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IDG Connect – The 5-Step Plan for a Successful Business Intelligence Program


The 5-Step Plan for a Successful Business Intelligence Program

 

The 5-Step Plan for a Successful Business Intelligence Program

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·         Posted by K R Sanjiv

·         on October 22 2013

 

More and more organizations see the benefits in using quality data to drive their businesses forward, and for good reason. A recent study by the Economist Intelligence Unit – dubbed The Data Directive – that draws on a survey of over 300 businesses, has found that there is a correlation between the superior use of data with a positive impact on overall earnings and business performance. What it boils down to is that organizations that successfully leverage their data for strategic advantage are performing better than those that do not.

Embracing the use of business intelligence technology will help organizations achieve success through data exploitation if done correctly. Organizations that don’t develop plans for using quality data to their advantage will find themselves left behind. Here are some tips on how to get started:   

1.    Define the vision: Evolution of BI technologies provides an in-depth understanding of what can be done with the data. New advances in BI have the potential to support business objectives. New types of BI visualization technologies can support the exploration of data-sets in a much more amorphous manner, and aid in the discovery of patterns, segments, unobvious relationships and outliers. The fundamental problem is to figure out what questions to ask and work out which data matters the most. Leveraging BI, organizations can get a 720 degree view of the customer’s requirements. Hence, an insight into the big picture is required – one that receives support across all organizational functions and establishes how the organization can successfully evolve with a clear vision.

1.    Define the business outcomes: A vision and good intentions are only the starting point for the successful use of data. In order to avoid the program falling by the wayside after the initial euphoria, it is important to set specific and measurable targets for BI projects. One needs to leverage a mix of top-down and bottom-up approaches to identify potential business use cases. A top down approach can be used to identify KPIs (Key Performance Indicators) and bottom up approach can be used to determine the data to improve the KPIs. It is recommended to look for quick wins – use cases which can be improved in a short span of time to ensure continued business support. 

2.    Build the organization: Insights from the EU Data Directive research have shown that beyond data-specific concerns, a lack of skills is one of the key barriers in building a successful data-centric organization. There aren’t a sufficient number of people in organizations as well as the marketplace with the right set of skills to make the most optimal use of data. One of the strategies adopted by the organizations leading the data revolution is to appoint a chief insight officer or a chief data officer, for industrialization of actionable insights.

3.    Consider governance: organizations that prove they are committed to the balance between privacy and value will win the support of their stakeholders. If you are considering implementing a business intelligence solution to move to a data-centric organizational model, creating a Centre of Excellence or BI Competency Centre comprised of people who understand both – the company’s business and the IT environment – may be a very good idea. The team will be able to help build a BI system that is flexible and adaptable, a very important factor if the program is to stay relevant as the business evolves. The center will also be able to ensure corporate governance principles are met, can help monitor user adoption and benefits realization, and drive enterprise-wide standardization of the BI system.

4.    Test the technology: Entire BI and data architectures need to be evolved to handle real time fast moving data at optimal cost levels. Begin by using tools with which the organization is already familiar and move ahead with pilot studies. Many organizations may already have experimented with business intelligence technology in the past with varying success. You might have encountered problem areas such as low adoption rates, skepticism among users, issues with the technology and a lack of executive support. The resulting intelligence reports may also have been lacking in common data definitions and have only limited usefulness for the decision-making process, failing in the exact area where you were hoping the technology would help. The problem is that very often, BI programs are unsuccessful because it is seen from either a business or a technology perspective, when in reality both aspects are just as important. However, by having gone through the motions described above, you will have already eradicated the potential problems you may have experienced in the past.  

Data analytics is a big trend in the business world today and for good reason. However, as with everything in business, there is no one-size-fits approach. Every business is different, with unique needs. However, by looking at what you want to achieve in the business and working backwards, instead of buying-in a system and then adapting your organizational culture to it accordingly, you are likely to uncover new and better ways for growing your business with the help of your business intelligence system.

 

K R Sanjiv is Senior Vice President and Global Head, Analytics and Information Management Services at Wipro

 IDG Connect – The 5-Step Plan for a Successful Business Intelligence Program.

 

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Picture This: Microsoft Buys Netflix, Makes Hastings CEO – TheStreet


Picture This: Microsoft Buys Netflix, Makes Hastings CEO

 |08/26/13 – 09:30 AM EDT

Stock quotes in this article: MSFT, NFLX, YHOO 

Find out if (MSFT) is in Cramer’s Portfolio.

NEW YORK (TheStreet) — It’s no surprise that Netflix (NFLX_) CEO Reed Hastings makes the rounds as a possible contender for the forthcoming CEO vacancy at Microsoft (MSFT_).

I emailed Hastings to ask if he had an interest and, shockingly, he did not reply. Not even with a curt one-line riff. But he’s no stranger to Microsoft. And Netflix, despite pop belief, desperately requires a bailout.

It’s a match sort of made in heaven. At least the heaven where Silicon Valley fat cats, Wall Street’s elite and guys whose retirement sends their personal wealth soaring go to rest. I need to check on this, but that place might actually be called hell.

Hastings isn’t on the MSFT Board of Directors anymore, but that’s neither here nor there. The move has Marissa Mayer written all over, except, over the course of a year, Hastings could spin Microsoft stock much higher than 70-some odd percent.

Look at what he has done at NFLX. On the back of Facebook posts, lame press releases and are they live or are they Memorex conference calls, now happily moderated in real-time by the most bullish Wall Street analyst and financial reporter, he’s set to rock his stock to $300 for the second time in just over two years.

There’s no question Hastings can convince his pals on the Microsoft board that it not only needs him, but needs Netflix integrated into Xbox and as a catalyst for the company’s failing mobile efforts.

Talk about saving Netflix. Microsoft has more than enough cash and cash flow to cover all of Netflix’s current debt, off-balance sheet obligations, international expansion, future content acquisition as well as subsidize many more years of the same. It would be like Netflix never had income statement, balance sheet and business model problems in the first place!

Hastings could stop charging for Netflix. Or execute the ultimate public relations coup by lowering prices to say $5.99 a month. Work some holiday promos where if you buy a Microsoft mobile device, Netflix is free for 36 months or until you’re admitted to the ER for binge viewing — whichever comes first.

Hastings playing with Microsoft’s cash hoard would make Mayer’s spending spree at Yahoo!(YHOO_) look tame. It would be like unleashing credit card-toting teenage girls on a One Direction merchandise stand with no line!

