Action Briefs
We learn a lot from the business community and want to share that with you in our Action Briefs that highlight business trends and their impact on the workplace and curriculum.
If you were an Ohio business owner many years ago, you only needed to know the laws affecting business in Ohio. Now, the legal environment is much more complex. The pervasiveness of the Internet and other technologies has not only added new dimensions to business law, but has also changed the way business law is carried out. While businesses have always needed to attend to the legal ramifications of their actions, it has become even more important to understand the ever-shifting legal system in today’s technological world.
One of the most prominent changes is the nature of intellectual property. Everyone has the ability to create and distribute content through social media, blogs, and personal websites. It is important to avoid using another entity’s trademarked phrases or images on the web, such as in domain names. It is also essential to identify and agree upon ownership of content on a website, especially when working with a web developer or host service. Social media users must be aware of the terms of uploading content such as images or videos. An article posted on LinkedIn, for example, can be used and distributed in any way LinkedIn sees fit.
Online communications bring a host of new legal issues that businesses should know. Defamation of companies and their employees has greatly increased and become more difficult to track. Businesses must vigilantly monitor the web for any disparaging or dishonest comments that may be detrimental to their success. Using social media as a means of providing customer service can help to resolve these issues. Marketing communications and digital advertisements, too, are subject to a world of new legal implications. Laws such as the CAN-SPAM Act place strict regulations on what can and cannot be included in promotional emails. Businesses should be aware of the FTC’s many guidelines and regulations for Internet marketing that will undoubtedly continue to change along with technological progress.
Another potential legal issue brought about by the Internet involves interstate and international commerce. In the past, most businesses were locally based, but now, businesses of any size can sell online to customers in other states and countries. Those who sell online must know the taxes and regulations in new markets. Sales taxes, which are traditionally enacted at the state level, present a problem. States have attempted to tax online retailers who sell to customers but do not have an established physical presence in that state. Legislation currently in Congress would simplify the policies, but until it is enacted, businesses need to ensure they are aware of the intricacies surrounding sales taxes and other international commerce regulations.
The nature of contracts has also evolved with technological advancements. The process of contract negotiation, traditionally lengthy and painstaking, has become instantaneous and interactive thanks to the use of electronic documents and communication. Ambiguous “back and forth” paper exchanges have been eliminated, along with timing disputes that can be easily resolved through the use of electronic records.
Despite these convenient simplifications, however, the digitalization of contracts involves some complications as well. Laws that determine what constitutes an e-signature vary across countries. Some consider simple electronic signatures to be equivalent to a handwritten signature, whereas others require encrypted digital certificates to authenticate the signer’s identity. Additionally, contract negotiators must ensure that all parties assent to the terms and conditions through electronic means. Many contracts require the reader to click a button or to scroll through the terms entirely before they can sign and indicate their agreement. It is recommended that in all cases, business contracts include consent to sign electronically, an opt-out option, an audit trail, and transparent circulation of the complete electronic document to all parties.
Data privacy law is one of the most prevalent and controversial issues brought about by the prevalence of the Internet. Governments and legal entities are struggling to determine how to handle the vast amount of personal information exchanged over the internet between individuals and customers. Businesses have a responsibility to handle customer information in the appropriate manner, which becomes further complicated when data is exchanged globally. Data protection laws differ substantially in various countries in terms of the level and nature of regulation.
One example of the complications that occur due to these discrepancies is the Safe Harbor Privacy Principles between the European Union and United States companies. The Safe Harbor Privacy Principles were designed between 1998- 2000 to manage the secure transfer of information between the EU and the United States. Because European officials felt that the privacy laws in place in the U.S. were not adequate in comparison to the EU’s stringent standards, they offered U.S. businesses a way to opt in by adhering to certain guidelines. If the businesses complied, they could receive data transferred from the EU.
In 2015, the European Court of Justice invalidated the Safe Harbor Principles, claiming that the data protection measures in place in the U.S. were still inadequate. The decision was largely influenced by the 2013 leak that revealed the NSA’s surveillance practices. US companies were faced with the task of complying with the EU’s strict regulations instead of the relatively simple guidelines of the Safe Harbor decision. Nearly a year later, a new mechanism for personal data exchanges has been implemented, called the Privacy Shield. The Privacy Shield Principles have some similarities with the Safe Harbor Principles, but they impose stricter and more specific requirements on U.S. companies.
The site “DLA Piper’s Data Protection Laws of the World Handbook” offers a comprehensive guide to world data protection laws and allows you to easily compare different types of law across the world: https://www.dlapiperdataprotection.com/#handbook/about-section
Classroom Implications
Most students can barely remember a world without the Internet’s ubiquity, so the changes in the legal system may not appear quite so drastic to them. However, they should be aware of the ways in which technology affects the legal system so they will understand the need to stay up-to-date on changes and developments. Students have probably already encountered online contracts when downloading software or signing up for social media accounts. However, they might not realize that by clicking “I Accept,” they are entering into a legally binding contract. They should be cognizant of what exactly they are accepting and should develop the practice of carefully considering terms and conditions.
