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Teri Bernstein, MBA, CPA has been teaching full time in the Business Department of Santa Monica College since 1985.  Prior to that, she worked in Internal Audit and Special Financial Projects for the 1984 Los Angeles Olympics, CBS, Inc., and Coopers & Lybrand (which is now part of PricewaterhouseCoopers).  She attended the University of Michigan and Wayne State University.


  • Managing Up vs. Managing Down: two different skill sets

    Kim Bowers of CST Brands: image from the New York Times article linked below Kim Bowers is the CEO of CST Brands , a large "corner store" retailer (they are a spin-off from the gas station company Valero ). She was recently featured in the NYT "Corner Office " article area, focusing on her views about management and human resources. Ms. Bowers indicated that over time, she has become "less tolerant of bad attitudes," and is quicker to sense when investing in an employee would be a waste of time and resources. She also has strong views about "managing up" (knowing how to communicate effectively with your boss) versus "managing down" (leading or inspiring the employees who report to you). Kim Bowers says: " I put people into two different categories: people who manage up really well and people who manage down really well, and I love the latter. If I find someone whose team would walk across hot coals for them, that’s the person I want to work with because I know there is authenticity there, and they are supporting their teams and vice versa. It’s the folks who manage up really well but have this underlying storm all the time who concern me because you don’t know if they’re just trying to charm to cover up. " Both skills need to be developed for an employee to be able to adapt to different types of leadership. Here are some guidelines from a different source: graphic from sochal.wordpress.com Ms. Bowers also has some advice for college students: " Make sure not to set your expectations too low for what you can do, and recognize that at every twist and turn you’re going to have opportunities to expand your horizons, and you should take those. You shouldn’t be looking just to climb the ladder, but be open to opportunities that let you climb that ladder ." Sources: " Kim Bowers of CST Brands on Managing Up vs. Managing Down ," by Kim Bowers, the New York Times, April 5, 2014. F ollow up: What was Kim Bowers' "CIA story"? Has fate ever intervened for you in a big decision? Do you think Ms. Bowers' early management experience shaped the views she holds today? Do you think her family position (birth order) influenced how she manages? Give examples. Do you do better at Managing Up or Managing Down? Why? What is hardest for you in the area where you are weaker?
  • Walmart's tax subsidies hurt taxpayers

    When a corporation publishes its annual financial report, they include income statements, balance sheets, statements of cash flow, other financial statement data, and footnotes to the financial statements. The footnotes are part of what used to be called "full disclosure," but is now referred to as "adequate disclosure." Wal-Mart's annual report for 2013 was forced to disclose factors beyond their control that could "materially affect financial performance." These included, " changes in the amount of payment made under the Supplemental Nutrition Assistance Plan (SNAP) and other public assistance plans (and) changes in the eligibility requirements of public assistance plans ." In other words, if public assistance plans to its employees were to be eliminated, Wal-Mart would either lose those employees, or have to pay them more to be able to afford food and housing without government assistance. This would decrease Wal-Mart profits. In other words, the American taxpayer is subsidizing Wal-Mart stockholders. "SNAP" is known in casual language as "food stamps," and the program has recently been reduced by Congress. $90 per month per family was cut in January...and $29 per month had already been cut in November 2013. Not only are many Wal-Mart employees subsidized by food stamp programs, many Wal-Mart shoppers get food stamps, so this cut in food stamps could mean a cut in revenue from this population. It is interesting to note that these cuts are so large that they might "materially" affect net revenues for Wal-Mart. How much has the American taxpayer been subsidizing Wal-Mart? / Source: " How Walmart Exploits Taxpayers ," by Michael Hiltzik, Los Angeles Times , March 26, 2014. Follow up: Research what income levels make an individual, and a family of four, eligible for food stamps.
  • Unpaid Internships cartoon: Not Funny

    part of a graphic story by Matt Bors, published by Upworthy Here is another story about unpaid internships. It seems as though unpaid internships have gotten out of hand. In 1992, 17% of post-college positions were unpaid; now it is 50%. Many interns do work that for-profit businesses usually need to pay people to do. They are profiting from unpaid labor. The argument made by corporations (and sometimes college counselors) is that an unpaid internship can lead to a job. But, check out these statistics: worked an unpaid internship....and got a job: 37% did NO internship....and got a job: 35% worked a PAID internship...and got a job: 63% So, it looks as though the employers willing to pay are more willing to employ. An organization now working to end unpaid internships is FairPay Campaign . Source: " Half Of Interns Are Victims Of This Illegal Act After College. It's Really Not OK .," by Matt Bors, edited by Joseph Lamour, Upworthy , posted on Facebook , March, 2014. Follow up: What is the elephant in the room regarding economic class and unpaid internships? What are the far-reaching consequences of the increase in unpaid internships related to this issue?
  • Borrowing money from your boss...good idea or bad?

