What is in this article?:
- Is Your Company Anti-American?
- Computing an American Index to Track Your Progress
Part of evaluating whether or not your organization is helping or hurting the planet is to measure how you do in supporting your own country.
This last recession really impacted just about everyone in the country and changed our values and consciousness. When the economy was booming, companies made more and more profits by selling people stuff they didn’t need, continually driving down the cost of products by using foreign manufacturers and raw materials produced elsewhere, taking major risks in order to produce major profits, and using technology wherever possible to get rid of people. Many companies created a mostly part-time workforce so they would not have to pay benefits, and used a lot of contract labor so they could expand and contract the workforce at their whim, and save on payroll taxes.
Life was good. We were all house-rich, there was plenty of work, and then it all came crashing down. There is not a person who was not somehow impacted by the recession that began in 2008, and for some, is still going on. Housing prices in places like Las Vegas and Detroit may never recover.
All of this changed the way companies define their success. No one ever really thought about what is good for the country; a business thought about what is good for their shareholders. Now, more and more companies are starting to assess their strategies in a new light.
Barclays Bank made big news at the start of 2013 by announcing that they were closing their Tax Avoidance Unit, which helped corporations avoid paying taxes on a massive scale. Some think the move was part of damage control to repair their tarnished image for rigging LIBOR and paying their executives 2 billion pounds in bonuses. The new Barclays, which is a UK bank, has decided that advising customers on how to avoid paying taxes is unethical and not for the good of the countries in which they do business.
Could it be that big banks like Barclays are really sincere about supporting the local economies and countries where they do a lot of business like the UK and the U.S? Whether it is a PR stunt or due to a real change in values, the action is real, and the bank has eliminated an extremely profitable unit.
We will start to see more of this in the future. Some manufacturing companies are starting to bring back previously outsourced jobs to the U.S. As wages have risen in China, Mexico and other countries, it is no longer as inexpensive to have products manufactured elsewhere. Apple, whose products are pretty much all made in China, has received a lot of backlash for using Foxconn in China to manufacture their products. Foxconn is the subject of an investigative report of suicides by workers because of the extreme stress levels.
It amounts to a financial drop in the bucket, but the $100 million Apple is investing to make some Macs in the U.S. could be priceless for national manufacturing. Apple is just one of several companies — Google is another — that has plans to import manufacturing jobs back to the U.S. because of the economic and political advantages of producing them at home. Apple CEO Tim Cook says the company will produce one of its existing lines of Mac computers in the U.S. in 2014, which represents a major change for Apple. Steve Jobs told President Obama, “Those jobs aren’t coming back” when asked at a dinner in early 2011 whether Apple would consider shifting some manufacturing to the U.S. from China. It seems now that some of those jobs are indeed coming back.
How Does This Impact Performance?
Doing a good job of supporting your country and community can have a big impact on your image with business and consumer customers. It can also have a big impact on potential employees. As the economy improves, people will get more selective in picking a potential employer. Being a company that is supportive of the U.S. economy is a factor important to many job seekers.
Of course, your product or service has a lot to do with your image as well. If you manufacture cigarettes or kids’ cereals loaded with sugar, creating new jobs for Americans may not offset the harm you are doing to society with your product.
Supporting your country is also something that could increase your costs. The major reason companies started outsourcing manufacturing, call centers and other key functions is that those things can be done overseas for a fraction of the cost. Call center workers in India earn a few thousand dollars a year, whereas American workers doing the same job get that much a month.
Another reason why some things are not done here in American is that we lack the capacity or skill. Hospitals cannot find enough American nurses to fill their needs, and schools are not graduating enough nurses. Apple claims that there is no manufacturer in the U.S. that can handle the capacity needed to manufacture millions of their products. Thinking about supporting your country is important, but so is making a profit. Excelling at one thing may cause problems in another area of performance. Now that wages are down here in the U.S. and up in other countries, manufacturing cars and electronics here might make financial sense.
When companies choose to outsource jobs or functions to other countries, they often don’t think about the side effects of doing so. They look only at the short-term cost savings. I read an article that said that when consumers hear a foreign accent when calling a call center, their stress level automatically goes up a few notches because past experience tells them that the CRS’s name is not really Bill, and that you two are going to have problems communicating. This experience may cause a customer to be less likely to be loyal to your firm, after seeing that you don’t care enough about customer service to staff your call center with competent people with good communication skills.
Manufacturing overseas sounds good too, and usually saves a lot of money in the short term, but there are other costs, such as hiring an agent or representative in the local company to oversee the manufacturer, sending your own people over there, waiting a long time for goods to be shipped, dealing with poor quality, and having the supplier steal your intellectual capital and end up being a competitor. Those are some pretty big costs that often don’t get calculated until it is too late.