The Blog

Marty Zwilling: Scaling a Business by Cloning Yourself Is Tough

2012-02-22T20:42:31Z

Many writers have outlined the critical success factors for product companies, like sell every unit at a profit, patent the design, and continuous product improvement. But recently I was asked about success factors for services startups, and I quickly realized that there is very little published to help the thousands of startups that fall in this category.

The distinction between product companies and services companies is easy to see. Products are tangible and can be consumed now or later, while services are intangible and have no shelf life. A product business can usually be scaled with minimal people, which can lead to enormous profits and "making money while you sleep." Scaling services means cloning yourself.

Obviously we can find many critical success factors, like finding and retaining high-value customers, which apply to companies that are product centric or services centric. Here are a few which I believe are at least most relevant and important to the services arena:

Do what you know and what you love. If your business offers a service, like marketing or management consulting, you are the product. If you or any of your partners really don't have the credentials, the commitment or the interest, you won't succeed. Customers don't like people who don't show their passion and love for the job.

Make sure your service is innovative. Being the low-cost commodity level service provider is not a recipe for success. It's hard to make up for a low margin by increasing your volume of work. You need to demonstrate innovative approaches, more knowledge, more productivity and superior results to get the references you need.

Networking and relationships. No expert or consultant can know everything they need to know. That's why it is just as important that you can fill in the gaps by having the right relationship with people to back you up. Networking is the way to stay current yourself and nurture those relationships.

Clearly communicate the vision, mission, and values. It's hard to "touch and feel" services ahead of time, to see if you are buying what you expected. Thus it's up to you to communicate effectively what you are about, to customers as well as your own team.

Attract and retain the highly skilled and motivated people. Services people need to hit the ground running. Customers don't like to see you learning on the job or outsourcing. Every partner and employee can kill your success potential in a heartbeat, so don't take shortcuts on your hiring and training practices.

Define and document the service process you sell. You can't measure, scale, or patent a service process that is not clearly documented. Even if your service is artisan based, like commercial photography or interior design, the principles, vision, and style need to be clearly communicated to your team as well as your customers.

Create and maintain the highest level of customer satisfaction. Customer satisfaction is very important for all companies, but it is everything for a services company. You don't have tangible product items which can be compared for quality and cost in the value proposition.

In reality, every company has a services business component, if nothing more than customer service. Thus these are the critical success factors that apply to every company, rather than the ones you typically see for product companies. In addition, the statistics show that over half of new startups, perhaps as high as 75%, provide services only (no product).

Another reality is that angel investors and venture capital groups almost never invest in a services-only company. Their perspective is that these entrepreneurs need only to sell themselves, but shouldn't need capital up front for product development or manufacturing.

That's another reason that your services business is all about you, and what you bring to the table for skills, resources, and customers. In essence, you are the ultimate critical success factor for your business. Make it happen.

Robert Reich: Corporations Don't Need a Tax Cut, So Why Is Obama Proposing One?

2012-02-22T19:10:00Z

The Obama administration is proposing to lower corporate taxes from the current 35 percent to 28 percent for most companies and to 25 percent for manufacturers.

The move is supposed to be "revenue neutral" -- meaning the administration is also proposing to close assorted corporate tax loopholes to offset the lost revenues. One such loophole allows corporations to park their earnings overseas where taxes are lower.

Why isn't the White House just proposing to close the loopholes without reducing overall corporate tax rates? That would generate more tax revenue that could be used for, say, public schools.

It's not as if corporations are hurting. Quite the contrary. American companies are booking higher profits than ever. They're sitting on $2 trillion of cash they don't know what to do with.

And it's not as if corporate taxes are high. In fact, corporate tax receipts as a share of profits is now at its lowest level in at least 40 years. According to the Congressional Budget Office, corporate federal taxes paid last year dropped to 12.1 percent of profits earned from activities within the United States. That's a gigantic drop from the 25.6 percent, on average, that corporations paid from 1987 to 2008.

And it's not that corporations are paying an inordinate share of federal tax revenues. Here again, the reality is just the opposite. Corporate taxes have plummeted as a share of total federal revenues. In 1953, under President Dwight Eisenhower, a Republican, corporate taxes accounted for 32 percent of total federal tax revenues. Now they're only 10 percent.

But now the federal budget deficit is ballooning, and in less than a year major cuts are scheduled to slice everything from prenatal care to Medicare. So this would seem to be the ideal time to raise corporate taxes -- or at the very least close corporate tax loopholes without lowering corporate rates.

The average American is not exactly enamored with American corporations. Polls show most of the public doesn't trust them. (A recent national poll by the University of Massachusetts at Lowell found 71 percent with an unfavorable impression of big business -- about the same as those expressing an unfavorable view of Washington.)

The administration's initiative doesn't even make sense as a bargaining maneuver.

Republicans will just accept the administration's lower corporate tax rate without closing any tax loopholes. House Republicans have already made it clear that, to them, closing a tax loophole is tantamount to raising taxes. And corporate lobbyists in Washington know better than anyone how to hold tight to loopholes they've already got.

Big business will fight to keep their foreign tax shelters. After all, it's almost impossible to distinguish between their foreign and domestic earnings, which is why the U.S. Chamber of Commerce and other business lobbies have spent the past three years trying to make it even easier for companies to defer U.S. taxes on income they supposedly earn outside the country.

Representative David Camp, a Michigan Republican who heads the House Ways and Means Committee, has already proposed a 25 percent corporate top rate and changes that would let companies avoid paying U.S. taxes on even more of the income they say they earn outside America.

Nothing is going to be enacted this year, anyway, so it would have made more sense for the administration to support a hike in corporate taxes -- and use it to highlight the difference between the president and his likely Republican challenger.

Mitt Romney wants to reduce the corporate tax rate to 25 percent before eliminating any tax loopholes. Rick Santorum wants to cut the rate to 17.5 percent and eliminate corporate taxes for manufacturers. Newt Gingrich wants to cut the rate to 12.5 percent and let companies write off all capital investments immediately.

It's discouraging. The President gives a rousing speech, as he did on December 6 in Kansas. Then he misses an opportunity to put his campaign where his mouth is.

Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.

Amy Schrier: Has a Woman Ever Created a Billion-Dollar Company?

2012-02-22T18:50:14Z

As any entrepreneur knows all too well, nothing can begin until the money is raised. Who to look to? Well, first I start with those that inspire me. Part of the process, the fun part, is thinking about who are the people who have done what I would like to do? So, lately I have been putting together that list. Those are the people I generally want to ask first for money.

The company I am launching, MISSION.tv, is a digital platform about making a difference in the world. We will produce and curate premium content -- video, articles, photos -- and create a social community. We will offer the most comprehensive, independent database of volunteer travel opportunities on the Internet, and perhaps of widest interest, we will connect visitors with nonprofit causes so they can, through activism and philanthropy, literally help change the world.

I have worked on the numbers diligently, carefully, thoroughly. I know them like the back of my hand. We have an ambitious but realistic model. We are seeking to raise an angel round now, and plan to generate many millions by the fifth year. This is what we wrote and plan to execute, but the plan doesn't stop there. When we succeed in meeting our numbers, there will be ways we to expand upon the brand, increase the revenues, grow into the global market of the Internet. I mean... who doesn't want to make a difference in the world?