    image from blog.financialsecurity.org Let's say you have an sudden financial crisis. Your car needs an unexpected, major repair...or your dog needs a few thousand dollars worth of surgery--and you don't have the cash. If you can't reasonably take on (additional) credit card debt, if you don't have family members to ask, or you don't have a major asset such as a house to borrow against, where can you turn for a loan? Well, there's the "workplace loan." At first glance, it might seem like a good idea. Get a cash advance from your employer and pay it back as a payroll deduction. The "messy" part of setting up the loan contract can now be handled by middlemen, such as Think Finance's product called " elastic ." Through this vehicle, loans of $200 to $1000 can be made...with a fee of 5% of the loan amount, plus interest. Another company, FairLoan , offers a similar service...at interest rates ranging from 18% to 30% plus a 5% loan origination fee. This sounds pretty pricey to me. The set-up is starting to remind me of historical " company towns ," where employees seemed to be taken care of by companies that built housing around coal mines or factories and provided stores and short term credit. But what resulted over time were employees that became so indebted to their employers that they could not move or take any stand against company policy. Also, the employer controls the interest rate and fees. The only other source of emergency loans for those with limited credit resources is the " payday lender ," which often charges up to 300% on an annual basis. image from forums.debtcc.com Source: " Take Out A Loan--From Your Employer ," by Gigi Douban, Marketplace American Public Media, March 21, 2014. Follow up: What is a "payday loan"? What are the pros and cons of this type of loan? What unforeseen consequences might be the result of an employee owing money to its employer, in terms of workplace events? How can a third-party facilitating the loan mitigate these possible consequences?
  • Jobs added in February: what does it mean?

    [View:http://community.cengage.com/GECResource/themes/ gew/utility/ :550:0] Link to video from Bloomberg , via LA Times. How can the number of jobs increase by 175,000 in the last month...at the same time the unemployment rate ALSO goes up by .1%? And is this news good or bad? Part of analyzing labor reports is looking at what had been predicted...so since 150,000 new jobs had been predicted by economists, the increase of 25,000 more than had been predicted is a positive outcome. 162,000 of the new jobs were private sector jobs and 13,000 of the new jobs were government jobs. The unemployment rate was expected to stay flat at 6.6%, but it did increase to 6.7%. Is this because more people than were expected to look for work were entering the job market? Is it because the bad weather decreased job opportunities or eliminated some part time jobs? The Labor Report is filled with statistics, but not many answers. Other factors measured include: The percentage of people in the workforce The length of the average workweek in hours Average hourly earnings (which were at $24.31/hr in February) Source: " Economy adds 175,000 jobs in February; unemployment rate up to 6.7% " by Jim Puzzangherra, Los Angeles Times , March 7, 2014. Follow up: How much has the bad weather affected the employment rates, according to the video? What employment sector LOST jobs in February? How would you explain this loss?
  • Blackfish: whistleblowing ethics and animal welfare

