Seriously?

Every once in a while the tone of this blog will get much darker than I really like, and I will end up reminding my readers (assuming I have readers) that I’m really a business teacher and not an Internet comedian after all. I have similar issues in my personal life, as I sink deeper and deeper into middle age and start catching myself acting responsibly and making mature decisions. At such times I will generally go out and do the most juvenile I can think of that won’t get me shot, arrested or fired (into which category, alas, running around pelting people with cream pies and yelling “Ya-HA! Ya-HA!” does not fall), and when I feel the blog is getting too dark I will try to find you a story about something completely stupid. There was a story about a botched refund this week that should do the trick…

According to the story from the local ABC News affiliate, a woman in Jacksonville, Florida was having trouble with a used car dealership that was failing to honor the warranty they had sold her. So she reported them to the State Department of Motor Vehicles, and after due investigation the dealer was ordered to refund her the money she had paid for the repairs. So they did – in loose change. Specifically, it was about $85 in pennies and the rest in $1 bills…

Now, I’m not going to dispute that pennies or dollars are legal tender, or that the dealership had a legal right to pay the refund in whatever fashion they felt was appropriate. My questions are why anyone would risk venting their spleen – and making themselves look even worse to potential customers – by pulling this sort of prank, and also where a car dealership got 8,500 pennies in the first place…

In the Internet age, most businesses that want to be successful are very careful about their public image, and in particular about their online reputation. We’ve already seen people threatening to sue online review sites like Yelp and Angie’s List for damaging their reputation, and there are persistent reports of various companies large and small paying people to leave positive reviews about them and artificially improve their online rating. By the same token, if you’ve done something as blatantly stupid as playing games with the small print on a contract and then getting called on it by the State government, I would think the last thing you would want to do is create a funny story that will get you mocked by thousands of scruffy bloggers around the world…

The second part of the question is why anybody would go to such lengths to pull such a prank in the first place. Car dealerships aren’t normally cash businesses, and unless this one also doubles as a bank there is no reason for them to have 8,500 pennies around in the first place. That may not sound like a lot, but that’s around 50 pounds of coins. If you wanted to roll them it would be enough for 170 rolls of pennies, but these were apparently just loose in a couple of bags. Unless the dealership also doubles as a strip club it shouldn’t have had 215 loose $1 bills lying around either, but I think we can probably conclude that the owner went to the bank after deciding to be rude to his customer…

Okay, so this story isn’t an atrocity. The customer in our story can almost certainly roll up the pennies and take them to her bank, and she can probably use the dollar bills to buy coffee or pay tolls or what have you. And it is possible that the owner of the dealership believes that there is no such thing as bad publicity, and is laughing all the way back to the bank. But I prefer to believe that it’s a prank gone wrong, a customer’s multi-media revenge, and a cautionary tale for anyone who might have been planning a similar stunt – or anything else that will bring you to the negative attention of the public…

Without the Word Cluster

A lot of questions popped up after the Malaysian airliner was shot down over the Ukraine – or over the disputed part of the country that a separatist group claims is rightfully part of Russia, depending on your point of view. People are questioning where the missile that brought down the plane was fired from, and by who; people have questioned how closely the Russians are involved in the supposed civil war, and what role this plays in Mr. Putin’s eventual plans for the region or the world; people have questioned whether the American satellite footage is real, and even if it is, what role this plays in Mr. Obama’s eventual plans for whatever it is people think the President is doing this time. The most basic question of all, I can’t help thinking, is why a civilian airliner was flying over a war zone in the first place – and, unfortunately, that’s even more complicated than most of the other questions…

A story this week from the NBC News site pointed out that there really isn’t any one agency with the ability to declare any particular airspace off-limits for reasons of safety or anything else. There is a United Nations aviation agency, the International Civil Aviation Organization (ICAO), headquartered in Montreal, that issues warnings and advisories to all member nations, but the ICAO has no ability to impose or enforce no-fly zones. Individual countries can declare their own airspace unsafe, but can’t be compelled to do so according to treaties dating back to the end of World War I, and Ukrainian authorities had declared the route Malaysia Airlines M17 was flying to be safe. Various military coalitions have declared no-fly zones over the years, but there is no such group involved in the Ukrainian civil war; The Netherlands are part of NATO, but Ukraine isn’t…

Ultimately, the only thing most pilots have to go on are temporary restrictions, usually called Notices to Airmen or NOTAMs, which can be issued by (or occasionally about) specific airports or air corridors by local air traffic controllers or national aviation agencies. No US carriers were flying through Ukrainian airspace at the time because the FAA had issues such a warning, but there is no consistency over what constitutes a credible threat from one country to another, or even one controller to another. And meanwhile, every airline in the world is under pressure to control costs (and keep fares low), which means using the fastest and more direct routes possible between destinations – even when that means flying over a warzone populated by trigger-happy pro-Russian idiots…

Now, we should probably note that with the exception of the United States and a handful of other countries, most national governments don’t have the intelligence assets available to assess the threat levels present along various air routes, let alone the airlines from that country. It might be possible to avoid all flight routes that pass through even questionable airspace, but only at the risk of driving airfares to a price level that will exceed what the public is willing to pay, thus losing all customers and eventually bankrupting the company. The truth is that air travel can never be made completely risk-free, and consequently every airline has to find a balance between risk and profitability that it is willing to accept. And with no International standard to follow, some companies end up making bad choices…

It’s easy to criticize Malaysia Airlines for flying over a war zone, but at this point in history the collection of local, national and international warning systems – none of which has any authority over anyone but the home country’s airlines – is so ridiculously complicated and miserably ineffectual that it can’t really be described without the use of the word “cluster” in there somewhere. And even if it becomes possible to appoint an international agency to actually restrict unsafe air corridors and give the definitive word on destinations, that still won’t protect carriers or their passengers from rapidly-shifting lines of battle, missile batteries that aren’t supposed to be in a given area, or idiots lobbing random projectiles into the general area of somebody else’s airport…

Bad at Math

In the past I have noted in the space that mathematics was never my strong subject, which turned out to be less of a problem than you would probably expect given the amount of quantitative analysis commonly found in Management research. For most of my career I have gotten around this by using analysis methods that can be done using programs like Minitab and Access, and sometimes in Excel using the Solver function or just running pivot tables. I’ve also made extensive use of one of my favorite management principles: “Never be afraid to ask for help.” But in the long run the ability to do simple arithmetic in my head has taken me further than any of my long-suffering math teachers could (reasonably enough) have imagined. For example, I understand why a distilling company that has been in business for less than one year is probably lying about their five-year-old product…

You can pick up the Daily Beast story if you want the names of some of the companies involved in the scandal, but the basic concept is that for the past few years there have been a large number of small companies entering the distilled spirits market with what they claim are “craft distilled” products – allegedly hand-made and hand-bottled in small batches using an artisanal process that is somehow superior to that used by companies that have been producing quality product for over a century. However, if you read the fine print (and look up said company’s incorporation documents) you will find that some of the people claiming to have distilled and aged their own products are actually using beverages distilled by a large-scale factory operation in Indiana and then sold in bulk…

Now, it’s important to remember that none of these things are illegal as such, assuming the company is using all of the right disclaimers. Saying that a given bottle contains liquor aged five years when the contents were distilled last week is a crime, but saying that we age our product for five years isn’t – the company may indeed be in the middle of its first five-year run of product and could just be selling liquor that someone else aged for five years until that first run is ready. If all of these facts are clearly specified on the package then the company hasn’t actually violated any of the food labeling laws. Whether or not they have violated the truth in advertising laws is another matter, of course, and even if these business practices do ultimately turn out to be permissible under the law, the ethics of the situation are another matter entirely…

