Globalization
Globalization has created several opportunities and challenges for the human resource department (HR) of organizations that wish to participate in the current global environment. The opening of the global market through technology has made it necessary for HR to help organizations establish a competitive edge and make a profit. Today’s human resource department must be a partnership between HR professionals, line managers, and employees (Mani, 2007, p.3). Globalization has opened the doors to worldwide manpower availability and outsourcing of processes. Globalization has created challenges for HR in the area of relocating employees, adhering to local and foreign labor laws, and maintaining strict ethics standards.
Through improvements in technology and the Internet, organizations are able to tap into a pool of job applicants worldwide. Job opening can be placed on corporate websites or through employment agencies and viewed anywhere in the world that has Internet access. Applications and resumes can be collected electronically for ease of collection, reviewing, and storage. HR records and policies can be shared between company locations through a corporate intranet. Technology has helped to streamline the HR system and reduce the number of employees needed corporate wide.
Many companies are joining the trend to outsource processes both domestically and abroad to lower cost and increase profits. Outsourcing can turn into a nightmare if not managed correctly. Human resources is a critical partner in a corporations attempt to outsource processes to capitalize on low cost labor. Human resources can assess the need for additional employees and the types of skills required for these openings. Human resources will be responsible for the training and relocation of employees to foreign assignments. With the move to outsource processes, companies will need to reduce the current workforce. Human resources must be trained in handling the needs of these terminated employees such as counseling, job placement, and further education or training. During mergers and employee downsizing, HR must communicate to the remaining workforce that their jobs are secure and help rebuild the team spirit to maintain production and quality standards.
Relocating employees to domestic or foreign assignments are costly for a company and have a high percentage of failure if not handled correctly. HR needs to play a critical role in the relocation of employees and ultimately the success of the move. Relocation involves many aspects from language barriers; local customs, schooling for children, and family adjustment. An employee who is removed from his or her native country is called an expatriate. To improve the success of an expatriate program, HR must offer training in language, local customs, and family counseling. Families should be sent to the new location on a fact-finding mission to explore the local area and determine if the relocation will work for the entire family not just the employee. Can one imagine the turmoil of removing a teenager from their friends to move to the Ukraine for the next two years? HR should be involved in expatriate compensation and benefits to ensure they match the responsibilities of the assignment. With the opening of the world labor market, the new trend is to seek out potential employees native to the assigned area to eliminate the need for expatriates. Hiring local talent will eliminate the costly expatriate program and increase the potential success of the job applicant to meet the long-term needs of the company.
Human resources management has evolved in to more than just a department that processes employment applications and handles employee complaints. An HR specialist must be knowledgeable in both local and foreign labor laws, business strategies, and human relationships. With the opening of the world labor market, HR must be careful not to discriminate against any applicant for any reason. Not only do corporations need to follow United States labor laws but they must also follow any foreign labor laws that apply in the areas where they employ workers. All HR employees must understand and follow the rules of the Equal Opportunity Employment Act and affirmative act laws. A company’s HR department is responsible for filing required government labor reports and willfully assisting in any government audits.
Ethics is a big topic today with all the reports in the news of corrupt corporate officers. The human resources department is responsible for developing a corporate code of ethics and ethics policies. HR shall provide training on ethics for new and existing employees as required. An ethics hotline should be established where employees could voice their concerns anonymously. As companies move operations to foreign countries, HR needs to establish and enforce strict rules on not negotiating with corrupt government officials. Employees must be taught and monitored not to accept bribes, gifts, or kickbacks.
“The ever-expanding scope of global competition is causing a reexamination of how human resources can best support the rapid pace of business globalization. A shift from traditional and static structural solutions to business challenges must be made to a fluid and evolving dynamic network. A global competitive advantage will depend less on strategic planning inside the corporate head quarters and more on the behavior of employees across all regions of the world” (Pucik, 1996, p. 2).
Diversity
There have been many trends and challenges in human resource management (HRM) over the last few decades; the challenge of diversity has been a substantial factor that has been magnified by the trend of global organizations.
In today’s global environment organizations need to develop a diversity program that truly take advantage of the talents and skills of their global workforce. Diversity is a challenge for human resources management, but successful organizations find a way to capitalize on the talents of a diverse workforce. In the pursuit of successful human resources management, the understanding of diversity is just one part of the equation. The desire to capitalize on the global market, through the use of technology, while embracing the diversity of the workforce to improve efficiencies and remain competitive is a critical and necessary process. The labor market in the United States continues to become more diverse with women and other minorities, so organization need to find a way to embrace the talents and capitalize on the strengths of a diverse workforce. Creating an HRM system that values diversity and challenges the historic culture, is a vital necessity for organizations to become and remain competitive. Corporations that desire to compete in the global economy understand the importance of embracing the values and capitalizing on the strengths of a diverse workforce, which in turn creates a competitive advantage. Not all organizations have learned how to create this competitive advantage. In fact, some organizations have had to learn a painful monetary lesson before implementing a diversity program that embracing the differences in culture. “Nothing like a lawsuit to kick start a diversity program, imagine how much money could have been saved?” (Noe, Hollenbeck, & Gerhert, Wright, 2003).
In a global economy, organizations need to develop diversity programs that encourage the understanding of different cultures, values and contributions. The training and resources needed for these programs need to be monetarily supported by senior management, to ensure future success of the program and the organization. In addition, diversity training needs to occur from the top down, from senior management to entry level personnel. Diversity training should be included in the recruiting process, so the culture of the company will continue to progress regardless of turnover. Successful diversity programs help eliminate discrimination in the recruiting and promoting processes, which creates a healthy and productive working environment. Culture change is more than just lip service; it is a long-term endeavor to create a competitive advantage. Managing a successful diversity program has rewards that stretch beyond the facility walls of the organization, like lower cost due to turnover and the ability to provide world-class goods and services to internal and external customers (Noe, Hollenbeck, & Gerhert, Wright, 2003).
Organizations that compete in international markets have unique needs that affect HRM practices and diversity programs. Having teams working together from around the world with different work schedules, languages, training needs, and cultures, needs a diversity structure that will capitalize on the organizations global strengths, to ensure a competitive advantage. When organizations are considering staffing and recruiting needs, they need to ensure that methods used are without biases against minorities, including any test given to potential employee candidates. A diverse workforce has different values in benefits offered by an organization, some cultures might hold more value in daycare, while other cultures may have a higher regard for some other benefits offered. The landscape of needed employee expertise for modern organizations has changed drastically compared with traditional needs, due to technology, like the explosive use of the computer in all industries within the United States. Historically, mastery of some type of technical skill was the most important factor when addressing a staffing need; today interpersonal skills have a greater value to modern organizations, because this type of strength will give an indication of how well an employee will work with other team members. In modern organization, all technical needs involve the use of a computer, the Internet and the ability to work in a team environment. In addition, most organizations are looking to feel their staffing needs with candidates that have a history of educational and professional achievements, including technical certifications, college degrees and quality management training (TQM). This atmosphere creates a tough job market for individuals seeking employment across the spectrum, because careers requiring college, technical, and QMT training are very competitive markets. So, for those who do not qualify for these opportunities are forced to settle for lower paying jobs. To combat shortfalls in the lack of necessary skills needed to compete globally and create a competitive advantage, some organizations implement training and mentoring strategies, to develop internal resources. To reduce possible future shortfalls in the capabilities of the workforce, some organizations make an effort to hire and train from within. This method can be costly to maintain and ineffective, if a solid training program is not in place and sufficiently support by senior management of the organization is not maintained. There is a wide spectrum of staffing needs from within most organizations, from entry level, to highly trained, educated or technically skilled personnel. So, organizational training needs can vary from basic remedial skills, to advanced technical training. Regardless of training or education, many employees lack the necessary interpersonal skills to successfully work in a team environment and the ability or exposure to diversity in the workplace. Organizations within the United States need to find a method to close the gap between the abilities needed and the abilities available, to compete in a global environment, regardless of well the economy is performing. The companies that have invested in technology to streamline their internal processes, trained and developed their personnel and continue to invest in a quality management training program with continuous improvement methodologies, have and will continue to whether the storm at a greater speed, then their industry competitors (Noe, Hollenbeck, & Gerhert, Wright, 2003).
