The Most Useless Question

It should come as no surprise to my readers (assuming I have readers) that I’ve been through enough job interviews to have formed a complete set of opinions about interviewers – or their Human Resources departments, at least – based on the standard questions they ask the applicants. I’m not going to deny that standard questions are important, or that most companies have a list of them – it is difficult to compare the answers a set of applicants give you if you don’t ask them all the same questions, and who’s even mentioned the accusations of bigotry (because you asked some applicants different questions than others!) yet? But there are good questions and bad questions, and some are worse than others…

First of all, any question that has been considered an industry standard for decades is probably a bad idea. Enter the question “What are your greatest strengths and weaknesses?” into Google, just to take the obvious example, and you will get 2,110,000 hits (as of this writing), including hundreds (probably thousands) of possible replies for that question and detailed instructions on how to use them, when to use them, how to tell which one your interviewer would most like to see, when to be modest, when to be honest, when to try turning the weakness into another strength, and when to simply lie through your teeth. If you look in the right places online, you should be able to find the fifty or so most asked interview questions, and complete explanations of how each one works and how to answer it, in a matter of minutes. And there’s no real motivation for any job applicant not to do exactly that…

Unlike a factual question, this sort of inquiry calls for a personal opinion, and while lying about the facts can be a crime under some conditions (e.g. perjury), being conceited, arrogant or delusional in your opinions about yourself generally isn’t. Even worse, though, are the questions that have virtually no chance of providing you with any useful information or insights even if they are answered candidly. In her column on the Forbes website, Maureen Henderson make a strong case for the “Most Useless Job Interview Question There Is” being that evergreen favorite, “Where do you see yourself in the next 5/10/20 years?” As Ms. Henderson correctly notes, most people couldn’t answer that question if they wanted to, given the literally unknowable nature of events that haven’t happened yet. Moreover, the average person would be thinking about more than just what job they’re going to have in five years; if they answered the question honestly they’d probably be telling you about their personal life, family, plans for retirement, or many other things that have no bearing on whether or not they would make a good addition to your staff…

Now, I don’t mean to imply that screening applicants and identifying the best choices for specific jobs is easy, or that the questions that will help you make that determination are obvious and easy to formulate. But depending on how dynamic your industry happens to be, it may not be possible to say with any confidence what positions will even exist in five or ten years, let alone whether any particular candidate would be qualified to do them. Which means that even if your applicant tries to answer this question honestly, and even if they manage to limit the answer to things that directly relate to your company and their prospective job, the answer they give you is still likely to be meaningless…

In the long run, you’re probably better off putting together technical questions about job issues, problems the applicant might have to solve on their new job, conflicts they were able to resolve on their last job, or details about their professional knowledge and training. You could have them tell you about some accomplishment of which they are proud, the circumstances that lead them into their current career path, their favorite school subjects or on-the-job training programs, or their personal/professional preferences in computers, equipment, cell phones, consumer electronics, cars, airlines, hotels, restaurants, clothing brands, retail stores, furniture, decorations, family pets, retirement planning strategies, or anything else that might give you some insight into what they would be like to work with and whether or not they would be useful to the company going forward…

You might not anything useful out of these questions, either. But at least you’re less likely to get some generic (and useless) response that some HR expert wrote down and posted on to the Internet ages ago…

It All Becomes Clear Now

Some time ago a video went around the Internet of a FedEx delivery driver throwing an expensive computer monitor over a seven-foot security gate, marking the package as “delivered,” and driving off. A few weeks later a second video showed us another FedEx driver stealing a package left by another service off of a doorstep while making a later delivery. This was rapidly followed by a blizzard of additional videos, some real and some staged, in which people in FedEx uniforms (real and home-made) did a variety of wince-inducing things that the company would probably like to believe never actually happen, before something else popped up and the world’s collective attention moved on. At the time, I was baffled by the minority of these videos that were eventually verified as real; it seemed fantastical that even a very large company could possibly experience that much bad behavior in that short a span of time. Little did I know that many of the people involved didn’t actually work for the company…

You can pick up the story from the Bloomberg site if it hasn’t been taken down, but apparently ever since FedEx bought Roadway Package Systems in 1998 and developed it into the FedEx Ground subsidiary, they’ve been classifying all of the delivery drivers as independent contractors, not employees. As a result, the company does not pay for overtime, health or retirement benefits, or even the drivers’ Social Security contributions; they actually deduct money from the drivers’ paychecks to cover the use of the delivery trucks and the cost of the uniforms that these personnel are required to wear. According to some of the lawsuits that have popped up about this, the company is, in fact, taking as much as sixty percent of the “wages” paid to these personnel, turning what would otherwise be good jobs into ones that barely pay…

It remains to be seen how the various legal actions will turn out; U.S. Circuit Courts in Indiana and D.C. have sided with the company, but the U.S. Ninth Circuit Court of Appeals in San Francisco ruled that the FedEx Ground drivers are employees (and entitled to all of the same rights as any other employee) in a decision handed down just this past August. Now the Kansas State Supreme Court has ruled in favor of the drivers (as of October 3^rd), and the National Labor Relations Board (NLRB) has rejected FedEx Ground’s claims, finding that the drivers are in fact employees. This issue is still a long way from being resolved, and so far the company is still fighting, but the momentum seems to be with the drivers. As a former management consultant and analyst, I can’t help wondering if anyone has pointed out to the company that this whole policy was idiotic in the first place…

FedEx Ground drivers are the company’s front line customer service personnel; in many cases they are the only human contact customers will have with the firm. If those employees are conscientious, helpful, and treat both the customer and their packages well, it reflects well on the company and makes people more inclined to use the service again. If those employees are grumpy, surly, disgruntled, resentful, or angry with their employer, they are likely to do things like throwing packages of delicate electronics over fences, leaving packages in garbage cans, or even (in extreme cases) leaving the shipments at any random address along their route rather than delivering them. And while it would facile to blame the company for all of the bad behavior of its personnel, this system is creating the perception that the company does not care about its delivery personnel, and will cheerfully rip them off for more than half of what they are allegedly making in the first place…

None of this excuses the bad behavior (and outright criminal offenses) being committed by the “independent contractor” driver personnel, of course. But it does offer some explanation for those nagging questions about how an otherwise highly successful company ends up with that many miserable excuses for employees…

Protection from What?

