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The impact and responsibility of business on workers, consumers, and community
 Have I Got a Deal For You
What kind of legitimate business would want to block a ban on "unfair, deceptive and abusive" credit practices?
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *  Love Thy Neighbor“I realized we’re either going to go down in flames or we’re going to be a national model,” Judge Rizzo said. “We’re going to look at these cases and see what we can work out.”
The “City of Brotherly Love” lives up to its name these days with a foreclosure prevention program that is inspiring other struggling communities to follow. Not one to wait for Washington to come through, the city made famous by America’s revolutionary founders has created a program for distressed homeowners like no other.
“Under the rules adopted by Philadelphia’s primary civil court, no owner-occupied house may be foreclosed on and sold by the sheriff’s office before a ‘conciliation conference,’ a face-to-face meeting between the homeowner and the lender aimed at striking a workable compromise. Every homeowner facing a default filing is furnished with counseling, and sometimes legal representation.”
The New York Times reports, “In a nation confronting a still-gathering crisis of foreclosure, Philadelphia’s program has emerged as a model that has enabled hundreds of troubled borrowers to retain their homes. Other cities, from Pittsburgh to Chicago to Louisville, have examined the program and adopted similar efforts.”
“It brings the mortgage holder and the lender to the table,” said City Councilor John M. Tobin Jr. of Boston, who is planning to introduce legislation to enact a program in his city modeled on Philadelphia’s. “When people are face to face, it can be pretty disarming.”
“When homeowners in Philadelphia receive legal default notices from their mortgage companies, the court system schedules a conciliation hearing. Canvassers working for local nonprofit agencies visit foreclosed homeowners, distributing fliers that inform them of their rights to a conference, and urging them to call a hot line that can direct them to free housing counselors.”
The beauty of the program is that fast-talking unscrupulous subprime lenders like Countrywide, Washington Mutual, Wachovia, Indy Mac, as well as quasi-government big boys like Freddie Mac and Fannie Mae are forced to face those they have intentionally harmed for profit. Housing counselors then pressure lenders to right their past wrongs by adjusting principal amounts or interest rates down. In the end, most lenders play ball under the Philadelphian initiative and homeowners get to keep their homes.
Jobs for Life Jobs for life are becoming as quaint and old-fashioned an idea in modern Japan as they are in the United States. For three decades, the concept of “Jobs for Life” has been eroded only to be replaced with a brutally harsh job cut culture that is corporate America. In the US, companies increase earnings by slicing staff with abandon. Long term employees in the U.S. are famously given 10-20 minutes to pack up 20 years of belongings and exit the “premises.” To ensure compliance, uniformed security personnel escort them to the door. Not so in the socially conscientious Japanese corporate culture. Dignity remains the word of the day.In Japan, employee-friendly labor laws make it difficult to lay-off workers American style. Japanese banks and corporations can’t just slice and dice like their U.S. counterparts. They would be breaking the law. Large employers in Japan are obligated legally to determine and then prove that their company’s financial hardships justify the layoffs. Next employers have to prove they tried every other available option before reducing the workforce such as reducing working hours, cutting pay, creating a volunteer termination program, transferring workers to other departments, or temporarily laying off workers.
 Unemployment in Japan is a social shame for the both the employee and employer. The philosophy that an employer makes a commitment to a worker and ultimately his or her family is a strong ethic in Japanese business culture. However, economic crisis can make lay-offs unavoidable. In that case, there are a series of progressive measures and strict employment laws required of employers to lay off workers with dignity and sensitivity to their families. Read more below…From Rob Gross at efinancialCareers.jp Making layoffs in Japan isn't so easy by Rob Goss
When business is bad, banks in Western countries tend to wield their axes with abandon. Not so the J-banks.
Take Mitsubishi UFJ Financial Group. When it announced in late March plans to close 50 branches and cut 1,000 jobs, it didn’t go pink-slip crazy, it chose to make the cuts through attrition over the next three years. For cultural and legal reasons it may have been difficult to do anything but that. Japan has among the toughest and most employee-friendly labour laws of any developed economy, says Pete Millett, director of recruitment firm People Services International. “Even though staff cuts are obviously necessary in the current economy and are definitely taking place here, they remain quite difficult to implement,” he says.
Yasuhiro Fujii, an employment law partner at Baker & McKenzie GJBJ Tokyo Aoyama Aoki Koma Law Office, agrees that Japan’s labour laws are tough compared to the US or even Europe. And he explains that when making redundancies for business reasons, four strict requirements have been established for employers to properly justify dismissals.