So, I put a list together of some of the greatest companies of all time and the entrepreneurs who founded them. Then I Googled them to learn their annual revenue size. The first thing I noticed on the list was there were no women. The list by the way, was Apple/Steve Jobs, $65 billion, Microsoft/Bill Gates $60 billion, Amazon/Jeff Bezos $34 billion, Google/Larry Page + Sergey Brin $29 billion, Ebay/Pierre Omidyar $9 billion, AOL/Steve Case $2 billion, Facebook/Mark Zuckerberg $2 billion.

I began to wonder, were there simply no women who had billion-dollar ideas? I went to Inc. magazine's list of top 10 women entrepreneurs. None had I ever heard of. All companies were under $100 million, and 60% were under $20 million.

Buddhism teaches you never to get angry or upset about anything, just to observe it and note the information. So, that's what I did. There must be some purpose for me noting this. I typed right into the Google search bar: Has a woman ever started a billion-dollar company? And the 2nd response on the list was: in bright fuchsia... Miss Dallas 2011 Princess... The Miss Dallas Scholarship Organization, a local division of Miss America. Can you believe that? It's true.

I emailed my MBA friends... Has woman ever started a billion-dollar company? No one seemed to know for sure. The replies were slow, awkward and uncertain.

Of course we all know women have had billion-dollar ideas. But it is challenging to go from billion-dollar idea up the long and arduous path of venture capitalist acceptance than ends in billion-dollar company. And not one woman has made it yet. It might be helpful if there was affirmative action for investments. Imagine if fifty cents out of every VC dollar went to a woman-founded company. What a different world we would live in ten years from now. I think I would like it better.

Marian Gibbon: Five Books Every CEO Should Read

2012-02-22T17:42:22Z

This is a list to embolden. For a number of years I've been following the evolution of the conversation about Corporate Social Responsibility (CSR). Over time I have concluded that the CEOs who take a truly responsible approach to their work simply get down to business, doing the right thing because it's what they believe in, commit to. In their companies goodness is not a department, it is naturally embedded into every fiber of the organization.

These five books have influenced and bolstered my views. All are firmly rooted within the framework of capitalism and profit-making, girded by a passionate belief that companies run well are powerful forces for good in society. Three are written by CEO-founders of large, global enterprises, two by investors (there's overlap-Vanguard Group founder John Bogle is both).

Each addresses the qualitative side of doing the right thing --the words stewardship, caring and long-term come up repeatedly -- and they also underscore the bottom-line benefits of a values-driven approach to business. Importantly, they don't sugar-coat the very real challenges associated with staying true to a higher set of principles, adhering to a moral imperative.

For every CEO -- especially those who are struggling with the perceived burdensome elements of CSR -- taken together these five books bring it back to basics, simplifying and enlivening consideration of why-and how-to do the right thing.

1. Profit With Honor -- Daniel Yankelovich

A 1946 graduate of Harvard, Daniel Yankelovich has tracked public opinion and social trends in the United States for the better part of five decades. Profit With Honor was published in 2006, in the wake of the Enron, WorldCom and other financial scandals of the early 2000s.

Yankelovich opens with a quote from philosopher Alfred North Whitehead:

A great society is a society in which its men of business think greatly of their functions. Low thoughts mean low behavior, and after a brief orgy of exploitation, low behavior means a descending standard of life.

From there, he builds a strong case that business is at heart the keeper of social norms. When business abandons this role, society falters. Neither a fan of regulatory-driven rehab nor of CSR, Yankelovich goes on to lay out a framework that he calls stewardship ethics as a post-crisis alternative to the concept of shareholder value. It is grounded in caring, community and higher expectations of business. This is where the book is at its squishiest -- the others on the list pick up its slack.

2. Enough -- John C. Bogle

From the same generation as Yankelovich, John Bogle is much-admired as a pillar of impeccable integrity in the investment community. Enough is his plea-and well made case-for a return to core human values in the wake of the second round of scandals and crises in the early 2000s. His thesis: Good ethics is good business.

As both founder and investor he brings a unique perspective and credibility to his writing, in which he invokes Socrates, the founding fathers, Homer, Goethe -- and Daniel Yankelovich. His number one rule for building great organizations: make caring the soul of the company. This, at its heart, is true CSR.

3. Profit for Life -- Joseph H. Bragdon

Joseph Bragdon is a money manager for high net worth individuals. Published in 2006, Profit for Life is his very meaty consideration of both the management practices and the outstanding investment performance of 60 global companies he has identified as Living Asset Stewards, companies whose cultures are driven by caring for living assets-people and nature-versus non-living-capital.

Inspired by systems thinkers Peter Senge, Arie de Geus and Fritjof Capra, it's hard to overstate the value of this book: It is both unarguably hard-nosed and deeply heartfelt -- polished and thorough -- and it completely reframes consideration of the pursuit of profitability -- from that of a necessary evil to a resource to be leveraged for the greater good. The book's subtitle: How Capitalism Excels. (Market performance of Bragdon's Global LAMP Index through 2011 can be found here.)

4. Business Lessons from a Radical Industrialist -- Ray C. Anderson

Picking up where Bragdon leaves off, Business Lessons from a Radical Industrialist is CEO Ray Anderson's first person account of leading Interface, the Georgia-based carpet manufacturing company he founded in 1974, on the pursuit of zero impact operations by 2020.

This is an engaging roll-up-your-sleeves, nuts-and-bolts guide to sweeping operational change. If you think it can't be done, Anderson will convince you that it can -- and should -- and that, in fact, you'll make money in the process. (Very sadly, Ray Anderson passed away from cancer last year, a deeply felt loss.)

5. The Key Speech -- Sir Ove Arup

Rounding out the list is the text of a brief speech, rather than a book. The employee-owned, UK-based company Arup was founded in 1946 by Anglo-Danish engineer Ove Arup. In 1970, Arup made a speech to his partners that remains a cornerstone of the group's operating philosophy today.

It's a quick read. Arup is down to earth, funny, pragmatic, and he nimbly addresses the challenge of navigating the tensions between conflicting operating ideals. He is also firmly committed to the idea that having a vision that encompasses moral principles binds a community-and a company-together. Arup was ahead of his time -- or, perhaps, we're seeing the value of circling back from where we came.

Today it's harder and harder to separate consideration of doing the right thing from issues of environmental sustainability. Bragdon and Arup touch on it, Anderson's tale is all about it. For further reading specifically on sustainability, the book that inspired Anderson's quest is Paul Hawken's The Ecology of Commerce.

Similarly, more and more leaders are looking to nature as a source of inspiration for innovation and organizational design. Again, Bragdon and Anderson both reference this thinking. Janine Benyus' book Biomimicry: Innovation Inspired by Nature is a much-cited resource on the subject and on my To Read list.

Cindy Auten: "Car-cation": Take a Vacation From Your Car

2012-02-22T17:19:56Z

For those who had off on Monday, I hope you enjoyed your three day weekend and sorry about all of the emails in your inbox. I was working away and actually had to take one of those infrequent trips into the office for some in-person meetings.

