Recent Posts


  • CEO Pay Tops $10 Million

    Median Chief Executive Officer (CEO) pay is more than $10 million according to a joint study by the Associated Press and Equilar , an executive pay research firm. That is 257 times the salary of an average worker. (See how CEO pay was calculated. ) Who is the highest paid chief executive? Why do CEOs make so much? Why does the top manager keep getting a huge raise, while the paycheck of the average employee increases just a little over one percent? How is employee compensation influenced by robots, high unemployment, and globalization (outsourcing)?
  • Dairy Queen CEO on the Minimum Wage - CNNMoney

    Dairy Queen CEO John Gainor says 'people need to be paid a fair wage,' low wages are connected to turnover, and that the company is currently dealing with rising minimum wages in states. Think about a federal minimum wage of $10.10 an hour. What is your state's minimum wage ? What is a living wage ? Select your location and calculate the living wage for the town where you live or go to college. Be sure to compare the living wage to a typical hourly wage for management. How much more does a manager make? Why does a manager make so much more money? What is a fair wage for teenage and part-time employees? Explain.
  • Minimum Wage Debate

    Protesters gather in front of a McDonald's in New York City The fast-food industry competes by offering low-cost meals. Historically, fast-food employees have been low-payed teenagers. Today, especially since the great recession, many fast-food employees are adults. Thus, the fast-food industry is a target of labor organizers, such as the Service Employees International Union , to increase wages. Protests to push for higher wages took place across the United States Thursday, December 6. The protesters called for pay of $15 per hour. The United State Department of Labor states, "The federal minimum wage for covered nonexempt employees is $7.25 per hour effective July 24, 2009. The federal minimum wage provisions are contained in the Fair Labor Standards Act (FLSA) . Many states also have minimum wage laws. In cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages." Thus the minimum wage is set by the government, not by the employer. The National Restaurant Association, an industry lobbying group, said in a statement that the demonstrations were a coordinated public-relations campaign “engineered by national labor groups where the vast majority of participants are activists and paid demonstrators; relatively few restaurant workers have participated in the past.” Scott DeFife, the NRA’s executive vice president for policy and government affairs, stated, “Dramatic increases in a starting wage such as those called for in these rallies will challenge that job-growth history, increase prices for restaurant meals, especially in the value segments, and lead to fewer jobs created. Business owners already face great uncertainty due to a lack of a clear economic plan from Washington and the health care law’s implementation. Calls to double the minimum wage only intensify the challenges faced by job creators.” Who should set wages? The business or the government? Explain.
  • The Affordable Care Act

    On October 1st, anyone can go to and use the new Health Insurance Marketplace to see all of the health plans available in an area and sign up for one. Also, anyone can find out if they are eligible to pay less for private health insurance or whether they qualify for other free or low-cost programs. Attached is a report discussing how affordable insurance will be. Find your state's Marketplace premiums at . What is the Affordable Care Act and what does it mean for a company and its employees?
  • McDonald's and Visa Help Employees Manage Money