There’s no better way for Microsoft to get back to fooling everybody, at least for a couple of years, than by handing the conversation over to the spin master Hastings and buying Netflix in one failed (or is it fell?) swoop.

 Picture This: Microsoft Buys Netflix, Makes Hastings CEO – TheStreet.

 

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Why Steve Ballmer Failed – Derek Thompson – The Atlantic


Why Steve Ballmer Failed

The resignation of Microsoft’s CEO is also an acknowledgement: The computer world changed, and Microsoft hasn’t.

DEREK THOMPSONAUG 23 2013, 11:37 AM ET


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Microsoft CEO Steve Ballmer, a thunderous leader who presided over a deadly quiet decade for the tech giant, announced he will retire within the next year.

It is quite easy to say that Ballmer failed. And, in a way, he did fail. In September 2000, nine months after Bill Gates named Ballmer chief executive, Microsoft was worth $642 billion, a nominal record for an American company that wouldn’t be eclipsed until Apple squeaked by in August 2012. But as the Nasdaq imploded, Microsoft fell hard, and leveled out. And stayed level.

For a decade, Microsoft’s stock price has functioned like a thermostat set to $25. And shareholders tend to not like thermostatic stock.



Rather than fall for some great man theory of technology, it’s fairer to observe that Ballmer failed not because of some obvious product flop (even though Surface stinks) or some famous design snafu (even though Windows 8 is sort of a nightmare). Instead, he failed because he inherited a company whose success relied on desktop computers stuffed with Windows and Excel. And his tenure coincided with the rise of another sort of computer — mobile computers — that Microsoft couldn’t continue to monopolize.

The long view is useful here. Windows, along with Intel, got its clock cleaned by Apple and Google in the last decade. Their global market share of operating systems fell from 96 percent around 2000 to 35 percent in 2012. Apple and Google wedged their way into our laptops, phones, and tablets, while Microsoft saw its sliver of the mobile market decline between 2005 and 2012.

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Let’s travel back in time. It’s the year 2000, and Microsoft is a ginormous software company. In particular, it is an operating systems company. It builds the foyer of American computers.

Microsoft derived more than half its profits from Windows when it was the biggest tech company in the history of the republic. Most of the rest came from Office and its Word and Excel operating systems. Here are two illuminating graphs from Microsoft’s annual report in 2000 showing you exactly how the company made money. [Glossary: Windows = Windows; Apps = Microsoft Office, Exchange, and other software; Consumer = grab bag of devices and learning apps]

Screen Shot 2013-08-23 at 10.38.21 AM.png

Schooled by the California’s geniuses of consumer experience, Microsoft has tried to remake itself as a consumer company. Arguably, it has succeeded in only one place: XBox. But becoming a consumer company requires more than a great product idea. It requires a top-down change in corporate culture to turn around an entire company’s ethos.

But look at how Microsoft makes money today. I’ve left the Windows category in green for easier comparison.

[Glossary: Windows = Windows; Server/Tools = Windows Server, Azure, Premier support, Microsoft Consulting Services; Business Division = Microsoft Office, Exchange; Entertainment Devices = Xbox, Skype, and Windows Phone; Online Services = Bing/MSN]

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I don’t know what these graphs tell you, but here’s what they tell me. Microsoft, for all its celebrated attempts to be beloved by consumers, is still not a consumer company. It’s a rich company. It’s a huge company. But it’s still an Excel and Windows firm, now with a servers side-business. When you take away XBox — which still isn’t a huge part of the company’s overall business — Microsoft still isn’t a place that builds things people really like. It’s a place that builds things people — and, particularly, business people — think they have to use.

To say that Ballmer didn’t recognize the frailty of the “put-our-stuff-into-PCs” strategy is too simple. In his tenure, he has replaced almost every major division head at Microsoft, shifted the company away from its “PC-first heritage” toward search, video games, and Internet calls. But he arguably failed to anticipate the simplest and most important shift in his business, which is that people were taking computers off their desks. He didn’t compete with Google and Apple to protect the moat around his software business, and today Ballmer’s would-be competitors hardly even consider him worthy competition. As Google Chairman Eric Schmidt said of Microsoft: “They’re a well-run company, but they haven’t been able to bring state-of-the-art products into the fields we’re talking about.”

Steve Ballmer made some very bad things. But his tenure will probably be judged by the things he didn’t make and the big picture he didn’t see. Microsoft used to be huge, and then the computers got small.

 Why Steve Ballmer Failed – Derek Thompson – The Atlantic.

 

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Stack ranking: Steve Ballmer’s employee-evaluation system and Microsoft’s decline.


The Poisonous Employee-Ranking System That Helps Explain Microsoft’s Decline

By Will Oremus

 Posted Friday, Aug. 23, 2013, at 4:09 PM

Microsoft CEO Steve Ballmer

Microsoft CEO Steve Ballmer oversaw a system called “stack ranking,” in which employees on the same team competed direcly with one another for money and promotions. Critics say this rewarded brown-nosing and sabotage over collaboration.

Photo by Kimihiro Hoshino/AFP/Getty Images

 

There were many reasons for the decline of Microsoft under Steve Ballmer, including, as I wrote this morning, its lack of focus and its habit of chasing trends rather than creating them. But one that’s not obvious to outsiders was the company’s employee evaluation system, known as “stack ranking.” The system—and its poisonous effects on Microsoft’s corporate culture—was best explained in an outstanding Vanity Fair feature by Kurt Eichenwald last year.

Anyone interested in Microsoft or business administration should read the full piece. But here’s an excerpt from the part where Eichenwald explains stack ranking:

At the center of the cultural problems was a management system called “stack ranking.” Every current and former Microsoft employee I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees. The system—also referred to as “the performance model,” “the bell curve,” or just “the employee review”—has, with certain variations over the years, worked like this: every unit was forced to declare a certain percentage of employees as top performers, then good performers, then average, then below average, then poor. …

For that reason, executives said, a lot of Microsoft superstars did everything they could to avoid working alongside other top-notch developers, out of fear that they would be hurt in the rankings. And the reviews had real-world consequences: those at the top received bonuses and promotions; those at the bottom usually received no cash or were shown the door. …

“The behavior this engenders, people do everything they can to stay out of the bottom bucket,” one Microsoft engineer said. “People responsible for features will openly sabotage other people’s efforts. One of the most valuable things I learned was to give the appearance of being courteous while withholding just enough information from colleagues to ensure they didn’t get ahead of me on the rankings.” Worse, because the reviews came every six months, employees and their supervisors—who were also ranked—focused on their short-term performance, rather than on longer efforts to innovate. …

So while Google was encouraging its employees to spend 20 percent of their time to work on ideas that excited them personally, Ballmer was inadvertently encouraging his to spend a good chunk of their time playing office politics. Why try to outrun the bear when you can just tie your co-workers’ shoelaces?

