If you see how Hermes Group, an Otto owned logistics company, (sub-)subcontractors have to handle their daily work load at (often below) minimum wage pay, often with their private cars, it's hard to believe he's that serious about running a morally superior business for any other reason than getting good PR.
DHL is not golden either but Hermes is just bad in every aspect. As a private customer in Germany I would try to avoid getting stuff shipped to me through Hermes by all means possible, since you never know who delivers your stuff (high fluctuation of sub-sub contractors) the delivery experience ranges from unacceptable to slightly above sub-par.
I agree. I think, today's Otto Group is not morally superior to Amazon's business at all, at least judged by their Hermes business. At least, I can not see any viable differences.
What totally pisses me off is, the aura of "charity" that Otto is surrounding around himself. He also got a high German medal (the so called "Große Verdienstkreuz mit Stern") for his charities. With examples like these, German high medals become the same value as the "Nobel Peace Prize" that is given to some of the worst persons that have lived.
I now understand, why some people strictly refuse to be dishonored by such prizes.
It's right there with the "trickle-down" myth. The whole idea that that CSR[1] somehow frees companies from paying their share in social taxes and exempts them from regulations[2]; that the government controlled social sector and welfare could be privatized (at least in Germany there's something left) and social taxes and regulations could be replaced by voluntary CSR measures. It might work for a few PR-exploitable areas, but not everything yields a ROI high enough to please the investors.
If a company want's to do something good they should show it first through their products, trough the resources they are made with and how well they treat their employees.[3]
I do not know, who ever came up with the idea, that voluntary CSR could replace social taxes and regulations, but in my opinion, that is nothing else as neo-capitalistic bullshit, again!
Those that believe in it should go to the worst areas of England and into the slums of the US and see what the results are. England once was one of the wealthiest and best to live in countries of the world. Now, after Thatcher, it is just a hollow carcass, cankered by neo-capitalism. What is left is the reign of the bankers, leaving some tips on the desk for the underdogs.
Thatcher was highly regarded as role model how profitable it is to go for more privatization. But the result is, that today the UK is in worse state as it was before Thatcher.
It was profitable of course! But not for the 99% of the people.
I'm no fan of Margaret Thatcher, but the UK economy in the 1970's was a complete disaster - much, much worse than it is today.
For example a combination of very high inflation (above 15% pa for the 4 years between 1974 and 1977[1]) combined with huge strikes by unions led to incidents like the "three day week"[2] (where the conservative UK government rationed electricity to businesses: they could only use it 3 days per week) and the "Winter of Discontent"[3] (where the Labour government failed to reach a wage control agreement with unions, leading to more strikes and the Thatcher government).
Official unemployment figures throughout the 1970's look much better than today (eg, 5-6% unemployment rather than ~7.5% now), but that doesn't take into account the fact that many were not being paid because of strike action, and also that the high inflation meant people were chronically underpaid (hence the strikes).
It's not at all clear to me that it was Thatcher's amazing economic policies that turned the economy around rather than the boom years of North Sea oil.
Even if Thatcher's policies did stimulate the economy at the time, from where we're sitting now, what is clear is that that stimulus was not sustainable, and that all that privatisation and the Big Bang did was borrow from the future to splash the cash in the then-present.
That is exactly what I wanted to point out. Oftentimes such privatization is buying short time benefits from the future. In my opinion, Britain has sold to much of its assets and is carrying a huge burden today.
Saying that without also acknowledging the problems of the 1970's is just as bad as saying "the 1980's were great for Britain - look how profitable companies became".
Many things Thatcher did were terrible, but at the same time (for example) it's difficult to argue that a national government should be in the business of running road transport for the country[1]. There's a reasonable argument that some utilities work best in state ownership in some cases, but many of the other things that were run by the government prior to Thatcher were complete disasters.
I also don't want to say that everything was good before Thatcher or that a socialistic approach is always better or even good. But what I wanted to say, that many of the long term results of Thatcherism are hurting the country till today, even when it was brought out of economic decline.