Ownership of content on social media and data privacy are both legal issues to which students can relate. Students may not think twice about posting a photo on social media until they learn that the site owns that content and can use it in various ways. Increased knowledge of the laws affecting data collection can help students to stay safe online and avoid unfair marketing practices.
Sustainable development--meeting the needs of the present without compromising resources for the future--is a topic being grappled with daily by business and industry. Last month’s Action Brief explored shifting factors in energy supply and demand, while this month’s brief dives into how businesses are working to reduce their carbon footprint and what factors impact their progress/willingness to get onboard. As our good friend Kermit says, it’s not easy being green.
Business Implications
Businesses are taking innovative measures to implement renewable energy sources and/or reduce their carbon footprint. Many companies are purchasing carbon offsets and renewable energy credits for this purpose. Other efforts include:
- Recycling—metals, petroleum products, paper products, plastic
- Repurposing—furniture, décor, food waste, rain water
- Reusing—packaging, containers, operating-room instruments
- Installing—occupancy monitors in HVAC and electrical systems; efficient light sources, fixtures, appliances, and controls; vehicle recharging stations; rooftop solar panels; watering stations to refill reusable water bottles; LEED certified buildings, green roofs
- Monitoring—suppliers’ sourcing, production, shipping, and transporting activities
- Reducing—amount of packaging materials used, weight/volume of products, total reliance on nonrenewable energy sources, use of hazardous materials, energy used in production processes, waste going into landfills and water supplies
- Producing/Selling—environmentally friendly products
- Partnering—with other entities focused on green energy
- Utilizing—SMART manufacturing techniques, LEED criteria for building upgrades, Greenhouse Accounting methods to track greenhouse emissions and offsets, renewable energy sources, locally grown foods, natural lighting, local supply chains
- Encouraging—consumers to re-use hotel sheets and towels; employees to take steps to curb energy consumption; and use of bicycles, shuttles, and public transportation for commuting
Green construction is having a positive effect on the economy and will continue to do so as demand grows. Green building programs are largely responsible for the $134 billion annually being taken home by 2.3 million U.S. workers. LEED certified and other green buildings can be costlier to build than traditional construction (some experts estimate a $3-$5 per foot increase or much more, depending on added green features), but the higher initial cost is associated with greater energy and cost savings throughout the life of the building.
The Morgan Processing and Distribution Center (part of the United States Postal Service) in New York City sports a 2.5-acre green roof which cost about $30 per square foot to install-- twice as much as a traditional roof. The roof’s lifespan, however, will be about 50 years (twice as long as the roof it replaced). The green roof, along with other energy saving measures implemented at the center, help save the postal service over $1 million per year. Cost recovery, in this situation, could likely occur in three to five years.
While the initial costs can still be prohibitive for building or going green, other factors impacting the “greening” of businesses include:
- Concern about reliability of renewable energy sources
- Concern that energy efficiency processes might compromise overall business operations and therefore the bottom line
- A perception that the changes made in one business might not make a difference to the overall environment
- Inability to pinpoint carbon outputs and track waste streams accurately in order to assess potential effectiveness of efforts to be energy efficient
- Confusion about environmental claims
- Costs associated with changing and adjusting production processes
- Concern about willingness of customers to pay more for green products
Greenwashing—the act of marketing a product as more environmentally friendly than it actually is—has become a major concern. In response, the Federal Trade Commission (FTC) developed the Green Guides, designed to help businesses market their products more accurately, but they are not enforceable by law. The FTC can, and does, pursue false or misleading environmental claims made by companies under Section 5 of the FTC Act: 15 (Unfair methods of competition unlawful; prevention). Still, confusion over terms like eco-friendly, recyclable, green, biodegradable, and earth-friendly are rampant. Some consumers are giving up their green efforts completely due to the complexities. In short, businesses need to substantiate the environmental claims that they make about their products or risk consumer--and sometimes legal-- backlash.
Classroom Implications
Understanding the technological, political, and economic systems that drive energy is a life-long learning process. A good place to start is by having students compare various types of renewable energy as explained by the National Renewable Energy Laboratory: http://www.nrel.gov/workingwithus/learning.html
Ask students to discuss carbon neutrality in business operations. They could consider the following:
- What are the challenges businesses may face in becoming carbon neutral or offsetting carbon emissions? Are these challenges different for smaller vs. larger companies?
- What are some of the ways businesses can move towards carbon neutrality?
- Is there a moral obligation for businesses to become carbon neutral?
How are other countries addressing energy issues both from a business and community perspective? These two resources will help broaden students’ global perspective on energy use:
- http://e360.yale.edu/content/feature.msp?id=2955
- http://www.businessinsider.com/solar-energy-is-on-the-verge-of-a-global-boom-2015-4
Is it possible for politics and conflicting business interests to influence energy choices? See this article about what a group of students ran into as they attempted to make their school more environmentally friendly: http://www.dw.com/en/students-preach-renewable-energy-get-politics-lesson/a-19426179
Ask students to identify local use of environmental marketing and pinpoint potential incidents of greenwashing. This resource will help students better understand greenwashing and some of the enforcement actions taken by the FTC: http://www.greenerpackage.com/green_marketing/ftc_cracks_down_biodegradable_marketing_claims
The potential impact of shale on natural resource availability in the U.S. and abroad is unknown but potentially a game-changer. Heightened focus on the preservation of global resources for future generations plays a role in the energy debate. As energy resources are explored, and utilized in different ways, companies have to deal with the resulting supply-chain issues. This month’s Action Brief looks at shifting factors in energy supply and demand, and some of the resulting economic effects.