    image from www.examiner.com What do the bands Heart, Willie Nelson, and Barenaked Ladies have in common? It seems that all of them have dropped out of commitments to play at SeaWorld due to the " Blackfish " scandal. Animal welfare is a hot-button topic that can polarize fans and radically influence events. If you aren't up on this particular scandal, here are the particulars: "Blackfish" is a documentary, directed by Gabriela Cowperthwaite , that is critical of the treatment of whales in captivity. It is currently available on Netflix . Controversy surrounding the leaking of documents relating to the 2010 fatal attack by a killer whale named Tilikum on Dawn Brancheau, a SeaWorld trainer, is a major part of the current issue. SeaWorld has pursued an aggressive campaign to deny harm to killer whales in captivity and to block certain OSHA officers from oversight of their facilities while the whole issue is under review. According to the NYT article, " Whether the film and a subsequent debate about the propriety of orca captivity have taken a toll on SeaWorld’s business — a publicly traded company with a stock market value of more than $3 billion — remains an open question ." Whether relevant or not..."Blackfish"--once considered a contender for the 2013 Best Documentary Oscar--was not nominated. It seems that SeaWorld's pushback against what may or may not have been unfair ethical complaints has had some influence in at least the small community of Academy voters. It remains to be seen what effects accusations--true or untrue--may have on the SeaWorld business model for years to come. Source: " Seaworld Questions Ethics of Blackfish Investigator ," by Michael Cieply, New York Times, February 28, 2014. Follow up: What effect do animal rights issues have on you and your business decisions? Do you eat meat? Wear fur? Wear leather shoes or belts? How do these issues affect your peer group? Are there any broader issues that influence your decisions? What are your thoughts about misplaced indignation and the effects it can have on legitimate business operations? What should the penalties, if any, be for this type of breach? What should the standards of proof or business harm be for damages? Have you seen "Blackfish"? What are your thoughts?
  • "Old Economy Steve" meme-- Millenials comment on parental advantages

    This meme started with a picture of a young adult, circa 1970. Economic conditions, business environment, and opportunities were pretty different in the 1970's (although I do remember a pretty profound recession and extreme competition for jobs and grad schools when I graduated from college in 1975...of course, that was a peak baby boomer year). Although it is not "hot" right now, the meme had its "15 minutes of fame" on Reddit . So--what is the "New Normal" in terms of skills and life-style opportunities for young adults today? In my own family, it doesn't look as though there is a "normal" set of expectations--everyone seems to be carving out their own lives, in ways that work for them. The big difference that I see in general is the disparity between the very rich and the majority of Americans. The "middle class" lifestyle seems to be more difficult to obtain, and there seems to be less of an interest in sharing the wealth by progressive taxation. How are economic conditions affecting you? Source: " Old Economy Steve: a Meme for Frustrated Millenials ,"by Daryl Paranada, Marketplace, American Public Media, May 28, 2013. Follow up: Search the internet Images of the Old Economy Steve meme. Find one that speaks to you. What about the economic inequity can you change, or work with others to change? Would it be worth it? Explain. What about the meme you picked is totally out of everyone's control? Are there any advantages for people in their 20's in today's economy...compared with conditions in the early 1970's? What are they?
  • Sweet-to-the-core product launch

    image from article linked below Pictured above is one of Ben & Jerry's new "core" ice cream flavors: Hazed and Confused. There is a core of Nutella (chocolate/hazelnut), surrounded by hazelnut ice cream and chocolate ice cream with fudge chips. The products in this launch have multiple ice creams in one yummy container. Ben & Jerry's is a company that started in 1978. During that time, they have expanded world-wide and have remained profitable. One way that they have continued to thrive has been to adapt their product line on a regular basis. This product launch is one innovation. The other products that are a part of this launch are: That's My Jam Chocolate Peanut Butter Fudge Salted Caramel I wish I could say I'd already done a product taste test. Which flavor do you think will be most successful? Source: " Ben & Jerry's Nails It With New Core Ice Cream Flavors, " Huffington Post, February 25, 2014. Follow up: Read about Ben & Jerry's on their website, linked above. What attributes make Ben & Jerry's different from other corporations, and in what way is it similar in terms of structure? What are Ben & Jerry's "core" values? How do they influence the following: marketing campaigns? product manufacture? employee relations?
  • Corporations push 401(k) benefit toward a slippery slope

