Another Take on Business Legacy Costs

Business strategists and economists appear to have their heads up their "you know what" at times. I read a several month old Business Week blog article on the subject of "legacy costs," and almost threw up.

The article pertained to General Motors and was driven by the question: Why is GM so plagued by legacy costs? The article raised the obvious issue that GM, a company with 300,000 employees, is supporting the number of retirees appropriate for a company with a workforce of 800,000, almost triple the size.

Why is this any great realization? In short, GM and other older companies have been in business, well, for a long time. Guess what? You can't stay in business for a long time unless you make commitments, including those to your workers. Toyota and other younger companies will have legacy costs as they age. Guess what? They are already acquiring them.

There is another point that disturbs me, which is this view among economists and business analysts that legacy costs are problematic and we should jettison them, which is exactly what many companies are now doing. Guess what? It's little wonder that workers and the American public are less and less commited to employers, "American" product brands, or anything else.

Let's turn this issue on its head and start rewarding companies that have survived by innovating, that are socially conscious, and plan to be around for a long time. Maybe then, GM and its peers will truly reinvent themselves.