Sunday, June 7, 2009

The Ethics of Paternalism

Going over my notes last week, I ran across an interesting question regarding the ethical responsibility a company has to its employees. It seems there was a case (which eventually reached the U.S. Supreme Court) in which a company that manufactured batteries of various kinds had systematically avoided hiring women for certain positions that involved a significant chance of exposure to lead. The company’s thinking was that since lead exposure can lead to birth defects, they would simply keep anyone who was (or could conceivably become) pregnant away from their manufacturing stations that used lead. We should note that the positions in question were not highly-paid or especially desirable, nor would experience in any of them result in promotion or any other form of career advancement. One could in fact argue that the only special treatment associated with these jobs was who would be hired to fill them…

As you might imagine, when this situation was finally made public a huge firestorm of protest broke out. The company’s defense – that they were acting in the best interests of their employees, to keep anyone from having to choose between their job and their future children – did not placate any of the parties responsible. Several of the company’s opponents roundly condemned this position, in fact, pointing out that men can also suffer significant health consequences from lead exposure, and that assuming that a female applicant wanted children (or was even capable of having them) constituted both gender discrimination and massive condescension on the part of the company. Although the company’s motives may have been well-intentioned, the paternalism it displayed was intolerable – and also illegal…

Now, you might think that I’m dredging this case up from the mists of time; that all of this happened before women were commonly accepted in the workforce, maybe even before they received the right to vote. If so, I regret to inform you that these events are less than 20 years old as of this writing; the Supreme Court decision was handed down while I was in business school in the early 1990s. But while it’s doubtful that anyone would attempt to institute this specific policy today, echoes of the situation described live on; people are still more likely to assign hazardous duty to men than women; single people are more likely to sent into harm’s way than those who would leave a widowed spouse and bereft children; women are still barred from most combat position in our military, and so on. Which to me begs the question: to what extent, if any, should an employer place the welfare of its people ahead of their legal right to die (or be genetically damaged) in unpleasant ways while on the job?

Obviously, there are OSHA regulations and similar laws that attempt to keep everyone safe on the job. And even more obviously, this is a very slippery slope indeed; the line between keeping women off a specific job category because they might get hurt and keeping them off any specific job because you’re a bigot and you don’t believe they can do that job as well as a man could is so fine I can’t imagine how to measure it. In theory, all work assignments should be made regardless of the applicant’s personal characteristics, on merit alone – but does that mean that an employer has no special responsibility for any of its employees? That if one of their people wants to do something with potentially harmful long-term effects, the company should just ignore the possible repercussions and let them go on ahead? Does our responsibility as managers to treat all of our people as even-handedly as possible supersede our very human desire to protect our people from harm?

It’s worth thinking about…

Saturday, June 6, 2009

The Grad School Diaries: The Sartre Conundrum

The suggestion that I am not a very social person, which my various critics have often raised (beginning with my late mother, when I was about three, and continuing to this day) has never seemed entirely fair to me. Given my extravagant trust issues (developed during my train wreck of an early childhood and also, unfortunately, continuing to this day) I’ve always considered myself to be remarkably friendly, approachable, and easy-going. I don’t make a lot of friends, and I don’t do so easily, but I tend to hang onto the ones I do encounter; I’m currently in touch with a whole circle of people I’ve known for 25-plus years now, and married to someone I’ve known since 1983. I have enough self-awareness to realize that I can be considered a “difficult” man (and sometimes am) and that I can on occasion give offense without ever meaning to – thus, I try to make up for those failings by being loyal, supportive, and very difficult to offend myself. But that said, there are still days when people get on my nerves…

When I made the decision to join this program I was expecting a number of challenges, not least of which would be taking up the lifestyle of a full-time student again after all of these years. I hadn’t anticipated a return to the sort of existential angst that is so typical of young intellectuals in their late teens and early twenties, but I suppose I really should have. This program is by far and away the most difficult thing I have ever attempted, and I am even less prepared for (and indeed less suited to) this life than I was to becoming an undergraduate in 1982. Already, just a few weeks into my first semester at MSU, I find myself floundering, trying to cope with a massive load of reading and study, and a middle-aged man’s memory, which is not a good combination. I’ve compared it to being an old athlete trying to get back into a familiar game, and that analogy is sound as far as it goes. But some days, there’s a much darker image that comes to mind…

