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Specs

Specs

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Published by terrabyte
Since Reaganomics, American businesses have paid less tax and minimized increases in worker salaries and benefits. Their profits have skyrocketed and CEO salaries have increased ten times faster than inflation. Rather than being the foundation for economic opportunity and growth, big corporations have been a drain on American society. There needs to be a new paradigm guiding American businesses.
Since Reaganomics, American businesses have paid less tax and minimized increases in worker salaries and benefits. Their profits have skyrocketed and CEO salaries have increased ten times faster than inflation. Rather than being the foundation for economic opportunity and growth, big corporations have been a drain on American society. There needs to be a new paradigm guiding American businesses.

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Published by: terrabyte on Aug 07, 2007
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04/24/2011

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SPECS 
A New Paradigm for Business
Since Reaganomics, American businesses have paid less tax, produced lower quality products,reduced or minimized increases in worker salaries and benefits, and outsourced jobs overseas.Their profits, on the other hand, have skyrocketed and CEO salaries have increased ten timesfaster than inflation. Rather than being the foundation for economic opportunity and growth, bigcorporations have been a drain on American society. Just think of WalMart.What would our Founding Fathers have thought? In their time, corporations had charters thatlimited the scopes of their activities, geographic reaches, and life spans. A strict interpretation of the Constitution and the times during which it was written is contrary to the rights and societal power that were bestowed on corporations in the 1800s by the judicial branch of the government.That’s right, corporations were granted the rights of people not by legislation or a Presidentialorder, but by activist judges.Individuals have rights but also responsibilities. We have to abide by society’s laws, pay outaxes and other debts, and be loyal to our country. We have to work hard for our employer andcooperate with our coworkers. We have to be good to our friends, cordial to our relatives, andcivil to our neighbors. We have to have all kinds of insurance in case something bad happens.Above all, we have to care for and support our families. Individuals are expected to at least try todo all these things. When they don’t, they are frowned on, criticized, fined, and evenincarcerated. Consequences for inappropriate behavior can be harsh.What about corporations? You would expect that they would abide by society’s laws, pay their taxes and other debts, and be loyal to our country. You would expect that they would be good totheir customers, cooperative to their suppliers, and supportive of their employees. You wouldexpect that they would work hard to ensure the quality of their product or service and paydividends to their shareholders. But they don’t. Most publicly-held businesses follow a one-dimensional strategy of maximizing profits. And what happens when corporations violateenvironmental, financial, or other regulations? They pay a fine. What if they sell defective products? They pay a fine. What if they layoff employees and outsource jobs. They not onlydon’t pay a fine, they are praised for maximizing profit. And if something really bad happens, thegovernment is there to bail them out and prohibit lawsuits.Imagine this. An individual releases a deadly gas in a neighborhood and kills 20,000 peopleoutright and harms over 100,000 others. He's caught and found guilty. What happens? He getslife in prison if not the death penalty. But if you're Union Carbide and you released methylisocyanate in Bhopal, India, you and your insurance company pay off the claims and youcontinue operations.Corporations aren’t affected by criticism unless it affects their profits, which is hard to do evenwith an organized boycott. Corporations aren’t affected by fines, which usually are insignificantcompared to their profits. Corporations can’t be incarcerated at all. In fact, there are few
 
