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​RUSS  J. ALAN

MONDAY, MARCH 1, 2010

Unemployment: Why American businesses are failing
By RUSS J. ALAN

Why are American businesses laying off instead of hiring? Why aren't they making money?

American companies shouldn't be downsizing, they should be expanding. "But our sales are down!" OK, who's fault is that? Don't you know how to sell? "But we have a bad economy -- don't you watch the news?!"

Sales are not down because we have a bad economy; rather, we have a bad economy because sales are down. It's not the democrats' fault completely. It's not because of NAFTA. The simple fact is, American companies have forgotten how to make money. Get out there in front of the customer and sell.

I don't care what kind of business you are running. For instance, the phone rings at Kellie Temporary employment service and "Taqwandra" answers the phone. "Thank you for calling Kellie Temporary Personnel, this is Taqwandra, how may I offer you an award winning customer service experience at this time?"... as she scrubs her 4 inch fingernails with an emery board. She continues, "Hello William! No William we don't have any positions right now, it's been really slow -- the bad economy you know, we don't have any positions at this time, but you are still on our "active" list as soon as one of our clients calls us with an opening. What? No William, WE DON'T NEED ANY SALESMEN HERE AT KELLIE! -- I just got through telling you it's the bad economy -- what? You got a bad attitude. William, I don't think we will be placing you anywhere at this time..." Translation: "William, go die."

William is right. Taqwandra is wrong. It's not the economy. The problem is that Taqwandra hasn't been busy selling her company's services to new business clients. You see, Kellie Temporary Personnel Services, the "Kellie Girl" people, has a talent base consisting of skilled professionals in every business field, many of whom possess qualities acquired through involvement in various fields for several decades. Temporary personnel agencies like Kellie can save their potential clients millions of dollars every year by advertising job openings, screening and testing applicants, handling payroll, deductions, benefits, not to mention hiring and firing. Kellie's potential business clients can use the skills of the cream of the crop, on a temporary basis, and every now and then find a temporary employee who would be perfect match as a permanent, direct hire for their company.

Yes, I just gave Kellie Services their perfect sales pitch, but they wouldn't hire ME, I guarantee you. They aren't thinking of how to make money through the expansion of their business, their managers hired on for one thing: to be the boss over people. So instead of going out to new potential clients to market their services, they just sit and wait for the phone to ring. They not only have forgotten how to sell, they don't have the desire.

Automobile dealerships have forgotten how to sell cars. They used to sell the customer on the benefits of the product and matching the product to the customer's needs and desires, arriving at a final "win-win" deal was a fine art. Real estate agents no longer sell the corner lot, the state park across the street, the excellent school district, the brand new architectural roof. Instead, they put a bad picture in the Multiple Listing Service and wait on the phone to ring. They take the customer to see the house the customer wants to see, and they stay in the kitchen while the customer walks around the house, and hope they sell it to themselves. Sales people have become merely "order takers".

Businesses have forgotten how important it is to get in front of the customer and sell the product. One of my favorite examples is Circuit City. In early February 2003, North America's second largest electronics retailer announced sweeping cutbacks of its workforce, including the dismissal of approximately 3900 commissioned salespeople. Circuit City's sales force was moved to an hourly wage, a measure that then CEO Alan McCollough said would save the company about $130 million in payroll costs which included severance pay (to the sales people that they were going to fire). At that time, Warren Mann, former director of the MARTA Cooperative of America buying group said "...Circuit City's abandonment of sales commissions is a major blunder. They’ve gone to the dark side of retail, with a clerk floor like Kmart. You can’t make money selling better goods in a self-sale environment."

Approximately 60% of Circuit City workers were commissioned sales people. In 2007 the chain fired 3,400 of their most experienced salespeople and replaced them with generic, untrained, near-minimum-wage workers. Warren Mann was right -- Circuit City sold their last laptop and went out of business in early 2009.