Here's the highlight of my Monday. Traffic, or I should I say, lack of traffic. I couldn't believe how fast I got to the office. A regular day would take me more than two hours. Rain? Three hours. Snow? Fuhgeddaboudit. If you were one of the few that traveled to work on Monday, then you understand my delight. It was a commuter's dream. Foot on the gas and a vacation for my brake pedal -- I may have even skirted over the speed limit a time or two, unintentionally, of course. Let's face it, how often do you actually get to even go the speed limit during rush hour?

So, what's even better than a clear road? Not being on the roads at all. Today, I had my 30-second commute. Telework. This time of year, I get really excited about Telework Week -- March 5-9. It's our chance to not test the roads and take that 30-second commute. Last year, close to 40,000 employees across the globe teleworked. This year, we expect to exceed these limits, with more than 22,000 pledges already made. Join us and pledge at www.teleworkexchange.com/teleworkweek. There's a handy calculator on the site that counts pledges, total commuting costs saved, and emissions reduced.

So, if you are new on the telework block, here's what you can expect during Telework Week:

More Smiles: Eliminating those stressful commutes will make employees (and you) happier. Teleworkers don't sit in traffic, are known to be as, if not, more productive, and happier with the hours they've regained. A happy employee is a productive employee.

More Money: The average Telework Week pledge will save some $60 by not commuting for one week. Translating for a year, that's $3,000 back in your wallet. Have you noticed the price of gas recently? I thought so. Many are seeing $4/gallon, with fears of paying $5/gallon in the near future.

More Balance: Take your commute out of the mix and you have more time to balance your work and family. It's time to focus on what matters, and eliminate what really doesn't. According to the University of Southern California, drivers traveling the 10 worst U.S. traffic areas spend on average 140 hours annually sitting in traffic. That's almost a full month of work, and more time spent in traffic than on vacation.

So why telework now? It's the telework perfect storm -- there has never been such a need for this work practice before -- the need to be flexible yet efficient, save time as well as money, and keep that workforce happy. And for those cannot possibly telework, think about telework a different way. Teleworkers will certainly contribute to your commute being that much smoother.

Still sitting on cloud nine from this morning's non-commute, I'll definitely be off the roadways for Telework Week. Will you?

Cindy Auten is general manager for Telework Exchange and clearly has issues with commuting. She can be reached at cauten@teleworkexchange.com.

Marty Zwilling: 10 Hiring Shortcuts No Young Company Can Afford

2012-02-22T17:12:25Z

Every startup with any traction quickly reaches a point where they need to hire employees to grow the business. Unfortunately, this always happens when pressures are the highest, and business processes are ill-defined. At this point you need superstars and versatile future executives, yet your in-house hiring processes and focus are at their weakest.

The result is a host of hiring mistakes that sink many young companies, or take years to fix. The solution is to never forget that hiring is a top priority task for the CEO, which should never be delegated, and which often has to supersede the urgent crises of the day.

A key success element is to start by avoiding the known list of interviewing and hiring mistakes that have been documented many times over by human resources professionals. Here's a tongue-in-cheek summary of ten big ones to jog your recollection:

"I'm not quite sure what we need, but this guy sounds like a miracle worker." The message here is that if you don't know exactly what help you need, you probably won't get it. Do your homework on a proper job description, and make sure the applicant credentials on the resume are a fit before you proceed to interview.

"He's not quite what I'm looking for, but I think he is trainable." This is the inverse of the first problem - you know what you want, but you are trying to force fit the candidate into the position. Maybe you are desperate to fill the position, or he's related to the boss.

"I'm confident this candidate can learn a lot from me." This is the arrogant position that you know more than anyone you could hire, so all you need is a helper, not help. Helpers are expensive, since it often takes longer to jointly do a job than it would take one qualified person to do it alone.

"I didn't have time to read the resume, but he has great answers." Some people talk a good story, but can't produce results. Resumes won't give you the positive conclusion, but they can highlight negatives, like job gaps, bad writing, and minimal experience.

"He couldn't keep up with me on results, but we have to start somewhere." It's always a mistake to judge a candidate by using yourself as the bar. You should assume that you are looking for someone who has skills you don't have.

"This one is such a good fit that I don't need to waste time on a second interview." No matter how good you are, we can all miss things the first time around. Never hire someone without a second interview, and without having a second interviewer verify your assessment. Everyone you hire has to fit effectively with many others on the team.

"After my sales pitch, he was so excited I knew he could do the job." Some hiring managers spend the interview selling the company under some mistaken impression that the level of candidate excitement they can generate is indicative of future performance.

"He's not perfect, but our only alternative is to let the work stack up even more." This is pure desperation, guaranteed to have bad results. If you hire someone who can't do the job, the work backs up more, and your work doubles to get them replaced.

"His experience is light, but he seems like a good guy." Avoid evaluating just personality in lieu of job skills. All the statistical research shows that there is very little correlation between a good personality and any specific job. Look for job knowledge first.

"Based on the glowing terms I heard from my friend, I'll just skip the reference check." There are lots of factors that can't be assessed in an interview, or by listening only to an advocate. In this litigious society, reference checks are more productive if you also listen to what is not said.

Another element is admitting that there are things you don't know, and identifying what they are. Too many executives let their ego stand in the way, either in admitting that there might be things they don't do well, or in identifying and communicating specific job requirements.

Take a lesson from an old Business Week article by entrepreneur Andy Dunn, aptly named "To Recruit the Best, Admit Weaknesses" where he admitted to the best applicants "I am not good at what you do, I need your help." In my view, if every CEO and hiring manager followed this advice, as well as good hiring practices, their business would scale a lot faster with a lot less headaches.

Greg Voakes: The Rise of Couponing in Small Business

2012-02-22T16:08:19Z

This week, couponing and consumer savings site Coupons.org launched an infographic called "The Coupon's Comeback." The graphic argues that couponing, a phenomenon largely dormant for the last 20 years, has found a resurrection in the form of online media, social couponing sites, and more traditional dashboard sites. "The Coupon's Comeback" explores the rise in coupon offers and redemption since pre-recession times, the surprising demographics of coupon use, and the evolution of online couponing.

According to the graphic, Americans have been engaged in a "long-term affair with the coupon," which is not entirely surprising, since the coupon has been around for over 100 years. Recently however, there has been a huge surge in coupon use and as a result, spending and savings are up. More and more small businesses are offering coupons, and the number of online coupons increased 360 percent since 2009. As more retailers get online, that number will continue to multiply. By 2014, the number of mobile coupon users is projected to grow a staggering thirteen-fold.

Despite this growth in online couponing, only 1.5 percent of all redeemed coupons are accounted for by Internet coupon codes and promotional codes. Furthermore, according to the infographic, the most recent data shows that in 2010 Americans only redeemed 0.6 percent of the total possible savings offered with coupons. Seemingly, the issue is not the number of coupons offered, but how customers are accessing these deals.

With an increasing number of small businesses offering deals, it can be wearisome to actually find them. Prior to the most recent Internet coupon boom, the fastest way to shop and save was by scouring the Sunday pages for coupons prior to purchasing; a time-consuming process often not worth the amounts saved. Moreover, many of the largest companies with far-reaching marketing arms don't offer the best deals, even though they can be ubiquitous. Sites like Coupons.org function by performing these types of searches automatically, bringing together all the best deals from large and small companies, as well as both print and Internet coupon codes, in one easily navigable location.

