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. She attended the University of Michigan and Wayne State University.
image from www.staffinglink.com
Recent research has produced two opposite outcomes regarding entrepreneurs' attitudes toward raising the minimum wage:
One might conclude that there is a lot of variation in entrepreneurial ranks (they are a diverse lot), but as it turns out, the language used in the questions may have skewed the outcomes of each of the surveys.
"When the Small Business Majority asked its minimum-wage question, it stated the amount of the current minimum wage -- $7.25 an hour -- but did not mention how much the minimum might rise. You can understand how a business owner would listen to this question and think, 'Well, $7.25 sounds awfully low. My people get more than $7.25 anyways, and keeping up with inflation sounds fair. Sure, let’s raise the minimum.' "
On the other hand:
The NFIB survey "asked if respondents were in favor of amending the state constitution to include a 14% increase in the minimum wage. It didn’t state the current minimum. This sounds like a bigger deal...Most entrepreneurs didn’t get 14% raises last year, and they don’t want their payroll costs to go up by that much, either." Plus, mentioning that the state constitution would have to be amended made it sound serious.
So--which survey was more fair? Or, were both flawed?
Source: "Who Speaks for Entrepreneurs?," by Kimberly Weisul, Inc.com, April 25, 2013.
photo by Ken Bennett, Wake Forest University, shows apiece of material that is hooked up to meter
David Carroll, of Wake Forest University, has developed a kind of cloth that can charge your cellphone. He calls it "power felt." The material works by using body heat and movement to create electricity.
The science behind this is thermoelectrics. We experience a cruder form of thermoelectrics when we hold onto a piece of cold metal and it warms up. What causes the warmth is the movement of electrons. With nanotechnology, Mr. Carroll has made a fabric that can manufacture electricity by converting the movement of bouncing on a carseat or flapping in the wind. The fabric is flexible and relatively cheap.According to Business Insider, "this fabric soon may be stitched into every shirt, lying under every car hood and wrapped around every house."
Where do I invest?
Source: "How 'High-Performance Clothing' Will Power Your Phone And Monitor Your Health," byRobert Ferris, Business Insider, April 16, 2013.
Government stimulus .................vs.................Austerity
image from decisionsonevidence.com
The economics story of our time, according to Paul Krugman, is the failure of "austerity" as a response to a fiscal downturn when compared with government stimulus packages to stimulate the economy. The "real-life experiment' has taken place over the last three years, as the United States government provided modest economic stimulus by spending tax dollars investing in government projects and infrastructure. During this time, several European countries, notably the United Kingdom, has "tightened its belt," responding only with shrinking government and cuts to services.
Theoretical support for austerity has recently been debunked. But Paul Krugman makes additional points with respect to why austerity is still a bad idea:
Of course there are still other ways to look at things, but growing businesses and start-ups love investors, and a government investor is better than no investor at all.
Krugman makes the point that there are other ways to look at the situation--but that recent economic history has given a clear indication of what works now.
Source: "The Story of Our Time," by Paul Krugman, New York Times, April 28, 2013.
image from activerain.com
Why do people avoid talking about money? That is too big of a question to answer here, but in committed couples it is necessary to come to some understanding regarding money, spending, and planning for the future. Financial planning has a major effect on lifestyle, housing, feelings of security, travel, leisure activities, care of children and pets, and retirement. Couples can't avoid the topic forever.
Tara Siegel Bernard interviewed a couple who succeeded in avoiding "the money talk" until six months after they were married. At this point, Jennifer and Scott Bartone nominated themselves for a "Fiscal Health Day" tune-up offered by Ms. Bernard. The Bartones had some big issues:
Ms. Barnard consulted with Kristin Harad, CFP, a financial planner in San Francisco, and suggested the following:
Another good idea for everyone sharing finances was recommended by Kristin Harad:
"I always recommend that each partner receives a predetermined amount that they direct to a 'totally fun' account — one solely for the fulfillment of the individual, spent without judgment or review. The restriction is put on the front end by the amount directed; however, the actual purchase can be whatever the partner desires. This essential simple freedom relieves an unbelievable amount of marital tension."
I can say from personal experience that this piece of advice really works.
image from everydayfeminism.com
Sources: "Your Agenda for 'Fiscal Health Day'," by Tara Siegel Bernard, New York Times 'Bucks', April 26, 2013.
