A note: I didn’t edit this article because I want it to remain accurate. But I would have phrased some things a little differently at this point. However, the overall message, I am still a proponent for. Our country was founded on entrepreneurs, my generation needs to keep it that way.
Outsourcing is one of the most feared words in the vocabulary of United States workers. As communication and technological advances become more efficient, globalization is becoming quite the pandemic across business culture. Trends have proved that most companies base their decision to outsource on the cost benefit of a given activity. If the said activity is not cost beneficial, there is a high probability of that activity being out-sourced to an area that will lower cost and thus increasing it’s contribution margin which will yield higher profits for the company. Analyzing this fact, a conclusion can be made to fight against outsourcing, we must manipulate the cost benefit function to provide an acceptable and realizable benefit of keeping the activity in question local. In order to do this, every function, or employee, of the activity must be efficient and work toward a common goal.
Most workers fail to realize that top management’s decisions that involve costs can be traced back directly to them. The productivity and efficiency level they work at are what drives the data that top management use to make key business decisions. For example, in the ABC costing method, each activity is measured by how much resource is used, how many labor hours must be allocated to that project for completion, and actual overhead is applied. Essentially, every cost that is associated with a very specific activity is measured and recorded. ABC costing is a very popular method to use to measure whether a given activity is cost beneficial. And it is frequently used to determine whether outsourcing should be utilized.
In order to help eliminate jobs being out-sourced to other economies, we must find a way to motivate workers to eliminate the apathetic way of thinking, into a more productive and beneficial way of thinking. The organization must run as a system. And every function of that system must be working toward a common goal. By individualizing each function of the system into an independent variable, separate from the whole, we are eliminating the motivation to stay on track towards the common goal. One example that I believe causes this separation is hourly pay.
Hourly pay in most cases is very inefficient. By assigning a determined pay rate per hour for each individual employee is generally similar to asking that employee to work as slow as they can. As an individual, the goal of work is to make money. By assigning an hourly rate, we tell the employee that the longer you stay, the more you get paid. This is a total contradiction to the common goal the organization theoretically should place in the minds of their employees. Success is based on efficiency and productivity along with proper measurement of demand and cost to revenue relationships.
Fundamentally, we can help eliminate outsourcing by influencing a positive output for the data used by top management. In the example of ABC costing, as workers, we can eliminate a lot of the cost by reducing labor hours per unit of activity and be more aware of how much resource we consume to create that unit. As management, we need to find a solution to the individualization of the functions of a system, and bring them together to work toward a common goal. We need to reward workers on their output, not their hours creating the output. Everyone has a roll in protecting the local jobs. The world is becoming smaller as our technology and knowledge grows larger.
Let’s change this, we are the future of business.