Consumer demands are changing. Customers want more immediate access to the best relevant deals and are using the Internet as the primary way to redeem coupons. Now, one in five smartphone users use mobile coupons and the demographics of coupon users are shifting. According to "The Coupon's Comeback," households with an income of over $100,000 are twice more likely to use coupons than households earning less than $35,000. For small businesses, this is a prime market and a great opportunity to offer chances for saving within the overlooked benefits of online couponing.

In fact, according to a recent survey conducted by Forrester Research, companies that offer coupons are viewed more favorably by consumers than those that do not. The result of this is increased brand loyalty, where savings opportunities often determine the final purchase.

Consumers who save by using coupons offered by small businesses contribute in two meaningful ways. First, they save money for themselves. Second, they support a small business that otherwise may not have had the sale, improving their chances for finding a similar deal from the same place. Ultimately, this online coupon renaissance is a win-win, for consumers and small businesses alike.

With enough coupons offered in 2010 to save every single American $1,677, there has never been a better time to take advantage of these types of coupon opportunities. "The Coupon Comeback" and the booming of sites like Coupons.org highlight the increased, and now integral, role that saving money has in customers' shopping habits -- spending may be necessary, but saving is the key.

Dylan Ratigan: 30 Million Jobs Tour Heads to College: What's Your Experiment?

2012-02-22T15:50:26Z

Last week, I went on Late Night With Jimmy Fallon, and I brought a prop -- a weird-shaped lightbulb from Firefly LED Lighting, an Austin-based green tech company. The lightbulb, by taking an approach that dissipates heat through metal sidings instead of concentrating it in the bulb itself, has dramatically increased efficiency.

It's an experiment, backed by a pilot project, data, and a small amount of seed funding. And if we're going to save America, it's going to be experiments like those I've seen in Austin and elsewhere that will lead us there.

For the past three years, I've been talking about the politics of Washington, D.C., and the financing conventional wisdom from New York City. My eyes were opened to the realities of the system in 2008, when I saw the bailouts up close as an anchor on CNBC. It's depressing, closed, and difficult to see the gears of America chew up human potential.

But now I've found myself more enthusiastic than I've been in years, as I've shifted my attention from D.C./NYC to cities burgeoning both with ideas and with the excruciating pain that Washington and New York have inflicted on them. What's become apparent to me is that the rate of change on this planet, due to technological, ecological, and financial mechanisms, is the highest it's ever been. That means that our rate of adaptation must also be high, that we must adapt our communities, companies, and selves to what is quickly becoming a new and different world.

We must experiment, or die.

And as we experiment, with new communities, new technologies, and new financing structures, we must do so with an eye for quality and for learning. I want to inspire all of us to experiment with our lives, the way that America itself is an experiment in forming a more perfect union. Here's what we're going to have to do to restore this entrepreneurial spirit.

1) We must get over our abject and irrational fear of failure. One of my heroes, Salman Khan, has built a learning model that uses the Internet and in person teaching, and the goal is mastery. The method is failure. Do the problem set again and again, until you get it all correct. It doesn't matter if you fail, it only matters if you don't try again.

2) We must build a capital market that can make investments of between 30 thousand and 3 million dollars, which is what most experiments cost. The old model is broken -- Facebook will have a $100 billion valuation and raise billions in its IPO, but this is so the original investors can cash out, not to fund innovation. By contrast, Firefly LED had a seed round of $325k in 2010. That's the kind of capital that builds innovation, and we should have more opportunity to get it.

3) We must deal with the student debt problem, which is a direct incentive to not experiment. When you are young, you are in the most experimental part of your life. Don't burden our young with unpayable debt, it's guaranteed stasis. And stasis in a rapidly changing world that demands adaptation, as we know, means cultural death.

4) We must get rid of the employer based health care system. If experimenting means you can't see a doctor when you are sick, then you aren't going to experiment. That's bad. We need to find a new way to deliver care, so we can thrive as a society.

5) We must deal with the upside down housing market. The main store of wealth for the middle class, who should be a seat of innovation, is home equity. Without writing down debt and restoring a healthy housing market, this store of wealth will gradually be destroyed and rendered unusable. People won't be able to move or tap lines of credit if we don't fix the housing finance system. We must restore our distribution mechanism for financing the way we live, and we haven't yet done so.

More than all of these, though, we need a culture that values innovation. We need to experiment in our own lives, with ourselves, our business endeavors, our government, and our surroundings. With a million high quality experiments, we'll learn so much that we will see a new Renaissance in how we deal with the rapidity of change we are currently experiencing. And if there were ever a time we need such a Renaissance, it's now.

My pledge to you is that I will be exploring America the experimental. I will challenge myself, and everyone I meet, and I will use all the resources at my disposal, to encourage the cultural shift we know we need.

MORE: Dylan visits Late Night with Jimmy Fallon to talk about the 30 Million Jobs tour and creating a culture of experimentation:

Jared Bernstein: Corporate Tax Reform: Be Careful What You Wish For

2012-02-22T14:05:00Z

Pretty much every discussion of tax reform these days ends with an agreement that we need to broaden the base and lower the rates. Well, the White House today will release the broad outlines of a plan to do just that on the corporate side of the federal tax code.

According to advance info from this morning's NYT, the proposal will be to cut the current top corporate rate of 35 percent down to 28 percent, and to close a bunch of loopholes to make up the difference. Some other features include:

a lower rate -- 25 percent -- for manufacturers;
a minimum tax rate on foreign earnings to discourage tax sheltering by multinationals;
added incentives for R&D (probably making that tax credit permanent, something the administration has long supported) and clean energy investments;
a bunch of other loophole closures...

And therein lies the rub. It is widely recognized that many corporations already pay far less than the statutory rate -- from the WaPo story on the proposal:

Today, the U.S. corporate tax rate of 35 percent is one of the highest in the world, but an abundance of loopholes and deductions means that many companies pay far less than that -- or nothing at all. Companies in the United States pay almost half the taxes than companies do in other rich countries, compared to the size of the economy, according to the Organization for Economic Cooperation and Development.

Last I checked, we were collecting around 1.3 percent of GDP in revenue from the corporate sector. That's low both in our own historical terms (the average has been about 2 percent over the past few decades) and especially in international terms, despite the fact that we have a higher statutory rate. And it's not just the recession depressing corp revenues, though that's part of it, because corporate profitability is once again soaring.

This tells you two things. First, a lot of companies take advantage of the breaks in the code and second, getting to a revenue-neutral 28 percent will mean taking away a lot of those goodies.

Some of the biggies are accelerated depreciation, interest deductibility, the ability to pass corporate capital gains over to the individual side of the code (where it gets favorable treatment), and a bunch of international loopholes, like deferral -- the ability to avoid U.S. taxation by holding multinational profits overseas.

I don't think today's release will go into much detail on specifics, but the implication is clear: if those who have been clamoring for a lower corporate rate are serious, they need to step up and support these loophole closures.

