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By Mitchell Goodman, MBA1
Just down the hall from Kresge Library is the National Quality Research Center. For those students who walked past the library or had to ask Professor Gene Anderson about Marketing 501 grades, you know where the center is located. Members of this group include Professor Anderson, Professor Claes Fornell, Professor Michael Johnson, and research scientists Barbara Bryant and Jaesung Cha. They have worked to develop the American Customer Satisfaction Index.
The ACSI is a forward-looking quantitative measure of quality and satisfaction as drivers of individual business and national economic success. The measure was created to help bridge the gap between an economy measured on numbers but judged increasingly by consumers on product differentiation, quality, value, and satisfaction. The index, updated annually, was first published in 1994. The results for 1996 were just released in the current issue of Fortune. I recently spoke to Professor Anderson regarding the effort that has been undertaken to develop this measure.
ACSI estimates customer satisfaction on a company-by-company basis and rolls these numbers into industry, sector and national indices. Two-hundred firms were selected from the 7 major economic sectors that include retail, finance, manufacturing durables, non-durables, communications/utilities/transportation, services and the public sector. These firms have total annual sales of $2.7 trillion. The customers that are surveyed are consumers rather than other businesses. The data is collected by surveying 50,000 randomly selected "recent-purchase" consumers by phone. These recent customers are asked questions regarding expectations, quality, value, satisfaction, and other variables regarding the product or service. Once collected, the data is analyzed using econometric models to determine index results. A portion of industry sectors is reviewed on a quarterly basis, which means that in one year, each sector's index is updated once.
The United States was not the first country in which this methodology was applied. Sweden instituted a similar survey in 1989 and Germany did the same in 1992. Taiwan is currently looking at a limited set of industries and other EEC countries, including New Zealand, Argentina, and Brazil are considering adding this index to their respective economic indicators. In comparison to Germany and Sweden, the US has a higher satisfaction rating. According to Professor Anderson, this is a result of cultural and economic reasons which include greater competition and availability of products and services within the US.
Because the index is non-profit, continual funding is required. Until now, the research has been sponsored by the University of Michigan Business School and the American Society for Quality Control (ASQC). In order to meet the financial needs required for this project, the index is now also being sponsored by corporations. For a sponsorship fee, companies are granted access to detailed data regarding their specific markets. In addition, they receive software that allows them to perform strategic analysis based on the data.
According to Professor Anderson, the numbers are simply just numbers. The importance of the numbers is the relative differences between firms, industries, sectors, and other countries over time. Quantifiable benchmarking of quality across firms and industries is now possible. This means that quality can be translated into a company's bottom line, which provides a sort of "return on quality."
Regression analysis has shown, as one might expect, that financial measures including market/book value, return on assets, price/earnings, and return on equity are positively correlated to the index while a company's risk is negatively correlated to quality. According to Professor Anderson, one point on the index translates into $654 million. These are staggering figures that truly show the impact of quality on the bottom line. Characterisitcs of firms with high index scores indicate that they develop market-oriented strategies and customer-oriented systems that will support a value-enhancement cycle.
As research into this area continues, the ACSI may become one of the more closely watched measures economic indicators.
by Steven L. Pessagno, MBA1
Joel Slemrod
doesn't do his own taxes. Ah, the ironies of life. Slemrod, the UMBS Paul
W. McCracken Professor of Business Economics, happens to be one of the
country's most preeminent authorities on taxation and economic policy.
"Believe me: I used to do my taxes by hand," Slemrod remarked with a smile between sips of chicken and rice soup at Good Time Charlie's last month. "I switched to TurboTax last year, and the IRS caught an error made by the program." And there's no turning back now: Slemrod farms out his taxes to an accountant who "will save me a lot of time" in calculating the government's take of his earnings this year.
Slemrod and economics-department graduate student Jon Bakija are quietly basking in the success of their recently released collaborative effort entitled Taxing Ourselves (MIT Press; 304 pages; $25). The Economist, in a December review, praised the book for offering a "clear understanding of the principles behind America's existing tax system, its goals, and how different proposals would affect their attainment."