    image from Vanguard The slippery slope of pension benefit "norms"...here we go again. Forty, thirty, twenty--even ten years ago in many industries, the standard for pension benefits was a "Defined Benefit" plan. Corporations would set up plans to fund retirement benefits that were usually based on a formula valuing time-on-the-job and salary. For example, a typical benefit might be 2% of final salary x the number of years employed. Someone who had worked at one company for 30 years, and who retired with a salary of $100,000 would get 100,000 x 2% x 30 or $60,000 per year as a defined benefit pension. Now the standard has moved to the "Defined Contribution" plan, exemplified by the 401(k). In a typical scenario with a 401(k), the employee contributes a a pre-determined "defined" amount out of each paycheck and the employer matches that amount, or a percentage of that amount. The contributions are invested until the employee retires, and the benefit received in retirement is dependent on the success of the investments over time. (No guarantee.) But with all pension plans, a key factor is "the time value of money." Most employers contribute their portion at the same time the employee contributes: at each payday: However, lately, big employers have been shifting their policy to a "lump-sum" contribution. AOL was making this this shift during its recent privacy kerfuffle. As you can see from the graph above, waiting till the end of the year to make the payments means that the company has the use of the money for longer...and employees lose out on investment earnings. In addition, if employees change jobs mid-year, they lose the employer side of the contribution entirely--again saving the employer money. Employee compensation is a combination of salary, paid time off, reimbursed expenses, health benefits, retirement benefits, and other factors. Although it may be easiest to focus only on salary, all factors must be evaluated over the long term to really know what an individual employee is being paid. Sources: " Beware the End-of-Year 401(k) Match ," by Ron Lieber, New York Times, February 14, 2014. " Making Retirements Less Secure ," by the NYT Editorial Board, New York Times, February 14, 2014 Follow up: Read the article. What is the lifetime differential mentioned in the Vanguard analysis presented therein, based on typical job-changing events that would be likely to occur over an individual's working life? If you were looking for a job, what type of pension benefit would you look for? Would this be a major or minor factor in your job decision, assuming you had multiple offers? How might your decision change if you were in your 40's or 50's?
  • I'm sorry, I'm sorry, I'm so sorry

    image from www.desicomments.com What is an apology, really? This was the topic inspired by AOL's CEO Tim Armstrong's recent apology (for his egregious violation of employee privacy with respect to the health care costs of "distressed babies"). Of course, this apology came on the heels of Chris Christie's apologies --and several other public apologies by individuals who may or may not have been sincere. Here was Armstrong's apology, sent in an email to his staff: “I made a mistake. I apologize for my comments last week at the town hall when I mentioned specific health care examples in trying to explain our decision-making process around our employee benefit programs.” Armstrong added some action behind his apology--he reversed AOL's proposed changes in its 401(k) contribution policy, which had been the topic of the town hall conference call in which he made his original gaffe. For me, this action raises even more questions about whether his apology was appropriate, since the "amends" were made to a different group than those that were harmed by the privacy violation. In my mind, a meaningful apology includes the following: an expression of regret for one's actions, listening with patience to the person who was harmed, and hearing how the actions harmed that person (if they wish to express their feelings)--without contradicting them or making excuses, making "amends" where possible to rectify the mistake, or compensate the individual in some way for the harm done, and taking action not to repeat the mistake again. The Armstrong apology seems to miss the mark by trying to tackle a public relations problem by reversing the 401(k) pull-back--which is not a direct amends to the individuals he harmed with his careless airing of private health care information. Armstrong also made no mention of changing the "data-mining" policies that brought the health care issues to his attention in the first place. Apologies can often go awry. Here are some apologies that often offered, but which probably do not make the situation any better: "I'm sorry you're such an idiot." "I'm sorry you have feelings." "I'm sorry you feel bad but I feel worse." "I'm sorry you found out about that." But sometimes a sorry beast really does seem to be sincere about his apology: image from koolbeenz.blogspot.com Source: " AOL Chief's Words Lead to a Study In 'I'm Sorry' ," by Andrew Ross Sorkin, the New York Times Dealbook, February 10, 2014. Follow up: Describe an experience where you have apologized for something. What did your apology sound like? Was it successful? Why or why not? Describe another experience where you have been on the receiving end of an apology. Was it satisfactory? Why or why not? What are the elements of a sincere apology from a public figure, as you see it? The author of the NYT article has a different take on Tim Armstrong's apology than I have: why does he see it more favorably?
  • Privacy: If it were MONETIZED we'd have a benchmark for collecting damages