By now most of you will be familiar with the automobile company that calls itself Tesla Motors; some of you may also be familiar with its products, which are considered to be some of the most advanced electric vehicles in the world. What you may not have realized is that in addition to changing the way cars are designed, built, marketed, and refueled, Tesla Motors has also changed the way cars are sold, operating almost entirely online. There are display locations (the company calls them “Galleries”) in a number of states where you can examine a Tesla vehicle, and the company is working on how to arrange test drives, but nothing quite like the traditional franchised car dealerships used by all of the other companies that sell cars in the United States. As it stands, you can go online, choose all of the options you want in your Tesla product, including color scheme, place your order, and have the car delivered to your door

Compared to the traditional method of selling a car, this new approach has a number of advantages – the largest of which is cost. Tesla isn’t collecting franchise fees from its dealers, which must have some impact on their bottom line, but from a sales standpoint the company does not have the overhead a dealership experiences, either in payroll or physical plant; they also don’t have the dealer’s mark-up to consider. Tesla’s primary products to date have all be relatively expensive, but they’ve been able to offer them for sale at a lower price than any vehicle made for equivalent cost while still maintaining a greater margin than most of their competitors. You might expect the people who own the traditional car dealerships to see this as a direct threat to their business model, control of the market, and way of life, and to take any action necessary to stop Tesla’s sales operations. You would not be disappointed in that expectation…

You can pick up the story on the Bloomberg News site if you want to, but what they’re talking about is a bill that has already been passed by the Legislature here in Michigan, and is currently being reviewed by the Governor’s office, that will ban sales of Tesla products (or any other automobile sold using any channel other than a franchised dealership) within the state. Given that Michigan is home to all three of the major U.S. automakers, this legislation comes at the surprise of absolutely nobody. What I find surprising about it is the grounds the automobile companies and their governmental pawns are using to ban Tesla’s sales operations. “States are fully within their rights to protect consumers by choosing the way cars are sold and serviced,” said Charles Cyrill, a spokesman for The National Automobile Dealers Association, in an email to Bloomberg. He goes on to claim that without competition between dealers to keep the price down, there is nothing stopping the manufacturer from raising their prices…

As so often happens, I’m left wondering if the National Automobile Dealers Association is made up entirely of credulous idiots, or if they think the general public is so constituted. Dealerships do not usually compete with each other on price, because they are working from the same MSRP set by the manufacturer, and because they are working within protected territories guaranteed by their franchise agreements. But even if they did, the primary force holding down the price of a new car isn’t competition with other dealers; it’s the availability of equivalent products. If any giver carmaker raises their price above what the public is willing to pay for their product, all of their customers will just move to a more reasonably-priced alternative. That’s how a free-market economy works – at least, when it’s not being manipulated by powerful business interests through political influence…

Forcing Tesla to work through traditional dealerships would have no impact on the invoice price of the car – what it costs to buy one from the factory – it will only impact the price the customer has to pay for one, since the price differential is the dealerships’ only source of income. It has some benefit for the public, in the sense of creating jobs for franchise owners and car salespeople, but none whatsoever for the customers. In fact, the only real winners in this scenario are all of the other automobile dealerships and their franchising companies, who will have an easier time competing with Tesla on price if their newest competitor is forced to incur the same price structure under which everyone else labors…

How anyone manages to state with a straight face that such a bill represents anything other than blatant protectionism for the companies supporting the lobby group is beyond me, but perhaps that’s why Mr. Cyril chose to put this howler in an email instead of actually saying it in person. And while I’m sure we can all appreciate the U.S. auto industry’s efforts to protect consumers from more efficient direct sales channels, I highly doubt if anything this heavy-handed is going to help their public image – or keep Tesla from taking away still more of their market share…

What Ever Happened to Free Parking?

Over the years I’ve gotten into disposable income arguments with a number of people, most of whom have told me that conspicuous consumption is disgusting no matter how small the amounts involved are relative to your income, and people who spend $800,000 on a car or $200,000 on a bottle of whiskey should just get a Honda Accord and a bottle of some premium brand and donate the other $970,000 or so to charity. I’d like to think that I’m more tolerant than that, although in fairness I should probably just admit that I don’t particularly care how people want to squander their money. I follow the Heinlein school of ethics, which holds that anything you enjoy that does not unnecessarily harm another person is not wrong in an ethical sense – although it may stupid. The case of the million dollar parking space, as reported in the New York Times this week, probably falls into that last category…

Even if you’ve never been to New York City, the concept that parking would be hard to find and very expensive there shouldn’t be too hard to grasp. Space within the city is extremely limited, and as a result all real estate is expensive. Most of the residents don’t even own cars, and a surprising percentage of them will be happy to tell you, at the drop of anything resembling a cue, how wonderful it is to be able to go anywhere you want to go on public transportation, how much money they save every year by not having to make car payments (or pay for car insurance), and why this is further evidence of the complete superiority of their city to anywhere else in the world you could possibly live. I’m not convinced that the existence of a parking space that will cost you as much as $6,600 per square foot supports that contention, however…

According to the story in the New York Times website, the parking spaces are part of a new condo development in a building that will offer three-bedroom units in the $8.7 million to $10.45 million range – or around $3,150 per square foot; less than half of what the parking spots cost based on footage. Or, to look at it another way, each of these parking sports will require financial resources that would be sufficient to purchase a really nice house (complete with multi-car garage) in many other large cities, or four quite large houses in a good part of East Lansing, Michigan, outright. This would seem extravagant almost anywhere, but in a city that prides itself on its public transportation – and which is widely associated with both horrible driving conditions and unbearable automotive expenses – it seems like a complete logical disconnect…

Now, we should probably acknowledge that according to the same story it isn’t that unusual to see parking spaces with a six-figure price listing in New York; the author also points out that the available number of off-street parking spaces has dropped by around 26% over the past 30 years, whereas the population of the city certainly has not. We might also want to concede that someone who is paying in excess of $10 million for a new residence (especially a condominium) might consider an extra 10% in order to park in the same building no more than a minor expense – or possibly an interesting investment, since it will both enhance the value of the condo and also offer a property than can be sold separately from the residence. But it should probably also be noted than anyone who can afford to spend that kind of money on real estate can most likely also afford cab fare…

In the long run a parking space that costs four times more than the national average for a house may seem like a particularly disgusting example of conspicuous consumption, but if the people who buy them end up selling the properties at a good profit in five or ten years it’s hard to imagine what was wrong with this choice from a business standpoint; if the spaces appreciate the way some real estate did in the early 2000s the owners might end up having the last laugh on all of us. The truth is, if I could realize a profit of millions of dollars – or even $200,000 for a nice 20% profit – on buying and selling a piece of property, I don’t believe that I’d care whether it was a 200-unit apartment complex or a 200 square foot parking space…

And I can’t imagine why anyone else should care, let alone give me a whole lecture on conspicuous consumption…

Please Tell Me It’s A Hoax

There are times when you run across a story so absurd that you have to wonder if you’re being pranked, either by the news media or by the people in the story itself. The unfortunate fact is that much of what you can read about online, even more so than traditional news outlets, is completely untrue and was created for the sole purpose of getting you to repeat it and get upset about it. So when the story about an ultra-Conservative group attempting to run a donut shop founded and run by a high school student out of business because they don’t like the name of the place first hit my desktop, I made a determined effort to find some indication that the story was a hoax. Unfortunately, this does not appear to be the case…

