MBA Research

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.

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:

 

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. 

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. 

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