In conclusion, organizations that invest in quality diversity programs with monetary support and resources from senior management, have a better chance to motivate their workforce by breaking down historic differences and biases of a diverse workforce. Investing in training programs that help employees learn how to work with diversity is a key element for successful organizations. To ensure success in the global environment organizations that work with partners or customers around the world, need to implement a diversity program that involves training on differences and similarities. Global organizations have employees of different ethnicity's, cultures and beliefs, so finding a method that will capitalize on these global strengths is the difference between success and failure. Companies must implement a diversity strategy coupled with a quality program that creates a holistic approach to the programs of the organizations environment, is paramount to achieving the organizational goals.
Technology
Many new technological trends in human resource management have come into usage within the last decade. These innovations have allowed HR professionals to better handle the vast amount of information under their supervision. Other advances have made connecting to employees and resources much easier and quicker. The unfortunate reality is that these advances have been in use, in other sectors of business, for more than twenty years. It seems human resources as a part of the business model has been placed on the back burner, so to speak, and left out of the technologically advancing market. Companies continue to rely on outdated methods to recruit, train, and employ workers. These mistakes are the reason companies cannot recruit well trained and competent employees, or the company spends vast amounts of capital to acquire and train individuals only to lose him/her to another company. Employee turnover costs companies hundreds of thousands of dollars a year because the company under pays, lacks stable benefits, or digresses in outdated policies that hamper or discourage growth and/or commitment. By introducing new and radical ideas to HR management the company can out grow the competition by acquiring top performers in the industry, developing a benefits package that both the company and the employee can be comfortable with and cutting attrition rates to keep talent in the company.
Advances in human resource information management systems (HRIS) have grown by leaps and bounds in the last ten years. Many HR gurus believe no other technological achievement has helped the industry as much as HRIS advancements. “I see three major developments: (1) multi-tenancy architectural design in software, which is the key architectural enabler of software as a service as well as cost-effective HRM BPO; (2) web services architecture, a.k.a. SOA, which holds the promise of greater long-term flexibility as well as greater implementation ease, therefore of lower total cost of ownership; and (3) intelligent self-service, which combines traditional transactions with the content (i.e., business rules, policy information, analytics, etc.) needed to ensure complete and correct transactions while reducing demands for customer contact. When these are combined, as they have been and are being done by leaders in HRM BPO (because they must do so to provide effective and efficient services), the results are improved business benefits at reduced TCO” (Bloom, 2006). Human resources information systems are growing into vast databases of potential treasures or abysses of peril and doom. Potential, current, and former employees of the company have information stored in these databases. The system is a wondrous world of money making opportunity for the company if the cards are played right. It is up to the HR administrator to sift through the rocks and pull out the diamond. The proper training and development of this professional will give the company a better chance of pulling out the diamond.
When asked what the most important technological trend has been in her career, Linda Lausten, human resources director for Power Chevrolet, Inc., replied, “my Blackberry. I take it everywhere. It keeps me in contact with everyone whether by phone, text, or email” (Lausten, 2008). By keeping her Blackberry with her at all times Linda can communicate no matter where she is or goes. If management needs her help she can get the information and begin a search or development of a plan right away. The Blackberry is connected to her computer database so she can access any information needed even off-site. This could be helpful if a worker hurts him or herself outside of normal business hours. Laptop computers have also become more powerful and lighter weight allowing associates to take them on the road with all the important information right at their finger tips.
Excluding the Blackberry, cellular phones have made staying in contact with the business easier. Emergencies happen and if no one is available to explain proper procedure the chances of the wrong procedure being followed increases. This can open the company to liability unnecessarily. Cellular phones began as bulky, awkward bricks weighing 3-4 pounds. Now cellular phones are as small as a pocket watch. Cell phones may seem more powerful than previous models but that really comes from better circuitry and design in the addition to a huge network of towers and repeaters to bounce the signal around the world. The communication allows people to converse around the world in seconds, inside buildings, on airplanes, and even on the oceans. Many cell phones have many of the same features as the Blackberry including web access, calendars, and Email.
All the advances in technology have given new life to identity theft and hackers breaking into confidential files. Companies have had to beef up security measures to ensure employee information is kept safe. Human resource personnel must be diligent in their quest for security. Laptop computers are virtually the most vulnerable to hacking due to the mobility factor and unsecured Internet connections. Laptops are also vulnerable to theft if left unattended for more than a split second. This allows thieves to have absolute access to not only personal information but also confidential company data that may cause huge problems in the wrong hands. Electronic mail also poses a threat with worm, Trojan, and spyware being transmitted every day through innocent looking emails. Companies have an obligation to keep employee information confidential and privacy issues have been an increasing problem in the recent past. Many credit card companies have had information stolen due to lacking security programs. Internet and Intranet security from many manufacturers, such as Norton and MacAfee, help keep networks secure and private information safe. This cost is substantial but what is the privacy of your employees and customers worth? It will cost multiple times more if the information is stolen and misused while in the care of the corporation. “Today, organizations are asking their HR departments for innovative approaches and solutions to improve productivity and the quality of work life while complying with the law in an environment of high uncertainty, energy conservation, and intense international competition” (Mani, 2007, p. 6).
Monday, November 8, 2010
Obama Versus McCain 2008
This was an analysis of the presidential race I did in October 2008. It was significant to a few people I had some very interesting, and heated, discussions with at the time. I still think the questions are relevant to what Obama is doing right now. I tried to be objective and unbiased, pointing out the good and bad in both candidates.
In the presidential race between Barack Obama (D) and John McCain (R) the subject of restructuring and/or saving the American Economy has been a much heated debate. The American people seem to be at wits end. Both candidates blame the other’s party for the failure. The best thing to do now is stop blaming each other and start figuring out a way to fix the problem. Both candidates have plans for the rebirth of the economy both at home here in America and globally as a whole.
Barack Obama, the senator from Illinois, has a large plan in which he attacks ten different planes of the economy. The basic forefront of the plan is to cut taxes for families earning less than $250,000 per year. “Obama and Biden will restore fairness to the tax code and provide 95 percent of working Americans the tax relief they need. They will create a new "Making Work Pay" tax credit of up to $500 per person, or $1,000 per working family.” (BarackObama.com, n.d., ¶ 1). The second main factor is tax relief for small businesses and start ups to drive them to spend the money in new developments and creating jobs (BarackObama.com, ¶ 2). The third and final main point is to instill fair trade and to “fight for a trade policy that opens up foreign markets to support good American jobs. They will use trade agreements to spread good labor and environmental standards around the world” (BarackObama.com, ¶ 3). These all are great ideas and putting them into actual use will help millions of families and businesses cope with the downturn in the economy.
The problem is these ideas cost money and the economy in this country is already strapped for cash. Where is this money going to come from? The money paid in taxes is what runs this country, just like a business selling a product, the money has to be made to continue the cycle. Struggling states and municipalities are closing down some areas to conserve money because the deficits are so great. Cutting taxes is going to help a few people but where is the country’s money to function going to come from? The top five percent of wealth in this country pays 90% of the taxes in the U.S. already; cutting taxes for the lower 95% is going to put more strain on the upper 5%. Not that they cannot afford the extra burden, but that just proves that becoming wealthy is a punishment not a pleasure.