"Are you married to your financial opposite?" by Brian Turner, CNN Money, August 27, 2009.
image from nydailynews.com
The tragedy in the fertilizer plant in West, Texas killed 12 people and injured 200 in a fire that turned into a blazing explosion that trapped workers. These statistics are worse than the statistics from the bombing at the Boston Marathon. Both events injured innocent people, who were occupied with tasks that had no political significance. Yet the Boston tragedy was immediately labeled "terrorism"; the tragedy in Texas was headlined as an "accident."
Bruce Machart recalls his own grisly experiences with foreseeable industrial accidents, from 18 years ago when he was working in a factory. In industrial management, these accidents are called "LTAs"--"lost time accidents," a phrase which seems to belie their life-altering severity. Nevertheless, Mr. Machart points out that the devastation to families in Boston and families in Texas are not different. They both feel like terror. Yet, the media has spun the results a little differently. "Lives have been 'lost' in Texas," notes Machart, "but in Boston, by God--lives have been 'taken'."
image from news.yahoo.com
One thing for certain, "spin" has been a major player in the communication about these tragedies. Politicians have used the events to gain political capital. Barney Frank said that increased regulation--bigger government--might have prevented the tragedy in Texas. Commentators on the other side countered that small businesses can't afford the costs of increased safety and regulation. I don't know. Could more safety precautions have been taken? Or was the accident inevitable, as Machart implies was the case in the industrial setting with which he was experienced?
Clearly, the language we use to talk about events can change the way we feel about them, and can influence the way we deal with the underlying causes of destructive events. There is debate about the ethical obligations that business have to maintain safety standards when regulations are not in place or are not enforced. Perhaps talking about these events as equally tragic is a way to influence corporate behavior regarding safety.
Source: "Only an Accident," by Bruce Machart, New York Times, April 23, 2013.
"Democrats Invoke Boston, West To Defend Government's Role," radio story by Ari Shapiro, National Public Radio, April 26, 2013.
"Real Beauty." Dove, a Unilever brand, has an advertising history of encouraging normal-looking women to see themselves as beautiful. This video highlights what David Brooks, in a NYT editorial, perceived as a confidence issue for women. He decided to use "crowd-sourcing" as a survey vehicle. He encouraged readers to email email@example.com with the answers to these questions:
The common phrase that came to my mind when I first saw this was "Reality check!" Neither the men nor the women had an accurate perception of their personal attractiveness. In general, the men saw themselves more positively than a third party saw them; women saw themselves more negatively. Is the assertiveness that comes with a more positive self-image a business asset?
In my experience, it is better to have perceptions that are "right-sized" for the situation. Nevertheless, I am curious about the experience of others. I look forward to reading the results of Mr. Brooks' crowd-sourcing experiment.
Source: "The Confidence Questions," by David Brooks, New York Times, April 23, 2013.
image by Neil Houghton; related article linked below
Nassim Nicholas Taleb is a big thinker. His latest book is about the concept of "antifragility," which he defines first as being the opposite of fragile. But his thesis is that the condition of antifragility is beyond resilient and strong in the face of adversity--it is a response in which things actually improve when the environment is chaotic.
Taleb's approach uses three responses to disordered situations: fragile, robust and antifragile.
Neil Houghton has used a four-dimensional approach to understanding responses, as illustrated in the grid above. One way to extract meaning from the chart is to locate points on the red tetrad--"stable" and "robust" for example. One consequence of this combination of responses is being "rigid."
On the left side of the chart, at points on the green tetrad, you can see "difference" and "coherence." The possible outcome of these states of being is "emergence." I think that "emergence" is one of the positive outcomes that Taleb was imagining in his theoretical approach (though many reviewers object to the tone and manner in which he makes his point).
I like these approaches toward understanding chaotic situations, because they expand the palette of choices individuals perceive as responses, and they suggest possible outcomes. The axiomatic premise is reality-based: Disorder will arise...and we don't have to be afraid of it. "Ice-breakers" at parties or conferences increase people's stress initially, but often create camaraderie and connection soon thereafter. Dumping a messy drawer onto a table is a good way to start to improve it. Life-threatening disease can cause individuals get into better shape than ever. In some businesses, "zero-based budgeting" can lead to more profitability after a period of severe disruption.
Nevertheless, there are many situations where a calm and orderly approach produces the best results.
Sources: "You are all soft! Embrace Chaos!," by Michiko Kakutani, New York Times, December 12, 2012.
"Antifragility and the future," by Neil Houghton, wordpress.com, December 30, 2012.
image from www.editorial.equities.com
This year, prior to Apple's February annual meeting, rumors were afloat that Apple, Inc. would "split" its stock. It was trading above $500 per share at that point. Often, companies "split" their stock when the price becomes too high for a large number of investors to afford to purchase the usual $100 share lot. At $500 per share, it would require a $50,000 investment in Apple to own 100 shares.