I have also pointed out from time to time over the years that if the government ever outlaws making money off of the stupid, the credulous, and people who are bad at mathematics our economy will probably collapse. Without product labelling and truth in advertising laws there would be nothing to stop companies from marketing liquids distilled from any available organic sludge as genuine imported liquor from whatever country is selling best this week, just to take the obvious example, and most of these laws do include the making of misleading statements on the list of things you are not allowed to do. But anyone who publically states that their company was founded in 2013 and their products for sale are five years old is effectively telling you up front that someone else made that product…

You’ll have to decide for yourself if the product is worth the asking price – and whether or not you are comfortable doing business with a company that is following the letter rather than the spirit of the consumer protection laws. There could be other problems that would result from such a practice…

Define Success

I can’t really take credit for this one – I was directed to the idea from the What If site, which was created by the genius behind the XKCD web comic – but as I followed up across the related sites a question popped up in my rather idiosyncratic thought process: When can you reasonably describe a crowdfunding exercise that brings in over $1.4 million as a failure? Just as important, though, is the counterpoint question: When can you reasonably describe a project that receives just 0.0000025% of the necessary funding (that’s one dollar for every 40,000,000 you actually need) as a success? Well, it depends on the how you define success – and on how big the project really is, I suppose…

If you haven’t seen any of the Solar Roadways video or text presentations you can find a good selection of them on You Tube, but the basic idea is to replace the asphalt and concrete surfaces of all of the roads (and highways and parking lots and so on) in America with solar panels. Since that’s somewhere around 29,000 square miles, we could conceivably generate three times our current total energy requirements just using current solar cell technologies, with more to come as the state of the art improves. There are a number of technical issues involved, which you can read about on the Jalopnik site here, but there are also some offsetting advantages, such as using the same roadway-mounted solar panels to house programmable LEDs, making the roads reconfigurable in real time. Unfortunately, when we look at the business side of the concept the whole thing gets murky with amazing speed…

Project estimates provided by the Extreme Tech website put the total cost of conversion for 29,000 square miles of roads at around $56 trillion USD – or about four times our current National Debt – using the cost figures provided by the Solar Roadways company’s own projections. And that doesn’t even consider the costs involved in developing the clear outer layer of the roadway – there isn’t currently any form of super-glass that can handle all of the operational requirements for such a substance. There are also issues like the proposed LED lane marker system costing more than the solar cells themselves, the cost of transmitting the generated energy to customers who can use it (which dwarfs the rest of the project), and operational concerns like cleaning the glass tiles (roadways get dirty a lot), replacing broken elements while traffic swirls around you at highway speeds, and hackers getting into the LED lane markers and configuring the roads into one giant death trap…

Now, we should probably acknowledge that there is nothing inherently wrong with the idea of widely dispersed solar collectors, assuming there is some economical and technically feasible way of connecting them to the power grid. For that matter, even if a continental-scale project isn’t possible, there’s no reason you couldn’t have single streets or individual parking lots built this way that can power their surrounding buildings. If creating a self-cleaning glass strong enough to stand up to truck traffic while still collecting sunlight isn’t feasible, then what about roof tiles made the same way? Or simple parking-space carports, which are common in the sunny parts of our country, that use the same technology to turn entire parking lots into giant solar arrays? Of course, that would require further research and development, since the current solar cells are still a bit too expensive for this sort of mass use. If only somebody were to come up with seed money for such a program – say, using crowdfunding…

It remains to be seen if the Solar Roadways people will get anywhere with their more advanced designs; as previously noted, they still need 40,000,000 times more money to complete the project. But between crowdfunding and Department of Transportation grants they now have around $2.2 million USD in research funds, which isn’t exactly small change. I don’t know if we will ever drive on continuous bands of solar collectors, but it’s possible that we might park under them, work under them, or live under them sometime soon. Even with a funding percentage of 0.0000025%, it’s hard to call that a failure…

The Ethics of Lines in the Sand

It’s probably important to remind anyone reading this blog (assuming that anyone reads this blog) that I’m not actually that old – I have not yet reached half a century on this increasingly weird planet, despite appearances to the contrary – I’ve just lived through chaotic and rapidly-changing times. A good example popped up this week with the Equal Time crisis in Warren, Michigan, where an atheist group requested equal time at City Hall to present its views along with various religious groups doing the same. Whether you personally agree with atheism or not, it’s impossible to deny that a lot of people do, and that in the US they have the same right to practice and promote their belief structure as anyone else. Unfortunately, the Mayor of Warren apparently doesn’t think so, since he refused to allow the atheists to have their access and stated publically that he would also deny such access to Nazis or the KKK…

Even granted that Warren isn’t exactly one of America’s largest cities, it’s difficult to imagine how anyone could get elected to be mayor of anything and not grasp that people would be offended by the comparison. It’s also hard to imagine what harm the atheists could possibly do anybody in the first place. Faith by definition is not susceptible to arguments of logic or reason; that’s kind of the point. Any true believer in any faith would be no more likely to give it up in favor of atheism than they would to adopt any other religion, and possibly much less so considering that the atheists are effectively trying to prove a negative. But it does raise the issue of what we are supposed to do as managers when two or more people of incompatible belief systems fall under our jurisdiction…

Traditionally, most managers have dealt with this situation by telling all of the true believers in their company, department or work group to just leave it outside of work. This does not give any favor to any one faith or discriminate against any other; it also has the advantage of getting the employees to stop spending their work days trying to prosthelytize each other and go back to work. Increasingly, however, we have seen push-back from people who insist that not being able to display religious iconography wherever and whenever they want to is a violation of their First Amendment rights, and demand to be allowed to turn their personal workspace into a shrine of whatever their faith happens to be. But as bad as that is, the recent fighting between the atheists and the religious groups is taking the whole problem to a new level…

Regardless of what your personal beliefs might be, it’s easy to understand how you might be angered by a demonstrator who is proclaiming that your beliefs are only held by simpleminded, gullible fools – or by people who are comparable to the KKK or the Nazis, depending on which side of this conflict you happen to be. In a very real sense, any form of atheist propaganda is a vicious attack on the beliefs of any person of faith who has to look at them. And increasingly, any overt attempt to prosthelytize someone about your faith, or even display it openly, is becoming just as harsh an attack on the atheists. The question isn’t so much where this is going to end, since that is out of our hands; the question is what we as managers can be expected to do about it…

Which brings me to the question: Do we, as managers, have an ethical responsibility to allow anyone who works for us to practice all aspects of their faith at all times, including the ones that would prevent them from doing their jobs in the first place? Do we have a responsibility to allow people to display iconography, celebrate holidays, or attempt to convert their coworkers if their personal faith demands such things of them? No one wants to be the Grinch who forbids the employees from putting up cut-outs of Christmas trees or pastel eggs, but do we have an obligation to allow such rituals? Or does our responsibility to the owners of the company, the stakeholders in our enterprise, and ultimately the community itself outweigh our responsibility for our employees’ personal happiness and religious fulfillment, and require us to go on telling everybody to keep it out of the workplace?

