Making the Perfect Gen Y Work Environment - Or Else!

As the first wave of Generation Y makes its way into the workforce, well established corporate cultures are being forced to change - not only the way employees are recruited, but also the way new recruits are treated. Born between 1977 and 1997, Generation Y is the first to have grown up with the internet, be technologically savvy, and have career ambitions that go well beyond earning a high salary. (Business Week, 2005) As company’s are quickly realizing, Generation Y expects to be treated with respect, be constantly challenged with new and innovative tasks, and have the freedom to set their own schedules. As Daun Paris, president of Eastern Consolidated points out, “They want to be able to create their own situations and do it their way.“ (Marsh, 2007) Because of this, Generation Y is largely against high degrees of power distance, and do not feel obligated to stay working for a company that makes them uncomfortable or does not suit their own particular needs.

Despite being deemed self-centered and self-interested by former generations, Generation Y also has a fierce desire to help and protect the larger community; ranging from environmental concerns to human rights activism. (Business Week, 2005) They are consciously seeking out jobs that allow them to work toward these larger causes while at the same time satisfying their own personal growth needs.

So, what does this mean in terms of corporate culture? Using the nine criteria suggested by the GLOBE research program, (Robbins 2005) a successful work environment for Generation Y would be:

Assertive - High: The ability to be confrontational and tough, particularly with higher-ups, is an essential component for Generation Y. They want their opinions to be heard and respected, as well as for their ideas to be taken seriously.

Future Orientation - High: Organizing, planning, and creating “the next new thing” is exactly what motivates Generation Y.

Gender Differentiation - Low: Growing up on the heels of the 1970s feminist movement, this generation does not believe gender should be a factor in the workforce. Both genders should be equally heard and represented.

Uncertainty Avoidance - Low: Social norms and conventions are precisely what Generation Y enjoys breaking and going against. They hold innovation and change above tradition.

Power Distance - Low: Although their may be “leaders,” everyone’s ideas should be taken seriously, and a friendly (rather than respectfully reserved) work environment should be fostered.

Individualism/Collectivism - Both Low and High: Although highly individualized in the sense that they value personal success over company loyalty, they are largely collective in as they want to work toward larger societal causes such as environmentalism.

In-Group Collectivism - High: They value being part of a “team.” This can be exploited through group projects, and a strong company culture. They want to be proud of where they work and what they stand for.

Performance Orientation - Medium: Although it is important to be successful in the end, Generation Y also believes that how they get achieve success is also important. Trying is considered just as valuable as succeeding.

Humane Orientation - High: More so than previous generation, Generation Y is concerned with being fair, tolerant, embraces diversity, and believes equality is crucial to success.

Each of these dimensions should be carefully considered by existing organization trying to retain new recruits from Generation Y. Because they’ve grown up in a culture where job and family stability is a thing of the past, members of Generation Y do not think twice about leaving jobs that they dislike. Catering to their expectations, rather than trying to impose existing company values upon them, is a necessity for company’s wanting to lower turn-over and increase new employee retention.

Overall Generation Y will have it their way, and if they don’t find a company that suits their needs, they will simply create one.

Sources:

Marsh, Amanda. Management Matters. 2/16/2007.
Commercial Property News, Vol 21, Issue 4. P. 16. Reference URL: http://ebsco.waldenu.edu/ehost/detail?vid=11&hid=15&sid=
e515f4da-425b-4bf8-80da-8e159d847566%40sessionmgr2

Welcome to the Gen Y Workplace. May 4, 2005. Business Week Online. Reference URL: http://www.businessweek.com/bwdaily/dnflash/may2005/
nf2005054_4640_db_083.htm?chan=search

Robbins, Stephen P. and Mary Coulter. 2005. Management. Eighth edition. Upper Saddle River, NY. Pearson Education Inc.

Connection Between Women Managers and the Internet

Having the ability to embrace diversity and incorporate change quickly is one of the greatest determining factors of success for companies today. Changes in workforce composition and the medium of conducting day-to-day business activities are two key factors that need to be fully considered and addressed by managers at all organizational levels. In particular, more women are occupying top-management positions, in part due to the proliferation of e-businesses.

