Analysis of The End of Work By Jeremy Rifkin – Final Thoughts

Since this book was written 24 years ago, I will cut author, Jeremy Rifkin, a little slack. That was back during the time we all thought Y2K was going to be the end of the world as we knew it back then. As a matter fact, it was said that computer technology was not advanced enough to handle the shock of the date, January 1, 2000. Just look where we are today. I think Rifkin should considered updating his theories to coincide with today’s technology. I will give him some credit, a small amount, if you will. The Postscript—the last two pages of the book, he did admit there was hope—there was hope that there would be “millions of new jobs in the Third Sector.” (Rifkin, 1995) He also states that the government will probably play a much smaller role in the business sector. I’m not sure that is such a bad thing. If you are interested in seeing what people thought the world would be like today, back in the ‘90s, this would probably be an interesting read for you. Thanks for following along!

Jennifer

Resources

Rifkin, J. (1995). The end of work. 1st ed. New York, N.Y.: Putnam’s Sons.

 

Analysis of The End of Work By Jeremy Rifkin – Part V: The Dawn of the Post-Market Era

The final section of Rifkin’s book discusses the implications and issues with having more free time versus working time, the diminishing market value of labor, third sector organizations, and the independent sector. Basically, these chapters offer insight into a new, emerging world where the government will have to focus more on the civil society. This selection wraps up Rifkin’s banter on a dramatically increasing crime rate due to automation and the effects of a workerless society.

Re-Engineering the Work Week

Rifkin opens this chapter with a quote from philosopher Herbert Marcuse:

“Automation threatens to render possible the reversal of the relation between free time and working time: the possibility of working time becoming marginal and free time becoming full time. The result would be a radical transvaluation of values, and a mode of existence incompatible with the traditional culture. Advanced industrial society is in permanent mobilization against the possibility.” (Rifkin, 1995)

This concept is just as it sounds. If such an event occurs, there will be a huge shift in the cultures of the world. Inevitably, there will not be enough work to go around, leaving much of the population to its own devices. Such a dynamic would also increase the issues of unemployment and under employment, and, according to Rifkin, the world will go mad having nothing to do and having little to no money to survive, even thought he also points out that the average work time “has increased by 163 hours, or one month a year,” over the past 40 years. (Rifkin, 1995) In this sense, he seems to be contradicting his own argument. An report released by the heritage foundation discusses how automation has reduced human labor. This report provides information that coincides with Rifkin’s evaluation of automation’s effects on the world’s workforce, but it also provides an justification on how we have and will continue to adapt to this altering dynamic. Per the report, although “automation does reduce the human labor needed to produce particular goods and services… it also reduces production costs,” which, in turn, creates competition amongst businesses offering the same products, therefore, “forc[ing] firms to pass these savings on to their customers through lower prices,” and “these lower prices lead consumers to buy more of the now less-expensive product and leave them with more money to spend elsewhere, increasing the demand for labor in those sectors of the economy.” (Burke) Here, we see the other side of the dispute —a resolution, if you will.

A New Social Contract

In the past government has had its place in business, big and small. Conversely, as Rifkin translates it, even “standing armies cannot stop or even slow down the accelerating flow of information and communications frontiers.” (Rifkin, 1995) What this means is governments across the board cannot regulate many industries as in the past because technology is changing the dynamic at such a determined frequency. While this could be cause for alarm on some level, as far as matters of taxation goes, this still may not be all bad as it fundamentally means businesses will be put back into the hands of the people. It kind of sounds like a positive tradeoff.