    McDonald's partnered with Visa to develop a " practical money skills for life " web site to help employees manage their money. A Budget Journal (attached) is offered "to help you make financial goals, build budgets and track your spending." That sounds very similar to the functions of management of planning and controlling. A budget is a plan for spending money. Tracking is control because it determines what was spent and compares it to the financial goals. In addition, guidelines are given for writing goals . In management class, we refer to these as "objectives," because "you cannot do a goal." Semantics aside, the guidelines below can help you write objectives. A realistic goal is SMART (in more ways than one) S pecific M easurable A ttainable R elevant T ime-related Specific - Smart goals are specific enough to suggest action. "Example: Save enough money to get a refrigerator, not just save money. Measurable - You need to know when you've achieved your goal, or how close you are. Example: A refrigerator costs $600, and you have $300 already saved. Goals which aren't measurable, like "I'd like to have more money," are much harder to achieve - and you don't even know when you get there. Attainable - The steps toward reaching your goal need to be reasonable and possible. Example: I know I can save enough money each week to arrive at my goal within one year. Relevant - The goal needs to make common sense. You don't want to struggle or work toward a goal that doesn't fit your need. Example: You don't need to save money for 18 pairs of shoes. Time-related - Set a definite target date. Example: The repairman says my refrigerator won't last another year. I need a new fridge in the next six months. McDonald's has been criticized for the sample budget journal . Annie-Rose Strasser of Think Progess wrote , "Not only does the budget leave a spot open for 'second job,' it also gives wholly unreasonable estimates for employees' costs: $20 a month for health care, $0 for heating, and $600 a month for rent. It does not include any budgeted money for food or clothing." A McDonalds spokesperson provided this statement to ThinkProgress : "In an effort to provide free, comprehensive money management tools, McDonald's first used the Wealth Watchers International budgeting journal when this financial literacy program launched in 2008. As part of this program, several resources were developed including a sample budgeting guide, an instructional video and a web resource center that had additional tools and information. The samples that are on this site are generic examples and are intended to help provide a general outline of what an individual budget may look like. " -- How important is it for employees to develop 'practical money skills for life"? What do you think about the Budget Journal? Does it help employees develop practical money skills? How could you improve the sample? rite a management objective that a first-line supervisor at a McDonald's restaurant could use to encourage employees to develop money skills for life.
  • CEO Severance and Bankruptcy

    CEOs of bankrupt companies have received millions of dollars. That doesn't seem fair since employee jobs and benefits are cut. Yet, if a company is in bankruptcy, CEO compensation is subject to the requirements of the Bankruptcy Code . Tom Horton, chairman and chief executive officer (CEO) of AMR Corp. and American Airlines , Inc. isn't allowed under the federal bankruptcy code to receive a severance payment of nearly $20 million when AMR merges with US Airways Group Inc. A judge cited a section of the federal bankruptcy code passed in 2005 that limits the CEO's bonus to 10 times the bonuses for the employees. Any party in a bankruptcy case can protest pay plans. But, only the U.S. trustee of the Justice Department objected to Horton's severance. They said the payment was too large in relation to the average severance that AMR employees were getting .The unions and other creditors had approved Horton's compensation. At Horton's rate, the severance of the AMR worker would average $2 million. There's no evidence that employees will receive that severance! Why do you think the unions approved the CEO's severance? What do you think the new airline after the merger will pay Horton? What type of bonuses should managers whose companies go into bankruptcy receive?
  • How Mars Makes M&Ms

    Mars is number 95 on Fortune's 2013 list of the 100 Best Companies to Work For . It is a private, family owned company. Fortune reports, "Mars boasts employees who love not only the products they make but also the office culture and the company's long-standing principles." Employees get free candy out of vending machines. They can chew Wrigley gum at meetings. They get bonuses when the company is profitable. They are encouraged to help the community. Mars Volunteers are employees who are paid and given time off by the company to clean parks, aid medical clinics, and plant gardens. "Mars Ambassadors, a highly competitive program, selects a few employees -- 80 in 2011 -- to spend up to six weeks working with Mars-related partners in remote areas; for example, six employees spent a week in Ghana with growers of cocoa beans." The Mars Five Principles of Quality, Responsibility, Mutuality, Efficiency and Freedom guide employees and are the foundation of the company culture. Have you ever thought of working for a company that makes your favorite candy? Make a list of your favorite products. What career opportunities exist at your favorite?
  • 50 Percent Pay Cut for JPMorgan Chase CEO

    A JPMorgan management task force just released a 129-page internal report about a trade on credit derivatives that cost JPMorgan Chase more than $6 billion. The report found that traders acted on their own, concealing losses while managers seemed in the dark. The Wall Street Journal reported that the board said in a statement that the chief executive officer (CEO) "bears ultimate responsibility for the failures that led to the losses." As a result, CEO James Dimon 's pay was cut by 50 percent for 2012. It is $11.5 million, down from $23.1 million the year before. Javier Martin-Artajo, a manager who oversaw the trading strategy from the bank's London offices; Bruno Iksil, the trader known as the London Whale for placing the outsize bet; and Achilles Macris, the executive in charge of the international chief investment office are no longer with the company. Compensation issues stir up a great deal of controversy. JPMorgan Chase had no risk management control in place . The traders were influenced by compensation - the promise of huge profits. Massive pay packages for CEOs are a corporate governance issue. For example, good corporate governance would be a straightforward compensation policy which is in line with a company's actual performance. How did profits hide all concerns? Could this happen again?
  • Flu and Absence Management