“First, the employer must have a financial need to reduce the number of employees, sufficiently based on a business slump, decline or depression affecting the employer,” he says.
Secondly, the employer must also have exhausted all efforts to avoid dismissals in restructuring.
“Primarily, the employer should be able to show that it has made every effort to, among other things, cut overhead costs, place restrictions on overtime work, suspend hiring and transfers, second or transfer employees to related parties, terminate temporary staff from agencies and part-time workers, grant temporary leaves and temporary layoffs, and implement a voluntary termination scheme,” Fujii says.
Finally, the employer must use objective standards and a fair application of those standards in targeting the employees to be dismissed, and must follow proper procedures.
While the J-banks and the local offices of foreign banks in Japan are governed by the same set of employment laws, Millett says there are noticeable cultural differences between the two when it comes to cutting jobs. “Differences arise more from the cultural willingness of when, how widely, and how deeply to make or not make staff cuts,” he says.
David Swan, director of financial services at Robert Walters Japan, adds that from a cultural perspective it can be more difficult for Japanese firms to make layoffs because many employees view their jobs as being for life and Japanese companies tend to take a more paternal approach to their employees’ careers.
The pay might not be so hot and the business culture might be off putting for many Western bankers, but in troubled economic times, maybe life at a J-bank isn’t so bad after all.
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The HUMAN BOTTOM LINE
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Outsourcing American Values
These are difficult economic times. Companies, large and small, are forced to lay off workers and downsize to stay afloat. Hyatt Regency Boston, Hyatt Regency Cambridge and Hyatt Harborside at Logan International Airport claim that business is down 18% this past year. To remedy that problem, the three hotels, located in the city that birthed a bloody revolt against an indifferent king, fired their entire housekeeping staff. The company replaced the long-term workers at less than half the cost with subcontracted housekeepers from an outsourcing company in Georgia. The harshness of the action in the current economic climate toward its "working poor" employees has put the affluent hotel chain in the center of a media firestorm.
“There is a right way and wrong way to do things,” said Massachusetts Governor Deval Patrick referring to the Boston Hyatt Hotels layoff of its housekeeping staffs. Replacing long-term employees with cheaper outsourced workers is doing things the “wrong way” in the Governor’s view. The Governor issued a state-wide employee boycott of the hotel chain unless the workers are reinstated.
Housekeepers who worked at the Boston Hyatt Regency’s for over 20 years earning $15.39hr plus full benefits like dental, health, and 401K plans were given two weeks’ severance and replaced with outsourced workers for $8hr and no benefits. “Never ever in all my years have I seen a wholesale contracting out of an entire department,’’ said union leader Janice Loux, who is organizing support for the fired non-union workers.
Outsourcing is often a legal way for big companies to circumvent United States employment laws. In 1938, the Fair Standards Labor Act was enacted. The law was a radical shift from the Dickens’ like conditions of American and European labor. Workers fought bloody battles and strikes enduring centuries of abuse and neglect to finally win minimum wage standards, forty hour work weeks, and time and a half overtime pay. The law also officially abolished child labor. It was considered a tremendous advance of labor rights in Depression Era America.
The Great Collapse of the United States financial system has taken its toll on hundreds of thousands of businesses and millions of workers. Businesses have to lay off workers to survive if revenues are down. The travel industry is particularly suffering from decreased business and consumer spending. Hyatt Hotel spokesman said the layoffs couldn’t be helped and blamed the economic downturn for their harshness. Governor Patrick stated, “Surely there is some way to retain the jobs for your housekeeping staff, as other hotels have done, and to work with them to help the company meet its current challenges, rather than tossing them out unceremoniously to fend for themselves while the people they trained take their jobs at barely livable wages.”
Despite the hotel’s claim, hundreds of protestors gathered in front of the Hyatt Regency in Boston and the city’s cabbies vowed to boycott the hotel as well. It seems the heart of the American Revolution still feels its “of the people, for the people, by the people” roots. This can’t be good for business. The hotel chain underestimated citizen solidarity in the revolution’s birthplace.
US Representative Michael Capuano and state Senator Anthony Galluccio called for a boycott of Hyatt as well. The Boston Globe reports, Capuano said, “If we let them do this, another hotel will do it, and then another business, and on and on.’’
Harvard Business Review (HBR) issued a scathing blog entitled, "Lessons From Hyatt: Simple Ways to Damage Your Brand.” Ouch! Being a nice guy (or gal) is not being soft nowadays. It is just good business. Even HBR, hardly a radical left wing pro-worker rag, is offended by Hyatt’s bad business practice. People care about how you treat your workers, especially in a people business like hotels.