You can go to the local ABC affiliate station’s website and read it for yourself if you like, but even the station is saying that they can’t take responsibility for all of the details being correct. The story goes that conservative groups in the small town of Front Royal, Virginia, have converted the community into something right out of a Hollywood movie script, waging war on anything they consider to be insufficiently religious, including all references to magic, the supernatural, popular culture, music, pre-marital contact (of any kind) between people of different genders, or – apparently – donuts being sold in a store with a 1950s pin-up theme. It’s not exactly a new concept – every few years another small town somewhere in America will drop into a Footloose scenario and outlaw parties, mixed-gender social events, dancing, or whatever else has its elders in an uproar. This is the first time on record, at least as far as I can tell, that theocratic groups of this type have gone after someone for the name and theme of an otherwise harmless business, however…

I’m not going to present this as an ethics issue because I don’t believe there is another side to the story – a group of people are using their alleged religious convictions to cover their bigotry and hatred for anybody and anything different from themselves. I should acknowledge, I suppose, that I have no evidence that these so-called “Christian Conservatives” would react any differently if the donut shop was being run by a male entrepreneur, or someone whose surname is more Anglo than “Ramos,” but I know which way I would bet if I had to…

What makes this a business issue – and brings it into my purview in this blog – is that what they are actually attacking is a successful business run by a young woman who has managed to start up and run her operation while attending school full time. Even if we are willing to stipulate that running a donut shop with a slightly racy theme does somehow interfere with someone’s ability to practice a level of humorless, joyless religious fanaticism that even our Puritan ancestors would find embarrassing –and I am not willing to so stipulate, in fact – that does not change the fact that these wingnuts are infringing on someone’s right to operate a business and earn a living. And if they can do that to Ms. Ramos and her donut shop, and get away with it, what is to stop them from targeting any other woman-owned, minority-owned, or otherwise inconvenient business? For that matter, how long is it going to be before people with no religious convictions whatsoever start making up whatever stories they need to in order to drive a competitor out of business?

Assuming that this hasn’t already happened, of course…

Now, I must once again point out that I don’t have any independent confirmation of the story. I hope, more intensely than I can possibly tell you, that the whole thing turns out to be a hoax; that there really is a Tiana Ramos and that her Naughty Girl Donuts is thriving and prospering, surrounded by supportive townspeople who can’t even imagine why anyone would make them out to be a bunch of hateful fanatics. Because if this story is true it should sent a chill down the back of every entrepreneur and business owner in this country – and I will fear for the future of our Republic…

Your Tax Dollars At Work!

The other day I was reading a story online about some of the agencies that have been receiving surplus equipment from the US military through the U.S. Department of Defense’s Excess Property Program. If you haven’t heard of this, it’s the same program through which the police force in Ferguson got all of the armored vehicles, assault rifles, tactical body armor, black uniforms and helmets, and other gear that made them look less like law enforcement officers and more like motorized infantry. In theory, this will allow local governments to obtain the equipment they would need in order to deal with major threats to the community, like terrorist attacks or natural disasters, without draining more money from their budget than they could possibly afford. In practice, however, there seem to be a few problems with this idea…

To begin with, any law enforcement agency that routinely makes use of this gear during non-disaster, non-catastrophe conditions is going to have an image problem. The sight of a wave of officers dressed in black tactical gear and body armor with military-grade rifles, grenade launchers, and armored vehicles is enough to convince anyone seeing it that the people running that agency have gone power-mad and are reacting with excessive force just so they can play with their exciting new toys. The sight of that kind of firepower being aimed at unarmed civilians staging a protest against unjustified use of deadly force is going to make an already tense situation worse, and the fact that such equipment (and the people using it) frequently are being used in inappropriate situations does not help…

Every time a police department deploys a SWAT team, complete with assault rifles and armored vehicles, in order to search for suspects who have never actually lived at the address being invaded, everyone in this country is a little less free than they had been, and all of the traditional animosity and distrust between underserved and disenfranchised communities and their local authorities become that much worse. But some of these scenes are enough to convince even social conservatives that things have gone too far. For example, last week the San Diego Unified School District acquired its own armored vehicle under this program, a mine-resistant ambush protected vehicle or MRAP, of the kind used for army patrols in Afghanistan…

You can catch the story from the local public radio station’s home page if you’d like; there are some really great pictures included (even if one of them has been digitally altered) that give you an idea of the size of the vehicle involved. The school district is insisting that they will only use the MRAP as a rescue vehicle, to knock down walls or transport children to safety in the event of an “active shooter” situation or a fire or earthquake. No one has explained, as yet, what is going to happen if they accidentally knock down a wall on top of some unsuspecting class, or how they appear to have managed to get through the last century-plus of operations without owning a vehicle whose armor can stop small-arms fire and IDE explosions, if this need is so critical. But nearly as bad, at least in my opinion, is the inherent squandering of government funds involved here – because that’s our money they’re throwing away…

Since the despicable attacks of 13 years ago today there have been exactly zero armed incursions on American soil, and exactly that many occasions when local law enforcement would have had occasion to use military-grade weapons to repel one. The world is a more dangerous place than it was decades ago, but nearly all of the threats to our nation and our way of life are made up of covert attacks and shadow warfare carried out at levels that local police forces will never encounter. The only possible benefit of this military surplus give-away is to require the armed forces to buy new gear, which funnels more public funds into the companies that make it. The whole thing is a mass of the worst possible kind of pork-barrel spending, covered with a two-faced mock-patriotic flag-waving justification stinking to high heaven of both social and financial inequity…

And I object to it, in the strongest possible terms, because the funds we are giving away consist entirely of money we are borrowing from other nations – some of which aren’t all that friendly…

Call Me Paranoid…

I don’t know if you’ve heard of the ride service that calls itself Uber; if they don’t have anyone working the area in which you live it may not have come up yet. The company is based around the smart phone app of the same name, which allows the user to summon a driver to pick them up from just about anywhere and transport them, much the way a taxi service does. The difference is that Uber drivers are not professional drivers and they don’t have a cab driver’s license; they don’t even work directly for the company. For the most part, the Uber drivers are just private citizens with cars whom you can pay to take you somewhere, assuming that they happen to be out driving around the area you’re in. Working from a modest start in 2009, the company is now reportedly operating in 34 countries and providing both work (for the drivers) and relatively cheap and safe transportation to the users – or, at least, that’s the idea…

My original reaction to the concept, when I encountered it in New York last year, was that this was something in which I would only participate if that were one of the demands made by terrorists holding my wife. To me, it sounded like the service was made for carjackers (have a car and a smart phone brought right to your door, whenever you want!) and armed robbers, not to mention the risk to Uber passengers, such as being kidnapped or assaulted by some random driver. And while it is true that the company would have some record of what happened to you – and where the police could find the driver after you went missing – I still couldn’t help thinking that this would be cold comfort to you if you ended up being the victim. I’ve known at least two people who were killed while hitchhiking, and while this is somewhat safer that just sticking your thumb out, it doesn’t seem that much safer…