It’s worth thinking about…

Of Course They Are

This past week a story ran on Huffington Post that surprised a lot of readers and resulted almost immediately in a vast chorus of scorn and derision – as usual. On any given day you can expect to find stories of varying impartiality on every topic from international politics to local sports, some attempting to sound mature and some that are openly incendiary. But what made this story different was that the controversy was arising over food, and specifically about a listing of the 30 best barbeque restaurants in the United States. What made it so controversial is that not one of the 30 restaurants listed are from Tennessee, Louisiana, North Carolina, South Carolina, Mississippi, Alabama, Arkansas, Georgia, Florida, or Missouri, while states like New York, Vermont, Wisconsin and Ohio all had multiple entries…

One might reasonably ask how any such survey managed to bypass the entire region of the United States most associated with barbeque – but only if you had also failed to note the headline of the article, which states that these are the 30 best barbeque restaurants as identified by Open Table, the online restaurant reservation system. To their credit, the folks at Huffington Post do note that these are the top 30 barbeque restaurants that accept reservations on Open Table, and speculate that many of the great Southern barbeque joints don’t take Open Table reservations. Given that a lot of great barbeque is produced by hole-in-the-wall operations with a devoted local following, which therefore do not want or need Open Table, this is likely correct. However, I thought it was a good example of how bias gets into otherwise interesting data – and renders it utterly worthless…

Clearly, there is no practical way for a single reviewer to sample all of the restaurants in a given category in the United States in one lifetime; there’s just too much ground to cover. But unless the same reviewer (or group of reviewers) is doing all of the samples, there is no way to avoid having matters of personal, regional, national, ethnic, professional or other preferences from influencing the data. But in this case we are adding an additional problem in that all of these choices have been filtered by a factor that has nothing to do with how well a restaurant produces food, let alone how well it makes a specialty type of food relative to other providers. Even granting that having the technical ability, knowledge and willingness to use Open Table would allow you to make better barbeque – which seems unlikely, frankly – this sample is automatically excluding everyone else from the survey…

Now, this type of bias isn’t limited to business applications. You can see it in everything from people hiring employees because of pre-conceived ideas about gender, ethnicity, socioeconomic background, or appearance to former Vice President Dick Cheney leading the search for the best candidate for Vice President and discovering (no doubt much to his own surprise) that it was himself. You will sometimes see this referred to in the management literature as Confirmation Bias, which is the tendency to see whatever information is available as proof that your existing opinions are correct. In some cases this will result in bad decisions, when people use unrelated or even negative evidence to convince themselves that the choice they already wanted to make was the best one, while in other cases people will stop gathering information once they find enough to confirm whatever they already believe…

I don’t have any magical way of dealing with this issue – I’m as capable of confirmation bias as the next man. It is only by questioning our assumptions – not just at the start of the project, or at the end of the day, but continuously – that we have any chance of recognizing these errors, let alone avoiding them. But if you need a good example to work from, consider that you may confidently expect that the best restaurants in any category take Open Table reservations – if the only restaurants you are considering are from the Open Table database, that is…

History Lesson

In my last post I mentioned the idea that management is a simple mechanical science – insert this much input here, get that much output there, all things you could do with a basic logic circuit, never mind an actual robot. I am often critical of this behavior pattern, both in this space and in my actual job as a management instructor, but even I have to admit it’s an attractive idea. If all management decisions could be made using basic arithmetic there might be no need for me in either my business or academic professions, but there would also never be another management or policy mistake, all companies would be run perfectly all of the time, and no one would ever have to deal with any of the nonsense masquerading as management that have been a staple of my blog…

Much of this kind of thinking is blamed on one of the first management scientists, whom you may or may not have learned about in school: Frederick Winslow Taylor, founder of the school of thought known as scientific management, or occasionally “Taylorism.” Taylor was the first known researcher to actually study the process of work through scientific observation, and the first to suggest concepts like breaking down work into discrete tasks and training employees to do them the same way every time. It’s probably fair to say that Taylor had as much to do with the development of our modern industrialized culture as Henry Ford or either of the Carnegies. But Taylor was a mechanical engineer, not a psychologist, and much of scientific management breaks down along the exact lines we’ve been discussing for the last couple of weeks…

It wasn’t until the 1950s that the field of Industrial/Organizational Psychology really split off from both psychology and sociology, following the work of pioneers like Herbert Simon, James March, Richard Cyert, and Abraham Maslow. I’m not going to get into those theories in detail – partly because I have already made reference to so many of them in this space, and partly because we’re wandering away from business and off into even softer sciences at this point. I call this to your attention because the idea that all of the many management failures we’ve been seeing in recent years are because we don’t know any better is absolute hogwash…

I had over 300 students over the last academic year, and every one of them could have explained how a policy that rewards stubborn, aggressive and combative behavior and effectively punishes cooperation and courtesy will result in horrible customer service without a moment’s hesitation. Granted, they are exceptional students – they’re Spartans, after all – but this isn’t the only business school around. There are thousands, possibly millions, of people in this country who could easily do the same, and there have been since well before I was born. We have decades of data, hundreds of studies, and quite literally hordes of highly trained people in this field, albeit well-dressed hordes carrying briefcases. Yet still this type of idiocy remains not merely entrenched but unquestioned throughout the world of business…

I don’t actually believe that one passable business teacher and one scruffy blogger can change all of that, even if they do happen to be the same person. I do believe, however, that if I can get even one management professional to avoid making such mistakes, then neither my time as a teacher nor my time as a blogger have been wasted…

Not Another Follow-Up!

Last week I brought you the story about the Comcast retention specialist, and the disastrous audio recording of him fighting like a man possessed to keep a disgruntled customer from disconnecting that has been going around the Internet. At the time I speculated that the company might have a policy about not letting people leave, or quotas of people that each retention specialist has to talk out of it, or even that such measures might be part of the compensation package offered to these personnel. As the follow-up story on the Slate site makes clear, it’s actually much worse than that…

According to the informant cited in the article, who claims to be a former Comcast employee and appears to have the documentation to support his or her claims, the company pays its retention personnel on a salary plus commission scheme similar to those used by many sales organizations. The salary offered is very low, often just a few dollars over minimum wage, and the majority of the compensation is based on preventing a specific percentage of your calls from resulting in an actual disconnect. This would be difficult enough, but the story also claims that the company uses target thresholds, or “gates,” to drive their people harder and avoid paying as much in “bonus” money…

On such a system, instead of collecting the percentage of your incentive money that corresponds to your performance (e.g. you have a 70% retention rate, so you get 70% of the money) you must be over a certain target to get anything above your insultingly tiny salary. If the threshold levels are half of your bonus at 75% and full bonus at 85%, and your retention rate is 74%, you get nothing. And while it is possible to survive on 16,000 to $20,000 per year in certain parts of the US, I’m not currently aware of any place in this country where you could live well on that salary level – especially if you have a family to support…

Now, I suppose one could argue that nothing is keeping these Comcast reps from finding better jobs; one could also argue that if there is a surplus of people willing to do these jobs at this price level then the company would be mad to offer more. The job market is controlled by the law of supply and demand, just like any other free market, and recent experience in the United States has demonstrated that there are people who will work for rates even lower than the minimum wage if you ask them. However, none of this has anything to do with my original contention, which was that using such methods will motivate people into the wrong behaviors…

If the company’s incentive program rewards people for retaining customers, but does not reward them for providing helpful and courteous service, then people will try anything they can think of to retain customers and pay no attention to courtesy – or even common politeness. This is the same problem that causes salespeople to be impatient and rude to someone who isn’t making a large purchase, waiters to ignore patrons who aren’t ordering anything expensive, and many categories of personnel to try to sell people expensive goods and services that the customer does not want or need. All of these behaviors lead to lower standards of customer service, inferior public image, deterioration of the company’s brand, and ultimately to destruction of the company’s bottom-line value…