Business Implications
Greater availability of domestic energy resources has drastically changed the face of gas and oil production in the United States. The “shale revolution” is reshaping the country’s dialogue about energy strengths and weaknesses, especially now with record amounts of propane and other natural gas liquids being exported. Other countries with shale resources are also working to extract gas and tight oil, but access to fresh water reserves used in the process can present a challenge in many parts of the world. Coal plants and other traditional energy operations are closing or laying off massive numbers of workers as they go out of business or restructure to support alternative energy’s processing and delivery.
Companies in the renewable energy sector are also experiencing their own viability issues. Many companies are struggling to stay financially solvent while facing funding issues and other business challenges not unusual for start-ups. Government subsidies are potentially on the chopping block which adds to eroding confidence in many companies. While renewable energy is relatively low-cost, and growing in use, many companies are coming up short with funding to support new and growing infrastructures.
The boom in natural gas and oil holds many potential benefits, such as less dependence on foreign resources, increased manufacturing, more choices and lower prices for consumers, and maybe even cleaner air. Disadvantages are:
- Potential contamination of water and other natural resource supplies due to fracking and wastewater disposal
- Fracking induced earthquakes
- Loss of jobs and revenue in traditional and new alternative renewable energy source sectors
Much to the dismay of environmentalists, the shale boom may have somewhat slowed a shift toward the use of products that utilize renewable energy sources. As an example, many consumers are passing up hybrid vehicles for conventional gasoline-only models. Surprisingly, even some consumers who had switched to hybrids are going back to fuel-only powered vehicles. Lower gasoline prices mean a longer break-even time for consumers purchasing hybrids. Guessing that the price of gasoline will rise again, automakers are ramping up production of traditional vehicles, but not putting hybrids on the shelf just yet.
While hybrid car sales may have taken a recent hit, studies show that more than 50 percent of consumers from across the globe are willing to pay more for products from companies committed to making an environmental impact. As consumers become more savvy about sustainability issues, many companies are strengthening their green appeal in the following ways:
- Incorporating more areas of relevance to customers’ lifestyles
- Encouraging customers to live sustainably beyond that particular product
- Understanding what social and environmental issues their customers are concerned about and continuing to address those concerns in product development
- Demonstrating credible environmental impact (proof) based on product sustainability
How are these companies and others walking the walk? Look for next month’s Action Brief when we explore how companies are working to reduce their carbon footprint and the obstacles they are facing in doing so.
Classroom Implications
Understanding the different types of energy and basic cost implications of use can be crucial for students as they enter into the energy debate and understand the impacts on business:
- Help students become energy literate by accessing information and lessons on this website: http://cleanet.org/clean/literacy/energy/index.html
- Explore energy related issues with students such as:
- How are decisions made regarding energy use—what are the main drivers?
- How do varying energy sources impact the economy and the environment?
- How do energy policies vary in different states/countries?
- How do energy prices and the process of importing/exporting affect our economy?
- How are businesses impacted by fluctuations in energy costs, and what are some of the techniques used in mitigating those variations?
- Ask students to identify local business efforts to sustain energy. What resistance has been encountered? What support has been provided? Discuss community benefits that have resulted.
Businesses are striving to provide competitive pay and benefit packages to employees, even as the cost of doing so keeps rising. Employers struggle to pass on these additional costs in the price of their products/services or by reducing profits shared with shareholders and employees. This month’s Action Brief looks at how both businesses and employees are dealing with these challenges.
Workplace Implications
The pressure to bolster wages is increasing as fewer workers with the skills needed for the jobs available are giving workers more wage leverage. Layoffs continue in the energy, computer and retail industries and job creation remains very low. Unemployment remains relatively constant as more workers retire or drop out of the labor market without substantial growth in the number of jobs for those that are entering the labor force for the first time or trying to reenter the workforce. Companies are also trying to balance increasing minimum wages in some states, and the new overtime pay rules scheduled to take effect December 1, 2016. These regulations though costly to all employers, will be particularly hard on the retail, restaurant and non-profit industries who have not been able to afford to pay higher wages because of tight profit margins or trying to hold down costs in order to provide more charitable services. Once again, businesses will likely pass these costs on to consumers via higher prices, reductions in profit sharing, or cuts in charitable services provided.
The new overtime regulations will directly affect 4.2 million workers and will cost employers about $1.5 billion a year which equals about 0.03% of total pay in the U.S. Small businesses, likely to feel the most financially burdened if the order does go into effect, are struggling with how to comply in the most cost-effective ways. Some options include:
- Tight restrictions and close monitoring of overtime hours
- Hiring additional staff to relieve overtime burden
- Increasing salaries above the threshold for overtime pay
A main concern of the revision is the potential curbing of opportunities for employees to show extra dedication to their work by putting in extra hours. It may also be troublesome for workers who have earned the exemption status in the past and may now go back to non-exempt status and be required to clock in and out to track their time again.