According to the Boston Globe, “Other hotels have taken a different approach to riding out the recession. Earlier this year the Liberty Hotel ended its contract with the company that provided its security and night janitorial service and replaced them with hotel workers from other departments who might have otherwise been laid off. “We would not [outsource housekeepers] because we want to tightly control the guest experience here and the cleanliness,’’ said managing director Jim Treadway. Representatives from the Hilton and Marriott hotel chains said they have not outsourced their housekeepers and have no plans to do so.”
Harvard Business Review Editor Paul Michleman says, “Hyatt is a hospitality company. Hospitality companies rely on the currency of brand maintained by superior customer service — to sustain and grow their businesses. But were I personally planning to spend the night in the Boston area sometime soon, I'd do my best to avoid staying at a Hyatt.” I think a lot of us feel this way, especially given the large array of choices available in a city like Boston. Frankly I am sure I will never stay at a Hyatt again if I can avoid it.
HBR blog continued, “Is this the way you'd want your management treating your fellow workers? Would this inspire you to go "above and beyond" for your customers?
Michelman concludes, “There's at least a small lesson here: think about the way your actions will be perceived by all your stakeholders before you take them. Will these actions affect the way your customers feel about you? Might they impact worker morale? How will they look on the "most-emailed" list of your local paper? If you're not asking these questions and imagining the worst-case answers, you're that much more liable to do something you regret.”
Hyatt Hotels Senior Management in Boston and perhaps around the nation are certainly huddled in offices privately exclaiming, “Je regrette.” By the way, the last time a big business did this was Circuit City in 2007 when they laid off long term workers and replaced them with new workers at half the cost. Yet the cost was even greater than they expected—bad customer service and buyers just going down the road to Best Buy.
In a retail or hospitality business where customer service is your bread and butter, worker morale, knowledge, and motivation are keys to your long-term success. Circuit City went out of business less than two years after the highly publicized layoffs. We have to believe poor management and inexperienced customer service had at least some part in its downfall.
Moral of the Story: Good Business Pays. What is Good Business? Treat your employees, employers, customers, clients, and stakeholders the way you would have them treat you. That sounds familiar doesn’t it?
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A Healthy America
There has been a lot of discussion this year in Congress, corporate America, the medical and pharmaceutical industries, the media, and in American homes on the reform of our nation’s desperately inadequate healthcare system.
Should we mandate corporate Health Insurance or create a national healthcare system like our Canadian neighbors and European friends?
Wal-Mart, arguably the number one hated employer in the U.S., publicly endorsed “corporate mandated healthcare.” Triple Pundit Blog wrote of its “skepticism” of Wal-Mart devotion to its tens of thousands of uninsured employees. Darth Vader Wal-Mart aside, their call for a solution is worth noting.
Everyone in America knows something new is on the horizon—a change for citizens, a change for employees and employers. Universal Healthcare has finally been acknowledged by some of its most stalwart opponents as a cultural probability.
The question then becomes corporate mandated health insurance or national taxpayer supported plan?
Clearly, corporate Health Care won’t work. Not everyone works for a corporation. The problem is that 40 million Americans are uninsured for a reason. They don’t work for corporations. Corporate mandates won’t solve that. Neither can small business and the self-employed easily shoulder the burden for others. Health insurance issues might discourage entrepreneurs and start-ups in favor of large companies.
While Wal-Mart throwing its hypocritical voice into the fray creates skepticism for anyone looking on, it doesn’t matter. What really is at stake is that one of America’s most notorious anti-employee benefit employers has thrown down the gauntlet.
If Wal-Mart knows how the nation’s healthcare system is changing, then the rest of us can breathe a sigh of Hope.
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Protecting Vulnerable Workers
According to the latest report from the Gangmasters Licensing Authority in the United Kingdom more efforts must be taken to insure the fair treatment of workers in the UK’s supermarket supply chain. Accusations of worker abuse, unfair and unsafe working conditions, and the exploitation of child labor have promoted the GLA to create a new “protocol” laying out vigilant terms of worker protection. The new doctrine states, “Retailers and suppliers (are) ‘equal and constructive partners to safeguard the rights of the invisible work force.
