Did China Waste 6.8 Trillion Dollars In Mismanagement and Corruption?

According to a report by China's National Development and Reform Commission and the Academy of Macroeconomic Research the country wasted nearly $6.8 trillion dollars in investment money (as cited in Business Insider).  Half of the investment money between 2009 and 2013 was wasted in ineffective construction projects that were supposed to improve the nation’s infrastructure to spur growth.  A sign of major corruption or just mismanagement?

Low interest rates can spur all types of investments and these are beneficial for national growth. There is always a cost with such stimulus if infrastructure investments in the provinces don't actually lead to growth or simply don't have a return on their investment. Local government makes decisions on where and how to spend resources but continued poor investments can damage growth. 

As with any large project it is possible that money is not spent in the most effective places to obtain a significant return on investment. For example, an expanded highway will have one return rate over 10 years while the development of discounted industrial parks may have another. Some will improve upon the infrastructure and expand the economy while others will help a few business but have a lower overall impact. 

Likewise, China is known for higher levels of corruption. This is typically the case in restricted economies that follow a communist system where central government makes most decisions. Government becomes the major source of income and officials and their associated companies find a way to skim off the top of major projects. Development is a great buzzword that leads to the reallocation of resources. 

The $6.8 trillion dollars may not have been a complete waste but certainly didn't get the bang for the buck it was originally intended to have. Poorly designed projects, lack of proper financial planning, inefficient development, a week development plan, and of course corruption can zap stimulus power. At present the Chinese economy is expected slow down a little while further stimulus in the form of lower interest rates are used to prop up growth.

Why We Should Support Small Business Saturday

Small Business Saturday came and went just after the Black Friday Holiday shopping spree. Small business Saturday is that one day where shoppers come out in droves to support their local businesses. For good reason small business is seen as the backbone of the American economy with higher growth rates and potential than many large corporations offer. 

According to the Small Business Administration small business has contributed to 64% of new jobs and 44% of private payrolls. Small business is a significant contributor to the American economy and supporting small business has a long lasting impact on the overall economy. Small Business Saturday is designed to remind us of that importance and support small business through our purchases.

America itself was started and developed from family owned small businesses. It is this entrepreneurial spirit that has helped a great many native and immigrant Americans moving up the social ladder. Even in today’s world small business still stands as a primary pathway for people to move from poverty to wealth. 

If you have ever ran a small business you will soon understand how difficult it can be run one. There are mountains of things to learn, lots of regulations, and a lot of difficulties on the way. The far majority, go out of business, eight out of ten, within the first year. Enthusiasm resigns itself to the cold hard reality of life. 

Supporting small business is about supporting the entrepreneurial spirit within the country. These small business owners may have families, be running part of the year in the red, and have lots of stress. Having one day out of the year to support their efforts is not a bad idea. These businesses can be a strong support for the economy and our neighborhoods.

The Difference Between Coaching and Counseling Employees

Managers are part administrators and part cheerleaders. Without strong employees the manager is unlikely going to make much of a dent in the performance of his or her department. The very nature of management requires the coaching and counseling of employees. 

Coaching and counseling seems the same but are very different in how they function. Coaching is the act of giving advice in much the same way as counseling except with a difference; coaching is more specific. It requires a focus on something narrow and teaches how to improve that function.

Coaching uses a person with higher levels of skill to show the employee how to improve their performance. The coach may provide direction, training, or advice to improve performance. The employee gains more skill and the department functions better with the use of that new skill.

Counseling is a different kind of interaction with employees. Someone who is engaged in counseling helps employees work through options but doesn't necessarily make the decision for them. The employee is the center and the manager acts as Socrates who helps the employee fully understand the options and then narrow them down to those that are beneficial.

The two have different benefits and detractors on a department. Employees in a coaching situation might be better at a specific tasks but not understand the greater purpose of that task. The employee in the counseling situation may come to greater awareness but this doesn't necessarily have an immediate impact on the department through better performance.

New skills obtained through coaching are specific enough to easily measure and performance is often be expressed in a metric. The benefits derived from greater awareness through counseling are difficult to measure but have a long-term benefit for the employee and company.

