engagement

U.S. Government Warns Conglomerate To Fix Security Flaws

by Reuters on December 22, 2011

Huffington Post…

* Researchers say flaws make systems vulnerable to attack by hackers * Siemens says first fixes will be released in January (Adds comments from Department of Homeland Security) By Jim Finkle BOSTON, Dec 22 (Reuters) – Siemens said it is working to fix security flaws in industrial controls products that the U.S. government warned could make public utilities, hospitals and other critical parts of the country’s infrastructure vulnerable to attack by hackers. The German conglomerate, whose industrial control systems are widely used around the world, said on Thursday in a posting on its website that it had learned of the vulnerabilities in May and December of this year from security researchers Terry McCorkle and Billy Rios. The U.S. Department of Homeland Security issued an advisory that warned of the vulnerability, urging Siemens customers to minimize exposure of industrial control systems to the Internet to make them less vulnerable to attack. “Successful exploitation of these vulnerabilities could allow a hacker to log into a vulnerable system as a user or administrator,” the agency’s Industrial Control Systems Cyber Emergency Response Team said in the advisory. Rios told Reuters that one of the most serious of the vulnerabilities, known as an “authentication bypass,” allows hackers to get around password protections on Web interfaces, which Siemens customers use to access industrial control systems. Siemens industrial controls systems are used to run an assortment of facilities from power generators, chemical plants and water systems to breweries, pharmaceutical factories and even uranium enrichment facilities. “People with low skills will be able to use this authentication bypass,” said Rios, who described the problems on his blog, www.xs-sniper.com. Siemens said it had addressed some of the security vulnerabilities and that it would release its first security update to fix them next month. The company does not know of any cases in which hackers had exploited the vulnerabilities to attack its customers, spokesman Alexander Machowetz said. Some Siemens software is designed to automatically install services that make control systems accessible via the Internet, Rios said. They are installed with a default password, “100,” which is published in user manuals that are available on the public Siemens website, he added. “People set up control systems, and they don’t realize that they are on the Internet, waiting for people to connect to them,” Rios said. Siemens industrial control systems have been scrutinized by security researchers over the past few years. The notorious Stuxnet virus, which crippled Iran’s nuclear program, was first identified by researchers in June 2010. It targeted Siemens software used to control gas centrifuges that enriched uranium at a facility in Natanz, Iran. Last May, the U.S. government warned U.S. water districts, power companies and other Siemens customers of another security flaw uncovered by researcher Dillon Beresford that made systems vulnerable to attack. In August, Beresford disclosed at the Black Hat hacking conference in Las Vegas that he had found further vulnerabilities in Siemens products, including a “back door that could allow hackers to wreak havoc on critical infrastructure.” (Reporting By Jim Finkle; Editing by Lisa Von Ahn)

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U.S. Government Warns Conglomerate To Fix Security Flaws

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What Do Employees Think Of Corporate Sustainability?

by on December 8, 2011

Huffington Post…

Do employees support and engage with corporate sustainability strategies? According to a new report, it depends. Brighter Planet, an organization which uses “hard numbers and raw data” to explore opportunities and trends in sustainability , has released the results of its second biennial survey on employee engagement with sustainability, and discovered several important trends. Brighter Planet states that since 2009, they have found that corporate sustainability programs are ” becoming less effective as they spread .” Their results suggest that “employee weariness at ineffective sustainability initiatives could undermine promising progress.” Additionally, they found that the most effective companies are those that promote a breadth of sustainability programs, especially in “emerging green issues like procurement, water use, and business travel,” and companies that make a point of collecting data on “their footprint, the impact of staff travel and commuting, and employee sustainability efforts.” The organization writes that its survey includes responses from almost 1,000 individuals in 47 states and 51 countries , including employees from “WalMart, Visa, UPS, Coca-Cola, Exxon, McDonalds, the U.S. Government, and many other leading organizations.” If you’re weary of companies that may be “greenwashing,” check out HuffPost blogger Candice Batista’s list of resources for sifting through companies’ environmental claims. Click here to view advertisements from companies that may have less than sustainable intentions. To read Brighter Planet’s full report on employee sustainability engagement, click here .

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What Do Employees Think Of Corporate Sustainability?

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Peter Levine: Could Civic Engagement Be the Key to Economic Success?

September 16, 2011

Since 2006, unemployment has risen by 10 points in Nevada but just one point in North Dakota. Such differences matter deeply for people’s lives, and we need to understand the underlying reasons. The obvious place to look is economic conditions. A Goldman Sachs study in August found that the only factors that mattered were the extent of the housing bubble (more was worse), the size of the state’s oil and gas industry (more was better), and the proportion of its workforce in high-skilled professional jobs (higher was better). My colleagues and I are concerned about civic engagement : voting, volunteering, belonging to and leading groups, attending meetings, and working with fellow citizens to address problems. Those activities are now measured annually by the federal Current Population Survey. So we included them in a statistical model along with major eight economic factors to see what explained changes in unemployment best. We found that the civic measures were strongly related to changes in employment from 2006-2010, but none of the economic factors was associated with employment to a statistically significant degree. Please see Civic Health and Unemployment: Can Engagement Strengthen the Economy , released today by CIRCLE at Tufts University, the National Conference on Citizenship, the Saguaro Seminar at Harvard, Civic Enterprises, and the National Constitution Center. In short, the more civic engagement, the less unemployment. Particularly valuable forms of engagement seemed to include volunteering, working with neighbors, group membership, meeting attendance, registering to vote, serving as a group officer, and contacting public officials. The main focus in the report is on states, but more limited evidence from metropolitan areas finds the same patterns at that level as well. The report carefully notes that we cannot tell for sure whether civic engagement lowers unemployment; other explanations are explored. However, the statistical relationships are notably strong and deserve much more attention by economists, policymakers, and the public. The statistical analysis itself cannot explain why civic engagement may be an important factor in avoiding unemployment, but other research lends support for several hypotheses: Participation in civil society can develop skills, confidence, and habits that make individuals employable and strengthen the networks that help them to find jobs People get jobs through social networks (online and offline) Participation in civil society spreads information relevant to investors and workers Participation in civil society is strongly correlated with trust in other people, and people who trust others are more likely to invest and hire Communities and political jurisdictions with stronger civil societies are more likely to have good governments Civic engagement can encourage people to feel attached to their communities As the report concludes: Even at a time when the global economy has been buffeted by strong and dangerous forces, all communities have capital and skills that can be deployed to create or preserve jobs. Investors may be more willing to create jobs locally if they trust other people and the local government, if they feel attached to their community, if they know about opportunities and can disseminate information efficiently, and if they feel that the local workforce is skilled. All these factors correlate with civic engagement. Those correlations, plus the other evidence cited in this report, lend some plausibility to the thesis that civic health matters for economic resilience. If we want to boost civic engagement at the state and local level, many strategies are worth considering — from funding nonprofits to reforming election laws. But civic education at the k-12 level should certainly be part of the strategy, and that was the topic of another major report released this week: Guardian of Democracy: The Civic Mission of Schools .

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Jon Huntsman Blasts Rick Perry Over Evolution, Climate Change, Ben Bernanke Comments

August 20, 2011

WASHINGTON (AP/The Huffington Post) — Presidential candidate Jon Huntsman is pounding away at rival Rick Perry’s skepticism of manmade global warming and criticism of the nation’s central banker, saying those stands hurt the GOP and make the Texas governor come off as a not so serious national figure. Huntsman, a former Utah governor who was President Barack Obama’s first ambassador to China, has trailed in early polls nationally and in early voting states, leading his campaign to pledge more aggressive attacks on the top candidates. Perry, who entered the race last weekend and has surged to a prominent role, has provided Huntsman with an ample opening to take shots. Perry said in New Hampshire this past week that he didn’t believe in manmade global warming, branding it an unproven scientific theory. He also defended the teaching of creationism in schools because evolution “has some gaps to it.” Huntsman responded in a tweet, saying “To be clear, I believe in evolution and trust scientists on global warming. Call me crazy.” “When we take a position that isn’t willing to embrace evolution, when we take a position that basically runs counter to what 98 of 100 climate scientists have said, what the National Academy of Science has said about what is causing climate change and man’s contribution to it, I think we find ourselves on the wrong side of science, and, therefore, in a losing position,” Huntsman told ABC’s “This Week.” Huntsman said he couldn’t remember a time when “we actually were willing to shun science and become a party that was antithetical to science. I’m not sure that’s good for our future and it’s not a winning formula,” according to interview excerpts released Saturday ABC. The full interview is set to air Sunday. Campaigning in Rock Hill, S.C., on Saturday, Perry didn’t back down, saying he believes the Earth’s temperature “has been moving up and down for millenniums now and there are enough scientists out there that are skeptical about the reasons for it.” Many conservatives question the evidence that shows climate change is happening and the government solutions to stem it. Perry also took on the Federal Reserve and its chairman, Ben Bernanke, when he said the central bank’s leader would be committing a “treasonous” act if he decided to “print more money to boost the economy.” Such action, the governor told a crowd in Iowa, would amount to a political maneuver aimed at helping President Barack Obama win re-election. Huntsman said he wasn’t sure that “the average voter out there is going to hear that treasonous remark and say that sounds like a presidential candidate, that sounds like someone who is serious on the issues.” Perry said Saturday voters are worried about monetary policy. “I’m about representing the American people out here and the American people are really concerned and scared.” Trying to put Perry’s broadside against Bernanke in context, Huntsman said “people are crying out for us to get back to some level of sensibility and this just kind of perpetuates the name-calling and the finger-pointing and the blame game where we want solutions.” “These sideshows,” Huntsman said, take “us that much farther off the ball” from the focus of fixing the economy and creating jobs.

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Stocks Keep Falling As Traders Worry About Looming Recession

August 20, 2011

NEW YORK — A growing belief that the U.S. economy may be headed toward recession gave the stock market its fourth straight week of losses. The anxiety in the market was obvious Friday as the major indexes went from moderate gains early in the day to another sharp loss. The Dow Jones industrial average had its 10th move of more than 100 points in 15 trading days this month. “We just don’t know whether we’re going to have a recession,” said John Burke, head of Burke Financial Strategies. There was little news to help investors determine their next moves. However, JPMorgan Chase & Co. joined other financial firms and cut its forecast for economic growth during the fourth quarter. It’s now predicting growth at annual rate of just 1 percent, down from an earlier forecast of 2.5 percent. That added to the recession fears. Investors disliked the news late Thursday that Hewlett-Packard Co. is planning to exit most of its consumer businesses, including PCs. HP fell 20 percent to a six-year low. HP plans to transform itself into a company that caters to corporations. After the market rose early, some investors sold in case bad news comes out of Europe over the weekend. European investors were also cautious – banking stocks fell near two-and-a-half-year lows, dragged down by rumors about banks’ potential losses on bonds issued by heavily indebted governments. “These things usually break out over the weekend and then you have a mad dash Monday to react to them,” said Mike McGervey, the head of McGervey Wealth Management. The drop late in the day recalled the 2008 financial crisis. Then, many investors stepped up their selling in the afternoon out of fears about news that might break overnight – or on weekends. Lehman Brothers failed on Sunday, Sept. 15. The government took over mortgage companies Fannie Mae and Freddie Mac the previous weekend. The Dow lost 172.93, or 1.6 percent, and closed at 10,817.65. It was down 4 percent for the week. Since July 21 – four weeks and one day – the Dow is down 15 percent. Companies that rely on an expanding economy for higher revenue fell. Caterpillar Inc., International Business Machines and Alcoa Inc. each fell more than 2 percent. The Standard & Poor’s 500 stock index fell 17.12, or 1.5 percent, to 1,123.53. It was down 4.7 percent for the week. All 10 industry groups that make up the index fell. The Nasdaq composite fell 38.59, or 1.6 percent, to 2,341.84. It was down 6.6 percent for the week. Although stocks fell, investors did not continue pushing the price of Treasurys, as they have the last three weeks. The yield on the benchmark 10-year Treasury note was almost unchanged at 2.07 percent, compared with late Thursday’s 2.06 percent. It had been up to 2.11 percent earlier in the day. The yield fell below 2 percent Thursday for the first time as heavy demand sent its price sharply higher. Investors began the week confident after last week’s volatility, the worst the market has had since the 2008 financial crisis. The Dow rose nearly 215 points on Monday when Google, Time Warner Cable and Cargill were among companies announcing multi-billion deals. The market remained relatively calm the next two days. But on Thursday, a stream of bad economic news in the U.S. combined with worries about Europe’s debt problems and sent the Dow plunging 419 points. Since July 21, the market has gone from one crisis to another, and the weakening U.S. economy has been at the heart of the selling. In late July, the concern was the debt debate going on in Washington. In early August, it was the downgrade of the U.S. debt rating by Standard & Poor’s. Since then, worries about the impact of the downgrade have faded, and growing evidence that the economy is slowing has driven stocks down. Signs of a slower economy around the world have only made investors more pessimistic about the U.S. Earlier this week, Germany said its economy grew just 0.1 percent in the second quarter. And Germany is the strongest economy in Europe. Stocks fell Thursday on news of another drop in home sales, weaker manufacturing in the mid-Atlantic states and an increase in the number of people who applied for unemployment benefits. The stock market tends to reflect the expectations that investors have for the economy and company earnings six to nine months in the future. So traders are interpreting the numbers they’re seeing as part of a slide in the economy that will continue for some time. A recession is generally thought of as two consecutive quarters in which the economy contracts, as measured by a country’s gross domestic product. With expectations of growth in the U.S. already low, investors worry that the economy can’t withstand another unexpected event like the earthquake in Japan or the string of bad weather that ravaged the South earlier this year. JPMorgan analyst Michael Feroli said business confidence, household wealth and global growth all look worse than just a few weeks ago. He expects economic growth to be nearly flat into the first quarter of 2012. Next week is likely to bring more volatility. On Friday, the government will give its second estimate of how the economy did during the second quarter. It said a month ago that the GDP grew at an annual rate of just 1.3 percent during the quarter. Economists expect the government to announce a lower reading: 1.1 percent. The GDP report July 29 contributed to the market’s heavy losses. So did the government’s revised estimate for the first quarter: 0.4 percent. Next Friday also brings the Federal Reserve’s annual retreat at Jackson Hole, Wyo. It was a year ago at Jackson Hole that Fed Chairman Ben Bernanke hinted that the central bank would begin buying $600 billion in Treasury securities to stimulate the economy. The buying ended June 30. Now investors want to know if the Fed will act again. But some analysts think that the U.S. economy will continue to grow on its own, although slowly. “The market is thinking that we’re going into a recession, but the data is telling you that we’re not,” said Jonathan Golub, chief U.S. market strategist for UBS. He pointed to an increase Thursday in an index of economic leading indicators that suggested the economy is expanding slowly.