Another thing that is destroying American business: managers. As I wrote in my October 13, 2009 column, Now Hiring: Anti-Capitalists Needed - Management Positions, management blames employees when the numbers are down. When the numbers are up, management takes the credit.

Managers are so intelligent. An employee may be an outstanding earner for their company, but if they don't stroke the ego of their bosses just right, they will he fired at the drop of a hat without warning. Years ago, the majority of the U.S. states adopted the "at-will employment rule".  The at-will rule has its genesis in a rule in Horace Gray Wood’s 1877 treatise on master-servant relations. Managers, who are in it to control, manipulate and boss people, think they benefit because there are no employment contracts, and they can fire an employee anytime they get ready, for any reason or no reason, with no warning verbal or written, with no thought of how much money their company spent to train and to develop that employee. The manager doesn't listen to the employee's issues he runs into every day on the front lines, dealing with the company's customers. Managers don't want to get involved in the process, they are bored by the process, and are interested only in the "bottom line".

So instead of listening to the employee's complaints and suggestions, the manager fires the employee in whom the company has heavily invested, for insubordination, without warning, without any prior counselling. Never mind that the average cost to recruit, hire and train a new employee can cost anywhere from $4000.00 to up to $50,000.00 depending upon the industry and profession, "You're fired. Turn in your badge and your credit card.". Translation: "William, go and die". Just like at Circuit City, the money maker loses his job, and the worthless manager, who after firing the employee, sniffs smugly like Barney Fife and struts with a swagger back to his office as if he has performed a master stroke.

In the mind of a manager, if things go bad, say the numbers are down, it is the workers fault. On the other hand, if things go well, and the numbers are up, "management has done an excellent job." In other words, workers are incapable of doing a good job, and management is incapable of making mistakes.

While in the womb, a person is wired to be a worker or a manager. His direction is later further determined by whether his parents set rules for him or allow him to set rules for THEM. The young manager kicks and screams, and his parents frantically begin offering toys and/or putting bottles or food into his mouth until the tantrum stops, as the child becomes increasingly impressed with his ability to control his employees. He begins using his learned manipulative talents in his interactions with those whom his parent's mistakenly believe is his peers. Watch young children playing together. You will see which children patiently work with the toys, and which children instruct and direct the activities.

In order for the order giver to become a manager, he goes to college and majors in business (because this is the easiest course of study, requiring less work (which is attractive to him, because he is a manager, and really doesn‘t want to work)).

Why is a college degree such an important prerequisite for a management position in America?
While in business college, during the time when she isn't "binge drinking" and/or having group sex, the young manager is taught by her Marxist professors that capitalism is bad and socialism is good, corporations pollute the earth, profit is immoral, et cetera, then she graduates with this nonsense in her brain and off she goes to a management "POSITION" in the American marketplace!

In the old days, smart companies would “promote from within”. These days however, companies largely do not promote from within, but on the occasion that they do, a laborer who is a good producer will remain on the production line, and those who produce at the lowest output levels are promoted to management. As stated by Dogbert in Scott Adams’ Dilbert comic strip of February 5, 1995, "leadership is nature's way of removing morons from the productive flow".
During the corporate “downsizing” craze of the late 1990’s when many laborers were “laid off”, smart companies like AT&T downsized their management ranks instead, and through “empowerment“ they allowed front line workers to make certain management decisions which the worker believed would benefit the company as well as the customer. The idea was brilliant.

Aren't businesses supposed to be in business to make profit for producing a product or service? Why then do they hire managers (or laborers for that matter) who only desire to be boss and to manipulate and make counter-productive decisions?

Why do companies hire anti-capitalist college grads who think profit is immoral? Why do they promote entitlement-mentality, non-producers to management? Can the American economy survive when company decision makers have contempt for capitalism and very little knowledge of economics?

If American businesses don't soon wake up and remember why they are in business (to make money and be successful), the downward spiral will soon result in the final crash of our economy.