It turns out I’m not the only one who thinks so. In fact, apparently some of these things are actually happening, according to an article on the Daily Beast site earlier this year. It turns out that there have been complaints against Uber drivers, including at least one who was accused of raping a passenger, and several who appear to have gotten access to their riders’ personal information and stalked them over the Internet (and possibly in person). I haven’t seen any cases of Uber drivers being carjacked – I’m not sure how you would tell such a crime from a “regular” carjacking unless the company went out of their way to acknowledge it as such – but it seems unlikely that a large number of people can expect to place themselves in harm’s way on a regular basis without some ill effects. This is especially true when you consider the statistics on cab drivers being assaulted and robbed while on duty…

Now, I understand that the vast majority of Uber drivers are fine, upstanding citizens trying to scratch out a living as contractors for an Internet company, just as the vast majority of Uber customers are just ordinary people who are just looking for a safer, faster, and less expensive way of getting around the city. The problem is, most of the people who live in your town are probably good, honest folks, too, but that probably doesn’t keep you from locking your doors at night…

The author of the linked article describes being stalked by an Uber driver, who then tracked down her work email and her employer’s work email to protest the negative review she gave the driver as the result of the stalking incidents. He may not actually have meant any harm by this – it could in fact be a case of wanting to explain himself and apologize for his actions. But if the drivers can actually get access to passenger information (and the company has contradicted itself a number of times about how much of this is possible) then I don’t think it’s a very far stretch to conclude that eventually somebody is going to use that same information to do harm to one of their riders, either in person or in terms of identity theft…

All things considered, it just seems like a lot of risk to accept in the name of cheaper and potentially more convenient transportation – or for a low-paying part-time job. Or, to look at it another way, the entire business model looks a lot like another great idea ruined by people…

Limited Shelf Life

In business, one of the hardest things is knowing in advance which new products or services are going to maintain strong sales over time. A lot of people lost a lot of money in the late 1990s and early 2000s on the assumption that Beanie Babies would continue to appreciate in value forever, and a lot of people have lost a lot of money over the past three decades by assuming that home computers, the Internet itself, or social media were all passing fads that would soon go away again. It gets even harder when we move into the arts and pop culture, where even a certified platinum hit does not guarantee that a given band will ever have another song on the charts (the world teems with “one-hit wonders”), and a recording act that has been producing under-appreciated albums for twenty years might suddenly leap to prominence. I have to question if it is that hard to imagine that products with no reason for existing except to tap into (and cash in on) a prefabricated teen idol’s popularity might lack staying power, though…

A New York Post article from last week reveals the not particularly surprising news that cosmetics giant Elizabeth Arden is losing money on fragrances linked to both Justin Bieber and Taylor Swift. The reporters suggest that the effect is attributable to both lower-income customers cutting back on luxury items because of the economic situation and also to people getting tired of unpopular behavior on the part of the two celebrities in question (e.g. Bieber’s “bratty antics” and Swift’s “diva routine”). I have to agree that these factors probably do figure into the drop-off in sales of these products, but at the same time I have to note that the majority of pop acts over the past four decades have followed a similar career trajectory, and the percentage is even higher for those individuals specifically developed and groomed by a record company for the purpose (as opposed to naturally-occurring groups of musicians). And the increasing saturation of both the entertainment and cosmetic industries is making this type of failure increasingly common…

Go into any large retail establishment that carries the so-called “celebrity fragrance” products, especially around the holidays, and you will find yourself confronting dozens or hundreds of possible choices, none of which have any particular virtues apart from being endorsed by the particular celebrity whose picture appears on the package. In fact, other than “smell like this celebrity,” most of these products do not even attempt to provide any other selling points. By the same token, in the YouTube era it is possible for dozens (or hundreds) of new performers to appear at any given time, and even if a specific recording artist is able to sell a large number of albums and attract a large following, there is no way of telling how long that success will last – even assuming that the celebrity in question doesn’t do anything objectionable enough to drive his or her fans away…

Now, I don’t mean to suggest that there aren’t recording artists with staying power – the Rolling Stones are well into their sixth decade and showing no signs of stopping, to take the obvious example – or cosmetic products with even longer life spans, like some of the famous Chanel fragrances. But performers and products with that kind of longevity will generally have more to offer than just instant fame from a television show or a sleazy record producer, such as talent or actually smelling nice. In other words, they offer value for the customer’s money. And while there have been occasional exceptions over the years, I don’t think I would want to base my company’s strategy (and ultimately survival) on someone’s ability to catch lightning in a jar repeatedly over time…

Would You Believe…?

We’ve been talking in this space for some time now about the ongoing debate surrounding for-profit colleges, and specifically if the service they provide is worth the tuition they charge. There are some people who will insist that the entire industry is a scam; a carnival game that promises riches but will never give you any real value for your money – and in particularly egregious cases, like the “Trump University” scam, they are undoubtedly correct. There are also people who will insist that for most general education subjects the relative rigor of the school is less important than the fact that you took those classes in the first place, and there appears to be some support for that position as well. However, there is a new study out that adds an interesting spin on the debate…

You can pick up the original story from the Inside Higher Ed website if you want to, but what they’re talking about is a research project done by the National Center for Analysis of Longitudinal Data in Education Research (CALDER), where the researchers sent out a little under 9,000 simulated applications for entry-level jobs, half of which depicted community college graduates and certificate holders, and half of which represented people with equivalent credentials obtained from for-profit schools. In all cases, the fake applicants were presented as young people, with 2010 high school graduation dates and with a consistent level of work experience, training, skills and abilities. And what the researchers discovered was that the response to the two different applicant pools was virtually identical – roughly the same percentage of people in each group received positive replies from employers and requests for interviews…

Now, there’s definitely a temptation to see this study as deflating the claims of the for-profit industry, and in fairness it’s hard to blame anyone for wanting to do that. Even leaving the outright charlatans out of it, we have all seen a lot of advertising over the past decade claiming that the for-profit schools can get you a better education on your own schedule, without having to deal with any of the aggravation associated with traditional institutions of higher education (like qualifying for admission, one imagines). But Academia in general has been rising to the bait in recent years, lumping for-profit schools that actually do provide value with programs that are really just multi-day advertising programs for someone’s personal writings (I’m looking at you again, Trump University) and claiming that the whole industry is fraudulent. And this study would appear to debunk those claims right along with the ones made by the for-profit schools…

Granted that paying hundreds or thousands of dollars for a class that you can get at a local community college for under fifty is not necessarily a good value for the money, saying that such a program has no value would seem both unkind and inaccurate. If a given student can get the same results from either school, then the for-profits may be over-priced, but that doesn’t make them useless. And in cases where a local community college does not offer on-line classes, or sections that meet on weekends and evenings, the private sector could be the only practical option available for some students. We should probably also note that there is more to getting an education (at any level) than just how much it is going to help you find work. If students who are already employed are able to gain knowledge and skills – or even just self-confidence – that will assist them in their careers through any form of education, then it becomes increasingly difficult to conclude that their chosen program is not giving them good value…