Not a lot of individual investors have that kind of money to put in one place. If Apple split its stock 2:1 ("two to one"), then the number of shares owned would double, and the price of those shares would be divided by 2. After the split, 200 shares of stock would be worth $50,000, so 100 shares would be worth $25,000. A 4:1 split would make a 100-share lot be worth $12,500. This is a more "reasonable" price for an individual investor.
Stock splits are analogous to getting change for a one-dollar bill. Before, you have ONE piece of money worth $1 total. After, you might have FOUR pieces of money, each worth twenty-five cents. But the four pieces of money together would still be worth $1 total.
Sources: "Stock splits, That's So '90s," by , Wall Street Journal, April 13, 2013; [article no longer available].
"Why investors should care about stock splits," by Ian Salisbury, Marketwatch, WSJ, February 27, 2013.
"Apple says no to a stock split," by Karen Weise, Bloomberg Business Week, February 24, 2013.
image from www.funnyjunk.com
Complaints. We all have experienced unfair treatment or poor products. Sometimes the situations are so egregious that consumers take their complaints to a higher level. The Federal Trade Commission (FTC) keeps track of the complaints it receives involving businesses. Last year, the FTC received over two million complaints, and they recently published the top ten categories into which those complaints fell:
Some of these complaints involve real fraud, but some result from poor communication and unskillful customer relations. Dealing with complaints that escalate can be costly for businesses...and in the current environment of immediate social networking, business mistakes can be instantly (and unilaterally) publicized. Businesses can also adopt a pro-active approach to customer relations that is positive and effective.
Real-life complaint outcomes are delineated in columns written by The Haggler, David Segal, published in the New York Times. These tell the stories of consumer complaints that have gone unresolved, and the various strategies that are employed--with the added pressure of a published outcome--to achieve a fair outcome for both sides.
The world is not perfect. Mistakes happen. Miscommunications can lead to consumer disappointment. How businesses handle these imperfections may be more important than what actually happens. No legitimate business wants a complaint to escalate to the FTC.
Source: "Top Ten Consumer Complaint Categories," source: Federal Trade Commission, published in Insurance Journal, March 29, 2013.
Scott London, KPMG partner, at left, allegedly receiving a payoff fromBryan Shaw, in an FBI sting operation (photo, U.S. Attorney's office)
Scott London threw away his personal integrity and a 30 year career at a Big Four accounting firm for about $50,000 in cash kickbacks and a Rolex watch. These were the "gifts" given to him by buddy Bryan Shaw, to whom London had given insider trading tips worth over $1.3 million over a three year period. London plans to plead guilty at his hearing on May 17th, 2013.
London's position at KPMG gave him access to information that was not yet public. He passed on information to Shaw that enabled Shaw to execute stock transactions in advance of market-changing announcements. These resulted in major gains for Bryan Shaw. The transactions involving two companies in particular--Herbalife and Sketchers--drew the attention of regulators. Shaw was approached by the FBI to help in a sting operation that eventually caught London accepting a cash payoff.
What were these guys thinking? One observer, Gene Murphy, a white-collar-crime defense attorney, remarked: "You got two knuckleheads who keep affirming each other's stupid ideas."
Scott London, especially, should have known better. He was the Southern California regional managing partner for Audits at KPMG. The only value that an auditing firm has is its integrity, and its ability to attest and affirm the integrity of its clients' financial reports. If a major auditing partner of one of the four biggest accounting firms in the world is cheating, what is an audit worth?
These are questions that KPMG's clients, and those clients' investors, are probably asking themselves now.
Source: "In KPMG insider trading case, crime and blunders alleged ," by Walter Hamilton, Andrea Chang, Tiffany Hsu, et. al., Los Angeles Times, April 13, 2013.
image from www.salterbaxter.com
Who among us have complained that we do not get enough email? Most of us are sitting on a huge pile of it, which varies from very important to annoying.
Every business that each of us connects with seems to have mastered the art of putting us on a mailing list. Even our friends and relatives have us on lists. The mountain of email has to be excavated. Strategies have to be implemented to stay on top of things. Jenna Wortham suggests several strategies, starting with setting aside a few hours with coffee and good music and getting ready to dig in:
I didn't feel so bad when Ms Wortham mentioned that she had 40,000 unread emails, which an app she'd purchased had identified as a "normal" amount of traffic. No wonder most of us feel overwhelmed!