Barack has great plans to kick start the economy by delving into the mess with a strong back wind with such plans as eliminating taxes for seniors who earn less than $50,000 or for adding a rebate for over 10 million families by instituting a new “Make Work Pay” tax rebate. The plan to create better trade plans and amend old plans like NAFTA and CAFTA to make the agreements more fair for the U.S. side of the equation will take time and maybe a long term fix, but something short term is needed to get it off on the right foot.
Senator McCain also has a very detailed plan to get the country out of recession and help an ailing global economy right itself. John’s plan involves cutting taxes for corporate America in hopes prices will fall and more people will spend money to bring cash back into the economy. The problem with this idea is companies want to make a profit, the money being put back into the businesses as profit will, in some cases, merely see its way into the pockets of the officers of the company. How does this help the economy? Jobs are still threatened because costs are high, and profits are not being spread around to get the economy rolling. Plus if the prices do not drop people will still cut back on luxuries and only spend enough to buy necessities. The one idea John continues to press forward and has the best chance of winning is his energy plan. His plan to expand domestic oil exploration and drilling to decrease the U.S. dependency on foreign oil and to leap forward to create better green fuels like nuclear and solar power stations and plants will give the American people greater savings and cut costs by billions in the near future. His ideas to increase clean coal technologies have been some the most aggressive of any administration to date. The concept of bring the technology to bear on the problem of energy production in the U.S. will also create hundreds of thousands of new jobs to design, build, and operate these facilities needed to make the plan a success.
McCain’s ideas do not stop just on energy production, but his plans to help companies build more fuel efficient transportation options such as hybrids, fuel-cell, and full electric cars and trucks will reduce even farther the dependency on fossil fuels. The plan is to help America “break its strategic dependence on foreign oil” and “change how we power our automobiles and rejuvenate our automotive industry” (JohnMcCain.com, 2008, ¶ 12). By requiring companies to build more fuel efficient and alternative fuel vehicles, with penalties for failure to follow the guidelines, the McCain administration is leaping forward on the Obama administration.
Many of the ideas both candidates have will give the economy a fighting chance to recover and once again lead the world as the global powerhouse it once was. The question is who is the best choice? This is a hard decision because no one knows the truth until one of them steps into the oval office and assumes command. The plans include money from an unknown source or a source that is already burdened by low funds. The candidates talk and debate and campaign on hundreds of issues with the bottom line of making the country better from the ideas each one brings to the table. Factors of Congress and Lobbyists, the Supreme Court and the Justices, and every American who goes to work to earn a living for his/her family will put the winner to the test. Four years is a very short time to try and implement hundreds of ideas and concepts to bring about change. But is change for change’s sake good or bad? Will one man be able to right a sinking ship and limp it back to shore for repairs? Where is the money coming from to fund these radical plans? These are the questions Americans should be asking and the candidates should be answering when the senators are at the microphone.
In the presidential race between Barack Obama (D) and John McCain (R) the subject of restructuring and/or saving the American Economy has been a much heated debate. The American people seem to be at wits end. Both candidates blame the other’s party for the failure. The best thing to do now is stop blaming each other and start figuring out a way to fix the problem. Both candidates have plans for the rebirth of the economy both at home here in America and globally as a whole.
Barack Obama, the senator from Illinois, has a large plan in which he attacks ten different planes of the economy. The basic forefront of the plan is to cut taxes for families earning less than $250,000 per year. “Obama and Biden will restore fairness to the tax code and provide 95 percent of working Americans the tax relief they need. They will create a new "Making Work Pay" tax credit of up to $500 per person, or $1,000 per working family.” (BarackObama.com, n.d., ¶ 1). The second main factor is tax relief for small businesses and start ups to drive them to spend the money in new developments and creating jobs (BarackObama.com, ¶ 2). The third and final main point is to instill fair trade and to “fight for a trade policy that opens up foreign markets to support good American jobs. They will use trade agreements to spread good labor and environmental standards around the world” (BarackObama.com, ¶ 3). These all are great ideas and putting them into actual use will help millions of families and businesses cope with the downturn in the economy.
The problem is these ideas cost money and the economy in this country is already strapped for cash. Where is this money going to come from? The money paid in taxes is what runs this country, just like a business selling a product, the money has to be made to continue the cycle. Struggling states and municipalities are closing down some areas to conserve money because the deficits are so great. Cutting taxes is going to help a few people but where is the country’s money to function going to come from? The top five percent of wealth in this country pays 90% of the taxes in the U.S. already; cutting taxes for the lower 95% is going to put more strain on the upper 5%. Not that they cannot afford the extra burden, but that just proves that becoming wealthy is a punishment not a pleasure.
Barack has great plans to kick start the economy by delving into the mess with a strong back wind with such plans as eliminating taxes for seniors who earn less than $50,000 or for adding a rebate for over 10 million families by instituting a new “Make Work Pay” tax rebate. The plan to create better trade plans and amend old plans like NAFTA and CAFTA to make the agreements more fair for the U.S. side of the equation will take time and maybe a long term fix, but something short term is needed to get it off on the right foot.
Senator McCain also has a very detailed plan to get the country out of recession and help an ailing global economy right itself. John’s plan involves cutting taxes for corporate America in hopes prices will fall and more people will spend money to bring cash back into the economy. The problem with this idea is companies want to make a profit, the money being put back into the businesses as profit will, in some cases, merely see its way into the pockets of the officers of the company. How does this help the economy? Jobs are still threatened because costs are high, and profits are not being spread around to get the economy rolling. Plus if the prices do not drop people will still cut back on luxuries and only spend enough to buy necessities. The one idea John continues to press forward and has the best chance of winning is his energy plan. His plan to expand domestic oil exploration and drilling to decrease the U.S. dependency on foreign oil and to leap forward to create better green fuels like nuclear and solar power stations and plants will give the American people greater savings and cut costs by billions in the near future. His ideas to increase clean coal technologies have been some the most aggressive of any administration to date. The concept of bring the technology to bear on the problem of energy production in the U.S. will also create hundreds of thousands of new jobs to design, build, and operate these facilities needed to make the plan a success.
McCain’s ideas do not stop just on energy production, but his plans to help companies build more fuel efficient transportation options such as hybrids, fuel-cell, and full electric cars and trucks will reduce even farther the dependency on fossil fuels. The plan is to help America “break its strategic dependence on foreign oil” and “change how we power our automobiles and rejuvenate our automotive industry” (JohnMcCain.com, 2008, ¶ 12). By requiring companies to build more fuel efficient and alternative fuel vehicles, with penalties for failure to follow the guidelines, the McCain administration is leaping forward on the Obama administration.
Many of the ideas both candidates have will give the economy a fighting chance to recover and once again lead the world as the global powerhouse it once was. The question is who is the best choice? This is a hard decision because no one knows the truth until one of them steps into the oval office and assumes command. The plans include money from an unknown source or a source that is already burdened by low funds. The candidates talk and debate and campaign on hundreds of issues with the bottom line of making the country better from the ideas each one brings to the table. Factors of Congress and Lobbyists, the Supreme Court and the Justices, and every American who goes to work to earn a living for his/her family will put the winner to the test. Four years is a very short time to try and implement hundreds of ideas and concepts to bring about change. But is change for change’s sake good or bad? Will one man be able to right a sinking ship and limp it back to shore for repairs? Where is the money coming from to fund these radical plans? These are the questions Americans should be asking and the candidates should be answering when the senators are at the microphone.