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Robert Reich: Stock Tip: Be Worried. Workers Are Consumers.

August 20, 2011

Repeat after me: Workers are consumers. Consumers are workers. We’re slouching toward a double dip, and the stock market is imploding, because consumers — whose spending is 70 percent of the economy — have reached their limit. It’s not just the jobless who can’t spend. It’s mainly people with jobs. Median wages continue to fall. Weekly wages in July for Americans with jobs were 1.3 percent lower than eight months before. America’s median earners are now earning less (adjusted for inflation) than they earned ten years ago. Every CEO of every company that continues to squeeze payrolls (Verizon, are you listening? Ford?) needs to understand they’re shooting themselves in the feet. Where do they expect demand for their products and services to come from? They’re doing the reverse of what Henry Ford did back in 1914 — paying his workers three times what the typical factory employee earned at the time. The Wall Street Journal called his action “an economic crime” but Ford knew it was a cunning business move. With higher wages, his workers became his customers, snapping up Model-Ts and generating huge profits. Many on Wall Street are scratching their heads, trying to understand why the stock market is plummeting. After all, they tell themselves, corporate earnings are still near record highs. But it’s becoming clear those earnings can’t be sustained. Corporate earnings are the highest they’ve been relative to worker wages and benefits since just before the Great Depression. And the richest 1 percent of Americans are getting a higher percent of total income since just before the Great Depression. Get it? It was only a matter of time before the boom on Wall Street turned into a bust. Economic booms cannot continue without American workers participating in them. Foreign consumers have helped sustain earnings, but that won’t continue, either. The European economy is sinking and China is pulling in the reins on growth. What will happen to the Dow Jones Industrial Average when corporate earnings revert to their historic average relative to American wages? I’ve seen various estimates. They’re not pretty. Robert Reich is the author of Aftershock: The Next Economy and America’s Future , now in bookstores. This post originally appeared at RobertReich.org .

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State Unemployment Rate Rises Again

August 20, 2011

By Adam Weintraub, Associated Press SACRAMENTO, Calif. (AP) — The unemployment rate in California climbed again, hitting 12 percent in July as the state added just 4,500 payroll jobs for the month, officials said Friday. The report by the state Employment Development Department showed much weaker job growth in July than June, continuing what has been a spotty economic recovery with big variations between regions of the state. Coastal regions with strong technology export industries continued to show solid economic performance and frequently outpace national growth rates, while the Central Valley and Inland Empire lag well behind, said Steve Levy, senior economist at the Center for the Continuing Study of the California Economy, in Palo Alto. “It’s really a tale of two Californias by geography, by sector, and when you put them together it’s disappointing,” he said. The state jobless rate rose from 11.8 percent in June and hit 12 percent for the first time since March. Most industries added jobs, but big reductions in government payrolls shrank the net gain. California still has the second-worst state unemployment rate in the nation, behind Nevada at 12.9 percent. The national rate in July dropped slightly to 9.1 percent. A survey of California businesses in July counted 14.1 million payroll jobs, up by 189,400 jobs, or 1.4 percent, since July 2010. That’s roughly enough to keep up with recent population growth in the state but not to recover from the loss of about a million jobs in the past five years during the housing bust and recession. California continues to show wide economic variation from region to region. The jobless rates in the San Francisco and San Jose metro areas stayed unchanged in July at 8.8 percent and 10.4 percent, respectively. Los Angeles lost 30,600 jobs in the month and saw the jobless rate increase from 12 percent to 12.4 percent. Inland areas hardest hit by the housing bust also stayed weak. The Stockton area lost 14,400 payroll jobs and saw unemployment rise from 16.6 percent to 17.5 percent. Imperial County, east of San Diego along the Mexico border, lost 1,600 jobs and saw the jobless rate climb from 29.7 percent to 30.8 percent. The economic sputtering echoes the status of the U.S. economy. Jobless rates rose in more than half the states for the second month in a row. Hopeful signs on hiring early in 2011 grew weaker after April, and stocks have plunged over the past several weeks amid growing fear that the economy will stay weak for a prolonged period. The latest numbers came as state government turns up the rhetoric on jobs. Gov. Jerry Brown named former bank executive Michael Rossi as his senior jobs adviser and Senate President Pro Tem Darrell Steinberg, D-Sacramento, says he intends to focus on jobs and streamlining state business regulations for the rest of the legislative session. Jobs and the economy loom over the state’s finances. The budget approved by the Legislature’s Democratic majority assumed the economic recovery would bring in $4 billion more than projected early in 2011. If that assumption proves wrong, it would trigger billions in additional cuts to schools, universities and other government services. The California Republican Party jumped on the latest unemployment numbers as evidence that Democratic policies are failing. “Instead of piling on more job-crushing bills, the Democrats should vacate Sacramento and give California business owners a chance to turn things around,” state GOP chairman Tom Del Beccaro said.

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Andrew Pyle: Putting Cash to Work

August 19, 2011

The same culprits that came out of the woodwork last summer to predict impending recession are back at it. The amount of airtime being given to these folks, after they so missed the call last year, is amazing. I was stopped by a business owner on the street who had just read the latest edition of one of Canada’s noteworthy news magazines and was visibly upset — not by the dark prognostications, but because of how negatively biased it was. I suggested it might make good lining for a bird cage. One of the reasons I have been loath to join the doom-and-gloom crowd in recent weeks has been the state of corporate finances in North America. We have just come off multiple quarters of strong earnings performance, leading to bloated cash balances among firms. In the U.S. alone, the cash hoard is close to two trillion dollars and climbing. Canadian firms are enjoying decent profit growth as well, although the drag from the lofty Loonie is being felt. Bottom line, this latest go round of negativity has nothing to do with a lack of earnings or liquidity, as we dealt with in 2008. Quite the opposite in fact. This is all about waiting for firms to open the taps and start using their burgeoning sacks of cash. Similar to households, companies are more likely to build cash positions when there is economic uncertainty. This makes the difference between a firm staying afloat and getting capsized by a rogue recession wave. Politicians on both sides of the pond, in their bungling of fiscal affairs, have caused the uncertainty that has prompted firms to build cash; however, smart CEOs will recognize that there is a limit to political ineptitude and that the tough fiscal decisions will inevitably have to be made. This realization will be one catalyst for spending cash, whether it’s in the form of increased hiring, expanded capital investment, mergers and acquisition, raising dividends or simply buying back stock. The latter two will become particularly important in my opinion this half. After seeing $6 trillion dollars of equity market valuation wiped out from the mess of the past several weeks, investors are understandably peeved. Retirement plans are being brought into question because of the decline in equity assets and severely depressed yields on fixed income paper. Investors know that companies have no control over the interest rates they are getting on their ‘safer’ securities (other than running a strong business and having a solid credit rating), but they can do something about yield on common stock. The longer firms resist the temptation to put earnings to work in expanding operations, the louder the call will be for dividend increases as compensation for the perceived added risk in holding stock in this environment. I would expect the call for share buybacks to also get even louder, particularly for those companies that either don’t pay dividends or are on the low end of the dividend scale. Since the start of this quarter, only 23 companies on the S&P 500 have announced share buybacks, according to Bloomberg statistics. This compares with 47 firms in the second quarter and 48 buybacks during the same period a year ago. While there is no guarantee that an increase in share buybacks will turn the bearish market around, it could protect against further significant (negative) technical milestones. That said, the more positive deployment of cash would be towards operations and not dividends or buybacks. If uncertainty regarding the political ability to stabilize US and European fiscal situations proves transient, and firms start to look at increasing capital spending and beefing up payrolls, it becomes a win-win. Share valuations will be enhanced, but future revenue and profit growth will as well, providing for a stronger basis for dividend growth than simply the paying out of nervous cash hoards.

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Panetta Issues Gag Order

August 19, 2011

Defense Secretary Leon Panetta has moved to gag all communications between the Pentagon and Congress on the highly sensitive issue of the congressional Super Committee.

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Starbucks Howard Schultz CEO Pledge: Will It Work?

August 19, 2011

To be successful in a bid to starve Washington of dollars, Starbucks CEO Howard Schultz will likely have to expand his campaign to boycott campaign contributions beyond fellow CEOs. On Aug. 12, Schultz made a high-profile challenge : cut off all campaign donations until the political class starts behaving like adults. In an email to corporate America and “concerned Americans” alike, Schultz said: “[W]e today pledge to withhold any further campaign contributions to the President and all members of Congress until a fair, bipartisan deal is reached that sets our nation on stronger long-term fiscal footing.” According to the Center for Responsive Politics, a nonpartisan research group, the business sector remains the major source of donations to individual campaigns . But a Top 10 list of ” heavy hitters ” in federal-level political donations lists only one corporation: AT&T. Since 1989, political giving has been dominated by labor unions, including the American Federation of State and Municipal Employees, the Service Employees International Union, the International Brotherhood of Electrical Workers, theLaborers Union and the American Federation of Teachers. Labor unions contacted by HuffPost — including the SEIU, AFL-CIO and AFSCME — were unavailable for comment on Schultz’s pledge. Complications for the effort to freeze campaign dollars could arise from the newly-established ” super PACs ” — independent political committees that can accept unlimited contributions from individuals, corporations and unions. The groups are likely to have an outsized influence in the next election cycle: In 2010, conservative super PACs spent $121.7 million, while liberal groups spent an estimated $12.6 million; the numbers for both are expected to increase significantly in 2012. Schultz noted that in the days following the release of his pledge, he had “heard from thousands of people” and included among his supporters NYSE Euronext CEO Duncan Niederauer and Bob Greifeld, head of the Nasdaq OMX Group — both of whom emailed letters of support to companies listed on their respective exchanges. “I think that Howard’s idea is a great one, and I have told him that he can count on me,” Greifeld wrote . “At NASDAQ OMX, we will also continue to invest in the future by hiring and focusing our efforts on job creation.” In his message, Niederauer said, “Now is the time for corporate leadership, and for the collective voice of our CEOs to be heard. It is my hope that our leaders can put politics aside and focus on generating long-term sustainable growth driven by the private sector.” Neither Niederauer nor Greifeld was available for further comment Friday. In an email to HuffPost, Jim Olson, Starbucks’ vice president for global corporate communications, noted that “[i]t is still very early — we’re only seven days into this effort,” but reiterated that the company had “heard directly from hundreds of people –- CEOs, business leaders, community leaders, and citizens.” Olson added that “[t]hese responses have included pledges of support” as well as “a rich vein of additional ideas that we are discussing and determining how or if to act upon.” Starbucks, he wrote, is “taking the appropriate time to review all of the responses and consider the many ideas we have received before we make public who is supporting Howard’s pledge.” You can also tweet your response @HuffPostBiz .

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Don McNay: How Do You Get Credit Cards Out Of Your Life?