Empowering the Third Sector

The third sector is “the segment of a nation’s economy that is made up of neither public nor business concerns, as nonprofit health or educational institutions.” (Third sector.) No matter if you are a nurse at a UNC Health Care, an office assistant for the Autism Society, or a professor at Western Carolina University, you are part of the working class in the third sector. I currently work for a nonprofit organization which provides gently used clothing and household goods for a dramatically reduced price. As there will always be a need for affordable options to clothe ourselves and to furnish our homes, it seems like jobs in similar organizations will be safe for many years to come. The same goes for health care and education. People get sick every day. Most people find themselves embarking on two to three career changes or more throughout their life cycle. When speaking of empowering the third sector, that is exactly what Rifkin is speaking of. The issue he raises with this particular dynamic is the threat of “volunteerism” taking over the work force. (Rifkin, 1995) Many organizations use volunteers to cut labor costs across the board. That said, it is unlikely volunteers will actually replace all workers in the end. For instance, most hospital volunteers do not have the same skill set as a medical doctor, and, therefore, they cannot provide the same level of care. To elaborate further, even if doctors volunteer time at a medical facility, chances are they will not do that one hundred percent of the time, because they would not be able to survive financially. So, while volunteerism does eliminate the need for employees on some level, it is very unlikely it will completely wipe out the need for all paid workers.

Globalizing the Social Economy

As alleged by Rifkin, “a new form of barbarianism waits just outside the walls of the modern world.” (Rifkin) In this final chapter, the author poses the question of whether or not the third sector with able to absorb workers who have or will be displaced from the other sectors. If history shows us anything, from the prehistoric world to the modern world, humans have always adapted to new technology. This is an undeniable fact. As I previously stated, Rifkin also believes the world’s growing crime rate is a direct reflection of automation. I would like to pose another point of view for everyone to ponder. Isn’t it possible that there has always been a high crime rate around the world? Isn’t it possible we are just more in tune with it, because today’s technology gives us minute by minute updates on that information? I am not completely disregarding his point of view or the information provided in this book, it just seems like there is always more to the story.

Conclusion

While reading this book, I can understand how Jeremy Rifkin has caused such a stir with modern theorists around the world. This piece of work is extremely thought provoking, indeed. I certainly do not agree with many aspects of his automation theory, but, I have to admit his argument is an emotional one. It makes the reader think of the effects of automation from a different perspective, if for just a few brief moments.

Resources

Burke, L. (n.d.). Automation and Technology Increase Living Standards. Retrieved March 3, 2019, from https://www.heritage.org/jobs-and-labor/report/automation-and-technology-increase-living-standards

Rifkin, J. (1995). The end of work. 1st ed. New York, N.Y.: Putnam’s Sons.

Third sector. (n.d.). Retrieved March 3, 2019, from https://www.dictionary.com/browse/third-sector

Analysis of The End of Work By Jeremy Rifkin – Part IV: The Price of Progress

This section of The End of Work covers the topics of potentially permanent job loss, a dramatic farewell the working class, how automation effects all of the nations, and rising crime rates. At this point in the book, it seems it is Rifkin’s belief that automation will surely destroy life as we know it. It’s almost as if he is telling us the world is going to come to an end, and it’s all because of automation.

High-Tech Winner and Losers

When talking about high-tech winners and losers, Rifkin means that the corporations of the manufacturing sector are the winner and the workers who have lost their jobs, due to automation, are the losers. According to his research findings, in an effort to yield bigger profits, many manufacturing companies jumped on the “trickle-effect” train and never looked back. The trickle effect occurred when businesses saw the need to “keep up with consumer demand,” while “reducing the costs of products.” (Rifkin, 1995) While this created a number of jobs in the industry, those who were uneducated or undereducated found themselves out of work. David Autor, professor of economics at Massachusetts Institute of Technology (MIT), has a different perspective on automation. While he is no stranger to the effects of automation on the workforce, he says that predicting automation will eventually destroy all jobs is an “arrogant” assessment of the situation. (Autor) History shows there have been many times when our country has faced job loss as a result of technology; however, he says, “There’s always new work to do.” (Autor)

To watch Professor David Autor’s TED talk on automation, click here.