Microsoft wasn’t the first company to adopt this sort of ranking system. It was actually popularized by Jack Welch at GE, where it was known as “rank and yank.” Welch defended the practice to the Wall Street Journal in a January 2012 article, saying, “This is not some mean system—this is the kindest form of management. [Low performers] are given a chance to improve, and if they don’t in a year or so, you move them out. “

As the Journal and others have noted, what seemed to work for Welch—for a time, anyway—has produced some ugly results elsewhere. Even GE phased the system out following Welch’s departure. But in an interview with the Seattle Times just last month, Ballmer indicate that he was sticking with it. From the Seattle Times:

Q: A lot of people have slammed Microsoft’s stack ranking review system as contributing to a noncollaborative atmosphere. Is the kind of cultural change you want to effect possible with that stacked ranking system still in place?

A: We’re doing our performance reviews now. We’re finishing up our year (and there are) no changes to—no—I’ll say minor changes to our system. I think everybody wants to work in a high-performance culture where we reward people who are doing fantastic work, and we help people who are having a hard time find something else to do. Now, whether our existing performance-management system needs to change to meet the goal of fostering collaboration is something that Lisa Brummel [head of human resources] would take up.

It will be interesting to see whether Microsoft’s next CEO takes more personal responsibility for the company’s corporate culture—or leaves it for Lisa Brummel to take up.

 Stack ranking: Steve Ballmer’s employee-evaluation system and Microsoft’s decline..

 

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Signs of Changes Taking Hold in Electronics Factories in China – NYTimes.com


Signs of Changes Taking Hold in Electronics Factories in China

The iEconomy: Factory Upgrade: Change comes to factories in China.

 

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CHENGDU, China — One day last summer, Pu Xiaolan was halfway through a shift inspecting iPad cases when she received a beige wooden chair with white stripes and a high, sturdy back.

THE iECONOMY

A series examining challenges posed by increasingly globalized high-tech industries.

Multimedia
Gilles Sabrie for The New York Times

ON THE LINE Workers assembling Hewlett-Packard computers at a plant in Chongqing, China, operated by Foxconn of Taiwan. More Photos »

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At first, Ms. Pu wondered if someone had made a mistake. But when her bosses walked by, they just nodded curtly. So Ms. Pu gently sat down and leaned back. Her body relaxed.

The rumors were true.

When Ms. Pu was hired at this Foxconn plant a year earlier, she received a short, green plastic stool that left her unsupported back so sore that she could barely sleep at night. Eventually, she was promoted to a wooden chair, but the backrest was much too small to lean against. The managers of this 164,000-employee factory, she surmised, believed that comfort encouraged sloth.

But in March, unbeknown to Ms. Pu, a critical meeting had occurred between Foxconn’s top executives and a high-ranking Apple official. The companies had committed themselves to a series of wide-ranging reforms. Foxconn, China’s largest private employer, pledged to sharply curtail workers’ hours and significantly increase wages — reforms that, if fully carried out next year as planned, could create a ripple effect that benefits tens of millions of workers across the electronics industry, employment experts say.

Other reforms were more personal. Protective foam sprouted on low stairwell ceilings inside factories. Automatic shut-off devices appeared on whirring machines. Ms. Pu got her chair. This autumn, she even heard that some workers had received cushioned seats.

The changes also extend to California, where Apple is based. Apple, the electronics industry’s behemoth, in the last year has tripled its corporate social responsibility staff, has re-evaluated how it works with manufacturers, has asked competitors to help curb excessive overtime in China and has reached out to advocacy groups it once rebuffed.

Executives at companies like Hewlett-Packard and Intel say those shifts have convinced many electronics companies that they must also overhaul how they interact with foreign plants and workers — often at a cost to their bottom lines, though, analysts say, probably not so much as to affect consumer prices. As Apple and Foxconn became fodder for “Saturday Night Live” and questions during presidential debates, device designers and manufacturers concluded the industry’s reputation was at risk.

“The days of easy globalization are done,” said an Apple executive who, like many people interviewed for this article, requested anonymity because of confidentiality agreements. “We know that we have to get into the muck now.”

Even with these reforms, chronic problems remain. Many laborers still work illegal overtime and some employees’ safety remains at risk, according to interviews and reports published by advocacy organizations.

But the shifts under way in China may prove as transformative to global manufacturing as the iPhone was to consumer technology, say officials at over a dozen electronics companies, worker advocates and even longtime factory critics.

“This is on the front burner for everyone now,” said Gary Niekerk, a director of corporate social responsibility at Intel, which manufactures semiconductors in China. No one inside Intel “wants to end up in a factory that treats people badly, that ends up on the front page.”

The durability of many transformations, however, depends on where Apple, Foxconn and overseas workers go from here. Interviews with more than 70 Foxconn employees in multiple cities indicate a shift among the people on iPad and iPhone assembly lines. The once-anonymous millions assembling the world’s devices are drawing lessons from the changes occurring around them.

As summer turned to autumn and then winter, Ms. Pu began to sign up for Foxconn’s newly offered courses in knitting and sketching. At 25 and unmarried, she already felt old. But she decided that she should view her high-backed chair as a sign. China’s migrant workers are, in a sense, the nation’s boldest risk-takers, transforming entire industries by leaving their villages for far-off factories to power a manufacturing engine that spans the globe.

Ms. Pu had always felt brave, and as this year progressed and conditions inside her factory improved, she became convinced that a better life was within reach. Her parents had told her that she was free to choose any husband, as long as he was from Sichuan. Then she found someone who seemed ideal, except that he came from another province.

Reclining in her new seat, she decided to ignore her family’s demands, she said. The couple are seeing each other.

“There was a change this year,” she said. “I’m realizing my value.”

An Inspector’s Push

“This is a disgrace!” shouted Terry Gou, founder and chairman of Foxconn, the world’s largest electronics manufacturer and Apple’s most important industrial partner.

It was March of this year and Mr. Gou — seen by activists as a longtime obstacle to improving conditions inside his factories — was meeting with his top deputies in Shenzhen, China. In 2011, The New York Times began sending Apple and Foxconn extensive questions about working conditions in factories manufacturing Apple products.The resulting articles in late January detailed problems ranging from excessive overtime and under-age workers to sometimes deadly hazards, such as workers’ using a poisonous chemical to clean iPhone screens at another manufacturer, and an explosion in Ms. Pu’s Foxconn plant that killed four workers.