I think, that neither socialism nor pure thinking that capitalism and market will "just make it all right" work in the long run.
The results of "market makes it alright" are visible in the sweat shops of the 3rd world countries. In the western countries we have a long tradition of market regulation and that is our luck -- but it seems we are running out of luck.
That was my recollection, but looking at plots of real GDP per capita and debt/GDP, I'm not seeing any substantive changes associated with the Thatcher years. Is there any metric where it pops?
It looks like under Thatcher got inflation under control, unemployment rose, then fell (similar to the US during the same time period) and the economy had a run of growth from '81 to '90 that peaked near 5%.
Not too shabby when you look at the 10 years prior when inflation was 25% and the economy shrank from '74-76.
Britain was regarded as a "sick man of Europe" before Thatcher took office.
1970-1979, unemployment was mostly below 5%. It was about 7% after it "fell" post-Thatcher, when it started rising again in 1991. It then fell again, finally getting back to pre-Thatcher levels only sometime post 2000 - where it stayed until the 2009 crash.
"[T]he economy had a run of growth from '81 to '90 that peaked near 5%.
"Not too shabby when you look at the 10 years prior when inflation was 25% and the economy shrank from '74-76."
That's pretty cherrypicky. Let's get a slightly broader view:
The economy shrank from '74-'76; it also shrank '79-'81 and '90-'91. The years '71-'80 peaked in '73 at over 7% growth (for which the '74-'76 slump may well have been a correction). I'm not sure I'd call it shabby, but I'm not sure it's great, especially with the high unemployment rate.
'Britain was regarded as a "sick man of Europe" before Thatcher took office.'
I'm aware of the perception, and the shifts therein. I was curious as to the accuracy of it.
I don't think, that such figures as economic growth and inflation rate are the only and best methods to evaluate the results of a specific politic.
What is the impact on the people and the state in general? Which factors are also important in this time.
The thing is, that economic bad times change with better times -- even with no change at all in politics. To consider every time a success of the leading party is often times just statistical brainwashing.
The Germans also had a bigger raise in economy with the opposite politics.
Also look how the long term results are, since the Thatcherian politics are still followed by the successors. The privatization of many areas like railway and water services resulted in worse quality of service. Also the UK today has nearly killed of all its industry base. Instead they have only left their banks, so they are largely susceptible now to blackmail of this sector, that is the reason why the banking sector can not be reorganized in Europe, since it is blocked by the veto of the British.
What is left is a poor leftover of capitalism.
Of course it is white-washed by statistical figures that always skip the negatives, since the advocates of unregulated capitalism want to prove their point.
Henry Kissenger, for one, was a straight-up war criminal. “Worst persons who have lived” doesn’t have a very precise definition though, so I’ll pass on judging that one.
Perhaps not in the "worst person that have lived" category; but many have said Obama was awarded the prize almost entirely on the merit of campaign promises he has since failed to enact.
All of the leaders of countries involved in any kind of war during their ruling would certainly meet the criteria. If Yaser Arafat and Barack Obama deserved the Nobel Peace Prize, I guess now it's time for Vladimir Putin to make the list complete?
Really? That's all the criteria for "worst persons to have ever lived"? That's a pretty low bar and seems like it would qualify pretty much every head of state ever.
In contrast, I know a couple of people that work for Otto directly (i.e. not for Otto owned companies like Hermes or MyToys) and their work environments are fantastic. I also have friends in other big companies like Unilever, Mondelēz (former Kraft), and more, and based on what I am told, Otto offers the best working conditions.
Logistics companies are currently in a hard and cut throat market, and the only place where you can order and be kinda assured that the workers working conditions are o.k. is, I think, Deutsche Post. Doesn't make it right, but as explained above, some of Otto's other endeavours do indeed excel with very good working conditions.