Requiem for the Working Class

Merriam-Webster defines requiem as “a mass for the dead.” (Culpepper, 2012) Clearly, the title of this section implies that the day of the working class citizen is all but gone. Rifkin paints a grim picture of displaced workers who are part of “the other world”—“workers who are experiencing rising levels of stress in high-tech work environments and increasing job insecurity…” (Rifkin, 1995) While, this is a matter not be taken lightly, I feel his statements are a bit overdramatized. This goes back to David Autor’s argument that we have always advanced right along with new technological advances. I would also like to point out, no job is stress free. Furthermore, the jobs of yesteryear—physically demanding manufacturing and service jobs—were much harder on the body.

The Fate of Nations

In this chapter, Rifkin discusses how automation has effects the rest of the world, including manufacturing plants in Mexico and India. Basically, he gives the same automation scenario for third world countries. Consistent with his argument of how computers have changed the American landscape, Rifkin also argues that “machines are replacing workers in every developing country.” (Rifkin, 1995) A 2015 study, conducted by the Oxford Martin School, corresponds with this argument; however, although “the majority feel automation poses a major challenge to societies and policymakers,” they are “optimistic that automation and technology will help to boost productivity over time, and believe that investment in education will be the most effective policy response to the potential negative impacts of automation.” (This:; et al., 2016) In contrast to Rifkin’s claims, it seems people still have hope that we can continue to progress and thrive in a computerized world, and that can be accomplished by planning ahead.

A More Dangerous World

The final chapter in Part IV, focuses on the rise in teenage violence. The reasons for this are “rising unemployment and loss of hope for a better future,” which, in turn, is causing more and more teenagers to “turn to a life of crime and violence.”  (Rifkin, 1995) While Rifkin may have a plausible argument here, is there more to it than that? Quite possibly, bad parenting could also be a dominating factor in this trend. An article published by the American Society for the Positive Care of Children presents an alternative argument to Rifkin’s theory. Bad parenting can also cause a child to go astray. Some symptoms of bad behavior are the inability to have long lasting friendships, psychological disorders, depression, low self-esteem, and a tendency toward violent behaviors. (2018)

Conclusion

The information presented thus far paints a picture of gloom and doom for the future. The more I read of this book, the more I keep hoping Rifkin will at least touch on a solution. Hopefully, in my next blog, I will be able to report he does exactly that.

Resources

Bad Parenting for a Child | Negative Effects. (2018, October 17). Retrieved February 27, 2019, from https://americanspcc.org/2014/07/17/effects-bad-parenting-child/

Culpepper, J. C. (2000). Merriam‐Webster Online: The Language Center0011The Staff of Merriam‐Webster. Merriam‐Webster Online: The Language Center. 47 Federal Street, PO Box 281, Springfield, MA 01102; Tel: (413) 734‐3134; Fax: (413) 731‐5979;: Merriam‐Webster, Inc c1999. Free. Electronic Resources Review, 4(1/2), 9-11. doi:10.1108/err.2000.4.1_2.9.11

Rifkin, J. (1995). The end of work. 1st ed. New York, N.Y.: Putnam’s Sons.

This:, S., 2019, 2. F., 2019, 2. F., 2019, 1. F., 2019, 0. F., 2019, 0. F., . . . 2019, 0. J. (2016, January 27).Impact of automation on developing countries puts up to 85% of jobs at risk. Retrieved February 27, 2019, from https://www.oxfordmartin.ox.ac.uk/news/201601_Technology_at_Work_2

Analysis of The End of Work By Jeremy Rifkin – Part III: The Decline of the Global Labor Force

I must admit I was pretty excited to read this section of Rifkin’s book. I come from a long line of farmers, factory workers, and service workers, so I can identify with these particular groups of people. Indisputably, I have noticed a drastic decline in the farming and factory sectors in the state of North Carolina, since the 1980s. I have, indeed, saw a few of my family members lose jobs in recent decades. Yet, I am not sure automation is completely to blame for this dynamic.