In that sense, the White House's proposal creates an interesting political challenge. For years now, American corporations and their reps here in D.C. have been calling for a lower rate while at the same time availing themselves of billions in tax breaks that have kept them from paying the statutory rate. In my debates with supply-siders, they're all about the rate... they're happy to trade more base for points off of the rate. In the next chapter of this debate, we'll get to see how much they meant it.

Everyone loves the first part of the mantra: lower the rates. Now let's see how the feel about the second part: broaden the base.

This post originally appeared at Jared Bernstein's On The Economy blog.

Noel A. Poyo: Job Creators: It's Not Just The 1%

2012-02-22T12:01:56Z

"Job killer!" "Job taker!" These are epithets that are too often hurled in our present political discussion. The slow pace of the economic recovery, and the persistence of high unemployment, has rightly focused our national dialogue on job creation. But many politicians have taken to draping the mantle of job creator over almost any policy or project that they want to advance. Putting our nation back to work is too important to allow empty rhetoric to go unexamined; it is too important to overlook effective economic development.

So who are the job creators? One argument says that it's the wealthiest 1% among us. While this is partially true - there are job creators among the super wealthy - there are also a great many venture capital investors and titans of industry that slash as many jobs as they create.
Another argument suggests that it is the elite classes of innovators in sectors like technology that create jobs. Again, innovative tech companies undoubtedly create jobs, but it's worth remembering that Facebook, which some would value as high as $100 billion, employs only about 3,000 people.

At best, the super wealthy and the super techie make up only a partial picture of who drives job creation in our economy. Let's go beyond the shallow sound bite definitions for a moment and examine some facts:

Data released by Advanced Data Processing (ADP), one our country's largest payroll service provider, indicates that businesses with fewer than 50 employees made up 45% of non-farm, private payrolls in October 2011 and, in the past two years, these smaller businesses increased payrolls more than companies with more than 50 employees.

The Kaufman Foundation's research indicates that nearly all net job creation since 1980 has occurred in firms less than five years old.

So small businesses are a critical source of employment in our economy; and entrepreneurial startups, in particular, are the driving force of job creation.

And who are these entrepreneurs and small business owners? According to the most recent Census Bureau Survey of Business Owners (2007), Hispanic-owned businesses are the fastest growing segment of the small business sector, expanding at nearly twice the rate of the national average between 2002 and 2007. What's more, Hispanics owned 2.3 million nonfarm U.S. businesses operating in the fifty states and the District of Columbia in 2007, an increase of 43.7 percent from 2002.

The Kaufman Index of Entrepreneurship found that, even in the face of this economic crisis, the entrepreneurship rate among Latinos has increased. These rates are higher yet among immigrants.

For example, Kansas City, MO, a city like so many that is experiencing a Latino population boom, is home to family-owned Mary's Hair Salon. Established last April, Mary's Salon offers bilingual customer services. Karen Caballero (owner/daughter) and Maria Barron (business administrator/mother) have a mission to provide quality hair salon services at affordable prices. Ms. Caballero and Ms. Barron received technical support and training from the Hispanic Economic Development Corporation of Kansas City (HEDC), a nonprofit organization dedicated to providing bilingual and bicultural support to Kansas City's small business community. A strong entrepreneurial drive and some strategic support from HEDC, were key ingredients to this small business success. Ms. Caballero and Ms. Barron originally wanted to start with two hair stylists to meet the demands of their clientele but quickly developed the need to hire two more. The business now employs five people.

Nicolas Canales launched Spanish Black Belt in 2004, a Spanish language institute that specializes in high-powered tutoring programs. After being turned down by a major bank for having a fledging business, Nicolas started his business with a $30,000 micro-loan from Latino Economic Development Corporation in Washington, DC and has created 20 jobs. Since launching his business, Nicolas has doubled the size of his teaching staff, increased his revenues by 150 percent, and Spanish Black Belt has entered new markets including Denver and New York.

With so many unemployed people turning to small business strategies to earn a living, our political leaders and Federal small business policy should place a greater focus on delivering capital and technical support to micro businesses.

Wouldn't it be refreshing for Speaker Boehner to balance his vision of wealthy job creators by recognizing the job creating potential of small business owners like Ms. Caballeros? And wouldn't it be encouraging for President Obama to put more muscle behind making federal agencies - whose job it is to focus on growing small businesses - really work for Mr. Canales and the thousands of other entrepreneurs across the country that are adding people to their payrolls?

So who are job creators? I'll offer my own admittedly partial picture - Latinos, that's who.

Gene Marks: 27 People Who Lied To Me Last Week

2012-02-22T10:44:28Z

Want to own a small business? It's not as romantic as you may think. Very few entrepreneurs go on to become the CEOs of publicly held companies. Sure, there are many upsides: the independence, the freedom, the joy of innovation, the girls, the parties, the cheering crowds. But for most of us, running a business means long hours of hard work in industrial parks near the airport. We deal with a lot of headaches. And boy, do we hear a lot of lies! Don't believe me? Here's just a partial list of 27 people who lied to me this past week alone.

1. My banker. My banker personally assured me that I was a "very important customer" as I sat in his branch office. Umm ... really? Aren't you the fifth guy I've seen sitting in that chair over the past six months? And aren't you feeling a little uncomfortable saying how valuable I am when your own office has no personal effects ... anywhere? I'll start believing you if you're even still working at this bank the next time I visit. And by the way, do you know what my business actually does? I didn't think so.

2. The customer who told me he'll pay. Oh, those silly gooses. They always say that. And then 60 days later I have to call and beg them for the money owed to me from a service I already performed. And then I'm the devil and accused of "poor customer service" because I refuse to provide more services until the open invoice is paid. This happened to me last week. Footnote one week later: Invoice is still unpaid.

3. The vendor who says he'll deliver on time. No he didn't. He forgot to tell me they were closed Monday for the holiday. Other than government workers and school teachers, since when is President's Day a holiday? Suffice it to say, the items I needed didn't arrive until the day after he promised. Why do I keep believing these guys?

4. My teenage daughter. I'm not sure what it is, but she lied to me about something last week. Just you wait and see.

5. The customer who told me "money's no object." Why, that's awesome! Then I'm raising my rates to $5,000 per hour. Oh, that's too expensive? Then I guess it is about the money. So ... can we please stop saying that?

6. The guy who promised me more business. I love guys like that. "Yeah, give me a special deal now because there's lots more business where that came from." Here's what I learned in the past 18 years of running a business: I'm likely to grow more hair before I see more business from the guy who makes that promise.

7. The guy who invented those 5 Hour Energy drinks. Running a small business can be tiring, so who can resist a little energy shot in the middle of the afternoon, right? Wrong. All I experienced from one of these bottles was a case of the jitters and an overwhelming desire to drink human blood. Luckily, the jitters went away after only a few minutes.

8. Dun & Bradstreet. They, like many of their fellow credit bureaus, collect and sell financial data about businesses. They also determine the creditworthiness of our country's major banks. Last week, they assured me that the new customer of mine was a good credit risk. Anyone want to take bets?

9. The President. I'm warning you: Do not believe his March Madness predictions. They're always wrong. Oh, and don't believe his claim that the payroll tax cut will help the economy. Tax "rebates" offered to the masses over the years have never worked. But they do make for tasty election year treats.

