Tag Archives: The economy

Watch Out McDonald’s! The Government May Soon Be Telling You Where You Can Locate Your Next Franchise

Not all that long ago, there was a distinct line of separation between the government and the private sector-like the line of separation between church and state.  Given the recent fiascos in the banking and auto industry, it’s beginning to look like that line has been permanently blurred.  Today, various members of the House and Senate have seen fit to meddle in the operations of GM and Chrysler by playing the role of senior executive for these firms and telling them how to run their businesses.  What’s more, these government officials are thoroughly enjoying this new role.  For example, Senator Tom Udall of New Mexico is lobbying the auto companies to restore the 12 GM dealers and six Chrysler dealers in his state that had their franchises terminated.  Representative Barney Frank, a Democrat from Massachusetts, has lobbied GM to keep a parts distribution center, which employs 90 people, open in his district.  Representative Frank M. Kratovil, a Maryland Democrat, has introduced a bill that would restore the franchise agreements to dealers who have them terminated.  Other members of Congress are debating whether or not they should regulate executive pay in all industries, not just those receiving government financial aid.  The list goes on and on, “…don’t close the assembly plant in my district; don’t build the Volt battery in Korea, build it in my state or don’t build pickups and SUV’s, make smaller, more fuel efficient cars.”

             Where does all this stop?  It doesn’t.  When a group of people, who are in power positions, gets off on meddling in the internal affairs of major corporations, this usually leads to more meddling, not less.  So, look out McDonald’s, Congress may soon dictate where you can locate your next franchise.  As for the Big Mac with all those fat calories, it’s either history or it will carry a large “sin tax” and sell for $19.95 each.  The Quarter-Pounder will probably be taken off the menu and replaced with something nutritious like McChard Pie and the compensation of your executives will be determined by your shareholders.  A rosy scenario, don’t you think?

The Wrong People Are Suffering Because Of The Auto Industry Mess

        

         Yesterday, President Obama said that the beginning of the new General Motors would take “a painful toll on many Americans.”  The question is, which Americans?  The politicians and bureaucrats in Washington aren’t feeling any pain.  The last I checked, they were all still getting paid.  The senior executives running General Motors, many of whom helped get us in this mess in the first place, still have jobs.  The people who are going to suffer are the 21,000 auto workers who are going to lose their jobs this next year and 2,100 dealers who are being let go from General Motors and their employees—these are the people who are stressing out, will soon be unable to pay their bills and who will be facing foreclosure on their homes.  And let’s not forget the American tax payers who are going to have to foot the bill for all of these shenanigans. 

 

            There’s something very un-American about this picture.  The people who are going to do all the suffering didn’t create the mess and they’ve have had no say in what’s going to happen—they’re victims of decades of bad decisions made by senior management—the people who still have jobs.  Americans don’t mind sacrificing as long as it leads to something.  However, if you take a close look at the rhetoric, it quickly becomes apparent that the success of the new GM is anything but a done deal.  President Obama said yesterday that the painful restructuring “…will give the iconic American company a chance to rise again.”   All this suffering and, in the president’s own words, GM only has a “chance” to rise again.  Fritz Henderson, the GM president and CEO referred to yesterday’s bankruptcy as a “defining moment” in remaking the company.  He actually sounded a little too upbeat, like he was still trying to convince himself that the new GM had a future.  Again, something’s not right here and all the wrong people are suffering and paying the price.

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!