August 19, 2011

In my structured settlement business, clients come to me with large lump sums, perhaps received from an inheritance or a settlement from a lawsuit. I tell the ones with credit card debt, “I don’t offer any products that will pay you as much in interest as you are paying the credit card companies.” I get people to pay off their debts, cut up their cards, and use the money they were paying to the credit card companies for savings or possible investments. But, most people don’t have piles of cash lying around and aren’t counting on a big lump sum. Getting out of credit card debt is a slow process where you need to have a long-term goal. Dave Ramsey and I disagree on several topics, but we agree on the goal of jettisoning credit card debt. I have attended Ramsey’s live seminars and watched him explain his “snowball theory” for eliminating credit card debt. It works as follows: Ramsey says you should pay off your smallest credit card first. Until the balance is eliminated, pay only minimums on other debt while focusing on the one credit card. This creates a momentum in your plan. To quote Ramsey: “The math seems to lean more toward paying the highest interest debts first, but what I have learned is that personal finance is 20 percent head knowledge and 80 percent behavior. When you start knocking off the easier debts, you will start to see results and you will start to win in debt reduction.” I ran into a childhood friend at my mother’s funeral who later told me she was maxed out on several credit cards. She is a clerical worker who doesn’t make a lot of money. I told her about the snowball theory, and she followed it. She also cut back on impulse shopping. It took four years, but last year she e-mailed and told me she had paid off all the cards. Not only was it a great financial accomplishment, it dramatically boosted her self-esteem to know she could accomplish a seemingly impossible task. My friend faced up to her financial dilemma. A lot of people get overextended, fall behind on payments, and start getting calls from credit-card collection companies. If you have ever had a collection agency call you at work, or while a date is visiting your apartment (I’ve had both happen), it is a humbling and embarrassing experience. My credit card problems occurred before I had a mobile phone, but I would imagine getting a collection call on your cell phone with others around can’t be fun. People who are being hounded by collectors need to get familiar with the Fair Debt Collection Practices Act. It’s been around for a long time but is widely ignored by banks, collectors, and regulators. It provides consumers with real protections when used correctly. You can find a detailed booklet about the Fair Debt Collection Practices Act at www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf Few people realize (and collectors will never tell you) that if they want no further contact with a collector, the Fair Debt Collection Practices Act gives them a way to make the calls and letters stop. Collectors cannot communicate with consumers in any way (other than litigation) if the consumer gives written notice that he wishes no further communication or refuses to pay the alleged debt. With or without written notice, collectors can only contact consumers by telephone between 8 a.m. and 9 p.m. local time. Collectors cannot call repeatedly or continuously. Consumers can prevent collectors from contacting them at work simply by telling them not to. The consumer does not have to send a letter. Collectors cannot contact consumers who are known to be represented by an attorney. Collectors can’t use deception, such as implying they are an attorney or law enforcement officer, to collect a debt. They can’t threaten arrest. They can’t threaten legal action if it is not actually contemplated and they can’t use abusive or profane language when speaking to a consumer. Collectors routinely ignore the Fair Debt Collection Practices Act. They realize that few consumers know the law and fewer will complain. They also realize that the Federal Trade Commission, especially in the years before the 2008 market crash, rarely enforced the law. I once had a collector (who was looking for a relative who had never lived in my city or household) violate almost every provision of the Fair Debt Collection Practices Act in a profane-laced rant. I documented the conversation in detail, filed a complaint with the Federal Trade Commission, and thought that such a clear-cut violation would get the agency’s attention. It didn’t. I got a form letter saying it would add my complaint to its files for statistical purposes. Despite my unhappiness with the enforcement of the law, knowing it and citing it to collectors can often blunt abusive collections practices. Ending a string of harassing phone calls gives consumers time to deal with debts in a rational and well-thought-out manner. After people get the creditors off their backs, they should sit down and devise a strategy for getting credit cards out of their lives. Don McNay, CLU, ChFC, MSFS, CSSC of Richmond Kentucky is an award-winning financial columnist. He is the author of the book, Wealth Without Wall Street: A Main Street Guide to Making Money, which will be released on September 20. McNay founded McNay Settlement Group, a structured settlement and financial consulting firm, in 1983, and Kentucky Guardianship Administrators LLC in 2000. McNay has Master’s Degrees from Vanderbilt and the American College and is in the Hall of Distinguished Alumni of Eastern Kentucky University. McNay is a Quarter Century member of the Million Dollar Round Table and has four professional designations in the financial services.

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Bank Of America To Perry: ‘We Will Help You Out’

August 19, 2011

WASHINGTON — A Bank of America executive offered more than just encouragement to Texas Gov. Rick Perry in a CSPAN clip uncovered by blog ZeroHedge . He offers “help.” After speaking at a Politics and Eggs breakfast in Bedford, N.H., on Wednesday, Perry was approached by a man who then introduced himself to the governor and said: “Bank of America — we will help you out.” The man appears to be James Mahoney , Director of Public Policy for Bank of America. He serves on the board of the event’s sponsor, according to ZeroHedge . Politico confirmed that it was Mahoney in the video. A spokesperson told Politico that Mahoney was offering ” nonpartisan policy expertise .” Since 2003, Perry’s campaigns have received more than $125,000 from Bank of America’s PAC and executives, according to ThinkProgress. Bank of America did not return calls seeking comment.

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Winslow T. Wheeler: Chitchat With Leon and Hillary on the Defense Budget

August 19, 2011

The invitation came to me from Secretary of Defense Leon Panetta’s Public Affairs Office to attend a “conversation” with Panetta and Secretary of State Hillary Clinton at the prestigious National War College in Washington. Although I knew it wasn’t me they wanted to talk to, I sat in the audience to hear Panetta and Clinton in action, especially on the subject of my prime interest: the defense budget. The “conversation,” it turns out, was with Frank Sesno, the former CNN personality and currently the Director of the School of Media and Public Affairs at George Washington University. Sesno took the “conversation” assignment seriously; although he boldly said that it was important to “ask the tough questions” — just like a journalist — he did no such thing. Lofting over shallow dinner-talk queries, Sesno chummed it up with Panetta and Clinton and permitted them to say anything they wanted without fear of challenge. Clinton tended toward impromptu speeches on whatever she was asked about — well articulated and forceful, much like she did as a senator at hearings where, rather than conduct oversight asking informed questions and following up, she would express her political points and neither seek nor reveal any new or deeper information. Panetta was more subtle and single-minded. Although he comes from the same political background — White House insider and Congress — his answers were shorter and more softly stated, but they were directed at one and only one objective: defending the Pentagon’s budget. Sesno started the “discussion” asking about budget cuts beyond the $350 billion the Pentagon has already committed to over the next ten years — saying “What’s really at stake?” Panetta whacked the softball question hard: “Very simply, it would result in hollowing out the force,” and “it would break faith with the troops and with their families,” and finally “it would literally undercut our ability to provide for the national defense.” The bureaucrat moguls at the Pentagon, who currently preside over the largest defense or non-defense agency budget since the end of World War II, must have been delighted. After four years of sometimes tough guy Robert Gates, who fired senior officials for not toeing his line, DOD’s high spenders must be elated to have at the top someone who has leaped so quickly and with such eagerness to defending their agenda. The $850 billion cut that Sesno was referring to does sound like a lot — if you are ignorant about the background and budget history. He offered no pushback and did nothing to probe Panetta’s budget preserving agenda, to question Panetta’s assumptions, and or even seek the data behind them. Things didn’t get any better when Sesno allowed the audience a grand total of one question on DOD budget issues. The individual Sesno selected asked about funding for foreign language training. Panetta dutifully said it was important and that he wanted to look for “creative ways” to protect it. Clinton gave a speech about it, and the remaining 99.9 percent of the national security budget went unaddressed. Instead of this feather-stroking chitchat, consider the following: If the Pentagon’s “base” (non-war) budget were to be cut $850 billion, or so, over ten years, it would go down to about $472 billion annually , the approximate level of the base DOD budget in 2007. (This, not coincidently, is about the same level of a new round of defense budget cutting hysteria circulating in Washington in response to a just released memo from OMB Director Jack Lew.) Using the Pentagon’s “constant” dollars that adjust for the effects of inflation, that $472 billion level would be more than $70 billion higher than DOD spending was in 2000, just before the wars. Over ten years, base Defense Department spending would be almost three quarters of a trillion dollars above the levels extant in 2000 . And, none of the additional monies to be spent on the wars would be eliminated. At $472 billion per year, the Pentagon budget would be almost $40 billion more than we averaged, in inflation adjusted “constant” dollars, during the Cold War when we faced an intimidating super-power, the Soviet Union, its Warsaw Pact allies and a hostile, dogmatically communist China. At the 2007 $472 billion level our defense budget would remain more than twice the defense spending of China, Russia, Iran, Syria, Somalia, Cuba and any other potential adversary — combined. The problem is not money. Under this so-called worse case scenario, the Pentagon would be left quite flush with money, plenty of it in historical terms. The problem is that the Pentagon, as it exists under its current leadership, is incapable of surviving with less money. They quite literally do not understand how to face a future where the DOD budget exceeds any and all potential enemies by a multiple of only two. Many — including Obama’s bipartisan 2010 National Commission on Fiscal Responsibility and Reform, a separate task force put together by congressmen Barney Frank (D-MA) and Ron Paul (R-TX), yet another commission headed by former budget leaders Senator Pete Domenici (R-NM) and OMB Director Alice Rivlin, and two alternative budget proposals from Senator Tom Coburn (R-OK) — have itemized how to save about $900 billion from the National Defense budget. The political landscape is littered with competent recommendations to remove many of the thick layers of hydrogenated fat from the Pentagon. These proposals hit on many of the same soft spots in the DOD budget, such as the unaffordable, underperforming, years behind schedule F-35 Joint Strike Fighter. The implied consensus on such ideas and on the approximate amount (roughly $900 billion) suggest that the slightly lesser $850 billion in Pentagon savings is not “doomsday” (Panetta’s word) but quite endurable — and would actually leave DOD quite flush with money. But, it is unthinkable to Secretary Panetta, as it is to those who perform the enabling chitchat.

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Analysis: The billion dollar fine that may never hit Slim

August 19, 2011

By Cyntia Barrera Diaz MEXICO CITY (Reuters) – Mexican tycoon Carlos Slim’s America Movil seems set to dodge a record billion-dollar fine for alleged anti-competitive behavior — at least for now. One of Mexico’s biggest antitrust cases is bogged down in court appeals, infighting and legal machinations which threaten to reduce the massive sanction to a mere twinkle in the regulator’s eye. Competition watchdog Cofeco was due to decide by the end of September whether to ratify the fine, but the body has been mired in disagreement and observers say the case is unlikely to be finalized. “The way I see it is that this will take a very long time to resolve,” said Mariano Calderon, a partner with law firm Santamarina y Steta who specializes in constitutional, fiscal and administrative litigation. “I think it will take at least a year, or maybe even two, to solve the core of the problem.” A reprieve on the fine would be good news for Slim at a time when his telecommunications empire in Mexico is under heavy scrutiny from regulators and market turmoil has knocked about $21 billion, or 13 percent, off the market value of his public companies since the start of the year. Competitors have also become more vocal about what they see as Slim’s misuse of his stranglehold on the telecom infrastructure, following his purchase of the country’s former phone monopoly two decades ago. Cable, Internet and phone rival Megacable has intervened with gusto in the convoluted workings around the billion-dollar fine, trying to tip the balance toward Cofeco ratifying the sanction. The regulatory knot is not easy to untangle. Cofeco slapped America Movil’s Telcel with the fine in April after determining the company charged higher prices to wireless and wireline competitors to connect to its network. The decision to sanction Telcel split the five-member Cofeco board. Two commissioners voted against it, another one disqualified himself from voting due to a conflict of interest, leaving just one commissioner backing a fine. Eduardo Perez Motta, president of Cofeco, used his casting vote, which counts for two, to push the decision toward a sanction. Flushed with success, Perez Motta talked profusely about the agency’s crackdown in local media, prompting Telcel to complain of unfair treatment and move against him. Telcel filed a motion to bar Perez Motta from a second vote where regulators must decide whether to ratify the fine. Perez Motta tried to bring himself back to the fight but was thwarted by a local judge. “EVERYTHING IS HALTED” In a further twist, competitor Megacable won an appeal challenging the exclusion of Perez Motta from the vote, meaning the case cannot proceed unless his status is solved first. “In summary: everything is halted,” said Actinver analyst Martin Lara. An additional hurdle is brewing for regulators and the government: the commissioner who disqualified himself from the first vote, Jose Navarro, leaves his post in mid-September. That means Cofeco’s board could potentially have just three active members at the expected time of the vote. Under that scenario, the decision on the Telcel fine could be in the hands of the two commissioners who voted against the fine originally and the one who voted for it; assuming none of them changes their position, Slim would get off. But Navarro’s successor is a wild card. He or she has to be appointed by President Felipe Calderon. His government is moving into election mode ahead of a federal poll in July 2012, which opinion polls show it is likely to lose to the main opposition party. Some watchers think Mexican regulators took too long to address competition issues in the telecom market, allowing tensions between players to snowball. “The fine comes five years after the original claims (from competitors against Telcel that led to the sanction) were filed,” said Ramiro Tovar, a telecom consultant. The fine “doesn’t solve a thing … this is about regulation.” (Additional reporting by Tomas Sarmiento; Editing by Phil Berlowitz) (cyntia.barrera@thomsonreuters.com, Mexico City newsroom 5255 52827161)

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U.S. court gives women deadlines to pursue Wal-Mart claims

August 19, 2011

SAN FRANCISCO (Reuters) – Women who were part of a massive class action lawsuit against Wal-Mart will have until the end of October to file individual lawsuits against the company, a U.S. judge ruled. Women who say the company denied them pay raises and promotions because of gender bias are regrouping after the U.S. Supreme Court dismantled a class of up to 1.5 million current and former Wal-Mart workers in June. Attorneys for the women are expected to try to fashion smaller class actions as the litigation moves forward. In an order issued on Friday, U.S. District Judge Charles Breyer in San Francisco gave women who were part of the large class, and who had received permission to sue from the U.S. Equal Employment Opportunity Commission, until October 28 to file lawsuits. Plaintiffs must first take up claims with the EEOC before being able to file a lawsuit in federal court. Other potential plaintiffs who never filed a charge with the EEOC against Wal-Mart have until next year to do that. “The court agreed with us that there needed to be a consistent, common date that applies to all claims of former class members,” said plaintiff attorney Jocelyn Larkin. “This is a fair approach that is very similar to what we proposed,” Wal-Mart attorney Theodore Boutrous Jr. said. The case is Betty Dukes et al v Wal-Mart Stores, Inc., U.S. District Court for the Northern District of California, 01-cv-02252. (Reporting by Dan Levine)

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MoneyWatch: How To Avoid Getting Laid Off

August 18, 2011

The first thing you need to do is assess your vulnerability to these cuts on several levels. The first one would be based on your own personal performance — how does it compare to that of your peers, how well does your boss regard you, and what kind of support do you have beyond him or her? Because if you only have your boss’s support, you’re vulnerable since his or her job may be at risk as well. So you want to seek out and build as wide support for yourself at your company as possible.

