Redesigned mip

Discussion in 'UPS Partners' started by spritskr, Mar 15, 2005.

  1. a380

    a380 Guest

    I think that we need to recognize that there are many UPSers that have come from other industries and didn't start by washing package cars in the snow barefoot uphill both ways. These are very intelligent people who contribute to the success of the company because of the skills they have that the typical UPSer doesn't. They came because of a good deal and part of that deal was MIP.

    Mess with MIP too much and these folks will walk. Reality is that loyalty is rented to the highest bidder in the business world.
     
  2. onetoofar

    onetoofar Guest

    From CorpIS:
    " 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."

    I've got to disagree with you there about people 'not being comfortable with the culture'. The problem is the culture, at least from a management perspective, has just been forcibly changed. Before the plan change, I knew the 15 hour days, weekends and travelling would make a positive impact in the bottom line. This impact would be given back to me and every other MIP participant every year. Now my work will still save this company millions a year but what comes back will not reflect my (or anyone's) hard work. It will reflect how 'skillful' a handful of people are at setting estimates. Since we've seen first hand how poorly they did in the 4th quarter of last year, lots of folks are nervous.
    We're still all partners but a dozen or so will get the ultimate & only say in a good portion of our annual pay. It's a big change from everyone pitching in.
     
  3. mipexample

    mipexample Guest

    MIP improvement example Where have I missed the incentive?


    2 unit manager at $ 6,000 per month times 12.5 = $75,000 base salary

    Last year MIP was 2.4 times 2 units = 4.8, plus 1.0 additional incentive for keeping way too many eggs in the UPS basket = 5.8 times $6,000 = $34,800.

    2004 total taxable income = $109,800

    2005
    $6,000 times 2.5 percent raise = $150

    $6000 + $150 = $6,150 month

    12.5 times $6,150 = $76,875 base salary

    2005 MIP target based upon unknown goals is 2.0

    2.0 times 2 units = 4.0, plus 1.0 for keeping way too many eggs in UPS basket = 5.0

    5.0 times $6,150 = $30,750

    Take away deferred possible payment of 40% of MIP - $12,300

    MIP total including deferred payment is $30,750 - $12,300 deferred possible income = $18,450 MIP received in real dollars.

    $76,875 base plus $18,450 MIP = $95,325 taxable income for 2005

    $75,000 base plus $34,800 MIP = $109,800 taxable income for 2004

    2004 income of $109,800 times 87% is $95,526

    2005 income is a 13% reduction

    Even when one considers to deferred possible income for 2005 the total income is $2,175 less than 2004 including the 2.5 % raise

    Grade 18 positions are being eliminated.

    Possibility for promotions is being reduced significantly.

    Grade 16s will assume at least some of the grade 18 responsibilities.

    Benefit cost for part of what I had at no cost a few years ago has increased significantly each year since the improved plan was implemented for management.


    Where have I missed the incentive?

    Work harder, do more, for less?????????????
     
  4. air1

    air1 Guest

    Keep in mind those at the top (maybe not the same indviduals but same mind set) that eliminated the Thrift Plan to "provide us more opportunites to invest."

    It is very hard to believe what senior management says about the MIP changes when they don't walk the talk. Compare your last raise to theirs - any where near the same percentage? What kind of leadership puts themselves first? Even if they had only taken the almost cost of living increase the rest of us got, their actual $ increase would have been more than the average annual salary of the rest of us.
     
  5. I have to admit on one hand I feel I'm part of the reason for this new MIP
    program. I just quit after 10 years with the company, and several of my former
    partners are still my friends. So, I really feel for all of you stuck with the
    "golden handcuffs."

    On the other hand, I am completely baffled at the absolute inability of UPS
    upper mgmt to see how changing the way its management folks are treated is the
    way to fix retention problems.

    I still have yet to sell a single share of what I was awarded. I completely
    believe in the power of ownership. But can forced ownership really be called
    "ownership?"

    Why is it division/district managers treat their supervisors and managers like
    scum? Do they not realize the supervisors and managers in the organization are
    some of the most dedicated and loyal employees in the organization?