As an educator, and a taxpayer, I can honestly say that I really don’t care how people go about learning more things, so long as they do. As a business analyst and a management consultant, I can very definitely say that if people are willing to pay extra for convenience (e.g. for classes held where and when they can easily attend) there’s nothing wrong with someone providing such a service. Of rather greater concern to me was the fact that both groups combined received responses from barely 20% of all of the companies to which they “applied”, and interview requests from just over 10%. If something like 90% of job applicants with two-year degrees or equivalent certificates can’t get as far as a job interview, we may have a bigger problem than where to spend our education money…

How Stuff Works: The Triple Bottom Line

The Triple Bottom Line is another one of those concepts that everybody has encountered at least once, in some management text or business news article, all about better ways to run your business and save the world in the process. Many, if not most, of these screeds tend to get ignored because, let’s face it, most businesspeople are more concerned about selling product, paying expenses and turning a profit than they are about warm and fuzzy concepts that people make up to fill management textbooks. What they’re ignoring the Triple Bottom Line is more than just an academic buzzword; it’s a way to accomplish multiple worthwhile things while potentially making more money than you would with a conventional approach…

Most people are already familiar with the First bottom line; it’s the one that appears at the bottom of your financial statements for the month; the amount you made or lost as the result of business operations. This is occasionally derided by the sort of idiots who believe that a world with a barter economy or a socialist utopia are actually achievable in our time, or for some reason believe that success in a commercial enterprise is somehow wrong. I have often pointed out in this space that there really isn’t anything wrong with turning a profit, providing jobs for your employees, business for your suppliers, a good return on investment for your stockholders, and offering a useful product or service for sale – all of these things help worthwhile people to have better lives and potentially better futures…

I’ve also spoken in this space about the Second bottom line, although I haven’t usually called it that. Consider for example that if our company makes money it will contribute to the local economy, both from taxes paid on income and sales, but also through the amounts it spends on goods and services and the amounts all of its employees and suppliers (and their employees) spend on goods and services. This increases the funds available to the local government, and allows for better police protection, fire service, public healthcare and education, libraries, parks, and social services, just to name a few. Some people may dismiss this as nothing more than a side effect, or complain that the business doesn’t really care about these effects, but I have to ask: if your community is gaining all of these benefits, do you really care why the people who own the company are providing them?

The Third bottom line is all about the environment, and doing business in a way that is environmentally sensitive – or, even better, has a positive effect on the environment. The best example I’ve ever seen – the one I teach in my management classes – is a garbage-collection company that started composting the organic waste it was being paid to collect. Not only did this keep millions of tons of trash out of the landfills, it also created the world’s best organic fertilizer (that’s what compost is), which enabled local farmers to achieve better crop yields while at the same time avoiding harmful runoff from chemical fertilizer. The farmers made more money, the local water and air were cleaner, the landfills didn’t fill up as fast, and the company eventually realized they were making more money selling compost than they were being paid to collect the garbage in the first place…

Now, I realize that I’m not going to change anyone’s business philosophy, let alone strategy, with a 600-word blog post. But I have to ask you to consider a situation where people are paying you to come and haul away the raw ingredients for your most lucrative product: is that not beautiful? If you could benefit your employees, your stockholders, your community, and the whole world while making more money doing so, why would you not want to do that? The key point of the Triple Bottom Line isn’t that there is more to life than making money (although there certainly is). The point is that sometimes doing the right thing and doing the smart thing involve doing the same things, and it would be a shame to pass up a chance like that – especially since it’s probably already there, waiting for you to find it…

Repurposing

Here’s another interesting case for you: Suppose you are the general manager of an airport that no one is using, and nobody particularly wants to move into. It’s not a far-fetched situation, either; a lot of the smaller and less well-traveled US airports are falling on difficult times following the consolidation of the industry. Thirty years ago there were over 70 major airlines in the United States, and at least four dozen of them that flew coast-to-coast, all competing for passengers and guarding air routes to which only they had access. Getting permission to use a gate in an airport outside your normal system wasn’t possible, at least not at anything like an affordable price, and customers in a given city were limited to whoever was already entrenched there. Then Congress deregulated the airline industry and everything changed…

Today there are fewer than a dozen carriers with nation-wide operations left in the US, and most of the survivors have been moving away from direct, non-stop flights in favor of a hub-and-spoke system. There was a time when if you wanted to fly from Los Angeles nonstop to Des Moines or Pittsburgh you could just get on a flight and go, but this is no longer the case. Today you’d probably have to fly to Dallas or Chicago (on American) or Denver (on United) or possibly Phoenix (Southwest) and catch a connecting flight – and some of the minor airports aren’t even that lucky. Increasingly in the US you will need to get on a regional carrier that can connect you to a major airport and change airlines there…

The difficulty here is that an airport is (usually) a large, sprawling installation, and it requires a lot of expensive maintenance to remain operational, regardless of how many flights are landing there. And while it might be possible to use some of the airport grounds to launch other businesses, both the EPA and the FAA will probably take a dim view of that, not to mention what Homeland Security and the TSA are going to think. Unless you can find some form of revenue stream that can be generated using the existing facilities, or whatever resources are located in, around, or under those installations, a lot of the lesser airports are going to have to close…

Fortunately for the folks in Pittsburgh, they’ve just discovered one such resource: natural gas. It turns out that the runways at the Pittsburgh airport are sitting over a large, and previously undiscovered, natural gas field – and that modern horizontal drilling techniques can get at the gas without disrupting operations at the airport or weakening the integrity of the structures. Dallas and Denver both have working oil fields on their grounds, and have operated them for years without any ill effects. This is especially important in Pittsburgh, where the Economist is reporting around half of the airport’s current revenue is being taken up just paying the interest on various debts. Hopefully, this will be enough to keep the airport out of the sort of death spiral where it can’t afford to keep up its facilities, so fewer airlines want to go there, which lowers revenue still further and the cycle repeats…

It isn’t being reported at this time just how long the natural gas deposits might last. We can only hope that the people running the airport will use the time during which the gas is flowing to figure out their next move – because eventually the gas field is going to run out, and when it does they’re going to be right back to where they are now, trying to find some other financially viable use for a dying airport…

Bet on the Man

I’m not usually considered an early adopter of new technology; it’s the skeptic in me that keeps making me question whether the “next big thing” really is the next big thing (like the iPod or Face Book) or just looks like it could be (remember the Newton? how about the Lisa computer?). In recent years I’ve been skeptical about hybrid and fully electric vehicles, not so much because I don’t believe in the technology as because the inertia built into the automotive industry and its allies in the petroleum industry. Put simply, there are too many rich and powerful people who are too invested (often literally) in keeping things the way they are now for us to imagine any large-scale change happening in this sector. To even challenge the status quo you’d need not only cutting edge technology, but also visionary leadership, superior product design, exceptional marketing, impeccable public relations, and a truly brilliant strategy to tie everything together…

