New MBA graduates are superb with spreadsheets, markov chains, data mining and a hoard of other high-end analysis techniques. But they have yet to learn the value of employee loyalty and experience. I used to work for a company that valued loyalty. The employees would go out of their way to assure that a customer was satisfied-even to the point of calling the boss himself to get a quick resolution of a customer problem. Overtime? Never mind. The customer was all-important. Then a new crop of bottom-liners (a.k.a. bottom feeders) got control. The employees got screwed on a regular basis, and “policy” was cited as a reason. The employees shifted attitude accordingly. Their new touchstone was that the best way to defeat the MBA’s was to do exactly what they demanded. Working hours ended promptly. No more free overtime, no more extra effort was expended. I honestly don’t know how to measure to the cost of this attitude shift.
But I do know that it was costly. The company lost contracts, and there was no one to blame.
Years ago I was discussing product development with an engineer from a competing company at a standards meeting and the topic of outsourcing came up. He was telling me that they were spending more than we were on product manufacturing because of the high reject amounts and the fact that they had to set up a rework facility here in the US because they would lose all profits if they had to ship them back to be reworked. The reason it cost us less for the device to be created here was we had subcontracted the manufacturing to several small local companies that although were more expensive had a far greater level of reliability with very few units requiring rework, something the subcontractors could perform themselves meaning we didn’t need a rework facility. The reason for the higher costs this company were incurring was because management didn’t look at all the processes involved just the main manufacturing processes which were cheaper.
Part of this is because too many companies are being run by MBA’s with little education in engineering. A company I worked for went through a downturn and struggled for several years because the board replaced the CEO that had founded the company with their own. The company finally became viable when the CEO that was put in place not only had an MBA, like all but the founding CEO, but had an engineering degree as well, which the founding CEO did have. I think the reason that so much outsourcing is done is because the management that does it doesn’t always see the hidden costs that have continued to rise.