With the advent of the twentieth century, the number of the commercial enterprises has increased significantly. The state companies have, in their turn, increased their production activity. Moreover, the number of the employees has been increasing permanently, and the change in the character of production has become evident. Before the 50th of the 20th century, the production was manual or mechanical, and the importance of the safety conditions was particularly highlighted. Extensive protective measures were invented by the International Labor Organization, local organizations of the individual countries, and the labor protective committees of the private corporations. Although effective protective measures were launched in the production facilities, emergences, sometimes with lethal consequences, took place (Steffy, Joneset et. al, 1986). It was ascertained by both the scholar and the business communities that, if the complete safety is guaranteed for the hired workers, especially those engaged in the hazardous areas of the economy, like mining, oil production, automotive, police, and the military service, the goods production and the services rendering are simultaneously increased.
Nowadays, the character of the both production and services has been changed dramatically. The correlation of the production and services has been shifted to the dominance of the services. In other words, nowadays approximately 63% of the global Gross Domestic Product (GDP) is generated by the rendering of services, while the rest is due to the production of the goods and commodities. Therefore, this change in the character of the both national and international labor eventually result in the change of the safety measures approaches. It is evident, that they tend to be more sensitive and require extra-legal regulation and the significant financial investment to ensure the total compliance with the law provisions and with the wild economic competition between the different enterprises. This theory is applicable both for the small scale business entities, as well as for the transnational business corporations. Naturally, the leaders of the international and business fields timely comprehended the necessity to incorporate the widely advocated additional measures. In this research paper, I examined the changes that were implemented in the five leading business organizations from the different spheres of the economy, such as building, agricultural, mining, IT, and legal auditing. The choice of the three productive and two services companies was not random. It is dictated by the need to demonstrate for the target reader that changes are applicable for each sphere irrespective of the nature (Kurtz, 2010).
The observance of the existing and creation of the new labor standards has always been an important goal of the entire labor community (WorkPlace: An Overview, 2010). This complex process involves direct and indirect participation of the numerous agents of the employment relations (Kurtz & Boone, 2010). The state authorities, the employers, and their duly authorized representatives together with the employees and other hired agents take part in this considerably sophisticated process. Although the sphere of the implementation of the discussed enhancements lies purely in the practical parlance, it is impossible to compose an effective proposal or merely draw more or less accurate conclusions without a broad recourse to the extensive theoretical background. In this section of the paper, the cited sources are evaluated and the relevance of the specific sources is accentuated.
The Labor Law (1972) composed by Theodore Woodrow-Kneel is among the primary sources used for the composition of this research. The main significance of this book is the detailed insight into the legal framework, which governs the existing labor relations in the United States and gives an informative comparative analysis of the US and European Labor Law. Moreover, this source highlights the necessity for the governmental regulation of the working conditions enhancement, setting forth that the advocated improvement changes must be not merely desirable for the creation of the favorable business environment, but it must be legally mandatory to ensure the obedience of the employees’ interests and privileges. More importantly, this book covers the aspects regarding the efficacy of the laborers and the improvement of the working conditions on the working places. The informative statistical background is provided to ensure the overall understanding of the peculiarities of the problem.
The second source, which has been extensively used in this paper, and which, in its turn, is no less important is Contemporary Business (2009)composed by one of the most outstanding and internationally acknowledged European labor relations and business analyst David Kurtz. Indisputably, the nature of the employment relations remained the same, although the subject matter has been changed dramatically. Therefore, this scientific tool is viewed as one of the most useful for this study.
Causation between the Safety Conditions and the Productivity of the Enterprise
The first question that has been revealed in this research is whether there is causation between the workplace safety conditions and the productivity of the enterprise. This causation has been numerously challenged by the various scholars of the international and national economies. The objectionable character of this issue due primarily to the twofold nature of the one. Naturally, the employers’ community very often ponders over the fact, which policy is more effective: the investment to the improvement of the working environment or conversion of the investment funds into the category of the accrued profits of the company. In other words, is it reasonable to invest a lot to raise safety standards in order to increase the productivity rates and ultimately the profits collected by the firm, while it seems to be rational to take these investments, which can mathematically be equal to the accrued profit? The aim of this study is to clarify whether the collected profits exceed the amount of the financial resources invested into the project.
Another aspect that is worth being accentuated in this section of the study is the fact that the amount of the accrued profits and the costs spent on the improvement of the working conditions are dependent on the nature of the industry which a specific business model belongs to. To illustrate these ratios are different for the IT, mining, oil production and legal auditing services and therefore, another aim of this study is to affirm that the implementation of the discussed strategy is different for the companies engaged in the different spheres of the economy.