    I remember the days of working to convince operators it was better to retain
    new hires for long term goals and total quality than term them at the first
    misload. That initiative of making retention the number one priority came from
    the top. It made sense for the $8.50 per hour workers. Why doesn't it apply to
    the 80k per year sup's and managers?

    Mike Eskew, You don't have to take their money away to keep them. Just thank
    them every once in a while - even publicly. Maybe it will catch on and flow
    down the ranks. Earned money is not a thank you. MIP is earned money, and
    delaying it for 5 years is taking it away with technicalities. Quit promoting
    unethical managers into staff level positions. Promote good people who treat
    their employees right and get long-term gains through training and buy in. Get
    over the idea of accountability being the end all be all. True accountability,
    the kind that works comes from within.

    If you want to save money quit giving away the farm to delivery drivers. They
    have a tough job don't get me wrong, but explain why they should be making more
    than the supervisors who work much harder with even less support.

    For my sake, I'm glad I decided to leave. I couldn't be happier. I have finally
    realized what was meant by "quality of life." (that was promised with the
    center of the future and PAS...) I may not be paid as well, but I am cashing in
    on the skills UPS experience gave me. (by the way, they really are
    marketable.)

    Those of you still in. I wish you the best of luck and I hope to see some
    changes in your favor soon.
     
  6. upscorpis

    upscorpis Guest

    OneTooFar,

    That's a good point you make. I too sting a bit from that. The partnership used to mean if UPS makes a profit, then we all profit. You're quite correct that my generalization may have been too broad. Too clarify my intended meaning, folks that are uncomfortable about being invested that end up leaving are better off elsewhere.

    MIPExample,

    You need to factor in a few other things on the positive side; tax free deferrment into the 401k, gross amount of RSU's growing vs. net, tax deferrment into retirement of the last five years, reduction in A shares on the market will support the price, etc. As for promotions and grade 18s, I hear both sides of that arguement. "UPS is too bloated with upper management" is an oft voiced opinion as well.

    air1,

    I agree with your point. Leaders should lead by example, not by word.

    Is this glass half full or half empty? It's tough to say right now...
     
  7. air1

    air1 Guest

    I didn't mean to imply that Mike Eskew was the only UPS CEO who took more than his share. Previous CEOs (other than Jimmy C) were not any better.

    As to forced ownership, I have never sold any of my stock except for when UPS asked me to and then only the minimum. Our people who sell stock, and I know a few, only do it to supplement their monthly income to make ends meet. They don't really want to but feel they have to.

    We should also not forget what happend to OPL - We had to invest in it too. By the way, the OPL senior management salaries and retirement "packages" are nothing to sneeze either. All while they "run off" the business.

    Maybe someday, with the right leadership, we'll return to the greatness United Parcel Service once was - the envy of many, many businesses for our management, engineering and business ethics and, because of those things, the willingness of our people to do what needed to be done.

    It's no wonder that the IPA and Teamsters don't trust us, we can't trust each other.
     
  8. interested

    interested Guest

    Outstanding discussion, I hope we get some more participation.

    We don't have a lot of trust in each other, I agree. We have long been an environment that has had enormous success doing things one way. We are extremely top-heavy. Communication travels one way, from the top down. Changing that mindset with respect to policies, procedures and even compensation programs, is hard on those of us whom it affects the most. Why? I think because we all want to be a part of those decisions.

    We have proven as an organization that we have the ability to carry the ball. You want how many packages delivered every day? Yeah.. we can do that. You also want us to pick up x number of million packages a day ? Well...why not. we are already dressed in our browns and on the road, sure- we'll get them. We are without peer in our industry when it comes to getting packages moved. Now the business has changed and we are struggling a bit. We have to think out of the box and try and switch things up. So we need to change our gamelan. The frustrating part of this change is that the partnership is not involved in any of the planning. There is virtually no communication throughout the ranks as to what our feedback is on certain monumental decisions that will affect our everyday morale, production and resources. None. I am not just limiting this to management, I mean all partners.