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Julia Plevin: 500 T-shirts: Fashion And Culture At Demo Day

August 18, 2011

Black t-shirts were on sale for $25,000 at 500 Startups’ Demo Day on August 16. Kind of. Dave McClure, founder of 500 Startups , the Internet seed fund and incubator program in Mountain View, jokingly promised that when an investor wrote a $250,000 check to any of the 30 companies presenting at Demo Day, he’d throw in an awesome t-shirt that said, “500 Startups: We’re kind of a big deal” on the front and “#500strong” on the back. Coincidentally, #500strong was the official hashtag for following the event on Twitter. If you’ve ever been in a fully packed room with Silicon Valley insiders, you’d understand that there’s not much that can separate these people from their computer gadgets and twitter feeds. While the presentations were taking place offline, the commentary was happening online. The #500strong twitter stream was moving so fast it was like high school note passing on speed. When DJ Real, a waif hipster with blonde curly hair and an embroidered graphic sweatshirt, kicked off the event with some bad jokes and awkward dance moves (talk about high school!) someone in the audience tweeted, “I wish I had been late.” At one point DJ Real asked the audience, “Is anyone in love tonight? How about in love with your computers?” And so he droned on. To all of the negative twitter chatter, Dave McClure responded, “Folks we take risks @500startups — doesn’t always work, but we keep rolling.” And so commenced the presentations. From a proofreading marketplace ( Kibin ) to email marketing ( Tout ), from fine coffee delivery ( Craft Coffee ) to last minute event tickets ( WillCall) , the companies presenting ran the gamut from stuff for tech nerds to apps for common folk. All so different, but all the same in that they were all seeking funds in order to solve #firstworldproblems . And they all had great t-shirts. “Most people don’t have the problem of having to sort the hundreds of emails they receive everyday. I get lots of emails, but that’s part of my job,” said one venture capitalist in attendance. A problem with a lot of these founders, with their fancypants resumes and numerous degrees, is that they are living in their own bubble and suffer from myopia when it comes to solving problems that affect most people. Yes, PicCollage , a photo collage app dubbed the “anti-Photoshop” for its usability, is fun and Snapette , “the app for snap-happy fashionistas,” could help you find a pair of heels in SoHo, but these companies aren’t about to alleviate any of the grave issues facing society today. Nor are they trying to. Man Packs delivers underwear and socks (and condoms!) to men who can’t buy themselves the bare necessities. Their team t-shirts said, “More time to slay dragons.” Now men can have even more time to play video games! At least Alex Baldwin, the designer at Console with a Justin Bieber haircut, knew what’s up. “Who likes free t-shirts?” he asked before chucking a few shirts to the crowd. (Full disclosure: I snagged one.) Console makes it easier to rock out during the workday. “During the day we like to rock out, not fiddle with stuff,” Baldwin said during the presentation. When Ainsley Braun — the UX designer for website security company Tinfoil – took the stage, she asked everyone in the audience to please put down their computers and smartphones unless they were tweeting about her presentation. In response to this, CNET editor Rafe Needleman tweeted “…How cute. But no.” You simply cannot ask computerheads to turn off their monitors or quiet their keyboards. Braun’s plea for full attention may have come up short, but her shiny Tinfoil Security t-shirt turned some eyes because even nerds are distracted by bright shiny things. Braun and her co-founder ordered the t-shirts from a local guy who does silk screening. The companies are not obliged to get shirts made, but all of them do because it helps them stand out and be easily identifiable to potential investors. Somewhere along the way, t-shirts have become a thing in the startup world, making the savvy SV insider’s uniform of choice a pair of jeans, some new Internet company’s shirt (the lesser known, the better!) and probably dark rimmed glasses. T-shirts are often sent around the scene as a marketing ploy or traded like soccer players trade jerseys with the opposing team after a match. So choosing which startups to cut checks for based on the best shirts may be just as practical a method as any other that a venture capitalist uses. Kibin had some rad yellow t-shirts with an outline of Shakespeare’s face and his famous quote, “Be not afraid of greatness.” From.us , a company that improves the gift-giving process, had cool blue shirts with a drawing of a little girl hugging a big present. At the end of his four minutes, the presenter told the audience that his “cofounder is the one in the back wearing the same sweet t-shirt.” Clearly they were trying to make a statement with their style. Shirts aside, Storytree , a website for documenting family history, was quite captivating because it combined human-centered design with storytelling, two things that really can bring greater happiness to the world. Really all of the companies were founded by bright, passionate people and here’s to them all becoming the next big thing. But worst-case scenario, at least they can start t-shirt businesses as a fallback career.

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Geithner Defends Small Business Loan Fund

June 23, 2011

WASHINGTON (David Lawder) – Treasury Secretary Timothy Geithner defended the Obama administration’s initiative to aid small business lending on Wednesday, blaming delays in disbursing capital to banks on a cautious approach by regulators. Geithner, testifying before the House of Representatives Small Business Committee, fielded questions from lawmakers as to why none of the $30 billion in capital for small banks in the program had been disbursed. The program was approved by Congress last December. “I wish it were otherwise, but we’re doing what you would expect us to do,” Geithner said. “We are being careful with the taxpayers’ money.” He said that bank regulators, which must approve the requests before passing them onto Treasury, wanted to ensure that capital was not disbursed to banks that are not viable. “We can’t justify helping to keep them alive,” Geithner said of such banks. The Treasury chief said that so far, the program has received 869 applications from banks for about $11.6 billion in capital, or just over one third of the available funds. Treasury will soon begin to disburse funds from the program, which aims to leverage $300 billion in new bank loans to small firms, which are considered an engine of job growth in the economy. Under the program, banks will pay interest rates for the funds ranging from 1.0 percent to 5.0 percent. The more they increase their lending with the funds, the lower the rate they will pay. CONFIDENCE FROM BUDGET DEAL Several lawmakers on the Republican-controlled House panel also suggested that small businesses may increase hiring if they had more certainty about the federal budget deficit and their future taxes. Geithner agreed, but said a bigger challenge was uncertainty about the strength of recovery and said a budget deal needed to protect growth. “It’s important not just to bring more gravity to our fiscal position and demonstrate that we can live within our means, but we have to do that in a way that that’s going to be good for growth. Good for the economy in the near term and good for the economy in the long run, and that’s a complicated challenge,” In his prepared remarks, Geithner said the Obama administration would make every effort to aid small firms. “There is no single silver bullet, which is why we have taken a multifaceted approach,” Geithner said in remarks to the House of Representatives Small Business Committee. Geithner also outlined measures that the Obama administration has undertaken, including tax relief, public-private partnerships, assistance to small exporters and efforts to award federal contracts to small businesses. Geithner said small companies faced heavy challenges because so many were concentrated in sectors like construction and real estate that were hit especially hard by the recession and bursting of the real estate bubble. (Additional reporting by Glenn Somerville; Editing by James Dalgleish) Copyright 2011 Thomson Reuters. Click for Restrictions .

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New Hampshire Republicans Restrict Minimum Wage

June 23, 2011

New Hampshire legislators voted to override a veto by Democratic Gov. John Lynch on Wednesday, paving the way for a new law to restrict the state’s minimum wage. The bill, sponsored by Republican Rep. Carol McGuire and strongly backed by GOP leadership, automatically ties the state minimum wage to the federal minimum wage, assuring that New Hampshire’s rate is as low as it can legally be. With its minimum wage currently set at the federal rate of $7.25 per hour, New Hampshire is ensuring that it will continue to have the lowest minimum wage in all of New England. Maine, Vermont, Massachusetts, Rhode Island and Connecticut all have state minimum wages between $7.40 and $8.25 an hour. The fight over McGuire’s bill led to some unusual stances for New Hampshire politicians. McGuire has been honored by the libertarian-leaning New Hampshire Liberty Alliance and enjoyed Tea Party support, yet she essentially argued that the state should defer to the feds when it comes to the minimum wage. Meanwhile, the Democratic governor made a states’ rights argument for killing McGuire’s bill. Lynch said New Hampshire shouldn’t relinquish its right to set its own wage rate. The governor’s spokesman, Colin Manning, told HuffPost that as a result of the law New Hampshire now “cedes state control and authority” to the federal government. “New Hampshire has had a minimum wage law since 1949, and neither our citizens nor our businesses have called for its repeal,” Manning wrote in an email. “There is no need to undermine our state’s economic strategy or cede our state authority to the federal government, which is why the governor vetoed the bill.” Calls to McGuire and Republican House Speaker William O’Brien seeking comment were not returned. But in a statement after Lynch’s veto, O’Brien accused the governor of acting on “an anti-business philosophy” and “removing the ‘open for business’ sign” from New Hampshire by trying to maintain the current minimum wage flexibility. “There is no reason for New Hampshire to set ourselves higher than the national average and make ourselves less competitive for these workers who need to gain experience,” he said. Opponents of McGuire’s bill point out that the previous law did not set the New Hampshire minimum wage any higher than the federal rate — it only gave the state the option to do so if it pleased. Also, New Hampshire does not appear to have suffered from a competitive disadvantage, given that the minimum wages in neighboring states were already set higher. Several states have raised their minimum wage in recent years, but GOP leaders and business interests have assaulted some of those bumps as job killers. Missouri Republicans tried and failed to cap their state’s minimum wage earlier this year . Then in May, a Florida federal judge ruled that a state agency had been illegally suppressing its minimum wage. And business groups in Maine have lobbied for the creation of a ” training wage ” that would let companies pay teenagers less than the state minimum. The current federal minimum wage of $7.25 per hour translates into a $15,000 salary for a full-time worker. Many economists now say that higher minimum wages can provide a boost to the sluggish economic recovery. “Given the fact that minimum wage workers spend every penny they earn in their local businesses, a strong wage floor is also vital to stimulating the consumer spending necessary for real and lasting economic recovery,” said Christine Owens, executive director of the National Employment Law Project, in a statement decrying legislators’ override of Lynch’s veto. Earlier this year, Democratic Rep. Terie Norelli called McGuire’s bill “just the beginning of what I think is a real assault on New Hampshire workers and wages and irresponsible legislation.” Last month, Lynch vetoed a bill brought forth by Republicans that would have converted New Hampshire into a so-called right-to-work state. The bill would prohibit collective bargaining contracts that require workers to pay union dues if they are not union members. It would make New Hampshire the first right-to-work state in New England. O’Brien has said Republicans will try to override Lynch’s veto of that bill in the fall.

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Why An Ice Cream Cone Now Costs $4.25

June 23, 2011

If you’ve gone to an ice cream parlor recently, you may have noticed that a cone (or cup) of ice cream has gotten more expensive. But before you chalk it up to regular inflation (as you might with rising prices for stamps or movie tickets), you should read this investigation of the cost of ice cream in the Boston Globe . It turns out that recent increases in ice cream costs have global causes—from skyrocketing demand for dairy in suburban Shanghai to a beet-killing cyclone in Australian farm country. The piece, by following the economics of a single menu item, provides an illuminating window into the food price hikes that have affected people in every part of the world over the last several years. (Via Kottke )

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WATCH: Mayor Fasting In Hopes Of Solving City’s Financial Crisis

June 21, 2011

NEW YORK (Edith Honan) – Pennsylvania’s debt-ridden capital of Harrisburg has tried every form of fiscal belt-tightening, from layoffs to furloughs to filing for bankruptcy. Now, it is turning to God. Mayor Linda Thompson said on Friday she will join religious leaders in three days of fasting and prayer to encourage “a cooperative spirit among government leaders, the business community and citizens.” “I am open about my faith and will be participating in the voluntary prayer and fast,” Thompson said in a statement. The city is now weighing a financial rescue plan presented by the state. The fast and prayers, which will be facilitated by about a dozen Christian, Jewish, and Muslim religious leaders, will begin at midnight on June 21 and end on June 24. On Monday, a team of state-appointed advisors recommended the city sell a deeply indebted incinerator at the root of its fiscal problems, renegotiate its labor agreements, cut jobs, sell other assets and assume $26 million in new borrowing. The city council has until July 23 to adopt the plan. (Editing by Greg McCune) Copyright 2011 Thomson Reuters. Click for Restrictions . Watch video from WHTM ABC27 here:

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Gates Downplays Troop Cuts in Afghanistan

June 19, 2011

WASHINGTON — Outgoing Defense Secretary Robert Gates acknowledged on Sunday that the U.S. State Department is in direct talks with the Taliban in Afghanistan, but cautioned that troop drawdowns in the decade-long war will be modest at most in 2011. Speaking on CNN’s “State of the Union,” Gates said U.S. negotiations with the Taliban are unlikely to yield significant results before December. “The drawdown must be politically credible here at home,” Gates said, and implied that a call from Sen. Carl Levin (D-Mich.) to reduce troop levels by 15,000 by the year’s end may not be feasible. “We can do anything the president tells us to do, the question is whether it is wise,” Gates said. On ABC’s This Week, Sen. John McCain (R-Ariz.), one of the foremost Congressional boosters of the war in Afghanistan, said that he would support a “modest” reduction in troops of 5,000 to 10,000 this year. McCain said that Gates’ previous support for a “modest” drawdown informed his position. On “Fox News Sunday,” Gates also warned against making aggressive cuts to defense spending, saying the military is not a source of deficit trouble. “The base defense budget is not part of the deficit problem,” Gates told Chris Wallace. “The base defense budget, not counting the wars, is about 3 percent of GDP [gross domestic product].” But an examination of the full scope of military spending — not just the base defense budget — yields a higher number: In 2010, 20 percent of the U.S. budget was devoted to “defense and security-related” operations, according to the Center on Budget and Policy Priorities , a liberal-leaning think tank. This article was updated to include Sen. McCain’s comments.