consequences commensurate with unacceptable corporate behaviors that don’t fall primarily onemployees, stockholders, suppliers, or customers. It is as if your neighbors, friends and familywere forced to pay the penalty if you ever committed a crime. You could go scott free.The myopic strategy of profit-above-all-else sounds good in business school but has wreckedhavoc on society. It should be clear to any sensible person that a paper entity like a corporation isnot the same as a living biological organism. True, corporations are run by biological organisms, but so are automobiles and nobody thinks a Ford Focus should have the right to free speech. Butcorporations do have rights, and unless that were to change, they should also be expected tofulfill responsibilities to society and the entities they deal with. There needs to be a new paradigm guiding American businesses.Businesses should be held accountable for 
 five
dimensions of performance:
Shareholders
— dividends, stock price, other financial indicators, etc.
Product
— improvements, defects and recalls in products made or services provided,ISO9000, etc.
Employees
— salary, benefits, training, working conditions, EEO, OSHA, difference between staff and executive compensation, etc.
Customers
— customer-business interactions, customer satisfaction and loyalty,complaints, etc.
Society
— environmental compliance, charitable works, layoffs and outsourcing, unfair competition, relationships with suppliers, etc.The idea would be to use available data compiled by businesses and the government agenciesthat already monitor them to assess the performance of US companies. There would be no newhuge bureaucracies to create and monitor SPECS. The system would be created largely from theconsensus of the business community, academia, and the public with only the facilitation of government. The same huge bureaucracies that already monitor and regulate business wouldmonitor SPECS implementation. More importantly, the public would easily be able to identifywhich companies are good to work for and which products come from responsible Americancompanies. Businesses that follow SPECS and benefit the growth and well being of the countrywould be rewarded with tax breaks and other preferences.SPECS would be developed and implemented in phases.Phase 1 — Planning – 5 yearsBegin the planning process by setting up a small office in the Executive Branch of the Federalgovernment to initiate a national dialogue on what elements should be included in SPECS. Therole of the office would be to facilitate and focus discussions and publicize results, but not swayopinions. Begin the discussions in business schools and expand to unions, trade associations, andother interest groups. As the dialogue grows, add needed specialists to the office to plan andfacilitate events and assist in conflict resolution. Hold regional and national conferences to focusdiscussions and include the public. Create an independent ad hoc multi-agency advisory group toadd the perspective of Federal government agencies. Invite states to create advisory groups of their own or participate in compacts. Move the discussion on to how the important business
 
elements should be measured, and develop trial scoring formulas for the five components of SPECS to summarize the performance of companies. Develop some standardized graphic todepict scores. At the end of the planning period, prototype formulas and graphic would beavailable for testing.Phase 2 — Testing – 5 YearsRequire all publicly-held companies to calculate their SPECS scores and prepare the summarygraphic. Provide guidance and assistance as needed. Encourage the companies to include thegraphics on their advertising, websites, and other public releases. Open comment periods on thescoring formulas, graphic representations, and other aspects of the SPECS program. Revise thescoring system as needed. Extend requirement to calculate SPECS scores to all privately-held UScompanies above a certain size (e.g., over 500 employees). Begin a campaign to educate the public on how individuals can interpret SPECS scores to make informed decisions on purchasing, employment, and other aspects of their lives. At the end of the testing period, thescoring formulas and graphics should be finalized and all US companies (except businessesdefined as “small”) should be able to calculate their own SPECS scores.Phase 3 — Implementation – 10 YearsRequire companies to update their SPECS scores at least annually and place them on all their advertising, websites, and other public releases as well as any submissions to the government.Work out plans, guidance, exceptions, schedules and other items needed to implement thefollowing by the end of the 10-year implementation period:
Inclusion of SPECS graphics on products above some price threshold sold in the US.
Development of websites and other communications devices to educate the public onchanges in SPECS scores.
Providing preferences in competitions for government contracts to companies with highand balanced SPECS scores.
Provide tax breaks for businesses with high and balanced SPECS scores.The SPECS graphic would illustrate how well a corporation performed and balanced the fivedimensions. For example, consider these hypothetical graphics. The blue star represents thehypothetical best performance on the five SPECS dimensions. The blue star shows balanced performance because all the arms of the star are the same length. The white icon inside the bluestar represents the company’s performance. The closer the icon is to a star shape, the more balanced the company’s performance is between the five dimensions. The longer an arm of thewhite star, the better the company’s performance is on that dimension.The hypothetical SPECS graphic for BigBoxMart (below) shows that the corporation makes a lotof profit for their shareholders, treats their customers well, and has sophisticated computer systems to manage their inventory. But they are below average in their support of society because of their role in destroying small town business districts and poor on their support of employees because of their low wages, refusal to pay benefits, and anti-union policies.

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