The decision a manager makes to coach or counsel does have an impact. If a particular aspect of a job is in need of improvement then coach. If the relationship between the employee and the company will be a long one then counsel. Hourly employees fit a little better with coaching while professionals are a little better at counseling.

Improving Customer Care Quality Through Efficiency

Service efficiency and service quality have often been considered two different dimensions that don’t work well together. As service quality improves the efficiency of service moves downward. Likewise, as service quality moves down efficiency can move upwards. Conventional wisdom may not be accurate. A study by Talluri, Kim and Schoeherr (2013) used both transactional and survey data to show how service quality and efficiency can work together.

What they did find was that service efficiency should be improved through the development of higher levels of technology before moving into service demand quality. Without efficiency in place quality becomes more expensive. Focusing on efficiency and then on quality appears to push growth higher.  

Efficiency allows for the use of less resources to service customer’s needs. As core service functions are defined the processes and procedures streamline to cut out any waste. There may not be a lot of options in the types of services offered to customers but there is also less waste in the overall process.

Customers like a level of customization when handling and solving their problems. If they have an issue then general flexibility in dealing with that issue is beneficial. However, this customization reduces the overall efficiency of the organization. Customers may be happy but they are soaking too many resources to maintain profitability.

Developing customer service should be streamlined to meet certain organizational objectives. Once the efficient aspect of customer service has been covered it is possible to expand the range of service to raise overall satisfaction. Like a cycle the process of streamlining and then offering enough flexibility to meet customer needs is important.

The report helps administrators put in perspective the tradeoffs of efficiency and quality. It also helps them understand that these concepts are not necessarily mutually exclusive. It is possible to improve on efficiency and then work on offering enough flexibility within defined limits to serve customers adequately. When done together it can save the company money and improve upon customer satisfaction.

Talluri, S., Myung, K. & Schoenherr, T. (2013). The relationship between operating efficiency and service quality: are they compatible? International Journal of Production Research, 51 (8).

Black Friday and the Holiday Shopping Season-The Philosopher and the Capitalist

Black Friday is the day that a mass of Christmas shoppers line the store fronts in search of hard fought treasures. This year Black Friday is being stretched from Thursday evening till the end of business on Saturday. Crowds are not so heavy, consumers not so excited, and sales over the entire season will be a better determinant of retail success. Whether you are standing in line or buying over the net consider what Black Friday means to you.

Changes in days are not the only differences you will notice this year. The crowds are a little thinner and there have been a few more protests over excessive consumerism. People simply are not buying everything they can this year and are instead focusing on those big ticket items that save them money; assuming that buying these items are necessary. Many others are skipping the crazy shopping madness and instead searching for their products online.

The problem with Black Friday is not the deals or even the interest. The problem lies in how people rely on buying as many products as possible to show their interest in others. Lots of products and expensive gifts are not the only activity on the menu. Consider the time you spend with others and the memories. Instead of crashing through the door maybe you should take your family out, get lunch, and go shopping together.

The anti-consumer culture crowd came out this year to teach us the value of Thanksgiving. I applaud them for their efforts and the philosopher in me thinks in many ways they are right. I refused to stand in line or worry about whether or not I get a specific expensive item on my "Santa List". Instead, I decided to make shopping this year stretched out over a few months.

Black Friday does act as a marker for holiday season sales. The theory is that if Black Friday goes well then the rest of the year will also go well. Throughout much of the year retailers don't make much money and most of their income is allocated to paying bills and overhead. Black Friday and the holiday season is a time when many turn their red line into a black line for the year.

The capitalist in me hopes the retailers do well and positive consumer sentiment of late fosters higher sales. Retailers are an important part of the economy. They take manufactured products, built from raw materials, and sent to locations by drivers, that are put up on shelves by store workers. This equates to employment, employment, employment. Even Scrooge could understand the connection between employment and bread on Tiny Tim's plate.

Whether your a philosopher or a capitalist, or a little of both, you can appreciate the value of holiday shopping and the meaning of the holidays to a great many people. Perhaps if we focus on what is important to us, and the people we love, we can still enjoy buying products and keeping the spirit of the Holiday Season alive.  Next year shop throughout the year, look for deals, save up your money, and enjoy more of the holiday season doing what you want. Good luck and happy hunting.