10. Rick Santorum. He wants us to spend more time with our families. That has to be a lie. Has he ever spent more than five minutes with a couple of teenagers? Has he never watched an episode of Gossip Girl?

11. Gallup. Their latest poll last week reported that our "economic confidence" is the best in a year. Well, let me check my bank account. Oh, cash is down. And my customers are still sitting on quotes and taking a "wait and see" attitude. Other than the makers of the "The Amazing Spiderman" (which looks ... awesome!), is there anyone else feeling so confident about 2012?

12. The price of that new router for my home office. No, it wasn't $129 like I was promised. It wound up costing me $3,129. That would be the cost of the router plus the 15 hours of my time spent over the weekend trying to figure out why it was always going offline and why my wireless printers couldn't connect to it. (Epilogue: Router now working, wireless printers inexplicably go offline.)

13. Charlie Manuel. He's lying when he says he wants to "adjust Ryan Howard at the plate." Any Phillies fan will tell you what he means to say is "when an opponent shifts every single one of their players to right field, we want Ryan to hit the ball to left field because if he keeps hitting like he's been hitting our fans will kill him."

14. Plug and play. That's a lie. Particularly when it came to the new bluetooth headset I purchased for my Dell desktop. There was plugging, but no playing. Instead there was lots of downloading, reinstalling, cursing, stomping, screaming and overseas calls to tech support where it was finally resolved.

15. The US Airways pilot on my flight to Orlando. He said that congestion at the Philadelphia airport would only delay us 10 minutes. Dude, have you ever flown out of the Philadelphia airport? It's never less than a 45-minute delay if you don't leave your gate on time, and even then it's a good 30 minutes. But you knew that, didn't you?

16. My CPA. He lied to me when he promised to have this year's tax returns done in "a jiffy." A "jiffy" to most accountants means getting a FedEx delivered to your house at 11 p.m. on April 14. And God forbid if you have a question on what was done at that hour. But I'm sure he'll stand loyally by my side in case there's an audit. Right? Hello? Hello?

17. The economists on Seekingalpha.com. Those guys seem so smart, don't they? And they all have their opinions about where the economy is going. And yet, they all seem to differ from one another. So who's lying to me? Who cares -- most of them are usually wrong anyway.

18. The researchers in Australia who say that "work is causing cancer." Yeah, yeah. And so does alcohol, baby food, bottled water, celery, Adam Sandler movies, fruit, gingerbread, mobile phones and orange juice. We all know there's only one thing on that list that can truly cause cancer (or at least a very severe case of boredom). Now can we all just get back to work?

19. My "loyal" employee. He says he is. But he's not. Watch what happens when the economy gets better. We try to keep these people. But if they're really good, they get snapped up by Google or Microsoft anyway. Such is the life of a small-business owner.

20. The company that sold me 10,000 prospects for my marketing campaign. They said the data was good. But when 8,000 emails get returned undelivered, I have to question their claim. And I would, if their phone wasn't suddenly disconnected.

21. The guy who told me he was giving me the "best price." No it's not. It's the best price for him. Whenever someone says he's giving me his "best price," I know I'm being lied to. And in this case, I was. Because it was the same guy who sold me that list of 10,000 prospects. Drat!

22. The French. No one from France lied to me this past week. But I'm sure they would if they had the opportunity.

23. The search engine optimization consultant. Well, he didn't actually lie to me. Not exactly. He said that for $5,000, my company could be listed on the first page of Google. And it was. At 3 a.m. Tuesday night. For 30 seconds. And then it disappeared into oblivion. Just like my 5,000 bucks.

24. My IT guy. Either he lied or he conveniently forgot to tell me that moving to "the cloud" would mean that it now takes five minutes to print out a document and five times as long to update a proposal in Word because of the slower performance. Oh, and my cloud server "doesn't support" Internet browsing. So now I'm writing my letters and surfing the Web from my desktop. Didn't I start there?

25. My employee who told me this video was funny. OK, it was kind of funny. Now get the hell back to work.

26. MakeUseOf's List of "inspirational" videos. What, after hearing all these lies you think I can get inspired? Where's a 5 Hour Energy Drink when you need one?

27. The U.S. Energy Information Administration. Last week they said we would become "more energy independent" by 2035. I never believe the predictions of any government agency. Not when they can't even figure out historical numbers without revising them 57 times. And uh ... if we're becoming so energy independent, why are my company's fuel costs higher than ever?

And the one person who didn't lie to me last week? The teenage girl at my local Starbucks who took my order with a bored expression, never looked me in the eye and handed me my coffee like it was a plastic bag of doggie doo. She could care less about me. No, I would never hire someone like her to work for me. But hey, at least she was honest!

Another version of this post appears on The Philly Post.

Alana Muller: Optimism Should Be at the Top of an Entrepreneur's Checklist

2012-02-22T01:54:22Z

Optimistic entrepreneurs are the most successful kind. They are energetic and fun to be around, and it is exciting to be party to their startup endeavors. Sure, they require a good heaping dose of realism, too, but their passion and conviction ooze through every pore of their being and their enthusiasm is downright contagious.

One might wonder if my colleagues and I simply see the world through rose-colored glasses, especially in a questionable economy. I say, we're seeing things in their appropriate light. Just last week, the Ewing Marion Kauffman Foundation, in conjunction with LegalZoom, released its inaugural Startup Confidence Index. The results mirror my own experience -- entrepreneurs today are surprisingly optimistic about 2012. In fact, more than 25 percent of them plan to expand their staffs in the next several months, and twice as many of them -- 68 percent -- expect the economy to improve or stay the same during the year.

In my own work with the FastTrac program, where we open a portal to the entrepreneurial ecosystem for current and aspiring business owners -- before, during and after the startup process -- I am exposed to this type of optimism on a daily basis. Nothing gives me a greater charge than to hear from one of our entrepreneurs around the world -- their willingness to share their successes, their setbacks, how they are moving forward and their ideas to help other entrepreneurs. It is incredibly inspiring.

But, let's face it; optimism alone is not enough to ensure business success. I am often asked if there is a checklist -- some source code to determine what it takes to cut it as an entrepreneur. Unfortunately, there is no magic bullet. However, there are some indicators of entrepreneurial potential.

Successful entrepreneurs develop feasible ideas into profitable businesses. They recognize opportunity; consider and implement sales and marketing plans; convert prospects into customers; locate and acquire financial capital; build solid, effective management teams; and they ably manage risk. In fact, speaking of risk, it is critical for an aspiring entrepreneur to identify his or her risk tolerance level. He or she might ask:

Do I often seek out and try new and different things?

Do I enjoy the challenge of finding a solution when I encounter a problem?

Do I embrace the discomfort associated with trying something new or different as part of the learning process?

Am I open to asking others for help or guidance?

There is no hard and fast rule for whether the answers to any of these questions will help an individual to succeed as an entrepreneur, but a "Yes!" response to questions like these indicates a person's ability to work through the uncertainty associated with entrepreneurship with confidence, perseverance and aplomb.

