"After I finally asked a salesman for help, he said they had nothing .. that met any needs. They could check with dealers or order ... How long would that take? Depends. Could be six to eight weeks."
Naturally, it was a car dealer. Naturally, the sale was lost - to a Japanese make. Unnaturally, the dealer was American, and the Olds mobile no-sale experience was repeated (at Pontiac, Ford and Olds again) as a New York Times author tried despairingly to follow his leader and Buy American. British readers will get a powerful scene of deja vu.
The experience is symbolic of the increasingly close resemblance between America's relative economic decline and Britain's. Car dealers used to be the epitome of the super-salesmanship on which the US economy thrived. The relapse raises an oddity that has long troubled British observers. Dealers who successfully sell Japanese cars, like workers who operate Japanese transplants, are no different in nationality. What explains their superior performance?
The answer must lie in management. The chicken-and-egg question (which came first, the macro-economic decline or the inferior micro-managing) can't be asked with a straight face in this context. The evidence of a terrible Time interview with Robert Stempel, the head of General Motors (owner of Olds and Pontiac), implies that the same defensive smugness with which Britain's worst businesses responded to criticism and under-performance has taken hold in what was once America's economic flagship.
Stempel labelled as red herring" the fact that GM's offerings to Japan had the wrong (ie left) handed steering. He was "very proud" of his recalls, because they showed how few of its cars were defective. He blamed the media for customers' perception (misguided, of course) that Japanese cars were "the best product". He'd be happy to exchange pay with any Japanese CEO, he said. Since Stempel's $1.6m is thrice that of Nissan's Yutaka Kume, and his fringe benefits substantially juicier, GM, shareholders should accept the offer.
Stempel and the other industrial chieftains who rode to Japan on President Bush's coat-tails have paid dearly in hostile publicity. Is American opinion right to be enraged by the disparity between the courtiers' corporate results and average reward ($3.4 million, no less)? The critics could be right in principle but irrelevant in practice - unless overpayment encourages under-performance. The link could take various forms. First, there's sheer cost. Tony O'Reilly's top score for 1990 ($75.1 million) equals 9% of H J Heinz's net income, or the proceeds of $939 million of sales - and that's not counting other executives dragged up by the boss's lead. The bulk of O'Reilly's goodies came from stock options, which are not accounted for as costs, but most certainly are. O'Reilly's profit, the difference between it on price and market value, is Heinz's loss.
Shareholders blessed by a 27% annual growth in total returns may think O'Reilly cheap at the price. But when would the price become too high? And who decides? The decision is that of the hero, endorsed by aboard of like-minded (and like-paid) associates. O'Reilly himself graced the board of Alleghany Corporation, which became a byword for overpaid and under-performing executives.
What you pay for is what you get. The payee will tend to follow the course of action that optimises personal rewards. In a system dominated by peer approval, bonuses linked to annual profits, and options geared to the share price, to managers will react accordingly. They will conform to the conventional wisdom, concentrate on short-term financial performance, and attempt to boost the shares. Mergers and acquisitions meet the first two requirements and are thought (wrongly) to fulfil the third. Small wonder that big deals are so wildly, but often woefully popular.
What's discouraged many matter more than what's promoted. The system militates against long-term programmes and imposes absurdly short pay-off periods on investment for organic growth. Though board salaries were comparatively low in the 1960s, when Britain (and, it's now clear, America) missed the bus on which Japan had jumped, the phenomenal rise in US chief executive remuneration is a symptom of conditions akin to those which blighted British development.
Industrial dynamism is unlikely to flow from top-heavy managements, whose privileges and perquisites stem from unbridled power, and who are supported by a similar financial establishment. Their companies will be sustained for a time only by the strengths of the past. In 1960 Britain stilled Germany's real output per capita and doubled Japan's; in 1990 the US still led the world. But since 1960 the US v Japan ratio has fallen from 3.35 to 1.24; the lead over Germany has dropped from 1.62 to 1.34. Even Britain has edged up v the US from 1.50 to 1.43.
That must be a measure of decline in management performance. Yet during the 1980s, with the pay of the US worker stagnating, the pay gap between boardroom and shopfloor widened sharply - not a symptom of economic failure, but a cause. Along with mass lay-offs like those at GM, it vitiates efforts to achieve the collaborative working which is correctly identified as the way of the future. The future used to be the American way. But Stempelism will never make it so again.