In Praise of Discrimination
By
Timothy Lutts, Chief Investment Strategist and Editor of
Cabot Stock of the Month Report From Cabot Wealth Advisory 8/6/09
Sign up for free Cabot Wealth Advisory e-newsletterA week ago Monday, I concluded my column by recommending a young Chinese stock, Duoyuan Global Water (DGW). The company makes water-processing equipment for a wide variety of uses, from high-purity sterilizers for pharmaceutical companies to high-volume grit and sludge processors for wastewater treatment plants. Business is booming, because China is booming and Duoyuan is the leading company in the industry. It's a simple story ... with big potential. Since I wrote about it, the stock has soared from its small base at 30 to a record high of 36, and I think more progress will come in time. But a well-deserved pullback began today, so if you haven't bought yet, I suggest trying to get on board after this pullback ends.
(To read the full issue, go to our Web site archives
here.)
Today's serious topic is not Duoyuan's stock, but the company itself ... specifically, the following notice that can be found in the news section of the company's Web site.
"In the mid of March, 2009, Duoyuan conducts a skill competition for Workers at the production line to culture a competitive work atmosphere. There are six groups in this match which are a assembly group, a locksmith group, a miller group, a latheman group and sheet-metal worker group. After two-hour tense competition, each group appraises and elects the nominees for the top three prizes. By this skill competition for workers at the production line, it increases their passion at work and improves their skills. Many workers express that they will make use of their spare time to learn professional technology knowledge to improve their work efficiency and reduce reject ratio."
Ignore the grammar; translation into English is tricky ... and, happily, not a key factor in the company's success.
But ponder for a minute the concept of holding competitions among employees to see who is better and who needs to work on their "technology knowledge." Does that sort of thing still happen in the U.S. workplace? Is it even legal anymore?
Or have we come to the point where it's more important to make everybody feel good about doing their best ... even when some are not even trying to do their best? (I have no doubt those Duoyuan employees were doing their best, knowing that their jobs might be at stake.)
The fact is, we can't all live in Garrison Keillor's Lake Wobegone, where "all the children are above average."
When I was a kid in fourth grade we used to have regular spelling bees, and everyone in the class had to participate. I loved it because I was good ... and often ended up facing off against Judith Tivnan. On the other hand, we also had mandatory physical education, at which I wasn't so good. Now we have neither, for a variety of reasons.
It doesn't feel good to be recognized as a below-average performer at something. But for managers who are trying to run a business, the ability to discriminate among employees according to ability is an important step toward achieving corporate goals, among them growth and profitability, and I have no doubt that Chinese companies are doing just that.
Once upon a time, the word "discrimination" had this positive connotation; it suggested fine judgment, the capability of making small distinctions. But in recent decades that's been superseded by the legal definition, which has the negative meaning of treating a person based on the group to which that person belongs rather than on individual merit.
The recent dust-up in Cambridge, for example, between the professor and the policeman hinged on perceptions of discrimination. Happily, a little intervention from the most powerful man in the world seems to have put an end to it.
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