The passage of the Affordable Care Act brought the possibility of healthcare coverage to millions of Americans where there previously was none. But the cost of insurance premiums has continued to rise substantially, placing a strain on both businesses and employees. Some insurance companies are electing not to provide medical insurance through the government exchanges in some states. Many companies have moved to the provision of high-deductible healthcare plans or eliminated spousal and family coverage to be able to incur the increasing medical costs to provide coverage for their workers. Some companies are providing Consumer Driven Health Plans that give employees more information about the cost and quality of services for each particular provider. This allows greater flexibility in choosing providers and facilities from which to receive services along with more specific information about costs.
Companies have also begun incentivizing employees towards better health as a way of controlling spiraling costs. Financial incentives, other rewards, or lowered insurance premiums are offered to employees in some companies who:
- Complete personal health-risk surveys
- Take action to improve their health, such as participating in diabetes management or fitness programs
- Provide documentation of improved health biometrics (e.g., lower blood pressure or cholesterol levels)
Some companies use penalties rather than rewards to motivate workers. In Houston, city employees are required to complete a personal health assessment in order to avoid a $25 a month surcharge on medical contributions. Some employers are not hiring, or they are charging more to provide medical coverage to employees and family members who are smokers or users of tobacco.
Programs such as this have advantages and disadvantages. Pros may include healthier, more productive employees, and lower healthcare costs. Cons may include a lack of employee motivation for further improvement beyond the reward, taxes on incentives and rewards, and penalties that can damage employee morale. Some see the programs as potentially discriminatory with rewards or penalties or having to spend time participating in alternative programs based on an individual’s weight or other physical indicators that may not be within their own control.
Employees continue to want the three core benefits of medical coverage, retirement plan contributions and vacation/paid time off. Some businesses are using other creative solutions as they work to provide stronger benefit packages including:
- Onsite fitness facilities, or memberships to offsite fitness clubs
- Paid volunteer opportunities
- Pet-friendly work environments
- Financial counseling
Classroom Implications
Helping students understand costs related to benefits will begin to aid their understanding of some of the tough choices employers face as they design benefit packages.
Benefits frequently take a backseat to pay when a job offer is considered. Ask students to consider what benefits will be most important to them as they enter the workforce. Challenge them to think about and list reasons why they should evaluate benefits just as carefully as pay. The following article can help students consider the many aspects of benefits and their overall worth as part of a compensation package: https://collegegrad.com/jobsearch/successful-job-offer-negotiation/evaluating-your-benefits-package.
Have students research various company benefit plans. Ask them to compare the advantages and disadvantages of each.
It’s no secret that political, social, and economic polarizations are growing at home and abroad. This month’s Action Brief highlights how polarization helps to define and shape the business world.
Business Implications
Individuals holding all conservative or all liberal political views have doubled in the last decade. Political polarization in the U.S. is increased by the loss of middle-wage jobs to foreign countries. In areas hit hard by these job losses, political views swing to the right or to the left depending on the reason for the job losses. In addition, growing minority and socially concerned populations help sway the election of politicians representing the far left or the far right based on the issue. Increasing partisan legislators can result in a slow-down of the legislative activity needed for businesses to operate and thrive.
As job and economic polarization increase and the middle class shrinks, sales of goods are affected. While high-end retailers are seeing sales surge, many retailers geared toward the middle class are struggling to stay open. Retail establishments with actual stores are also closing because of the trend to buy items on-line. The same trend is playing out in the restaurant industry with higher end restaurants thriving, while foot traffic at mid-tier establishments has decreased. Businesses in every retail sector are reevaluating their markets based on economic polarization.
Political and economic polarizations in other countries also affect American business operations overseas. Risks can include potential take-over by a hostile government, financial and economic insecurity of consumers, potential repatriation of earnings, security of workers and consumers and even obstruction of normal day-to-day business operations.
Americans are also more polarized around social issues. Businesses are increasingly willing to take a stand on these topics even at the risk of alienating some customers. LGBTQ issues are currently front and center. Target announced last month that it would allow staff and customers to choose restrooms and fitting rooms consistent with their gender identities. While this move increased the notion of Target as a partner in social justice for some people, others used the stance as a reason to boycott Target.
Before taking positions that may disaffect some customers, companies should consider what-if scenarios to lessen the unanticipated fallout to their brand and bottom line. Social media can escalate polarizing issues in a matter of hours. So, businesses should pay attention to feedback, but not react too quickly as sentiments on social media can quickly shift.
Implications for Students
Students can learn about different types of polarization by studying issues and case examples that affect businesses today such as climate change, trade agreements, political leaning of press and media,healthcare reform, and same-sex marriage. Studying how and why these issues can be divisive and how they impact businesses differently will help students see that the outcomes of polarization are hard to predict up front. A good case example is found in this article about Old Navy’s recent advertisement featuring an interracial couple: http://www.cbsnews.com/news/lovewins-how-twitter-rescued-old-navys-interracial-ad/
Helping students make the connection between common behaviors that can create polarization on a personal level (e.g., viewing opposing opinions as threats) and a system-wide level, can be beneficial. Asking them to identify social media posts made by themselves or others that are or could be polarizing is a good way to emphasize the power of one person to be either a builder of bridges or walls. Students should be reminded that regardless of their views on a particular issue, they can still treat those with differing views with respect and dignity. They can foster understanding by communicating rationally and debating or protesting the issues without violence.
