Outsourcings Benefits in Management

Table of Contents Introduction Overview of Outsourcing Reasons for Outsourcing Levels of Outsourcing The Benefits of Outsourcing Conclusion Reference List Introduction Outsourcing is the act of transferring some of an organization’s recurring internal activities and decision rights to outside providers, as set forth in a contract. Because the activities are recurring and a contract is used, outsourcing goes beyond the use of consultants. In other words, outsourcing can be defined as the process of shifting tasks and services previously performed in-house to outside vendors. As a matter of practice, not only are the activities transferred, but the factors of production and decision rights often are, too.Advertising We will write a custom research paper sample on Outsourcing’s Benefits in Management specifically for you for only $16.05 $11/page Learn More Factors of production are the resources that make the activities occur and include p eople, facilities, equipment, technology, and other assets. On the other hand, decision rights are the responsibilities for making decisions over certain elements of the activities transferred. This paper looks at the reasons why most organizations outsource and the growth of outsourcing from the tradition to modern organizations. It also looks at the different levels of outsourcing and concludes by giving some of the benefits of outsourcing. Overview of Outsourcing Outsourcing is a management practice that has been going on for many centuries. However, it has gained popularity in the recent past and organizations are attempting to think about it as a new practice. It has certainly changed in shape and has taken a different form, although the concept remains the same. Although primitive prehistoric villagers would not have understood some terms like core competencies, outsourcing, and increase in productivity, the benefits were real and it is these that lie at the heart of many of t he modern arguments referring to outsourcing. Modern organizations are nurtured by the outgrowth in division of labor meaning that organizations employ different individuals with different skills, competencies, and attributes. These individuals are hired to perform specific functions in the organization (Manning et al 2008). In the last century, few organizations had attempted to do everything themselves. There were always some products and services that came from outside suppliers and were never made in-house, and the boundaries between the two were flexible. Many diverse firms engage in intensive outsourcing. As outsourcing continues to grow in importance, its nature and focus is evolving. In the past, it is only the manufacturing industries that engaged in outsourcing but it has now been accepted in almost all industries including the service industry. It has also become a cross-national and global concept; for instance, it is estimated that about 40% of the entire automobile pro duced in North America came from the US, and much of this offshore supply is outsourced (Brown Wilson, 2005). The nature of outsourcing is diverse. Some firms now outsource core production activities so extensively that they no longer engage in production, as traditionally understood.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Inbound and outbound logistics are being extensively outsourced also. Some firms are extensively outsourcing secondary value-chain activities such as information technology, accounting systems, distribution, and aspects of human resources. Despite its increasing importance, many firms do not have a clear understanding of the benefits and costs part of its destiny in the hands of other firms that are seeking to maximize their profits. Thus, while outsourcing is often described as an alliance, the contracting parties inevitably have conflicting interests. The strategic objectives of outsourcing that decision makers should seek are to maximize the net benefits of outsourcing relative to the in-house provision of value-chain activities. In practice, this can often be simplified to minimizing the total costs of any given quantity and quality of outsourced good or activity. However, costs must be viewed comprehensively. Costs consist of expenditures for the good itself and the costs associated with governing the outsourced transaction. This raises a number of fundamental questions relating to governance costs (Noreen et al 2011). Reasons for Outsourcing There are many reasons why organizations choose to outsource other than rely on the resources available within them. One of such reasons is to enhance effectiveness by focusing on what one can do best. Other organizations outsource in order to increase flexibility so as to meet changing business conditions, demand for products or services, and advanced technologies. Other reasons include but are not limited to the following: Transform the organization Customer satisfaction and increasing the value of products as well as of the shareholders Improve management and control (Barrar Gervais, 2006). Acquire innovative ideas Improvement of operations Reduce investments in assets Gain market access and business opportunities through the provider’s network Expand production capacity and sales volume Reduce costs and increase benefits (Noreen et al 2011). Employee career development Increase commitment and energy in non-core areas Levels of Outsourcing There are different levels of outsourcing which occurs in different levels of activities. Most of the common levels are individual, functional, and process. Individual outsourcing involves moving specific positions out of the organization. This could be the management position of a poorly performing function or a technical position, such as, an intelligent analyst or an auditor. These positions are difficult to fill when turnover occurs and therefore it is advisable to outsource before an organization is able to find the appropriate person to fill such as a post. Individual outsourcing occurs when a person fails to perform the activities assigned to him at the desired performance level, or according to the organization’s expectation (Manning et al 2008). Almost all organizations