Employee Motivation
Increasing employee motivation, satisfaction, and performance is essential to production and profitability. No company can survive if the workforce is not on board with the development and direction of the company. Employees who enjoy their jobs listed the work itself as the biggest contributors to satisfaction. Organizational Behavior authors Stephen Robbins and Timothy Judge stated “…enjoying the work itself is almost always the facet most strongly correlated with high levels of overall job satisfaction. Interesting jobs that provide training, variety, independence, and control satisfy most employees (2007).
Creating a plan to strengthen an employee’s job satisfaction has been a factor for study for more than half a century. Some companies have instituted various ideas to increase their employee’s satisfaction. More recognition, promotions, matching personality to the task, and various health and stress management tools are being instituted at many companies. Things like free gym memberships, free health screens, in-house massages, recreation centers in-house, and healthy food catering for lunches are just some of the many ways companies are helping their employees. Google is probably one the biggest outside-the-box thinkers when it comes to ensuring employees are stress-free and happy. Google has open meeting rooms in hallways lined with whiteboards because according to Google president Larry Page “Ideas don’t just happen in the boardroom. If an idea hits an employee walking down the hall that person should have a way to express that creativity and immortalize it immediately”. Groups can meet in specially designed areas that foster relaxation and creativity like the lounge area where big, overstuffed Laz-E-Boy chairs surround tranquil vegetation and whiteboards. A cafeteria serves healthy breakfast, lunch, and dinner options (free of charge) so employees do not have to leave to get a good meal. Recreation areas with video games, personal televisions, satalite radio, and computers are on excellent places to just “getaway” according to Eric Schmidt, Google’s CEO. “Employees need to relax whenever they need to, not on a schedule. Stress relief fosters healthy habits and productivity”.
These ideas didn’t just happen out of the air. There was serious thought and ingenuity in bringing these thoughts to fruition. “Google is the only dotcom to achieve the rare distinction of zero percent employee turnover” according to 123oye.com (n.d.). So Google seems to have won the battle between success and employee satisfaction. But not every company can have hockey tournaments, foosball competitions, and Zen-like atmospheres for their employees. A plan to optimize employee production and balance it with reasonable employee satisfaction comes from listening to what employees have to say. If they’re uncomfortable in the way desks are arranged, try a different configuration until a good balance is found. When an employee asks why the company doesn’t have bottled water or reverse osmosis filtering, have a company bring in a water dispenser or, if funds allow, have a filtration system put in on the drinking fountains. These are simple things that make employees happy and they feel they are appreciated.
Innovative companies have excelled at developing employees that can identify a problem, collaborate with a team or management, and fix or avoid the issue. Mentoring and/or finding these types of individuals have been a hurdle for every company on the planet. An experienced HR department with clear instructions and definitions of the type of person needed and the job description so a person’s qualifications can be matched to the job that will do the best job and reduce turn-over and increase productivity. Other properties of innovative companies are reward systems, handling failure with praise for initiative, and creating a learning environment that set them apart from the norm. Companies that continue to reinvent themselves consistently produce higher profits and lower turnover rates. So innovative companies are ones that hire and develop the best and brightest talent they can afford, create learning environments that foster creativity and idea, and reinvent themselves when the time is right to keep them at the forefront of their industries.
Creating a plan to strengthen an employee’s job satisfaction has been a factor for study for more than half a century. Some companies have instituted various ideas to increase their employee’s satisfaction. More recognition, promotions, matching personality to the task, and various health and stress management tools are being instituted at many companies. Things like free gym memberships, free health screens, in-house massages, recreation centers in-house, and healthy food catering for lunches are just some of the many ways companies are helping their employees. Google is probably one the biggest outside-the-box thinkers when it comes to ensuring employees are stress-free and happy. Google has open meeting rooms in hallways lined with whiteboards because according to Google president Larry Page “Ideas don’t just happen in the boardroom. If an idea hits an employee walking down the hall that person should have a way to express that creativity and immortalize it immediately”. Groups can meet in specially designed areas that foster relaxation and creativity like the lounge area where big, overstuffed Laz-E-Boy chairs surround tranquil vegetation and whiteboards. A cafeteria serves healthy breakfast, lunch, and dinner options (free of charge) so employees do not have to leave to get a good meal. Recreation areas with video games, personal televisions, satalite radio, and computers are on excellent places to just “getaway” according to Eric Schmidt, Google’s CEO. “Employees need to relax whenever they need to, not on a schedule. Stress relief fosters healthy habits and productivity”.
These ideas didn’t just happen out of the air. There was serious thought and ingenuity in bringing these thoughts to fruition. “Google is the only dotcom to achieve the rare distinction of zero percent employee turnover” according to 123oye.com (n.d.). So Google seems to have won the battle between success and employee satisfaction. But not every company can have hockey tournaments, foosball competitions, and Zen-like atmospheres for their employees. A plan to optimize employee production and balance it with reasonable employee satisfaction comes from listening to what employees have to say. If they’re uncomfortable in the way desks are arranged, try a different configuration until a good balance is found. When an employee asks why the company doesn’t have bottled water or reverse osmosis filtering, have a company bring in a water dispenser or, if funds allow, have a filtration system put in on the drinking fountains. These are simple things that make employees happy and they feel they are appreciated.
Innovative companies have excelled at developing employees that can identify a problem, collaborate with a team or management, and fix or avoid the issue. Mentoring and/or finding these types of individuals have been a hurdle for every company on the planet. An experienced HR department with clear instructions and definitions of the type of person needed and the job description so a person’s qualifications can be matched to the job that will do the best job and reduce turn-over and increase productivity. Other properties of innovative companies are reward systems, handling failure with praise for initiative, and creating a learning environment that set them apart from the norm. Companies that continue to reinvent themselves consistently produce higher profits and lower turnover rates. So innovative companies are ones that hire and develop the best and brightest talent they can afford, create learning environments that foster creativity and idea, and reinvent themselves when the time is right to keep them at the forefront of their industries.
Healthcare Reform in America
1. Title: How Health Reform Will Affect Older Americans
2. Author: Mark Miller
3. Source: Businessweek Magazine
4. Topic: U.S. Healthcare Reform
5. Talking Points:
• Medicare cuts
• Medicare benefits
• Other add ins
6. Summary:
The new healthcare reform bill signed into law by President Obama has had numerous opponents that have told older Americans that the bill has Medicare cuts built in, that the government will control last rites decisions, and eliminate prescription drug coverages for seniors. The author researched the bill and has highlighted the main contradictions to these claims. First, traditional Medicare benefits have not been cut. The only reductions have been to the “reimbursements to Medicare Advantage” according to the author. This translates to reductions for doctors not in the benefits for Medicare recipients. The reason for this is because the companies that Medicare Advantage enlists to provide care have been “reimbursed by the federal government at 114 percent of regular Medicare rates” and this takes money away from traditional Medicare recipients. Second, the Medicare part D drug coverage has gaps in the coverage levels that cause undue hardship on members that fall in the gap between $2,830 in out-of-pocket expenses and the top level at $4,550 in out-of-pocket expenses. In that gap the member is responsible for all costs associated with their prescription costs. Some seniors can barely afford their medication at the reduced rates and most cannot pay the cost in the gap area. The healthcare reform law reduces that cost by 50% on name brand drugs to help offset the cost in the gap levels. Plus it reduces the gap level each year until in 2020 the gap is gone, meaning all Medicare part D members will have coverage with gaps. There are also tax rebates for those in the gap area to help for this year 2010. Lastly, for the rest of those Americans who do not have health insurance due to pre-existing condition, they will not be denied coverage because of that fact. A new “high-risk insurance pool” will be created to allow those families to buy into an affordable plan.