This month’s Action Brief explores massive growth in emerging markets that provides businesses with opportunities, while challenging the United States’ superpower status. The continued growth may change how U.S. companies need to operate in those markets. This growth is also leading to increasing income inequality in some emerging economies and provides a potential role for businesses to make contributions that may narrow these gaps.
Business Implications
Doing business in countries with emerging and, at times, untapped markets can be financially rewarding, enabling businesses to increase production and sales while potentially decreasing overall manufacturing costs. It also allows them to expand their global brand recognition. Emerging markets are typically identified as countries whose economies are growing, have some economic and governmental stability, have an expanding infrastructure and are becoming increasingly global. Examples of these countries include China, Brazil, India, Argentina, and South Africa.
On the other hand, it poses risks due to cultural differences, political unrest, and fewer sanctions governing business-related transactions. Bribery is at the top of the list of executives’ concerns, followed by violations of sanctions, money laundering, organized crime, potential terrorist financing, and personal security. Property ownership rights vary from one country to the next, making it imperative for businesses to thoroughly understand their protection and support of intellectual-property rights as well as any facilities and equipment in the country.
Over the past 15 years, Brazil’s economy has changed from one that wasn’t noteworthy to the world’s seventh biggest economy. It offers ample business opportunities, especially in conjunction with tourism and the upcoming 2016 Summer Olympics. But, its growing economy and strengthened military presence are accompanied by political unrest, interest rates at a nine-year high, and an emerging trend of wealthy Brazilians’ buying luxury goods abroad instead of at home. The country has the highest per capita income of any of the BRICS countries, Brazil, Russia, India, China and South Africa. Businesses are facing rapidly changing political and economic conditions that will potentially impact their Brazilian business operations. This underscores the need for a deep knowledge of the local business climate.
While being classified as a country with an emerging market can be a sign of financial health, many of the countries with this designation find themselves in environments with growing income disparities. Countries such as China, India, and the Russian Federation, have seen disparities widen with respect to income, education, and career progression. Reducing income inequality can help promote economic growth and is a key factor to sustaining a healthy economy. Access to education, training, healthcare, and well-designed redistributive policies can help countries narrow income gaps.
Exercising corporate social responsibility in emerging markets is one way that businesses can potentially help countries with emerging economies grow in a way that brings the majority of citizens along to greater prosperity. As the prosperity grows, so do business markets and financial returns on investments . For instance, the Coca-Cola company developed partnerships with healthcare management organizations, pharmaceutical companies, and medical treatment providers in Africa to help respond to the HIV/AIDS crisis there. Such initiatives help make the world a better place to live. They also build brand recognition, generally leading to greater use of those companies’ products and services as the economies grow.
Classroom Implications
Teachers can have students take an example of a business and evaluate how it would grow or prosper given varying conditions in different countries. The exercise should involve evaluating risks and economic factors, comparing size of workforces, developing potential production plans, and trouble-shooting around quality issues.
Since the world is watching Brazil right now, have students monitor the current and emerging conditions there, especially with the 2016 Summer Olympics on the horizon. This would provide an interesting case study on emerging markets for students. Students can also discuss the mosquito-borne Zika virus’ impact on travel to the games due to attendee and participant concerns about the risk of the global spread of disease. Help students understand that the Zika concerns may limit Brazil’s economic benefits of the games.
Students should become familiar with income inequalities both in the U.S. and in other countries. It is important for them to learn about other indicators that stack-up to differentiate the “haves” from the “have-nots.” Looking at examples of corporate social responsibility both at home and abroad will get students thinking about their role in addressing inequality across the globe.
Monopoly is a game sometimes used to teach students about inequality and social stratification in society. Use the following link to access a description of how the game is played and a set of revised Monopoly rules for this purpose: https://www.socialpsychology.org/action/pdf/2011monopoly-rules.pdf
As technology continues to evolve and play a primary role in business, cyber-crime will continue to pose threats to the safety of intellectual property and other data housed online. The global data-breach cost is projected to be more than $2 trillion by 2019. This month’s Action Brief examines the threats to intellectual property as businesses maximize the value of sharing information online while minimizing intellectual property risks and losses.
Workplace Implications
Cyber-attacks can be very sophisticated, reaping huge financial rewards for the perpetrators and potentially bringing businesses to a standstill. But, damage can also be done unwittingly by careless employees or by a single person with a grudge. Organizations must prepare an offense that puts them in a position to minimize the destruction from either type of attack.
Cyber-attacks from outside the United States are pervasive and costly. Executives across our nation are pushing the government to be more proactive in working specifically with China to minimize those data breaches. Most likely, every major U.S. company has had its online information pilfered by Chinese hackers.
On the flipside, American and European officials recently agreed on a new transatlantic data transfer deal. The EU-US Privacy Shield will govern access to people’s digital data as the data move back and forth across the Atlantic. European Work Counsels are also strengthening security measures around employee personal identifiable information coming into the United States in response to less rigid privacy protections in the U.S.