In January, Apple publicly released the names of many of its suppliers for the first time. Additionally, the company made the unusual move of joining the Fair Labor Association, one of the largest workplace monitoring groups. Auditors from that association were soon inspecting Apple’s partners in China, starting with Foxconn.

Now, Mr. Gou was learning the results of those examinations. Foxconn was still failing to stop illegal overtime, the association’s lead inspector told Mr. Gou and his lieutenants, according to multiple people with knowledge of the meeting. The company was failing to keep student interns off night shifts. Foxconn had not put sufficient safety policies into practice and had exposed potentially hundreds of thousands of workers to at least 43 violations of Chinese laws and regulations.

“The world is watching!” Mr. Gou yelled, according to multiple people. “We are going to fix this, right here!”

But the inspector was not done.

He turned to the only Apple executive in the room, the senior vice president for operations, Jeff Williams. Apple needed to change as well, the inspector said. Apple, to its credit, had been working for years to improve conditions in overseas factories, but the company was treating such problems too much like engineering puzzles, the inspector said.

“Long-term solutions require a messier, more human approach,” that inspector, Auret van Heerden of the Fair Labor Association, told Mr. Williams. Instead of concentrating on writing more policies, Apple needed to listen better to workers’ complaints and advocacy groups’ recommendations.

Some of those suggestions surprised Mr. Williams, say people who worked with him. Since 2007, Apple had built one of the most extensive auditing programs in the electronics industry, inspecting over 800 facilities. It was a point of pride for both Mr. Williams and the company’s top leadership.

When Mr. Williams, who declined to comment for this article, returned from that March meeting to California, changes began. Among them, say people with firsthand knowledge, was the hiring of roughly 30 professionals into Apple’s social responsibility unit in the last year, which tripled the size of that division and brought high-profile corporate activists into the company. Two widely respected former Apple executives — Jacky Haynes and Bob Bainbridge — were recruited back to help lead the unit, reporting ultimately to Mr. Williams and the chief executive, Timothy D. Cook.

“Everyone knows Bob and Jacky,” said a former Apple executive. “It sends a message that Jeff and Tim expect everyone to get on board.”

Moreover, the company has reached out to advocates it once rebuffed. In late April, Apple allowed the first in a series of pollution audits by Ma Jun, a Chinese environmental advocate who works closely with dozens of other multinationals but whom Apple had refused to speak with until last year, according to Mr. Ma. In September, the company joined the Sustainable Trade Initiative, an advocacy group based in the Netherlands.

“They know now if they don’t participate, it is the same as saying nothing,” Mr. Ma said.

Foxconn has also shifted. After the meeting with the Fair Labor Association, Foxconn announced that by July 2013, no employee would be allowed to work more than an average of 49 hours a week — the limit set by Chinese law. Previously, some Foxconn employees worked schedules that approached 100 hours a week. No other major manufacturer has pledged to abide by China’s work-hour laws in such a public manner. Foxconn, which is based in Taiwan, also promised to increase wages, so employees’ total pay would not decline despite fewer hours — the equivalent of a 50 percent raise for many workers, analysts say.

With 1.4 million employees in China — the most of any private company — Foxconn is setting a bar that all manufacturers will be judged against, say executives at other companies.

“When the largest company raises wages and cuts hours, it forces every other factory to do the same thing whether they want to or not,” said Tony Prophet, a senior vice president at Hewlett-Packard. “A firestorm has started, and these companies are in the glare now. They have to improve to compete. It’s a huge change from just 18 months ago.”

Foxconn, in a statement, said that it was “committed to ensuring that we provide a safe and healthy working environment for all our employees,” and that the company had regularly increased wages over the last three years.

Secrecy and Transparency

Despite those reforms, however, worker advocates inside Apple and with outside groups say the electronics industry’s problems will not genuinely diminish until Apple — the world’s most valuable company — starts filling a public leadership role similar to that of companies in other industries with overseas problems, like Nike in footwear manufacturing and Patagonia in apparel.

Such public leadership and transparency can run counter to a culture of secrecy that pervades Apple. Employees often don’t know what their lunch companions or next-door office mates are working on. This secrecy has helped Apple stay ahead of competitors, but has been a problem when it spills into the broader corporate culture, say past executives.

“It’s remarkable how the paranoia in Silicon Valley prevents companies from cooperating, even on something like corporate social responsibility,” said Mr. van Heerden of the Fair Labor Association, who added that his work with Apple, Foxconn and other companies was confidential.

While Apple is the only electronics company to join Mr. van Heerden’s monitoring group, it has not opened up in some other ways. Apple has declined to release audit reports on the hundreds of facilities the company has inspected. After two factory explosions last year, Apple did not share investigative reports with other companies so they might avoid similar accidents. Apple does not, in general, publicly identify terminated suppliers or factories that have violated Apple’s supplier code of conduct.

Moreover, Apple’s growing team of safety and corporate responsibility experts are typically prohibited from sharing their findings at conferences, in academic journals or other forums where their insights could be absorbed by other companies, according to former members of that team.

“Apple is scared that if we open the kimono too wide, it will ruin what has made Apple special,” said one former company official. “But that’s the only way to really improve things. If you don’t share what you know, then no one else gets a chance to learn from your mistakes and discoveries.”

Apple declined requests for interviews. In a statement, it said the company embraced its “unique position to lead” and had taken working conditions very seriously for a long time. “No one in our industry is doing as much as we are, in as many places, touching as many people as we do. Through years of hard work and steadfast commitment, we have set workplace, dormitory and safety standards, sought help from the world’s leading experts, and established groundbreaking educational programs for workers.”

“We have been upfront about the challenges we face and are attacking issues aggressively,” the statement continues. “We believe deeply in transparency and have demonstrated this through reporting our shortcomings and exposing violations.”

At a conference in May, Mr. Cook, the chief executive, said that the company was “going to double down on secrecy on products.”

He added, however, that “there’s going to be other things that we do that we’re going to be the most transparent company in the world on. Like social change. Supplier responsibility. On what we’re doing for the environment. We’re going to be the most transparent, because we think that transparency is so important in these areas, and that if we are, other people will copy what we’re doing.”

