• Managers Use GDP

    Managers are interested in the economy. So, they look at the gross domestic product (GDP), which is the broadest gauge of economic output. The United States Bureau of Economic Analysis (BEA) reports on GDP. The bureau defines real gross domestic product as the output of goods and services produced by labor and property located in the United States.

    BEA released its first-quarter 2012 advance estimate of GDP August 27, 2012. The New York Times prepared a chart based on that report and previous reports, as seen below.


    Recession and recovery or growth can be seen in the chart. According to the U.S. National Bureau of Economic Research, the worst recession since the Great Depression of the 1930s began in December 2007 and ended in June 2009. A recession is a period of declining real GDP and rising unemployment. During the recession real GDP dropped by ~3 % and unemployment rose from 4.7 % to 10 %.

    The recession (2007-2009) included a housing bubble, financial system losses, and a commodity boom.

    From 1995 to 2007, the U.S. housing market was booming, which encouraged many households to borrow money to buy real estate. Some of these new homeowners' loans were subprime. In other words, given their down payments, incomes and credit histories, they were at a high risk of loan default. Since 2007, many of the new homeowners found themselves underwater, owing more on their mortgages than their houses were worth. As a result, mortgage defaults and home foreclosures increased.

    In 2008, the financial institutions that held these subprime mortgages faced large losses.

    • Bear Stearns was purchased by JP Morgan Chase
    • Fannie Mae and Freddie mac were taken over by the U.S. government
    • Lehman Brothers declared bankruptcy
    • Bank of America purchased Merrill Lynch
    • American International Group (AIG) received $85 billion from the federal government
    • JP Morgan Chase purchased Washington Mutual, the biggest bank failure in history

    In July 2008, oil peaked at $147.30 a barrel and a gallon of gasoline was more than $4.00 across most of the U.S., driven in part by increased demand from China and other rapidly growing emerging economies. Economic contraction in the fourth quarter caused a dramatic drop in demand. Prices fell below $35 a barrel by the end of the year.

    Since the second half of 2009, the economy has been growing, coming close to 4 % growth in early 2010. Then growth slowed, but accelerated the rest of the year. The most recent report says that growth has slowed to 2.2 %.  How might this affect decisions by managers? Will they increase or decrease production? Will they hire or lay off employees? What other decisions might be affected?

  • Fired by email

    All employees at the asset-management unit of Aviva PLC, Britain's second-largest insurance company, were mistakenly sent an email which said, 'I would like to take this opportunity to thank you and wish you all the best for the future.' Many of the employees thought that they had just been fired by email. This story became news around the world.

    In reality, the employee was not fired by email, but had been laid off and the email was a follow-up message. Quickly, the manager realized what had happened and recalled the email. An apology email was sent.

    The costs - both human and financial - of a poorly handled termination can be extremely high. The rise in wrongful termination suits is due, at least in part, to mismanagement of the termination process. When asked, many terminated employees report that they sued their former employer because of the way they were treated, rather than for any financial gain.

    Regulations that apply to termination include:

    • Age Discrimination in Employment Act
    • Americans with Disabilities Act (ADA)
    • Civil Rights Act Title VII, Civil Rights Act of 1991
    • Fair Labor Standards Act
    • Family and Medical Leave Act
    • Immigration Reform and Control Act
    • National Labor Relations Act (NLRA)
    • Occupational Safety and Health Act (OSHA)
    • Pregnancy Discrimination Act

    When a terminated employee sues the organization, both parties lose. For the organization, the loss includes legal fees, time and energy of key personnel, internal morale, and external public relations. The terminated employee loses time and energy that could have been directed to the job search.

    Termination Action Plan

    Once the decision to terminate an employee has been made, the manager should develop an action plan. A pre-termination planning decision to release an employee, who no longer fits the organization's needs, enhances an organization's development objectives.