According to an article published in the Journal of Leadership Studies (2000), online businesses are providing a way for more women to become top-level managers. Because e-businesses are still a fairly new frontier, they are breaking many of the “traditional” pathways to becoming CEOs or Company Directors. These positions were often handed down from one man to another via familial or social networks, creating the “glass ceiling” effect that many women encountered during the 1980s and 90s. However, since the introduction of the more egalitarian culture, strongly supported by e-businesses, such networks are largely frowned upon and women are encouraged to pursue top-level positions. (Klein 2000)

However, the link between women in top-level management and the internet seems to go both ways. Not only do e-businesses facilitate the insertion of women into these positions, but women who have made it into these top- level positions in more “traditional” companies are now leading those companies toward the internet. Ann Moore, Chairman-CEO of Time Inc., is a perfect example of a women who has taken over a very “traditional,” male-dominated company and is now spearheading an initiative to take things digital. Not only did she preside over the launch of People.com, but she is currently working towards a new health portal that should rival WebMD. (Business Week 2007) Moore is trying to create a place for Time Inc. to prosper in the future by staying abreast of new technologies and remaining competitive without dragging the company down in the process.

Regardless of the particular circumstances, it is necessary for managers to make pro-active decisions that allow their companies to change with the times, be it more women in top-level management or a greater reliance on technological advances such as the internet.

Sources:

Klein, Esther E. The Impact of Information Technology on Leadership Opportunities for Women: The Leveling of the Playing Field. Journal of Leadership Studies, Vol. 7, 2000.

Moore, Ann. Edgy Days at the Top of Time Inc. Business Week, 2/12/2007. Issue 4021, p23-23, 1p, 2c. Reference URL: http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=23855503&loginpage
=Login.asp&site=ehost-live&scope=site

US Consumer Pessimism May Lead to Economic Downturn

According to an article published in the April 11th edition of Business Week Online, there is a general pessimism among U.S. consumers concerning the future of the economy despite moderate growth trends that imply economic stability for the remainder of 2007. Although unemployment is currently at 4.4% nationwide, a low since 2001, and 180,000 new jobs were created in March alone, the public still feels shaky about what the coming months will bring. Some obvious reasons for their uncertainty is the Iraq war and the continually changing price of oil. Just how pessimistic one is seems to be related to one’s annual income, namely the wealthy are the least pessimistic of all, while the poor hold the most doubts. (Coy, 2007)

The discrepancy between analytic forecasts and general public opinion should not be taken lightly. Consumer pessimism has the potential to become a self-fulfilling prophecy. Greater pessimism leads to less consumption because people are worried about what the future might bring so decide to save more, which lowers aggregate demand for goods and services. In turn, less demand means less revenue for firms, which will eventually lead to less job creation, and an overall downturn in the economy. In essence, what the public expects to happen, will indeed happen. Their expectations will become their reality due to the self-protective actions (ie less consumption) they take today. In fact, less consumption could cause a significant fall in GDP, as consumers make up roughly 70% of all U.S. GDP. (Coy, 2007) So despite a rather optimistic outlook among forecasters for 2007, public uncertainty and fears for the future may sway the economy downward in very real terms.

Source: Coy, Peter. “The Economy: Why So Gloomy?” Business Week Online. April 11, 2007. Reference URL: http://www.businessweek.com/investor/content/apr2007/pi20070411_639834.htm?
chan=top+news_top+news+index_businessweek+exclusives

Go Ahead, Have a Cig Kiddo

Why should cigarette manufacturers be permitted complete freedom to target developing countries?

Like any other business, cigarette manufacturers should be able to pursue the objective of profit maximization as long as they fulfill their social obligations and are within the confines of the law (Robbins, 2005). Faced with tightening regulations in developed countries, it makes financial sense for cigarette companies to target their products to foreign consumers whose countries have less restrictive laws. It is the responsibility of national governments, not private enterprises, to concern themselves with the well-being of citizens. If a government decides that smoking has more negative effects on the nation than is tolerable, it will enact laws that will force cigarette companies to conduct business accordingly. Similarly, if consumers do not want to incur the health costs of smoking, they will not buy cigarettes, thereby limiting the profitability of cigarette companies and restricting their expansion. Both governments and consumers have the power to control the operations of cigarette companies, so regardless of which country is targeted, the amount of expansion into that country is always the responsibility of the country itself.

Efficiency Wages Not So Efficient Anymore

The March 28th online edition of Business Week reports that electronics retailer Circuit City is planning to lower employee wages across the board as a way to reduce costs and boost profits. Faced with fierce competition from long-time rivals such as Best Buy, Circuit City is hoping the wage cuts, along with other structural changes, will allow them to stay ahead of other electronics retailers. (Business Week, 2007)

Previously employees at Circuit City were paid above market, or efficiency, wages. Voluntarily paying higher than average wages has its benefits. First, higher wages attract a better pool of employee candidates. Second, it reduces employee turnover because less people leave for other equitable-position jobs at competing companies. Less turnover leads to a well-trained and experienced sales staff, and eventually more sales. Finally, higher wages gives employees the impression that the company cares about them, which fosters company loyalty and a greater willingness to perform to the best of their abilities while on the job.