Specific Nature of the Improvement
The second concern that is discussed in this study is the specific improvements implemented by various companies in the various sections of the economy. In particular, this research outlines what physical improvements have been implemented in the production cycle of the discussed companies. Moreover, it is accentuated whether specific improvements that are positive for one field bring similar results for another field of the economy, providing that these fields are diametrically different in their natures. To illustrate, is the improvement in the construction of the chairs beneficial for the production process of the legal and auditing teams; will the same changes be positive in the IT industry, or shall other items be improved to guarantee the increase in the production process of the enterprise? Moreover, the pricing discrepancies must be accentuated. In other words, assuming that the type of the specific improvements has been clarified, the next step of the effective financial planning is to define whether the costs invested into the improving safety conditions of the specific industries are justified financially and economically. Without the regard to the safety conditions of the employees, one needs to answer the question whether the owner of the enterprise will obtain profit as soon as all these measures have been implemented.
Previously Positive Experience
This section of the study is devoted to answering the question whether the international business and trade unions communities have ever performed positively in this field, i.e. whether the incorporation of the specific health and other working conditions improvements eventually lead to the rise in the production rates and the ultimate increase of profits (Andrews, 1975). It is widely known that the countries of the British Commonwealth, the European Union, the United States of America, Latin America, the countries of the former Union of the Soviet Socialist Republics, and other countries of East Europe have long promoted the policies of the increasing the productivity rates at the government level, while the feed of the private corporations and other participants of the business process have never been openly revealed for the international community. The question is whether the social and labor protective initiatives launched by the government resulted positively in the development of the business intuitions and overall rise of the economy. In accordance with the recent reports published by the European Business Association, it becomes evident that a huge set of the similar changes has been incorporated to the production process of the enterprises of the former Japanese Empire and modern Japan (Rugman & Hodgetts, 2003). When the workers employed by Mitsubishi, Toyota, Honda and many other automotive factories realized that they were no longer susceptible to the professional assembly line wounds and other grave injuries, the efficiency of the production rates and the accrued revenues were reported to increase by the 12% and 7% respectively, primarily as the workers no longer felt intimidated that they may suffer an injury. With the establishment of this policy, the workers comprehended that they may entirely concentrate on the productive aspect of the industrial cycle and that they no longer need to accentuate their own safety and well-being while sitting in the office or standing before the assembly line.
The Side Effects of the Policy Implementation
There is no available remedy to ensure 100% efficacy in any of the promoted labor and other projects. It is evident that the side effect will soon emerge. To illustrate, the increase in the salaries and wages ultimately does not increase the dedication and enthusing of the workers, but bring the very opposite results – the workers become particularly unwilling to work and become obsessed with their alleged importance, especially when they are additionally remunerated by the business owner. Following this principle, it becomes evident that even outwardly absolutely work healthy initiatives may bring completely reverse results (Andrews, 1975; Chambers, 2008). As far as the discussed situation is concerned, it is important to highlight the fact that the specific side effects that almost always accompany the policy of the incorporation of the additional safety standards to any business environment have already been cleared out by the experts of the European Business Association (Kurz, 2010). The group of experts after a careful and meticulous consideration of the huge amount of the different case studies eventually came to the conclusion that the policy of the positive working environment and safe working conditions are justified only when the scope of the policy is not unintentionally exaggerated by the entrepreneur who has taken the decision to launch the working alteration in question. To be more exact, when an employee realizes that he / she is treated with a heightened degree of attention and care, he or she becomes immediately softened, and the ‘labor grasp’ is immediately and permanently loosened even by the most qualified workers. Therefore, considering the fact that the decision to promote the policy in question has been taken by the business men, the changes for the safe working environment must be rational and must not the exceed the standards imposed and advocated by the contemporary commercial practice and the mandatory legal principles outlined by the state authorities of the leading world countries.
If the scope of the changes is excessive, it becomes immediately evident for the business owner, who soon comprehends the fact that, although he / she has done even more than his / her counterparts, the efficacy of his / her workers is lower than the efficacy rates performed by the workers and employees of the business competitor.
Besides, the side effects of the policy at hand have been numerously reported to influence negatively the individual performance of the workers. When the workers or employees, especially those who are engaged in the assembly lines, comprehend that their safety is completely guaranteed and there is nothing to be preoccupied about, then they start to think about other aspects of their life, which are not connected to the industrial cycle of the enterprise. To illustrate, the BMW factory located in Bochum, Germany, reported that, when the modernization of the equipment took place in 2002, and the dangerous manufacturing facilities were replaced by the safe modern ones, the workers engaged in the industry promptly realized that, while the safety requirements were assured, the attention paid to the production process could be naturally diminished. The result was obvious. While the attention paid to the safety aspect was diminished, simultaneously, the attention given to the production process was diminished, as well. Naturally, the efficacy of the production was considerably reduced; thus, the reduction in the accrued profits was observed. Although this practice does seem to be considerably paradoxical in its nature, the results are confirmed by the production facilities of Microsoft, Toyota, Mercedes, United States Oil, Shell Inc., Lukoil, and other transnational corporate giants, as well as their partners.
