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You don't expect easy answers from the WAG. So I chose not to review the top
stories of 2005. Any hack can do that. It's much more fun to feature what I
project will be front page news in 2006. Ok now, look deep into the crystal
ball...
1) More Boomers will stay on the job
Fully 43% of the workforce is eligible to retire in the next ten years
according to Business Week. But I anticipate that many boomers will want to
stay engaged at work. In equal fashion, companies will beg boomers to delay
their retirement as experienced managers and skilled workers become more
scarce. Imagine...gray will be hip again.
2) Shareholders with a conscience will make waves
General Motors could not ignore Kurt Kerkorian in 2005 when he took nearly
10% stake in GM and took target at its dysfunctions. With less toned
muscles, expect a rising swell of social investors to use shareholder
leverage to lobby management to make changes. Example: Green Century Capital
Management, formed to put equity behind environmental ideals, owns shares of
ConocoPhilips and ExxonMobil with the intention to keep management at the
respective oil companies accountable.
3) The reason Y
Companies will be eager to discover what drives 20-somethings today. It's
not just how much generation Y spend, but how much they influence what other
people spend - one in three consumer dollars according to one UK study. If I
may cut to the chase, Generation Y cares about experiences, participation,
and living for the Now. Delayed gratification does not resonate for a
generation with an uncertain future.
4) White collar workers will tread water...and grow restive
In 2005 corporate profits grew nearly 15 percent from the previous year.
That is twice the pace of growth in compensation for employees. And what
growth there has been in compensation has mostly concentrated at the top of
the management food chain. Put simply, the salaries of most white collar
workers are treading water, growing roughly at the same rate as inflation.
While jobs were being cut, white collar workers kept quiet. As the economy
grows, expect more boldness.
5) Corporate investment gets its groove back
One financial theme dominated business over the past four years: cost-cutting. That trend will change in 2006. Capital spending will increase dramatically, especially in the areas of research-and-development and technology capacity. A survey of CFOs conducted by Barron's business review shows that 66% of CFOs plan to increase capital spending in 2006 by and average of 9% above 2005. Nearly half of the CFOs plan to increase their R&D investments. Caveat: Don't expect these investments to lead to a big jump in new jobs.
6) Healthcare benefits will stay sick
More companies will demand that employees take control of their health care
spending in much the same way employees took over management of their
retirement funds. Healthy young people are ideally suited for these plans;
of course, they are not the ones who usually need health care. I anticipate
more corporate executives to join a growing movement of health care reform
activists. Unfortunately lobbyists have bought the farm already, and the
sheep won't say a bleating thing. Sadly, I expect nothing to change in
2006...only rising frustration.
7) Sweating out sweatshops
Last April, Nike, Gap and Patagonia joined with five other clothing
retailers and six grassroots anti-sweatshop groups to form the Joint
Initiative on Corporate Accountability & Workers' Rights. The project
establishes a single set of labor standards for apparel factories around the
globe. Although a living minimal wage for each locale still may be far off,
history is moving toward more universal guidelines. That trend will gain
more momentum in 2006.
8) Ma Bell may have to live in a shoe
Traditional telecom companies are in deep trouble. I am turning to the cable company for my high-speed internet access. I make most of my U.S. calls on cell phone, and I use Skype for my international calls. I may even get a Skype phone this year and then the cost of my calls will approach zero. I am THIS close to dropping phone service into my home. I don't see a glimmer of hope for the telcos.
9) Excessive executive pay...enough already
Shareholder activists will target excess executive pay big time in 2006.
Nearly 90 percent of institutional investors believe that U.S. executives
are vastly overpaid, according to the survey results of a recent study by
Watson Wyatt Worldwide. The final straw may be the latest expos? that many
U.S. companies are secretly reimbursing executives for taxes they incur on
salary, perks, and stock awards. Governing boards are starting to understand
that executive greed damages employee morale and shareholder return. Expect
a spate of boardroom conflicts.
10) Everything China
A billion people can't be wrong. China will pop up everywhere in 2006. No
matter what the industry - venture capital, electronics, entertainment,
apparel, food - all roads lead East. Expect most Western pioneers to lose
their entrepreneurial shirt.
The devil is in details, of course, so keep reading your WAG in 2006! Oh, and just one bit of advice: If you don't like the news, go out and make your own!
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