As tempting as it might be to blame the Comcast fiasco on one bad employee, or even on one bad policy, what this actual represents is the single most common logical fallacy in any service economy – and one of the most common misapprehensions in all of management theory: the belief that our employees are nothing more than machines, and all we need to do in order to increase their output (work) is to increase their intake (pay). I’d be a little more charitable about the whole thing if we didn’t have over five decades of research that prove this is garbage…

There’s a Storm Coming…

It would be comforting to describe today’s story as merely asinine; the actions of a deranged or possibly diseased mind, or perhaps those of a gibbering idiot. Then we could file it under the “Stupid” tag and forget all about it – after a reasonable pause for laughter, if desired. Unfortunately, I don’t believe this is the case; it smacks of the kind of fanaticism posing as business and greed posing as faith that we’ve seen so much of lately, and the business implications alone are appalling. In Tampa, Florida, there’s a nurse-midwife who is suing a family planning center because they declined to hire her after she told them she refused to prescribe birth control pills…

I found the story on Slate, who got it from a couple of other bloggers, but they’re linking to the agencies actually involved in the lawsuit, which seems like adequate confirmation. Apparently a woman named Sara Hellwege, a nurse-midwife, applied for a job at the Tampa Family Health Centers, during which process she listed membership in an anti-contraception group on her resume. When asked about this, Hellwege admitted that she would refuse to prescribe birth control pills to anyone. The Centers told her that this was an important part of the job, and they needed someone who would be willing to complete those duties. As a result, Hellwege and her right-wing backers are now suing the health centers, claiming that this represents religious discrimination…

It would be tedious, at best, to explain all of the ways in which this is wrong, but we can probably start with the actual laws. The health center did not ask Ms. Hellwege what religion she practices, and then refuse to hire her on that basis; they asked her if she would be willing to perform the duties assigned to the position for which they were hiring. Membership in a secular organization (the anti-contraception group in question has no religious affiliation) does not indicate any particular personal belief, but even if it did the health center didn’t ask Ms. Hellwege if she belonged to such a group, she told them. Moreover, even then the health center did not decline to hire her because she belonged to a group of far-right wing nuts; they declined to hire her because she refused to do the job…

It’s also worth noting that this case makes no sense as an Equal Opportunity Employment complaint under Title VII, because the same law makes exceptions for cases where making accommodations would cause the employer “undue hardship” – which, I think we can agree, forcing a family planning center to hire anyone who will prevent clients from planning their families definitely would. One has to wonder how any reasonable person would have applied for a job they would be unwilling to do in the first place; it sounds completely insane. Unless the whole point of the exercise was always the lawsuit, and not the job…

The clue here is that both Ms. Hellwege and her anti-conception backers keep throwing the word “abortion” around, both in their communications and in the court documents. Birth control pills have nothing to do with abortion; they are part of the class of contraceptives called “non-barrier methods,” and prevent someone from becoming pregnant in the first place. But it’s hard to get people worked up about contraception, either in the legislature or the courts, while abortion is still an emotional issue for much of the country…

As I mentioned at the top of this post, the business implications are appalling. Imagine a world in which anyone who wants to can apply for a job with your company and then demand that you hire them and let them tell you and your clients how to live their lives or else they will sue you for millions. No matter what your position on birth control or abortion might be, there’s no way to cast this as anything other than a sleazy attempt to use a law intended to protect religious freedom in the workplace to push a political agenda onto everyone else. Let’s just hope this gets slapped down by the court before it takes out whatever is left of Business in America…

You Had Better Duck

Some time ago in this space I wrote about the adventures of a 60-foot yellow rubber duck that had exploded in a harbor in Taiwan, which I used as an example of unexpected operational failures and the need to stay at least one move ahead of whatever else is going on. At the times this may have seemed a bit harsh, given that rubber ducks do not usually explode, and that if you are in the middle of displaying an 18-meter tall inflatable sculpture half a world away from your home base (the duck’s creator is from The Netherlands) there are probably a great many things on your checklist that come before “Make Sure Duck Does Not Explode.” For example, making sure that the duck does not get loose from its moorings and float away down a river, never to be seen again…

You can pick up the story from the BBC News site if this is getting too fantastical for you, and I certainly wouldn’t blame you if you did. Apparently, after exploding (or bursting, at least) in Taiwan and deflating in Hong Kong, the duck had been taken to a port on the Nanming River where it was mounted on a 10-ton metal platform and anchored to the riverbed using steel cables – none of which appears to have slowed it down when flood waters hit the installation and sent the duck drifting away. Despite the fact that the duck weighs over a ton, is as tall as a five-storey building, and is bright yellow (like the bath toy it resembles) there have been no reported sightings of it confirmed at this time…

Now, I will be the first to admit that I don’t know anything about public art installations, meteorology, river currents, large-scale rubber fabrication or the relative tensile strength of steel anchor cables. But I do know a few things about preventable failure, and I must admit that if a project I was running had already exploded, deflated, been attacked by eagles (as reported here), and was a larger-scale version of an installation that had already gotten loose from its moorings once in Europe (although that time the duck was caught again – when it became wedged against a large bridge, effectively blocking travel on both the roadway on the bridge and the canal below) I might consider asking how certain everyone was that this particular installation was safe…

Fortunately for all parties involved the duck isn’t really part of a business venture; its International tour (which has already passed through Sydney, Sao Paulo and Baku without incident) is intended mainly to bridge cultural barriers and increase understanding between nations by exposing them to something so completely absurd and yet aesthetically adorable that anyone whose sense of wonder hasn’t been surgically removed must stand in amazement and/or swear off of whatever they were drinking the night before. But advertising stunts using smaller inflatable constructs are becoming increasingly common in some countries (including the US), and the duck’s misadventures give an excellent example of just how far an otherwise harmless publicity stunt could potentially go off the rails – or, in this case, down the river…

It has often been noted that while all human beings learn from mistakes, the truly successful person is usually the one who learns from someone else’s mistakes. I certainly hope this is true – especially if any of my readers (assuming I have readers) is planning anything that involves large-scale public installations, river conditions, or inflatable waterfowl…

The Ethics of Expectations

Some time ago I wrote in this space about how people were spending tens of thousands of dollars – frequently money they had borrowed under student loan programs – on culinary programs in the mistaken belief that such a credential could immediately land them a $60,000 a year job on graduation. At the time I was rather harsh on the students, noting that entry-level jobs in that field range from $8 to $12 per hour, and pointing out that there are any number of free resources online that would allow anyone to verify that statistic if they bother to look. But we should also acknowledge that sometimes these students are actively deceived by unscrupulous education companies, who promise to provide special instruction that would allow their own students to bypass those entry-level jobs and move directly into high paying positions – or, at least, that’s what a class action lawsuit filed in Federal Court this week is claiming…

You can pick up the story off the Courthouse News site if you want to, but the story is simple enough. Members of the class are claiming that they were given false and unrealistic promises by the culinary school they attended, and are now stuck with $45,000 or more of student debt they can’t possible pay off and completely useless training – or, at least, nothing that would get them better than the aforementioned $8 to $12 per hour jobs. Suits of this kind are popping up more and more often, and I don’t intend to comment on the ethics of lying to your students, or any other customer, about the relative value and utility of the services you provide; I don’t feel there is any other side to the discussion. Preying upon the hopes and dreams (and naivety) of the customer in this fashion is fraud, and I hope the person or persons responsible are charged with criminal offenses and sued repeated in civil court as well. But this does raise the question of how far a company should be required to go in order to discourage potential customers…

Consider, if you will, that all service-based companies make money by providing some kind of (hopefully useful) service to their customers. Expecting an educational institution of any kind to turn away prospective students with money in hand isn’t reasonable, any more than expecting any other kind of service business to reject a customer would be, provided that the student can afford the course of study and has a reasonable chance of obtaining the credentials promised and getting the results he or she desires. But what about the case where one or more of these conditions do not clearly apply?