Financial Justification of the Policy
It is a highly sensitive issue on whether these changes are justified from the purely financial point of view. Naturally, the business owners’ community comprehends that the advocated changes are beneficial for the community of the employees from the safety assurance positions and purely from the legal viewpoint. Moreover, this practice is necessary to ensure that the mandatory legal prescriptions of the government are observed entirely and scrupulously. However, it is still undecided for them whether this policy is consistent with the business owner’s financial aspirations and ambitions. It is necessary to give an answer to the question whether the costs of the investment will be ultimately overlapped by the accrued profits, and therefore, whether the owner of the business will obtain monetary satisfaction for his / her contributions and investments.
The Amount of the Financial Resources Spent on the Reorganization, Improvements, and Modifications
The following section of this work defines the formula that must be followed by the business owners’ community to assure that when the improvements have been made, the profits will be collected. Thus, the ideal ratio must be deduced and the percentage of the alleged changes must be highlighted (Boone, 1999).
Five leading companies from the different spheres of the economy have been chosen in order to perform the study. The companies have been intentionally selected from the different spheres of the economy to demonstrate the differences and peculiarities of each area of the economy. As it has already been defined in the previous parts of the study, three out of the five reviewed companies are from the production sphere of the economy, while the two of them represent the services.
In general, the following companies have been selected for the objects of the study:
Seabord Corporation – one of the giants of the agricultural sector of America and globally (Schilo, Bosca, Marzena & Stuurma, 2008). The firm is engaged in shipping and the production of the agricultural products. The company primarily focuses on the production and shipment of the citruses and sugar. Another section of the firm’s activity is flour milling and distribution of these products. Besides, the firm is the one of the major energy producers in the Dominican Republic, and there are two floating barges that generate electricity for the entire island.
The company is known to take a carefully weighted course in terms of the employment conditions enhancement. Moreover, the company attentively focuses on the issues which require substantial financial contributions, and all decisions of the Board of Directors are carefully weighted before they are launched. Furthermore, the firm is known for the abstaining from the hastily adopted decisions, especially when the monetary aspect is involved.
Utah American Energy Inc. – this company is among the main producers of coal and lignite. The company operated solely in the United States of America and is widely known for the number of the social and safety conditions enhancements for its employees. Safety requirements are known to be the highest within the industry.
The company encompassed the number of the subsidiaries in the United States of America and offices worldwide. Although the company’s main activity is the production of coal and lignite, the working conditions of the all employees are permanently enhanced by the supervising community and the board of directors.
Advent Software is a software giant based in San Francisco, which primarily deals with the development of the software for the wide variety of the accounting firms and investment management companies ranging from the small scale accounting and investment boutiques to the transnational accounting and investment corporations.
The working conditions in this company are considerably stressful mentally, and therefore, the company promotes the policy that purports permanent enhancement of the working conditions of both its programming and administrative staffs. The firm has approximately 14 trillion dollars in assets (Financial Statement, 2011), and therefore, the firm is capable of financing the most daring working enhancement policies.
Ernst & Young are among the leading companies, which provide the legal and auditing services for the corporate clients worldwide. The firm is located in the United States of America and has branched in almost all countries of North and South America and Europe.
The peculiar feature of Ernst &Young is that all newly recruited legal or accounting associates are obliged to work more than 60 hours weekly in order to perform successfully.
In order to attract the most sophisticated post graduate professionals, the firm is promoting the policy aimed at permanent enhancement of the working environment (Thompson, 2006). The job is considerably stressful and full of permanent strains. The mistake in calculations may lead to the significant financial losses incurred by the company, and therefore, the mental processes of the Ernst and Young professionals are highly intensified, and the firm is advocating the policy aimed at permanent increasing mental health standards of the workers.
The fifth company, which has been examined in this study, is Toyota Motor Company, headquartered in Tokyo, Japan. The company is a multinational supplier of automobiles, bicycles, other vehicles, and the related goods. In 2008 the company employs approximately 25 000 of the servants, managers, and assembly line workers, involved in the assembly of the models (Chambers, 2008).It is known that the production of the automobiles, motorcycles, automotive commodities and related goods is a highly dangerous process. Therefore, the workers are very preoccupied about their own safety when they fulfill their industrious functions. In contrast to their primary competitors, such as Ford Motors or BMW, the average industrial results demonstrated by the workers of the Toyota Company are average.
The automobile industry is very important for the global community. Therefore, the section of the paper covering the aspects with the Toyota Company is typical for the entire automotive producers of the world.