The Wall Street Journal was a bit more exuberant. "Taxing Ourselves is one of the best books on taxation I have ever read," professed reviewer Bruce Bartlett, the former Deputy Assistant Secretary of the Treasury for economic policy.
"I couldn't have written a better review myself," Slemrod admitted with a chuckle, as we sloshed our way through the slush of a January snowfall before sitting down to lunch. Crossing South University to avoid a vertical reinforcing apparatus being hoisted high above the ground at the School of Social Work's seemingly eternal construction site, Slemrod mentioned that he didn't even know the review had appeared in the paper. "When I returned from vacation in Puerto Rico," Slemrod continued, "I called my mom to tell her I was home, and she said, 'Joel, did you see this review? It says it's the best book on taxation ever!'"
An Impressive C.V.
Slemrod's curriculum vita would humble most anyone: two University professorships; editor of the country's leading academic journal in his field; consultant to Price Waterhouse, the World Bank, and the U.S. Department of Treasury; former member of the Council of Economic Advisers under Ronald Reagan. As you can imagine, the list goes on.
But perhaps not imaginable is just how unassuming Slemrod is--given such an accomplished background, the high level of responsibility that comes with the various facets of his professional career, and a highly estimable reputation that garners frequent requests to testify on tax issues before Congress.
Slemrod, who was born in Morristown, NJ, came to the University of Michigan (from the University of Minnesota) in Fall 1987 as a joint professor of Economics in LS&A and of Business Economics in UMBS--a unique joint appointment for a so-called rookie professor because it is rather rare.
An economics major undergraduate student at Princeton, Slemrod earned his PhD in economics from Harvard. "I knew that was what I wanted to go into since my freshman year at Princeton. It's amazing how a couple of good professors can be very influential" in nurturing a career interest. Nevertheless, Slemrod doesn't actively seek to influence certain students to pursue careers in economics. All he can do is "be excited about my work. And I feel good in that I've succeeded in doing this. Over the years, I've found that I can make [the subject matter] come alive if I can personalize it. After all, economics is all about people making decisions--which is very exciting to me."
Slemrod's enthusiasm for the discipline is immediately visible upon entering his office--an unusually large, triangular-like faculty office located in the Research Support wing next to Phelps Lounge in Assembly Hall. The entire left wall is lined with shelves of economics books, many of which would be considered "golden oldies" by those who know their economics.
One of Slemrod's pastimes is perusing the narrow aisles and dusty shelves of old bookstores in whatever towns he visits. Once while in Ohio, the economist happened upon a keeper: a first edition of a rare book by Irving Fisher, perhaps the greatest American economist ever, on probability. Slemrod snagged it for a mere $2. "I actually enjoy reading these [books]," Slemrod admitted, "to see how the field has progressed through the centuries."
A Unique Teaching Perspective
As a joint professor in LS&A and the B-school, Slemrod enjoys especially wide variety in the type of teaching available to a U-M professor. He teaches LS&A undergraduates, BBAs, MBAs, and PhD students--and "certainly, there's a lot of difference" among the groups. Doctoral candidates "are expected to be economists, so we focus on techniques for learning more. We essentially teach them how to be economists. The undergraduates in LS&A are taught how economists think and what the students should know about the subject matter in general." The B-school students are taught from two vantage points: that of the policy maker and that of the business person.
Asked about a teaching preference, Slemrod responded, "BBAs are probably the most enjoyable. Almost all of them are very bright, very interactive, and very interested in economics."
The professor looks back on a BBA class he taught in the winter 1995 term, paradoxically called "Business and Government," as the best class he has ever taught. "The GOP had just won the House and Senate, and the students had to evaluate, using economics principles, the Contract with America," Slemrod said. "The students didn't have to be told that [the subject matter of the class] was important, because it was in the papers every day. And this gave me the chance to teach in real time."
