• 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?

  • The Labor Force is Changing

    Dona Collins is an infographic artist, blogger and financial writer at CreditLoan.com. This infographic comes from the article, "The Rapidly Changing Labor Force." How has the labor force changed over the years? How has that changed management?

  • McDonald’s Innovation Center

    McDonald's, America's largest food services company, is a global company. To keep ahead of the competition, McDonald's shares and refines best practices from all areas of the world at its Innovation Center. Recently, the company shared some of their new products, menu strategies, and technology platforms with security analysts touring the center.

    Several years ago Mike Cramer of Analytics Magazine reported that the Innovation Center is housed in a warehouse in Chicago, as seen in the picture below.

     

    Laurie Gilbert, manager of Innovation Operations, told Cramer, "We call this the Alpha Phase. In this phase, we rapidly prototype the design and development of solutions applying a mindset of 'Fail Fast, Fail Forward'." The breadth of design and testing includes:

    • The impact of new menu offerings on operational performance
    • Customer experience design inclusive of sight, sound, smell, taste and touch
    • Employee job design for optimal performance with the least amount of cognitive load and stress
    • Equipment design and layout
    • Information systems design and user interfaces
    • Service systems design and stress testing

    Now, self-ordering kiosks, mobile ordering and digital menu boards are being tested at some locations. This would result in managers receiving real-time ordering data. With this knowledge, staff could be scheduled more efficiently.

    In what other ways could receiving real-time ordering data help managers?

  • Entrepreneurs Go to College

    CBS News 60 Minutes ran a segment about a billionaire paying entrepreneurial students $100,000 to drop out of college. The program asked the question, "Is college worth the cost?"

    Entrepreneur Vivek Wadhwa teaches at Duke and Stanford.In this video, he explains how the social skills gained in college actually help Americans get ahead. Lots of people have ideas, but they aren't able to turn them into inventions, and then into companies. A college education helps entrepreneurs start and run successful businesses.

    Traits of entrepreneurs include being willing to take risks. They are optimistic.They believe they are going to change the world. They have a grand vision about how they are going to make an impact. They believe in themselves. Entrepreneurs work well with others.They work very hard.

    Would you take the money to drop out of college to start your own business? Explain.


  • Men in Pink Collar Jobs

    Today, more men than ever before are working in jobs traditionally held by women, such as nursing and teaching. (Industry jobs held by women have been called "pink collar" in the past.)

    Integrated occupations improve our society. People having a passion for their work, whether working in a traditional or a nontraditional job, is important to our society because those workers are more satisfied with their lives. Integrated occupations make the workplace more efficient. The best person for the job is the one whose skills match the job description, no matter their sex.

    What benefits do men see in jobs traditionally dominated by women?

  • The American Dream

    Solomon McCown (SM&) hired Anderson-Robbins Research to conduct a national poll with 1,009 adults on the current mood of America. In the wake of the recent recession (Great Recession), SM& wanted to better define behaviors and values in the "New Normal." Changes found have implications for management relationships with employees and consumers.

    Some of the keys for achieving the American dream include the following answers given by a majority of the respondents.

    • "living in an environmentally responsible and sustainable way"
    • "a high quality college education"
    • "good health"
    • "a long and healthy retirement"
    • "helping others through volunteer work or charitable giving"

    These answers are depicted in the slide above.

    What is your definition of the American Dream? How should managers use this information?

     

  • Management Conduct Contrary to Policies at Best Buy

    Richard Schulze founded Best Buy, but is stepping down as chairman after a company inquiry found that he failed to reveal the CEO's relationship with a female employee. CEO Brian Dunn resigned last month for violating Best Buy's policy. He had an inappropriate ("close personal") relationship with a female subordinate. The female employee was much younger than the CEO, according to reports.

    The Associated Press reported, "The company probe found that although Dunn did not misuse company resources or aircraft related to the relationship, he and the employee were in significant contact for no identifiable business purpose. For example, during one four-day and one five-day trip abroad in 2011, the CEO contacted the female employee by cell phone at least 224 times, including 33 phone calls, 149 text messages, and 42 picture or video messages."

    Problems affect productivity. Both Schulze and Dunn forgot that company policies, procedures, and rules are important. They are written to take care of problems which occur again and again. Companies have an incentive to implement and enforce strong policies prohibiting harassment and effective complaint procedures. Furthermore, employees have an incentive to alert management about harassment before it becomes severe and pervasive.

    The "Facts About Sexual Harassment" below is from the U.S. Equal Employment Opportunity Commission (EEOC).

    Sexual harassment is a form of sex discrimination that violates Title VII of the Civil Rights Act of 1964. Title VII applies to employers with 15 or more employees, including state and local governments. It also applies to employment agencies and to labor organizations, as well as to the federal government.

    Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitute sexual harassment when this conduct explicitly or implicitly affects an individual's employment, unreasonably interferes with an individual's work performance, or creates an intimidating, hostile, or offensive work environment.

    Sexual harassment can occur in a variety of circumstances, including but not limited to the following:

    •  
      • The victim as well as the harasser may be a woman or a man. The victim does not have to be of the opposite sex.
      • The harasser can be the victim's supervisor, an agent of the employer, a supervisor in another area, a co-worker, or a non-employee.
      • The victim does not have to be the person harassed but could be anyone affected by the offensive conduct.
      • Unlawful sexual harassment may occur without economic injury to or discharge of the victim.
      • The harasser's conduct must be unwelcome.

    It is helpful for the victim to inform the harasser directly that the conduct is unwelcome and must stop. The victim should use any employer complaint mechanism or grievance system available.

    When investigating allegations of sexual harassment, EEOC looks at the whole record: the circumstances, such as the nature of the sexual advances, and the context in which the alleged incidents occurred. A determination on the allegations is made from the facts on a case-by-case basis.

    Prevention is the best tool to eliminate sexual harassment in the workplace. Employers are encouraged to take steps necessary to prevent sexual harassment from occurring. They should clearly communicate to employees that sexual harassment will not be tolerated. They can do so by providing sexual harassment training to their employees and by establishing an effective complaint or grievance process and taking immediate and appropriate action when an employee complains.

    It is also unlawful to retaliate against an individual for opposing employment practices that discriminate based on sex or for filing a discrimination charge, testifying, or participating in any way in an investigation, proceeding, or litigation under Title VII.

    Dating a co-worker has resulted in the Best Buy CEO losing his job. Not sharing the information with the board has resulted in the chairman of Best Buy's board losing his position. Do you think any others at Best Buy knew the CEO and employee had a relationship? If so, do you think there was office gossip? Could employees see this relationship as a sign of favoritism? Should the CEO fear blackmail, the possibility that she would accuse him of hierarchical harassment or blackmail?

  • Who should be fired?

    Visit msnbc.com for breaking news, world news, and news about the economy

    JPMorgan Chase, the largest bank in the United States, just lost $2 billion in something called its "synthetic credit portfolio" by making complex trades on European bonds (corporate debt). The loss came from the Chief Investment Office in London. Ina Drew was the chief investment officer who oversaw the trade. The trader involved, Bruno Iksil, was known as "the London Whale" for his big trades. Both have resigned as a result of the scandal.

    JPMorgan Chase chief executive Jamie Dimon delegated authority to Drew, and she delegated authority to Iksil. In an organization, authority flows downward and can be seen in the organization chart. The chain of command is an unbroken line of reporting relationships that extends through the entire organization and defines the formal decision-making structure. This way employees know who their boss is, to whom they are accountable, and where to go with a problem.

    Authority is the legitimate power of a manager to direct subordinates to take action within the scope of the manager's position. Formal authority in the organization can be traced all the way back to the U.S. constitutional right to own property. The owner of the organization has the authority to make decisions.

    Owners (stockholders) hire managers and hold them accountable for the results of the corporation. Dimon told "Meet the Press" host David Gregory that "there's almost no excuse" for the bank's $2 billion trading loss. In essence, the chief of the unit and the trader have been fired. But, Dimon was convinced by them (Drew and her team) that the risk was manageable.

    Who do you think should be fired?

  • Where have all the young firms gone?

    "Where Have All the Young Firms Gone?" This is the title of the Kauffman Foundation-Census Bureau study (PDF attached) on U.S. entrepreneurship. The Census Bureau's Business Dynamics Statistics (BDS) provides annual business data from 1976 to 2010. (See Figure 3 below.) The briefing was partially funded by the Ewing Marion Kauffman Foundation. The Kauffman Index of Entrepreneurial Activity measures annual employer and non-employer business creation in the United States.

    The press release stated the following. "Young firms - those five years old or younger - now comprise fewer than 35 percent of all firms, down from nearly 50 percent in the early 1980s. This decrease is accompanied by a decline in the share of employment accounted for by entrepreneurial firms from 20 percent in the 1980s to 12 percent in 2010. The share of job creation also has fallen, from more than 40 percent in the 1980s to about 30 percent in recent years."

    The report, "Where Have All the Young Firms Gone?," focuses on the decline in starting new businesses. This is a concern because new businesses create jobs. Yet, Scott Shane, the A. Malachi Mixon III Professor of Entrepreneurial Studies at Case Western Reserve University, writes that this report means that "failure rates must've dropped, too." This is the good news.

    Do you dream of starting a business? If so, what kind of business? What do you think stands in the way of new business formation?

