| The mergers and
acquisitions make the headlines but below the
surface there is a growing trend toward business
alliances as the strategy to extend markets and
improve the bottom line. According to McKinsey,
global corporations may have 20% or more of their
assets committed to these alliances. These
arrangements have typically been used to
facilitate geographic expansion or to co-market
products but we are now seeing more companies
exploring a full-range of alliance opportunities.
Pepsico has used an alliance with Starbucks for
innovation and more rapid commercialization
introducing ready-to-drink coffee products.
Coca-Cola alliances have created new channels to
rapidly reach new customer segments with their
bottled water products at lower cost and risk.
ConAgra has put its meat processing plants into
joint ventures gaining operating efficiencies with
lower capital requirements. The results? The 10
most alliance-intensive companies studied by
McKinsey are delivering an average total return to
shareholders nearly 4 times greater than others in
their study of 77 leading consumer-packaged-goods
companies. Based upon this kind of return,
McKinsey says we can anticipate a strategic shift
from the past M&A focus to alliance
partnerships over the next few years. |
| |
Those who look upon
health care as ‘just another market’ say that the
motivated and educated consumer can exert pressure
on prices and thus slow the continuing escalation
of healthcare costs. This belief has led to what
are called consumer-driven health plans (CDHP).
The CDHP seeks to motivate the insured to make
wise healthcare purchasing decisions by offering
lower premiums on high deductible plans. A CDHP
also typically educates the insured by providing
access to pricing schedules and quality
information on their web site. The insured is thus
motivated by the high deductible to ‘shop around’
using the information provided by the plan to get
the best prices and service.
How is the
strategy working? According to a recent survey by
the Employee Benefit Research Institute (EBRI) and
the Commonwealth Fund, American’s aren’t signing
up for CDHP’s as hoped. Overall enrollment in
these plans was fundamentally unchanged in 2006.
Also, few participants say they used their plans
web site to compare price (5%) or quality (7%)
according to a survey by the Kaiser Family
Foundation. As in 2005, the overall level of
satisfaction of those insured under
high-deductible plans continued to be less than
for those in traditional healthcare plans and
participants report a higher level of delay or
avoidance of needed care under these
plans. |
| |
Businesses are
increasing the use of background checks in their
hiring process. Among the additional information
taken into consideration is a regular credit check
of the applicant, a practice that has nearly
doubled over the past decade. Fully 35% of
employers were checking an applicant’s credit in
2003 up from 19% five years earlier according to
the Society of Human Resource Management (SHRM).
In some cases the credit information has been used
to eliminate an applicant from further
consideration for employment or promotion. This
practice is now under fire from some quarters as
invalid and even discriminatory when applied to
credit scores of minorities. In a discrimination
case filed against Harvard University an African
American temp was denied advancement to a
full-time salaried position based upon her credit
score. Her case claims discrimination pointing to
studies that show that minorities are more likely
to have bad credit scores and low scores have not
been shown to negatively impact job performance.
Antidiscrimination laws make it illegal
for a hiring process to disadvantage a minority
even inadvertently so a company must be able to
demonstrate that the credit check is in fact a
reasonable measure of a person’s capability to do
the job in question. There are clearly jobs where
credit checks may be logically used as part of the
employment screening. If the job requires handling
or managing money or extensive travel, an employer
can make a strong case that credit scores are a
relevant factor related to the job. When used, an
employer must receive written permission from the
applicant to do the credit check. They must also
give those denied employment or advancement on the
basis of the results a chance to respond. In the
end, however, the confounding problem with credit
checks in employment screening is the ‘Catch-22’
nature of the measure. Applicants frequently have
poor credit scores precisely because they need
employment but a poor score limits their ability
get a job. |
| |
| ‘Market share’ has long
been a common measurement of corporate activity.