Have you ever run down a steep slope, so steep in fact that you could not have walked up it? It’s more of a slide or a controlled fall than it is an actual run, particularly if the ground is covered with loose earth and gravel, shifting under your feet as you try to find your footing. There is a combination of agility, balance, experience, skill, timing and sheer dumb luck that will bring you safely to flat (and stable) ground again, if you can just find it; otherwise, you’ll probably fall, scrape the heck out of your knees, rip the skin off your palms, break one or both legs (or one or both arms/wrists), break your neck, or just bash your head against something and die (although combinations of the above are also possible). Now imagine that a whole pack of people who are younger, thinner, faster, more agile, and generally in better shape than you are, all of whom also had acrobatic or gymnastic training you couldn’t have qualified for (let alone completed), are telling you how easy this challenge is and how little trouble they had with it…

I know, of course, that they mean well, and that in fact most of them didn’t have anything approaching the trouble I’m having. But that still isn’t helping. In the play called “No Exit” Jean-Paul Sartre wrote “Hell is other people” – and anyone who has been forced to deal with unpleasant strangers on an airplane or in a place of public accommodation knows how right he was. It’s possible, I suppose, that there is some other venue in which you could study the strange contradiction that being surrounded by helpful people is sometimes worse than being alone – particularly if you have to try to be bright, and upbeat, and hopeful whenever they’re around. But this one will do until something worse comes along…

Assuming, of course, that I can manage to cope with the anger, frustration, complete intellectual inadequacy, panic, fear and crushing depression, all without breathing a word of my difficulties to another soul for fear of being seen as "displaying negativity." I'm surrounded by people trying to be helpful, and yet, more alone than ever. How is this even possible? It's the Sartre Conundrum, and I'm not sure even the existentialist master himself could answer it on a day like today...

Friday, June 5, 2009

New Theme Park

There’s a wonderful moment in the recent “Iron Man” film, where the hero’s personal assistant walks in on him as he’s having trouble getting out of the armor that serves as the centerpiece of the movie (and the comic series). Most of the earlier iterations of the Iron Man myth have avoided dealing with this, but a suit of armor (even sealed, flying power armor with its own life-support systems and weapons and such) isn’t just a single piece of machinery; it wouldn’t just clamshell open and let you walk in. Real armor, throughout history, has been a collection of components fitted to different parts of the body for different functions, and it’s unrealistic to suggest that the Iron Man armor would be something you just pull on like a cotton jumpsuit. But in the scene our hero is hanging in mid-air, as a bunch of robotic arms attempt to disengage him from the different bits of ironmongery, and his assistant gasps at the sight…

Which leads to one of the film’s best moments, when our hero looks at her, and replies: “Oh, come on! This isn’t even the worst thing you’ve caught me doing!”

This was precisely my reaction when I learned that a genuine UFO cult is planning on building an alien-based theme park and “Happiness Academy” in Las Vegas. As reported by the local CBS affiliate, the well-known nut cult that calls themselves the Raelians is planning on constructing a new facility, including a museum, lecture facility, full-scale replica of a UFO and whatever else a “Happiness Academy” would entail in Las Vegas, starting sometime within the next year…

Anywhere else in the world, this announcement would no doubt be greeted with all manner of public protest. There would be denouncements from local religious groups, calling the Raelians “a dangerous cult” that was obviously created by the devil to distract their members from whatever their particular dogma happens to be. There would be complaints from local business groups about the masses of weirdos that will be attracted to such a facility scaring off paying customers. There would probably be protests and counter-protests about separation of Church and State, the need for various levels of government to intervene in (or stay out of) the situation. Local politicians would scent which way the wind was blowing, and try to gain advantage by taking whatever position about the new theme park seemed politically expedient…