    The flu is increasing the level of absenteeism in workplaces across America. According to the Centers for Disease Control (CDC) " widespread influenza activity was reported by 47 states ." Graphic from CDC at The CDC advices, "If you get sick with flu symptoms, in most cases, you should stay home and avoid contact with other people except to get medical care." But, not all employers offer sick leave. Employee benefits the employer must provide by law include social security and workers' compensation. Thus, some employees go to work sick. Unfortunately, even more employees get the flu and call in sick. Employee absences affect an organization's finances and productivity. Washington Employers Association has developed a guide to calculate the rates and costs of absent employees. (See attached Absenteeism Calculator.) The SOHO Guidebook cites the following as notable hidden cost factors associated with absenteeism: Lost productivity of the absent employee Overtime for other employees to fill in Decreased overall productivity of those employees Costs incurred to secure temporary help Possible loss of business or dissatisfied customers Problems with employee morale Managers need absence management strategies. What should managers do about flu absence? How can flu absence be prevented?
  • What is Santa worth?

    Barron's reports that a mall Santa makes about $8,000 during the month of December. Barbara Marquand of says that Santa's yearly rate is around $135,000 in " Santa Index 2012: St. Nick's efforts worth about $135,000 this year ." She compares Santa's job to similar ones listed in , the hours per day worked, and the days per year worked, as seen in Santa's Index 2012 below. Santa's job BLS occupation used Hours per day Days per year Mean hourly wage Annual earnings Manufacturing executive (workshop) Industrial Engineers 8 364 $38.39 $111,792 Professional shopper Sales and Related Workers 8 15 $19.19 $2,303 Wrapper Packers and Packagers, Hand 12 14 $10.81 $1,816 Labor negotiator (with elves) Labor Relations Specialists 0.5 365 $28.31 $5,167 Letter reader Correspondence Clerks 1 100 $17.04 $1,656 Company representative in mall Customer Service Representatives 8 21 $15.92 $2,675 Investigator (knows if you've been good or bad) Private Detectives and Investigators 1 30 $23.37 $701 List checker (checking it twice) Bookkeeping, Accounting, and Auditing Clerks 1 30 $13.38 $401 Taking care of reindeer Farmworkers, Farm, Ranch, and Aquacultural Animals 1 365 $11.60 $4,234 Snow plow driver Highway Maintenance Workers 0.5 360 $17.47 $3,145 Pilot Airline Pilots, Copilots, and Flight Engineer 10 1 $56.76 $568 Going down chimneys (chimney sweep) Building Cleaning Workers 10 1 $13.89 $139 Cookie & milk taster Agricultural Inspectors 10 1 $20.25 $203 Deliveries via sleigh (distributor) Shipping, Receiving, and Traffic Clerks 10 1 $14.65 $147 Announcer ("Merry Christmas to all, and to all a good night!") Public Address System and Other Announcers 0.01 1 $19.17 19 cents Total: $134,944 Wage source: Bureau of Labor Statistics What do you think? Is Santa worth more or less? Explain.
  • Employee Gifts

    What gifts do employees want to receive this holiday season? Managers don't have to guess! The answers are available from an annual survey by Glassdoor , "a free jobs and career community that offers the world an inside look at jobs and companies." Employees want money! The top gifts on employees' wish lists are cash bonus and salary raise. They don't want a party. Only 5 percent wanted company-sponsored parties. But, most employees will get a party, not money. Why the disconnect? Interview 5 employed people. Ask them, "What holiday gift do you want from your manager?" Then ask, "What gift do you expect to get from your employer?" Do the two answers match? If not, why not? This year's survey was conducted online within the United States by Harris Interactive on behalf of Glassdoor from November 8-12, 2012 among 2,059 adults ages 18 and older. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.
  • Study Reveals Workers Need a Break from the Office