are structured on a basis of functional cost with specialized knowledge and key responsibilities. Processes can be defined as the flow of products or services within an organization. A single process is generated by linking similar activities to create an output that satisfies a customer’s needs.Advertising We will write a custom research paper sample on Outsourcing’s Benefits in Management specifically for you for only $16.05 $11/page Learn More Processes defer from one organization to the other and it is upon each organization to determine its own processes. There are many contractors in the world who earn their income through outsourcing. IBM is one of these contractors that have been doing well in the business of outsourcing. In 2003 IBM decided to outsource its expertise to Visteon an auto parts manufacturer. This contract was estimated to earn the company over two billion dollars in a period of ten years (Hechlinger, 2003). The Benefits of Outsourcing Some of the benefits expected from outsourcing by investors include the following: 1. Creation of value for shareholders 2. Reduction of production costs by taking advantage of external supplier’s lower costs 3. Improvement of the quality of input by purchasing some superior capability from external supplier If a firm could easily imitate the cost or capability advantage of outside suppliers, it could produce the activity in-house. The acquisition of superior capabilities can also be thought of in cost-saving terms. However, it is usual in the business strategy literature to analyze each activity on the value chain in terms of the firm’s ability to lower cost or to improve quality. The contractor or supplier also benefits from outsourcing in terms of increased revenue, which he can use to diversify his activities. For instance, in the case of IBM and Visteon contract, IBM was expected to make large sums of money and also become a widely known contractor (Hechlinger, 2003).Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More To ensure that outsourcing is a cost-effective strategy, the costs of outsourcing must be compared to the costs of internal production of the activity. Production costs are those directly generated by the opportunity costs of the resources used to produce the good. There are a number of production cost rationales for outsourcing. The most basic is that internal production of the activity entails production at levels that are too low to be efficient, that is, to achieve minimum efficient scale. Many goods and services for which the organization has low unit demand exhibit significant cost lumpiness (Barrar Gervais, 2006). Just as a supplier can bring services to a locale within ones country, it can also bring one to new markets on other continents because of its global locations. The more places in the world a company can provide such presence the more opportunities one has to grow his global customer base. When considering a potential outsourcing in hopes of advancing into new mark ets, one has to make to determine the cost benefits of such endeavors. An estimate of potential revenue that would be received in the new capabilities has to be made and such estimate has to be reasonable. The estimated revenue has to be compared to the prices from suppliers in order to determine whether the new capabilities are cost effective. If a particular company is interested in going global, it has to look for suppliers who have the capabilities to take the company there. In order for the company to compete in the global market, it has to be available globally. Some facility labor relations conditions permit the use of in-house mechanics that are not bound by trade or craft union jurisdictional lines in performing operations and maintenance work. Contractors by and large, follow trade and craft union jurisdictional lines, hired by contractors are not better than those recruited for the facility’s in-house workforce. They lack the specific experience that the regular em ployees acquire in time at the facility, but they often compensate for this by bringing a greater breadth of experience to the job (Noreen et al 2011). Conclusion This paper has given a brief overview of outsourcing; what is meant by the term outsourcing, its growth, and how modern organizations are relying on outsourcing for most of their operations. It has also looked at the different levels of outsourcing and the good about this process to both the organization and the contractor. Outsourcing can deliver significant economies of scale by using standardized procedures and leading edge technology. Suppliers can perform finance and administration functions far more cheaply and efficiently than companies working on their own. This could include reduction in working capital, improvements in tax efficiency, and avoidance of capital expenditure. The services are also provided at an agreed cost which should also lead to a more accurate prediction of costs, and therefore more accurate bud getary control. A specialist provider can bring best practice and new investment in resources. Outsourcing financial operations can encourage business to be more innovative and focused on value creation. Reference List Barrar, P. Gervais, R. (2006). Global Outsourcing Strategies: An International Reference on Effective Outsourcing Relationships. Burlington: Gower Publishing Ltd. Brown D. Wilson S. (2005). The Black Book of Outsourcing: How to Manage The Changes, Challenges, And Opportunities. New Jersey: John Wiley and Sons Hechlinger, J. (2003, February 12). IBM Gets $2 Billion Outsourcing Job — Most Computer Operations Of Visteon To Be Taken Over As It Diversifies From Ford. The Wall Street Journal (Eastern Edition), B3. Manning et al. (2008). A Dynamic Perspective on Next-Generation Off shoring: The Global Sourcing of Science and Engineering Talent Academy of Management Perspectives 22.3: 35-54. Noreen, E. W., Brewer, P. B., Garrison R. H. (2011). Managerial Accounting f or Managers (2nd ed.). New York, NY: McGraw Hill. This research paper on Outsourcing’s Benefits in Management was written and submitted by user Artur0 to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Free Essays on Why Is He So Good