This year, Apple began publishing monthly summaries of suppliers’ compliance with overtime standards. In October, Apple hosted other technology companies for a private discussion on responses to excessive work hours overseas. While Apple’s annual supplier responsibility reports do not contain details on specific factories, they are still among the most thorough in the electronics business.

But Apple has not sought the high-profile leadership opportunities that have set off transformations in other industries. Nike, for instance, has convened public meetings of labor, human rights, environmental and business leaders to discuss how to improve overseas factories. The clothing retailer Gap Inc. has invited outside organizations to critique its purchasing practices and publish their findings. Patagonia shares its factory audits with competitors and has been a vocal supporter of a centralized audit report clearinghouse that lets companies share information.

“That’s the standard Apple has to meet,” said a former Apple executive. “That’s how a leader transforms an industry.”

A More Human Touch

Almost 200 miles southeast of the factory where Ms. Pu received her new chair is another plant that is experimenting with improving workers’ quality of life — and shows the trade-offs of such gains.

The factory, in Chongqing, makes computers for Hewlett-Packard, a company with little of Apple’s glamour. It is operated by Quanta, a little-known Taiwanese manufacturer.

Inside the plant, amid thousands of workers in bright white uniforms, are occasional flashes of pink worn by people like Zhang Xuemei, a bubbly 19-year-old with glinting earrings whose sole job is to chat with co-workers.

For eight hours a day, Ms. Zhang collects complaints about the factory’s free meals and dorms. She listens to workers who are divorcing, homesick or arguing with managers. When she finds someone suffering, she refers them to the company’s full-time doctor or professional counselors.

Quanta’s 10-story dormitories feel like a college campus. There is a free movie theater, television rooms, a large martial arts gym, two spacious karaoke bars, a huge cafeteria and an aerobics hall playing a Chinese remix of “Gangnam Style.”

Neither Quanta nor Hewlett-Packard claims it has solved every labor woe. And the amenities are partly selfish: one of the biggest problems for Chinese factories is that workers are constantly leaving. Hewlett-Packard hopes that by improving living conditions, turnover and training costs will fall.

“You can tweak the line and get one second out of the process, but if the people turn over every three months, think what that does to your quality,” said Mr. Prophet, the Hewlett-Packard executive.

Last year, a worker advocacy group criticized another Quanta plant, in Shanghai, for harsh working conditions found at many factories, including extensive overtime and poor food. In Chongqing, Hewlett-Packard has agreed to pay slightly higher prices initially so that Quanta can offer workers a better quality of life. Such payments are the price all companies should bear for more humane factories, say Hewlett-Packard executives.

There are costs for workers, too. Quanta’s employees earn slightly less than their peers at Foxconn. What’s more, Quanta’s emphasis on hours that are easier on employees means they are prohibited from overtime shifts that advocates say are abusive, but which some workers insist they want.

Zhang Jiang, a slim 21-year-old, previously assembled laptop computers at another company in Shanghai. Each week, he sent the bulk of his pay home so his younger brother could stay in school. Overtime was like a blessing, he said.

But last summer, fed up with the 25-hour train trip to see his family, Mr. Zhang moved to Chongqing and joined Quanta. He enjoys the better facilities and dorms. He frequently visits his parents’ home. But his take-home pay has fallen by nearly a third and the thought that his brother may have to drop out of school so he can help the family gnaws at Mr. Zhang. Instead of working in the factory each night, he spends hours playing an online game, Dungeon Fighter.

“I’d like to work 80 hours a week,” he said.

Change Is Hard

Hewlett-Packard also makes products at Foxconn factories, as does almost every major electronics firm. Foxconn, more than any other company, has proved that Chinese plants can deliver obsessive attention to quality. The company has helped make China into a manufacturing juggernaut through strict discipline that is visible everywhere, even in the salutes managers give visiting executives.

That discipline, say former Apple executives, is one reason every iPhone is put together so well.

It is also one reason the reforms enjoyed by employees like Ms. Pu — who received the new chair — have not spread quickly. Though Foxconn has trained managers to treat employees more gently, foremen still use profanity and intimidation, workers say.

“The managers speak in a manner that often feels like a threat,” said Mou Kezhang, who works in iPad quality assurance at the Foxconn factory in Chengdu.

Foxconn, in a statement, said it had “always been among the fastest to adopt change and reform.” Its policy, the company said, is “to treat employees with respect and if we find any transgressions, they are immediately investigated and addressed.”

In the last two years, Hewlett-Packard has increasingly moved its manufacturing to Quanta. Foxconn has not fought particularly hard to win that business back, according to Hewlett-Packard officials. Often, the quality-of-life improvements requested by Western electronics executives come at the cost of a supplier’s bottom line. Even within Apple, tensions erupt because executives often believe improvements should be financed by suppliers, whereas suppliers say changes are not feasible unless Apple pays more.

And ultimately, some workers themselves resist reforms. In March, when Foxconn announced that workers’ hours would be reduced to China’s legal limits, employees began complaining. “Absolutely I’d like to do overtime to work more than 60 hours, but now there’s a ceiling on it,” said Ma Changqiao, a 23-year-old at Foxconn’s Chongqing factory.

Change is hard, say officials at multiple companies. Reforming labor conditions in a country as large as China will probably take decades, and labor abuses are an ever-evolving problem without just one right answer.

In September, six months after Foxconn agreed to a Fair Labor Association request for new internship rules, two worker advocacy groups found that students in nonmanufacturing courses were being improperly forced to work at a Foxconn plant in north central China. One student studying preschool education said she was prohibited from quitting her internship and was compelled to work night shifts. Afterward, Mr. Gou of Foxconn issued apologies to wronged interns and the responsible official was fired.

Today, Foxconn’s internship program continues — a testament, executives say, to Foxconn’s commitment to a program that can benefit thousands of students, even when making improvements is hard and stumbles are inevitable. Changing the company’s culture is slow going. But the needed reforms, executives at Apple and Foxconn hope and believe, are falling into place.

Signs of Changes Taking Hold in Electronics Factories in China – NYTimes.com.

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The Hell of Online Shopping – NYTimes.com


OP-ED CONTRIBUTOR

The Hell of Online Shopping

By DELIA EPHRON

Published: December 23, 2012

 

A few days ago, I got an e-mail from my sister Amy in Los Angeles saying she and her husband had received boxes from J. Crew. Christmas presents from me, she assumed, since I had ordered them online and told her to expect them.