The following criterions have been used in order to find out whether the research questions can be answered either positively or negatively:
– What is the type of the object of the study?
It is necessary to find an answer to this question for better understanding of the target audience of the company. This section is for the alleviation of the private or public character of the enterprise and the related consequences.
– In what field of the economy does the company operate and what relating aspects are to be accentuated because of the company specialization?
This question is necessary in order to understand what peculiarities need to be noted by the team of experts to define the amount of the investment that must be exercised in order to guarantee the increase in profits and obedience of the safety standards. Besides, this question is necessary to comprehend the nature of the changes that fetch the increase in the production rates if similar changes are incorporated in the various industries (Boone, 1999).
– What changes that are general for all companies have been implemented in the industrial cycle of this very company?
This criterion is used to detect the general trends, i.e. the changes of the working environment that can be made to any company and the results will always be positive, irrespective of the nature of the enterprise.
– What specific changes inherent to this field of the economy have been made to the reviewed company?
This criterion is used to make the target audience aware of the specific improvements that must be incorporated to the enterprise of the specific industry. To illustrate what changes in the working environment of the IT Company must be implemented raising the efficiency of the enterprise.
– Do the organizations, in fact, spend money on the enhancement of the safety conditions or the statements of their authorized representatives that are declaratory in their nature?
This criterion is essential for the present report to understand whether the board of directors of the reviewed companies, in fact, exercises the declared financial investments and whether these investments are channeled in accordance with the plan of the investment. As far as the method of the data assembling is concerned, the shortest way is to analyze the annual financial statements and the balance sheets of the reviewed companies.
Utah Energy Incorporated
According to the recently published annual financial statements in 2011, the company accrued more than $ 500 billion in revenues. Generally, the firm’s Board of Directory resolved to allot 3% of the accrued revenues to ensure that the safety enhancement procedures have been launched and the advocated results are justified.
Several changes in the safety assurance, which are inherent for all companies, have been successfully implemented to this very firm. First and foremost, the company has invested about $ 1 billion to purchase the safety helmets of the intensified capacity. The industry, in which Seaboard Corporation operates, is highly dangerous, and accidents are common in the dangerous fields of the economy (Kurtz & Boone, 2009). The mining production is known for the bereavement of many miners and other professionals engaged in the field. The problem is that the mines and the oil towers are full with the numerous dangers and other perils of the industrial cycle.
It is worth stressing that the company has implemented the use the safety vests and the intensified hosepipes construction. When the miners go to the mine, they take specifically created oxygen masks to ensure the access of oxygen in case an accident takes place. Therefore, the workers are additionally assured that they will not die of suffocation if an accident with the mine takes place and the access of the oxygen for some reasons will be ceased for them.
As far as specific changes for this very company are concerned, the firm decided on the introduction of the internal messaging and connection system and the solidifying of the fundamental walls of the mines. Provided that these measures have been successfully implemented, the workers of the firm express their readiness to participate even in the most risky projects, while submerging to the underground facilities of the company and excavating useful raw material from there. Another successful initiative of the company is the permanent and routine semi-annual medical examination of both productive and administrative staffs of the company, which are responsible for excavation and subsequent realization of the excavated coal and lignite. Moreover, special gadgets are attached to the work robes of the employees, thus, they are assured that their heart rates, pulse, oxygen consumption, and the internal blood pressures are constantly monitored by the team of experienced doctors responsible for the removal and subsequent treatment of the workers who do not correspond to the safety requirements dictated by the company.
This firm, indeed, finances generously the projects connected with the enhancement and the obedience of the safety standards and regulations. The procedure of the launch of a specific safety related project has the following algorithm: first, an intuitive is launched in the committee responsible for advocating of such changes. Then, the initiative is deliberated by the Board of Directors of the firm, which defines whether the project is worth being realized. Finally, when the project is ultimately approved by the Board of Directors, the financial department of the firm reports on whether the firm is capable of providing finance for the realization of the project. When the result is positive, the person responsible for the successful realization of the project is appointed by the Board of Directors. In 2010-2012 accounting years, the firm spent more than $ 5 000 000 for the development and modernization of the safety measures in the company. The following expenditures are reported to have taken place in the company, in accordance with the 2010, 2011 and 2012 financial statements of the company:
– The purchase of the helmets;
– The purchase of the vests;
– The modernization of the mines;
– The modernization of the ground facilities;
– The instruction of the employees on the safety issues and the related areas;
– The closure of the old, endangered mines and working facilities.
The results of the implemented policies are evident: the profits have risen by 13% (2011 Financial Statement). The years, which proceeded the years of the changes incorporation, were reported to have been productively unprofitable. After the launch of the programs in 2010, although waves of the financial crisis swept over the globe in general and the United States of America in particular, the production rates of the firm remained the same and even slightly increased in contrast to the competitors of the company.