Suppose, for example, that there are high-paying jobs in the field in question, but only a few of them each year for thousands of applicants – can we still expect the school to refuse this student? What if there are jobs in the field, but the student in question is unlikely to complete the program or obtain sufficiently impressive credentials to get any of them? What if there are jobs available, and the student can qualify to get them, but the student loans they will need to complete the course of study will destroy their economic future and eliminate any chance of their buying a house or saving for retirement? How bad do someone’s chances of completing the ambition that brought them to the school have to be before we can reasonably expect the institution to send them away?

Which leads me to the question: do we, as managers, have an ethical responsibility to our customers to refuse them service if we believe that they have no chance of receiving the full benefit they want from our company? Does our answer change if we have provided the customer with a complete breakdown of the field, the service and the odds of success, but they persist anyway? No reasonable person is going to suggest that a qualified customer who can afford service should be denied it, or that a customer with a completely unrealistic expectation should be served. But at what point do someone’s odds of success become so bad that we must tell them to give up on our services and look for some other approach?

It’s worth thinking about…

Like It Was Hard

After you’ve been writing a blog like this one for a few years, pointing out various types of business failure, mocking people and organizations that really should have known better, and generally getting on people for mistakes that seem obvious after the fact, it gets increasingly difficult to avoid saying “I told you so” (or perhaps “I informed you thusly,” if you watch The Big Bang Theory) when somebody makes a completely predictable mistake. I’m on record as saying that you should never second-guess the decisions somebody else made in a crisis; they were there and you weren’t, and we have no way of knowing what your actions would have been. But when it’s a business policy, not a single decision, and it blows up a way that any small child could have predicted after dozens of business writers in addition to me have been going on about it for years…

Take, for example, the recent case of a customer service fiasco at Comcast. It really should have been a non-issue: a customer had decided to cancel their service due to dissatisfaction with the company, and had declined all efforts to retain them. Any service provider is going to get calls like that, because no matter how hard you try to improve your service or support functions there will always be somebody who doesn’t like something or who just manages to fall through the cracks. If you do business with 10,000 customers today, and all but one of them are happy with your service, you can correctly claim to have a 99.99% customer satisfaction rating. However, to that one remaining customer whose appointment was entered for the wrong time, whose bill was miscalculated, who was accidentally left on hold over someone’s lunch break, who was not informed of a service interruption because his or her telephone number was not recorded correctly, or any of a thousand other minor failures, your success rate is 0%, and their satisfaction will change accordingly…

So why didn’t the company’s representative just process the disconnection and let it go? Without access to Comcast’s Human Resources files I couldn’t tell you for certain; it’s possible that the company has a bonus for the number of customers you talk out of disconnecting, or a penalty for the number of customers you weren’t able to successfully retain; it’s also possible that the rep in question or even his work group as a whole were being admonished for losing too many customers lately. Perhaps Comcast isn’t recruiting the right people, or isn’t providing the right training, or perhaps every one of their thousands of customer service representatives is great except for this one. But for this one particular customer, the company is every bit as bad as its horrible reputation would suggest, and now the audio recording of the call has gone viral, making the company a laughing stock yet again…

I’ve written in this space about the need for top-flight customer service personnel; I’ve gone on at length about how to recruit them, how to train them, how to lead them, and how to make them better. But my most often-repeated comment has been about how the customer service representative may well be the lowest-paid, least-educated, least-trained and most-ignored member of your entire corporation, but if he or she performs poorly enough on any given call nothing else is going to matter. You are going to lose that customer and everyone he or she can persuade to follow them – and in the Internet age, if your customer service rep is bad enough for long enough it’s only a matter of time before somebody records the call and starts playing it for everyone in the world…

This disaster wouldn’t have been easy or cheap to prevent – but it’s not like it was difficult to predict that something like this was going to happen…

And Now a Word from Captain Obvious

If you spend as much time as I do looking for story fodder, there are certain types of “reporting” that are going to get on your nerves after a while. Wildly over-dramatic headlines are annoying, especially when the story is of no particular interest to anyone. Stories that bring up issues resolved years ago, crises for which suitable solutions were implemented in the last century or horrible cultural insults that no one even noticed, let alone protested, are just wastes of everybody’s time and bandwidth. And stories that attempt to create an issue where none exists – or, indeed, ever could – are just a huge nuisance all around. The best thing you can say for most of this flotsam cluttering up the Internet is that we aren’t killing and grinding up any more trees to print it on. But every once in a while, a story hits that combines two or more of these problems into a complete morass of suck…

Take, for example, a recent Rolling Stone online article about “The 5 Most Dangerous Guns in America.” This sounds like it could be a controversial but hard-hitting look at the gun types and models that are used in the largest number of crimes, the ones that are the most easily obtained and/or stolen, the ones that can be most easily modified for various sinister purposes, the ones that are the hardest to detect and therefore the greatest threats to public safety, the ones most often used in workplace shootings, the ones most often used in school shootings, the ones most often used in drive-by shootings, or even the ones that are most likely to fail in spectacular ways and kill the person wielding, cleaning, or standing in front of them. Unfortunately, that would require research, interviews and analysis – what used to be called “journalism” back when people still did any of those things…

Instead, this “article” lists just five categories of guns: pistols, revolvers, rifles, shotguns and derringers. Throughout the six pages, the author uses FBI and BATF data to present the total number of each gun type recovered at crime scenes in 2012, all of which tells us exactly nothing. Consider, for example, that according to the ATF something over 119,000 automatic pistols were found at crime scenes in 2012. That would include non-violent crimes, misdemeanors like trespassing and jaywalking, and suicides (in most municipalities suicide is a crime as well as a tragedy); it also gives us no idea of the relative safety or lethality of these weapons or how many of these “crimes” were eventually dismissed as self-defense. And while the raw number may sound like a lot, 119,000 isn’t actually a particularly impressive fraction of the 150 million to 200 million handguns estimated to exist in the United States alone…

Now, we should probably acknowledge that this story would have been controversial no matter what happened. The fact is that any gun can be deadly if the person firing it can hit the target, and the most dangerous gun in almost any situation is the one being held by a person who does not know how to use it safely. But the worst part of this type of reporting is that it replaces any opportunity for meaningful dialog about gun-related violence with nonsensical scare-mongering. Those five types of gun represent almost every kind of firearm normally available to the general public (black powder weapons and specialty types not withstanding); one might just as well say that most traffic accidents are caused by cars, trucks, SUVs, motorcycles, vans and buses (including RV types). In other words, it’s a statement so self-evident and meaningless that even Captain Obvious himself would hesitate to bring it up…

I don’t have any easy answers for the ongoing gun control debate; I don’t believe there are any. And even if I did, I don’t believe a blog about business and management topics would be the right place to air them. I’m just saying that if I owned any news source in any medium I would fire anybody who approved this sort of blather for publication – and then I’d assign the reporter to do some actual research for a change...