. Some of his lines have double meanings. One of Hamlets quotes in scene two is â€Å"Not so my lord. I am too much in the sun.† â€Å"I am too much in the sun.† What does this really mean? In this situation, Hamlet is replying back to his Uncle that he is in the spotlight right now, and also that he is the ex-kings son and is mourning for him. This is a fine example of how Shakespeare is artistic in his writing. Another example of Shakespeare’s fine writing is that in many of his playwrights, he includes corruption of some kind. In Hamlet, the King is murdered by his brother, so that he can be the new King. The ghost of King Hamlet comes back to tell Hamlet to get revenge. Hamlet hasn’t decided what to do until, the quote, â€Å"To be, or not to be, that is the question.† In this quote he is asking himself what he shall do. Should he forget about the revenge and be miserable for the rest of his time, or should he take an act of revenge and avenge his fathers’ death? The quote, â€Å"To be, or not to be, that is the question,† is one of Shakespeare’s most famous quotes. That is a prime example of how a short quote can say so much. William Shakespeare’s Hamlet has a scene where a play is done in front of the King and Queen. Hamlet designed the play to reconstruct how King Hamlet died. He did this to see King Claudius’s reaction. When asked what the play was called, Hamlet replied, â€Å"The Mouse Trap†¦This play is in the image of... Free Essays on Why Is He So Good Free Essays on Why Is He So Good I have always been curious as to how some of William Shakespeare’ s playwrights such as Hamlet have stood the test of time. Clearly there must be a reason for this. Hamlet is a story of appearance versus reality. Why is it one of the best pieces of literature today? Why and how has it stood the test of time? It must be his way of writing. The most likely reason Shakespeare’s Hamlet has stood the test of time is because of its great artistic writing. In Shakespeare’s writing, he twists his words. Some of his lines have double meanings. One of Hamlets quotes in scene two is â€Å"Not so my lord. I am too much in the sun.† â€Å"I am too much in the sun.† What does this really mean? In this situation, Hamlet is replying back to his Uncle that he is in the spotlight right now, and also that he is the ex-kings son and is mourning for him. This is a fine example of how Shakespeare is artistic in his writing. Another example of Shakespeare’s fine writing is that in many of his playwrights, he includes corruption of some kind. In Hamlet, the King is murdered by his brother, so that he can be the new King. The ghost of King Hamlet comes back to tell Hamlet to get revenge. Hamlet hasn’t decided what to do until, the quote, â€Å"To be, or not to be, that is the question.† In this quote he is asking himself what he shall do. Should he forget about the revenge and be miserable for the rest of his time, or should he take an act of revenge and avenge his fathers’ death? The quote, â€Å"To be, or not to be, that is the question,† is one of Shakespeare’s most famous quotes. That is a prime example of how a short quote can say so much. William Shakespeare’s Hamlet has a scene where a play is done in front of the King and Queen. Hamlet designed the play to reconstruct how King Hamlet died. He did this to see King Claudius’s reaction. When asked what the play was called, Hamlet replied, â€Å"The Mouse Trap†¦This play is in the image of...

