ADJUSTING YOUR BUSINESS MODEL TO REALITY AND MORALITY

August 21, 2018
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It appears that, over the years, major improvements in the American worker’s standard of living were triggered by either of two events:

1) American workers, frustrated with low wages, used unions and strikes to help them achieve their goals. The results were usually destructive in many ways: strikers did not bring home the bacon, once their union’s fund was depleted (which usually took no more than a few days – administrative costs, as we all know -). The employer, in the meantime, was hurt in its productivity and therefore ability to generate profits. And if many US manufacturing jobs moved abroad over the past quarter century, it was NOT due to automation, but to the fact that beggars can’t be choosers, and that the pre-teen worker in Sri Lanka has to worry about whether he will eat today, as opposed to whether he can afford a new car.

2) American employers, and their very expensive yet very effective lobbies on Capital Hill, have been convinced believers of the “trickle down effect”. Any economy providing a tax break to the corporate world will automatically result in higher wages for its workers. Wrong too, as we are currently witnessing that recent substantial corporate tax breaks have done little for vastly increased profit to be distributed.

If neither of the above are sustainable, what is the largest economic power in the world to do?

Import tariffs: it could be a reasonable approach, if globalization, which took over a century to become a reality, was to disappear overnight. Suppose you want to get the populace to “Buy American” when it comes to automobiles. Fine, but that would contradict the heavy tariffs being levied on imported steel. Steel accounts for up to 18% of a car’s cost. How about hides to make upholstery: they come from Spain and South America. Put a tariff on them and they will become prohibitive. The US has the fourth largest herd of cattle in the world (after India, Brazil and China) yet we don’t seem to be capable to turn a profit from using hides. Electronics are coming to us pre-assembled. So do precision clocks and the like, coming to us from Western Europe. Let’s face it: we are too rich for our own good, and that will NOT change as long as we continue to take it for granted.

Take a moral and enlightened approach to business. Happy people are productive people. I realize it sounds simplistic. It has however been proven time and time again. Happy people do not leave, therefore reducing staff turnover, therefore lowering recruiting, training, insurance costs. Happy and gainfully employed people are more likely to become shareholders of their employers than if they were feeling “exploited” or unfairly compensated.

Profit sharing should be a must: no business model can survive that does not share its profits with those who helped generate them. It is not the line worker nor middle management that can incur huge business losses: it is the C suite and the Board of Directors. Should they get away with poor business decisions while those not even associated in the decision-making process are left holding the bag?

Folks, this is not SOCIALISM. This is COMMON SENSE.

One Comment

  1. Robert Cohn August 22, 2018 2:17 am

    Force profit sharing sounds like a form of socialism to me, but Good companies take Good care of their employees. Just returned from the Hyatt in Kauai, that I opended, and after almost 28 years there are still more than 200 of the original working there, according to staff. The hotel is a Union hotel.
    Good companies do the right thing, and employees stay.
    You are correct, that happy employees stay, but it is not all about money.

    Reply

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