It is a major, sometimes even primary, measure for
some organizations. This focus can sometimes be
detrimental to overall performance and may even
end up reducing profitability according to Wharton
marketing professor J. Scott Armstrong. After
publishing the results of a study in 1996 that
came to this conclusion, Armstrong has continued
to study the impact of focusing on market share
and has recently co-authored the publication of
the results of 12 new studies supporting this
position. As a simple example of how market share
might negatively impact corporate performance,
Armstrong points out that companies (like DuPont,
GE, Union Carbide and Alcoa) whose only goal is
profit maximization have significantly higher
returns on investment (ROI) than do companies
whose only goal is market share. Highlighting the
dangers of basing corporate strategy on competitor
positions has become something of a mission for
Armstrong and he continues to try to get business
schools and corporate leaders to turn their
attention away from this measure. He even goes so
far as to advocate stopping measurement of market
share. What does he say about Jack Welsh’s
position that GE not stay in any business where
they were not either #1 or #2 in their market?
Well, it’s never too late to change . .
. |
| |
We all know that
Americans are not saving enough for retirement.
Right? Well, it now appears that some may be
saving too much!. New more sophisticated savings
calculators are challenging the widespread belief
that Americans are significantly under-saving. It
turns out that the current calculators widely
available for setting up a retirement savings plan
are just too simple minded. Even worse, many are
conflicted by being part of a sales program
designed to spur the user into greater savings and
investments. But when the new calculators with
dynamic inputs are used, the savings requirements
may be 10% less than those determined by our
current static models. This can translate into a
retirement plan that actually over-saves by a
significant amount!
Unfortunately, it
isn’t time to celebrate just yet. Olivia S.
Mitchell, professor of insurance and risk
management at Wharton suggests that there is no
definitive answer to the question because of the
large number of variables involved and some
variables, like the future of Social Security and
Medicare benefits are impossible to predict.
Another Wharton professor, Kent Smetters, notes
that ‘the traditional wisdom that people are going
to come up short is more right than wrong.’ Future
calculators may better enable benefits managers to
advise employees. For now, however, the best
advice is to continue to encourage employees to
save based upon the calculators we have. It’s
better to over-estimate the requirements of
retirement than to fall short. |
| |
Attend one of the
Chamber’s seminars in March and update your hiring
and firing practices to avoid problems. Create a
top quality workforce and increase your company's
return on investment. Avoid legal pitfalls as you
develop an EEO compliance system with
documentation. Earn 6.5 Continuing Education Units
(CEU's). Chamber members receive discounted price.
March 20: Willowbrook, IL.
March 21: Chicago, IL.
March 27: Springfield, IL.
Click
here for more information. Click
here to register. |
| |
| The level of employee
confidence rose to a new high in January of this
year according to a recent survey of over 4,000
workers in the U.S. The survey was conducted by
Harris Interactive on behalf of Spherion
Corporation. It tracks how employees feel about
both the economy in general and their own personal
job situation. At 60.5, the index is up 1.1 points
over the prior month and 1.3 points higher than
January of ’06. Confidence levels were either
higher or unchanged in all categories surveyed.
Workers (28%) believe that more jobs are available
– a 2% gain from December and 60% say they are
confident they could find a new job today. The Job
Transition Index component of the overall
confidence index found that more than one-third of
workers plan to change jobs in 2007. |
| |
I have always had a
natural aversion to jumping on a new version of a
major software system during its initial rollout.
This reluctance is probably based on sad
experiences over the years of chasing the patches
and version updates that frequently follow a major
upgrade. But if you are determined to move ahead
now to get the many benefits of the new Microsoft
OS, you should at least be aware that there are
apparently some compatibility problems with
current versions of Apple products. Apple says
that its current products are not necessarily
compatible with Vista and they recommend
holding-off until they can release updates to
their products in the coming weeks.
|
| |
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| Illinois
Chamber HELPLINE |
| Knowing what you can and
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Call our staff of HR experts. Let Pam Holleman
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| |
| Your membership in the
Illinois Chamber pays! We offer valuable programs
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In addition to our growing list of outstanding
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Learn more about these
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| |
 The Chamber urges
all Illinois employers to recognize their Guard
and Reserve employees by signing and displaying
the ESGR Statement of Support. To get yours,
simply complete
an online form and you will receive a
personalized certificate that demonstrates your
support. Also visit the SBA Veteran's Business
Development web site for assistance to small
business owners that have employees activated in
the Guard or Reserves. Click MORE
|
The Exec
Report - Wood S.
McComb, Editor
Copyright © 2007 The Illinois
Chamber
|
