peterskim blog

As you progress through your career and work at a number of different companies, you realize that there are good companies and bad companies and everything in between. What’s the difference between a “good” company and a “bad” company? Quality of management, clarity of vision, opportunities for career development/advancement, work environment, treatment of employees, etc… There are no perfect companies, but some companies are clearly better than others.

I think it’d be interesting to try to quantify what the discount/premium is for salary when taking company quality into consideration. For example, a lot of techies would consider a company like Google to be an “A list” company. Google doesn’t need to overpay people in order to acquire high quality employees because there is so much demand. In fact, they can probably get away with underpaying their employees since for the employees, there are no better alternatives but for Google, there are plenty of people willing to replace anyone who decides to leave Google.

On the other end, there are a lot of companies that might be considered “F list” companies—companies that are poorly managed, lack vision, completely pigeonhole employees into niche roles, and treat their employees like slaves. It’s a miracle that companies like that find a way to stay afloat but they do. When these “F list” companies need to hire new employees, how do they attract sufficiently talented people when those people can choose to work at a better company? “F list” companies have to 1) overpay to make up for it being an “F list” company and/or 2) settle for less-than-qualified individuals.

If “A list” companies can underpay and “F list” companies have to overpay, what are those discounts and premiums? Have human resources professionals found a way to quantify those discounts and premiums?

Or maybe what most frequently occurs is that since there are also superstar and subpar employees, the superstar employees tend to end up at the “A list” companies while the subpar employees go to the “F list” companies. The interesting scenarios are when overall supply and demand for a particular job are completely out of whack, like what seems to be the current scenario for software engineers. Not that it’s always been great for software engineers—CS majors graduating in 2002, even from the top schools, had a tough time finding a job.

I’ve thought about this issue as I’ve considered a number of different companies and ranked them in order of quality as I perceive it. How much more would Company Z, which I rank last in my list, have to pay in order get me to go there instead of Company A, which I rank first in my list? Would I turn down a significantly higher offer at Company Z in order to work for Company A?

I decided that I would because money can motivate me for only so long. If I took the job at the lesser company, I would eventually become unhappy and unmotivated, regardless of how much money I made.

I did a google search on “company morale” because I wanted to learn about various ways to evaluate and improve morale within an organization. Here’s one link that shows a clear case on how NOT to motivate people:

http://technocrat.net/d/2006/8/28/7262

It blows my mind how some leaders and managers think they can motivate people by being negative. One of my coworkers told me that at his last company, one of the managers recognized that people were only working the minimum required hours and not putting in a lot of effort, but instead of yelling at them to work harder, he thought about why people weren’t motivated to work hard. They ended up trying different means of increasing communication, encouraging a more open environment, promoting more team-based work, etc… And he said it worked.

Money is rarely a reason why people are happy or unhappy at work, so I’m not sure why HR departments focus so much on monetary compensation. Maybe I’m overestimating people, but I honestly think most people want to work for more than just a paycheck. I think most HR departments can be a lot more creative in coming up with ways to make people feel happy about being at work.

Now that we know what social enterprise is, we can have some discussion about it. I think social enterprise can be very powerful, as long as the fundamentals of business are not ignored with the excuse that they conflict with the social cause.

I’m torn with regards to whether I want to align myself to the social enterprise movement. I’m thinking about this as I’m reflecting on how to present myself through my business school applications and interviews. I want to express that I believe there can be significant social impact made by for-profit business that direct their attention towards places and problems that could use help. However, I don’t believe that is the only way that business can make a positive impact on society. I believe that a thriving competitive free-market economy with successful businesses is a fundamental positive good for society.

It is a good thing when we have numerous brands of athletic shoes or clothing or electronics or anything else that we can choose from that offer consumers the full gamut of quality and feature levels. It is a good thing when we have numerous stores that sell those numerous products that compete for our hard earned dollars, and therefore are able to offer us the lowest possible prices. This would be impossible outside of a free market capitalist system.