Ransomware is the latest emerging cyber-threat that businesses are encountering. Attackers hijack company online information until a specified amount (i.e., the ransom) is paid to release the data. A southern California hospital recently paid $17K in bit coins to regain its patient information. Although its records were released to them, there’s no guarantee that businesses will get their data back-- even when they pay the ransom.
Not all cyber-crimes are committed behind closed shades. Some companies utilize competitive intelligence in the field to track employees of rival companies to gain information by swiping a cell phone or by gaining visual access to a laptop screen. Many businesses now prohibit smart phone photographs of white boards containing company information out of fear that the photographed information will be stolen by a competitor.
A disgruntled CTO has admitted to sabotaging his former company’s business portal, bringing operations to a standstill and effectively shutting down the business. He was upset with the founder/CEO’s decision to decline a purchase offer that would have benefited the CTO. The founder used his 401k and his children’s college funds to rebuild the business from scratch.
The music and motion picture industries are working to harness online piracy. Since there may be no way to completely stop illegal downloading, some industry representatives are trying to find ways to capitalize on the growth in popularity potentially created by free access to creative works.
Besides tightening security, some companies are taking a vigilante approach to cyber-thieves by attempting to steal their information back from perpetrators. Some companies use a “honeypot” approach, planting enticing documents on their servers that, when opened, will provide a trail for identification of the hacker. One approach even activates the computer camera of the thief to enable exact identification.
Best practices for the prevention of threats to intellectual property include:
- A dedicated information security team who works company-wide to implement a comprehensive data protection plan
- Frequent enterprise-wide assessment
- Security awareness training for employees
- Strict password and system access policies
- Layered defenses against remote attacks
- Open communication throughout the company regarding real or perceived threats to data
- Secure backup and recovery processes
- Refrain from using flash drives to transport data
Classroom Implications
Work with students in the cyber-security area can begin with a self-evaluation of their own online security risks. Scanning their personal social media pages and social media circles to identify potential risks is a good place to start. Pinpointing risks on a personal level can then feed into thinking about the hindrance of attacks on a larger scale. Students should also be safeguarding their data by keeping their personal devices (e.g., phones, iPads) secure at all times. They should follow industry recommendations for password protection on these devices.
As a group, students could also study examples of data breaches on a larger scale, identify the consequences, and discuss how the attacks could have been prevented. Following a news story of a data leak or breach over a several months will help sensitize students to the fall-outs of a cyber-attack. Examining different types of positions within a company and how people in those positions may present risks to a company can also be eye-opening.
A good case study in this area can be found here.
Business Trend
As consumers grow more health savvy, their demand for local, natural, and organic food choices continues to increase. In addition, these same consumers are learning more about where their food is coming from, and they are disenchanted with the ways our current food system is taxing environmental and social structures. This month’s trend explores how business practices are changing in response to these demands and realities, in hopes of providing consumers with the foods they want within a sustainable food system.
Workplace Implications
The interdependency of environmental, social, and economic systems involved in the food supply are complex and not always easily navigated. Close collaboration all along the food supply chain is vital in creating sustainability, especially when the focus is on unprocessed, fresh, or natural food products which have a shorter shelf-life than their preserved counterparts.
The organic and farm-to-table movements have been major players in sustainability efforts. While organic food has become widely accessible in grocery store aisles, it can be costly, presenting a barrier for many consumers. The farm-to-table movement, however, which emphasizes locally grown food choices, (e.g., farmers markets) have proven, in many cases to be a more affordable choice. Still, challenges exist in cost-effective sustainable food production, and businesses are charged with meeting demands of stakeholders and consumers in both areas.
Proactive businesses are making changes, both major and minor, that align them more closely with sustainable models. Among them are:
- Adopting the value of sustainability as part of their company mission
- Closer management of supply-chain efficiencies
- Sourcing from, and partnering with, local smallholders and suppliers
- Increased attention to carbon footprints
- Developing and utilizing packaging that is reusable, recyclable, and/or biodegradable
- Implementing employee and consumer education regarding sustainable food production and delivery practices
Many production processes can be complicated by evolving definitions of sustainability and growing government regulations that can shift based on locale, discouraging some companies from participating in the movement entirely. However, as consumers continue to influence the market, participation will be harder and harder to avoid.
Lastly, companies are asking themselves: How are we doing? Are we making a difference? Efforts to increase sustainability need to be tracked using metrics that can indicate the level of progress towards more sustainable operations.
Implications for students
Students can benefit from studying and learning about real-world examples of food growth, production, and distribution from beginning to end. This would include the source of raw materials, land and agricultural issues, supply-chain management, transportation and delivery logistics, processing and manufacturing, packaging, marketing, pricing, and consumer consumption habits. Choosing a food item at the point of sale, and tracing it back to the point of origin would prove eye-opening.
In addition, students could be asked to consider the following in an effort to emphasize company and individual roles in food sustainability:
- How does what we eat affect our health and our environment?
- What challenges do we face in becoming more sustainable?
- How can we provide more food more sustainably?
- How can we contribute to a more sustainable food system?