I was therefore very interested to read about the new gambit from Tesla Motors last week. According to the statement issued by Elon Musk on his personal blog, the company is now offering an 8-year, unlimited-mileage warranty on the battery pack and power train on all of its vehicles. That would be amazing enough, but according to the note they will also be extending the new warranty retroactively to cover all of the units in each of these designs that have already been sold. Warranty agreements that offer as much as ten years are common, as are offers of 100,000 miles or more, but as far as I can tell this is the first such offer to include unlimited miles as part of the deal. But when you consider the implications of the offer, it rapidly becomes apparent that this is more than just a selling point for the product…

One of the biggest problems for any new technology is that people are going to see it as unproven – even if, as in this case, the technology in question is actually very old. It turns out that electric cars have existed for over a century and actually predate most of the current internal combustion technology that everyone thinks of as being proven and reliable. It seems obvious that by offering unlimited mileage on its warranty, the company is effectively saying that they have no concerns about the durability of their products; they are effective both challenging people to try driving one of their cars a spectacular number of miles over eight years of ownership, and calling their entrenched competitors on the fact that none of their supposedly “proven” and “mature” gasoline-powered cars has anything approaching this level of coverage…

Then there’s the specific perception of electric-only and even hybrid cars as needing new battery packs every few years, and that the manufacturers are unable to handle disposing of the old batteries. If Tesla is offering a complete warranty on their drive systems and battery packs for eight years they clearly aren’t expecting to have to replace any in three or five years – and they can’t be that worried about having to dispose of bad units when that becomes necessary. You would also expect excessive use to shorten the service life of both the power pack and the associated drive systems, but Tesla is clearly not concerned with that, either. Some consumers may still view the purchase of these cars as something of a gamble, but it is apparent that if that’s the case, the company and its ownership (including at least one entrepreneurial legend) are going to take that risk right along with you…

And if that wasn’t enough, there’s also the matter of getting more vehicles onto the road. The only way for Tesla to become a mainstream brand – not some new, exotic, possibly ephemeral technology toy – is for the sight of its products to become commonplace; for the sight of a Tesla roadster in the next parking space to become no more remarkable than the sight of a Ford on the other side. If this can boost acceptance and purchase of the vehicles – and the company is already operating at full manufacturing capacity and building a new factory to increase that output – then they just might make it out of the Introduction phase of the life cycle and into the Growth phase. Once they can convince more than just the Early Adopters to purchase their product they’re off to the races…

Stay tuned, folks. This is starting to get interesting…

The Ethics of Overtime

This past week I mentioned the concept of stealing time from the employees, which I should hasten to note does not have any ethical issues; it’s a crime in most of the United States and an outrage anywhere. Hourly personnel must be compensated for each unit of time they work, and if you ask them to exceed the legally mandated standards for a shift they must be paid overtime. Where this question gets murky is when we consider the employees who are not paid on the basis of hours worked; the so-called “exempt” personnel. It has become so common for employers to consider the exempt classification as a blank check that there’s actually a common joke about this: Exempt personnel are called that because they are exempted from having a personal life. But while this is (usually) legal, and almost always stupid, I have to ask if it is also unethical…

First of all, we should probably acknowledge that forcing your employees to continue working beyond the 40 hours of the standard work-week isn’t just offensive to slacker sensibilities, it’s also counter-productive. Years of research on this have shown that individual performance drops off somewhere between 48 and 52 hours per week depending on the individual; if you exceed that point you will actually start getting less work done the more hours you require. Or, to put in another way, forcing your employees to work 60 hours each will generally result in less quality work getting done than if you had just let them leave after 40 hours, while also generating resentment, fatigue, absenteeism, stress-related medical conditions, and resistance/obstruction to management directives. Keep up this policy and you can confidently expect all of your employees with initiative and determination to leave for better jobs, driving the company into an eventual death spiral…

This runs counter to the best interest of the company, the stockholders, and anyone else who has a stake in its success, which may be considered both unethical and a gross violation of fiduciary responsibilities. It also has the effect of lowering the quality of life, working lifespan, and ultimately productivity of your best personnel, which would make this policy appear unethical in its own right. Yet, at the same time, there are numerous examples of industries where a 40-hour week isn’t possible, because tasks in that context take more than 40 hours per week to complete and can’t reasonably be split into multiple shifts – familiar examples being healthcare, childcare, law firms and entertainment. Even worse, at least from the ethical perspective, is the case where work could be completed by a second shift, but the company can’t afford to hire one…

It would be easy to dismiss these cases by saying that if the company can’t afford to meet expenses (payroll or otherwise) it is effectively bankrupt, and should just surrender and end operations – ignoring the fact that this will throw the employees out of work, ruin the stockholders, and possibly destroy the entire community. It would also be easy to dismiss the whole problem by saying that people are not being forced to work in these jobs or go into those careers, and should just quit if the hours are too long- ignoring the fact that sometimes there is no other suitable job available. And perhaps even worse yet is the fact that once we allow one company to squeeze unpaid overtime out of its employees because it faces bankruptcy we are stepping out onto some treacherous ground: how are we to determine who is close enough to the edge to be allowed such an exception, and who is doing this just to save money and fatten the bottom line?

Which brings me to the inevitable question: Under what conditions is it ethically acceptable for a company to demand extra hours of work from its employees just because they are of exempt status and (presumably) want to keep their jobs? If this is excused by the needs of the company, the community or even the nation, how dire must the situation become before this is acceptable, and who gets to decide? Most people would probably prefer working 45 hours a week to being fired outright, just as most firms would prefer hardship to insolvency, but at what point does this stop being a necessity of hard times or difficult industry conditions and become exploitation of people caught on the wrong end of a power imbalance?

It’s worth thinking about…

How Stuff Works: Stakeholders

I’ve mentioned the Stakeholder concept a few times before in this space, but it’s one of those evergreen topics that always seems to come up in the news – and occasionally in movies, novels, or real life – and I thought it might be a good idea to review the concept. Everyone knows that a corporation is governed by three groups – the shareholders, who actually own the company, the Board of Directors, who are elected by the shareholders and hire the senior management team, and the senior managers themselves, who in turn hire and manage everyone else who works for the company. But have you ever considered who else might have an interest (or stake) in how well the company performs, and whether or not it prospers?