Source: "How To Lighten The Crush of Email," by Jenna Wortham, New York Times, April 10, 2013.
image from facebook.com
The Monday Campaigns have been a force behind the Meatless Monday movement. One marketing arm has been directed to college students. Sodexo Corporation, which runs dining halls at several universities, has been promoting Meatless Mondays for several years now. But the marketing reach of this movement is widening.
Top chefs and wineries are jumping on board. This month, there is an article in The Wine Enthusiast that suggests pairings of wines with meatless meals. Some examples:
Some of the celebrities and top restaurants that have committed to Meatless Mondays are:
Says executive chef Rob Dalzell of The Ranch at Live Oak, "In the end, wine and vegetables come from the same place. If they grow together, they usually go together."
Sources: "Wine Pairings Add Flair to Meatless Monday Dishes," Meatless Monday website, April 8, 2013.
"Feast Without The Beast" by Alexis Korman, Wine Enthusiast Magazine, April 2013, published online on March 29, 2013.
The Monday Campaigns
image from methodlust.com
When Eric Ryan and his childhood friend, Adam Lowry, started Method--a maker of ecologically-minded soap products--they had no idea they were starting a movement as well as a company. Their products' success caused industry leaders in cleaning products (e.g. Proctor & Gamble) to develop their own lines of "green" products.
Last year, Method was acquired by Ecover, a company based in Belgium that shares the sustainability values of the Method founders.They had been approached by the "usual suspects"--Big Soap--but they chose to go with a company that had a good chance of supporting the "methods" they'd set up. They hope to thrive and grow with the new partnership.
Says Eric Ryan: "Everybody needs soap. It's a dirty world out there."
Source: "A Soap Maker Sought Compatibility In A Merger Partner" by Rod Kurtz, New York Times, January 16, 2013.
image from whotv.com
A few days ago at a fundraiser, President Obama said that Kamala Harris, the Attorney General of California, was "by far the best-looking attorney general in the country." The President apologized the next day, and it seemed to be no big deal, but some research has indicated that even positive comments--judgments of ANY kind--can have a negative impact on how the person receiving the compliment is perceived. In the study cited in the article below, the person being complimented was a woman.
The research was set up like this: subjects were shown similar biographies of two hypothetical Congressional candidates--Dan and Jane. No physical description of either candidate was given. Jane was preferred slightly (49%-48%).
Then, in another version, there was a "neutral description of Jane's appearance"; she trailed by 5%.
In Version 3, there was a positive physical description of Jane: Jane trailed by 13%.
In Version 4, there was a negative physical description of Jane: Jane also trailed by about 13%.
Go figure...any physical description of Jane, the female candidate, caused her potential success to decline. The study's authors concluded that "even a complimentary comment like Obama's is both inappropriate and damaging in a professional setting. It primes people to think of a woman's appearance, and that's apparently enough to keep them from thinking about her actual qualifications."
I'd like to see another study done where the man's physical appearance was remarked upon, and see what the results are in that case.
Sources: "Here's Why 'Good Looking' Is Wrong and Damaging," by Kevin Drum, Mother Jones, April 8, 2013.
"Name it. Change It. Women's Media Center. She Should Run" survey by Chesapeake Beach Consulting, Lake Research Partners. [pdf file--open with Google Chrome if using a Mac]
image from cbsnews.com
The woman in the image above is watching "TV." She isn't doing it in the traditional way--she is streaming a TV show on her computer. "Zero TV" refers to this type of TV viewer--not one who eschews television (banning it on intellectual or educational grounds). Nielsen, the rating statistics leader, began to look at the viewer category "Zero TV" in its quarterly report ending this past March. Nielsen plans to incorporate this category into its Fall analysis, so that these watchers can be factored into ad rates. But are these viewers watching the ads?
Viewers like the young woman pictured worry creators of TV content. TV show producers can only make money through the sales of ad time, or licensing their cable product. How will usage be measured accurately and revenue streams accurately reflect usage?That is not the only way things are changing. David Brancaccio's piece on Marketplace reveals that some users are reversing this situation again. The new way of getting content? Mobile TV. Users download material directly from TV satellites, bypassing the internet. These users are also bypassing the living room, and watching on their smartphones, tablets or laptops.
Behavior changes are already changing the marketplace, partly because watching living room TV today is such a hassle! I think that TV + cable box + DVR + DVD player + ROKU + OnDemand + remotes for all of them + surround sound can be too much to deal with. When is someone going to think of a way to make money to simplify all of this?