From Business & Human Rights Resource Center:
Supermarket Work Force Protocol
The Gangmasters Licensing Authority (GLA) has launched a consultation today on a protocol between the GLA and leading supermarkets to help combat labour exploitation in the UK. Developed through discussions with ASDA [part of Wal-Mart], Iceland [part of Big Food Group], Marks and Spencer, Morrisons, Sainsbury, Tesco, the Co-operative and Waitrose [part of John Lewis Partnership], it seeks to establish common principles for how the GLA and the supermarkets will work together. This includes exchanging information on workplace abuse and conducting joint visits in the supply chain. The consultation will bring suppliers, labour providers and all those affected into the initiative.
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Vive La France: The French Take the Lead
America does not like to be bested by their old buddies the French. Remember the outrageous rivers of French wine poured in protest during the Bush years? (When I think of all the Bordeaux gone down the drain, it truly hurts.) And remember Freedom Fries in retaliation for French disagreement to American autocracy?
Well… all that is a fleeting memory now. Freedom Fries are replaced by a nightmare global economy that is sinking faster than fast.
Carmakers in France are experiencing similar challenges to American automakers. Growing inventories, falling sales, outdated models, poor energy efficiency, worker layoffs, all the obstacles our Big Three face on our shores. Only the French government would never dare say to their workers, as the US government does, “Let them eat cake.” That didn’t go over too well the first time, did it? Just the thought of it makes the hairs on the back of their necks stand up, if you know what I mean!
Never say the French are slow learners. Rather than ignore the plight of distressed automakers, President Sarkozy announced a six billion euro ($9bn) bailout for Renault and Peugeot-Citroën. Only there is one major caveat: the companies must agree to keep workers employed and not close factories. Why didn’t we think of that??????????????
I don’t know why, but it still has not been suggested. So GoodB, in the name of our revolutionary comrades in arms, suggests that America the Beautiful take another page from the French book of law and order.
Let them eat cake ended with a vicious response from ignored and neglected citizens: “Off with their heads.” Now we wouldn’t want to do that to any of our members of Congress, would we?
Perhaps the US should reconsider a Big Three Bailout with these conditions. Here are your funds: keep the doors open and the folks employed. In turn you have to make cars that people want to buy. But if they don’t have jobs, they can’t even buy a loaf of bread, now can they?
Come to think of it - this would be a good focus for a national bailout of all large companies to prevent more unsustainable layoffs that will in the end deplete our entire system.
Should we create more unemployment insurance, food stamps, homeless shelters, bread lines, and Medicaid? Or should we instead inject capital in these teetering companies and keep our workforce employed?
It seems a logical response. Vive La France.
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POWER TO THE PEOPLE
“They've had rough times, and that fuels a desire to say, 'Enough! We can't be kicked around anymore. There really is a sense of desperation. They have nothing to lose." Lead Fried, United Electrical Workers union organizer commenting on worker protest
Power in the wrong hands is a dangerous thing as we have seen repeatedly in the financial news this past year. Banks, bailed out by taxpayer money yet without taxpayer consent, continue to shape the economic fallout. Congress and Treasury Secretary Czar Paulson gave carte blanche (blank check) to our banking and financial institutions to protect themselves as the mothership sank. Perhaps that was not the initial intention, yet that is undeniably the result. Yet out of the blue in the midst of the crushing of the masses by Big Banks and Big Brother, a small group of passionate protestors changes the game.
Things are tough in working class America. For the 250 mostly Hispanic Republic Windows and Doors Employees on Chicago’s North Side, things have never been tougher. The unionized workforce received their employee Christmas present a few weeks early this year: three day’s layoff notice with no severance, no pay, and no job. The struggling and powerless workers were devastated contemplating their financial ruin and potential homelessness. Most workers made no more than $30,000 a year. At poverty wages for those supporting a family, workers live paycheck to paycheck. In a land where a strong work ethic pays the bills for ordinary citizens, the unceremonious layoff was a mighty blow. In three days many would be not only out of a job, but out on the street. So they did what any other misused American worker would do, they protested.
Fortunately for Republic workers, they are part of a union that has negotiated vacation pay and severance. Fired Republic workers armed with economic desperation refused to leave the factory floor without collected monies owed them. “We are fighting for our family,” said one $14 hourly worker after 34 years of service to Republic. “We’re not going anywhere until we get what’s fair and what’s ours,” said a mother of two who had worked on Republic’s assembly line for 13 years. The rage and frustration of the cast-off work force was palpable. Financial hardship empowered the factory workers.
