A SINGAPORE STORY - FOR THINKING SINGAPOREANS ONLY

Date: 05/03/2004 09:53:30AM

This is an interesting story to share:

Mr. Tan runs a business selling plastic toys. He hired managers Chan and Dick to help run the company. The production line has five workers: Ah Beng, Ah Seng, Ah Huat, Muthu and Ali.

As the CEO, Mr. Tan pays himself a million dollars a year. His justification is: "Without a good leader, the business will not be successful; and you won't get a good leader if you're unwilling to pay for one." Mr. Tan has never worked in another company before.

Chan had won a government scholarship twenty years ago while Dick is an expatriate from America. Mr. Tan thinks very highly of them and pays them each half-a-million dollars a year.

As an expatriate, Dick also gets housing, transport and relocation allowances amounting to a quarter of a million dollars a year.

The production workers each gets $1,500 a month with $300 going towards a retirement gratuity that the company would match dollar-for-dollar.

The business hasn't been going too well. In fact, business has been downright awful for the last few years. Consumers seemed to prefer the cheaper plastic toys from companies across the street.

Mr. Tan is furious. "These consumers are a bunch of idiots," he said, "don't they know that the companies across the street are not managed by talents like Chan, Dick and myself?"

Mr. Tan has always been deeply impressed by Chan and Dick. Chan has the remarkable ability to use words like "synergy" and "paradigm shift" in every sentence. And Dick? Dick is white.

So Mr. Tan got down to some serious discussions with Chan and Dick. After many hours of brain storming, they decided that they know what's wrong with the company.

"We don't have enough talents," Mr. Tan declared, "we need to hire more scholars and white men." And he did. So now, there's Ang, who was Chan's best friend when they were in RI, and Brad, Dick's brother. They are hired on the same terms as Chan and Dick.

To reward themselves for coming up with this visionary strategy, Mr. Tan gave Chan, Dick and himself a 10% raise.

With the raise and the hiring of two new management staffs, Mr. Tan figured that he had to cut cost. So he laid off Ah Huat, who's about to retire and receive his retirement gratuity from the company.

The remaining four production workers now have to work 12 hours a day to cover for Ah Huat. They didn't get any compensation for this extra work because Mr. Tan told them that this is a difficult time for the company and all workers have to make some personal sacrifices. "Luckily, we now have a world class management team and business will pick up in no time," Mr. Tan proclaimed.

However, business hasn't picked up at all despite having a world class management team. On the contrary, business seems to have worsened quite a bit.

Mr. Tan is now even more furious. He has no doubt that he and his management staffs are world class. So the problem with the company must surely lie with the blue-collar workers like Ah Beng and his gang, who hardly have any paper qualifications and speak dialect and Singlish. But just to be sure, he engaged the services of a management consultancy firm to confirm his belief.

The management consultant cost Mr. Tan an arm and a leg but he identified the problem: "Your labour cost is way too high. Do you know that the average annual wage of your employees is more than $400,000? That's ten times the amount for the companies across the street."

"Ah ha! Just as I thought," Mr. Tan congratulated himself on arriving at the same conclusion as a world class management consultant, "Ah Beng and his gang are overpaid."

So Mr. Tan reduced the salary of his production workers to $1,000 a month and abolished the retirement gratuity scheme.

Sounds familiar?