The working conditions of Deutsche Post are changing too. The base personal still is fairing very well, I think, but the parcel department DHL is more and more also working with sub-contractors. A similar model as Hermes is doing. But it must be said, that Hermes was one of those that started this race. So, it is legitimate I think to say, that DHL reacted on the move of Hermes, since the big companies are demanding the lowest prices and Hermes of course is ahead with its model against a Deutsche Post with guaranteed jobs, relatively high salaries and high costs for pensions.
Fully agree with you. Every time I see a Hermes notice on my door I have immediate nightmares where the package might have landed.
A few weeks ago, after asking Hermes to deliver the package to a local Hermes station, it took a lot of discussion with the guy there trying to convince him to go through the packages. With him stating it wasn't delivered, while Hermes confirmed me it was there.
To put it shortly, the package was there and this is a common occurrence with Hermes deliveries.
If you can control which company is handling your deliveries, never ever use Hermes besides sending stuff back to Amazon.
This is true of a lot of firms. Large companies like to be pillars of the business community, but push their problems to their suppliers. It's not just Otto.
The other challenge is it's hard to change a paternalistic culture where "Dad" is looking out for everyone. It's hard to make change happen, and hard to get people to double down during a crisis. The lethargy at these cultures is palpable.
That is right. It seems to me a large trend today, to install this "chain of irresponsibility" in many companies. Because they can save some money and say it is not their fault, when somebody criticizes.
But since it seems to me, that Hermes was one of the first in the Germany based parcel delivery businesses to use this concept, they have no excuse. What kind of excuse is it anyway to say "the others are doing it too!". Tell that in a courtroom after a murder!
It is the same game, btw. that western companies play in 3rd world companies. They do not open the sweat shops themselves, but work with contractors or sub-contractors or even sub-sub-contractors. And when a sweat shop burns down, to many workers kill themselves (all things that already happen(ed)) or something else happens -- they know about nothing and are horrified by the "bad behavior" of their contractor that they would "never imagine"!
Hermes Logistics is but ONE of Otto Group's +100 companies. HL isn't even a mainstay of the OG portfolio as they were only purchased a few years ago. Judge not, the whole bushel because of one bad apple.
Yes. It's always funny to see people clamour to minimum wages. Eg they express costs in terms of multiples of minimum wage. Or celebrate raising the minimum wage.
Hong Kong recently raised the minimum wage from 0 to a couple of dollars. (Ie introduced a new one.) Poor People didn't suddenly earn more money.
What isn't mentioned in that article is that two other high profile German mail order companies ("Quelle" and "Neckermann") declared bankruptcy over the last couple of years and were mostly liquidated, because their business models had become unsustainable. Otto so far is the last of those former giants standing and probably profiting from the death of its direct competition.
An acquaintance of mine actually works for Otto and he told me several things. First of all, in the heads of many people at that company the catalogue is still the main driver of revenue. Online is more or less an afterthought. This is also reflected in their average customer who is older and less educated than the average Amazon customer. Secondly, their IT is ancient by Silicon Valley standards. Orders, for instance, are allegedly only processed once at night by batch job, because their infrastructure doesn't support anything else.
All in all, my money is on Amazon and Zalando (basically an Amazon clone supported by the infamous Samwer brothers) who will soon run circles around Otto if they don't catch up fast which isn't an easy thing to do with a slow behemoth of a company like that.
I ordered recently a chair from Otto and was mostly surprised that I couldn't use a credit card. Instead they send an invoice a few days after delivery.
Michael Otto’s family has been as omnipresent in German
postwar retail as Wal-Mart, Sears and Target have in the
U.S. So what does this 70-year-old patriarch of this $18
billion clan most want to talk about? A factory in
Bangladesh.
With gusto he describes how he and Nobel Peace Prize-
winner Muhammad Yunus hatched a plan to build a humane
clothing factory, where all profits would go back into the
community for schools and hospitals. At best, the Otto
Group would recoup its initial investment. Immediately
they faced red tape. Electricity would take five years.
Officials wanted bribes. Otto refused to base a social
business on a corrupt footing and walked away. “It’s
unbelievable,” says Otto, pounding on his wooden desk in
his corner office in Hamburg, Germany. “You would think
the government must be happy somebody is building such a
company and leaving the money in the country.”