The Ethics of Benefits

In all of the recent controversy over whether companies in general should be excused from having to pay for employee benefits that violate the company’s religious beliefs – or those of the people who control the common stock, anyway – one of the things that doesn’t seem clear is what a company’s obligations to its employees actually are. These days even arch conservatives seem to be okay with the idea that everyone deserves adequate medical care, assuming that no one asks them to pay for it. And I have already written in this space about how benefits are really part of a company’s compensation package, and how offering better ones is really no different from paying higher salaries than a competing firm. But the question of what constitutes a critical quality of life issue and what is just something that people would enjoy getting someone else to pay for isn’t always clear. I thought we should take a closer look…

First off, let’s consider the various health-related benefits. It may seem fantastical at this point in history that some companies don’t offer even the most basic healthcare coverage, but if all jobs came with health benefits there wouldn’t have been any need for the Affordable Care Act in the first place. Even here, however, it isn’t always clear what the critical factors are. For someone who as trouble getting around, the ability to select your own physician (so you get to choose a provider nearby your house) may be vitally important; for those with greater mobility it may not be. People with chronic conditions may need access to specialists, or want to see a doctor who is already familiar with the progress of their disease, while somebody whose primary health issue is limited to patching up their parasailing injuries may not care who is applying the bandages and painkillers…

As difficult as that is, it gets worse when we move into things like dental and vision benefits. If you need new glasses every year, then vision coverage is very important; if your eyes are 20/20 you may not care about this. Life insurance can be of relatively little use to someone who is single and childless; death and dismemberment coverage is critical for anyone who works with any kind of heavy machinery, but not so much for someone who never uses anything more dangerous than a copier. By the same token, someone who is relatively healthy may regard a time bank of sick days to be a nuisance, while somebody with a chronic health problem may need those days to avoid losing their job, and management may not want to offer them at all…

Things become even more extreme when we move into other kinds of employee benefit. For someone without children subsidized day care and personal days to deal with school/PTA meetings, soccer games, taking children to the doctor and what have you may seem like the company is punishing (and in some cases, fining) them for not having families, by making them do the family peoples’ work and lowering the pool of funds available for benefits they could use. But to a single parent trying to care for multiple small children on a relatively low income such benefits may be the difference between survival and succumbing to poverty – and rescinding them (or just not offering such benefits in the first place) seems cruel. The same could be said for tuition benefits for someone trying to escape from dead-end jobs, or even about the free turkey and pie giveaways we used to see at Thanksgiving and/or Christmas in some companies, in the case of a disadvantaged family that will otherwise be feasting on macaroni and cheese with puffed cereal on the side…

The more we consider this issue, the more it seems as though one person’s critically-needed benefit is another person’s wasteful boondoggle or inappropriate entitlement. Which leads me to ask the question: What do we, as employers, have an obligation to supply to our employees? Do we owe them more than the agreed-upon wages that we feel are fair compensation for the work that we are requiring them to do? If we have an ethical responsibility to provide the necessities of life, who gets to decide what things are really necessary and which are merely desirable? Happy and healthy employees are more productive, and ultimately lead to a more profitable company – provided that the costs involved in making them that way don’t exceed the increase in the firm’s income. But at what point does something stop being a basic necessity of life and become an inappropriate use of company funds?

It’s worth thinking about…

Going to the Dogs

It was one of those headlines that you just know aren’t going to pan out, but you have to look anyway: “Canadian students invent ice cream that is stored at room temperature.” Anyone who has ever suffered through the freeze-dried abomination that is marketed as “Astronaut Ice Cream” already knows that the idea of storing a frozen dessert at room temperature is something of a dodgy idea to anyone whose idea of sweets does not include Styrofoam packing kernels. And if you follow the link, you will find that, as expected, the story it leads to isn’t entirely the one the headline would lead you to expect; it’s just closer than usual…

The product in question, which really was developed by students at McGill University, is less hype than a self-churning sorbet that can be stored indefinitely at room temperature before you activate its nitrogen canister and throw it in the freezer. It isn’t really ice cream in the sense that it isn’t actually frozen until you leave it in the freezer for a few hours, and also in the sense that it’s a vegan product containing no dairy products of any kind – hence, neither iced nor cream. I’m personally a little dubious about flavors like “hibiscus and ginger or almond and pistachio” – if it doesn’t contain chocolate, caramel, or vanilla it’s not really ice cream, as far as I’m concerned. But a much larger issue, at least as I see it, is that the people who shop for ice cream and the people who shop for “vegan sorbet” aren’t really the same people. Or, to put it another way, I don’t believe that there is currently any defined market for this product…

Now, in fairness, there is some precedent for a non-dairy/vegan frozen dessert product, including at least one brand that has been around for the last 25 years; it’s just that this category of product does not appear to have ever achieved mainstream acceptance. Sold under the name brand of “Tofutti,” these products make use of frozen tofu (and various flavoring, texturing and coloring additives) to produce non-dairy products that look – and, to some extent, taste – like real ice cream products, but which contain no animal products of any kind. It’s a great idea, in its own way; the product in question is cheaper to make and more ecologically responsible than conventional dairy products, and is generally considered healthier to eat, as well. The problem is, no matter how adept you become at freezing and flavoring bean curd, it still doesn’t taste that much like ice cream…

In management terms, a product or company that has a relatively weak position in a relatively unattractive industry (or part of a larger industry) is classified as a Dog – not to be cruel; it’s just a technical term. But from a management or financial standpoint, a company whose primary product is neither growing explosively in market share or revenue (like a Ben and Jerry’s or a Coldstone Creamery) or maintaining a consistent and profitable control over a large market share (like a Baskin-Robins or a Carvell) or even taking a strong position in an unstable part of the industry (such as any good frozen yogurt company) is not an attractive prospect for investment and further development, and should probably be removed from your portfolio. At least, that has been the case until now…

It remains to be seen, of course, whether or not the new stabilizing agent developed at McGill will work on tofu products, or whether the ability to store them for months/years without refrigeration and then churn up a batch whenever you want it will be a sufficiently large change in the product to make it more widely popular. Unless the inventors can also come up with some way of making the product chill itself as well – just open the box and hit the activator, and the product will do the rest – I can’t see this effectively competing with any of the existing types of frozen dessert. But, I must admit, I’ve been wrong before…

Flying: Then and Now

Ask anyone who has had to travel by air in the last dozen years what they thought of the experience, and you’re probably going to hear language that you can’t use on television. Between the annoying and insulting security measures (that are mostly futile), passenger discomfort (which gets worse every year) and flight delays most people already hate the entire process before you even get to issues like endless new fees or the time you waste getting to the airport two hours early. But if you ask anybody who has been traveling by air for a while, they’ll probably tell you that things didn’t used to be like this; that air travel used to be a more formal, dignified and enjoyable experience. They usually won’t mention that it was also far more expensive, or that you were more than five times more likely to die in a plane crash…

An article that ran this week on the Huffington Post UK site compares a number of factors between the 1950s – when the advent of jet airliners and international carriers began making the airlines over – to the current state of the industry. And while I wouldn’t say there were a lot of surprises in the article, it was a bit odd to realize just how much cheaper and safer air travel has become just in my lifetime. For example, in 1952 the industry average was listed as 5.2 deaths per 100,000 hours of flying – about five times the current average. This isn’t really that surprising, when you consider advancements in navigation, automation, radar, electronics, and power systems (especially engine reliability), but even for an admitted airplane wonk like me a 500% difference is kind of amazing. Then there’s price – everyone knows that airfare had dropped since the U.S. deregulated our airline industry in 1978, but according to the Huffington people we’re talking about an 83% drop in fares on the New York to London run. And while it is true that the food, drink and service were all better, there really wasn’t much to do – in-flight movies did not appear until the late 1960s, and even into the 1970s the picture and sound were nothing to write home about…