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Burrill & Company Adds to Its Alternative Equities Group

June 3, 2011

SAN FRANCISCO, CA–(Marketwire – Jun 3, 2011) – Burrill & Company is pleased to announce that Mr. Darren N. Streiler has been appointed as Principal, Burrill Alternative Equities Group, reporting to Peter Fry, Head of the Burrill Alternative Equities Group. Darren’s role will be to assist in the engagement of clients for the Group and to help with analyzing, structuring and underwriting of transactions.

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Peopleclick Authoria Promotes Thomas Tisdale to SVP Sales

April 7, 2011

Company Strategically Unites Vendor Management and Talent Management Solutions to Address Emerging Client Employee Engagement Initiatives Worldwide

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Dominique Strauss-Kahn: Nanjing and the New International Monetary System

March 31, 2011

I am delighted to be back in China this week for a high-level seminar in Nanjing on the international monetary system . Every time I come to this part of the world, I am impressed by the dynamism of the economies and the optimism of the people. The future is here. The region’s economic performance over the past few decades has been nothing short of remarkable. Asia now accounts for about a third of the global economy, up from under just a fifth in 1980. This trend has been reinforced by the crisis, with the emerging market powerhouses leading the global recovery. Asia has also made tremendous progress with poverty reduction. China alone has pulled hundreds of millions of people out of poverty over the past few decades. Such a feat has never before been accomplished in the history of human civilization. But to sustain this progress, Asia needs to grapple with numerous challenges today, among them the need to deal with overheating pressures and volatile capital inflows. And this relates directly to our discussion at Nanjing . The current international monetary system has certainly delivered a lot. But it also has flaws that need to be fixed, especially if the next phase of globalization is to succeed in bringing a strong and broad-based rise in living standards. I see four pressing issues: Imbalances across and within countries. We need stronger cooperation to promote effective global adjustment and discourage countries from running policies that lead to global imbalances. The G20 Mutual Assessment Process and the IMF’s “spillover reports” for the five most important systemic economies–which look at the effects of country policies across their borders–are steps in the right direction. More ambitious ideas, including a strengthening of countries’ multilateral obligations and of accountability mechanisms for these, are also worth discussing. No framework to oversee capital flows. Everybody knows that capital flows can sometimes be destabilizing. This is something many countries worry about. But we do not have globally agreed “rules of the road” on what they should do. Sometimes we need to look at old ideas with a fresh perspective, and we are developing more of a consensus view. In the past, capital controls were not in our toolkit. Today, we see them more as part of the toolkit, although only in specific circumstances and not, of course, as a substitute for good macroeconomic policies. Inadequate global liquidity. We need to strengthen the global financial safety net, to reduce the need to “self-insure” by building up costly reserves buffers. There are a number of options here. One possibility is to strengthen partnerships with regional financing arrangements. Another is to improve the predictability of the provision of systemic liquidity more generally. Too few options for safe global assets to meet the demand. The question here is how to diversify reserve assets. One option is to encourage greater international use of currencies other than the four currently in the SDR basket, including those of large dynamic emerging markets. Over the longer term, the SDR itself could play a greater role. These issues go right to the heart of the IMF’s mandate, and their resolution will require further engagement and discussion among our global membership. Certainly, they are challenges in which all global citizens have a stake–to support an ongoing recovery and avoid future crises, ensuring better outcomes for all. The Nanjing meeting was a useful step toward the international monetary system of the future. And speaking as the head of the IMF, it was also a useful step in advancing the partnership between Asia and the Fund. A partnership that I firmly believe will continue to strengthen in the future. From iMFdirect blog

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Mark W. Kline, M.D.: Fighting Sickle Cell Disease in Angola: Building Partnerships to Match the Challenge

March 22, 2011

Angola has one of the world’s highest rates of sickle cell disease, but lacked a formal, organized effort to fight it — until now. A history-making agreement was signed today in the capital of Luanda, initiating the West African nation’s first program to address a disease that likely affects some 6,000 babies born in Angola each year. Even though a fifth of Angola’s roughly 17 million people have the sickle cell trait, information on the number of children affected is sketchy, as only a fraction are diagnosed. Serious complications of the disease — including bacterial infections and stroke — mean that only about half of Angola’s affected children reach age 2. The disease is a major contributor to Angola’s child mortality rate, among the world’s highest. A staggering one in four Angolan children will die before they reach their fifth birthday. The good news is that we now have the tools to change this bleak outlook for African children born with sickle cell disease — in exactly the same way we now expect American children with the disease to live long and full lives. The key is early diagnosis and treatment. That’s the focus of a new public-private partnership of the Republic of Angola, the Baylor International Pediatrics AIDS Initiative (BIPAI) — a joint program of Baylor College of Medicine and Texas Children’s Hospital — and Chevron. Based on experience in the United States — which accounts for less than one percent of the estimated 300,000 to 500,000 global cases of sickle cell disease each year and where newborn screening is universal — the program’s pilot will begin with newborn screening and subsequent treatment at two large maternity hospitals in Luanda. The project, designed by leading global sickle cell disease expert Dr. Russell Ware in close coordination with BIPAI and medical experts in Angola, is comprehensive. Following the pilot, the goal will be to expand subsequent phases to Angola’s 18 provinces, simultaneously building Angola’s capacity to address the disease through public health policies, health training and the dissemination of clinical research. Why is Angola’s need so acute? Although rich in natural resources such as diamonds and oil – Angola is the second-largest oil producer in sub-Saharan Africa and the 7th largest supplier to the U.S. — Angola is only eight years removed from a 27-year civil war that devastated its infrastructure, including its healthcare system, and severely impacted its socio-economic development. Why this particular partnership? To help its children, the Angolan government reached out to Chevron. Not only has Chevron operated in Angola for more than 50 years, it also has been a driver of the successful Angola Partnership Initiative, a multipartner, multiyear effort to rebuild Angola’s agricultural sector and promote small business [outside the oil industry]. Chevron, in turn, reached out to experts — in this disease, in pediatric medicine and, as in the case of Baylor College of Medicine and Texas Children’s Hospital, to organizations with a proven track record establishing medical capacity building programs. To make headway against such a disease, especially in a time of limited resources, the engagement of corporate partners is critical. Success depends on building smart partnerships — that include the core strengths of leading global companies — that match the size of the challenge. But why do Angola’s health issues concern business? Only with a healthy local workforce and a healthy local economy can a business, global or local, operate successfully over the long term. It’s in the interests of business to help address unmet basic human needs — health, education and economic development — that pose risks to any community. Chevron has learned that success depends on committed partners, with unique and complementary resources, who collaborate — the same ingredients at work in other partnerships Chevron engages in around the globe. Partners with strategically aligned strengths are even more effective vehicles for bringing focused action to diseases such HIV/AIDS, tuberculosis and malaria. As with its other partnerships, Chevron’s $4 million investment in this new alliance comes with a hands-on commitment to achieve lasting results: the involvement of its employees and business partners. The agreement signed today is only the beginning of giving more of Angola’s children a greater chance at life .. and moving Angola one step closer to harnessing its vast national potential. We all have a stake in helping write history like that.

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Angela Haines: Creating a Company Culture Takes More Than Free Lunches

March 3, 2011

When Laura Ching and her two co-founders of Tiny Prints , a Sunnyvale, California-based online customized stationery company, first sat down to create their enterprise in 2003, they were four years out of the Stanford Business School and had all spent time working at big companies. “We saw an opportunity to create a utopian culture to fix some parts that we saw were broken at some major corporations,” Laura says. “So we set up some core values, including to instill a passion to win, to nurture creativity, to treat each other like family and to insist that every dollar counts- -e ven building our own IKEA desks because we couldn’t afford anything else” Now five years later the three find themselves at different stages of their lives, both personal — with spouses and children — and professional, with about 250 employees, but “we still maintain those values,” says Laura, ” though we have to work harder to stay true to them.” Company culture is one of those buzz phrases that gets some managers boasting about Nacho Wednesdays and Bingo parties or wearing t shirts and flip flops and allowing pets in the office, but many start ups find competitive value early on by going beyond bells and whistles to create a productive atmosphere. Flexible hours and competitive compensation certainly help. But Towers Watson workforce strategist Julie Gebauer, author of Closing the Engagement Gap , notes that “engagement” or getting employees to participate in the company culture with heads, hands and heart, “is not about employee programs but about what kind of leaders they have and leadership’s focus and commitment. They care about what their company stands for and their ability to build their own skills. If you talk only about projects and schedules, there is nothing for them to connect with personally.” Her observations are seconded by culture guru Howard Schultz, CEO of Starbucks , who says even when you start a company, “everything matters — everything. You are imprinting decisions, values and memories onto an organization.” Laura Ching of Tiny Prints, which posted revenues of over $100 million in the past twelve months, admits that she has introduced a “look forward to Mondays” theme by offering lunches, happy hours, games,” but the real point was “for us to understand why employees don’t look forward to Mondays. We’ve set up committees to discuss how we apply our values. If we find out that one reason employees don’t look forward to Mondays is that their workloads are too heavy, we adjust expectations too and don’t just offer free lunches.” In 2004, when CEO Michelle Conceison founded her indie music management company with only two employees, “culture was the first thing on my list because I wanted a company that both employees and clients wanted to be associated with.” But she admits that it’s a “squishy thing which I can’t always explain.” For her it started with her company name. “Usually music agencies carry the founder’s name. So I chose Market Monkeys which always makes people smile — a good beginning for such a cut-throat business.” Before conferences, key sales points in her business, Michelle writes personalized letters to her employees, reminding them of the spirit of her organization, “to keep the promises we make so that together we can do great things.” At the conference, she continues, “our culture is evidenced in the room we set up for our clients, the lighting, the handouts, maybe it’s the way we sit in the room always ready to talk to our clients, or the fact that we give all of them a pleasant place where they can play and be treated like professionals.” Last year her business, now with about 25 clients, grew 30%. Productive companies figure out how to focus attention on employee needs. CEO Victoria Nessen Kohlasch, of NK and Associates , a marketing company — with $500,000 annual billings — that helps small and medium sized companies including banks, insurance companies, and caterers with branding, says one of her core values is reinforcing employee strengths. She explains, “I don’t ask them to overcome their weaknesses because that’s not fair. I have a great operations person who I don’t expect to make creative decisions. You just can’t make your people jacks of all trades.” An early adapter of commitment to culture is women’s retailer EILEEN FISHER which posted 2010 sales of $310 million and currently employs 880 employees. Its Chief Culture Officer Susan Schor, says that “we’re not into metrics as much as we care about valuing our employees so they can contribute, so they’re motivated and can pursue what they’re good at and have positive relationships with each other.” Susan Schor says that the company offers perks, such as an annual $1000 well-being stipend — for massages, or gym fees or yoga classes — as well as annual clothing allowances. And the proof that their employees “feel very respected” is a turnover rate of 11% in the stores, compared to 45-50% for the industry, and only 4.5% for the rest of the company. No doubt good culture also creates good business. Last year Entrepreneur.com announced that EILEEN FISHER made The Great Place to Work Institute ‘s list of The Best 25 Medium-sized Companies to Work in America — for the 7th consecutive year! Visit a new hub for women entrepreneurs: www.wstartup.com and share your ideas!