Market Analysis for Skating Service Park Essay Example | Topics and Well Written Essays - 1250 words

Market Analysis for Skating Service Park - Essay Example The first problem is to conduct the research so that we can get as much of information as we could, we should do park intercepts and we can ask people numerous of questions regarding their outing, we can also find young boys and girls and also men aging from 10 to 35 in so many places such as markets, malls, and also the other skate board parks in Houston which are nearly thirty, we can provide them with questionnaires and ask their advice on their level of liking or disliking the idea of a new park. The research should be conducted through a proper questionnaire and the target audience or the respondents should be majority of males looking young and energetic and also people who are quite fit because the service would be used mostly by people who are fit, for the purpose of conducing research the best possible solution is to look for people in the near by parks such as parks in Bellaire and other areas, the other places would be malls and entertainment places such as game zones, and also the people on road skating can be questioned, the service is having few qualities and strengths that should be clearly mentioned in the questionnaire and also the questionnaire should not be prepared in a way that can give the audience a hint for the desired answer, there are also few things that should be noted without questioning them in the question paper such as the gender and area where the research is conducted or park name can also be used to identify the responses from people of that pa rticular park, it has been said by Bassett in 1992, "Service must be found at or near the customer. Decentralization is indispensable. Corner grocery stores, once a feature of every city, are returning in the form of "convenience" stores. Personal Service from hairdressers or barbers has always been dispersed into local neighborhoods"(p. 28). and also the ratio of research from male to female should be 70 to 30 respectively, because we have more to find out in the male users which are far more than female in the service offered. Questionnaire What's your age group a. 8 - 14 b. 15 - 21 c. 22 - 28 d. 29 - 35 Do you like skating a. Yes b. No (proceed if Yes) Where do you like to skate a. Parks b. Roads c. other Which is your current park for skating _____________ Which area can you reach easily for skating ____________ What do you think about the services the park (for skating) is providing you a. Excellent

Network Security and Its Business Impact Essay Example | Topics and Well Written Essays - 2000 words

Network Security and Its Business Impact - Essay Example Securing and stabilizing the network ensures the confidentiality of data and effects positively towards the productivity and functionality of a business. Providing secure information technology (IT) services to colleges and universities is a special and unique challenge. Unfettered and timely access to all enormous quanti ­ties of information is higher education’s life ­blood and is a key to its success in educating its students and generating new ideas and know-how. The situation becomes more challenging when a new technology is added and integrated into the existing setup and same or advanced level of accessibility and protection is expected. Thus, the need of the hour is to identify the security loopholes and develop security policies especially for environments where the wired and wireless networks co-exist. 3 Situation Overview: The research is set in MajanCollege in the context of improvising the security of the college network after adding the wireless network (Wire less LAN) with the existing wired network (Local LAN). 4 Presenting the Problem Definition: The problem for the Network administrators is focused on understanding that the security needs to be strengthened when a wireless network is added to the wired network. 5 Real World Target: The major benefit in the real world if the problem is resolved or partially resolved is that the network administrators would confidently revise the security policies every time a wireless network is added to their network rather than continuing with the existing policies for the wired network and not being susceptible to security breaches saving the confidentiality of the data which is an asset to business. 6 What is Security? Computer security is a complex of actions and activities aimed at creating... This study declares that providing secure information technology (IT) services to colleges and universities is a special and unique challenge. Unfettered and timely access to all enormous quanti ­ties of information is higher education’s life ­blood and is a key to its success in educating its students and generating new ideas and know-how. The situation becomes more challenging when a new technology is added and integrated into the existing setup and same or advanced level of accessibility and protection is expected.   Thus, the need of the hour is to identify the security loopholes and develop security policies especially for environments where the wired and wireless networks co-exist.  As the discussion stresses the major benefit in the real world if the problem is resolved or partially resolved is that the network administrators would confidently revise the security policies every time a wireless network is added to their network rather than continuing with the exi sting policies for the wired network and not being susceptible to security breaches saving the confidentiality of the data which is an asset to business.  The importance strategically of this work is that the integrated network security for wired and wireless network will help the college in securing valuable data, improving network systems performance, protecting networks from internal and external threats, to enable higher availability and accessibility to the network.