In Las Vegas, the reaction seems to have been more along the lines of people asking if the city really needs another UFO cult and its theme park; if the ones they already have can handle the traffic; or if this one will just make it harder for the existing facilities to pay their bills. I mean, sure, everyone’s happy to see new businesses opening up these days, what with the economic crisis and all, and Las Vegas could certainly benefit from some new construction jobs and real estate getting sold, but you have to think of the long-term effects of a new installation…

I kid, of course, but given how hard the city has worked to cultivate that image of “anything goes” it’s difficult to imagine how having the Raelians build a tourist attraction somewhere in the area will do anyone any harm, and if they actually have money to spend (or, more to the point, if they can actually attract any tourists with money to spend) the whole thing could be really good for the community, at least from a business standpoint. Assuming that the whole thing doesn’t turn out to be another heap of smoke and mirrors, like when the Raelians claimed to have successfully cloned one of their key leaders, that is. It’s a sad day when you can’t even trust the leaders of your local UFO cult anymore. Sometimes I fear for the future of our Republic…

Thursday, June 4, 2009

Tipping Over the Court Decision

We’ve already considered the issue of tips as part of an employee’s regular compensation in this blog, and I’ve also mentioned that as a Manager in the drugstore days, I was not allowed to accept them (customers would occasionally insist, and I’d then accept on behalf of my crew – and share the wealth with everyone who was on-shift that day). What you may not know is that while a number of states allow employers to pay lower-than-minimum wages to employees who receive tips, most of those same states have laws preventing employers from paying supervisors or managers based on the assumption of tips, OR letting supervisors and managers participate in “tip pool” systems. Which makes the situation going on in California right now all the more confusing…

If you’ve ever seen a tip jar on the counter at a bagel shop or a coffee house, then you’ve seen a tip pool in operation. In some restaurants, for example, you will see a team of servers looking after multiple tables, to the extent that it’s really difficult to tell who did the most work looking after a specific party – or who the customers were trying to reward when they left their tip. So what will happen is that at the end of the night, the manager will add up all of the tips left during that shift, divide by the number of people who were waiting tables (and sometimes by the number of hours worked), and pay each waiter that amount. Obviously, it doesn’t make any sense to have the manager (or supervisor) who is responsible for dividing up the tips also share in them; there is no way any of the staff would ever trust such a process, and no reason the customers (or higher management) should trust in such a system, either. You’d have to be an idiot even to suggest it…

Apparently, the people running Starbucks are that sort of idiot. A lawsuit filed in California in 2004 brought to light the fact that Starbucks was requiring its personnel to share tip-jar proceeds with their supervisors, despite state laws prohibiting this practice. The company defended this regulation by pointing out that a Starbucks supervisor does 95% of the same tasks as anyone else in their retail locations, including taking care of the customers, and that therefore it was appropriate that they share in the rewards (tips). Starbucks corporate also noted that its “supervisors” can’t hire, discipline or terminate the employees they direct, and are not responsible for distributing tips the way a manager running a tip pool would be. The court, however, felt differently, and last year awarded the baristas about $86 million in damages, and $20 million in interest. Which would have settled the matter had the company not appealed…

Which, of course, they promptly did. A story being reported this week by the Associated Press indicates that the 4th District Appeals Court has overturned the lower court’s ruling, agreeing with the company that the supervisors are doing essentially the same job as the baristas and should therefore be given a share of the tips. Which wouldn’t be a problem, except that the ruling directly contradicts the section of the state’s labor code that governs compensation schemes, which explicitly states that employers may not pay supervisors (of any kind) from tip pools (of any kind). Needless to say, the case is on its way to the California Supreme Court…

Now, I don’t want to rag on Starbucks, which is having enough troubles of its own, what with the closing stores, stock devaluation, and new direct challenges from McDonalds and Dunkin’ Doughnuts. But I can’t help thinking that this is not a healthy policy, both the original tip-sharing requirement and the ongoing legal battles. On the one hand, it has the potential to be a massive public relations nightmare, and on the other hand it has the potential to devalue supervisor positions all across the service sector (if companies are allowed to start cutting those salaries and paying the corresponding employees from tips), lowering the standard of living for supervisors and the quality of personnel who would be willing to accept those jobs. The repercussions could destabilize yet another sector of American commerce, lower the quality of service and ultimately performance and profit levels for thousands of companies, and drive the economy that much further into the tank…