    AOL 's CEO Tim Armstrong clearly has not internalized the importance of privacy to individuals...particularly privacy when it involves health matters or one's children or other family members. He may have even violated HIPAA laws when he publicly aired confidential health care information about AOL employees, as usually only human resource professionals are authorized to have access to health insurance information. . [View:http://community.cengage.com/GECResource/themes/gew/ utility/ :550:0] Video from Wall Street Journal online interview and commentary But according to the NYT article linked below: "... patient and work force experts say the gaffe could have a lasting impact on how comfortable — or discomfited — Americans feel about bosses’ data-mining their personal lives ." Indeed. All evidence seems to indicate that AOL managers scrutinized private health care records and drew damaging conclusions about individuals--then Tim Armstrong made these damaging revelations public. The data--although it did involve a corporate cost--was not at all connected to or influenced by the expenses involving the defined-contribution retirement benefits that AOL was seeking to truncate. Trying to establish a cause-and-effect relationship between a sick baby and AOL's desire to save money by delaying its matching contributions for 401K accounts just seemed to be a vicious attack intended to evoke an emotional response that would embarrass or shame the users of health care benefits. Nevertheless--the shame factor may have been an intentional attempt on AOL's part to induce fear in employees regarding future revelations of private matters that were now revealed to be not only possible, but apparently not in violation of AOL's ethical policies. Maybe money would talk in these situations. If there were federal fines established for violations of privacy, or if there were amendments to the Affordable Care Act to mandate monetary penalties for corporate violations of health care privacy--that escalated exponentially for subsequent violations--maybe corporations would think twice before disregarding privacy concerns. Sources: " Revelations by AOL Boss Raise Fears Over Privacy ," by Natasha Singer, the New York Times Business Day, February 10, 2014. Wall Street Journal Video . Follow up: Read up about the benefit that AOL was eliminating when Tim Armstrong held the town hall cyber meeting in which he discussed the health problems of the infants of two AOL employees...and the cost of those health problems. What link do you see between the benefit being discussed and the point he was trying to make by bringing up the the expense of the infant health care? What might have been a better example? Why do you think he picked the example he picked? Once a private matter has been aired in public, there is no way to "put the genie back in the bottle." What monetary "fine" would be adequate to compensate a person for corporate disclosure of: Financial information due to a security breach that was accidentally made public? Personal health information that was intentionally researched and made public? Information about the health or characteristic of one's children or family members that was intentionally made public without the consent of parents and individuals involved?
  • Income inequality

    [View:http://community.cengage.com/GECResource/themes/gew/ utility/ :550:0] video from mediaMatters. com Income inequality may be the greatest problem that current and future generations of Americans face. It matters little who is to blame. It is important to identify and act on the what can be done about it. It is interesting to see how one's perspective can change when one's circumstances change. If a person is doing really well, sometimes they think that income inequality is not an issue. But if they lose their job, or become disabled or...like all of us who are lucky to live so long...grow old--the principle "I've got mine...too bad if you don't have yours" doesn't seem to be the best way to go. Source: " Fox Doesn't Believe In Income Inequality But Still Blames Obama For It ," by Tyler Hansen, Media Matters.org , January 14, 2014. Follow up: What are your thoughts about income inequality? Are you a "have" or a "have-not"? What about your parents or grandparents? Do you think that solutions to this perceived problem should be implemented? Who should be in charge? What should the governing values be?
  • Outside the box: high pay for workers increases profits