...
How? I'm corrupt, and their are scavengers rummaging through the alley that runs behind the office. How do I leverage this poverty to make some sweet green? I've watched them dig through the trash, and they don't have anything, and they are just collecting bottles and cans for recycling. How do I profit from this?
Payday lending and rent-to-own are two legal, and rather corrupt* ways to scam money from poor people.
* In general these businesses do not make their lives better; they're worse off than if they hadn't done business with them in the first place. In general ... ymmv
So you're saying if someone need $100 right now and has terrible credit, that's it's better that they can't get the $100 at all, rather than pay a high interest rate?
That's not really the problem, though. The issue comes when those loans can be rolled over, and when the borrower ends up with multiple stacked payday loans, and can't make any headway into the capital because an increasingly large proportion of their income is taken up by interest payments. It's literally usury, and close to loan-sharking.
No I understand that, but the point remains, if you got rid of payday loans, you'd leave a lot of people with no options. It's not like they can walk into a bank and get a line of credit.
Assuming that they are poor though otherwise functional (capable of work), then in order to make money from them you take advantage of them, knowing that poor people desperate for money to support their families will put up with more shit.
Have a "recycling" company and need somebody to man one of the electronics burning pits? Get one of those poor guys in they alley to do it. What are his other options?
You may need to bribe others to get away with this, but if those people are also relatively poor, the bribes should be affordable.
My preferred way to make money from poverty is that tiny investments can produce huge returns. There are also high search costs.
If you can find poor people who are really smart and haven't been permanently damaged by their experience (i.e. internalized failure, still believe success is possible, etc.), you can find some really amazing employees, partners, etc. People for whom "find a place to stay in California for a few weeks while looking for a job" is basically impossible.
Oh, my argument is that corruption (by other people) causes innocent/good people to be poor, and then other people who are self-interested (at least) and potentially altruistic can help those poor people.
Although generally my preferred form of helping would involve the corrupt people and some rope; much more efficient.
I think the Chinese govt. is roughly on the same page as you re rope, though I don't know how much of that is actually just a weapon to be wielded against opponents. I wonder how well that's been working at reducing corruption.
Unless it's all a shame, a lot of what the central Chinese government does seems great for China and neutral to good for everyone in the world. Most of the stupidity in China seems to come from provincial or local governments.
Perhaps, but you are assuming their labor is worth more than a trivial amount in the first place. If it was, then they wouldn't be unemployed or poor to begin with. And regardless, that has little to do with corruption. It's just underpaying an employee.
I wonder how much of Otto's benevolence is being played up in the article (discouraging weekend working, tolerance of gigantic strategic failures). If he truly does what he's saying, it sounds like a very pleasant and productive place to work.
I do not agree with Otto's benevolence. I think it is just show. When you see what he is doing with his Hermes business, he is not benevolent at all but throws many people even deeper into despair.
There was also a documentary about his life-ruining business but the big "benefactor" just found covering slogans to disguise what it is really about: To rip people off. When his other businesses work the same, than it is a big benevolence show. Of course the German government bought the show (why not, our politicians are of the same kind!).
You cannot compare Hermes with the rest of the group. Hermes' working conditions are a result of the logistic market. And that is quite different from the conditions you find in retail. I worked for Otto in Hamburg and i can say that the benelovence is not just show.
I also strongly disagree with the (white-washing) statement, that the working conditions at Hermes are purely a result of the logistic market!
There are other logistic companies that still have far better working conditions. So it is possible.
The whole construction of Hermes is made this way, that the conditions of the workers are bad and Hermes itself can wash their hands of it.
Even the small companies in between this "chain of irresponsibility" are complaining of bad conditions and many go bankrupt for Otto's billions.