Seems like rather a lot to risk over just not having to pay your supervisors another dollar or two, that’s all I’m saying…

Wednesday, June 3, 2009

Don’t Answer That…

Suppose for a moment that your business held monopoly control over a product that the people living in your community needed to survive – and, in fact, were required by law to make some use of. Let’s also imagine that there is no real alternative product; even minimizing use of your product would require a huge investment of capital, to the extent that the residents would probably not be able to save enough money over the life of the equipment they would have to buy to avoid doing business with you to pay for the cost of that equipment. Under those conditions, would you attempt to quietly rake in your huge (and unavoidable) profits while keeping a low profile, or would you openly attempt to screw so much money out of your “customers” that they start politically agitating against you – and charge so much that the alternative technology starts to become affordable?

Before you answer, consider the strange case of the Salt River Project (SRP) in Arizona. A story being reported this week in the Arizona Republic claims that the SRP, a privately-held company that controls electrical service to a large number of areas in Central Arizona is expecting to make about $25 million less in net revenue this year than was originally projected, and are considering raising rates to make up the difference. Please note that the shortfall is not in gross sales, or gross income, or even gross revenue; we’re talking a reduction in net revenue, money the company actually gets to keep. Also, please note that the SRP has already raised its rates four times in the past 15 months, citing higher fuel costs. That sort of thing is hard to explain given that even after the recent hikes in the price of oil, fuel is still about half of what it cost last summer…

This doesn’t even consider the fact that utility companies in Arizona routinely charge 300% more for electricity in the summer months, when everyone needs the power to run their air conditioners (and evaporative coolers) to stay alive; we’re just talking about increases over previous years. It isn’t legally feasible to go without power either; most of the communities in the SRP area of operations have ordinances that allow a landlord to evict someone who hasn’t got water and power turned on. It’s doubtful that any of this would be allowed to happen anywhere other than Arizona, where the state government is so corrupt that attempts to make it illegal to bribe your state legislators routinely fail to pass. But leaving aside all of the legal, moral and ethical aspects of the question, I have to question the intelligence of the people running SRP…

Investment in home solar power systems has been prevented mostly by economic concerns; most such systems are so expensive that you’ll need to replace the system before you can save enough money to cover the cost of buying it in the first place. But if the SRP raises the cost of their service too far, that equation will change – and if they annoy their customers enough, an increasing number of people will also install solar panels just to deny SRP their business. Can the people at SRP really be stupid enough not to see that squeezing out the largest possible short-term profit will eventually destroy them? Can they really be short-sighted enough to ignore the danger inherent in violating the Second Law of Business that badly?

***Sigh.*** You’d better not answer that…

Tuesday, June 2, 2009

Frankenfood

We’re starting to hear more and more loud wailing and gnashing over genetically modified food products, or “Frankenfood” as people on the “against” side of the issue delight in calling it. It’s tempting to dismiss these folks as neo-Luddite fear-mongers who are against these new foods simply because genetically modifying anything is unfamiliar and therefore scary. Unless, of course, you study history or have just been around long enough to remember how other “perfectly safe” miracles of science like DDT, thalidomide, or cyclamates worked out in the long run; in which case, it’s hard to blame people for being at least a little dubious. I still think the purple tomatoes are a nice touch, though…

A story being reported by the BBC Online site describes a new strain of purple tomatoes that have been genetically engineered to contain an anti-oxidant pigment which is believed to have anti-cancer benefits if consumed regularly. No one is really sure how much impact diet has on any form of cancer, let alone whether high levels of anti-oxidants will really help you avoid getting cancer; most of the evidence to date has been more along the lines of “we know these things are good for you in other respects, and they MIGHT help prevent cancer, so why not?” It’s a difficult argument to refute, really; if a single weird-looking fruit is good for your health, and might have anti-cancer benefits, where’s the harm in eating one? It’s not like this is some new scientific development that could turn out to have unexpected side effects later, is it?