Slemrod has also taught an MBA elective called "Tax Policy and Business Strategy." This classes addresses how policy makers think and how business decision makers will react to tax-system redesigns and, of course, what information they need to react intelligently. In essence, optimal redesigns of the tax system should shoot to "minimally distort the economy and distribute the tax burden as fairly as possible. From a policy perspective, you don't want business people to make decisions they wouldn't otherwise make in absence of the tax system, unless there is a strong case to the contrary."
Case in point: Puerto Rico and the pharmaceutical industry. "As soon as you leave the San Juan airport, you immediately see the effects of the tax system on Puerto Rico," Slemrod explained, relating an example from his recent vacation. "Because of special tax preferences to Puerto Rican operations," he continued, "Eli Lilly has a plant on the left, Lederle on the right; and Pfizer's there as well." Companies such as drug makers have a strong incentive to locate their high-margin, high-profit operations in places with low tax rates (it costs about $.03 to "press a pill" that sells for over $3) and deduct R&D costs against the higher U.S. tax rates.
Slemrod uses the Puerto Rico example to convey the extent to which tax policy pervades everyday society. Of course, the favorable tax status Puerto Rico traditionally has enjoyed was a driving force behind the recent "No" vote against statehood. Ironically, the 1996 U.S. budget, which was passed after the "No" vote in Puerto Rico, has planned the phasing out of the Puerto Rico tax preference--a move that Slemrod expects to hurt the island economy over the long run.
He's Seen It All
Slemrod's appointment as the tax expert on the Council of Economic Advisers from 1984 through 1985 opened his eyes to the wonderful world of politics during the Reagan Administration. The Council is a nonpartisan body composed of 3 persons: a chairperson (then Beryl Sprinkel) and 2 others. These 3 then have 10 or 11 senior staff members to help them forge policy; the staff members--usually academics such as Slemrod--serve 1-year terms.
Nowadays, though, Slemrod believes the Council has become "a bit more politicized. I'm glad I did it," Slemrod reflected with a smirk. "But to tell you the truth, I got the idea after 6 months."
One of Slemrod's more memorable anecdotes involves a tax reform proposal for 1986, to institute a dividend credit to shareholders that would offset the elimination of an investment tax credit for corporations. A corporate executive called on the Chairman and Slemrod one day to influence his recommendation on the matter. Understanding the executive's dismay over the elimination of a corporate tax goodie, Slemrod proceeded to explain, though, that the proposal was a good one because the dividend credit would offset the elimination. Much to Slemrod's surprise, the executive responded, "I don't care about that. That's for the shareholders!"
Reflecting further on his time in Washington, Slemrod noted that "it was a great time to be there. The biggest tax reform since World War II was signed in 1986, and that's what I was working on."
And what was the gist of that reform? "The basic philosophy was to broaden the tax base and lower rates. We also strove to get rid of a lot of special preferences and deductions. We wanted to make things better by providing more equity and leveling the playing field for businesses, to get the government out of influencing what's profitable and instead let the market decide."
Slemrod has been asked to return to Washington but has declined such overtures. "Being in Washington," the avid tennis player remarked while gesturing with a soup spoon in his right hand, "you're using up intellectual capital instead of adding to it. [At the Council], there was no time for thinking. We had very tight deadlines. You had to do things very quickly."
But were he in Washington today, Slemrod might be serving on a Council that is now headed up by Janet Yellen, a former professor who taught him higher level macroeconomics at Harvard. Slemrod would have two pieces of advice for Yellen:
(1) "Clean the tax base. That is, get rid of preferences and deductions. Continue the spirit of the '86 bill."
(2) "Simplify the tax process." Elaborating on this point, Slemrod pointed out that "when a bill is made, no thought is given to the process of administering that tax. The costs of complexity are not trivial."
When quizzed on his stance on a flat tax, Slemrod characteristically neither endorsed nor dismissed the idea. "I avoid making value judgments, because the role of an economist is to lay out the menu" for others' decision making.