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Tom Donohue: The Road Ahead for a Nation at Risk

November 18, 2010

Election Day is now two weeks behind us. The analyses and recriminations were many, and the “What does it mean?” debates will likely continue until the next election, when they will begin anew. Such is life for those whose job it is to analyze and propound on such things. But for us, as the voice of business and free enterprise, we don’t have the luxury of analysis and navel-gazing, for on so many fronts we are a nation at risk and we must be about the business of moving forward. When we say we are a nation at risk — borrowing a phrase famously used to describe the deplorable condition of our nation’s schools — we mean that our economy remains in a damaged state. We know how fragile this economy is because we are in touch with our members, business large and small across the country, every day. Today, our economy is simply not expanding fast enough to reduce unemployment and create 20 million jobs — the growth we need to get us back to where we were before we plunged into the deepest recession in the post-war era. It would be all too easy to backslide. We have many ills to confront at once. We must stem the rising tide of regulations, address our faltering schools, modernize our crumbling infrastructure, and rein in skyrocketing deficits. We need a sensible trade policy that will spur exports and create jobs here at home. The American people don’t want status quo, they want their problems solved. To that end, we will be focused on the following areas going forward: Supporting sensible regulations –

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Evan Kraus: What Companies Can Learn From Social Informants

November 17, 2010

You often hear companies, organizations, and even celebrities claim social media success based on how many fans, friends and followers they have. But is that really an accurate measure of success? We at APCO believe that influence is a far more important gauge than raw numbers. Those Internet users with the most influence among their peers don’t just have followers — they have engaged followers. And by promoting this engagement, these influencers — a group we call Social Informants — have the ability to build buzz behind new products and spark debate with new ideas, creating a ripple-effect by sharing information. According to new research we’ve done with the Huffington Post, Social Informants spend nearly 200 percent more time online than average Internet users and are 56 percent more likely than online news readers to have over 100 people in their social network. These are the people corporations and organizations want to reach – and who we want to better understand. To get a better handle on the behavior of these users, we conducted a new study that examines what we are calling Social EQ — the expectations Social Informants have for how companies use social mediato market their products, shape their reputations and advocate for the ideas in which they believe. Based on opinion polling conducted among this group, we were able to isolate the six key factors Social Informants view as cues that a company’s social media presence is effective and worth supporting. We stress-tested our Social EQ model against Fortune’s 40 most admired companies , and got a Social EQ index score for each. When we re-ranked these companies according to these scores, the list was drastically different. One thing we noticed right away: tech companies dominated the top of the re-ordered list. You might think it’s just because they are “tech,” but then why are some tech companies near the bottom of the list? We believe you need only look to Social EQ’s most important effectiveness factor – dialog. This factor is based largely on whether company leaders and employees are actively using social media. It makes sense: allowing people to directly connect to people inside a company, especially at the top, makes the company feel more human and makes participating in its social media efforts feel more impactful and worthwhile. And because the CEOs of tech companies are frequently more comfortable with social media, they more regularly participate in these types of activities. We were surprised to discover that companies that are heavily investing in emerging social media platforms aren’t necessarily rewarded for it in terms of Social EQ. Yes, taking risks and demonstrating innovation gets you some credit among Social Informants, but our respondents were much more impressed by companies that ensure their various social media efforts are well integrated with each other and with the company’s overall Web presence. And you get bonus points if your social media outreach is optimized and easy to find. Companies with the best content and the most interactivity didn’t automatically outperform those without these attributes. While quality content and customer engagement are both very important, creating the perception that you openly solicit feedback and have a responsive and transparent social media-based customer service function carries more weight with Social Informants. Some companies have social media programs that we would have expected to score much better in the Social EQ model than they actually did. This is because, when it comes to Social Informants, perception matters more than reality. Those companies might be doing all the right things, but the Social Informants don’t yet recognize them for it. That’s a communication gap worth closing. These findings may have a significant impact on the way companies approach their corporate communication and marketing in the digital world. The link between successful social media engagement and an enhanced reputation is clear. Not engaging isn’t an option. Our findings show that companies will be better able to understand and leverage social media if they follow these important trends… 1. Because employee participation is so important, evolve the job of the communication leader away from message scripter and into story harvester, social media trainer, and internal communication cheerleader. 2. Transform customer service from a function designed to respond to in-bound inquiries into an active, information-seeking team of investigators, mining platforms like Twitter, Epinions and Amazon.com for disaffected customers and then deftly and respectfully converting those moments of frustration into opportunities to excel. 3. Let the tools, communities, and platforms take a back seat to a highly integrated approach. Don’t assign people to manage the company’s Facebook page or Twitter feed. Those are now office utilities, like electricity and paper. Instead, teach business managers and their communication staffers how to apply these new tools to resolve business problems in a holistic way. 4. Make sure awareness of your efforts remains high, and that you regularly track how they are being perceived. In a world where 87 percent of consumers trust a friend’s recommendation over a critic’s review , and social network users are three times more likely to trust other social network users’ opinions over advertising , Social Informants play an increasingly important role in communication and marketing. Understanding what motivates them to back specific efforts is crucial. The Social EQ model demonstrates that the typical reach metrics of fans, friends and followers is less important than overall effectiveness as indicated by factors like visibility of leadership, proactivity of customer service, and depth of integration. We believe it will change corporate and business leaders’ perspective on how to prioritize tactics and invest in what matters most. We’d love to hear what you think. Let us know in the comment section. WATCH:

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Dov Seidman: Upgrade to the Human Operating System

November 16, 2010

When I think of how we’ve successfully taken the humanity out of business, I often think of what Michael Corleone tells his brother Sonny in the movie “The Godfather”: “It’s not personal, Sonny. It’s strictly business.” For much of the 19th and 20th centuries, chief executive officers managed their workforces with a similarly unsentimental (if not lethal) approach. But as behavior has become the 21st century’s killer app, the coldly rational operating system of governance no longer computes. Instead, organizations should A) introduce a human operating system, a model with a culture that values humans and behavior at its core; B) reduce their reliance on the traditional governance operating system; and C) harmonize the two models to more effectively put humanity back at the center of business. Doing so will successfully generate the “Big Asks” that leaders want and need, their employees to deliver. Governance is concerned with control, with preventing unwanted behavior by drawing lines — e.g., authority to make decisions; lines of reporting and approval; or decision-making process. A human operating system, by contrast, revolves around unleashing employees to accomplish objectives set and objectives not even imagined. Beyond Productivity The governance operating system is based on an underlying assumption that employees act in their self-interest. This model includes formal policies, procedures, processes, financial objectives and performance targets; leaders use rewards and punishments to motivate employees to adhere to these rules and to achieve these objectives. When employees become more productive, we boost their salary or give them a bonus. When employees fall short of performance objectives or break the rules, we take away their bonus, freeze their salary or fire them. This operating system worked perfectly fine for decades … until leaders began calling on employees for other things besides productivity. Today, we are asking more of our employees than we have ever asked in the past. We want employees to relate to colleagues around the world who come from different cultures and speak different languages. We want employees to go beyond merely serving customers by cultivating unique, delightful and genuine customer experiences. We expect employees to take on much greater workloads as we shrink their teams. We ask employees to represent the company and nurture its brand, not only when they’re on the job, but whenever they publicly express themselves in tweets, blog posts, e-mails, or any other interaction. We increasingly ask employees to go beyond continuous improvement by conceiving and implementing disruptive innovations that deliver the step changes our companies need to thrive amid global competition. These are not only Big Asks, they are numerous asks. As I’ve argued before, carrots and sticks, while still necessary, are no longer sufficient. Instead, we as leaders need to inspire the game-changing behaviors we’re asking our employees to produce and operationalize our values so that we can scale our businesses sustainably through a human operating system that when brought to life through an organizational culture clearly identifies and pursues meaningful endeavors that satisfy employees’ human desire for significance. In a governance operating system an employee will see herself as a production-line worker who performs tasks in exchange for a paycheck. In a human operating system this same worker views herself as helping to limit human suffering by working with colleagues to produce a medicine that combats asthma, for example. This employee still needs to be paid and still needs to adhere to certain rules, but she’s much more engaged and much more willing to innovate, collaborate and commit to the organization’s mission if she is supported by a human operating system 90 percent of the time and governance 10 percent of the time than vice versa. Employee Engagement Leading companies and most innovative leaders are beginning to understand the need for a human operating system. “… [W]e are a people-based company,” Starbucks CEO Howard Schultz said in a recent interview. “You couldn’t find another consumer brand that is as dependent on human behavior as we are. We built Starbucks not through traditional marketing or advertising but through the experience. And that experience can come to life only if the people are proud, and if they respect and trust the green apron and the people they are representing.” Cultivating the pride and trust necessary to produce the customer experience Schultz describes requires much more than carrots and sticks. This is why so many companies now place less emphasis on productivity measures (what employees produce) and more emphasis on measuring how employees behave (i.e., engagement). Best Buy, for example, recently quantified a link between improvements in employee-engagement measures and revenue increases: The electronics retailer reports that a 0.1 percent increase in employee-engagement scores leads to a $100,000 boost to a store’s annual operating income. The “human capital management” movement, an approach that seeks to more effectively measure and track the value of “human resources,” also reflects a desire of leaders to move to a Human Operating System; the phrase “human capital management” itself also exposes the flaws of a governance model that treated people as machinery or office buildings (capital). Unlike tangible assets, employees do not depreciate; in fact, the value most employees provide to organizations appreciates over time. One of the most pressing challenges that management accountants currently face is how to account for ideas, interactions, social networks, behaviors and other intangible assets whose value has soared as knowledge workers have led the transition to a service-based economy. If the human operating system sounds like a stretch right now, consider how odd e-business sounded 15 years ago. In the mid- to late 1990s as business began to explore the Internet, “electronic business” was treated as a separate entity. Some companies even legally separated their “brick and mortar” business from their “e-business.” Today, the term “e-business” is hardly even uttered because it has lost its previous meaning by becoming a natural part of the way almost every company does business. Very soon, I expect that humanity (call it “h-business”) will become a natural part of the way organizations do business, much in the same way that measuring and managing quality progressed from an idea to an integral part of the organizational fabric in the 1980s. Rebalancing and Harmonizing Just as carrots and sticks will always have their place within organizations, so, too, will the governance operating system. I’m not suggesting that the human operating system replace governance; instead, I’m proposing a rebalancing and harmonization of the two systems: How would our companies look if our employees were informed and guided by governance 5 percent of the time and guided and inspired by values (that espouse innovation, hard work, principled performance, creative solutions, etc.) 95 percent of the time? I believe our companies would look more successful over the long term, and also much more efficient under this scenario. After all, at a time of diminishing resources, organizations that harness and support the most inexpensive and abundant source of energy — human energy — will generate the ideas, connections, collaborations, behaviors and innovations they need to mitigate the threats and maximize the opportunities that our morally and ethically interdependent marketplace poses. To succeed at rebalancing our governance and human operating systems, we need to harmonize them. By that, I mean we need to remove the conflicts between formal governance levers (such as rules and financial objectives) and values (such as trust and integrity). When company values espouse employee innovation but company policy requires an employee to obtain three different signatures to gain approval to spend a modest amount of company money to foster innovation, a conflict exists. Or, when company values espouse honesty but quarterly earnings pressure nudges salespeople and accountants to exploit gray (or black-and-white) areas of revenue-recognition rules, a conflict exists. Focusing More on Humans How do we harmonize our operating systems? By focusing more on humans and less on governance, according to United Airlines CEO Jeff Smisek. Asked by a Wall Street Journal reporter if he agreed that the Obama Administration has been unnecessarily tough on the industry, Smisek responded that the question was essentially off the mark. “This administration is the first to really begin focusing on modernizing the air-traffic control system,” Smisek responded. “I applaud them for that. In terms of the various [new] consumer rules, my own goal is to have an airline where all of that is irrelevant. If you have the right culture, the right folks and you’ve given them the right tools, they’ll exceed whatever regulations or laws or whatever the government can dream up.” The right culture, humans, and tools can address any regulatory risk. This approach should jolt most CEOs. Regulatory and compliance concerns currently rank as the top business risk in the U.S., according to a recent survey by Ernst & Young. Concerns about following current and future rules keep CEOs — besides Smisek, at least — awake at night more frequently than concerns about innovation, talent, emerging markets, and other risks. Smisek seems to understand that his company’s operating system should focus more on humans than it does on rules and other governance levers. By creating the right culture and equipping his people with the right tools, Smisek rightly believes that regulatory and compliance risks will barely rate a blip on United’s radar. Michael Corleone never would have made it as the head of a criminal or corporate organization in a century in which business is personal. * This story appeared in, and was written for, Bloomberg Businessweek .