Well, actually it is. There’s apparently also some debate about whether these actually taste like tomatoes, not to mention the fact that they look vaguely disturbing. But what makes this entire controversy so amusing is that up until the 17th Century, tomatoes were believed to be poisonous by many cultures, including Great Britain and its North American colonies. As it turns out, the leaves and stems of the tomato plant ARE poisonous (they contain glycoalkoloids), but the fruit is both safe to eat and actively good for you. There was even one celebrated case in the American colonies where a tomato proponent declared that he would publically eat a sack of the red fruits (to prove they were safe) while the local tomato detractors swore he’d keel over from the acid within the first few seconds. What seems to have gotten glossed over in the amusing historical accounts (and contemporary accounts) of this incident is that if our tomato fancier had tried eating the entire plant during his demonstration, it actually might have killed him…

So is genetically modified food any less safe than food bred to have specific characteristics of color, shape, size or flavor the old-fashioned way (e.g. through hundreds of generations of selective cross-pollination)? This remains to be seen, but I should probably point out that unless all of the food you’ve eaten in the last ten years has been taken from plants and animals you raised yourself, you’ve probably already eaten some of this stuff, and unless you move to a farm and start raising all of your own food through completely organic methods, there is a near-certainty that you will be eating some of these products again in the next ten years. Regardless of how we feel about Frankenfood, it’s already here…

I still think these tomatoes look disgusting, however…

Monday, June 1, 2009

Stupid People

When I started writing this blog, I created the “Stupidity” tag because any regular writings about business are going to include examples of failure, and some of those examples are going to be stupid. In my case, one of the areas I study is actually institutional failure, and while stupidity is only one of a long list of things that cause corporations and other institutions to fail, I continue to regard it as both the most preventable cause of failure and the most fun to write (and read) about. So I found the story about a bank issuing a credit card to a tree to be exactly the sort of grist I look for in setting up a new post…

A story related on the urban legend research site Snopes.com details the events following a California man’s efforts to get companies to stop sending him credit card offers by writing “Never waste a tree” on the form and sending it back in. Sure enough, a few weeks later he received a credit card back in the mail for a Mr. Never Waste Tree. Granted that it would have been a crime for him to have made a bunch of purchases on that card and then refused to pay for them on the grounds that the card is the property of Mr. Tree, this would have been cold comfort to anyone victimized by such a crime – or to any of the stockholders of the issuing company, all of whom would have seen their money shoveled out the window because credit cards are so profitable that quite literally ANYONE can receive one…

Now, I could point out that most of these credit card applications are processed automatically, and it is entirely possible that no live person ever saw this one until after the NBC affiliate station in Los Angeles did a story about it in 2005. I could also point out that given the volume of credit card offers being processed at the time, it’s unlikely that a human machine-minder would have noticed this one application even if someone WAS watching the machine that day, or that the company would have done anything about it anyway. After all, it’s always easier to try to force someone to pay for the goods they have (fraudulently) purchased than it is to get them to buy something in the first place. The problem is what happens when this sort of policy is taken to its logical conclusion…

Millions of Americans are drowning in credit card debt, and the sad fact is that most of them should never have been allowed to have a credit card in the first place. Millions of others are defaulting on mortgages they should never have been given in the first place, car loans they had no realistic prospect of making the payments on, and home equity loans used to make upgrades on houses that have now lost 70% of their purchase price. When a couple of kids fill out a “birthday club” card with a fake name in order to get an extra ice cream cone, it’s a (relatively) harmless sitcom moment; when half of the country does something equally silly what you get is a crushing economic downturn, $700 billion in “bail-out” funds, tens of thousands of jobs lost in the automotive industry alone, and a Federal deficit that we may not live to see the end of…

You’ve all heard me ranting before about how if an industry will not regulate itself, eventually the government will be forced to either step in and do so or let the entire national economy slide into the crapper. I just hadn’t figured it would end up being both…