Tag Archives: economic recovery

Wal-Mart is Way Ahead of the Pack in Terms of it’s Thinking on Employee Health Care

By partnering with its employees’ union to support the proposed government mandate for large businesses to provide health care insurance for their employees, Wal-Mart is demonstrating extraordinary foresight and leadership.  When  push comes to shove, nearly everyone in America wants better health care coverage for our citizens.  Employer provided health care coverage is the only way this can ever happen–tax payers can’t afford it and neither can the government. American businesses, on the other hand, can afford to pay for it and it will not cost them jobs nor will it drive down wages.  In fact, doing so will not only make American businesses more profitable, it will make them more competitive in the global economy.

Without realizing it, American businesses are paying a tremendous price for continuing to use out-moded, top-down management practices that are incredibly counter-productive–these are the same mangement practices that enabled the Japanese auto manufacturers to take over the American auto industry.  The cost to American businesses for using these practices has been conservatively estimated to be somewhere between $4 and $5 trillion annually.  If the people running American businesses would simply wise up and start utilizing management practices that brought out the best in their employees, they could recapture most of these $4 to $5 trillion.  This savings in productivity would not only be enough to pay for the best health care coverage on the planet, it would make America the most competitive nation in the global economy.

So, I say hats off to Wal-Mart.  Your extraordinary forsight and leadership has pointed out the way to get America and American businesses back on their feet.

Future Government Aid for the Auto Industry Needs to Focus on Creating Sales, not Cutting Costs and Closing Plants

After emerging from bankruptcy, the American auto industry is no doubt going to need more government help in the form of loans in order to succeed.  If the government truly wants to see the industry get back on its feet, it needs to focus on the revenue stream of these companies—bringing money into these companies through sales of their products.  Instead of putting more money into the hands of incompetent auto executives, the government needs to put this money into the hands of the consumers.  Two friends of mine came up with the following plan to make this happen:

 

            For example, let’s say the federal government decided to allocate an additional $20 Billion in loans to help the auto industry.  Instead of giving the money directly to the auto executives, the government could offer a $10,000  cash back rebate to every consumer who buys a new GM, Chrysler or Ford (Ford should not be penalized for refusing to accept government help) car within six months.  This would create immediate sales of 2,000,000 new cars and give the auto industry the jump start it needs to succeed.  The same amount of revenue would still flow into the auto industry, but they would have to earn it by doing what they’re in the business to do—building and selling cars.  It would also help speed our nation out of this recession.

 

            This program would be easy to monitor, easy to implement, provide instant results and it would create an instant cash flow for the industry.  The details of this program are listed below:

 

            Implementation

  • One cash back rebate per tax payer with a valid social security number.
  • Must purchase (or order) a new car within six months, free to choose between General Motors, Ford, and Chrysler.
  • An application for the rebate is made to the federal government after the purchase with proof of purchase, copy of registration, and basic documentation proving residency and tax-paying status.
  • Rebate check would be direct deposited within two weeks into designated checking/savings account.
  • The rebate of $10,000 could be used for ANY purpose including paying down the car loan, buy another car (even an import), buying Christmas presents, paying down bills, or paying down an upside down mortgage. Anything at all.

Results

  • Creates competition between General Motors, Ford, and Chrysler to offer even deeper deals
  • Ordinary citizens would benefit directly.  Consumers who decided to participate would also feel a sense of patriotism for helping out one of our most American of industries.
  • The incentive would be to buy smaller cars… it buys more of a car, but they are free to buy any size car they want.
  • The cash rebate would help fuel our economic recovery by also allowing this capital to move directly into our economy.
  • Fraud should be easily monitored. 


This would give the auto industry the shot in the arm that it so desperately needs and would provide a much needed jolt for our economy.  What’s there not to get here?

 

Why Not Take The Fast Track Out Of This Recession?

Right now there’s not a lot of excitement in America, and rightfully so, because there’s not a whole lot to get excited about—the economy is awful, people are still losing their jobs and homes continue to be foreclosed.  Everyone would like to see this recession end sooner than later, but all indications are that it will end later—much later.  When you think about it, this whole scenario is pretty depressing.

 

            This begs the question: is there anything that can be done to speed this process up so that we can begin to see light at the end of the tunnel?  The answer is yes and it’s really quite simple, but the executives running American businesses must abandon their century old practice of top-down management and replace it with company-wide collaboration.  The assumption behind top-down management is that the people at the top possess all the necessary knowledge to make decisions that are in the best interest of the business.  That assumption is no longer true.  It’s the employees on the front line—the people who do the work that the company gets paid for—who possess that knowledge.  They’re the ones who understand how the business works and they know what needs to be done to fix things.  So, why not take advantage of this wealth of knowledge. 

 

            For example, let’s take a look at a story that was reported in the New York Times on May 21.  According to the article, the economic downturn really hit the engine manufacturing business of SRC Holdings this past November to where the plant was faced with a six month gap in orders.  As Jack Stack, the chief executive of SRC put it, “the entire plant collaborated on how to schedule their workloads—they basically had to take eight hours out of their work week to save money until we could bet back on a full schedule.  Because everyone knew the numbers, they scrambled to find new products and clients…to fill the gap faster.  The result was that we lost money in December and January but we were back to full employment in February.  And we didn’t do this through the old command-and-control method (top-down management); everybody knew the gravity of the situation, and all the great ideas came from within.”  This is what company-wide collaboration can do for any company if senior management will just allow it to happen.

 

            If a company wants to jump onto the fast track to recovery like SRC Holdings, all its senior management needs to do are the following three things sincerely, consistently and well:

 

  • Ask the rest of the employees for their help.  Let them know that everyone is in this together and that they hold the key to getting the company on the fast track out of the doldrums.
  • Listen to their ideas.  These are the people who understand the nuts and bolts of the business.  They know what’s wrong and they know how to fix it.
  • Empower them to take action.  Give them the backing and support they need to put their ideas into action.

          If more businesses in America would abandon their top-down approach to managing and adopt this collaborative approach which is used by not only SRC, but  also by companies like Harley-Davidson, Southwest Airlines and Toyota, it would bring a sense of optimism, excitement and hope back to America and we truly would be on the fast track out of this recession.  For more details on how to make this happen, check out my latest book, Instant Turnaround!