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Brett Greene: How Social Media Influences Customer Service

November 15, 2010

Before you read the full story, I want to start with the fact that Vonage gave me great customer service, but getting there was an unnecessary adventure. Back in August of 2009 I signed up for a Vonage phone line when AT&T dumped their VoIP service in Colorado. I was happy with AT&T Callvantage for years and had actually left Vonage for AT&T years ago because of frustration with Vonage’s service issues and dealing with their call centers in India, which have since moved back to the United States. In February of 2010 I realized that I was using the phone on rare occasions. Using the combination of my iPhone , Skype and Bria was a good one for my personal and business needs. When I called to cancel Vonage I was reminded of their exorbitant early termination fee . (I consider this common telecom company extortion. Can you name one other service you have to pay to stop using? But we’ll save that for another post.) It was cheaper to finish out the contract at $10 (plus $6 in taxes and fees) each month for 100 hours of local service, which I knew I wouldn’t use, rather than pay the early termination fee. So I agreed to that change. On August 30, 2010 I called and finally canceled the service, or thought I had. A few days ago I noticed that I had been charged $16 in September and again in October. I called Vonage yet again to correct the mistake. For an hour I explained the situation to their representative and then to his supervisor, who said they did not have the power to issue a refund for the $32. Their notes showed that I had accepted a free month of service in exchange for continuing the service, which is not an agreement I had made, though the representative kept trying to push me into accepting it. They were robots following their scripts with a mandate to not let a customer leave easily. During conversations with both of them I did something I have never done in these situations before: I mentioned that I have over 30,000 Twitter followers with whom I would be sharing my experience. They didn’t seem to care. After they acknowledged that my account notes demonstrated I had dropped to the lowest plan in February, they claimed the only way they could help me was to cancel my service and possibly issue a refund later. According to the supervisor I spoke with, any refund issued would still require them to review the August 30th recorded phone call to confirm that I had not accepted a free month of service (which, incidentally, they had charged me for anyway). I asked the supervisor why anyone who was forced to pay for a service for 6 months that they wanted to cancel would agree to staying on for a free month. Any thinking person can understand how illogical that argument is. Ideally, a good customer service rep would acknowledge the mistake and rectify the situation in a way that the customer leaves feeling good about the company. This would result in the spreading of positive stories about their experiences with the company. Instead, the people I dealt with repeated in a mechanical way that they understood my problem, but that they couldn’t solve it. What a difference 17 hours and 30,000 Twitter followers makes! I posted a note on Twitter about this at 5pm Thursday night. By 9:30 am @Vonage responded to me by asking me how they could help and then brought @Vonage_Voice into the online conversation. A virtual Twitterstorm ensued in front of about 35,000 people following me and @Vonage. The Vonage social media customer service person was helpful and tried to get me offline as quickly as possible to talk with someone on their executive response team. Undoubtably, this was mostly done to make me happy enough to stop telling people online about my bad experience with Vonage. My refund was magically issued about 2 hours later, without anyone reviewing my August 30th phone call. So why couldn’t the representative or the supervisor I wasted an hour on the phone with offer me the same solution? I’m sharing this story in hopes that Vonage and other companies will address their ineffective customer service systems so that customers don’t need to resort to calling them out publicly in order to be treated fairly and receive a resolution for their account issues. Having an executive response team is smart. Not giving lower level employees the freedom to fix an inexpensive mistake is short-sighted. In hindsight, how much revenue will Vonage lose on the negative public relations this easily solvable situation generated? Vonage’s competitors and tens of thousands of potential customers can now discover and review customer to corporate communications on the social web that are now indexed and archived online forever in the Library of Congress. How much money was wasted by having four employees use up two hours of company time responding to my case? Definitely more than the $32 a representative could have refunded to me after a 10-minute conversation. This isn’t a Vonage issue as much as an issue with doing business the old way versus the social business way . We’ve all had similar experiences and wasted dozens of hours with companies that continue to use antiquated customer service systems. All they have to do to make the systems better is to treat customers like people instead of dollars. Companies should stop forcing customer service representatives to behave like robots, for fear of upsetting their supervisors when the best resolution is to give the customers what they want — even if that means to cancel service. If Vonage had done that I would have been posting on Twitter, Facebook and blogs about how this is one company that “gets it” instead of the dissatisfaction you’re reading now. Hopefully, as more companies realize that we live in a social ecosystem where people have voices that are heard by other customers, their customer service practices will change. Companies who embrace the social web enjoy customer loyalty from people who will promote them and give feedback on how to make their products and services more valuable. This engagement can only boost the companies’ bottom line if they pay attention and make strategic changes based on the feedback they are receiving. Operating a business with the customer in mind is more beneficial and cost effective on multiple levels. Maintaining hierarchical systems where both employees and customers are marginalized is both disempowering and costly. We live in a new era of collaboration between companies and the customers whose loyalties they seek. It’s better to build a large following of raving fans than to burn customer bridges over $32. Please share your own stories of inadequate customer service in the comment section to help corporate America understand what’s broken in their systems so they can understand how to prevent future damage.

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Katie Corrigan: Think Flexibly/Act Locally: The National Dialogue on Workplace Flexibility Goes on the Road

October 28, 2010

A lot can happen in a year. Since 2009′s National Work and Family Month, we’ve come a very long way — and the stage is finally set for workplace flexibility as a national priority, in the year 2010 and beyond. In March, the President and First Lady summoned a group of nationally recognized leaders — including CEOs, academic researchers, advocates and union representatives — for a groundbreaking discussion on the need to increase flexibility in the American workplace. That day, President Obama shared his belief that workplace flexibility has become, “…an issue that affects the well-being of our families and the success of our businesses. It affects the strength of our economy — whether we’ll create the workplaces and jobs of the future that we need to compete in today’s global economy.” The president’s comments signaled a tremendous evolution in issues at the intersection of work and family. They indicated that it’s no longer good enough to let families muddle through this on their own. Indeed, addressing this issue has become a social and economic imperative. But to really understand the depth of this challenge and the need for flexibility, it’s critical that we understand what’s happening on the ground — in workplaces and communities large and small. For meaningful change to happen in the American workplace, we need the engagement and commitment of business and civic leaders and employees and employers from across the country. That on-the-ground engagement and commitment is building quickly. Last week, far from DC and in the heart of Texas, a group of small business owners, managers, and employees — as well as advocates, researchers and union leaders — gathered on the Dallas campus of Southern Methodist University to carry on the conversation that began at the White House. They were the first to participate in the “National Dialogue on Workplace Flexibility” series being organized and hosted by the Department of Labor in cities across the country. Labor Secretary Hilda Solis kicked off the event, expressing how critical these issues have become. As she said in her recent editorial, “June Cleaver, Meet Juana Solis,” “Workplace flexibility initiatives aren’t niceties; they’re necessities for working families. For employers, they aren’t just the right thing to do; they’re the smart thing to do.” And then the conversation really began. We heard the latest data on small business from the Families and Work Institute — and got to hear from local business leaders on why they use flexibility as a business strategy. Participants engaged each other on best practices for implementing innovative flexibility programs — particularly within a small business — and addressed the challenges that come with them. We heard participants asking and answering critical questions such as: What’s the best way to train managers so that they understand how flexibility can support their own objectives — and overall business success? How do you implement flexibility programs that meet the needs of all workers — particular those on the “front lines” that need be physically present during regular hours? How can businesses — particularly small businesses — contain costs while also trying to offer paid leave when employees need it? To each of these challenging questions, participants offered innovative ideas and potential solutions. And ultimately, participant’s experiences and stories revealed a truly remarkable theme. That is — both employers and employees are recognizing that the nature of work has changed irrevocably over the last several decades. And that flexibility can be a crucial tool in helping the American workplace catch up. Before the Dallas event, the Society for Human Resource Management, a leading business association, published an ad declaring that “a flexible workplace is the next business imperative.” At the same time, the National Partnership for Women and Families and Family Values @ Work released a report — “Dallas Workers Speak” — outlining how employees “satisfaction correlates with a positive workplace culture that embraces flexibility and fosters trust.” There’s no doubt we’ve reached a turning point this year. There is increasing agreement that flexibility can support working families and business’ bottom line at the same time. And indeed, there are many innovative, effective workplace flexibility practices being used right now that are benefiting both employees and employers. In our conversations around the country, we’ve heard about business innovation, new models of measuring success and achieving your bottom line, practical ways to make work work for a diverse workforce, and community efforts to promote flexibility as a tool to combat traffic congestion, stabilize the low wage workforce, allow for job training opportunities, and boost health and wellness. Sharing these stories — and spreading the word on innovative practices — is a key to creating meaningful change in the American workplace. Which is why it is so critical the Obama Administration has taken this national conversation on workplace flexibility on the road, and into local communities. The Department of Labor’s next stops are in Atlanta and Los Angeles — with more to come in Seattle, Chicago, Boston and cities in between. For more information on attending an upcoming event, visit the National Dialogue on Workplace Flexibility website. And if you can’t make it to an event, considering hosting your own through the White House Work-Flex Event Starter Kit. Local, on the ground knowledge will make all the difference in propelling this national conversation forward. Make your voice be heard!

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Engage121 Strengthens Team, Announces Two Key Appointments

October 26, 2010

CEO Jon Victor Taps Jack Serpa & Nick Perold to Extend Engage121′s Leadership in Social Media Monitoring & Engagement

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STATS Names General Manager to Lead Its New ‘Sports Solutions Group’

September 27, 2010

New Business Unit Aims to Deepen Company’s Engagement Within Team Operations

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Dov Seidman: Why We Can’t ‘Motivate’ Engagement

August 24, 2010

Chief executive officers are concerned about employee engagement — and rightfully so. Senior management teams are investing great time, effort and money in improving their workforce-engagement numbers. They shouldn’t be — at least not until they are prepared to harness the full energy of an engaged workforce. Despite significant effort to improve employee engagement, it remains at an all-time low among the U.S. workforce. This has sparked a surge in valuable guidance on how to transform disengaged workers into engaged employees . Unfortunately, the majority of engagement-improvement initiatives continue to treat employee engagement as an end goal. Employee engagement is a condition — manifested by the inspiration an employee unleashes in his or her work when he or she is deeply connected to a mission, purpose and the values that connect us. What Masquerades as Engagement This problem was illustrated in a recent IBM television commercial , in which a motivational speaker decked out in an “Innovation Man” costume struts in front of a line of office workers standing at attention. Innovation Man singles out one of the professionals and peppers him with repeated taunts and questions as to whether he is “fired up” to innovate. The worker dutifully responds, “Sir! Yes, sir!” Innovation Man then questions the employee’s commitment: “Why are you fired up?!” The befuddled employee pauses before replying, “I don’t have any idea.” We cannot “motivate” engagement (or innovation, growth, or succession for that matter); instead, we must inspire the kind of outcomes we want by rooting ourselves in a set of values, being in the grip of an idea worthy of dedication and commitment, connecting around a meaningful and shared purpose, and aligning around a common, deep and sustainable set of human, societal and environmental values. Why? Because sustainably engaged employees generate ideas, innovation, creativity, processes and other outcomes that deliver long-term competitive advantages, and they also collaborate with others to make progress. How well do you think other companies fare in developing cultures based on thick rule books and other carrots and sticks? Not too well, as I’ve written about before and according to new research. Pay and benefits figure as only one of the four key drivers of job dissatisfaction, according to a recent study by the Conference Board, and compensation barely rates a mention in the study’s engagement-improvement steps. And a 2008 study by Duke University’s Fuqua School of Business examined the relationship between financial performance and senior leadership skills. Inspirational and ethical leaders were most strongly associated with stronger financial performance. The Duke study identifies specific behaviors that exemplify inspirational leadership: “engaging employees in the company’s vision”; “inspiring employees to raise their goal”; and “promoting an environment in which employees have a sense of responsibility for the whole organization, its mission and constituencies.” A Valuable, and Values-Based, Alternative This is the new frontier, where companies work in a systemic manner to ensure alignment of their purpose and mission to their business strategies and vision, and then cascade this inspiration through their core values into specific leadership behaviors. Only when observable leadership behaviors are identified, communicated, measured, tracked, managed and integrated into business processes and talent-management systems can an organization evolve on its cultural journey. Through our work with some of the world’s largest and most progressive organizations, helping them build sustainable cultures infused and inspired by sustainable values, we know firsthand that many business leaders are beginning to understand the need to commence this journey. In one large, global company we partner with, we found that 70 percent of employees agreed that a strong mission and purpose drive their organization. However, we also discovered that the company’s mission and purpose were disconnected from everyday decisions and behaviors: 50 percent of the same employees indicated that personal achievement and success was a more important driver of their behavior than the organization’s purpose and values; and 60 percent of employees thought that supporting a peer who acted within their company values and purpose but in conflict with a policy would result in management disapproval or possible punishment by the organization. Armed with this evidence and other related insights, this Fortune 100 company and its leaders are now working on how they can connect employees to the shared mission and purpose through values, rather than through rules, so that it manifests in more of the behaviors they want, e.g. more engagement and more innovation. This ability to harmonize a company’s values and a company’s policies is an important piece in ensuring a company’s human operating system is functioning for the benefit of the organization — something I hope to write more about in a future column. As leaders, we all should recognize that there is work to be done in encouraging behavior that shifts the focus from governing toward developing leaders who inspire principled performance. (I’ll show what such work looks like and how it operates in my next column.) We still need rules (along with carrots and sticks), but they are no longer sufficient in an era when organizational success, over the long term, depends on out-behaving the competition . Improving employee engagement does not require executives to don their motivational capes and work on improving employee engagement. Instead, the process begins with a simple question about the workforce, a query whose answer leaders should act upon: Are our employees inspired? * This story appeared in, and was written for, Bloomberg BusinessWeek .