 

But for whom, she asked? The cards were buried deep in the packaging, and one of them was missing. Nothing was gift-wrapped, either (although I had requested and paid for it). The boxes contained two pairs of shoes (although I had ordered only one pair), a man’s pullover and a sparkly pink woman’s sweater. The sweater was for a friend who also lives in Los Angeles, but somehow ended up being sent to Amy’s husband.

I called J. Crew to complain, and what followed was tedious and time-consuming, as all Internet dramas are, involving a review of numerous e-mails — “your order has been received,” “your order has been shipped” — in this case to the wrong place and in the wrong ways, some of which I might have prevented if I’d been vigilant tracking the flurry of e-mails.

The customer-service representative, consulting records, assured me that the box for my friend had been delivered. It had been left at the front door, she said, and gave me the address, which turned out to be not my sister and her husband’s house but my friend’s office, a gigantic building in Beverly Hills. “Left outside the front door? Are you sure?”

“Yes,” she said, and, as an apology, she would send me a $50 gift card. I e-mailed my friend. Had she received a box from J. Crew? “No,” she said.

My sister offered to gift-wrap and deliver my friend’s present. This was especially kind because traffic in Los Angeles is awful, as bad as New York’s during the holidays, which is one reason I order on the Web. But rather than make life easier, Web shopping only complicates it in new, more frustrating ways.

My husband, in charge of buying for all the children in our life, announced one evening that he had bought all his presents. To be done with Christmas shopping was so exciting that you’d think he’d used up some calories to do it, when in fact he’d never left his desk. The next morning he got an e-mail from Hammacher Schlemmer saying the item was out of stock and would ship after Jan. 1. So he had to phone and cancel the order. He then had to Web-shop all over again.

When I ordered the presents on the J. Crew Web site and checked a box for the gift-wrapping, I received a message back that J. Crew did not wrap shoes, my sister’s present. As Amy and I were sorting things out, I wondered why in the world I thought it was O.K. to send a Christmas present that wasn’t gift-wrapped.

It seems to me — a fact I had completely forgotten — that a Christmas present should be wrapped in pretty paper, maybe with some Santas dancing across it, maybe something glossy and glamorous. Shouldn’t the tag be handwritten? Shouldn’t the ribbon be made of paper that curls when you whip it across a scissor blade? A present should beckon you. Who wants a Christmas tree with a bunch of U.P.S. boxes under it?

Last week a U.P.S. box arrived. I opened it, and inside, unwrapped, was a slate cheese board and a gift card that said, in computer script, “Merry Christmas Julia and Jerry, love Anna.”

Anna is my niece. Jerry is my husband. I assume that I am Julia.

Precious holiday giving cannot be entrusted to a Web site. A gift shouldn’t be something you open by accident — hello, what is this? — ripping open the cardboard outer box with a knife, and then having your present fall out naked.

Ordering Christmas presents on the Web, regardless of the dubious ease, has obliterated the idea that there should be some grace to a present, some beauty, and that the receiver should experience it. Instead it’s become as mundane and problematic as all our Web purchases, which in my family include paper towels and toilet paper.

All this joy of Internet shopping was accompanied by our phone ringing several times a day: a computer voice from Virgin America insisting that my husband owes $70 — a $50 credit-card fee and $20 interest for not paying it. My husband has never had a Virgin America credit card. But to “proceed,” as in clear the problem up, the electronic voice asked him to identify himself by giving the number of the credit card that he does not possess. The telephone, which used to symbolize “reach out and touch someone” — remember that tear-jerking TV ad? — has become a disembodied voice reaching out to drive us crazy.

But I digress. Or do I? It all seems related. Intimacy replaced by expedience.

So this is my New Year’s resolution: I am never ordering another Christmas present on the Web again. Next year I am wrapping all my gifts myself and standing in line at the local post office for an hour or two to mail them. It’s the least I can do for the people I love.

 The Hell of Online Shopping – NYTimes.com.

 

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Sen. Levin, Small Businesses Push for Corporate Tax Hikes


Sen. Levin, Small Businesses Push for Corporate Tax Hikes

By Niraj Chokshi  //  December 14, 2012 | 1:05 p.m. 
Updated: December 14, 2012 | 2:27 p.m.

 

AP PHOTO/CHARLES DHARAPAK

Sen. Carl Levin, D-Mich.

 

It’s time to raise corporate taxes, Sen. Carl Levin, D-Mich., and small business owners said on Friday.

Tax-evasion tactics have led to an increasingly smaller effective tax rate for big corporations, putting smaller businesses at a competitive disadvantage, Levin and two small business owners said on a conference call with reporters. But the current fiscal negotiations offer a chance to right that wrong.

“It is very unfair to the American taxpayer, it robs the U.S. Treasury of needed revenues, it’s unfair to any competitors who don’t use these offshore gimmicks and these corporate loopholes,” Levin said. It’s time, he said, to return corporate taxes to historical levels.

Levin was resistant to putting an explicit target on how much revenue should be raised by ending what he called “tax tricks,” but he did offer a range for the next decade.

“I would think if you can get two to three hundred billion in additional corporate tax revenue over that ten-year period that that would be a significant contribution to deficit-reduction,” he said.

Some executives have pushed for “revenue-neutral” reform, which would simplify the corporate tax code, but leave the amount corporations pay roughly the same. 

Despite what he called “a huge effort” by big corporations to reduce their tax burden, he said he was convinced a revenue-neutral proposal would make it past neither the Senate nor President Obama.

Earlier this week, the Business Roudntable, a group which counts as members the heads of many of the nation’s largest companies, called for all options to be put on the table in talks to avert the $500 billion in year-end tax hikes and spending cuts that comprise the fiscal cliff. 

Tax-evasion tactics have led to an increasingly smaller effective tax rate for big corporations, putting smaller businesses at a competitive disadvantage, Levin and two small business owners said on a conference call with reporters on Friday. But the current fiscal negotiations offer a chance to right that wrong.

“It is very unfair to the American taxpayer, it robs the U.S. Treasury of needed revenues, it’s unfair to any competitors who don’t use these offshore gimmicks and these corporate loopholes,” Levin said. It’s time, he said, to return corporate taxes to historical levels.

Levin was reluctant to put an explicit target on how much revenue should be raised by ending what he called “tax tricks,” but he did offer a range for the next decade.

“I would think if you can get two to three hundred billion in additional corporate tax revenue over that ten-year period that that would be a significant contribution to deficit-reduction,” he said.

Some executives have pushed for “revenue-neutral” reform, which would simplify the corporate tax code, but leave the amount corporations pay roughly the same. 