Clearly, the employees who work for the company do. Although most of them probably don’t fall into any of those three groups (unless the company has an employee stock-purchase scheme as part of its compensation package), in many cases the employees will literally live and die right along with the company. But what about the other businesses from which our company purchases goods, services, or raw materials? If our company is their major customer, purchasing the bulk of their products, their survival may be just as dependent on the success of our company as our employees or shareholders are. And since those other companies have their own employees, stockholders and suppliers, they also have an interest in our success. But it doesn’t stop there…

Suppose there is a company whose business depends on some product that we make in order to stay in operation. Unless they can find another source for that product, the failure of our company will take them down, too, and throw all of their employees out of work (and potentially bankrupt their shareholders). Even if there isn’t, all of the companies that sell things to our employees will be negatively impacted by the loss of our revenue, and this could set up another chain reaction of companies failing and jobs being lost. But just within our own community, the local government depends on the tax revenue paid by our company and all of its employees to fund community services like police and fire protection, education, health, social services, and a host of other financial needs. If we go under, we could easily drag the entire community down with us, as well…

Now, it’s probably worth pointing out that even if our company is a publicly-held corporation, we have no fiduciary responsibility to any of these groups except our shareholders. In theory, the owners of our company could decide to take any number of actions that would benefit their financial interests in the short term at the expense of everyone else; one of the primary reasons the Board of Directors exists is to prevent that from happening (because no one would be willing to work for the company if that was going to be a regular event). But just because we aren’t financially responsible for the community in which we operate or the larger political unit (state or country) in which it is located, that doesn’t mean that our actions will not have consequences far beyond the scope of our annual report…

The truth is that even before the Industrial Revolution, the success or failure of one citizen would have a wider effect on his or her community than just that one person’s fortunes. As time has gone on, all of us have become increasingly interconnected, until today, when the failure of a company on the other side of the world (and of which you have never heard) could cost you your job, or even destroy your entire community. I’ve often said that it doesn’t really matter if you believe in the global economy; the global economy believes in you. The stakeholder effect is one of the more concrete examples of how that works…

Stealing Time

Readers of this blog (assuming I have readers) who live in the Western US or other parts of the world may not be familiar with the Jimmy John’s chain of sandwich shops. The company is a Subway competitor, with two major differences: the quality of their food is much higher and their business model is based almost entirely on take-out and delivery service. In fact, many of the locations in Central Michigan don’t even have seating; if you purchase food there you will have to find somewhere else to eat it. I’ve been a regular customer ever since we first encountered the chain, during the first week we were here in Lansing. It really annoyed me to find out that some of the franchises are being sued for stealing time from their employees – especially considering the wider implications of that crime…

You can pick up the story here if you’d like, but the basic concept is simple enough – and much more common in the US than I wish it was. Two of the Jimmy John’s franchises are being sued by former employers who claim that the franchise owners routinely required them to work “off the clock” without pay or other compensation. In practice, this has the effect of lowering the minimum wage, and therefore the payroll expenses experienced by the business. Employees are given the choice of working for less money or being fired, and during bad economic times they may need the job badly enough to put up with such demands…

It’s unusual to encounter this kind of chicanery in franchised businesses, since most franchisors have strict rules against the practice and in some cases can fine the franchise holder or even revoke their franchise agreement for doing so. People are likely to assume that the company is complicit in such exploitive practices even if they do realize that the locations in question are independently owned and operated; if they don’t realize the locations are franchised they will just assume that the corporation is screwing its own employees out of their minimum wages. Given that both the pay and the working conditions offered to fast food employees is already legendarily bad, no company wants to be associated with making things worse…

What may be getting lost in the shouting here, and is certainly being ignored in the highly politicized debates over a higher minimum wage, is the public impact of these wages and working conditions – and specifically, the fact that an increasing number of minimum wage workers are having to rely on public assistance just to stay alive. Fast-food companies – or quick-serve restaurants, to give them their industry title – have some of the highest operating margins of any major enterprise, and certainly have one of the highest ratios of how much the CEO makes relative to the average employee. Unfortunately, they are doing so by paying their employees starvation wages (sometimes literally) and dumping the cost onto the taxpayers; effectively a massive public subsidy for fast-food makers at your expense…

Now, I’m not going to suggest that every employee working far too hard for minimum wage is the head of a household trying to support multiple dependants on effectively no pay. Many of these positions are held by students, part-time workers, secondary wage earners in their households, and other who are not being driven to the edge just to provide a corporate executive with a larger bonus. My point here is that the fact that this is happening to anyone is an outrage, and the fact that these companies are effectively stealing your tax dollars as much as they are from the employees makes it a public disgrace. Requiring highly-paid employees working under exempt status to work more than 40 hours a week may be unethical and counter-productive, but at least it’s legal. Stealing time from your employees is Grand Larceny, plain and simple, and the people doing it should be charged as common thieves and prosecuted accordingly…

Dumping these expenses onto the public is effectively stealing the money that would otherwise be used for fire departments, police protection, public health, education and other vital services – and I don’t even have a name for that crime. But anyone who can accept a $20 million or $30 million salary while making his or her employees live on public assistance (or starve to death) needs to re-evaluate his or her personal values, assuming they still have any. And all of the people who are dead-set against raising the minimum wage should probably consider exactly who is paying for that public assistance, because it certainly isn’t the companies doing the exploiting – or shall we just call it stealing and have done with it? A crime by any other name…

Getting Paid

For some time now I’ve been speculating about the long-term viability of a business model based entirely on user-generated content. We’ve seen small-scale experiments with the concept, such as the Frito Lay Super Bowl ads that were made entirely by fans of the products and offered to the company for free, or the “Comments” sections now prevalent on almost all news and entertainment websites. It’s certainly an appealing idea: if the company can convince its customers to create advertising copy or just offer content that other users will want, free of charge, there will be no need to spend company funds on these activities. But there are a number of corresponding issues with this business model, not least of which is that you are asking members of the general public – and your actual customers – to work for no compensation except (possible) gratification…

I’ve said all along that it was only a matter of time before these unpaid content providers either stopped providing content or started demanding payment for it. Not the commenters so much – leaving smart-ass remarks or even outright trolling is still considered to be its own reward – and not the people for whom posting their writing is the entire point of the exercise, like the people writing fan fiction. But sooner or later the people who go out of their way to review things, writing lengthy analyses or even testing specific products or services for the express purpose of reviewing them, are going to figure out that they are effectively providing the content that would otherwise have to be done by employees for free. I learned this week of a test case on this exact topic being brought against everyone’s favorite review cite, Yelp...

This isn’t the first time that Yelp has come to the negative attention of the reading public, of course; there have been repeated complaints about the company extorting money from its customers in return for positive reviews, and just recently three executives of the company have been accused of $20 million in insider training by their own stockholders. As you can see in the linked story from Courthouse News Service, however, Yelp is now being sued by a group of former contributors who are claiming that since they do the exact same work that Yelp’s paid personnel do, they should be entitled to the same wages – retroactive to when they began posting reviews…

Now, I’m not going to pretend that I ever liked the Yelp model, or the company itself; my opinion of them started to plummet when I learned about the extortion cases and has been dropping every since. And I’m not claiming to know anything about employment law (or any other kind, really), so I can’t comment on whether the case has any merit or if the protesting contributors are wasting their money and some attorney’s time. But one does have to wonder if either the company or the reviewers who are suing them have really considered all of the implications of this situation…

On the company side, it seems obvious that since they are making all of their money by displaying content effectively given to them for free, sooner or later someone was going to ask to be paid for doing all of the work. It should also be obvious that Yelp can’t just ignore cases like this one. Unlike a regular e-commerce site like Amazon, Yelp can’t support itself by moving merchandise; their income is dependent on a steady supply of new reviews to drive their products and services. Without that stream of information the company has nothing to sell; thus, they can’t risk losing that entire population of reviewers. But if they start paying the reviewers, then anyone who goes onto their site and scribbles down a few notes can demand payment for his or her work – and probably will – regardless of whether the company ever makes a cent on those reviews.  