    • Schedule the termination as soon as possible. Move as quickly as possible to a termination date.
    • List the resource people (for example, human resources (HR) representative, lawyer, and outplacement consultant) available to provide support or assistance in the termination. A HR representative can outline the terms of the severance. Also, he or she can serve as a witness to what was actually said during the termination conference. An outplacement consultant assists the terminated employee in conducting an effective job search. As a result of this service, outplaced employees make a career transition more rapidly, with less overall stress, and have a distinct advantage over non-outplaced job seekers. The organization benefits from reduced severance packages, reduced likelihood of lawsuits, maintenance of morale and productivity of remaining employees, and increased community support for the actions of the organization.
    • Outline the primary reasons for the termination. Explain the reasons for the termination clearly, concisely, and candidly. In addition to performance issues, reasons for the termination might include change in strategic direction, mismatch between skills and job, reorganization, new technology, or change in ownership.
    • Develop a security strategy. If the individual has access to sensitive information, take precautions. For example, change computer passwords and secure documents. Arrange for the individual to separate out, under supervision, personal effects from organization property. Personal effects can be forwarded after a qualified person has had the opportunity to evaluate their contents. Point out that these actions are designed to protect the individual as well as the organization, so that no one can be falsely accused of removing confidential documents.
    • Determine time and location. If the termination is held in the individual's office or in a neutral location, not your office, you can control the length of the meeting and avoid a prolonged discussion or debate.
    • Plan internal and external announcements. Determine how the news will be communicated inside and outside the organization. A formal internal announcement concerning the departure and replacement of the employee is appropriate. Notify key external suppliers and/or customers with whom the individual had regular contact of the individual's replacement.

    Should employees always be terminated in face-to-face meetings? OR should email be used? Explain.

  • Managing Older Workers

    In 1999, I saved several provocative quotes from Ken Dychtwald, the leading thinker in the conversation on the "Age Wave."  Below are three of those quotes. 

    "Phased retirements, part-time and flex-time work and 'rehirements' will become common options for mature men and women who either need or want to keep working." 

    "In the years and decades to come, tens of millions of outspoken, long-lived men and women will force a redefinition of the purpose and arrangement of work in our lives. You can already see the tip of this iceberg with the growing popularity of sabbaticals, phased retirement programs, flextime, job banks, and career-transition retraining programs geared to older workers."

    "By 2020, the traditional 'linear life' paradigm in which people migrate through education, then work, then leisure/retirement, will be replaced by a new 'cyclic life' paradigm in which education, work and leisure are interspersed repeatedly throughout the life span. It will become 'normal' for 50-year-olds to go back to school and for 70-year-olds to start new careers."

    Most of these thoughts have proven true - even before 2020! Many managers see the aging of our population as a problem, but Dychtwald sees it as an opportunity. Should older people keep working? OR should they retire so that younger people can have their jobs? If they keep working, what are the most effective ways to reach out to-and connect with-older employees?

  • Managers ensure compliance for anti-bribery

    Recent bribery allegations against Wal-Mart in Mexico and Hollywood movie studios in China should remind managers that they are responsible for ensuring that clear anti-bribery policies are in place and that relevant staff at the least receive sufficient training. (See 3M's Anti Bribery Policy for an example.)

    The Foreign Corrupt Practices Act (FCPA) enacted in 1977 makes it illegal for Americans to bribe foreign officials. A bribe is offering anything of value (money or gifts) to gain a competitive advantage. The Securities and Exchange Commission ("SEC") and the Department of Justice ("DOJ") are jointly responsible for enforcing the FCPA. The SEC brings civil enforcement actions against issuers and their officers, directors, employees, and agents. The DOJ criminally prosecutes issuers and their officers, direc­tors, employees, agents, and domestic concerns, as well as foreign persons and entities (acting within the U.S.).

    According to the U.S. Department of Justice, The anti-bribery provisions of the FCPA prohibit the willful use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person.

    In this video, Fareed Zakaria reports "How to beat bribery." India's Chief Economic Adviser, the economist Kaushik Basu, uses a game theory simulation to suggest that "bribery in general will decrease if people who are asked for bribes can pay the money and they can still go and complain without worrying that they will be prosecuted. And the corrupt official who takes the bribe will know that if they take the money they face twice the penalty."


    Read the attached Investor Bulletin. What is "anything of value"? How is "foreign official" defined? What is an "indirect bribe"? What are the three situations in which payments to foreign officials would not result in liability under the FCPA? What do you think of Basu's way to fight bribery?

  • Scoring Business Model Attractiveness

    Rita McGrath, a Professor of strategy at Columbia Business School, has developed a 10-step chart to assess the level of attractiveness for a company's business model, which is the way a company makes money. Of course, innovation is important to the company's growth and its ability to remain in business.

    In general, business models with exit barriers, for which there are switching costs and which are relationship-oriented, tend to be more attractive than those with the opposite conditions. A score below 40 would mean that the company is more vulnerable and its business model is less attractive. The business model might lack customer loyalty and/or be easy for competitors to imitate.

    Identify a company and use Table 2 to assess the attractiveness of its business model. What is the score? Briefly explain why the score reflects your best guess of where the model falls.