An individual with a strong desire to succeed coupled with passion for what he or she is doing helps to get the entrepreneurial ball rolling. I have discovered, too, that the best entrepreneurs I have encountered exude determination, physical energy and resiliency -- they tirelessly pursue a vision and readily overcome the setbacks and disappointments often experienced when launching or growing a business. They are always selling -- they have their stories down cold and are eager to share their vision with anyone who will listen, making them interesting and persuasive and compelling. They hold themselves accountable for achieving results and have the self-discipline necessary to move the business forward, to shift gears as necessary and to take action even in ambiguous, confusing environments. They are a confident breed, and others gain energy from simply being around them.

That, of course, brings us back to optimism. Above all, great entrepreneurs are optimistic. Their passion, their belief, their can-do attitude all lead to a positive vision for the future.

In fact, you might wonder, what is better than an optimistic entrepreneur? The answer: Many optimistic entrepreneurs! The point here: Don't go it alone. Entrepreneurship by its very nature can be daunting and lonely and risky and scary. There is no need to go through it by oneself -- in fact, I don't recommend it. Instead, an entrepreneur should surround him/herself with the best -- the best support network (family, friends, informal advisers, and mentors), the best business partners and employees (people who care [nearly] as much as you do), the best board of directors or advisory board (be sure that they are fully committed to supporting you and truly enthusiastic about your success and the success of your business). Indeed, optimism and enthusiasm and a positive attitude feed on themselves and regenerate, leaving more of the same! Part of success is simply believing -- truly, deeply in your heart of hearts, in your gut -- that you will succeed.

So count me in. I stand by the optimistic entrepreneurs. Like them, I have high confidence in the future, and 2012 is a perfect place to start -- and to 'startup' your idea.

Mick Pattinson: Small Business Shut Out of Government Contracts -- and How That Is Changing

2012-02-22T00:50:48Z

No one gets more love than small business. Just turn on any news channel big or small, liberal or conservative, and within a few minutes some politico is telling us how much government is doing to help small business.

Everything except actually hire one: Most small contractors have never received -- or even bid on -- a public works job.

Try this at home: Next time you hire a painter or roofer or gardener or plumber, ask them if they ever do any government work.

They will say no. "Too much paperwork."

Translation: They do not have a credit score high enough to get a bond they need for government work.

It works like this: If your city council decides it needs a new roof, they put it out to bid. Your local neighborhood roofer submits the lowest bid.

But to actually do the job, your roofer needs cash and credit worth at least $300,000 in order to get a bond. (If the roofer cannot finish the job, the bonding company will, then go after the roofing company for the money. So if they don't think you will have it, they will not issue a bond.)

"Today, some bonding companies want 50 percent of the value of a contract as collateral before they issue you a bond, if they decided to issue you one at all," said Dominic Dunlap, a Chicago roofer. "This has put an enormous number of small contractors out of business all over the country because they cannot get a bond for government work."

This is what President Obama meant when he said some jobs were not as shovel-ready as he thought they were going to be.

"It doesn't make sense that the same small business people who pay taxes to pay for the jobs cannot bid on the jobs," said Jerome Stocks, mayor of Encinitas, Calif., and chairman of the San Diego Association of Governments. "Also, with fewer bids, that means state, local and federal government agencies are going to pay more for their projects."

Stocks is getting national recognition for his work in urging public agencies to split their jobs into smaller and smaller contracts to enable more small businesses to bid.

On a parallel front, agencies, contractors and at least one bonding company are finding a new way to get more bids from more small contractors. If this were the movie The Graduate, this is the part where the guy would lean over and tell Dustin Hoffman the secret to his future success: "Funds Administration."

The back story to the secret is this: The biggest reason a small contractor gets in trouble to prevent him from finishing a job is cash flow. They use money from one job to pay the vendors from another.

But led by a New York company called Ox Bonding, government agencies and bonding companies are not just managing that risk, they are getting rid of it entirely. Result: For the first time, thousands and thousands of small business owners are actually competing for and winning bids on their first public contract.

According to Dominic the Roofer, "We had tried more than a dozen bonding agencies without success but finally we found Ox Bonding and we were able to get a bond. Without them, we would be out of business. And they were able to issue us a bond because of the way they manage risk with funds administration."

The people at Ox Bonding are not Angels of Mercy: They run an insurance company. They measure the same risk in the same way as other bonding agencies, they just control it differently.

Instead of looking at just credit scores, they look at the company, its owners, its bids, its profits, pretty much everything.

They just want the answer to one question: Can this company finish the job on time and under budget? They use real construction people to actually meet with the contractors to see if they can do the job, not just check boxes on an application.

Once they figured Dominic the Roofer was up for it, Ox issued him a bond.

Here comes the important part: Once Dominic the Roofer received his bond, the work of the bonding company was just beginning: "Instead of writing a check to the contractor, the city writes a check to the bonding company, and they control the distribution of funds. They pay all the bills until the job is over," said Dominic the Roofer.

Boom! There goes the risk. No more robbing Peter to pay Paul.

"I started this company because when I was a teenager, I sat at the kitchen table with my father, a contractor, and listened as a bonding agent said my father could not qualify for a bond for a bigger job," said Robert Berman, CEO of Cininium Financial, owner of Ox Bonding. "That was very hurtful. There are thousand and thousands of great companies in this country that cannot bid on government work. Many are going out of business. We changing that."

And it is happening in more than 200 state, local and government agencies around the country, from Glen Cove, N.Y, to Honolulu from highways in California to solar energy installations in New Jersey.

"The funds administration is an excellent program," said Glen Cove city engineer Susan Lounsbury, P.E. "It took a bit of explaining to the people in the finance department, but once we did, they were fine with it. And getting to hire more local contractors is good."

Michael Kempner: Wooing Top Talent: What Matters to Millennials

2012-02-21T23:26:05Z

Recently, there's been a lot of talk, including this story in the Atlantic, on how the recession has impacted the Millennial Generation, particularly in terms of employment, finances, and work ethic. While it's true that this generation is earning less and staying at home longer -- Zach and Melissa, if you're reading this, this is not an invitation -- bright and ambitious Millennials are more in the driver's seat when it comes to their future employment than any generation before them.

Consider this from CNBC that shows graduates aren't flocking to the trading floor as they once were, even through Wall Street is still paying out the big bucks. More and more, graduates of top schools are flocking to start-ups in Silicon Valley and elsewhere. With role models like Mark Zuckerberg, it's easy to think this has something to do with the promise of a shiny IPO down the line. That may have a little something to do with it ... but I think author Bruce Tulgan got it right in this Washington Post blog about managing Millennials:

"...They want to hit the ground running on day one. They want to identify problems that nobody else has identified, solve problems that nobody else has solved, make existing things better, invent new things. They want to make an impact."

Now, I run a PR agency and am surrounded by young people and their passion to make a difference every day. So it's easier for me to integrate these ideas into our hiring, recruitment, and professional development strategies.

But it's even more important for industries that aren't particularly relevant or sexy to young applicants. Because even in this economy, there aren't enough high-skilled workers to fill the jobs that need filling. It's a really interesting paradox.

And it means it's even more important that a company is relevant to the interests and the aspirations of the young workforce.

That doesn't mean getting bean bag chairs for the board room or golf carts. You don't have to be Google or Facebook to attract top talent. But you do have to be relevant. You have to embrace and understand what this generation is looking for in their next job, and the ways they're going about finding it.