Government oversight, in the form of environmental regulations, has the potential to make our world cleaner and greener. The innovation and new technologies necessary to meet the requirements of the regulations can also stimulate our economy in the form of new businesses. However, existing businesses must still figure out how to comply with the regulations and meet stakeholder financial expectations simultaneously. This month’s trend looks at how businesses are being affected, and how their processes are changing in response to increased environmental government regulations.
Globalization has led to an increase in consumer demand for products, but has also placed stress on the environment due to increased production, and transportation of goods. As consumer demands increase, so do national and international regulations governing how businesses produce, package, transport goods, and dispose of waste. As a result of these regulations, businesses modify their processes, products, construction materials, physical layouts and designs, product packaging, and supply chains, etc. While these changes may result in increased efficiencies, they can also mean added costs and production times which can strain some organizations.
The cost of compliance affects businesses differently. Small businesses often take the hardest hit since often there is less room for absorption of compliance costs and fewer staffing resources to help interpret regulations. For larger companies, the costs may be easier to absorb, but managing compliance in a widespread business environment with multiple partners and delivery channels can prove challenging.
Many business owners are implementing environmental management systems (EMS) in an effort to meet or exceed government regulations. The implementation of an EMS can help foster the deep understanding of government regulations necessary for compliance. An EMS can also help employees become more aware of environmental issues, and help convince consumers that they are purchasing goods and products from a green company.
Businesses successful in compliance report a number of helpful strategies including knowledge of regulations and a commitment to compliance, careful selection of suppliers and partners who are also committed to compliance, flexibility and readiness to adjust processes, transparency, and willingness to experiment and innovate.
Implications for Students
Students should have some exposure to environmental threats posed by products and businesses as well as the legislation enacted to address those concerns such as the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the Farm Bill, etc. Instructors need to address the ways that these regulations impact businesses differently based on the type of business and its products and processes. To put these differences in context, teachers can have students interact with their business mentors/partners to determine regulatory impact on local businesses.
Educators can help students understand the importance of compliance by looking at case examples of how companies fulfill the regulations. Presenting case studies about disasters, both manufactured and natural which have had far reaching, negative consequences can be helpful as well. Looking at how compliance helps or hurts businesses in the short and long-term will assist students as they learn to look at success as a process rather than just a moment-in-time.
More...
Business Trend
Businesses today are increasingly exposed to a wide range of risks which, if realized, can result in significant harm to their reputations and their bottom lines. This month’s trend focuses on the risk of loss and the damages that can be incurred, and sometimes amplified, through social media channels.
Workplace Implications
Heightened competition, an increased regulatory environment, lean operations, and information availability are all contributing to the high risk environment that is business today. Natural disasters, equipment outages, failed ventures or partnerships, and data breeches can all cause ripples throughout supply chains. Often, the risk is realized through the actions of a single employee or customer. The rapid spread of information on social media, promulgated by the wide use of hand-held devices used for recording and sharing, creates a further hazard which companies must face.
Mismanagement of social media outlets by employees can jeopardize a company brand and undermine carefully constructed reputations. Last year, a restaurant chain suffered a public-relations setback at the hands of an employee who posted personal information about a customer on Facebook. The company made matters worse by deleting negative comments and blocking users from its Facebook page as the story spread. Customers and commenters quickly became outraged.
Health Insurance Portability and Accountability Act (HIPAA) violations offer opportunities for major damage to individuals and healthcare organizations. A healthcare provider acted quickly to fire an employee who posted a picture on Facebook of the backside of a patient receiving treatment in the emergency room. Employees who commented on or “liked” the post were also reportedly fired. Subsequently, the healthcare provider was sued by a physician who commented on the post but felt she was wrongfully terminated.
Even educational institutions are not immune to the perils of employee missteps. A university was embroiled in racial controversy this past fall, a professor was filmed trying to physically force a photographer from a demonstration scene. She now faces potential assault charges. Footage of the incident captured live, quickly went viral, and both the professor and the university were quickly tried and condemned by the public based on footage that lasted just over a minute.
Businesses need to fully evaluate and understand the risk of loss they face from within and outside their ranks. Written policies and procedures and ongoing training that specifically address appropriate employee communication (i.e., who can share what with whom) should be mandated. A comprehensive risk management plan, which includes prevention measures, provisions for whistleblowers, and response procedures is vital.
In addition, businesses need to make sure employees understand that they represent the company brand even when they are posting on their own personal social media profiles. Sometimes, the best examples of judicious behavior in this area can come from company executives, as they post on their own personal social profiles, in ways that are mindful of the company brand.
Classroom Implications
Students need to fully understand how to evaluate current and emerging risk factors in business. Looking at real-life examples of business losses will help the learning process. Students should brainstorm about strategies that could have prevented losses in the examples presented and discuss mitigation approaches. Students need to understand that when they work for a company, they become the company’s brand ambassadors. Actions they take in their personal and work lives reflects on the companies for which they work. In addition, instructors need to help students realize how violations of personal information, especially from a healthcare perspective, can affect victims. Allowing students to hear first-hand from affected individuals could have a lasting impact on students and help sensitize the future workforce to the importance of these issues.
Business Trend
Humans tend to be creatures of habit. Businesses that understand and respond to what makes us tick give businesses a competitive advantage. This month's trend focuses on the use of psychology in business.