Illegal Pay Discrimination, Bad Pay Policy, or Both Essay

Illegal Pay Discrimination, Bad Pay Policy, or Both - Essay Example However, his salary was $10,000 more than the female associate. Moreover, the other two counselors that were hired had no experience in counseling, and their salary is similar to the female associate. In my opinion, Charles M. Cummings is correct in believing that employees do enjoy having their achievements acknowledged by others, especially their supervisors and peers. Employees gain a sense of accomplishment and belonging when their achievements and successes are acknowledged. They are more successfully driven and motivated when they feel that they are contributing to the company or organization as a whole. Alfie Kohn believes that incentives do not motivate employees to perform their best for the long-term, only short-term. He believes that, when employees feel they will gain incentives for their performance, they will only improve their performance for a short while. Their performance will, eventually, drift back to its same, previous status. On the other hand, there are situations in which Kohn's theory of employees' performance does prove to be true. For example, working in a call center, the job is customer-service, whether the calls are in-bound or out-bound. In this particular situation, the calls are in-bound, meaning that customers call into the call center for help. Answering theAnswering the calls and helping customers with their problems, repeatedly, can become very tiresome. As a result, call centers usually offer their employees incentives for performing their job well, though the boost in the employees' performance will, most of the time, only last long enough to gain the incentive. Call centers also offer their employees incentives to find other people to come and be employees as well, and, more often than not, the performance cycle repeats itself. In conclusion, Charles M. Cummings believes that employees are encouraged when others acknowledge their successes, and this is true. However, there are instances when the theory of Alfie Kohn will be acceptable such as the situation with the call centers. Incentives can motivate employees to be more successful at their job, but the boost in performance will only be short-term. 13.1 - Unionizing FedEx FedEx should be unionized, and there are several reasons for this action. The policies and economic standpoint of FedEx seems to change frequently, these days, as with other companies in the workforce. The information that weighed heaviest on my decision was the fact that, when the employees at the Antigua location of FedEx engaged in a strike, the company terminated all of its employees and closed the office.Employees should have a right to have secure employment at their place of employment. Should FedEx unionized, the employees would, at least, know that their job will not be eliminated. However, if the employees' jobs are eliminated, FedEx would be liable for compensation for their ex-employees, depending on the

The History Of Goodmorning Vietnam Film Studies Essay

The History Of Goodmorning Vietnam Film Studies Essay Goooooooodmorning Vietnam! Ive seen the movie Good Morning Vietnam for my movie review. Good Morning Vietnam is a 1987 American comedy-drama. The film is written by Mitch Markowitz and directed by Barry Levinson. The film is set in Saigon during the Vietnam War. The movie is about a disc jockey, Adrian Cronauer (Robin Williams), who works at Armed Forces Radio Service (AFRS). This radio station appears hugely popular by the soldiers serving in South Vietnam. Adrians outrageous parodies and his rock music makes him popular, but hated by his immediate superiors. I think its a very nice film to see. and Ive seen the movie with a lot of pleasure. The movie Goodmorning Vietnam is filmed during the Vietnam War. The Vietnam War took place during the Cold War. The movie is set during the Vietnam war. We speak of the Cold War in the period from the second half of the 20th century. The Vietnam War occurred in the countries Cambodia, Laos and Vietnam, from November 1 1955 to the fall of Saigon that took place on April 30 1975. This war was the First Indochina war. It was the North Vietnam, who were supported by the communist against the government South Vietnam, who were supported by the United States and other anti-communist nations. The Viet Cong were the army of the Communist, who were placed in South Vietnam. The Vietnam war was largely a guerrilla war. Robin McLaurin Williams is an American actor and comedian. He is born at July 21, 1951. With his role as the alien Mork in the TV series Mork and Mindy and later with his stand-up comedy work, he became a famous actor. Williams has performed in al lot of films since 1980. He won the Academy Award for Best Supporting Actor for his performance in the film Good Will Hunting. Good morning Vietnam was a very important film in his career, because the most of his outrageous parodies were improvised by himself on the spot. In 1965, Airman Cronauer arrives in Saigon, during the Vietnam War, to work as a DJ for the Armed Forces Radio Service. Cronauers disrespectful behaviour contrasts with a lot off staff members and by his behaviour and other means of presentation, has he soon a conflict with his superiors. These superiors are Second Lieutenant Steven Hauk and Sergeant Major Dickerson. Hauk complies with rigorous Army guidelines in the field of sense of humor and music programming, while Dickerson is irritated by the behavior of Cronauers, but there are people who like Cronauers behaviour like Brigadier General Taylor and all the other DJs like the new man and his kind of humour more and more. Cronauers show consist of unpredictable humour mixed with news updates and rock and roll music that are hated by his superiors. Cronauer meets Trinh a Vietnamese girl. He followed her to her English class. The teacher let him take over the class. When the class ended, Cronauer tries to make contact with Trinh, but her older brother Taun stopped him, who tells Cronauer to leave her alone. Instead, Cronauer befriends with Taun and takes him to Jimmy Wahs, the local bar. Two older soldiers started a fight with the group that escalates into a big scenario. Dickerson states Cronauer responsible for this accident. Tuan is impressed of the DJs behaviour, so he arranged a date with Trinh, with the rest of the family, who chaperoning them. The news in Saigon is censored, but Cronauer locked the door of the studio and broadcasted it anyway. Dickerson ended the radio signal. Hauk replaces Cronauer, but his bad attempts at comedy and plays polka music rather than rock and roll, induce to a lot of letters and phone calls from soldiers who demand that Hauk must be removed and that Cronauer must be put back on the air. Cronauer can come back on the air, but he refuses to go back to work. During a traffic jam, Garlick and Cronauer are by a convey of soldiers. The soldiers persuade him to do an improvisation for them and he gives them a good laugh before they go off to fight in the field. It reminds Cronauer why his job is so important during the war and he is going back to work. Dickerson made up a conspiracy to blow up Cronauer by sending him to interview soldiers in the field, while Dickerson knows that the only road into this specific area is controlled by the Viet Cong. Cronauer doesnt show up by his English class and Tuan steals a car and drives off after them. Tuan finds them, but the car breaks down and they must stopped an Army helicopter that take them back to Saigon. At the station Dickerson tells Cronauer that his friend Tuan actually Phan Duc To is, a Viet Cong operative responsible for several bombing. He will be killed by the Army when they catch him. US Armed Forces members being friend with a Vietcong could be a serious problem for the United States Army. When Cronauer the next day on his way is to the airport, he sets up a softball game with the students from his English class. Garlick, who takes Cronauers place as DJ, plays a tape on the air the next morning after Cronauer is gone. The tape begins with a yell of Gooooooooooooodbye, Vietnam!. What spoken to me about the movie is that its based on a true story. There actually has been an Adrian Cronauer that broadcasted a radio show during the Vietnam War. His popularity and sense of humour werent exaggerated in the movie. I can imagine how important this show must have been for the American soldiers. Cronauer was their form of relaxation and amusement in the Vietnam War. I was also very impressed about the way Adrian (Robbin Williams) broadcasted his radio show. His sense of humour and quick reactions to the situation were amazing! This makes me appreciate Robbin Williams as an actor because of the fact that most of the radio scenes of the movie were totally improvised on the spot. I think the movie was also good because there was a deeper meaning in their description, in my opinion. This deeper meaning was in my opinion that Adrian found out that he was very important for the soldiers. I think that the radio during the Vietnam war very important was for the soldiers in t hat time, because it was the only thing were a bit of happiness took places.

