Fairness, or self-destruction? A snapshot from Kodak's good years

I would like to expand on a June column by Managing Editor Frank Miele entitled, “Searching for fairness in all the wrong places.”  

Mr. Miele tells a story of how the Consumer Financial Protection Bureau (CFPB) provided raises to those that received less than “superior” performance appraisals equal to the actual superior performers because of concerns for racial discrimination, fairness and equality.  

He points out that more than two-thirds of all Bureau employees were rated superior. He plausibly attributes this to a socialistic ideology and warns that such a focus will inevitably destroy any attempt to build a performance-based culture. I agree. Such results have been observed countless times and in many public and private organizations and are often studied in business schools particularly when on the topic of monopolies. Monopolies are largely free from competition. As a result, management is free to set up an evaluation system free from competition where the majority can be judged to be superior. All of this may sound nice and fair, but it often leads to expensive mediocre performance.

I know of which I speak, as I worked 32 years for Eastman Kodak Co. During the first half of my career, Kodak was an American monopoly. It was a safe place to work. During these good times, most were judged superior and most employees within classification received the same raises and annual bonuses. As a manager, I can say that performance appraisal time was mostly a conflict-free happy event with the exception of the complaints from the high performers who were working hard.  

As a company, we provided quality products at a fair price. But revenue growth could be guaranteed by simply raising the price of a box of Kodacolor by a nickel each year. As most everyone knows, Kodak is now near the end of its existence. The primary reason is technological substitution to the new world of digital photography and the integration of the camera into cell phones. Kodak was never positioned to become a communications company. However we had boundless expertise as a chemical company which could have provided for a bright future.

So what happened? I will leave the full analysis to the Harvard Business School. But I have often felt that as a monopoly, our socialized ideological performance appraisal system that was designed to deliver equality, fairness, and loyalty, also produced a pervasive and fatal level of complacency, loss of a real understanding of the marketplace, and the inability to rapidly change.  

An attempt by the Consumer Financial Protection Bureau to be fair can be judged to be noble. Yet at the same time, the CFPB is a federal monopoly, and I am left to wonder about the probability of the unintended consequences.

Ransom is a part-time resident of Bigfork.