Workplace Implications
Marketing has traditionally relied on psychological understanding to determine what customers want and what influences and persuades them. It has used its understanding of what makes people tick to build relationships and effectively interact with them. Marketers provide a variety of product and pricing options to appeal to customers’ varied preferences and needs.
Now, psychology has become a key business tool. It’s being used across companies by supervisors and managers to motivate employees, to make effective hiring decisions, and to form effective teams.
Research indicates that people act differently in groups than they do individually because they are concerned about their image. They want to impress others, becoming self-conscious and error-prone. This indicates that people tend to work better on simple tasks when in groups and better individually on complex tasks. Knowing this helps to guide managers as they structure projects and teams, enabling them to create better, more cohesive teams.
Psychological understanding of followers’ personalities and motivators enables leaders to effectively manage interpersonal-relationship issues that crop up. Knowing what motivates followers can be used to encourage them to do their best.
Classroom Implications
Teachers need to show students how psychological understanding can be applied in business functions to effectively and meet company goals. Since businesses use past customer and employee behavior to predict future business actions, students need to be taught how to use historical data and events for insights. Local business representatives can be invited to speak to students about current applications of psychology in their industry and/or function.
Business Trend
It is a small world . . . after all. This smallness is reinforced when economic ripples are felt throughout the world. This month's trend focuses on how the global economy affects domestic businesses.
Workplace Implications
A global economy presents opportunities and challenges to business. It provides opportunities for new, untapped markets, thereby increasing the level of production and consumption. It can lower the cost of production and the prices consumers pay. Since businesses can focus on maintaining and selling specific inventories vs. a wide variety of inventories, they can take advantage of economies of scale, making specialization profitable. A global economy also provides access to labor with needed skillsets, regardless of where the skillsets are located.
While China’s economy was growing at unprecedented rates, its businesses were buying up commodities that would be used in production. This drove up commodity prices, making it more costly for U.S. businesses to obtain needed resources. As China’s growth rate slowed and it shifted to a service focus, the resources’ prices decreased.
When the value of one country’s currency increases relative to those of other countries, challenges crop up. This situation is currently playing out with the devaluation of the euro and the Chinese yuan. When compared to the value of the U.S. dollar, it’s less costly to buy from businesses in those countries—even with the addition of shipping costs. In turn, U.S. exports decrease. This negatively affects businesses’ bottom line and eventually employment rates.
Business leaders need to apply a global frame of reference when forecasting, strategizing, and making business decisions. Without that focus, businesses can be blindsided by economic challenges and miss out on economic opportunities.
Classroom Implications
Students often have a very narrow view of the world—if “it” isn’t happening locally, “it” doesn’t matter. Teachers can broaden students’ world view by having weekly discussions about world events to have students reflect on and discuss how the events can potentially affect local businesses. Teachers should also share U.S. events and have students discuss the events’ potential impact on business and society in other countries. Current issues for consideration:
- With the presidential elections coming up, have students debate candidates’ stands on international issues, examining the economic pros and cons associated with the various views.
- Millions of people are fleeing the Middle East. Ask students why European countries are closing their borders to them.
- Millions of undocumented aliens currently live in the U.S. Ask students to discuss or debate the best economic solution to this issue.
Business Trend
As the 14th anniversary of 9/11 just passed, our September trend appropriately focuses on national security and its impact on the business community.
Workplace Implications
The well-being of the U.S. economy rides on the shoulders of national security, an ever-present issue given technological and environmental issues. Cyber attacks and acts of terrorism threaten and can disrupt economic activity. Unfortunately, businesses are experiencing rising costs associated with cyber attacks from domestic and international sources, including governments, other businesses, and individuals. U.S. data breaches in 2015 average almost $1.6 million in lost-business costs per occurrence. Professionals must consider the impact of terrorist acts on their companies, including human loss of life, disruption of operations, and lost profits.
These security risks impact brand management. A single breach can become a PR nightmare if not handled quickly and to the satisfaction of those affected by it. Companies must be positioned through advanced planning to respond as soon as a breach is identified.
Companies in certain industry sectors are expected to have robust security measures in place given their role in the food-supply chain, pharmaceutical-supply chain, etc. For these companies, employees must have a heightened awareness of contingency operations, in-depth knowledge of their supply chain and disruption risk, and sensitive risk-detection systems.
Employees must be vigilant in their use of mobile devices and social media. In essence, they need to understand the potentially crippling effects of sharing company or customer information. They need to know and adhere to company policies related to cyber security. For a younger workforce, this is an even more difficult challenge as they must counter the “invincibility” mindset that is normal.
Classroom Implications
Teachers can institute classroom cyber policies, providing a rationale for them. At the same time, teachers need to explain that employers have policies related to social media, email, mobile devices, BYOD, and unauthorized software use. Encourage students to ask about cyber security policies when on the job so that they do not unknowingly violate company policy. Provide students with up-to-date statistics about the frequency and costs associated with cyber attacks so that they understand the magnitude of the issue. Educate students as to the ways businesses protect their data. Teachers can have students examine the school’s emergency response plan and identify ways that the plan would differ in business settings.