Asked whether special interests such as the accounting profession are culpable for the reliably disappointing efforts to implement a flat tax system, Slemrod said, "True: but it's not socially productive to have highly talented people devising ways to reduce others' tax burdens." In the short-term a flat tax would have an adverse impact on persons employed to figure out ways to manipulate tax systems. "But this is a bad argument against a flat tax. You have to think long term."
Still The One
Back here in Ann Arbor, Slemrod remains uniquely positioned to influence the debate over tax policy in the United States. As Editor of the National Tax Journal, Slemrod develops and carries out the editorial mission of the official quarterly journal of the 3500-member, Washington-based, National Tax Association.
This year marks the journal's 50th anniversary. Appropriately enough, Slemrod and Editorial Assistant Mary Ceccanese have given the once bland and mustard-colored journal a fresh look. With modern typeface, the cover sports a design that effectively cuts the cover in half, literally along a right-corner--to--left-corner diagonal following the "x" in the word "tax."
Slemrod reviews 120 submissions per year, which he sends out to other academics for what's known as the "referee" (or peer-review) process. Representative of the competitive world of academic publishing, the National Tax Journal will print only about 20 of the 120 submissions it receives in any given year. Subject matter runs the gamut from proposals for a national sales tax (a bad idea, according to most tax experts) to the relationship between tax evasion and negative income tax rates to the marriage tax.
Strictly 9-To-5
One of the points Slemrod emphasized in our interview was that he is passionate about "studying tax as an economist. If you think about it, tax policy affects virtually all aspects of human behavior--from charitable donations, to labor-supply decisions, to the location of companies, and, of course, to evasive behavior. And that's the really fascinating stuff."
Suffice it to say, Slemrod the tax expert is a busy man. But the real focus of his life is his family. "I spend a lot of time with my family," he said when asked how he spends his time outside the office. "I have a daughter, 12, who plays the violin; and my son, 9, is a sports fanatic. Both of them play soccer. They keep me very busy," he remarked fondly. "I'm a 9-to-5er at heart. When I'm home, I'm home."
Hall Of Famer: Slemrod, as pictured on mock baseball card printed by New Jersey-based publisher Prentice-Hall.
by Geoff Phillips, MBA1
If you
were to see me walk into a room, from a distance you could not guess my
heritage. I look like a regular white male, average height, average build,
average looks. If you were to strike up a conversation with me, you could
not guess my heritage. American, you would think. If you were to ask my
name, you could not guess my heritage. It sounds American. If you were
to ask me where I am from, that would not give it away either. So, then,
what does it mean to be Hispanic?
My situation is not unique. If you look around at a meeting of the HBSA you see the entire variety of looks: blondes and brunettes, fair to dark, short to tall. If you were to look at each of these people individually, yes, some fit the stereotype. But so many do not. Some of us give it away in our accent, or our name, or our appearance. Many of us do not. What does it mean to be Hispanic?
When I was a senior in college I worked on campus at an office doing database programming. One of the women in the office had a connection to Mexico. I don't remember what it was, but she spoke Spanish. So we would converse in Spanish. One day, the secretary from across the hall came in and heard us conversing. She wondered where I learned Spanish. When I told her it was my first language, she could not believe it. When I told her I was Hispanic, she denied it. She would not believe I was Hispanic. That was when I decided to change my name.
Several times in work situations when people have found out I was Hispanic, they have been dumbfounded. They deny it as well. Many people do not know whether to believe it. Why is it so hard to believe? If my father had been named Rodriguez instead of my mother, I would not have this problem. If I had grown up in Puerto Rico taking class in Spanish instead of in Hawaii taking class in English, I would not have this problem. If I were just a little darker . . .