As for the users, if they do start getting paid by Yelp, they will completely lose their anonymity (the company has to have their information in order to pay them – and that information can be subpoenaed), and will thus be subject to legal action for any outright lies or even inaccuracies in their reviews. There will probably be other complications involved, as well, such as conflicts of interest, rules their primary employer might have about working additional (paying) jobs, loss of disabled or protected status, or even paying taxes on the income…

Personally, I think the lawsuit is a colossally bad idea for all parties involved, and I don’t believe that Yelp is going to be able to get this genie back in the bottle; even if this particular lawsuit is defeated I think they can probably expect a number of others just like it. They’re going to have to find some way to deal with the issue, before things get any further out of hand…

Supply and Demand

Quick, name the most basic remedy you can think of for there not being enough of something available in the market. Did you say, offer more money for it? Well, if so, that would indicate that you have a good understanding of how a free-market economy actually works, with the laws of supply and demand stating that anything for which demand exceeds supply with experience a price increase, and anything for which supply exceeds demand you should expect to see prices drop. It would also indicate that you know more about economics, or perhaps business in general, than the American trucking industry, which apparently can’t figure out why there aren’t enough truck drivers available despite lowering wages repeatedly over the last decade…

I got the story from the New York Times online, but apparently this issue has been kicking around for a while now. Adjusting for inflation, the average trucker’s salary is apparently 6% lower than it was a decade ago, despite an increasing demand for people to haul various goods and resources around the country. It seems obvious that this might be having a negative impact on the size of the labor pool – or, as reporter Neil Irwin puts it in the original article, “It takes a peculiar form of logic to cut pay steadily and then be shocked that fewer people want to do the job.” But what I found shocking, and truly appalling, about the facts of this case is the response from the industry, which is apparently complaining about a lack of skilled workers rather than instituting higher pay scales…

Now, I should come out and admit that while I have some experience with both shipping and logistics issues, I have no formal credentials in either of these areas, and I have certainly never run a trucking company. However, this has nothing to do with the issue at hand, because as Mr. Irwin correctly points out, saying that there is a shortage of skilled workers is effectively the same thing as saying we aren’t paying our workers enough. A significant number of drivers who are already qualified to handle these jobs have left the industry over the last decade due to declining wages, and the same factor makes training to be a truck driver increasingly less attractive. It is no exaggeration to say that this whole “crisis” is entirely within the ability of senior management to fix…

Without a great deal of additional research I can’t tell you if this situation is an outgrowth of runaway executive compensation (as Mr. Irwin implies), a decrease in the importance being placed on the role of labor, effects of an global recession, effects of an international economy, or some more subtle cause; I called the situation shocking because whatever the cause the solution is relatively simple. I called it appalling because this mentality – treating the workers like an unfortunate nuisance or an annoying inconvenience – runs counter to everything we have learned about management over the last hundred years, not to mention psychology, sociology and economics. The belief that you can ignore the workers, mistreat the workers, or act against the best interest of your workers and hope to achieve any long-term economic success has been debunked over and over again, and any first-year business student could explain the fallacy to you in detail – but apparently the people being paid multi-million-dollar salaries to run these companies can’t…

I can accept that even highly educated people might have trouble with subtle ideas – like the concept that outsourcing work to another country will throw people here out of work, eliminating the customers who would otherwise have purchased your product. But the idea that if your wages are too low, no one will be willing to take those jobs is another matter. I don’t know how this crisis is going to turn out, or if the Trucking Industry will be able to pull out of this tailspin while there is still time. But I really hope we can nip this kind of thinking in the bud before it destroys anything else…

The Ethics of Standards

Here’s another hypothetical for you: Let’s suppose that you have gained a national or international reputation because of your success with whatever it is you do (doesn’t matter what) and you decide to cash in on that public image by creating something (doesn’t matter what) and putting your name on it. Let’s also suppose that after a while you get bored with the venture and sell it to some investors, but as part of the purchase price you agree to let them keep your name on the property, because without that brand identity it will be much harder to sell. Now let’s suppose that after a few years go by the new owners have let the venture (whatever it is) run down to the point where you are no longer willing to have your name on it; the property is now so low quality that you feel it will hurt your reputation to be associated with it. Do you have the right to demand that they take your name off of the property?

If you didn’t catch it on the news I should probably just tell you that this is more or less what happened to Donald Trump this past week. Although Mr. Trump no longer owns two of the Atlantic City casinos that bear his name (he sold 90% interest in each to an investment group), they are still called the Trump Plaza and the Trump Taj Mahal, and at least part of their brand identity is a holdover from the days when Trump was building the biggest, gaudiest and most expensive everything in the world and slapping his name on the front. Unfortunately, Mr. Trump and his advisors now believe that these two properties are not being properly maintained, and have now decayed to the point where he is no longer willing to have his name on them. He is therefore filing a lawsuit to force the current owner to change the names of these facilities…

Now, I would be the first to admit that it isn’t easy to feel sorry for Donald Trump, or for anyone who has enough money to buy a hotel/casino from him in the first place. But the story does raise a serious point, even for those of us who aren’t billionaire reality-television star real estate developers. Assuming that you have licensed someone to make use of your name, and by extension your reputation or public image, at what point do you have the right to demand that they either conform to a standard that you would find acceptable (at least) or else stop using it? Or, to look at it from the other side of the desk, if you have purchased the right to use someone’s name, likeness or reputation in order to help sell your product, how much responsibility do you have to maintain quality at a level that won’t damage the reputation to which you have purchased the rights?

We should probably also acknowledge that if someone had purchased a license to use a celebrity’s name or likeness and that celebrity began acting in an embarrassing or repugnant way, no one would question the business owner’s wanting to drop the celebrity association, and a lawsuit to recover whatever fees were paid would not be considered inappropriate (although it might or might not succeed). But does the business have a corresponding responsibility to the celebrity? Does our answer change if the celebrity is a more sympathetic figure than Donald Trump, or if it is clear that the shoddy product or service really is threatening his or her livelihood?

No one is going to argue that any business should not comply with the terms of the contract it signed, or that a celebrity who is being paid for the use of his or her good name shouldn’t insist on a clause in the contract guaranteeing them the right to rescind use of that name in the event the business is damaging it. But assuming that no material breach has occurred, and that the celebrity has no such escape clause, does the business have any ethical responsibility to comply with such a demand? For that matter, does the celebrity have an ethical responsibility to let the business get whatever benefit they can from the use of his or her endorsement, assuming they were paid for it in the first place?

It’s worth thinking about…