In fact, these benefits were taken into account during Circuit City’s decision making process. The retailer realized that the general composition of its sales force would change due to the pay cuts. One major drawback is that the competency of its sales staff will decrease as its best employees leave for higher paying jobs. Also, the time and effort needed to train new employees will undoubtedly have a negative impact on sales in the near future. Because of these changes, “Circuit City is expecting to have consolidated net sales growth of 8% during fiscal 2007, down from the 9% to 10% originally forecast.” (Business Week, 2007) This means that the estimated effect of efficiency wages is between 1-2% of Circuit City’s net sales.

Interestingly, Circuit City does not intend to hire more employees at lesser wages. Instead they will be rehiring the same amount of workers as before. Normally companies that pay above market wages hire fewer employees to keep costs at reasonable levels, leading to less demand but greater supply in the labor force since more people want the higher-paying jobs. Now that Circuit City is lowering its wages to the market equilibrium but keeping the number of employees constant, the demand is not changing, but the supply should decrease because less people will want to work at Circuit City under the new wage structure.

Source:

“Circuit City Cuts Wages to Juice Profits.” Business Week Online. March 28, 2007.
Reference URL: http://www.businessweek.com/investor/content/mar2007/pi20070328_712708.htm?
chan=top+news_top+news+index_investing

Redressing Old Drugs for Profit

Drug patents are making headlines in the online version of CNN Money this week. Apparently major pharmaceutical companies are facing big losses this year due to the expiration of some of their leading drug patents, decreasing their monopolistic holds on the drugs and making room in the market for increased competition. As the cheaper generic versions of these drugs hit the shelves prices will undoubtedly fall, which means better deals for consumers, but large blows for major pharmaceuticals. In fact, the industry is projected to lose a total of $16 billion in revenue due to the increased competition caused by the loss of these patents. (Smith, 2007)

In an attempt to curb their losses, many companies are tweaking their drugs slightly, such as making time-released formulas, in the hopes of retaining some exclusive patent rights. (Smith, 2007) Now although this type of patent manipulation makes sense in terms of company revenue, what of the larger pharmaceutical goal of helping people live healthier lives? Privatizing pharmaceutical companies and making them for-profit inherently creates a tension between the societal benefits of medicine and the individual company desire to maximize gains. In this case the introduction of generic versions is something that everyone should ideally support. After all, lower prices means more of the drugs will get to more of the people who need them. On the other hand, no one can expect an industry to give up $16 billion without a fight.

So why doesn’t the government step in to right this potentially life-threatening market failure? Because if companies had no monetary (monopolistic patent) incentive to create new drugs, theoretically none would be created, and society would generally be worse off. Patents are designed to expire so that the full benefits to society of new drugs eventually prevail via generic versions and market competition. This allows for companies to profit substantially at the expense of society for a limited amount of time. In essence the patent system is a compromise between creative incentive and social welfare. However, as is evidenced by recent drug tweaking and patent law circumvention, this system may not work as well as intended.

Source:

Smith, Aaron. “Big Pharma teaches old drugs new tricks: Drugmakers hunt for new patents on old blockbusters to try and postpone the inevitable: generic competition.” CNN Money Online. March 21, 2007. Reference URL:
http://money.cnn.com/2007/03/21/news/companies/drug_patents/index.htm?postversion=
2007032115

Euro-Disney Culture Shock

The differences between American and European, particularly French, cultures and spending habits were two of the largest contributing factors to the initial failure of Euro-Disney. With its grand opening during a 1992 economic recession, Euro-Disney failed to garner expected revenues despite achieving its projected amount of yearly visitors. For example, Americans spent money on Disney supplied lunches while the French brought their own. Americans accepted and appreciated the no-alcohol policy of the theme parks, but the French were appalled at having that freedom restricted. Not taking into account these types of behavioral differences during the planning phase of Euro-Disney proved to be a costly and time-consuming mistake that took roughly two years to correct (Hartley, 2005).

Perhaps the best method to use in terms of understanding and being able to compensate for cultural differences would have been to use a questionnaire prior to making decisions about food, expected revenues other than park admission, and the like. The questionnaire could have been given to potential employees of the park during their interviews before the park opened. This would have tapped into a fairly large pool of potential visitors without much effort. Asking open-ended questions such as "Would you buy souvenirs during your visit? How much would you anticipate spending on them?", "How long do you think you would spend visiting the park?" or "What types of foods and drinks would you like to see offered at the park?" might have helped bring certain problems to light during the final planning stages.

Source:

Hartley, Robert F. 2005. Management Mistakes and Successes. Eighth edition. John Wiley & Sons, Inc.