Despite what he called “a huge effort” by big corporations to reduce their tax burden, he said he was convinced a revenue-neutral proposal would make it past neither the Senate nor PresidentObama.

Earlier this week, the Business Roundtable, a group which counts as members the heads of many of the nation’s largest companies, called for all options to be put on the table in talks to avert the $500 billion in year-end tax hikes and spending cuts that comprise the fiscal cliff. 

Friday’s call was hosted by the American Sustainable Business CouncilBusiness for Shared Prosperity and the Main Street Alliance, which are collecting signatures for a letter to Congress and President Obama to reform the tax system in a way “that is fair and provides sufficient revenue for the public services and infrastructure that underpin our economy.”

 Sen. Levin, Small Businesses Push for Corporate Tax Hikes.

 

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McDonald’s Worker Makes $8.25 an Hour, McDonald’s CEO Made $8.75 Million Last Year | Alternet


McDonald’s Worker Makes $8.25 an Hour, McDonald’s CEO Made $8.75 Million Last Year

The CEO makes almost 600 times as much as one Chicago worker.

December 12, 2012

 

 

 

Bloomberg has an article today highlighting the pay gap at McDonald’s. The whole piece is worth a read but the beginning is particularly striking. It highlights Chicago man Tyree Johnson, who holds positions at two different McDonald’s. Between shifts he has to give himself a quick scrubbing in one of the restaurant’s bathrooms because he can’t even show up for work at a McDonald’s smelling like a McDonald’s.

“I hate when my boss tells me she won’t give me a raise because she can smell me,” he said.

Johnson, 44, needs the two paychecks to pay rent for his apartment at a single-room occupancy hotel on the city’s north side. While he’s worked at McDonald’s stores for two decades, he still doesn’t get 40 hours a week and makes $8.25 an hour, minimum wage in Illinois.

This is life in one of America’s premier growth industries. Fast-food restaurants have added positions more than twice as fast as the U.S. average during the recovery that began in June 2009.

Johnson’s circumstances look particularly grim when they’re compared, as Bloomberg does, to the compensation enjoyed by executives whose pay gives a whole new meaning to “McJob.”

Johnson would need about a million hours of work — or more than a century on the clock — to earn the $8.75 million that McDonald’s, based in the Chicago suburb of Oak Brook, paid then- CEO Jim Skinner last year.

… Twenty years ago, when Johnson first started at McDonald’s, the CEO’s compensation was about 230 times that of a full-time worker paid the federal minimum wage. The $8.75 million that Thompson’s predecessor as CEO, Skinner, made last year was 580 times, according to data compiled by Bloomberg.

 McDonald’s Worker Makes $8.25 an Hour, McDonald’s CEO Made $8.75 Million Last Year | Alternet.

 

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Twinkie CEO Admits Company Took Employees Pensions and Put It Toward Executive Pay | Alternet


Twinkie CEO Admits Company Took Employees Pensions and Put It Toward Executive Pay

Hostess company continues to screw over its workers.

December 11, 2012 

 

Twinkie-maker Hostess continues to screw over its workers. The company is in the process of complete liquidation and 18,000 unionized workers are set to lose their jobs. More troubling – they could lose their pensions.

According to a report by the Wall Street Journal, Hostess’ CEO, Gregory Rayburn, essentially admitted that his company stole employee pension money and put it toward CEO and senior executive pay (aka “operations”). While this isn’t technically illegal, it’s another sleazy theft by Hostess executives – who’ve paid themselves handsomely while running their company into the ground. Just last month, a judge agreed to let Hostess executives suck another $1.8 million out of the bankrupt company to pay bonuses to CEOs.  

If there’s no way to recover the money for the Hostess pension plans for workers, then the Pension Benefit Guaranty Corp. will have to foot the bill to make sure workers get at least some of the retirement money they paid in.

Hostess shows us clearly what Bain-style predatory capitalism is all about: big bucks for the very few rich executives, layoffs and poverty for the workers and their communities.

And don’t mourn the loss of Hostess brands – they’ll be back, as the company is currently negotiating with over 100 potential buyers right now to bring Twinkies, Wonder Bread, and Ding Dongs back into the marketplace.  

The Hostess story has nothing to do with unions, and everything to do with the Enron-ization and Bain-ization of the American economy.  

In classic Enron style, back in 2005 Hostess sent out a letter saying they’d just had a very, very profitable quarter.  Their stock jumped up. The CEO, Charles Sullivan, and many of the senior executives sold chunks of their stock.   The CEO and senior executives were making out big, and the workers were making a decent living. 

At that time, one of the hostess workers – Mike Hummel, blogging asbluebarnstormer over at Daily Kos – noted that he was making $48,000 a year, a bit over the US median household income, and had insurance and a pension.  

Then, a few weeks later in 2005, came the letter saying that, oops, all of that profit had really been just an accounting error – the company was actually in trouble.  Although the CEO and the top guys had all made a nice killing selling the stock when it was high, and paying a maximum income tax on it of 15 percent because they used the Capital Gains loophole that Mitt Romney used to become a multimillionaire, they now wanted the workers to take a big pay cut. 

Hummel notes that the “oops” letter became the justification for asking the workers to take a pay cut, which they agreed to, and his pay dropped from $48,000 a year in 2005 to $38,000 a year last year.  But every year, $3 an hour of his compensation showed up in the worker’s pension fund instead of his paycheck.  Year after year.  With 18,000-plus workers, it was millions and millions of dollars.  Dollars that the workers had paid in, at the rate of $3 per hour.  

Then came the Bain-style takedown.  In order to strip the company down to its individual brands and sell them off, piece by piece, the company needed to bust the union.  The union said, “No,” so the company went to bankruptcy court – a method Bain and other vulture capitalists often use to kill off unions. 

In the meantime, the CEO and senior executives were paying themselves handsome salaries and big bonuses.  And where was that money coming from?  

On August 12 of 2011, the employees got a letter that said that the company was going to “temporarily suspend payments” to its pension funds.  That would be the $3 per hour that this worker had negotiated as part of his compensation – instead of paying it to him by putting it into his pension fund now, the company said they were going to put it in later. 

As the letter said, “I want to be clear that this temporary suspension of payments to the pension fund will not affect your pension benefits.”  

Workers believed management, and kept on working.  

But, it turned out, as we learned from that interview in today’s Wall Street Journal, that the senior management wasn’t just “borrowing” the pension funds – they were using them to fund ongoing operations.  Including big paychecks to the fatcats. 