I did not say that Otto is innocent in this case. Most of the bad press is a result of Hermes' overdependence of contractors, who often have contractors themselves. Of course, each link in the chain of contractors is obligated to make profit from the already low shipping price. DHL has this problem too (see the small "On behalf of" at the logo). Even though, DHL has another history (Deutsche Post) and therefore some advantages. The logistic companies are working on this. As a result you find more and more pickup shops. It is even discussed to make door-to-door delivery a premium service, so less delivery wo/men are needed and prices for direct shipping can be raised. The standard service will then be to pickup shops or automated packet stations only. Of course, this can be prevented if customers would accept higher shippings costs...
My critics of this system goes just in this direction. The construction is on purpose in a way, that responsibility is disconnected from Hermes and the pressure is made so that the contractors themselves are forced to create bad working conditions.
There are also contractors that admitted that they had to cheat the tax system to stay afloat. Many have gone bankrupt and the people involved are often left without social security. That's all inside the "System Hermes".
Hermes working conditions might not be the result of the market dynamics itself but you cannot put the blame on the Otto Group either. Hermes was a wholly separate company that was purchased by the Otto Group. It's not like OG bought the company and came in and put in place all these conditions.
Moral of the story is - people like their goods to be cheap, quickly delivered, and convenient to order. Amazon encompasses all of that and it seems that Otto's companies do not. I applaud his effort to put people ahead of profits, but unless he changes his business model amazon will continue to eclipse his empire.
Counterpoint: Perhaps government should enact regulation to lift the floor to prevent a race to the bottom. Amazon warehouses shouldn't become the sweatshops of tomorrow.
Governments exist to protect their citizens, not their businesses.
>>Governments exist to protect their citizens, not their businesses.
I totally agree. The problem is that many people defend businesses because, they say, those businesses provide people with jobs. Following this line of thinking, they are willing to completely ignore the shitty practices of said businesses, because in their eyes, jobs > *.
As mentioned in the article, it isn't really. There were mass protests by amazon employees in Germany last year. I don't know if anything really changed since then, but I kind of doubt it.
That would work in the short term, but in the long term they are just going to get rid of the employees entirely with robots. Which is of course, far worse, and already widely done in other industries, with no one protesting them.
Convenience here really is the main reason. On otto you still mostly have to use categories, on amazon you have an exceptional search. You have third party sellers on amazon and a streamlined buying process.
Different retailers target different sectors of the market and those sectors have varying levels of profit and growth. To me, Amazon seems to be aiming at the lower end, i.e. they focus on price rather than ethics, so they experience high growth in sales and relatively low profits.
I don't think everyone should copy them. It's like telling Apple to copy Acer or Samsung.
It's an unfortunate but common practice I've noticed: they don't want repetition, or anything close to it, so they jump between synonyms -- or, sadly, what the journalist thinks is a synonym. But since a lot of synonyms aren't perfect (or just aren't synonyms), you can't tell what they mean, and this is a prime example of it.
I see this same phenomenon in software/API documentation too, where you can't tell what is a necessary term to use, and what's an arbitrary label. Most recent case was a vim doc for how to record macros, and gave an example starting with "qq", which will store the macro into the letter q. But you always type q to start the macro, so using an example where the macro also is called 'q' just confuses things. They should have used an example like "qa", where it's clear that q is for all macros, and the second char is where it gets store. (Yes, you can un-ring that bell with further clarification, but it's still a bad example.)
I edited the story. We had to write it this way bc Otto reports a fiscal year that ends in February. Amazon's fiscal year is the calendar year. So it wasn't exact comparison and we had to fudge.
Wasn't 2010 basically the "mission accomplished" point for the recession where the recovery was officially declared to have begun? Maybe they're just assuming everybody knows that.
Did the guy (Otto) pay for front-cover or did Forbes randomly picked up a successful billionaire who made up himself in the period of the German economic miracle?
I mean, there's nothing attractive to this story: Amazon is bad on workers and Otto is good, won't get you far. Especially in the Anglo-saxon world.
Fascinating story of the growth of a giant. I wish they hadn't glossed over the early growth of the company and how it grew during the Cold War and the divide in Europe. Anyone know any more about that part?