  • Start at the bottom to reach the top

    In this video, the America Works Here campaign tells the story of America's restaurant industry -- the nation's second-largest private-sector employer and an engine of economic growth. Research from the National Restaurant Association finds that the restaurant industry can be a steppingstone to lucrative jobs, food service management, and restaurant ownership. (See attached Facts.)

    Nearly half of all adults have worked in the restaurant industry at some point during their lives, and more than one out of four adults got their first job experience in a restaurant.

    • 80% of restaurant owners said their first job in the restaurant industry was an entry-level position.
    • 94% of restaurant employees said the restaurant industry is a good place to get a first job and learn basic working skills.
    • 88% of restaurant employees said restaurants often provide the opportunity to start at the bottom and move up to management.
    • 81% of restaurant employees said the restaurant industry is a place where people of all backgrounds and experience can open their own business.
    • 46% of restaurant employees said they would like to own a restaurant someday.
    • 57% of first-line supervisors/managers of food preparation and service workers in 2009 were women, 16% were of Hispanic origin and 15% were African-American.

     Most people don't think that flipping burgers is a way to more lucrative-paying jobs and business ownership. Why is it important to start at the bottom to reach the top in the food industry?

  • CEO but not Chairman

    Aubrey McClendon is the co-founder of Chesapeake Energy. Until recently, McClendon was the company's Chief Executive Officer (CEO) and the Chairman of the Board of Directors. Shareholders criticized the company for giving McClendon a massive pay package which included loans from companies that do business with Chesapeake. As a result, Chesapeake's board took McClendon's chairmanship away and terminated the compensation plan that gave him ownership in every well drilled by Chesapeake.

    As CEO, McClendon oversees the company's daily operations. As Chairman of the Board, he supervises the board of directors. The board advises the management, hires and fires executives, and approves compensation packages. They determined that McClendon's personal business interests could conflict with those of Chesapeake.

    Many top executives have the title of CEO and Chairman of the Board. What other problems might occur if a CEO is in charge of the organization that's supposed to be monitoring him (or her)?

  • Trust is the real problem with ‘pink slime’

    Yesterday, the Wall Street Journal reported that Beef Products Inc., the maker of a ground-beef additive dubbed "pink slime" by critics, said it would close three of its four plants as it struggles to recover from the controversy. "Known in the industry as lean finely textured beef, the additive is made from scraps remaining after cattle are butchered into cuts such as steaks and roasts. Processors remove the fat from trimmings, and in some cases treat the meat for bacteria with ammonium hydroxide. The product is then mixed with ground beef."

    The "pink slime" problem is a failure of management and businesses not being up front with customers. "Finely textured beef with ammonium hydroxide" was used in fast-food burgers, school lunches, and ground beef sold at grocery stores.  Customers had no idea until ABC News ran a series of reports about 'pink slime.' The story spread quickly with social media. Public reaction was very negative and the product was removed from most ground beef. As the plants close, employees lose their jobs.

    This problem could have been prevented if managers had been truthful and listed the ingredients. Managers need to have transparency to the information shared with their work team, internal stakeholders, external partners, and customers.  If an additive is in a package of ground beef, the label should say so. Isn't that true about products such as sausage, bologna, and hot dogs?

    Many customers are willing to pay less, if the price is right - even for less quality ingredients. Think about it. We buy products such as Velveeta (cheese substitute), Cool Whip (whipping cream substitute), and Spam (ham substitute). They are less expensive, taste good, and last longer than the actual cheese, whipping cream, and ham. But, the labels on these products list their ingredients. And, they have great brand names. The managers understand the importance of marketing.

    Ultimately, business is all about relationships. Managers can improve relationships with trust. The more information managers are willing to share, the more trust they're given. To be even more truthful, the name of the ground beef product could be changed and labeled correctly. What brand names should be considered?

  • Turn procrastination into action

    When you are trying to finish a project, it's easy to NOT decide what to do next. Procrastination kills productivity because it makes any job a chore. The Now Habit by Neil Fiore stresses the importance of positive self-talk. Internal talk translates into feelings, inactions, and actions. When thinking "I have to do this" or "I should do this," your mind is actually saying: "I'm being forced to do what I don't want to."

    To put you in control of yourself and your work, Fiore suggests the following five self-statements that turn procrastination into action.

    1. I choose to,
    2. When do I start?
    3. I can take one small step.
    4. I can be perfectly human.
    5. I must make time for play.

    If you can't master positive self-talk, you'll never be able to get through a workday without feeling overwhelmed. Which of these self-statements help (motivate) you the most?

  • Games at Work

    Many people play computer or video games at home. But, most people think that playing video games at work could get them fired. Now, managers are using video games to train employees and increase productivity. Gamification makes work more engaging by letting employees do things that reward them. In return, rewards help employees commit deeper to the company and make them feel happy to be involved.

