Menninger cuts jobs, raises executive salaries

? Top Menninger executives took pay raises at a time when the psychiatric clinic was cutting about 1,000 employees, tax records show.

Menninger officials said the raises were necessary to keep the company growing before its move. But one former employee said the raises violated an understanding with workers.

The records show the largest increases were taken by then-chief executive Dr. Walt Menninger and senior executive vice president Dr. Efrain Bleiberg. Menninger took a 13 percent raise to $324,000, and Bleiberg took a 21 percent raise to $331,759 during the year ending June 30, 2001, according to tax returns submitted to the Internal Revenue Service.

Menninger Clinic president Ian Aitken and Menninger Foundation president John McKelvey said the raises were necessary to retain key employees while the clinic searched for a new home. In a partnership with the Baylor College of Medicine and The Methodist Hospital, Menninger will move to Houston by June.

Former Menninger psychologist Ira Stamm criticized the raises.

“At most levels throughout the organization, there was a belief and a common understanding that staff work together to get through difficult economic times, and that all staff would share in the economic hardship,” Stamm said.

Stamm said the salary figures show “a real disconnect between the value system as it was perceived by the average Menninger worker and the value system of the Menninger leaders.”

McKelvey said Menninger identified staff who “absolutely” had to be retained if Menninger was going to have any success in the future. Retention bonuses were given to all employees who were asked to remain.

The raises came after a consultant informed the organization in early 2000 that it would run out of money in a matter of years if it didn’t make changes, Aitken said.

As a result of the recommendation, Menninger began seeking a partner, which turned into a drawn-out process.

To prepare for the move, Menninger cut its research and education programs in Topeka, and local providers picked up several of its staff and programs.

Menninger paid severance to employees and trained professionals to start their own businesses. The 400 Menninger employees who had been working in mental health clinics in the Kansas City area were transferred over to their host providers.

“While it seems like management was out here slashing and burning all of the staff, we actually weren’t doing that,” Aitken said. “We were really spinning off that business so that Kansans could have a continuity of care.”

Stamm said some Menninger employees did not have such an easy time finding new career opportunities.

“The data on downsizing indicate that most employees do less well financially in their next job, if they are able to find a job at all,” Stamm said.

Stamm also recalled a Menninger executive refusing a 1995 request to use some of the $90 million in its endowment to provide better severance packages for downsized Menninger employees.

“I was told,” Stamm said, “that there was just no money to do so.”