There's such a strong negative connotation to "burning out" in the article. If an employee puts in a solid 2-3 years and delivers great results for a company, "burns out", and then moves on to a new role or company, is that really that bad?
The company (in this case, Amazon) got great results from its employee, the employee had a good experience (and can leverage it to get a promotion, internally or externally).
I guess it depends on what employees are looking for in their career - to be the best they can be, or live a laid back lifestyle.
edit agree with the comments... this is a too simplified black/white comment. completely agree that finding the right balance between work/non-work on an individual basis is important.
"I guess it depends on what employees are looking for in their career - to be the best they can be, or live a laid back lifestyle."
You're not being the best when you burn out. You're killing yourself and your productivity with it. We have decades of research concluding that productivity falls when you're overworked.
"The company (in this case, Amazon) got great results from its employee, the employee had a good experience"
The employee does not have a good experience when they're working themselves to exhaustion.
"If an employee puts in a solid 2-3 years and delivers great results for a company, "burns out", and then moves on to a new role or company, is that really that bad?"
Yes, because companies shouldn't have to work their employees to the bone to extract value from them. A long time ago, we decided that it's cruel, and created labor laws. Where have you been?
I think what is missing from the discussion so far is german work ethic. I am in awe of it. During work hours, people work. That's it. But when they are off, they are off. This strikes me as balance.
There is a BBC documentary called "How to make a German". I highly recommend watching it. After I watched it, I changed my own personal working style to be more efficient. It shocked me how much a difference it made. Since I am posting on HN during work hours, I can't say I'm doing it perfectly :p
>Yes, because companies shouldn't have to work their employees to the bone to extract value from them. A long time ago, we decided that it's cruel, and created labor laws. Where have you been?
Who is 'we'? You're wearing clothes and using a computer and probably exclusively using products that were made in nation-states that have virtually no labor laws. Where were you when globalization happened?
Regardless of moralizing in Western countries, you have decided it is not cruel to work employees to the bone and discard them when they break. You decided that when you bought the shirt you're wearing and the computer you're using.
Whether or not the status quo is right is one question; but you are wrong about what it is.
My comment was about the west. It's tragic that such poor working conditions exist in developing nations. But that should not excuse western companies when they over work their employees, as the original commenter implied.
> I guess it depends on what employees are looking for in their career - to be the best they can be, or live a laid back lifestyle.
He could no longer see anything, even though their bedroom was covered with the bright light of a sunny day in spring. As if he knew it was time to go, he held his wife's hand tight. Mustering some energy out of nowhere, gasping for air, he said, "I love you." Before she could answer anything, or even acknowledge his sentiment with a stronger grasp of their hands, he added, "but I really wish we'd been better employees".
I think it's more a question of what someone wants out of life. If your job is your life, than that makes more sense. If you value things outside of whatever you do for money, then working to burnout is only going to harm those other aspects of your life and ultimately you.
I don't think it's unreasonable to put some grey space between being the best you can be and being laid back. Something like working reasonable hours, being thoroughly successful in your career, and still engaging in outside activities. I think that burning out=being the best you can be is pretty shortsighted.
Also, for the kind of employee this is about, "your job is your life" is unlikely to be true, at least not in the meaning that you imply. "Your jobs are your life", in some cases is appropriate, not because they enjoy their job, but because there's so little else.
I don't disagree with any of these comments... running employees into the ground for an extended period of time can't be good. Happy, motivated employees are crucial to the success of any company.
DHL is not golden either but Hermes is just bad in every aspect. As a private customer in Germany I would try to avoid getting stuff shipped to me through Hermes by all means possible, since you never know who delivers your stuff (high fluctuation of sub-sub contractors) the delivery experience ranges from unacceptable to slightly above sub-par.
http://www.spiegel.de/kultur/tv/ard-film-ueber-lohndumping-d... [German]
http://translate.google.com/translate?hl=en&sl=de&tl=en&u=ht... [Google translate]