    RedCritter is a software developer applying gaming technology to business processes, such as increasing productivity, engagement, performance, and staff retention. "RedCritter Tracker is project management software that uses game techniques, such as badges and points, to reward users for completing project tasks" (Sheryl Jean, "RedCritter raises $750,000," The Dallas Morning News, May 2, 2012, 3D).

    Important management skills include leading, working in a team, and developing strategy. How do you think games at work could develop these skills?

  • Your transcript follows you for the rest of your life

    It is important to remember that your college transcript follows you for the rest of your life. This was emphasized recently when Time.com reported, "A disgruntled Yahoo shareholder questioned the qualifications and integrity of recently hired CEO Scott Thompson after exposing a misrepresentation about the executive's education."

    Daniel S. Loeb, the founder of the hedge fund Third Point, sent a letter to the board of Yahoo questioning chief executive, Scott Thompson's credentials.  The New York Times reported that Yahoo's website said that Thompson has a "bachelor's in accounting and computer science from Stonehill College." In truth, Thompson has a degree in accounting. Computer science was not offered as a degree at the time Thompson was enrolled.

    Loeb says this violate Yahoo's code of ethics and accused Yahoo of poor corporate governance. He wrote, "If Mr. Thompson embellished his academic credentials we think that it 1) undermines his credibility as a technology expert and 2) reflects poorly on the character of the C.E.O. who has been tasked with leading Yahoo! at this critical juncture. Now more than ever Yahoo investors need a trustworthy C.E.O."

    The company statement said, "This, in no way, alters that fact that Mr. Thompson is a highly qualified executive with a successful track record leading large consumer technology companies. Under Mr. Thompson's leadership, Yahoo! is moving forward to grow the company and drive shareholder value."

    Yahoo's code of ethics says, "Make sure information we disclose about our company is clear, truthful, and accurate." What do you think?

  • Customer Service is Social

    The use of social media improves customer service. Sword Ciboodle, a global provider of customer engagement solutions, and customer experience advisory thinkJar, developed a survey to answer the question, "How can an organization embrace social channels and technologies to improve customer service?" Managers can use this information to improve their organization's customer service. According to the report, 60 percent of companies polled in the U.S. and the U.K are using both Facebook and Twitter to answer questions from customers. Eighty-five percent of companies use one source - Facebook or Twitter -- to address feedback.

    In this Sword Ciboodle video, Paul Greenberg, President of the 56 Group and author of CRM at the Speed of Light discusses the social customer. This is The Part 1 and there is The Social Customer Part 2.

    Mitch Lieberman, vice president of market strategy at Sword Ciboodle, noted, "The most successful customer service program will happen for businesses who incorporate social into their overall customer engagement practices."

    In the video, Lieberman discusses systems of engagement and systems of record. How have you engaged (interacted and communicated) online with a product or service? What records (transactions, details, and contact information) does the company have on you? How does this information help managers improve customer service?

  • Choosing Events and Sponsorships

    Choosing which events to sponsor is a strategic decision by managers. Requests from nonprofit organizations are numerous, and many are quite emotional. But, by focusing on strategy, managers can choose those with the best fit for the business.

    One way to keep strategic focus when considering which events to sponsor is to use some strategic questions. A set of questions for managers to consider is found in Gina F. Rubel, Esq.'s book Everyday Public Relations for Lawyers. The questions are listed below.

    Your Business

    The Event / Sponsorship Opportunity

    What are your core business goals?

    What are the event's business goals?

    What are your marketing objectives?

    Does this opportunity meet your marketing objectives?

    Who is your target audience?

    Does this event reach your target audience?

    What is your budget?

    Does the cost of this opportunity fit within your budget?

    How do you measure the success for your marketing efforts?

    Does this event / sponsorship provide measurable opportunities?

    Do you track your opportunity costs?

    What are the opportunity costs if you do not participate?

    Who is your competition?

    Will your competition have a significant presence at the event? Note: You may want to participate because there is no significant competitive presence or the opposite might hold true.

    If there is alignment of the answers for your business and the event/sponsorship opportunity, the business will want to take advantage of the sponsoring the event.

    At this time, what nonprofits do you support? How could you use these questions to determine your charitable gifts?

  • Managers Embrace Video

    Video is part of almost every aspect of work. Rising bandwidth, lowered equipment costs, ease of editing, and growing expectations of employees make video an important component of training and development. Viraltracker created the infographic "Why Will CMOs Embrace Social Video?" with social video statistics.

    The wide variety of uses for video at work includes those listed below.

    • Video YouTube Segment
    • Video Reports
    • Skype (on every computer at work)
    • Webinar Video Elements
    • Video Conferencing
    • Smart phone Video Clips
    • Webchat Video
    • Video Capture of Seminars and Classrooms
    • Video Guests in Workshops and Conferences
    • Video Coaching

    How else might managers use videos at work?