And this isn't just an issue for your HR department. It's just as much about marketing as it is about recruiting. This is about the culture you're building and the reputation you have among all of your stakeholders.

Here are three ways to make sure your company isn't going the way of Wall Street:

The old rules no longer apply. It used to be that to land a job, you had to go through a headhunter, get recruited, or hope your resume was passed into the right hands. That's not just the case anymore. And don't think just posting online is all you have to do: Millennials are no longer content sending their resume into the black hole of an online application form. They'll email the CEO directly. They'll hunt down long lost friends on LinkedIn and ask for a recommendation. What was once the way of the bold is now just ... the way.

CSR is Just the Beginning. Millennials care what a company cares about -- how involved the company is in the community, its environmental practices and policies, and how it treats and develops its employees. Wall Street's bad rap is finally catching up with the banks, and big bonuses are finding it harder to overpower the image the industry has earned as not serving a social good. The banks and other industries like it will need to genuinely change that perception.

Remember: your internal culture is now external. In addition to spreading news about job openings, social media is making it easier for people outside your organization to learn about your internal culture. If people aren't happy at their jobs, they'll reflect that in their social media presence. Even if they aren't flat out ripping on their boss or quitting via YouTube, people will complain about bad days at work or the pressures of tough work environments. Build a culture where your employees are your best ambassadors, and where word of mouth is a good thing.

At the end of the day, transparency is no longer a choice. Just as hiring managers can learn more about applicants than ever before -- applicants can and are learning more about our companies. To recruit the best young players, we'll all need to rethink our game.

Rena Steinzor: The Economist Recycles Old Right-Wing Ideas to Gut Public Protections

2012-02-21T22:19:22Z

The Economist’s Feb. 18 edition offers a cover package of five articles on “Over-regulated America” (1, 2, 3, 4, 5). Our British friends want you to know there’s a problem here in the states that needs fixing:

A study for the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee. It’s a wonder the jobless rate isn’t even higher than it is.

You can almost feel The Economist’s pain: the jobless rate should be a lot higher than it is, if the premise about the costs of regulations is correct. Surely if the regulatory burden were actually 12 percent of GDP -- that’s what the SBA numbers say, if you draw them out -- things would be far worse than they are. Ideologically unable to consider the obvious alternative -- that regulations don’t add $10,585 in costs per employee, The Economist, just, well, “wonders” aloud.

Here’s what The Economist would have found if they’d dug just a little bit: Fully 70 percent of the SBA estimate was actually based on a regression analysis using opinion polling data on perceived regulatory climate across countries (in a strange twist, a separate article in the same issue actually questions the study, briefly). Whole reports have been written on why that number is bogus.

Our economy is still recovering from a tremendous collapse largely caused by under-regulation of financial institutions. But in its group of articles, The Economist wants us to think the opposite: “The home of laissez-faire is being suffocated by excessive and badly written regulation.” That premise, in turn, leads the magazine to -- you guessed it -- a series of warmed-over right-wing policy ideas aimed at gutting regulations. Let’s take a closer look.

******

The fundamental challenge for The Economist is squaring its anti-regulatory critique with its admission that “most” of today’s regulations have monetized benefits exceeding costs. The magazine likes that, after all. So where’s the problem?

Big business in the United States spent years pushing to institute a system where regulations are only approved if their monetized benefits exceed their monetized costs. So, for example, a polluter can’t foul a waterway and kill a couple people along the way, unless it makes a whole lot of money doing it. But a challenge emerged for these industries: many of the biggest regulations -- EPA air pollution rules, in particular -- have benefits far exceeding costs. Of course, the companies who will have to bear some of the cost of finally cleaning up their act still want to stop these regulations. So what to do?

The Economist has industry’s back, dedicating one of its articles to arguing that the federal agencies have been over-stating the benefits of their proposed rules. Exhibit A: the EPA’s “Utility MACT,” which will put limits on certain pollutants for coal-fired power plants, and save literally thousands of lives every year. In reality, the Utility MACT perfectly refutes The Economist’s premise: It is actually an example of an agency underestimating, not overestimating, benefits.

The magazine is upset that in the EPA’s calculation of $37 to $90 billion each year in health benefits for the rule (compared with $9.6 billion in costs), “less than 0.01 percent of the monetary benefits” came from reductions of mercury pollution. The monetized benefits came from reductions in particulate matter and other harmful pollutants, but not from the mercury that was the prime target of the rule. This is an argument we’ve heard ad nauseam from the coal power industry and its allies. It’s nonsense: The quantified mercury benefits are low because EPA didn’t calculate them. Putting an exact monetary value on not poisoning our children with neurotoxins that stunt their mental development is difficult and there’s no right number; the EPA just left it out, relying on the benefit calculations for the reduction of other pollutants. The case is a prime example, in fact, of how agency analyses usually underestimate regulatory benefits. Likewise, independent studies have shown the agency projections of costs of regulations to be too high.

******

The Economist settles on a series of unfortunate recommendations. Let’s start with the championing of sunset provisions: “All big regulations should also come with sunset clauses, so that they expire after, say, ten years unless Congress explicitly re-authorises them.” But the same pages contain a plea against involving Congress in rules, as they rightly criticize the REINS Act: “Passed by the House, it would involve Congress more heavily in rule-making. If there is a body worse than the executive agencies at this kind of thing, it is Congress.” The magazine also seems to realize another problem: “Lastly, automatic ‘sunsets’ of laws have their fans, though Congress could mindlessly reauthorise laws gathered up in omnibus bills (and a bitterly divided Congress might allow good laws to lapse).” The magazine has laid out some of the important arguments against one of its key recommendations.

Here’s one of their other big ideas: “More important, rules need to be much simpler. When regulators try to write an all-purpose instruction manual, the truly important dos and don’ts are lost in an ocean of verbiage. Far better to lay down broad goals and prescribe only what is strictly necessary to achieve them. Legislators should pass simple rules, and leave regulators to enforce them.”

This call for stripping laws or regulations of clear mandates, championed for decades by Philip Howard, is a prescription for giving up our existing public protections for some future, nebulous protection system with no clear teeth. And it would lead to, among other things, a storm of action in the courts, which would have to spend years interpreting what the broad rules meant. That should be troubling for The Economist, which says it’s worried about courts interpreting rules: “The courts, in fact, are the source of the worst uncertainty surrounding environmental regulation.”

The magazine touts “creating a full-time advocate for regulatory rollback” -- seemingly unaware that our tax dollars already fund such an office, the SBA’s Office of Advocacy. Just this week, that office trumpeted a list of rules that it says it played a roll in weakening or gutting.

Perhaps most troubling, The Economist floats the idea of requiring that an existing regulation be revoked any time a new one is instituted. This idea is not new; anti-regulatory guru Chris Demuth of AEI was pushing this idea at least as early as 1980. And it makes no more sense today than it did then. New and existing regulations should be evaluated on their merits, not an arbitrary system that says we have to get rid of the rule on peanut safety if we need to make a new one on cantaloupe safety. We need to be able to address new threats, be they toys from China or BPA in water bottles.

The Economist wants us to take its proposals seriously. But all it has done is repackage false claims about the problem – and about the solutions.