This week also brought with it news about a potentially brighter future for all of us who get stuck in the Economy section of the aircraft; at least in terms of on-board comfort. An article off the Daily Mail website details several new changes in cabin and seating design that have the potential to create a more comfortable passenger environment without adding weight or taking up extra space (both of which would lower the profitability of the flight). None of this is exactly surprising either; the inclusion of cup holders that are separate from the meal tray, footrests usable in the Economy cabin, or seats that can recline without getting any closer to the passenger sitting behind you are all common-sense upgrades that people have been asking for almost from the beginning of modern air travel. The amazing part, at least to me, is that no one has made any particular effort to upgrade this aspect of the experience before now…

Airline seats are theoretically safer now – thanks to advanced construction materials and the like – but they haven’t really changed in design over the past two generations. And while air travel is essentially a commodity product these day (in that competition is mainly based on price) on a route with heavy traffic and significant competition any material advantage that makes one company’s service more attractive than the alternatives could major implications for the success of that firm. It’s early days as yet, but it might just be possible that we could start seeing change for the better in the airline industry…

Unless the new developments in rail transportation render the whole question moot, of course…

Still Not Sure

I have written in this space before about those occasions when it seems impossible to tell whether a given company is actually taking the actions you’ve just read about, or if they are only doing something outrageous in the hopes of attracting media attention. A lot of new product promotions work that way, partly because it is difficult to create a truly ingenious advertisement for even the most superlative product, but also because it is becoming increasingly difficult to cut though the massive amounts of clutter clogging up any potential medium. In addition, there are a far greater number of both media and channels within them appearing every year – reaching all American television viewers was relatively easy when there were only three or four channels being broadcast, for example, but doing so is much harder when many areas have 900 or more possible viewing choices. And that does not even consider the increasing number of people who get all of their news and entertainment online, and don’t ever watch television…

It’s probably also worth pointing out that not all demographics will consider the same things outrageous or shocking, for that matter. Business failures resulting from efforts to market a new product or service to the wrong audience are legion, and it’s impossible to say how many additional ventures have failed because whoever was making the strategic policy decided to pass on a world-beating product simply because he or she didn’t like the idea – there’s no wreckage lying around from ventures somebody didn’t try, you see. Failures of this type are referred to collectively as the “I am the world” fallacy by Scott Adams in one of his non-fiction books about management, and can occur any time a senior manager applies his or her own preferences to a business decision instead of consulting actual marketing data. It is imperative that all managers and business analysts question their assumptions, not just regularly but constantly, before taking action. This is why I held back my first impression of the new Doritos product and took another look…

If you haven’t heard about them yet, the story goes that PepsiCo Canada has just released a new product that they are calling Doritos “Roulette”flavor. Hype aside, these are bags of ordinary nacho cheese corn chips, only every seventh or eighth chip is as spicy as the company has been able to make it, turning each bite into something of an adventure. The idea appears to be that if two (or more) customers take turns pulling a single chip out at random and eating it, sooner or later one of them is going to draw (and eat) one that will be painfully spicy. None of the materials I have seen about this product to date address what the players are supposed to do with the rest of the bag at that point – or why anyone would purchase these chips if they were not intending to play the implied game…

Now, we should acknowledge that this is hardly the first product to play on the apocryphal game of “Russian Roulette” in a food product, let alone the only food product with potential inedible portions hidden in each package. A familiar example in recent years might be the “Every-flavor Beans” created as a tie-in to the Harry Potter books and movies (their fictional counterparts appear in the story), which included such unappetizing flavors as grass, dirt, earthworm and vomit and oddball flavors like toast, popcorn, black pepper and sausage with more conventional candy flavors. Fans of the series would challenge each other to select a bean at random and eat it despite the possibly revolting taste, much as Doritos is suggesting their customers do with the corn chips. Whether or not you could just spit the losing beans out again was a matter of individual preference…

My personal reaction to the Doritos Roulette flavor was to question why the company is bothering to produce them – the Doritos “Flaming Hot” flavor has never been that successful, and the “losing” chips in this product are much hotter and even less appealing. But it important to note that I have now passed out of the key demographic for corn chips (males, 18-36 years old), and I’ve been out of the food wholesale business for over a decade; the fact that this product does not appeal to me is based on behavior patterns and consumer preferences that may well be irrelevant to the target market, rather than any hard data. I’m not sure whether this product has any real potential, or if it will have a brief flare of notoriety and then vanish onto the compost heap of history. I’m just calling it to your attention because that personal gut reaction should not be used to make decisions for a multinational corporation, but reactions just like it often are – and sometimes they destroy entire companies, not just unusual product ideas…

The Trouble with Humans

From time to time I will run across a story about a business that has instituted a basic safety measure – like passwords to keep non-customers off a business’ free Wi-Fi system, for example – that is being excoriated for doing so by people who insist that such a measure is unnecessary, insulting, discriminatory, or all of the above. As a consumer and potential customer I can understand these points – no one wants to be inconvenienced or even blamed for the bad conduct of other people. As a management consultant and a manager with experience in the retail and food service sections, however, I can tell you that there is no behavior so uncivilized, antisocial or disgusting that somebody somewhere won’t feel compelled to do it at their first opportunity. As evidence, let me offer the case of public libraries across the United States who have offered 3-D printing services to their patrons only to find themselves having to forbid the printing of guns, drug paraphernalia, or sex toys…

If you missed it the first time you can access the ChicagoTribune story about this here, but the basic concept is fairly simple. Over the past few years 3-D printers – devices capable of creating three-dimensional objects by cutting sectional views (or “slices”) from digital templates out of some suitable medium and then fusing or laminating them together – have gone from massive, expensive industrial equipment to machines small enough and cheap enough for home use. They’re still a bit too expensive for a lot of people to buy just for the fun of making random objects, but they’re well within the reach of a well-funded public library, and some such institutions have started buying them and letting patrons use them for a modest fee. In theory, this is a wonderful idea – it allows families to teach their children about the possibilities of 3-D rendering on the computer, and then print out an actual object using the printer. Unfortunately, this ignores the basic nature of human beings, and our ability to ruin just about anything…

Many of my readers (assuming I have readers) will remember the flap that appeared last year when the plans for an all-plastic handgun that could be fabricated by most home-use 3-D printers were released onto the Internet. Much of this died down when it became clear that such a gun would be far more dangerous to the person trying to fire it than it would to the target, but the plans are still out there, and it isn’t hard to imagine a variety of illegal purposes to which such an artifact could be put. Even more problematic, perhaps, are objects that can be used for non-violent but still inappropriate purposes, all of which are also available in many places online. Even if we accept that the development and dissemination of such files qualifies as protected speech under the First Amendment (there seems to be some debate on this topic) it’s still not the sort of thing one wants to have to explain to small children while working on a family craft project at the public library…

Now, it could definitely be argued that people using the public library’s 3-D printer to make inappropriate objects isn’t really any different from the other inappropriate ways people use the library’s computers, but that doesn’t address the underlying issue. I personally believe in free access to information for all users, including those too poor to afford their own computer or Internet connection; I also believe that censorship in general is wrong. But at the same time I have issues with not being able to use the library because a collection of homeless people is using it as an emergency shelter, and I don’t believe that families should be unable to use the library (or its special new printers) because other members of the community insist on looking up – and in this case, printing – images that are inappropriate in a public setting…