  • Tattoo Entrepreneur


    Some older people are leery of younger people with tattoos. They might think, "Why do young people want to molest their own body?"

    Pew Research Center gives us some insight on the subject of tattoos. It published a series of reports exploring the behaviors, values and opinions of the teens and twenty-somethings that make up the Millennial Generation. Millennials see tattoos as a form of self-expression.  "Nearly four-in-ten have a tattoo (and for most who do, one is not enough: about half of those with tattoos have two to five and 18% have six or more)."

    Tattoo parlors are a business, and the target market for tattoos has expanded from military personnel and bikers to the young adult. An example of an entrepreneur and a small business owner is Rob Arquero, seen in this video. He started Inkies Tattoo Studio, a high-end tattoo parlor with a comfortable, upscale ambiance.

    He hopes the ambiance will attract more business. What do you think?

  • 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?

  • Give your charisma a boost

     Leaders are charismatic. We teach leadership, so you can learn to be more charismatic. Olivia Fox Cabane, the Executive Director of Spitfire Communications and the author of The Charisma Myth, explains that there are three components to charisma.

    • 1. Presence - When you meet someone, you make him or her feel like he or she is the only one in the room.
    • 2. Power - You broadcast confidence.
    • 3. Warmth - You express goodwill and empathy.

    Charisma is about how you make people feel about themselves.  Be present, fully attentive and truly authentic. In the attachment, Ms. Cabane explains the importance of sincerity.

    How will you boost your charisma?

  • Celebrate Tax Day

    Many managers have decided to have special promotions today, April 17 the 2012 deadline for Americans to pay their taxes. I have received email specials from several restaurants such as Chili's Grill and Bar and Boston Market.

    Seattle's Best Coffee developed the Great American Coffee Refund commercial, as seen in this video.

    Besides restaurants, how could other managers encourage taxpayers to visit their stores?

  • Checklist for Business Dining

    You may be asked to meet a potential employer, manager, or customer for breakfast, lunch, or dinner.

    Even before the wait staff takes your order, ask the other person, "How would you like to handle the check? Would you like to go Dutch?"

    The other person will probably be thankful you asked because he or she might work for a company that has an ethics policy prohibiting employees from accepting anything of value. If he or she wants to pay for your meal, that's fine. It will probably be put on an expense account.

    Don't insist on paying. And never drink alcohol when you're meeting. It makes you talk too much. "Loose lips sink ships."

    See the attachment for some more ideas on "Business Dining Etiquette" from the University of Delaware.

    What other tips can you add to create a "Checklist for Business Dining"?

  • Corporate social responsibility (CSR) at General Mills

    General Mills believes that doing "well" for shareholders goes hand in hand with doing "well" for consumers, communities and the planet. The company accomplishes its corporate social responsibility (CSR) through nutrition, volunteerism, sharing expertise, protecting the environment, and more.

    General Mill's 2012 Global Responsibility Report highlights actions, goals, and performance in the areas of health, environment, and community. 

    Look through the report at http://www.generalmills.com/~/media/Files/CSR/csrII_2012.ashx. How could managers and employees at General Mills use the report as a guide? What do you find most helpful?

  • Human Resources Manager is #3 Best Job

    Human Resources Manager (HRM) is number three in CareerCast.com's list of best jobs. According to the Occupational Outlook Handbook, HRM plans, directs, and coordinates the administrative functions of an organization. They oversee the recruiting, interviewing, and hiring of new staff; consult with top executives on strategic planning; and serve as a link between an organization's management and its employees. The median annual wage of human resources managers was $99,180.

    CareerCast.com ranked 200 jobs from best to worst based on five criteria: physical demands, work environment, income, stress and hiring outlook. To compile its list, the firm primarily used data from the Bureau of Labor Statistics and other government agencies.

    Compare the job duties, education, job growth, and pay of human resources managers with similar occupations at http://www.bls.gov/ooh/management/human-resources-managers.htm#tab-7. Which job appeals to you? Why?

  • Use Pinterest for Vision

    A vision is where you want to be in the future; it is where you are going, not where you have been. In the past, people cut pictures out of magazines to make a collage portraying their vision. Today, you can use Pinterest to create an online vision board. The purpose of a vision board is to keep you focused. It keeps your goals constantly in mind.