Mo More Farmers

When Rifkin wrote this book, back in the 90s, he claimed that, even though half of the world’s population still farmed land, “new break throughs in the information and life sciences threaten to end much of the outdoor farming by the middle decades of the coming century.” (Rifkin, 1995) What Rifkin is saying here is my children and grandchildren may know a world with effectively little to no farmers. I do feel like some of the information Rifkin shared does contradict his claims, such as the development of agricultural software. Although this software has alleviated the need for manual methods for such things as soil evaluation, in turn, it has given farmers the ability to devise more complex, yet quicker and more effective, ways of doing prep work. This means they now have a better way to prevent soil erosion and the ability to predict how often crops should be rotated without waiting for several crop cycles to pass, before being able to pinpoint any issues. Also, the fact remains, plants still need soil, light, and water to reproduce. The location dynamic of location may have changed, but the fact remains automation has yet to take the place of the essential elements a plant needs in order to thrive.

Hanging Up the Blue Collar

In this section, Rifkin discusses the effects of automation on the automotive industry. Over time, robotics with the ability to create tasks much quicker than humans has emerged to the forefront of the trade. According to the author, “Robots are becoming increasingly attractive as a cost-cutting alternative to human labor on the automobile assembly line.” (Rifkin, 1995) If you have been keeping up advancements in the automotive industry, you have also probably noticed this trend. After reading an article in Business Insider, I learned the fear of robotic breakthroughs is not a new things. According to the article,  “Here’s How Robots Could Change The World By 2025,” every time there has been a shift in technology, people often wonder where new jobs will come from when previous jobs are lost. Contributor, John Mauldin, states:

“As I’ve noted more than once, in the 1970s (as it seemed that our jobs were disappearing, never to return), the correct answer to the question, ‘Where will the jobs come from?’ was ‘I don’t know, but they will.’ That was more a faith-based statement than a fact-based one, but whole new categories of jobs did in fact get created in the ’80s and ’90s.” (Mauldin, 2014)

If we look back on history, one thing looks certain, when jobs were lost, due to the creation of more innovating technologies, new jobs were created which filled the need for employment by those displaced workers.

The Last Service Worker

Extending on what I said in the last section, we have always found a way to create new jobs. Look no further than the service industry. In the past, when manufacturing workers lost their jobs, due to changes in the industry, those workers were able to find employment in the service industry. Rifkin argues that this will soon be a thing of the past, because automation has also had a huge impact on the service industry. For example, Mutual Benefit Life (MBL) “re-engineered” the way the company processes claims, cutting the processing time down from 22 days to just four hours, by finding more effective ways to do the work. (Rifkin, 1995) Of course, this new process eliminated the need for many positions in the company. But, a I previously stated, the birth of new technology has always created other opportunities in other areas of work.

Conclusion

Job loss in any industry is always a contentious subject to tackle. Rifkin is directly saying that eventually automation is going to destroy most jobs in every sector, if not all of them. Such a development could be detrimental to the human race. Are we really heading in that direction? What do you think?

Resources

Mauldin, J. (2014, August 20). Here’s How Robots Could Change The World By 2025. Retrieved February 26, 2019, from https://www.businessinsider.com/heres-how-robots-could-change-the-world-by-2025-2014-8

Rifkin, J. (1995). The end of work. 1st ed. New York, N.Y.: Putnam’s Sons.

Analysis of The End of Work By Jeremy Rifkin – Part II: The Third Industrial Revolution

This week’s topic of discussion is Part II of Jeremy Rifkin’s book, The End of Work. In this section, Rifkin covers his thoughts on artificial intelligence and how it has effected African-Americans and Fordism. In my previous post, I established that Rifkin’s claims on the evils of automation have been met with much skepticism. As you will discover, as I further discuss his reflections on the subject, there are certainly two sides to every story, and, depending on who you talk to, there could be even more sides to an argument

Crossing Into the High-Tech Frontier

According to Rifkin, we are now living in a “near-workerless society” which is the direct result of “a great shift in economic paradigms.” (Rifkin, 1995) Basically, he blames automation for the transition into our dependence on non-renewable resources, such as the machines that were essentially created to make our work much easier. While it is true we have become very dependent upon technology, I have to wonder if this is such a bad thing. Marianna Glynska, contributing writer for Huffington Post and a teacher, would probably whole-heartedly disagree with Rifkin. In the article, Can Technology Make Our Lives Better?, she discusses how the Lazertouch mini projector has changed how people deliver presentations. These handy gadgets can help users create a presentation without the hassles technical issues and without having to lug around a lot of heavy equipment. (Glynska, 2017) This example seems to deflect Rifkin’s claims a bit, as the device still requires human interaction to create the finished product.