Sources: "Broadcasters Worry about Zero TV Homes," by Ryan Nakashima, PhysOrg News, originally copyrighted by The Associated Press (AP), April 7, 2013.
"Why Go Through The Internet to Watch TV on the Go?" by David Brancaccio, Marketplace, April 8, 2013.
"Sequestration." The dictionary definition looks pretty grim. Here's the Merriam-Webster version:
NounThe action of taking legal possession of assets until a debt has been paid or other claims have been met.The action of taking forcible possession of something; confiscation.Synonymseizure
John Schwartz takes a satiric attempt (I think) in this article, to illuminate the reality of Federal sequestration by making analogies to what it would mean in a personal budget to apply parallel techniques. One of the underlying premises is parallel to the "no new taxes" position of some in Congress, as well as standard financial-advisor wisdom: It is easier to cut spending than it is to increase income. Therefore, the spending cuts that Schwartz suggested implementing included:
Schwartz didn't get much co-operation from his family members, and concluded that the lack of co-operation might be country-wide.
Sources: "The Kitchen Table Sequester," by John Schwartz, NYT Business Day , April 6, 2013.
image from www.hu-tech.co.uk
Risk management calculations really ARE "rocket science." The discipline attempts to quantify risks in workplace and product safety, as well as manage assets over the long term to provide employee benefits and adequate capital for growth or periods of economic stagnation.
The portion of the risk management department that involves workplace safety is usually well-attuned to the human factors that can make the best of plans go haywire. But on the finance side, the investment banking models that use algorithms to predict world markets, economic trends and changing demographics can be very esoteric, very math-oriented and very out-of-touch with human factors that can derail the models.
John Breit, a Columbia-trained physicist, has been a risk manager in the investment banking mode for 25 years. He was part of the wave of mathematical modelling professionals that displaced, to some degree, the "old boys' network" that ran the big investment firms prior to the 1980's. According to some observers, the mathematical modelling and the "smart guys' hubris" is what has caused the financial debacles since 2000.
Breit observed that something else was going on. He saw that the mathematical models--which the traders and executives did not understand--were used to hide the risk and prevent the traders and executives from questioning the models and providing information feedback from their "human intelligence" about what was happening in the markets. Breit thinks that the regulatory and compliance models that require managers to do check of boxes on forms prevents or at least discourages them from providing substantive feedback about growing mistrust or human "gut feelings."
Breit feels that the emphasis on avoiding being blamed is preventing open discussions and brainstorming possible risks. So traders feel isolated, but still under pressure to produce big gains, so they are vulnerable to a too-positive projection.
If the details of risk management are not your cup of tea, but you still want a generalist's overview of the investment side of risk management, rent or stream the movie, Margin Call.
Sources: "Uncovering the Human Factor in Risk Management Models," by Jesse Eisinger of Propublica, via NYT Dealbook, April 3, 2013.
image from article linked below
It is always a little risky in the workplace to use humor of any kind. But "pranks" can be particularly risky...even on a day devoted to pranks: April Fools' Day. Forbes published an article last year listing 8 rules for using humor in the workplace. One of them was using humor to make people feel more comfortable, rather than less comfortable. Pranks seem counterproductive to that aim.
The local newspaper daily in my town, the Santa Monica Daily Press, runs an annual April Fools' Day issue. The lead article is always one that is surprising, but reasonably plausible. On each page the articles become more and more absurd--the Letters to the Editor and the Daily Horoscopes being the absolute "give-aways" that something is afoul. But being fooled at all means feeling "foolish"...and that might not be a great way to be seen at work.
The Marketplace article mentions three pranks that definitely don't work in the workplace:
I'm not so sure how the fake crime scene pictured above would play out, either. The prank they "recommend" is linked below.
Source: "3 April Fools' Pranks You Shouldn't Pull At The Office (and 1 You Should)," by Adam Allington, Marketplace, American Public Media, April 1, 2013.
image from chicagocreativedesign.com
Double Encore is a company that is betting everything on home-grown apps. They develop for Apple (not for the android market), and they employ all their own developers. They are a Colorado-based technology company with a special relationship with Apple...and--THEY DON'T OUTSOURCE.
Their policy is contrary to the industry trend. The Computer Economics Annual Outsourcing Study recently reported that information technology outsourcing was up by 23% in 2012. But Double Encore is bucking the trend.
Here are some of the reasons:
Double Encore is marketing itself from this quality niche. Its policies also set the standard for its human resource management. Does it sound like a good place to work?
Sources: "Why We Don't Outsource [Seriously, Stop Calling Us]," by Emily Grossman, Double Encore Blog, March 24, 2013.