Effects of Macroeconomic Policies upon a Single Organization

Effects of Macroeconomic Policies upon a Single OrganizationUnderstanding the Tree by Knowing the af setThe analogy of the forest and the trees is particularly apt in illustrating the difference surrounded by macro- and micro-economic atomic number 18as of concern. Whereas microeconomics operates at the level of the respective(prenominal) firm, manufacturer or even undivided consumers, macroeconomics is princip completelyy concerned with the national or even global conflate issues of these entities. In other words, if single firm is a tree, macroeconomics is concerned with the policies that political campaign the forest. Thus, it must(prenominal) be kept in mind, the goals of the tree may non always be fur on that pointd by following the governance of the forest. Similarly, the policies that atomic number 18 scoop for the forest may not be in the best interests of both oneness tree. Utilizing this perspective, a brief examination shall be made of how macroeconomic forest indemnity might usurp a single organisational tree.Depending on semantics and the exact metric utilized The YMCA is arguably the macrocosms largest human service organization. This nonprofit organization was founded in 1844 in London and rapidly spread across the world, now being alert in over 140 countries. In the unify States the YMCA has approximate 2,500 branches with most 20,000,000 members. Each of these operating units is independently governed by a local get along with of directors who hires the CEO. This position set outs is the operations end of the business and is immediately responsible for the hiring of all other employees. Some operating units are quite small, perhaps having slight(prenominal) than 10 employees while others have several hundred or more. fiscal impact of a unit, in terms of projected revenue, could range from less than one hundred thousand dollars to nearly $100,000,000 (personal communication, J. Bean, retired YMCA Senior Director, October 6, 2005).One of the primaeval concerns of macroeconomic policy is to maintain optimal employment levels (Keifer 1999, p. 59). While the plight policies of a single organization are very unlikely to affect the forest, a negligible wage policy does certainly affect individual organizations. On October 1, 1996, the US minimum wage change magnitude from $3.85 to $4.75 per hour and amplificationd again effective September 1, 1997 to $5.15 per hour (US Department of Labor, 2005). Though businesses had months to pass and adjust, the net effect, in the end, was that a 34% wage increase was evidenced.In an organization such as a YMCA unit, this had the potential of having serious consequences as there are a frame of operating parameters different from umpteen other businessesThe YMCA is a nonprofit organization. While still being run as a business, the operating margins of nonprofit firms are typically much slimmer there are no real profit margins, there are no dividends or bonus and there is no exuberant executive compensation.The YMCA employs and extensive part-time work force. Many of these individuals are every entry-level or accept entry level wages.The YMCA is a service compulsive organization. In many private sector businesses, firms get very dying(p) if total personnel costs scale 30% of budgeted expenses. In a YMCA, depending on the exact architectural plan mix in a particularized community, it is not uncommon to see human resource costs occupying 60% of the budget.With these factors in mind, it is easy to see how increases in minimum wage grass disproportionately affect the bottom-line of service driven organizations. In 1996 or in 2005 (were their to be additional increases), there are but a number or strategies to be deployed. First, one can make budget cuts and get dressed service levels. For a nonprofit meeting the needs of the community, this is generally unacceptable. A second solution is to increase the efficiency of human assets so th at you are doing more with less. For example, if one had 10 employees at minimum wage ($5.25/hour) for an hourly expense of $55.25, the goal would now be to somehow re-engineer the process so that only six employees are required. This approach is a good one in the long run. In the terse run, additional funds must be invested, often in technology, so that workers efforts are leveraged to a great extent. Also, a potential problem with this solution is that many YMCA programs involve early days for which there a either government or organizational policies in regards to staffing ratios (i.e., in infant childcare programs, the ratio must not exceed one staff to four children). A third option is to increase revenue to cover the additional expense. In a YMCA, this can be achieved two waysIncrease earned revenue by increase program fees. In this situation, increases would likely be tolerated as there is a bona fida increase in the cost of doing business.Increase contributed income by ph ilanthropy. Faced with change magnitude operating costs and a compelling need for a program service, donors are often quite willing to help out a benevolent organization who demonstrates principles of good stewardship with existing assets.While employment policies are one example, the field of macroeconomic policies is one in which there is plainly no such thing as an isolated variable. Increases in minimum wage policy are likely to trigger inflation (Knoop 2004, p. 39). Inflation, in turn, increases the cost of doing business, particularly as the cost commodity goods such as gas, oil, electricity and water increase. Again, the same three strategies present themselves to the operators of enterprise.A last example of how macroeconomic policies can impact the organization in skepticism is that of federal monetary policy. While a nonprofit organization does not play the market per se, money is often borrowed for capital projects. A destitute fiscal policy will drive interest rates down, creating opportune times for consideration of borrowing funds. A related consideration is the boilersuit tone of the market. As nonprofit organizations are often the beneficiary of fiscal instruments, the specific tax advantages set by federal fiscal policy have an effect upon the generosity of some donors.In summary, the politics of the forest have a tremendous effect upon the trees. While the policies may, in the short run, create mild operational havoc, we must have some religion that the forest has our best interests at heart as a reinforced forest is better for all trees.Works ConsultedKnopp, T. (2004). Recessions and Depressions Understanding Business Cycles. Praeger Westport, Connecticut, US.United States Department of Labor. (2005). History of Changes the Minimum Wage Law. online http//www.dol.gov/esa/minwage/coverage.htm. Accessed October 6, 2005.