Policies That Corporate Directors Should Review
By Alvin Mason
Corporate Directors and Senior Level Managers should review and have discussions on the following:
- Bonus System
- Lobbying
- Political Contributions
- Consideration for the Employees
- Backup for Computer Systems
- Production Requirements
- Database Management
Bonus System
Every organization should periodically review any bonus system used by that organization. Where the purpose of a bonus is to reward a manager for a job well done the truth is that too much emphasis is put on maximizing that bonus at the expense of running the business correctly.
I am personally aware of instances where maximizing a manager’s bonus was more important to them than adequately serving their clients.
One example is in property management. In an apartment complex I lived at, the residents were required to sign a one year lease every year. Every year the rent was increased but the amenities were not held at the status quo. The residents came to expect the yearly rent increases but became disgusted that the standard of living was not maintained. This was a high-rise building and many times when an elevator broke the management would not have the elevators fixed on the weekends. On those same weekends the freight elevator was reserved for someone moving thus 1 elevator was available to serve the entire building.
Another incident was when the card machine for loading money to wash clothes was broke it took over 3 months for management to fix it. Residents paying premium rents had to go to another building to load their laundry cards.
As things that need attention are pushed back to another accounting period so the manager can show a better profit and loss statement in the current period, the residents comfort is negatively affected. Such things as toilet paper and paper towels in the fitness center restrooms are neglected.
One other example is in a janitorial service company I am very familiar with. The company has worked with a short staff asking people to do their job and more for over 1 year, using the excuse that it takes time to hire replacements because it takes time to clear them. To work in a government building, one must have a clearance. If this company really was serious about having a full staff considering a union agreement that guarantees an hourly salary $5.00 over minimum wage there would be a full staff.
In this same building many times the day crew takes equipment from the night crew and hides it because the company won’t provide adequate equipment and supplies. What is amazing is that this is a major cleaning contract in a building where a huge government agency resides. Every Janitorial company in the country would love to have this contract.
To make matters even worse this company sends people from the building they work at to another building making the shortage worse. The building maintenance company is actually charging the property management group of a government building with hours for work performed in a non-government building. The property management company is asleep at the wheel to allow this to happen. All this is done to maximize the profit for a bigger bonus. The company has no concern for the workers or the government employees.
A cleaning company servicing a major government building should never run out of cleaning supplies.
The bonus system for managers should include review of the efficiency of management together with revenue and/or profit and also incorporate the satisfaction of customers and/or clients. The bonus system should also have a determination section which allows explanation of extraordinary cost or uncontrollable cost which if no fault of management will not totally eliminate a bonus. In some cases the employee’s feedback should be considered in the bonus system.
These concepts would encourage senior management policy makers to consider all aspects of decision making and not just profit for a bonus. Feedback from customers and employees could prevent undesirable and/or unlawful decisions and actions.
Lobbying
Corporate Directors and Senior Managers should review their Lobbying policy. When a company is managed efficiently and effectively, making decisions in the best interest of shareholders, employees, and society, why is it necessary to lobby? Why is it necessary to have a law or policy changed in your favor? Is it acceptable to you as a director for the corporation to spend large amounts on lobbying instead of using those monetary assets to reward employees with salary and /or benefits or pay dividends?
The one acceptable issue that corporations should be lobbying for is a reduction in corporate tax. Why isn’t there a concerted effort by the majority of corporations on this issue? If there was a concerted effort such as contributing to campaigns and political action committees the corporate tax rate would be reduced.
The percentage of expenditures for Lobbying and Political Contributions combined, should not exceed the amount of financial resources budgeted for employee benefits or programs or dividend payments or contributions to non-profits and other charitable contributions.
Political Contributions
Political Contributions should only be used when a candidate is running on a platform that promotes an aspect of the contributing corporation’s core business or mission.
Can you, board member rationalize committing a significant amount of money to a political action committee? Why hasn’t the corporate tax rate been reduced? What quid pro crow is expected from such contributions? Is making a contribution necessary to win a contract?
The fact that everyone does it does not make Political contributions right. Does the contribution promote American idealism, the corporate mission, or capitalism? Unfortunately there is a separation of church and state but not business and state.