    There is so much knowledge and synergy in our people that goes untapped every day, it is frightening. You have drivers out there who have not missed a day of work in years. You have drivers who have driven for twenty-five years without an accident, almost all drivers are universally loved by their customers -We have thousands that fit this profile-People like that are worth more for what they know, then for what they can do in a day. We have people waiting for years to become full time drivers, lets start moving them into these ranks a lot quicker, start pulling some of the aforementioned experienced drivers, operators etc. off of their jobs and give them some challenging assignments to help IE and management build better routes, systems(PAS)compensation plans, etc. Give us a voice in this business and its decisions. If we don't currently have management people at the district level or higher who know how to tap into the potential synergies and capabilities of their existing people, replace them with capable management who know how to manage potential.

    Instead, we just roll out things like PAS and a restructured MIP and say " hold your people accountable" "Don't get caught up in the negative" "We need to have more buy in from the partnership" If a system cannot differentiate an apartment address, from an APARTMENT BUILDING ADDRESS, Then all the buy in in the world is not going to help. Similarly, If they are going to change our compensation and we are going to receive less for what we do? Do you really think it is just a matter of convincing yourself and some of your colleagues that it is really a good thing, (when it clearly is not)

    That is a direct insult to our intelligence. We know what we do every day. We know what the compensation is, and what it should be. We know what other people do for a living. we know what pressures other careers have and we are aware of the pressures of our career. We know what we should be paid, and when you tell us that we are going to have to maintain the same level of excellence for less money, tell us WHY. Don't try and convince us that this is anything other than a strategic business move to help boost shareholder confidence and defer some compensation. If you come right out and say we need help from the partnership. Here is what we are proposing to do with your compensation. Here is why we are doing this. Do you have any feed back or questions? Can you lend any insight as to how to make this tough transition smoother, more productive etc. for you and your fellow partners?-Thank you for all you do every day for United Parcel Service. We appreciate your support and buy in on this tough demanding transition in our business.

    Whether it is PAS or compensation or a change in start time on the pre-load, get us involved, you will be surprised at how dedicated, competent and willing we are as employees.and shame on you, United Parcel Service, for not recognizing that already. Because the decisions made these last few years clearly define that many employees that are under appreciated, underpaid and underutilized are still willing to tow the line and fight the good fight.

    That wont last forever, Loyalty is a two way street.
     
  9. trickpony1

    trickpony1 Guest

    interested,
    Very well said.
    But the people sitting at the $90,000-$120,000 a year desks in Atlanta aren't gonna have any part of this. Why?, you ask. Because it will threaten their job and they are so much smarter than we are....
     
  10. my2cents

    my2cents Guest

  11. pkgdriver

    pkgdriver Guest

    nice post interested
     
  12. my2cents

    my2cents Guest

    Just as a heads up, the redesigned MIP is discussed in the 1st Q conference call. IMO, worth the 45 minutes or so of listening time.
     
  13. confused

    confused Guest

    MIP stands for Money Invested Poorly. That is what the newly hired sups today think. Here is why. The managers and sups who have recently retired are all millionaires....the reason, their shares of stock split and split many times. How many times has the stock split since the IPO....Once....now the sups that have been promoted since the IPO will never even see a million dollars. But, the board will continue to get rich because they already have millions. Look at insider trading on any financial web site. You will see how a board member will aquire stock on one day and sell the same amount the same day. Thats right , the same day. and they tell everyone u should not sell. That is bull!!!!!!!!
     
  14. fedupwx

    fedupwx Guest

    Every Management level has a base the company would like you to maintain before you sell. For example a FT sup 2 times his yearly salary is the holdings the company would like you to maintain before you sell if you want to invest elsewhere, for a manager 3 times, Division manager 4.5 times.
     
  15. mipexample

    mipexample Guest

    MIP stands for money I might not get at all.

    The bigger question for management employees is; will I get MIP at all?


    Under the previous plan MIP as awarded based on the profit of the company. Many people would equate profit as the overall successs of a company, therefore hard work, effort, dedication, and all the input of management contributed to the overall success of the company. Management was compensated based on the overall success (profit) of the company.