My father always used to say that I had hybrid vigor. Hybrid crops are superior because they combine the good traits of two different strains. He was a farmer. There is something in all Hispanics that gives us vigor. We are not one color, one look, one language, but a tremendous mix bound by common links. This great diversity provides the vigor. Here at the B-school not only are we fortunate enough to enjoy the vigor of U.S. Hispanics, but we also can experience the diversity of our classmates from Latin American countries. In Latin America, vigor comes from the melding of European and indigenous cultures and tradition. While none of our Latin classmates may have experiences similar to mine, they nonetheless have to contend with situations of their own. So, the next time you meet someone Hispanic, smile and think hybrid vigor. They will be glad you did.
by Jeffrey Thompson, MBA2
There
are many phobias that plague the human psyche, but one of the most common
and paralyzing is the fear of public speaking. Toastmasters International,
headquartered in Mission Viejo, California with over 6,000 chapters worldwide,
is a leading organization devoted to making effective oral communication
a worldwide reality. The UMBS Toastmasters chapter strives to provide a
mutually supportive and positive learning environment where every member
has the opportunity to develop communication and leadership skills. The
UMBS chapter also tries to emphasize fun. There is enough stress and pressure
at the B-school, so Toastmasters is a relaxing way to face that public
speaking demon. The club's Sunday meetings include planned speeches of
four to six minutes and table topics where members give impromptu speeches
for one minute on a variety of topics.
Being part of an international organization offers a variety of resources including books, magazines and special events. Toastmasters International sponsors speaking contests and training seminars at the area, district and national level. Also, since there are so many chapters worldwide and many companies sponsor their own clubs, students can easily transfer their membership to a new club once they graduate.
Toastmasters International has a Distinguished Club Program every year. This program categorizes all the clubs and ranks them based on points earned from club growth, member speaking achievements and other club accomplishments. The UMBS chapter is currently Number One in its category of 4120 clubs. Although this year's Distinguished Club Program is only half over and keeping its number one ranking will take some hard work, the UMBS Toastmasters club has not lost its focus. Being number one is nice, but helping our members become better public speakers and business leaders is still our primary mission. If you are interested in improving your public speaking skills, check the Toastmasters board by the lounge and join us at our next meeting.
Photo by Donald Houston
The MSJ sponsored the first
annual "Bake Your Heart Out" to help the B-school kick off St.
Valentine's Day. Dozens of students, staff, and SOSers entered the competition.
After some pretty difficult decisions were made, the winners emerged:
* Kimberly Kempton (pictured above, left), Best Visual Presentation
* Sara Monk (pictured above, center), Best Valentine Spirit
* Caroline & Peter Langraff, Most Creative
* Raquel Wegner (pictured above, right), Best Overall Dessert
* Betsy Foss won the Border's Books gift certificate drawing
After the judging, our fellow MBAs helped us finish off the entries and enjoyed fresh-baked cookies and milk. I'd like to personally congratulate all our winners and thank
all our entrants for their efforts. I would also like to thank all the
MSJ staffers--especially Colleen, who designed our ribbons; Steve, who
orchestrated the logistics; and everyone else whose help and palates made
the event such a success.
--Extended caption by MBA Gourmet John Lipinski, MBA2
BBA1 Sapna Chadha, as pictured above, reads the MSJ in New Delhia, India, over Winter Break. With Spring Break just around the corner, don't forget to save this week's issue of the paper and take it with you to wherever you're going for Break. Submissions for the 'MSJ in Wacky Places' contest will be accepted on an ongoing basis. Simply drop off the pictures in the submissions box outside the MSJ office, with your name and a caption on the reverse side of the picture. Winners' pictures will be published on a weekly basis, and cash prizes awarded subsequently. The contest is open to anyone and everyone.
by Steve Ellis, MBA Evening
The MBA Evening Want Ad for 1997-1998
There comes a time when all things must end and my time, as both an MBA Evening student and your MBA Evening student government representative, is rapidly coming to a close. In a few short months, I will be graduating and moving out to California.
In the last several years, I feel that we, as evening students, have increased the visibility of the evening program at UMBS. However, I want to make sure that we can continue this momentum into next year.