The percentage of expenditures for Political Contributions and Lobbying combined, should not exceed the amount of financial resources budgeted for employee benefits or programs or dividend payments or contributions to non-profits and other charitable contributions.
Consideration for the Employees
Corporate Decisions should be made with more consideration for the employees. Those decisions should include weather to keep a plant or facility open and ensuring a livable wage with benefits. The bottom line is important but so is the corporate image and the corporate responsibility to the workers and the community. When a policy is being considered, the benefit to the decision makers should never outweigh the harm to the workers. Whatever happened to the Protestant Work Ethic? Hard work and dedication was once rewarded. I will leave you with this. On the day of judgement it will be better to be judged as one of the oppressed rather than one of the oppressors.Backup Computer System
Every organization that uses computers as a major part of their business transactions should have a reliable backup computer system. When a system goes down for anything other than routine maintenance which should be announced, an organization should be able to go to a backup system and continue to transact business. I have personally been involved in the wait and frustration at an airport when the computer system went down. The worst aspect of the problem was there was a line almost the length of the terminal and no guidance as to what the different lines were for. Some people who were elite customers were waiting in a line when there status would have given them priority. We were all wondering why there were not more people at work. It should have been an all hands on deck event.
Computers are a major part of transacting business for airlines, retail, restaurants, and many other types of business. Every major corporation should have a backup system in place so business can be transacted efficiently and customers not be inconvenienced.
The cost of a backup system is not that expensive. Even if the backup system was at headquarters and the customer representative at the point of sale/transaction was on the phone processing through headquarters at least transactions would be occurring even if at a slower than normal pace.
Why is it when a computer system goes down, that there is so much disorganization? Isn’t is foreseeable that at some point a computer system might go down?
Production Requirements
Many organizations today have production requirements or sales quotas for their employees. Such requirements can be a standard for a number of products to be produced or sold. Other requirements are a time requirement meaning the employees average time must be within a certain standard.
With production requirements, where an employee must produce a certain number of products in a specific time period, the results can be bad workmanship. Too many times when the consumer purchases a clothing product from a manufacturer with production standards we get clothing where the buttons are loose and/or zippers are poorly installed. Output requirements in all production processes can cause workers to take shortcuts or rush the process, negatively affecting quality.
Sales quotas put pressure to meet a sales standard on employees. Such requirements can lead to misleading customers and/or making guarantees that are not backed by the organization.
Requirements for time also negatively affect the customer. Time requirements many times are used in customer service situations. The time requirement many times has the Customer Service Representative (CSR) rushing to answer questions. Answering questions incorrectly or not fully answering 2 and 3 part questions. After giving only partial help the CSR will mark the call as complete.
Many times in service businesses such as retail and food service, labor standards are used to make schedules based on projected sales. Many times when the sales projection is wrong, the service is poor. Too often the labor standards do not take into account all the task that are involved, such as restocking, cleaning and closing while giving good service. How many times does the opening crew come in and notice what was not done?
One problem with standards are that the production required or labor allowed assumes that the employees are superstar employees. Every employee is not a superstar. If the employees were all that (superstar), why would they work in a low paying job? Too often the standards are made by a management group, too far removed from the front lines. People should not make standards that the standard setter themselves cannot achieve.
There is a difference in a requirement versus a goal. A standard should be a goal that allows an explanation as to why the goal was not achieved.
When setting a goal the organization should put as much emphasis on the customer as on profit.
Database Management
All organizations should have effective database management. A Customer Service Representative (CSR) should be able to access a customer’s account by making a query of any of the following:
- The customer’s name
- The customer’s address
- The customer’s phone number
- The customer’s account number
Too many times the CSR is unable to help a customer, the reason being the CSR cannot access the account. The frustration to the customer who has been a longtime customer cannot be measured. This problem occurs in situations where there is no Social Security Number (SS#) in the data base. In many business transaction especially subscriptions, The SS# should not be required.
Sometimes when a customer renews their business with the organization, the CSR starts a new account, sometimes to meet requirements to open a certain number of accounts.
The Data base system should integrate all accounts by the name, address, and phone number to prevent duplicate accounts in one customer’s name. That should prevent a customer paying their bill and having service suspended.
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