7. Level of data: Actual research data
8. Conclusions:
• Medicare members will not see a reduction in their benefits
• Medicare part D members will see more affordable options for medication
• People with pre-existing conditions will be able to buy coverage
9. Recommendations: Excellent article that helps people understand that the opponents did have scare tactics involved to put fear into seniors about the law. And it clears up some issues about the vague parts of Medicare part D.
10. Relevance: Very relevant to economics because it shows how the cost of Medicare has been ignored in the past. It shows how seniors can benefit from the reduction in costs to their medications.
How Health Reform Will Affect Older Americans
Mark Miller
Opponents of health reform used smokescreens to frighten older Americans -- conjuring up everything from death panels to dire predictions of slashed Medicare budgets and totalitarian takeovers of hospitals and doctors' offices.
But it's really not nice to scare Grandma.
So, now that the smoke is starting to clear, let's consider the important benefits in the new law for people over age 50. They fall into two groups: people over 65 on Medicare, and everyone else.
First, Medicare
The key smokescreen here was that reform would be funded through draconian cuts to Medicare.
But, as I've stated before in this space, the law contains no reductions in traditional Medicare benefits. None.
What the law does do is reduce reimbursements to Medicare Advantage -- the privatized Medicare insurance plans that offer all-in-one medical and drug coverage. These are managed care plans from insurance companies -- PPOs, HMOs and the like.
These plans have been growing quickly in recent years. But they are reimbursed by the federal government at 114 percent of regular Medicare rates, a payment scheme that was put in place to stimulate the Advantage market but amounts to no more than a big subsidy to insurance companies. The new law freezes the reimbursements at current levels through 2011, and then reduces payments by$116 billion over a period of years, ultimately equalizing them with traditional Medicare.
Will that translate to a squeeze on Advantage plans? Not necessarily.
The new law also offers bonuses to Advantage plans that meet certain benchmarks for high quality care. "That could engender a race to the top," argues Joe Baker, president of the Medicare Rights Center.
Moreover, it's important to keep in mind that Advantage plans operate in a competitive marketplace; if a plan were to slash benefits, enrollees could simply move to more attractive plans during the annual enrollment period. It's more likely that the reduced reimbursements will put pressure on insurance company profit margins.
And these plans could stand some tightening up.
A recent report to Congress on Advantage prepared by the majority staff of the U.S. House Committee on Energy and Commerce found that:
-- Medicare paid $12 billion more in 2009 for Advantage beneficiaries than it would have if the beneficiaries had participated in traditional Medicare.
-- Advantage plans are spending less of every premium dollar on actual medical care delivery than basic Medicare.
-- Twenty-three insurance companies in the program spent $121 million on 355 corporate retreats for executives, insurance brokers and board members between 2008 and 2009.
Next, let's talk about the new Medicare benefits contained in the law
First, the Medicare D prescription drug doughnut hole will be closed. That's the coverage gap that starts when a beneficiary's annual out-of-pocket spending hits$2,830, and resumes at the catastrophic level ($4,550 out of pocket).
This year, patients who enter the doughnut hole will get a $250 rebate. In 2011, pharmaceutical companies will provide a discount of 50 percent on brand-name drugs to low- and middle-income beneficiaries who find themselves in the doughnut hole. Then, the doughnut hole itself will shrink a bit every year, ultimately disappearing entirely in 2020.
The law also contains some important improvements to traditional Medicare aimed at boosting preventive care. Deductibles and co-payments will be eliminated for most preventive care services, starting this year. And doctors will receive incentives for joining “accountable care organizations", which will coordinate patient care and foster greater attention to prevention.
Starting next year, Medicare patients also will be able to get an annual wellness visit -- with no co-payment or deductible -- that includes a comprehensive health risk assessment and a long-term personalized prevention plan.
One possible negative in the bill for retirees is the end of a tax break starting in 2013 for employers that provide prescription drug coverage to Medicare-eligible employees. The ranks of these employers has been dwindling fast in recent years, but ending the tax subsidy could encourage more companies to discontinue the benefit or encourage retirees to use Medicare Part D benefits instead.
Meanwhile, the new law will help millions of older Americans who have lost health insurance but are too young for Medicare.
While insurability issues affect Americans of all ages, the problems are acute for people over 50, who tend to have more pre-existing conditions than younger people do, and use more health care.
Starting this year, insurance companies won't be able to refuse applicants with pre-existing conditions, and the new law also creates new insurance options for people without group coverage. Within six months, you can buy into a new high-risk insurance pool that caps annual out-of-pocket costs at $5,950 for individuals and $11,900 for families. While buying coverage will be mandated for most people starting in 2014, tax credits will be available on a sliding income-based scale to help make the coverage affordable.
The high-risk pool will serve as a bridge to longer-term solutions.
These include private insurance exchanges that will operate starting in 2014, as well as expanded Medicare for low-income households.
The new individual insurance options will open up some very positive new options for baby boomers in their 50s and early 60s, many of whom are eager to move on to second careers, entrepreneurial ventures and other new paths, but have been hanging on to jobs solely for the health benefits.
Health reform gives them the freedom to move on.
That will stimulate entrepreneurial activity, and it's going to open up spots on the management charts, allowing younger people to advance.
Is the smoke clearing for you yet?
2. Author: Mark Miller
3. Source: Businessweek Magazine
4. Topic: U.S. Healthcare Reform
5. Talking Points:
• Medicare cuts
• Medicare benefits
• Other add ins
6. Summary:
The new healthcare reform bill signed into law by President Obama has had numerous opponents that have told older Americans that the bill has Medicare cuts built in, that the government will control last rites decisions, and eliminate prescription drug coverages for seniors. The author researched the bill and has highlighted the main contradictions to these claims. First, traditional Medicare benefits have not been cut. The only reductions have been to the “reimbursements to Medicare Advantage” according to the author. This translates to reductions for doctors not in the benefits for Medicare recipients. The reason for this is because the companies that Medicare Advantage enlists to provide care have been “reimbursed by the federal government at 114 percent of regular Medicare rates” and this takes money away from traditional Medicare recipients. Second, the Medicare part D drug coverage has gaps in the coverage levels that cause undue hardship on members that fall in the gap between $2,830 in out-of-pocket expenses and the top level at $4,550 in out-of-pocket expenses. In that gap the member is responsible for all costs associated with their prescription costs. Some seniors can barely afford their medication at the reduced rates and most cannot pay the cost in the gap area. The healthcare reform law reduces that cost by 50% on name brand drugs to help offset the cost in the gap levels. Plus it reduces the gap level each year until in 2020 the gap is gone, meaning all Medicare part D members will have coverage with gaps. There are also tax rebates for those in the gap area to help for this year 2010. Lastly, for the rest of those Americans who do not have health insurance due to pre-existing condition, they will not be denied coverage because of that fact. A new “high-risk insurance pool” will be created to allow those families to buy into an affordable plan.
7. Level of data: Actual research data
8. Conclusions:
• Medicare members will not see a reduction in their benefits
• Medicare part D members will see more affordable options for medication
• People with pre-existing conditions will be able to buy coverage
9. Recommendations: Excellent article that helps people understand that the opponents did have scare tactics involved to put fear into seniors about the law. And it clears up some issues about the vague parts of Medicare part D.
10. Relevance: Very relevant to economics because it shows how the cost of Medicare has been ignored in the past. It shows how seniors can benefit from the reduction in costs to their medications.
How Health Reform Will Affect Older Americans
Mark Miller
Opponents of health reform used smokescreens to frighten older Americans -- conjuring up everything from death panels to dire predictions of slashed Medicare budgets and totalitarian takeovers of hospitals and doctors' offices.