    Now comes the new plan. Not only must one decide weather UPS is a good investment for their MIP; they must consider that they may not even get MIP. No matter how successful (profitable) UPS is there is no guarantee management will get MIP.

    The guidelines are now set up based upon elements that can be manipulated to determine MIP awards, regardless of how successful (profitable) UPS is.

    UPS is currently not making the elements that will be used to determine MIP awards. This means management will not receive the targeted MIP factor of 2.0.

    Will the award be 1.0? Will it be .5? Will it be 0?

    Does it matter if UPS stock is a good investment choice for MIP if you dont receive any?

    How hard will management work to further the overall success (profit) of UPS when the incentive is subject to variable elements that can be changed and manipulated by UPS?

    What is the incentive to work harder? Work harder and you might be compensated for it over the next 5 years?

    Work hard now, well pay you later, maybe, maybe not?

    I cant control the MIP award.

    I can control my efforts.

    I can control my dedication.

    I can control (to some extent) the number of hours I work.

    I can control weather I come to work when I am ill.

    I can control how I invest the money I already have.

    I can control weather I put all of my efforts and resources into UPS or weather I choose to begin putting my efforts and resource into other investments such as my family, real estate investments, other stocks, time off, entertainment and all of the other things management people at UPS have sacrificed or avoided to be a UPS partner and contribute to the overall success of UPS.

    Partnership is a two-way deal. I invest (time, effort, sacrifice, stock dollars) in UPS and UPS rewards me (pay, benefits, MIP).

    When UPS takes away part of the reward it only makes good sense to take away part of my investment.

    When the rest of management realizes the reward has been taken away will UPS continue to be successful?
     
  16. proups

    proups Guest

    Interested: "I don't think it is any secret that UPS salaries are well below industry standards in many of our disciplines."

    If that is the case, why do people stay?
     
  17. pretzel_man

    pretzel_man Guest

    Did you read UPSers.Com for the MIP status?

    Most elements were near target. Are you saying there is nothing management can do to affect those elements?

    If we cannot, maybe we don't deserve MIP. It would no longer be an incentive.

    P-Man
     
  18. proups

    proups Guest

    mipexample: can you control your spelling? Is it "weather" or "whether"? [​IMG]

    I agree with pretzel man - the MIP as I understand it is a performance based plan, not a profit sharing plan. I've heard that the investor community didn't like the old plan, hence the new plan. It gives management the incentive to work on things that are important to UPS - like growing volume.

    Go get a sales lead.
     
  19. tieguy

    tieguy Guest

    "I agree with pretzel man - the MIP as I understand it is a performance based plan, not a profit sharing plan. I've heard that the investor community didn't like the old plan, hence the new plan."

    And hence what many of us don't like about todays investment world. Catering to the fickle invester who will rarely look at a transportation stock as a good investment. I'm really fed up with catering to these idiots. Take the stock back to private and give me my 3 or 4 dollars a share that comes with record profits.
     
  20. interested

    interested Guest

    ProUps-

    Many have left. All present here can point to some real solid management people who have moved on. Brain Drain in a company our size is nothing new. Over the years a very,very rewarding compensation structure was an enormous incentive to stick around. Much of that has changed. What you have to take into consideration is that we are not harmed as much by the those who leave after 15-20 years, they are valuable, but they have also done much to grow this company already. It is the younger generation of management who are a dangerous threat. If you are an educated, full time supervisor who has 7-8 years experience with UPS and you are in your late twenties or early thirties, you have some hard decisions to make. If you fit that profile, and we have thousands that do, are you more valuable to FedEx, DHL or somewhere else in the logistics industry? The bottom line is that whether or not our people who fit the above profile know it, they are extremely marketable.

    I know in the last few years that professional headhunters have begun to really tap into the enormous pool of marketable employees that is UPS management. We have posted here, on the board, the question-All things considered, would you again choose the career path at UPS?

    Many have replied no. The proof is in the pudding. Tie brings up a great point- why this used to be such a solid career...$3-4 bucks a share, every year like clockwork. Those days are long gone...and some of our best young management will be gone soon too.

    We have to change some things...soon.