Workers believe that Republic Windows and Doors will open its doors elsewhere to cut union labor and overhead costs. As of this report, GoodB could not corroborate this claim. Republic was not taking responsibility for layoffs and blamed the stiffing of long term employee’s back pay on its creditor Bank of America for pulling financing. Home construction was suffering across America and related businesses are forced to lay off workers and banks are forced to cut financing. All this sounds logical if one were to study up on free market capitalism. Only newly nationalized Bank of America gobbled up 25 billion of taxpayer money just weeks ago with no direct benefit to taxpayers who footed the bill. Banks including BOA are hoarding taxpayer money and cutting small business and consumer credit.
Surely Republic and Bank of America are both accountable to the 250 workers and the American public. Big Banks are being reimbursed for bad bets, reckless investments, and outsized executive comp by ordinary working Americans who support them. Yet large banks and businesses seem to have little allegiance in return. While the press spotlight is on the tiny feisty crew at Republic Windows and Doors, Bank of America claims it will extend credit to the company for employee compensation. GoodB is staying tuned to see how the payouts are resolved. Check back soon.
The Trouble with Workers
RIGHT OUT OF PETER DRUCKER'S play book of management emerges HCL Technologies experiment with “workplace democracy.” Based in New Delhi, India, HCL has implemented a modern approach to employee management by asking for worker input.
Sounds dangerous perhaps to more authoritarian managers, but CEO Vineet Nayar sees it quite differently. “Command and control is the easiest management style.” Nayar believes that as employees are naturally responsible to management, so should management be responsible to employees. “Leaders must see themselves differently.” Nayar, 45, embraces a cutting edge philosophy in his leadership role based on a tried and true old idea: employee “suggestion box.” Executives still hold the power to make final decisions and implement policy. Yet HCL employees are permitted and even encouraged to voice their complaints about anything and anyone in the giant technology services firm. Using the principle of customer “trouble tickets,” HCL employees can issue trouble tickets to air their differences on method and practice openly. Nayar says senior managers should “overcome the fear of being exposed.” The purpose of employee trouble tickets is to empower workers to have a say in their daily working lives and in the management style of the company that supports them. Perhaps there are workers abuse the right with petty complaints or personal attacks on superiors, yet most employees see it as an opportunity to maximize productivity. Nayar says the ultimate goal of empowering employees with a voice is increased productivity through collaboration.
The idea sounds new, yet it really isn’t. Management guru Peter Drucker wrote that companies should view workers as assets rather than liabilities fifty years ago. Drucker saw the corporate environment as a “human community” based on mutual respect and teamwork. Oddly enough implementing the idea is very new. Publicly traded corporations have generally gone the other direction over the last few decades especially in the United States. Standard management operating procedure often views collaboration as unproductive. Yet hugely profitable corporations, even in the U.S., have used management/employee collaboration to great advantage - Google for example. Google’s Ten Golden Rules famously epitomizes the teamwork philosophy of Drucker and Nayer. Considering Google’s teamwork has increased profitability over 500% since its IPO four years ago, the corporate world would do well to emulate that model for success.
Fair Labor Practices: Team Values
The general belief that building a multibillion dollar company requires an iron fisted managerial policy driven to extracting as much from employees as possible while paying the absolute minimum (cite competitor Walmart’s Sam’s Club) is seriously challenged by Costco CEO, Jim Sinegal. Ranking 32 in the Fortune 500, Costco’s CEO Sinegal has a unique view that his employees are valued team players. Over forty-five million people shop Costco’s 520 stores in thirty seven states and eight countries every day. Sinegal believes if employees are treated well, they in turn will treat customers and Costco itself well. At Costco customer service is the key to job security and a dedicated repeat clientele. Valued employees create a positive environment for shoppers.
Costco has the lowest employee turnover rate in discount retailing saving the company hundreds of millions of dollars in recruiting and rehiring expenses. Ninety percent of employees, including part timers, are provided benefits like healthcare, dental, pharmacy, vision and 401k plans. They are paid 40% more than employees of competitors. Approximately 100% of promotions come from within the company. These advantages create a deep sense of loyalty in employees who are viewed as profit partners. Valuing human capital is an integral part of Sinegal’s corporate strategy for success.
The bottom line results are Costco attracts the most affluent repeat customers in discount retailing. Many of Costco’s selective customers do not shop at worker unfriendly rivals and choose instead to shop at Costco. Sales revenue in 2007 was $64.4 billion, up from $52 billion in 2006. They are the largest warehouse chain club in the world and the fourth largest retailer in the United States.
As of April 2008 the stock was trading at $71.51 per share, up from $53.00 in May 2007. Costco’s success under Sinegal proves that valuing employees is good business for the company, customers, shareholders, and the soul.
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