Corporations, On an Evolutionary Scale

April 30, 2014

Few would argue that corporations aren’t what they used to be. Long gone are the days of the big box corporate manufacturer who employed everyone from stock clerk to CEO. No, today’s corporate employers are lean, mean and increasingly - green.

 

Today we can see those changes manifest in a variety of ways, from business structure to the public face - there’s little that hasn’t changed over the last 30 years.

 

1. Subcontracting and Supply

 

Corporations these days are streamlining the supply chain by cutting back on the volume of regional suppliers in exchange for a handful of global or national suppliers. The result is that small businesses get the shorter end of the stick.

 

The advantages are obvious. The corporation needs only to make one phone call, for example, to get all the gas needed by their subsidiaries all over the world. This creates enormous economies of scale in which large corporations only trade amongst themselves, often shutting out local and small businesses in the process.

 

This effect has been recognized over the last few years by several different private companies and even a few state and federal governments.

 

Of course, these projects do have their neighsayers. Joel Sutherland, managing director of the Supply Chain Management Institute at the University of San Diego, recently told Business Week: “It’s building complexity in, not simplifying it,” he says. ”I don’t think there’s a strong business case for turning to small business suppliers...I think it’s more of a halo effect.”

 

2. Outsourcing All Except the Core Departments

 

As corporations seek more and more ways to cut the fat, they are concentrating their efforts on their core services - for example AT&T on phone, cellular and internet services and GE on… Well. Wait, what doesn’t GE do?

 

Recently, Wall Street Cheat Sheet put together a list of the 12 most frequently outsourced services. These services go from the obvious (manufacturing, data processing) to the less obvious (research and development, creative services from logos to PR).Of course, the term ‘Outsourcing” is maddeningly vague and can refer to anything from those iPhone manufacturing jobs at the Foxconn in China to getting the guy who lives down the block from you to build a website for your local restaurant.

 

Suffice it to say, that nearly all corporations outsource some part of their operations from accounting to legal services, often shedding hundreds of thousands of jobs along the way.

 

3. Telecommuting

 

Another way corporations are changing is that they are becoming less centralized and less hierarchical in structure. The business model is going from that of a pyramid to that of a hive. Part of this process has allowed many of us to work from home.

 

According to a 2012 Reuters poll, approximately one in five workers around the globe telecommute frequently and nearly 10 percent work from home every day. In an even more recent article, the New York Times sought to determine the typical telecommuter. It turned out it be a 49-year-old college graduate — man or woman — who earns about $58,000 a year and belongs to a company with more than 100 employees. And Forbes just ran an article descibing it as the trend of the future… Why?

 

According to the article it is a way to get more out of employees, who often will work longer hours if they work from home - especially in tech companies. “Having remote and virtual employees is not only a way to get things done round the clock, without commuting, and with hard-to-find skill sets but is also a way to meet the needs of employees who don’t want to or can’t live near the mother ship,” said the article.

 

4. Hiring: The Floating Workforce

 

On the heels of a mobile workforce is a fluid workforce, and there are few workforces more fluid than the temporary worker. In the best case scenario, the temp worker (also called contract worker or contingent worker) could be a student or an artist who is just trying to supplement his life in the short term. More often than not, however, the temporary positions in a company are permanently filled - by temporary workers that is!

 

And the news is awash in these kinds of stories.

 

NBC News ran one 10 days ago that recounts numerous sad tales including one worker who, at 56, is not only on an hourly wage, but at a rate that is 40% less than his previous salaried position.

 

As recounted to NBC: “There are a lot of perverse incentives for employers to use temps,” said Erin Hatton, an assistant professor of sociology at the State University of New York, Buffalo, and author of The Temp Economy: From Kelly Girls to Permatemps in Postwar America. “For one thing, it’s cheaper. Using temporary labor lets companies avoid the cost of providing benefits like health insurance, workers’ comp, paid sick leave and the like.”

 

5. Social Responsibility

 

Companies are starting to realize that they have a face in the community now and it’s not just all the behind the scenes hocus pocus of previous generations. Just as Mitt Romney once said, corporations are people too, my friends - and nobody wants to be friends with a greedy self-centered jerk.

 

Diversity programs abound, like this one from Target, or this one from Wal-Mart. And just two years ago, BP had to run a huge campaign to counteract the damaging image of a large, wealthy oil conglomerate recklessly damaging thousands of miles of coast for corporate profit. Did it work? Meh… Not really. But in this day of social media and round the clock news, nothing is ever kept private or left without comment.

 

Tune in this Saturday at 12 noon on AM970 The Answer for the Michael S. Robinson Show as we continue this conversation about The Changing Landscape of Corporations in America.

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