Technology and the African-American Experience

In this section, Rifkin talks about how automation created a “permanent underclass in the inner cities.” (Rifkin, 1995) It is his belief this all started with the creation of the mechanical cotton picking machine. Although this invention was imperative in the downfall of slavery, it created another problem for African-Americans who were unskilled to do anything else. While the freed slaves were finally allowed to live a life free of oppression, Rifkin argues that automation is the reason for a continuing economic racial divide. These new workers did find solace in the manufacturing industries, however, as Rifkin puts it, once “automation began taking its tole on the nation’s manufacturing sector, “ those workers found themselves displaced once more. When looking into this subject a little further, I found there is a growing African-American presence in the technological fields. According to Wayne Sutton, an African-American entrepreneur, “there are tons of African-Americans throughout the country doing amazing things in the field of technology, but a lot of people just haven’t heard about them.” (Dickey, 2013)

For a list of The 25 Most Influential African-Americans In Technology, click here.

The Great Automation Debate

In the mid-1960s, there was a huge debate over automation. There were those who were against the “cybernetic revolution,” citing it required “an immediate government response,” and there were those who “argued that technological displacement was a normal outgrowth of economic progress and would eventually be absorbed by a robust economy.” (Rifkin, 1995) In other words, one group wanted the government to intervein and put a stop to the technological advancements, or at least slow them down dramatically, while the other group argued that the people who were being displaced could learn new skills and be integrated into a new industry. While this latter may be true, is it really that simple? The article, How Technology Creates Jobs for Less Educated Workers, by James Bessen, uses the example of LPNs to show how technology has changed the field of nursing. Bessen points out that “employees gain much critical knowledge about new technologies through experience on the job and such learning often does not require a high degree of education.” (Bessen, 2014) Meaning, one could argue that automation is not the downfall of the workforce; it is just the catalyst for changing the way workers are hired and trained.

To read the full article, click here.

Post-Fordism

First of all, what is Fordism? Brittanica.com defines Fordism as “the system of mass production that was pioneered in the early 20th century by the Ford Motor Company” or “the typical postwar mode of economic growth and its associated political and social order in advanced capitalism.” (Jessop, 2016) On the surface, that doesn’t sound like such a bad thing, does it? If you were to ask Rifkin, he would say yes. As stated by Rifkin, following the Fordism model led to the development of a work force that allows “less and less room for independent decision-making at the lower levels of the command structure.” (Rifkin, 1995) I do agree that independent thinking is an essential life skill. That said, there is also a such thing as having too many people in charge. You know, too many chiefs in charge. Although we have since moved into the post-Fordism era, one thing is certain, having a clearly defined authority/worker dynamic is still an essential part of today’s work force.

Conclusion

Rifkin’s has touched on some pretty touchy subjects in this section of the book—how automation has made us more dependent on non-renewable resources, how it has created an ethnic divide in our nation, and how it has created a new generation of non-thinkers. These are all very big claims. What do you think?

Resources

Bessen, J. (2014, November 02). How Technology Creates Jobs for Less Educated Workers. RetrievedFebruary 26, 2019, from https://hbr.org/2014/03/how-technology-creates-jobs-for-less-educated-workers

Dickey, M. R. (2013, April 04). The 25 Most Influential African-Americans In Technology. RetrievedFebruary 26, 2019, from https://www.businessinsider.com/most-influential-blacks-in-technology-2013-4

Glynska, M. (2017, December 07). Can Technology Make Our Lives Better? Retrieved February 24, 2019,from https://www.huffingtonpost.com/marianna-glynska/can-technology-make-our-l_b_10477870.html

Jessop, B. (2016, May 17). Fordism. Retrieved February 26, 2019, fromhttps://www.britannica.com/topic/Fordism

Rifkin, J. (1995). The end of work. 1st ed. New York, N.Y.: Putnam’s Sons.