    Citrix, recently conducted a study on work/life balance with Wakefield Research to get a glimpse of modern office life. One of the top frustrations identified by more than 1,000 employees surveyed was "a boss that takes credit for our work." In order to avoid the boss, 30 percent planned their own vacation time opposite their boss' vacation to maximize time away from their manager. Obviously, some employees are dreaming about working for a new manager. When asked about TV bosses, office workers would most like to work for Gibbs from -NCIS‖ (20%), Miranda Bailey from -Grey's Anatomy‖ (15%) and Buddy from -Cake Boss‖ (14%). Workers care about their work, with 72 percent saying they would respond immediately to an urgent work email while on vacation. They are willing to work outside the office, with 64 percent of workers who have never worked remotely willing to give up at least one significant benefit in order to work from home just one day a week. Maybe people working at home do so because they can relax while on the job. Those that work from home dress casually. "Nearly half (49%) of those who have worked from home say they're most likely to wear jeans and a t-shirt when on the job - on the couch." (See more results from the survey in the attached file.) Which TV boss would you most like to work for? Why? Gibbs from -NCIS Miranda Bailey from -Grey's Anatomy Buddy from -Cake Boss‖
  • Top Cities for New College Graduates

    New college graduates must decide where to work and where to live., a leading Internet apartment listing subscription service, and, the nation's largest online career site, compiled a list of the "Top 15 Best Cities for Recent College Graduates." Entry-level jobs, higher starting pay, lower metropolitan unemployment, and cheaper rents for a one-bedroom apartment were considered. Young professionals have the best chance of starting their careers in these 15 cities. Are you willing to relocate to find a job? Choose a city. What are the job opportunities in your current field? What is the unemployment rate? What is the average annual entry-level salary? What is the average annual one-bedroom rent? Sources: Blog at and Press Release at
  • Why superstars are paid so much

    University of Chicago labor economist Sherwin Rosen wrote an article, " The Economics of Superstars ," to explain that high salaries for superstars are consistent with the workings of our economic system. Workers who generate a lot of revenue get high salaries. Rosen contends those top athletes, movie stars, musicians, authors and television personalities command huge salaries because their products can be sold to millions of customers at the same time. "When athletes and entertainers perform, they are reproducing at no cost for each customer," he wrote. (See attached paper.) By definition, service workers' products cannot be separated from their two hands. Physicians and beauticians can sell their services to only one person at a time. Their income depends on the amount customers will pay, multiplied by the number of times they perform their service during a workweek. Technology continually enlarges the market for the athletes or entertainers who possess exceptional skills, making their performances more valuable. Images and sound are reproduced and the size of the audience expands to millions and even billions of people. Before broadcasting, a game could only reach the 50,000 or so fans that sat in a stadium. In the 1930s, radio brought the audio portion of the game to those who weren't at the stadium. Television in the 1960s, cable networks in the 1970s, satellite dishes in the 1990s, and the Internet expanded the number of people who could watch. Even if each consumer pays just a few dollars or a few cents to watch or listen, it can generate enormous revenue. Top managers are not superstars, but their compensation has risen for similar reasons. Information technology gives companies a bigger customer base. As companies become larger, top management decisions measured in terms of profits are more important. Competition for top management jobs becomes more intense and their pay rises. Should top managers be paid like superstars?
  • California Managers get ruling on Lunch Breaks

    California employees are asking managers questions about lunch breaks. "Do we have time off for lunch?" "Do we have to eat during lunch?" Managers are asking, "Am I responsible for making employees take a lunch break? Some employers would rather lay off employees than face a law suit. The California supreme court ruled that retaurants must provide, not ensure employee breaks. After five hours on the job, you may, but you need not, take time off to eat. You may, but you need not, eat. In this video , Judge Andrew Napolitano discusses regulating lunch breaks in California. What are the advantages and disadvantages of managers policing lunch breaks?