    The best managers are almost always described as "visionary." Yet, women managers fall behind men in this measure. On the envisioning scale (being able to articulate a vision of the future and translate that into a strategic direction for the organization), INSEAD professor Herminia Ibarra found that "women leaders are not perceived to be as strong as men when it comes to articulating a vision of the future and translating that vision into a strategic direction for the organization." Find more on 'Women and the Vision Thing' in the January 2012 issue of the Harvard Business Review.

    Maybe creating a vision board will help! The Internet offers an endless number of digital images. With your future in mind, search for the exact pictures which portray your vision. If you want to start your own business, find images that capture that idea for you. Then, create your vision board out of these images.

    Have fun looking for pictures or quotes or headlines that inspire you. Choose a lot of images and phrases and words. Pin your favorites on the board. You might want to create several boards - one for each area of your life, such as school, work, health, spirituality, relationships, etc. Add comments to remind yourself of why you chose the picture. It is good practice to include a photo of yourself on your board.

    Look at your vision board every day for motivation. If you find it helpful, you can share your vision across other social media sites.

    Do women managers lack vision? OR, is this a perception of female managers?

  • Peter Drucker's Five Most Important Questions

    This video is part of the Drucker Institute's "Drucker for Future Leaders" curriculum. It introduces management, as well as Drucker’s five questions for managers. “Management means maximizing the effectiveness of human performance wherever it unfolds.”

    Drucker’s five most important questions are below.

    1. What is my mission?
    2. Who is my customer?
    3. What does the customer value?
    4. What are my results?
    5. What is my plan?

    How could using the five questions help you realize measurable results?

  • Happy Easter 2012

    The National Federation of Retailers reports that Americans will spend an average of $145.28 on Easter goods. "Retailers will make sure to offer plenty of promotions on candy, apparel, food and decorations in the coming weeks for eager holiday shoppers."

    Dailyinfographic used the information to design the Easter candy infographic below.

    What did you buy for Easter? How much did you spend?

  • Crowdsourcing as Management Strategy

    In the external environment of fast-paced technological change, nimble competitors, and demanding customers, world-class firms have adopted an integrated product development (IPD) process to provide best-in-class new products. IPD is a management strategy that uses customer inquiry, cross-functional teaming, and technology integration to improve the performance of product development lifecycles. The U.S. Department of Defense first proposed IPD as a name that better reflected the participation of manufacturing, design, marketing and finance in product development. IPD improves an organization's ability to quickly respond to market demands with high quality new products. Increasingly diverse needs of customers are met by exercising speed, efficiency, and quality in the development of new products.

    It makes sense that the next evolution of IPD can be conducted faster with the use of the Internet.  The Defense Advanced Research Projects Agency (DARPA) hopes crowdsourcing will speed up the design-to-production cycle. According to Steve Lohr in a New York Times blog, "Pentagon Pushes Crowdsourced Manufacturing" (April 5, 2012), "The crowdsourcing effort will rely on a software initiative, called Vehicleforge.mil, which will be a Web portal for gathering, sharing and testing ideas."

    General Electric (GE) and the Massachusetts Institute of Technology (MIT) are collaborating on the project. "Pictured is a schematic of the crowdsourcing platform GE and MIT are building to support DARPA's ongoing Adaptive Vehicle Make (AVM) portfolio. The idea of this platform is to help connect data, design tools and simulations in a collaborative environment to accelerate the design of highly complex industrial systems." The integrated, or concurrent, development process has easy access to management, with a centrally networked information system in place that is readily accessible by everyone.

    David R. Wallace, a professor of mechanical engineering at M.I.T, told Steve Lohr that "the Vehicleforge.mil program will allow solo inventors or small teams to tap into those capabilities. A vehicle body and chassis design, submitted as code, could be plugged into the Vehicleforge.mil platform and tested for aerodynamics by in a virtual wind tunnel, for example." Simulation services for complex designs allow researchers to "predict problems earlier to get a better design faster."

    Why do you think these managers believe that crowdsourcing will accelerate all of the processes that link the activities for designing and building what the customer requirements specify? How else can crowdsourcing be used as a management strategy?

  • Socially Conscious Consumers Prefer to Work for Socially Responsible Companies

    Socially conscious consumers prefer to work for companies that have implemented programs to give back to society according to Nielsen's 2012 Global Corporate Citizenship Survey. Choosing an effective cause requires strategic prioritization. Managers need to identify the most relevant cause to their business. Then, the cause program should be implemented.

    The global, socially conscious consumer is described by Nielsen as young, green, and willing to pay more for socially responsible products/services.

    Respondents were given a list of 18 causes, as seen below.