But it's really not nice to scare Grandma.
So, now that the smoke is starting to clear, let's consider the important benefits in the new law for people over age 50. They fall into two groups: people over 65 on Medicare, and everyone else.
First, Medicare
The key smokescreen here was that reform would be funded through draconian cuts to Medicare.
But, as I've stated before in this space, the law contains no reductions in traditional Medicare benefits. None.
What the law does do is reduce reimbursements to Medicare Advantage -- the privatized Medicare insurance plans that offer all-in-one medical and drug coverage. These are managed care plans from insurance companies -- PPOs, HMOs and the like.
These plans have been growing quickly in recent years. But they are reimbursed by the federal government at 114 percent of regular Medicare rates, a payment scheme that was put in place to stimulate the Advantage market but amounts to no more than a big subsidy to insurance companies. The new law freezes the reimbursements at current levels through 2011, and then reduces payments by$116 billion over a period of years, ultimately equalizing them with traditional Medicare.
Will that translate to a squeeze on Advantage plans? Not necessarily.
The new law also offers bonuses to Advantage plans that meet certain benchmarks for high quality care. "That could engender a race to the top," argues Joe Baker, president of the Medicare Rights Center.
Moreover, it's important to keep in mind that Advantage plans operate in a competitive marketplace; if a plan were to slash benefits, enrollees could simply move to more attractive plans during the annual enrollment period. It's more likely that the reduced reimbursements will put pressure on insurance company profit margins.
And these plans could stand some tightening up.
A recent report to Congress on Advantage prepared by the majority staff of the U.S. House Committee on Energy and Commerce found that:
-- Medicare paid $12 billion more in 2009 for Advantage beneficiaries than it would have if the beneficiaries had participated in traditional Medicare.
-- Advantage plans are spending less of every premium dollar on actual medical care delivery than basic Medicare.
-- Twenty-three insurance companies in the program spent $121 million on 355 corporate retreats for executives, insurance brokers and board members between 2008 and 2009.
Next, let's talk about the new Medicare benefits contained in the law
First, the Medicare D prescription drug doughnut hole will be closed. That's the coverage gap that starts when a beneficiary's annual out-of-pocket spending hits$2,830, and resumes at the catastrophic level ($4,550 out of pocket).
This year, patients who enter the doughnut hole will get a $250 rebate. In 2011, pharmaceutical companies will provide a discount of 50 percent on brand-name drugs to low- and middle-income beneficiaries who find themselves in the doughnut hole. Then, the doughnut hole itself will shrink a bit every year, ultimately disappearing entirely in 2020.
The law also contains some important improvements to traditional Medicare aimed at boosting preventive care. Deductibles and co-payments will be eliminated for most preventive care services, starting this year. And doctors will receive incentives for joining “accountable care organizations", which will coordinate patient care and foster greater attention to prevention.
Starting next year, Medicare patients also will be able to get an annual wellness visit -- with no co-payment or deductible -- that includes a comprehensive health risk assessment and a long-term personalized prevention plan.
One possible negative in the bill for retirees is the end of a tax break starting in 2013 for employers that provide prescription drug coverage to Medicare-eligible employees. The ranks of these employers has been dwindling fast in recent years, but ending the tax subsidy could encourage more companies to discontinue the benefit or encourage retirees to use Medicare Part D benefits instead.
Meanwhile, the new law will help millions of older Americans who have lost health insurance but are too young for Medicare.
While insurability issues affect Americans of all ages, the problems are acute for people over 50, who tend to have more pre-existing conditions than younger people do, and use more health care.
Starting this year, insurance companies won't be able to refuse applicants with pre-existing conditions, and the new law also creates new insurance options for people without group coverage. Within six months, you can buy into a new high-risk insurance pool that caps annual out-of-pocket costs at $5,950 for individuals and $11,900 for families. While buying coverage will be mandated for most people starting in 2014, tax credits will be available on a sliding income-based scale to help make the coverage affordable.
The high-risk pool will serve as a bridge to longer-term solutions.
These include private insurance exchanges that will operate starting in 2014, as well as expanded Medicare for low-income households.
The new individual insurance options will open up some very positive new options for baby boomers in their 50s and early 60s, many of whom are eager to move on to second careers, entrepreneurial ventures and other new paths, but have been hanging on to jobs solely for the health benefits.
Health reform gives them the freedom to move on.
That will stimulate entrepreneurial activity, and it's going to open up spots on the management charts, allowing younger people to advance.
Is the smoke clearing for you yet?
Current Conditions in the Automotive Market
General Motors fights for the coveted spot of number one in the global automotive manufacturing market. The company held the spot for more than sixty years until the first quarter of 2007 when Toyota Motors overtook GM as number in automotive sales globally. General Motors sold approximately 9.3 million vehicles worldwide in 2007 according to the General Motors website. Toyota announced the same number of sales at 9.3 million. According to Edmunds GM edged Toyota by merely 3,000 units to maintain overall global sales supremacy (Edmunds.com, 2008). Light vehicle sales were 16.15 million for 2007; number one GM’s portion was 3.87 million units to, second place, Toyota’s 2.63 million units (Autoobserver.com, 2008). Current numbers are down significantly from 2007 and highs in 2006. General Motors has not announced summer numbers for the third quarter of 2008. The first two quarters are devastatingly low compared to recent years. GM sales, for the first three quarters of 2008, have been off 18.3% from the same time last year.
New companies entering the market, whose downturn has all but crippled U.S. companies; have their work cut out for themselves. Tata Motors Limited in India is one of three new companies trying to grab a share of the world market. Tata manufacturers light cars and trucks, also medium and heavy duty commercial vehicles. The company is bringing to market an inexpensive sub-compact car called the Nano. The vehicle will sell for approximately $2,500. The company hopes the car will sell well in gas guzzling countries such as the U.S. and China. The car has yet to pass safety standards in many countries and it is unknown how the upgrades will affect the price. Some companies are pulling out of slow or defunct areas of the globe. China has increased sales for GM in the last decade, but recently sales have also slowed in China for other manufacturers. Smart Car USA is another company in recent months to dive into the sub-compact market with the ForTwo. The company has had better than expected sales due to high fuel prices and exceeding U.S. highway safety standards.
General Motors adjusts prices continuously to entice customers to buy their automobiles. During the summer of 2008 GM advertised employee pricing for everyone. This scheme was believed to kick start sales. Due to the economic downturn customers did not rush out and begin buying cars and trucks. Employee pricing allows dealers to sell vehicles at a lower price, a small percentage above cost. Financing has become harder to qualify for because the financial industry is in a freefall and the government has to bail out the banks. Banks and lending institutions are tightening the reins on sub-prime and risky loans.
Technology may help save General Motors from complete collapse. The introduction of the Volt, a full electric plug in car, in 2009 is predicted to catapult GM into the next decade. New hybrid technology has helped brands Chevrolet and GMC to compete in the market of large SUVs. The Tahoe and Yukon hybrids have sold light numbers compared to smaller hybrids from Toyota and Honda. Cadillac has jumped onboard and has introduced the Escalade Hybrid. This truck is a full-size, luxury SUV that GM is hoping will entice luxury owners to convert to greener vehicles. New safety standards like second generation airbags, traction control, and roll-over avoidance are great leaps forward for the automotive industry. Luxuries like XM satellite radio, navigation systems, and OnStar are big selling points for General Motors. Automatic drive systems are in development and are still in the infant stage but the technology is quickly gaining ground.