    [View:http://community.cengage.com/GECResource/themes/gew/ utility/ :550:0] " The Good Jobs Strategy " TEDx at Cambridge 2013 Zeynap Ton , an MIT professor, has studied retail sector jobs and profits, and has found that companies who pay workers well are more profitable in the long run. She found that, initially, cutting jobs and hiring minimum-wage workers produces short term gains, but when customer satisfaction decreases, sales and profits suffer. Originally writing in the Harvard Business Review , Ton noted that companies that offer high pay, flexibility, advancement opportunities and personal autonomy were also profitable. She profiled four companies in particular: Costco, Trader Joe's, Quiktrip and Mercadona (a Spanish company). photo taken by Wilfredo Lee for AP photo These were some of the practices employed by those companies that helped the human resource plan work: simplification of the product offerings and fewer sales promotions; training of employees in mastery of a wide range of tasks; letting employees make minor decisions (enriching individuals' expertise and job buy-in, as well as lessening the need for management time) elimination of waste in all other areas but staffing--such as advertising and logistics management. Adam Davidson's article in the NYT Magazine delineates his personal experience with the furniture retailer IKEA. IKEA changed their human resource strategy between one visit by Davidson and a second visit. Davidson's first experience was terrible--lost in the huge store, and unable to find staff capable of helping him, he vowed never to return. When he reluctantly DID go back--the experience was totally different (he was even greeted at the door by someone who pointed him directly to the area he needed to go to). What had happened in the meantime was that IKEA had hired an " operations management " firm named Kronos , who helped them set up a system along the lines of Ton's research. Sources: " Thinking Outside the (Big) Box, " by Adam Davidson, New York Times Magazine, January 5, 2014. " The Good Jobs Strategy ," by Zeynap Tom, published by New Harvest, January 2014. Follow up: Check out the stock prices for Walmart and Costco from 10 years ago, five years ago and today. What conclusions can you draw from an analysis of stock prices, compared with human resource policies? According to the NYT Magazine article, what other researcher backs up Ton's claims, and how many dollars in increased sales can be obtained for every dollar spent on workers? What does the field of "operations management" or "workforce management" entail?
  • Clawbacks: should individuals have to pay for financial wrongdoing?

    image from compliancex.com The SEC filed a case again Cincinnati's Fifth Third Bank and its former CFO, Daniel T. Poston early in December 2013. The SEC asserted that Poston delayed the write-off of $1.5 billion in bad loans in 2008, violating generally accepted accounting principles (GAAP). Both the bank and Poston settled the case straightaway (without admitting guilt). The bank paid $6.5 million and Poston paid $100,000 out of his own pocket. The fact that the SEC got Poston to pay out of his own pocket is significant in terms of enforcement options. However...the fine was far short of the "executive pay clawback" provisions of the Sarbanes-Oxley Act (SOX). The SEC's unwillingness to pursue the additional penalty is indicative of the difficulties of that level of prosecution and punishment. SOX section 304 delineated a reasonable penalty: if there were earnings misrepresentations that resulted in stock, bonus and other compensation to a responsible executive, then the executive should have to pay that compensation back. Easier said than done. In the Fifth Third Bank case, there was a misstatement that led to about $350,000 in extra compensation to Poston. But there was a technicality--the timing of the compensation determination vis-a-vis the write-off. In fact, there are three requirements that must be met to bring forward a successful suit under SOX: there must be a restatement of earnings due to accounting errors the errors must have been reckless or intentional there must be "recoverable executive compensation" earned within the next year Management can claim that the inflated values were appropriate, delaying or avoiding an official write-down, and making clawback prosecution impossible. However, the SEC received 557 whistle-blower complaints in 2013...and some of these might force more timely write-offs, which then might lead to clawback prosecutions. Source: " Clawbacks? They’re Still a Rare Breed ," by Gretchen Morgenson, New York Times, December 28, 2013. Follow up: What was the purpose of SOX (the Sarbanes-Oxley Act)? Do you think the clawback provision of SOX is fair? Why or why not?
  • Business tool: Naps

    image from www.citytowninfo.com Brian Halligan is the CEO of HubSpot , an "inbound marketing software platform." His experience is that all of his brilliant ideas arise either when he is falling asleep or just waking up. Even though these epiphanies arise only once or twice a month, it is important to him to nap on a regular basis, and he encourages his workers to do the same. Much of his workforce is part of "Generation Y." He has rethought the business culture and his management style in terms of what motivates and nourishes those in this generation. Some of the preferences Halligan tries to cater to include: workers wanting to work wherever they can work workers wanting freedom, but who are also willing to take on huge responsibilities workers wanting to change jobs about every six months (so he changes routines and assignments frequently) workers being motivated more by learning than by money. Halligan's philosophy about Human Resource management seems radical, but he seems to have been willing to adapt with the times--an important attribute in an information-technology-based company. Source: " Brian Halligan, Chief of HubSpot, on the Value of Naps ," by Adam Bryant, The New York Times, December 5, 2013. Follow up: What is an "inbound marketing software platform"? What is a "seam head"? What is "VORP"? Do naps work for you in the same way they work for Halligan? How do your own sleeping patterns either help or hinder your working life? Do Halligan's views about the "Gen-Y" worker ring true to you? Why or why not?