Thus, the purpose of this week's column is to solicit interest from individuals who want to become involved with the MBA evening program. Valerie Suslow, Academic Director of the MBA Evening Program, and I have talked about ways to bring new people into evening program leadership opportunities but since this is the first time we have had to plan this, we don't necessarily have a formal turnover process established.
Before I talk about the framework that we have agreed upon to make this turnover process occur though, I should discuss the future of this role. Since I started two years ago, the responsibilities of this position have expanded, in part due to the support of all of you. Because most of you haven't had the benefits of schedule flexibility and B-school proximity that I have had with my employment, it would be unreasonable to expect that one person would want to assume the scope of responsibilities for my current position. So, in order to provide opportunities that fit better with most of your schedules, we have tentatively decided to separate the role of evening columnist for the MSJ from the role of evening student government representative. In addition, we feel that in the future we also need more involvement from MBA evening students who primarily spend most of their time at Commerce Park.
In order to give each of you a better understanding of the scope of responsibilities for these positions, I have done my best to describe the major demands of each position. However, because these positions are still evolving, I also see plenty of opportunity for any of you to define the impact that you could have in any of these jobs.
--MBA Evening Student Government Representative:
While this position appears to have the most demands, it really will become the position that you want it to become. There are numerous opportunities to directly affect the role of the evening program at the B-school: (1) coordinate with the SGA President to develop opportunities for evening students to become involved in activities at the B-school; (2) communicate information with the Academic Director of the MBA Evening Program; (3) periodically update Dean White regarding the MBA Evening Program; (4) initiate any events which benefit MBA evening students; and (5) attend bi-weekly meetings, which are normally held at 6:00p.m., of the entire Student Government Association. As an evening student, with work demands and a travel schedule, it is acceptable if you can't make every meeting. As long as you communicate your input to the SGA President, you will be able to set a very flexible schedule for these meetings.
--Evening News Columnist for the MSJ: The most important aspect of this position is that you will need to submit a column each week. The best aspect of this position is that the MSJ has some great parties.
--Commerce Park Representative: This position can develop into whatever role most efficiently serves the students at Commerce Park. Here is my idea of some roles that this individual can serve: (1) attend bi-weekly SGA meetings as needed or as available; (2) provide feedback about the level of services available at Commerce Park; (3) provide input to the Evening News Columnist about information pertaining to Commerce Park students.
Now, please keep in mind that these are just the suggested needs of the evening program and if you have grand visions of redefining any of these roles, then I sincerely encourage you to express your interest.
As I mentioned earlier, Professor Suslow and I don't have a formal process for filling these roles. We want to find motivated and committed people who will make an impact on the evening program. If we have a lot of people express an interest, then maybe we will hold elections. If we have just a few people express an interest, then maybe we will just conduct interviews. This process is going to evolve based on the number of people who want to become involved.
So, if you want to become involved anyway in the evening program, here is how to do it. Send me an e-mail or call me at my home number, (313) 913-0394, and let me know what position you are interested in. In addition, if you have any questions about any of these positions, certainly e-mail me or call me. Please let me know by Wednesday, February 26. Professor Suslow and I will then decide the next logical step to take in this process.
As a final comment, I would like to mention that I have thoroughly enjoyed my involvement with the evening program and I think that I have had an opportunity to develop a number of important skills. I would highly encourage each and every one of you to seriously consider becoming involved with this program because I think you will value the experiences and relationships that you make.
M-Track MBA Evening Goal
Once again, thanks to all the e-mails I have received about people wanting the information about logging onto M-Track. We still have some people that are experiencing difficulties in downloading M-Track but we will eventually resolve the problems.
Since last week, we have had eight more people log onto M-Track which leaves us with 264 more people to get logged on in order to meet our goal. And of course, I'll end this column with this week's motivational M-Track slogan: "You don't have to be a computer hack to sign onto M-Track."
Number of MBA Evening students signed on to M-Track
| Last week's number | 503 |
| This week's number | 511 |
| End of winter term 1997 Goal | 775 |
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