Productivity within GM is nowhere the standards of Toyota or Honda and labor unions continue to put pressure on the American auto industry to drive up wages and benefits without stepping up production to pay for these costs. The labor units cost GM more each year as older workers retire and new workers must replace them. The retirement pensions continue to rise as retirees are living longer and wages for the factory workers rise because of union contracts. This phenomenon has caused GM to close plants and lay-off workers. Honda and Toyota do not have these problems because their employees do not retirement plans or large severance packages when a plant closes or staff is reduced. Fixed costs are rare in the automotive industry, and the variable costs grow each year. Fixed costs are the contractual agreements the company faces each year. Wages, benefits, and parts supplies are contracted to stay flat throughout the duration. The variable costs continue to skyrocket each year as fuel costs are out of control, shipping costs are tied to the rise in fuel, and energy costs like electricity and water.
Demand is waning every month and costs are rising. General Motors continues to change the prices of the vehicles or making deals with lower interest rates to bring customers into the dealerships. Nothing has helped drive sales up in the lagging economy. Dealerships are being consolidated or eliminated altogether to cut costs and give customers less options. Less competing dealerships allows GM to keep inventories lower and meet the drop in demand. AutoNation is the largest automotive retailer in the world. Bill Heard Inc. was the largest GM dealer franchise in the U.S. until the recent collapse and subsequent bankruptcy of the company. AutoNation has closed and consolidated a number of dealerships dropping the number of dealerships from approximately 350 nationwide to 250. This has helped GM to shed inventory costs and allowed production to drop off to meet demand. This also has caused GM to close plants and release workers. The plan is to close the Moraine and Janesville plants in December 2008 and early 2009 respectively. Over 8,000 jobs will be cut saving millions over the next five years as GM concentrates on producing smaller cars.
Supply and demand are tricky puzzles GM and the rest of American auto manufacturers are having a hard time figuring out. GM has lowered production to meet demand, but as the economy continues to spiral downward and costs for families rise, demand is slipping lower and supply is still too high. Inventories are setting dead on dealers’ lots while sales continue to slide. The hope of the government’s 700 billion dollar bailout of the financial industry is that lending will begin to help stabilize the economy and cash will flow back into circulation. The problem is consumers are scared and do not want to risk their money by making unnecessary purchases.
General Motors chief Rick Wagoner is optimistic about the future of the company. He believes the company will rebound and continue to reign as the superpower of the auto industry. Some experts have talked about the collapse of GM and eventual bankruptcy. Rick Wagoner has denied these claims and says the company is in great shape financially even though sales have dropped.
References
Autoobserver.com (2008). 2007: A Historic Year for U.S. Vehicle Sales. Retrieved October 12, 2008, from http://www.autoobserver.com/2008/01/2007-a-historic-year-for-us-vehicle-sales.html
Edmunds.com (2008). GM Edges Toyota in Global Sales in 2007. Retrieved October 12, 2008, from http://www.edmunds.com/insideline/do/News/articleId=124482
New companies entering the market, whose downturn has all but crippled U.S. companies; have their work cut out for themselves. Tata Motors Limited in India is one of three new companies trying to grab a share of the world market. Tata manufacturers light cars and trucks, also medium and heavy duty commercial vehicles. The company is bringing to market an inexpensive sub-compact car called the Nano. The vehicle will sell for approximately $2,500. The company hopes the car will sell well in gas guzzling countries such as the U.S. and China. The car has yet to pass safety standards in many countries and it is unknown how the upgrades will affect the price. Some companies are pulling out of slow or defunct areas of the globe. China has increased sales for GM in the last decade, but recently sales have also slowed in China for other manufacturers. Smart Car USA is another company in recent months to dive into the sub-compact market with the ForTwo. The company has had better than expected sales due to high fuel prices and exceeding U.S. highway safety standards.
General Motors adjusts prices continuously to entice customers to buy their automobiles. During the summer of 2008 GM advertised employee pricing for everyone. This scheme was believed to kick start sales. Due to the economic downturn customers did not rush out and begin buying cars and trucks. Employee pricing allows dealers to sell vehicles at a lower price, a small percentage above cost. Financing has become harder to qualify for because the financial industry is in a freefall and the government has to bail out the banks. Banks and lending institutions are tightening the reins on sub-prime and risky loans.
Technology may help save General Motors from complete collapse. The introduction of the Volt, a full electric plug in car, in 2009 is predicted to catapult GM into the next decade. New hybrid technology has helped brands Chevrolet and GMC to compete in the market of large SUVs. The Tahoe and Yukon hybrids have sold light numbers compared to smaller hybrids from Toyota and Honda. Cadillac has jumped onboard and has introduced the Escalade Hybrid. This truck is a full-size, luxury SUV that GM is hoping will entice luxury owners to convert to greener vehicles. New safety standards like second generation airbags, traction control, and roll-over avoidance are great leaps forward for the automotive industry. Luxuries like XM satellite radio, navigation systems, and OnStar are big selling points for General Motors. Automatic drive systems are in development and are still in the infant stage but the technology is quickly gaining ground.
Productivity within GM is nowhere the standards of Toyota or Honda and labor unions continue to put pressure on the American auto industry to drive up wages and benefits without stepping up production to pay for these costs. The labor units cost GM more each year as older workers retire and new workers must replace them. The retirement pensions continue to rise as retirees are living longer and wages for the factory workers rise because of union contracts. This phenomenon has caused GM to close plants and lay-off workers. Honda and Toyota do not have these problems because their employees do not retirement plans or large severance packages when a plant closes or staff is reduced. Fixed costs are rare in the automotive industry, and the variable costs grow each year. Fixed costs are the contractual agreements the company faces each year. Wages, benefits, and parts supplies are contracted to stay flat throughout the duration. The variable costs continue to skyrocket each year as fuel costs are out of control, shipping costs are tied to the rise in fuel, and energy costs like electricity and water.
Demand is waning every month and costs are rising. General Motors continues to change the prices of the vehicles or making deals with lower interest rates to bring customers into the dealerships. Nothing has helped drive sales up in the lagging economy. Dealerships are being consolidated or eliminated altogether to cut costs and give customers less options. Less competing dealerships allows GM to keep inventories lower and meet the drop in demand. AutoNation is the largest automotive retailer in the world. Bill Heard Inc. was the largest GM dealer franchise in the U.S. until the recent collapse and subsequent bankruptcy of the company. AutoNation has closed and consolidated a number of dealerships dropping the number of dealerships from approximately 350 nationwide to 250. This has helped GM to shed inventory costs and allowed production to drop off to meet demand. This also has caused GM to close plants and release workers. The plan is to close the Moraine and Janesville plants in December 2008 and early 2009 respectively. Over 8,000 jobs will be cut saving millions over the next five years as GM concentrates on producing smaller cars.
Supply and demand are tricky puzzles GM and the rest of American auto manufacturers are having a hard time figuring out. GM has lowered production to meet demand, but as the economy continues to spiral downward and costs for families rise, demand is slipping lower and supply is still too high. Inventories are setting dead on dealers’ lots while sales continue to slide. The hope of the government’s 700 billion dollar bailout of the financial industry is that lending will begin to help stabilize the economy and cash will flow back into circulation. The problem is consumers are scared and do not want to risk their money by making unnecessary purchases.
General Motors chief Rick Wagoner is optimistic about the future of the company. He believes the company will rebound and continue to reign as the superpower of the auto industry. Some experts have talked about the collapse of GM and eventual bankruptcy. Rick Wagoner has denied these claims and says the company is in great shape financially even though sales have dropped.
