not limited to: The ECA, the Sonoma County Alliance, the Operating Engineers Local 3, the Sonoma County Bicycle Coalition, Friends of Smart, the Petaluma Chamber Advocacy Committee, and the Press Democrat Editorial Board (their article is included here–)

This Measure is such a big help to our ECA members and working families. Please take the time to read up on the Measure on the website www.gosonomaact.com and help “Keep Us Moving”!