So do I need to be involved with a startup in Africa that sells sanitary products at affordable prices to the poor in order to make a positive impact in society? Being a part of launching new products as a product marketing manager at a large American corporation, for which the net result is the increase in profits, leading to the hiring of more employees, and improving consumers’ lives through innovative products is nothing to sneeze at.

I’m going to start a new series of posts titled “Definitions: What is ?” Often times, certain phrases are used even when people are uncertain of their meaning. This is more for myself as I try to understand what things really mean but maybe it’ll also be useful to you.

Social Enterprise
Wikipedia link: http://en.wikipedia.org/wiki/Social_enterprise

“Social enterprises are organizations which trade in goods or services and link that trade to a social mission. The need to deliver on both financial, social and environmental performance targets is often referred to as having a triple bottom line.”

Apparently “social enterprise” means different things in different countries. The Wikipedia entry has a good explanation of various definitions of the term.

Social Entrepreneurship
Wikipedia link: http://en.wikipedia.org/wiki/Social_entrepreneurship

“Social entrepreneurship is the act of a social entrepreneur. A social entrepreneur is someone who recognizes a social problem and uses traditional entrepreneurial principles to organize, create, and manage a venture to make social change. Whereas business entrepreneurs typically measure performance in profit and return, social entrepreneurs often start nonprofits and citizen groups.”

I’ve often seen the terms “social enterprise” and “social entrepreneurship” used interchangeably, when in fact, they are very different (at least according to the Wikipedia definitions). Social entrepreneurship seems to refer to attempts to make broad social change. Social enterprise seems to simply refer to entities that have a social cause as one of possibly many (including financial) motivators.

The type of stuff I’m excited about is obviously more “social enterprise” and specifically, the “American” brand of social enterprise as defined by Wikipedia. But perhaps even that does not accurately describe what I’m interested in.

I think for-profit entities that also have an underlying social cause in their mission statement can be limited and inefficient if they sway from a primary goal of increasing value to its shareholders. I believe a strong focus on maximizing value to shareholders inherently puts various accountability measures in place to help the company grow and succeed. If the company is distracted by other goals, it may actually have a negative impact in the long run. This is not to say that a company cannot or should not commit to acting ethically; my point is that having some social cause as a primary goal can conflict with shareholder value maximization and thus accomplish less good if the company fails as a result of it.

The type of organizations that I am excited about are for-profit entities that target underserved markets with the hope of causing localized improvements in the lives of those people. The Grameen Bank falls under this category. They started offering small loans to mostly women who could not get loans from existing banks. Or if they could, they would have been charged exorbitant interest rates.

In my opinion, the goal of economic policy should be to provide a framework for increasing everyone’s wealth. As this relates to helping the poor, I believe we should be trying to find ways to decrease absolute poverty, not relative poverty. Why make the distinction?

I believe the issue of relative poverty is not one relevant to real human “need”. It is mostly a matter of religion or psychology because it’s really about the question of whether we can deal with not having as much “stuff” as other people; it’s a matter of human wants. People in relative poverty, but not absolute poverty, are not in any danger of dying because of not having access to clean water or basic health care; their only “affliction” is a psychological issue that prevents them from having a positive, hopeful outlook on their future and leads to a form of life-paralysis.

Economic policy should not be used to address this sort of poverty. Economics is not well-suited to solve moral problems; it is more suited for solving efficiency problems. We have hundreds of millions of people around the world living in a state of absolute poverty, yet we waste billions of dollars in the US trying to help those only in relative poverty. Now that is injustice.

So if economists are not to solve the problem of the relative poor, who are? I believe that is the responsibility of moralists, philosophers, and religious leaders. People living in relative poverty need to learn that life isn’t about how much stuff you have, or more accurately, how much stuff you don’t have. The fact that a lot of people have more money than me should not get me depressed about my own life. Maybe God was getting at something when he made “Thou shalt not covet your neighbor’s possessions” one of the Ten Commandments…