Analysis of The End of Work By Jeremy Rifkin – Part 1: The Two Faces of Technology

It has been well over two decades since Jeremy Rifkin wrote The End of Work. In this book, he explores the concepts of automation, corporate downsizing, and job losses associated therein. He theorizes that the technology which helped with modern industrialization will actually lead to the downfall of the world’s current workforce. Since first publishing the book in 1996, many of Rifkin’s theories have proven to have a substantial amount of merit, but not without challenge from other theorists. He is “credited by some with helping shape the current global debate” surrounding these issues. (2019) For the purpose of this analysis, I am going to review the key points from Part 1: The Two Faces of Technology.

The End of Work

In this section, Rifkin discusses the concepts of substituting software for employees, re-engineering, and a world without workers. According to Rifkin, “the new computer-based technologies promise a replacement of the human mind,” “re-engineering could eliminate between 1 million and 2.5 million jobs a year,” which leads to “worry about where the new high-technology revolution is leading us.” (Rifkin, 1995) While Rifkin still stands by his assessment today, there are some who agree with him and there are those who challenge this way of thinking. David Rotman, editor for The MIT Technology Review, conducted research on the effects of automation and he discovered information which coincides with Rifkin’s take on the topic and information which contests his beliefs. Dr. Erik Brynjolfsson, a professor at the MIT Sloan School of Management, believes “rapid technological change has been destroying jobs faster that it is creating them, contributing to the stagnation of median income and the growth on inequality in the United States.” (Rotman & Rotman, 2016) Another of Rotman’s colleagues, David Autor, an economist at MIT, provides information that points to a “sluggish economy” as the culprit for the sudden slow down in job creation.” (Rotman & Rotman, 2016)

(To read the full article, click here.)

Trickle-down Technology and Market Realities

Here, Rifkin tackles such topics as mass consumption, the post-war world, and the shrinking public sector. Rifkin argues that the “new labor saving technologies,” of the roaring 20s actually led to the great depression of the early 1930s, when the unemployment rate jumped from less than one million to 15 million, at its peak. (Rifkin, 1995) He goes on to point out, in the past, “new products—especially television and consumer electronics—helped cushion the blow and provide jobs for workers displaced by machines in other industries,” but, he believes this is a thing of the past as “the new economic realities… make it far less likely that either the marketplace or public sector will once again be able to rescue the economy from increasing technological employment and weakened consumer demand.” (Rifkin, 1995) Melanie Swan, of the Perdue University Philosophy Department, disputes such claims. She concludes the issue is not technological employment itself, rather, “The problem is that those who become unemployed by technology are not being reabsorbed or planned for comprehensively in today’s society.” (Swan, 2017) In essence, this means that we could technically avoid this phenomenon by strategically planning ahead. Even though it seems Swan could be oversimplifying a solution, it does make some sense in the bigger picture of things.

(To read the full article, click here.)

Visions of Techno-Paradise

To wrap up Part I,  we are given a overview of how the field of engineering changed the scope of the American landscape, from the invention of electricity in the late 1800s, to the launching of the Russian space satellite in the 1950s. These were, indeed, exciting times in history. Still, Rifkin believes those great historical feats, and the ones that followed, “hold out the long-anticipated promise of a nearly workless world…” (Rifkin, 1995) Mark Paul, a Fellow at the Roosevelt Institute, and a Postdoctoral Associate at the Samuel DuBois Cook Center on Social Equity at Duke University, argues that automation is not the end of the world. He reckons that, although “technological change has the potential to create job loss in the short term,” “job gains from technology often outpace the losses over time and allow workers to focus on better, high-productivity jobs.” (Paul, n. d.)