    Sixty-six (66) percent of socially conscious consumers identified environmental sustainability as a cause companies should support. Do you agree? Which of the causes listed is most important to you?

    How can managers let potential employees know about their social responsibility?

  • Gross National Happiness

    Bhutan, a country east of India, measures their country's progress based upon "Gross National Happiness." In 1972, the Bhutan government started to develop a system for measuring the happiness of their people. The basic elements measured are: physical, mental and spiritual health; time-balance; social and community vitality; cultural vitality; education; living standards; good governance; and ecological vitality.

    Similarly, the International Institute for Management (IIM) developed the Gross National Happiness (GNH) Survey. The survey asks participants to rate their satisfaction (from 0-10, with 0 being very dissatisfied, 5 being neutral and 10 very satisfied) in 7 areas:

    1. Economic satisfaction (savings, debt and purchase power)
    2. Environmental satisfaction: (pollution, noise and traffic)
    3. Workplace satisfaction (job satisfaction, motivation, ethics, conflict, etc.)
    4. Physical health (Severe illnesses, overweight,..)
    5. Mental health (usage of antidepressants, self-esteem, positive outlook..)
    6. Social satisfaction [including family and relationship satisfaction] (domestic disputes, communication, support, sex, discrimination, safety, divorce rates, complaints of domestic conflicts and family lawsuits, public lawsuits, crime rates, etc.)
    7. Political satisfaction (quality of local democracy, individual freedom, and foreign conflicts, etc.)

     Companies are measured by revenue and profit. What would be the advantages and disadvantages if managers started measuring GNH using "Bhutanese" type of measurements?

  • China isn't the only country with Overtime Abuse

    Apple joined the Fair Labor Association (FLA) in January 2012 and in February, FLA inspected Foxconn, an Apple supplier with factories in China. Three Chines factories, two in Shenzhen and one in Chengdu, were inspected.

    Two parts to FLA's investigation at the three Foxconn facilities were: (1) An assessment of the treatment of workers and of working conditions in the factories, which seeks to identify root causes of workers' rights violations. This assessment analyzes information from several sources, including document review, physical observation, management interviews, and onsite and off-site interviews with workers. (2)Onsite, anonymous surveys to hear directly from the workers about working conditions and how they are treated in the factories.

    In its report, FLA found excessive overtime and problems with overtime compensation. Employees were found to work more than 60 hours per week and sometimes 11 or more days in a row. Foxconn, headquartered in Taiwan, has promised to cut hours worked, not salaries paid. By July 2013, no Foxconn worker will labor for more than 49 hours a week. This is the limit dictated by Chinese law.

    China isn't the only country with unpaid overtime. In the United States, fair wage cases are investigated by the Labor Department, and most cases investigated are for unpaid overtime. The Fair Labor Standards Act (FLSA), passed in 1938, delineated between manager, hourly employee, administrative worker, and the outside salesperson. It established the eight-hour workday, the 40-hour workweek, and time and a half pay for the workweek over 40 hours. Exceptions to the law are exempt employees: executive, administrative, professional, and outside sales employees. (See attached for overtime pay requirements.)

    Managers need to know the law. Employees on the employer's premises, under the employer's control, using the employer's tools are working and should be paid for that time. One type of overtime abuse is misclassifying employees as exempt. For example, some companies designate workers as supervisors or managers, but they don't supervise other employees and don't have authority over work schedules. Another type of overtime abuse is having workers perform job duties off the clock, such as working while taking less time for eating lunch or not compensating properly for travel time to run errands before or after work.

    Employees can work flexible hours, telecommute, and be attached to electronic devices to perform their job duties anywhere, anytime. How can managers keep up with the number of hours that people work and when they work?

  • Twitter for Communicating

    Many companies use Twitter for product promotion and to build customer loyalty. But, what about using Twitter to manage employees?

    Managers can save time by using Twitter and their smartphone for real-time communications with work teams. A tweet is limited to 140 characters, which saves everyone reading time. Employees will have to think to get their messages short enough to answer the question, "What are you doing?"

    Managers can start a Twitter account to follow their employees. Everyone will get time-sensitive communications.  The manager's and employee's smartphones should be set for Twitter Direct Messages. A Direct Message (DM) shows up in real time, just like a text message. In order for employees to receive a private message, they need to be following the manager. In order for the manager to receive a DM back, the manager needs to be following the employees. To send a DM, use "D" plus a space plus the person's Twitter handle (user's Twitter name).

    Employees need to know that the best way to reach the manager is by Twitter Direct Message, not other tweets.

    Why should managers Twitter?