government-controlled investment :: essays research papers

Some argue that personal retirement accounts would be a mistake and that the government instead should set up its own investment fund to help finance future benefit payments. The good news is that this indicates a growing awareness that  ¡Ã‚ °pre-funding ¡Ã‚ ± (i.e., accumulating assets) is a necessary component of Social Security reform. The bad news, however, is that government-controlled investment is the wrong answer to the wrong question. It assumes that policymakers should focus solely on balancing the program ¡Ã‚ ¯s revenues and expenditures. This ignores the other Social Security crisis ¡Ã‚ ªthe fact that the tax burden on today ¡Ã‚ ¯s workers is extraordinarily high compared to the benefits received (often referred to as the rate-of-return crisis). But even if balancing Social Security ¡Ã‚ ¯s long-term finances were the only goal, government-controlled investment would be the wrong answer. This is because a government-controlled pension fund would not face the competitive pressure and legal obligation to make investments solely for the economic benefit of future retirees. As one expert has explained: Giving the federal government that power and control would create large risks for the economy and for the retirement security of today ¡Ã‚ ¯s workers. The Congressional Budget Office, for instance, has warned: For example, evidence at the state and local levels with public employee pension funds ¡Ã‚ ªas well as evidence from similar arrangements in other nations ¡Ã‚ ªdemonstrates that politicians and their appointees often are tempted to steer the government-controlled pot of money toward special interests, political allies, or corporate contributors. In addition, even well-intentioned policymakers are not qualified to invest funds and manage money. Simply stated, they do not face the bottom-line pressures that force private businesses and investors to allocate resources wisely. Yet poor investment decisions have serious consequences. Most important, workers would earn lower returns on their money, and even small differences in rates of return translate into less retirement income.