Hostess CEO Gregory Rayburn wanted to make it clear that he wasn’t around when that particular thing happened. “Whatever the circumstances were, whatever those decisions were, I wasn’t there,” Rayburn told the Wall Street Journal.  After all, Rayburn isn’t a baker – he’s a bankster.  He’s the owner of Kobi Partners, a company that tells corporations how to “restructure.” Think Mitt Romney. And he’s going to make out very well on all this – the bankruptcy court just okayed $1.8 million in Christmas bonuses for the new fatcats at Hostess. 

Ironically, if you borrow money to pay for your education, you can’t get rid of that debt through bankruptcy – one of the “reforms” of the bankruptcy law during the Bush era.  But if you’re a CEO or a buyout bankster and you borrow money from your employees’ trust fund to be able to cover your own paycheck and million-dollar bonuses, and then take your company into bankruptcy, neither you nor the company have to pay those employees back even a single penny. Part of their pension is picked up by federally-run pension insurance, and the rest is just lost.  

There used to be a time in America when businesspeople had at least a modicum of ethics. Mostly it was because the majority of businesses were small- or medium-sized and locally owned, so the owners and managers had to look the employees in the eye. Or the unions were strong enough to keep the CEOs honest.

Reagan put an end to all that when he stopped enforcing the Sherman Anti-Trust Act, wiping out most of America’s small and medium-sized businesses, and when he kicked off the modern war on unions by firing the PATCO union strikers. You can see the result most clearly at any shopping mall or any downtown in America.  What used to be locally owned business are now big chains, from food to jewelry to clothing.

It used to be that CEOs shared the pain.  Lee Iacocca famously took a dollar a year as pay when he was working to turn around Chrysler. Steve Jobs did the same when Apple was in trouble.  Pretty much everybody who’s ever started a small business knows what it’s like to make payroll for workers while taking little to nothing themselves during the early years of the company.

But in today’s post-Reagan, Bain-model American capitalism, there’s never any risk for the CEO class. Instead, all the risk is borne by the workers. 

Karl Marx famously wrote that capitalism contains within itself the seeds of its own destruction. If true, the young, green shoots of that destruction may well be the corporate and billionaire excesses, ranging from the Hostess debacle to the billionaire oligarch Koch Brothers funding anti-union efforts by Rick Snyder and Republicans in Michigan.

 Twinkie CEO Admits Company Took Employees Pensions and Put It Toward Executive Pay | Alternet.

 

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Harold Meyerson: Wal-Mart’s strategy of deniability for workers’ safety – The Washington Post


Harold Meyerson

Harold Meyerson

Opinion Writer

Wal-Mart’s strategy of deniability for workers’ safety

By Harold MeyersonPublished: November 27

Bangladesh is half a world away from Bentonville, the Arkansas city where Wal-Mart is headquartered. This week, Wal-Mart surely wishes it were farther away than that.

Over the weekend, a horrific fire swept through a Bangladesh clothing factory, killing more than 100 workers, many of whose bodies were burnt so badly that they could not be identified. In its gruesome particulars — locked doors, no emergency exits, workers leaping to their deaths — the blaze seems a ghastly centennial reenactment of the Triangle Shirtwaist fire of 1911, when 146 workers similarly jumped to their deaths or were incinerated after they found the exit doors were locked.

The signal difference between the two fires is location. The Triangle building was located directly off New York’s Washington Square. Thousands watched the appalling spectacle of young workers leaping to the sidewalks 10 stories down; reporters and photographers were quickly on the scene. It’s not likely, however, that the Bangladesh disaster was witnessed by anyone from either the United States or Europe — the two markets for which the clothes made inside that factory were destined. For that, at least, Wal-Mart should consider itself fortunate.

The Bangladesh factory supplied clothing to a range of retailers, and officials who have toured the site said they found clothing with a Faded Glory label — a Wal-Mart brand.Wal-Mart says that the factory, which had received at least one bad report for its fire-safety provisions, was no longer authorized to make its clothing but one of the suppliers in the company’s very long supply chain had subcontracted the work there “in direct violation of our policies.”

If this were an isolated incident of Wal-Mart denying responsibility for the conditions under which the people who make and move its products labor, then the Bangladeshi disaster wouldn’t reflect quite so badly on the company. But the very essence of the Wal-Mart system is to employ thousands upon thousands of workers through contractors and subcontractors and sub-subcontractors, who are compelled by Wal-Mart’s market powerand its demand for low prices to cut corners and skimp on safety. And because Wal-Mart isn’t the employer of record for these workers, the company can disavow responsibility for their conditions of work.

This system isn’t reserved just for workers in faraway lands: Tens of thousands of American workers labor under similar arrangements. Many are employed at little more than the minimum wage in the massive warehouses in the inland exurbs of Los Angeles, where Wal-Mart’s imports from Asia are trucked from the city’s harbor to be sorted and packaged and put on the trucks and trains that take them to Wal-Mart stores for a thousand miles around.

The warehouses are run by logistics companies with which Wal-Mart contracts, and most of the workers are employed by some of the 200-plus temporary employment companies that have sprung up in the area — even though many of the workers have worked in the same warehouses for close to a decade. Last year, the California Department of Industrial Relations, suspecting that many of these workers were being cheated, charged one logistics company that runs a warehouse for Wal-Mart with failing to provide its employees with pay stubs and other information on their pay rates. Wal-Mart itself was not cited. That’s the beauty of its chain of deniability.

A small band of these warehouse workers has been demonstrating for the past couple of months to bring attention to the bizarrely contingent nature of their employment and the abuses that flow from it. Their numbers were augmented Friday byactual Wal-Mart employees in stores around the nation, calling attention to the everyday low wages and absence of benefits that the vast majority of the company’s 1.4 million U.S. employees receive.

Other discount retailers — notably Costco and Trader Joe’s — pay their workers far more, train them more extensively, have much lower rates of turnover and much higher rates of sales per employee, according to a Harvard Business Review article by Zeynep Ton of the MIT Sloan School of Management. Costco is a very profitable business, but Wal-Mart maintains an even higher profit margin, which it achieves by underpaying its employees. The conservative economic blogger Megan McArdle estimates that if Wal-Mart held its profit margin down to Costco’s level, its average worker would make about $2,850 more each year — a considerable increase in a sector where workers’ earnings average less than $25,000 a year.

But Wal-Mart neither pays its own nor takes responsibility for those who make and move its wares. For America’s largest private-sector employer, the emergency exits are always open.

 Harold Meyerson: Wal-Mart’s strategy of deniability for workers’ safety – The Washington Post.

 

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