(To read the full article, click here.)

Conclusion

Clearly, Rifkin’s theories are open to interpretation and argument. While researching automation, I found many pros and cons. There seems to be as many proponents as there are opponents. I will leave you with this question to ponder: Who is right?

Resources

Jeremy Rifkin. (2019, January 17). Retrieved February 3, 2019, from https://en.wikipedia.org/ wiki/Jeremy_Rifkin

Paul, M. (n.d.). Don’t Fear the Robots. [online] Rooseveltinstitute.org. Available at:http://rooseveltinstitute .org/ wp-content/uploads/2018/06/Don%E2%80%99t-Fear-the-Robots.pdf [Accessed 3 Feb. 2019].

Rifkin, J. (1995). The end of work. 1st ed. New York, N.Y.: Putnam’s Sons.

Rotman, D., & Rotman, D. (2016, September 01). How Technology Is Destroying Jobs. Retrieved February3, 2019, from https://www.technologyreview.com/s/515926/how-technology-is-destroying-jobs/

Swan, M. (2017). s Technological Unemployment Real? An Assessment and a Plea for AbundanceEconomics. [online] https://www.researchgate.net. Available at: https://www.researchgate.net/publication/315217034_Is_Technological_

Unemployment_Real_An_Assessment_and_a_Plea_for_Abundance_Economics [Accessed 3 Feb. 2019].

Organizational Creation and Growth Strategies: Interrogate and Extend Concepts

ENT 630 – Co-written with Essence Walton 

Why is it important to consider the implications of veil piercing in the planning stages of an organization; and how can a company maintain the “corporate veil?”

Veil piercing can be detrimental to the owners, stockholders, and employees of a business entity. For this reason, it is imperative for entrepreneurs to examine the consequences of such occurrences before launching a new venture. In doing so, the risk of future lawsuits can be minimized.  Once a business has been established, there are ways to avoid veil piercing. According to Matthew A. Griffith, Senior Attorney, Griffith Law Group LLC , “Maintaining the corporate veil is not difficult, but it does require business owners to complete some simple tasks and stay vigilant;” and, those tasks include, but are not limited to:

  • “Never commingle personal and corporate finances.
  • Create and maintain a company record book, which should include minutes of all company meetings.
  • Learn and follow any requirements unique to the state where your business operates.” (Griffith, 2017)

To read Griffith’s full article, click here.

Is an exit strategy needed? How does an owner’s exit strategy affect the decisions they make regarding their business?

Not all business owners create an exit strategy; however, it is important to have one in place when looking for investors. An exit strategy shows an investor how they can get a return on their investment. From the time an owner sets an exit strategy, the decisions they make are usually in alignment with this choice. For example, selecting a legal structure is done in the early stages of a startup. An owner with plans to remain in complete control of their business may prefer a sole proprietorship or limited partnership versus forms that are heavily regulated by the state like a corporation. Although an exit plan is subject to change as businesses grow, it is easier for an owner to change from particular structures to another such as switching from a corporation to a sole proprietorship. To avoid these complexities, it is highly recommended that owners develop an exit plan as soon as possible and get legal advice when doing so.

Referring once again to Noam Wasserman’s trade-off theory, if a business owner prefers to maximize their wealth rather than their control this will even influence their decisions on cofounders, investors, whom they hire, whether or not they will have a successor and other factors (Wasserman, 2013). Owners more interested in keeping their control will be less likely to hire people who are specialists in their fields so that they can do all of the decision makings. So to recap, an exit strategy is not necessary but is recommended because it influences the choices an owner will make regarding their business as they aim to reach their goals.

For a video synopsis of Wasserman’s book, click here.

Works Cited:

Griffith, M. A. (2017, July 17). A Checklist for Maintaining Your Corporate Veil. Retrieved November 24, 2018, from https://www.legalzoom.com/articles/a-checklist-for-maintaining-your-corporate-veil

Wasserman, N. (2013). The Founders Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton Univ Pr.