References
Autoobserver.com (2008). 2007: A Historic Year for U.S. Vehicle Sales. Retrieved October 12, 2008, from http://www.autoobserver.com/2008/01/2007-a-historic-year-for-us-vehicle-sales.html
Edmunds.com (2008). GM Edges Toyota in Global Sales in 2007. Retrieved October 12, 2008, from http://www.edmunds.com/insideline/do/News/articleId=124482
Ethics in Business
Ethics in the business world has become a media showcase in the last decade. With Enron, WorldCom, Tyco, Bernie Madoff, Martha Stewart, and Hilary and Bill Clinton having their business dealings questioned and investigated the country has been thrust into an ethics conundrum. What is right and/or wrong? What are the guidelines? Who decides what is right/wrong? The questions posed here are not the same for everyone. Ethics and morals of the individual are based on our experiences, childhood lessons, parents, school, and friends, among others.
In business the ethics, morals, goals, mission, and policies are made up by the owner(s), board of directors, or in the case of the government, Federal and State lawmakers. A company’s goal or mission states what the company plans to do in its life cycle. The ethics of the company are major contributors to the formation of the mission statement. No company states its mission to rip-off, cheat, and swindle its customers out of as much money as it can before getting caught. Although some companies have done this, the mission statement of a company, like Enron stated “Respect, Integrity, Communication and Excellence”, is opposite of the actions shown by the company (Corporate-aliens.com, n.d.). Enron’s Code of Ethics stated,
“As officers and Enron Corp, its subsidiaries, and its affiliated companies, we are responsible for conducting the business affairs of the companies in accordance with all applicable laws and in a moral and honest manner...We want to be proud of Enron and to know that it enjoys a reputation for fairness and honesty and that it is respected. Compliance with the law and ethical standards are conditions of employment and violations will result in disciplinary action, which may include termination...in addition to responding to the Act, we are adopting this Policy Statement to avoid even the appearance of improper conduct on the part of anyone employed by or associated with the Company...We have all worked hard over the years to establish our reputation for integrity and ethical conduct. We cannot afford to have it damaged” (Soxfirst.com, 2006).
Enron unfortunately has become a poster child for how a company can get off track from its mission and code of ethics. The victims of these companies continue to feel the effects of these companies and their unethical behavior.
Ethics and Social Responsibility
A company’s social responsibility is directly correlated to its code of ethics. Nike’s code of ethics requires its contractors and partners to abide by the same rules as Nike’s employees. One part that stands out as a socially responsible plan is “The contractor has written environmental, safety, and health policies and standards and implements a system to minimize negative impacts on the environment, reduce work-related injury and illness, and promote the general health of employees” (Pearce II & Robinson, 2011). This shows that Nike has a plan to reduce its environmental footprint and provide a safe workplace for its employees. This also requires Nike’s partners to adapt themselves to the same principles. With this plan Nike has forced its business ethics onto its partners and contractors. In some countries child labor and workers pay are not regulated by the governments of those countries. Nike has required that companies in its business community that wants to be a partner adhere to standards that Nike has deemed necessary to keep Nike’s image in the global marketplace high. Nike has addressed this in its code of ethics plan, “The contractor does not employ any person below the age of 18 to produce footwear. The contractor does not employ any person below the age of 16 to produce apparel, accessories, or equipment. If at the time Nike production begins, the contractor employs people of the legal working age who are at least 15, that employment may continue, but the contractor will not hire any person going forward who is younger than the Nike or legal age limit, whichever is higher” and “The contractor provides each employee at least the minimum wage, or the prevailing industry wage, whichever is higher; provides each employee a clear, written accounting for every pay period; and does not deduct from employee pay for disciplinary infractions” (Pearce II & Robinson, 2011). Companies with global power and consumer face value can use that leverage to impose its will on its partner companies. This poses the question, is that ethical? So the more money and power a company has can create ethical guidelines that other companies must follow or risk not being part of the success of the guiding company.
Ethical Perspective
Over the course of my educational experiences with the University of Phoenix my idea of ethics has been amended to view more than just the actions that affect me. I now assess how my actions will ethically affect others; teammates, subordinates, superiors, clients, and partners. I previously felt something that did not affect me in a positive way was unethical. Now I realize that view was selfish. I now view ethics as a basis for how an individual conducts him/herself in society for the benefit of all peoples. Treating people with respect and dignity is only part of ethics. Moreover being an ethical people does not make you a good person. Character and ethics go hand-in-hand.
In business the ethics, morals, goals, mission, and policies are made up by the owner(s), board of directors, or in the case of the government, Federal and State lawmakers. A company’s goal or mission states what the company plans to do in its life cycle. The ethics of the company are major contributors to the formation of the mission statement. No company states its mission to rip-off, cheat, and swindle its customers out of as much money as it can before getting caught. Although some companies have done this, the mission statement of a company, like Enron stated “Respect, Integrity, Communication and Excellence”, is opposite of the actions shown by the company (Corporate-aliens.com, n.d.). Enron’s Code of Ethics stated,
“As officers and Enron Corp, its subsidiaries, and its affiliated companies, we are responsible for conducting the business affairs of the companies in accordance with all applicable laws and in a moral and honest manner...We want to be proud of Enron and to know that it enjoys a reputation for fairness and honesty and that it is respected. Compliance with the law and ethical standards are conditions of employment and violations will result in disciplinary action, which may include termination...in addition to responding to the Act, we are adopting this Policy Statement to avoid even the appearance of improper conduct on the part of anyone employed by or associated with the Company...We have all worked hard over the years to establish our reputation for integrity and ethical conduct. We cannot afford to have it damaged” (Soxfirst.com, 2006).
Enron unfortunately has become a poster child for how a company can get off track from its mission and code of ethics. The victims of these companies continue to feel the effects of these companies and their unethical behavior.
Ethics and Social Responsibility
A company’s social responsibility is directly correlated to its code of ethics. Nike’s code of ethics requires its contractors and partners to abide by the same rules as Nike’s employees. One part that stands out as a socially responsible plan is “The contractor has written environmental, safety, and health policies and standards and implements a system to minimize negative impacts on the environment, reduce work-related injury and illness, and promote the general health of employees” (Pearce II & Robinson, 2011). This shows that Nike has a plan to reduce its environmental footprint and provide a safe workplace for its employees. This also requires Nike’s partners to adapt themselves to the same principles. With this plan Nike has forced its business ethics onto its partners and contractors. In some countries child labor and workers pay are not regulated by the governments of those countries. Nike has required that companies in its business community that wants to be a partner adhere to standards that Nike has deemed necessary to keep Nike’s image in the global marketplace high. Nike has addressed this in its code of ethics plan, “The contractor does not employ any person below the age of 18 to produce footwear. The contractor does not employ any person below the age of 16 to produce apparel, accessories, or equipment. If at the time Nike production begins, the contractor employs people of the legal working age who are at least 15, that employment may continue, but the contractor will not hire any person going forward who is younger than the Nike or legal age limit, whichever is higher” and “The contractor provides each employee at least the minimum wage, or the prevailing industry wage, whichever is higher; provides each employee a clear, written accounting for every pay period; and does not deduct from employee pay for disciplinary infractions” (Pearce II & Robinson, 2011). Companies with global power and consumer face value can use that leverage to impose its will on its partner companies. This poses the question, is that ethical? So the more money and power a company has can create ethical guidelines that other companies must follow or risk not being part of the success of the guiding company.
Ethical Perspective
Over the course of my educational experiences with the University of Phoenix my idea of ethics has been amended to view more than just the actions that affect me. I now assess how my actions will ethically affect others; teammates, subordinates, superiors, clients, and partners. I previously felt something that did not affect me in a positive way was unethical. Now I realize that view was selfish. I now view ethics as a basis for how an individual conducts him/herself in society for the benefit of all peoples. Treating people with respect and dignity is only part of ethics. Moreover being an ethical people does not make you a good person. Character and ethics go hand-in-hand.
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