A common catch-phrase around my household is “Another beautiful idea – ruined by people.” I could probably write an entire blog just about these situations, and I certainly have no concrete suggestions for how to solve this one. I’m just pointing out that sometimes safety regulations are there for a reason – and that no matter how innocent something appears to be in the abstract, we as managers have to be prepared to deal with trouble when the idea is implemented in the real world…

The Other Shoe

In yesterday’s post, I was talking about the fallout from this week’s Hobby Lobby decision, and why the whole policy that resulted in the lawsuit was a bad idea from a Management standpoint. For many years now I have maintained that any decision or policy that is ultimately against the best interests of the employees is not in the best interests of the company, at least in the long term. In a larger sense, I’m generally against policy decisions that negatively impact any of the corporation’s stakeholders unless there is some overwhelmingly important reason for doing so. Actions which are bad for the community, state or country in which the company operates in general are rarely good for the firm itself in the long run, if only in the sense of having customers who can buy your products and of not being constantly besieged by regulatory bodies, law enforcement agencies, consumer advocates, environmental groups, community leaders, civil rights lawyers, or angry mobs with torches and pitchforks. But as bad as all of that it, the Hobby Lobby decision may actually have created something even worse…

Traditionally, one of the reasons people form corporations is to protect themselves from certain types of legal liability. Incorporating the company creates the legal fiction that the company is an entity separate from the people who own it or manage it. The corporation can own property, conduct business transactions, borrow money and pay taxes; it can also be fined or sued – but the people who own it can’t be. As one of the stockholders, you can’t be personally held responsible for the actions of the corporation – which seems only reasonable, since you are only one of the hundreds or thousands of people who own it, and you didn’t personally make any of its questionable decisions. If a company in which you own shares declares bankruptcy and is sued by its creditors, the court may be able to seize the company’s assets, but they can’t take your personal funds. You can see how important this could be in the case of major product liability suits or matters of criminal malfeasance, to take only the two most obvious examples…

This legal fiction is generally called the Corporate Veil, and it is often considered one of the most important kinds of protection offered by incorporation. The problem is that the Veil is only a legal fiction; if the owners of the company do anything that even implies that the corporation is not a completely independent entity it is possible for the courts to ignore that fiction, or “pierce the Corporate Veil,” and hold the owners directly responsible for anything the company does. Common violations would include not keeping accurate records, not paying dividends to the shareholders, or intermingling the company’s assets – using corporate funds to pay for personal expenses, for example. It isn’t usually possible to pierce the Veil because the owners are clearly just using the company to further their own interests or agenda, because it is usually very difficult for hundreds or thousands of owners to agree on a personal agenda in the first place but it can happen – when a single individual or family owns the entire company, for example…

In the case of Hobby Lobby, it’s much too easy to argue that the owners of the company – who happen to be members of a single family – are using the company and its compensation packages to further their own political and/or religious agenda (to the extent that there is any difference, these days). As noted in yesterday’s post, their anti-birth control policy is not in the long-term best interests of the employees, the company or the owners themselves, but the opportunity to challenge the Affordable Care Act under a religious exemption does further both the political and religious agenda of the owners. If the court – any particular court hearing a case against the company – decides that they have broken the rules and may therefore not have the protection of the Veil, damages assessed by that court may be directed against the owners of the company. That would include any of the gender-discrimination or religious-discrimination cases starting up over this situation, by the way…

Now, I’m not going to pretend that this was the first thing that came to my mind when I heard about the Supreme Court decision last week. It wasn’t until I read the news story here and the “Friend of the Court” brief it references here that I realized that just how badly this could end for the company’s owners – and that nearly four dozen law professors from top universities thought so, too. So however much we may want to mock the owners of Hobby Lobby for the financial and public relations consequences of their actions, it would appear that the legal aspects of the situation are even worse – and that any first-year Law student could have told them how utterly stupid and ultimately self-destructive their policies were…

From the Top

I’ve been watching the fallout from the recent Hobby Lobby decision along with the rest of the country, and I have truly been amazed at the amount of scorn and derision being heaped upon the company, its ownership, its management team, and anyone who supports it by essentially everyone on the left side of the political landscape – and a fair amount of the center, as well. So far we’ve heard about how this is indicative of a war against half of our population, how it’s the emergence of a plutocracy that will destroy the very fabric of our country; how it’s the start of a theocratic state in North America, how it is discriminatory, racist, sexist, classist, and generally horrible for anybody who isn’t an ultra-right-wing white male religious fanatic. And I have no difficulty accepting any of these claims; but what strikes me about the situation is that the management policy that started the whole this sorry mess was a bad idea in the first place…

Consider, for a moment, the purpose of offering benefits to your employees. All pious mouthing aside, benefits are part of the compensation package which the company uses to attract the best available workers – or, at least, employees of sufficient quality to suit its requirements. If a given company offers better compensation than others in the same industry, whether that means higher pay, better health insurance, dental and vision insurance, retirement plans or other benefits, then jobs offered by that company will be more desirable, creating greater competition for those positions and giving the company access to a greater selection of possible employees. It is important to note that while access to adequate health care may be considered a basic civil right, having somebody else pay for it generally isn’t, which is why there are so many jobs that do not offer acceptable medical insurance – and why the Affordable Care Act was required in the first place…

Given that this is the primary function of all compensation elements from the company’s standpoint, intentionally degrading any part of the compensation package is counterproductive to the point of idiocy. Any measure which makes the package less attractive – which eliminating coverage for desired services most assuredly does – lowers the company’s ability to attract or retain the best personnel. This lowers productivity, lowers profitability, and generally decreases the overall value of the firm. In this specific case, negative feelings generated by the policy (and the lawsuit to protect it) also represent an excellent chance of angering or alienating employees who already work for the company and do not have the option of quitting – including member of the workforce connected to the issue by politics or ideology as well as by biology. This will lower productivity still further, and that doesn’t even consider the impact the company’s position is having on public relations and customer retention…

Now, as already noted, there are companies that do not offer health benefits of any kind, and from a purely strategic standpoint we can understand why. If employee relations are not a priority – if the labor situation in their industry is effectively a buyer’s market – then a company may not need any advantage to obtain the best employees, and if workers in that industry are considered easily interchangeable there may not be any great pressure to retain them, either. Alternately, a given company or industry may have an operating margin so thin that offering any additional compensation would make their business model untenable; the choice might be between higher wages and other benefits, for example. This is the first case of which I’m aware in which a company has decided to intentionally hamstring itself because of the religious convictions of the ownership, though – even assuming that’s actually what is happening…

Personally, I find the religious argument difficult to accept – especially since nothing the company does can prevent its employees from using the disputed birth control methods if they can find another way to pay the resulting medical bills. If the owners of a business actually support any religious belief, it seems obvious that it would be preferable to run the business effectively and use the resulting higher profits to support whatever ministry or other activities those beliefs require, rather than destroy the business and galvanize the opposition into the kind of action that could actually set back the owners’ religious goals. Or, to put it another way, in addition to the various legal, ethical, political, civil, social, customer relations, community relations, public image, employee relations and financial arguments against this policy, the whole concept is also stupid to the point where I can’t even think of a bad metaphor for how stupid it is. And the worst of the legal implications may be yet to come…