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Dov Seidman: Why We Can’t ‘Motivate’ Engagement

August 24, 2010

Chief executive officers are concerned about employee engagement — and rightfully so. Senior management teams are investing great time, effort and money in improving their workforce-engagement numbers. They shouldn’t be — at least not until they are prepared to harness the full energy of an engaged workforce. Despite significant effort to improve employee engagement, it remains at an all-time low among the U.S. workforce. This has sparked a surge in valuable guidance on how to transform disengaged workers into engaged employees . Unfortunately, the majority of engagement-improvement initiatives continue to treat employee engagement as an end goal. Employee engagement is a condition — manifested by the inspiration an employee unleashes in his or her work when he or she is deeply connected to a mission, purpose and the values that connect us. What Masquerades as Engagement This problem was illustrated in a recent IBM television commercial , in which a motivational speaker decked out in an “Innovation Man” costume struts in front of a line of office workers standing at attention. Innovation Man singles out one of the professionals and peppers him with repeated taunts and questions as to whether he is “fired up” to innovate. The worker dutifully responds, “Sir! Yes, sir!” Innovation Man then questions the employee’s commitment: “Why are you fired up?!” The befuddled employee pauses before replying, “I don’t have any idea.” We cannot “motivate” engagement (or innovation, growth, or succession for that matter); instead, we must inspire the kind of outcomes we want by rooting ourselves in a set of values, being in the grip of an idea worthy of dedication and commitment, connecting around a meaningful and shared purpose, and aligning around a common, deep and sustainable set of human, societal and environmental values. Why? Because sustainably engaged employees generate ideas, innovation, creativity, processes and other outcomes that deliver long-term competitive advantages, and they also collaborate with others to make progress. How well do you think other companies fare in developing cultures based on thick rule books and other carrots and sticks? Not too well, as I’ve written about before and according to new research. Pay and benefits figure as only one of the four key drivers of job dissatisfaction, according to a recent study by the Conference Board, and compensation barely rates a mention in the study’s engagement-improvement steps. And a 2008 study by Duke University’s Fuqua School of Business examined the relationship between financial performance and senior leadership skills. Inspirational and ethical leaders were most strongly associated with stronger financial performance. The Duke study identifies specific behaviors that exemplify inspirational leadership: “engaging employees in the company’s vision”; “inspiring employees to raise their goal”; and “promoting an environment in which employees have a sense of responsibility for the whole organization, its mission and constituencies.” A Valuable, and Values-Based, Alternative This is the new frontier, where companies work in a systemic manner to ensure alignment of their purpose and mission to their business strategies and vision, and then cascade this inspiration through their core values into specific leadership behaviors. Only when observable leadership behaviors are identified, communicated, measured, tracked, managed and integrated into business processes and talent-management systems can an organization evolve on its cultural journey. Through our work with some of the world’s largest and most progressive organizations, helping them build sustainable cultures infused and inspired by sustainable values, we know firsthand that many business leaders are beginning to understand the need to commence this journey. In one large, global company we partner with, we found that 70 percent of employees agreed that a strong mission and purpose drive their organization. However, we also discovered that the company’s mission and purpose were disconnected from everyday decisions and behaviors: 50 percent of the same employees indicated that personal achievement and success was a more important driver of their behavior than the organization’s purpose and values; and 60 percent of employees thought that supporting a peer who acted within their company values and purpose but in conflict with a policy would result in management disapproval or possible punishment by the organization. Armed with this evidence and other related insights, this Fortune 100 company and its leaders are now working on how they can connect employees to the shared mission and purpose through values, rather than through rules, so that it manifests in more of the behaviors they want, e.g. more engagement and more innovation. This ability to harmonize a company’s values and a company’s policies is an important piece in ensuring a company’s human operating system is functioning for the benefit of the organization — something I hope to write more about in a future column. As leaders, we all should recognize that there is work to be done in encouraging behavior that shifts the focus from governing toward developing leaders who inspire principled performance. (I’ll show what such work looks like and how it operates in my next column.) We still need rules (along with carrots and sticks), but they are no longer sufficient in an era when organizational success, over the long term, depends on out-behaving the competition . Improving employee engagement does not require executives to don their motivational capes and work on improving employee engagement. Instead, the process begins with a simple question about the workforce, a query whose answer leaders should act upon: Are our employees inspired? * This story appeared in, and was written for, Bloomberg BusinessWeek .

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Natalie Holder-Winfield: When Victims of Discrimination Take Matters Into Their Own Hands

August 4, 2010

Immediately after reading the news flash about another unfortunate shooting in a Connecticut workplace, I said a prayer for wounded and then searched for information about the shooter’s motivation. I was not surprised when I read on CNN.com that the alleged shooter told his uncle, “I killed the five racists that was there that was bothering me.” As in most instances of workplace violence, the alleged shooter was probably a victim of unchecked discrimination. Earlier this year, Yale New Haven Hospital suffered a tragic loss when a doctor was shot and killed by a former colleague who also alleged discrimination. While Hartford Distributors–a family owned beer distributor–denies that Omar Thornton, the alleged shooter, ever complained about discrimination, I found it interesting that they did not mention whether their company provided training to educate their employees about preventing, detecting and correcting workplace discrimination. As an employment lawyer who conducts compliance training, I know that some companies view diversity, anti-discrimination, and harassment training as a frill. Begrudgingly, they will hold compliance training sessions if it is mandated by a lawsuit or statute. (Although Connecticut employers with at least 20 employees are required to provide at least two hours of anti-harassment training every two years to their managers, there is a huge question mark as to whether companies are in compliance. To my knowledge, the CT Commission on Human Rights has not conducted an audit recently.) Yet, organizations like the U.S. Veterans Administration have experienced tremendous value from workforce training. A few years ago, the VA found that compared to the US Postal Service, they had more cases of physical and verbal violence. In 2008, 250,000 VA employees reported that a co-worker had engaged in exclusionary behaviors such as gossiping, withholding information, and bullying. In response, the VA embarked on a comprehensive training campaign to improve workplace civility called Civility Respect and Engagement in the Workplace (CREW). Understanding that workplace safety is connected to workplace inclusion, the CREW training programs tackled issues of supervisor diversity acceptance, worker reliability, and a host of other workplace violence indicators. As a result, workplace civility and workplace satisfaction have increased and discrimination complaints have decreased at the VA. Until companies understand that compliance training is a proactive investment, they will continue to be on the reactive end of brewing workplace disputes. If employees do not know how to handle workplace disputes, sadly, they may take matters into their own hands. Compliance training is about empowering people with information about their rights and responsibilities. The last thing Connecticut needs is for workplace violence to become a steady habit.

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Matthew Bishop: Is Corporate Social Responsibility Evil?

July 19, 2010

Is corporate social responsibility to blame for the oil spill in the Gulf or for the meltdown of the global financial system in late 2008? This accusation has been made by our friend Chrystia Freeland, the editor at large of Thomson Reuters, in the Washington Post . While it is easy to understand the contrarian appeal of this claim — how ironic that the instinct to do good resulted in doing bad; if only they had stuck to greedily pursuing profit maximisation — it is nevertheless utterly absurd. The lack of any evidence in Chrystia’s article, beyond the fact that both BP and Goldman Sachs have long been seen as leaders in the CSR movement, is telling. We are only surprised that she overlooked the fact the Toyota has also been found wanting in its core product quality, despite its public association with greenery. Three prominent failures by CSR leaders would have met any journalist’s definition of an ‘indisputable trend.’ Let’s consider BP and Goldman Sachs in turn. The exact chain of events that led to BP creating America’s (probably) worst environmental catastrophe remain to be seen. Certainly, individual errors will be found, and corners were probably cut. Yet it is also clear that the rest of the oil industry drilling in the Gulf were as equally unprepared to deal with such a spill as BP, even those — as Chrystia presumably prefers — most committed to maximising profits regardless of the cost to the environment. All of them seemed to believe that walruses would have to be rescued in the event of disaster in the Gulf, because they had simply copied disaster response plans designed for colder parts. As The Economist reported, according to Amy Myers Jaffe, an oil expert at Rice University, the industry’s strategy on blowouts was not to have them, rather than to work out how to put one right quickly. Surely no one believes that a strategy based on zero failures is prudent. It is true that, according to BP board member Walter Massey, its espousal of CSR did buy the firm time and greater leniancy than it might otherwise have received after the fatal accident at its Texas refinery. “The company’s reservoir of goodwill, built up over years of committed corporate stewardship, was of critical aid in helping us to weather the storm,” he said in March. But there is no suggestion that this led the firm to think it could get away with anything. Moreover, after the initial thrill of an oil major declaring the need to go “beyond petroleum” to stop climate change, the CSR movement’s enthusiasm for BP had waned long before the recent disaster. In particular, BP had been criticised for silo-ing its renewable energy activities away from the firm’s mainstream activities, and for increasingly putting financial performance ahead of everything else. Ironically, one of the justifications for replacing Lord Browne with Tony Hayward was his lordship’s lack of technical experience. Financial short-termism seems the likeliest explanation for the problems of Goldman Sachs — though there is again no evidence to suggest that the Goldman’s commitment to social responsibility played any part in the financial crisis nor the unpopularity of the Wall Street bank after it. Goldman actually exposed society to less systemic financial risk than its rivals, including Lehman Brothers, Bear Stearns and Merrill Lynch. Ripping off customers — for which it has just agreed to pay a large settlement to the SEC, without admitting any fault — is easier to attribute to sacrificing long-term reputation for short-term profits than it is for being blindsided by the urge to be socially responsible. Unlike BP’s recognition that it needs eventually to move beyond petroleum if it is to survive, the 10,000 Women campaign launched by Goldman Sachs, though brilliantly designed and executed, can hardly be viewed as core to the bank’s business strategy. In that respect, it is somewhat at odds with the trend in the CSR movement to focus on the sort of doing good that helps the firm do well. (And, let’s be clear, there are plenty of things to criticise the CSR movement for — just not the things that Chrystia claims.) Goldman Sachs is notable in doing its corporate philanthropy, and encouraging the personal philanthropy of its staff, in ways that entirely ring-fence them from the every day business of making money. Indeed, the main reason Goldman Sachs is so unpopular today is surely that it made so much money after the financial crisis, and paid its staff such large bonuses. In this respect, it failed to recognise that the world had changed — that the public had bailed out the banking industry, Goldman Sachs included, and in return expected some evidence of gratitude and remorse for the events that had made the bail out necessary. From Goldman Sachs, it got neither. It is our belief that a firm that had been more attuned to society and more committed to engaging with it constructively — the main goals of the CSR or corporate citizenship movement — would have been far less likely to make the basic mistakes that Goldman Sachs did, the costs of which are only starting to become clear. As we have said many times, the firm would have done far better, even in PR terms, if it had paid far smaller bonuses and given away far more of the money. (A more core strategy, for the longer term, would be to use its undoubted financial skills to do good, for example by helping to develop the nascent social investment market. Rather than justifiying Chrystia’s dismissal of CSR, the failings of Goldman Sachs and BP underscore the need for firms to take their engagement with society more seriously, and to put being on the right side of social progress at the core of their long-term profit-making strategy. A firm that did this would not cut corners with safety or show so little gratitude to taxpayers for helping it survive. Rather than criticise firms for being part of what Chrystia calls the “cult of CSR”, we should be figuring out how to destroy the cult of financial short-termism in the business world. (Our new book, The Road From Ruin , has some suggestions for doing that!) Admittedly, the conclusion that firms need to get better at CSR, and pinning the blame for BP’s oil spill and Goldman Sachs’s errors instead on short-termism, lacks the contrarian appeal of attacking CSR. But it does at least have the ring of truth.

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Brett King: Compliance and Social Media – Friends or Foes?

July 6, 2010

A consistent theme keeps popping up as I discuss social media innovations with bankers these days. It is increasingly frustrating for innovators who want to use mobile, social media, the web and other such tools to get these past hyper-risk-adverse compliance specialists. It seems as if many of the banker’s I’m meeting are saying that the favorite word of the compliance officer of today is simply “No”. That needs to change… Compliance holding up social media adoption In a recent American Banker’s Association survey they reported that 74% of participating banks confirmed that all ‘social media efforts were to be vetted by compliance first’. In an environment where minutes matter, and the response is key, such a logjam to social media participation is a frustrating mismatch with the realities of dealing with customers in todays uber-connected world. On Sunday I enjoyed brunch with Matt Dooley who heads up Direct Customer Experience for HSBC’s Commercial team in Asia, and his wife Maria Sit who runs Heath Wallace’s Asia division. Over lunch the issue of culture, compliance, philosophy and the reluctance to experiment to broadly with social media, mobile engagement and other such issues came up. Matt used a brilliant illustration to identify the problematic compliance hurdles we face today as bank innovators. He asked me whether or not a compliance department of a major financial institution would approve “snail mail” as a new initiative if it was proposed today? Let me explain. If snail mail did not exist today, what would your average compliance officer think if you came along and explained you wanted to use this great new technology for distribution of bank material like statements, new credit cards, PIN #’s, etc. You’d have your PowerPoint deck ready to go explain the process where you stuff an envelope, hand it on to someone you don’t know in the bank (likely a very junior staff member), he then puts it in a bag which is picked up by a truck with another person you don’t know, they take it to a large warehouse and sort it according to Geography, etc, etc… There just ain’t no way that snail mail would make it through the compliance check list of today’s modern financial institution. The compliance officers would no doubt quote scenarios like this to justify why it would be absolutely impossible for the bank to consider using this new ‘snail mail’ technology. This is the dilemma. Today there are those of us trying to improve customer experience, knowing full well that compliance departments are citing risk mitigation, regulations and laws, bank policy and procedures, and other such issues as reasons why innovators can’t release a new mobile app, engage in social media conversations in real-time with customers, and so forth. In the meantime, there are existing processes, procedures and systems that are far more riskier than things like social media, but they are immune to the compliance department’s gaze because they are already in place. Is it riskier to do nothing? Let’s take Twitter as an example. Today it’s rudimentary to do a Twitter search on major FI brands to see topics trending that in the old days if they were carried by mainstream media would turn a banker’s hair on end. In many cases, however, such interactions are simply ignored because there are no dedicated resources listening and responding to such social media conversations. The processes internally around getting compliance approval for a formal response simply make any such response useless by the time it is approved. But aren’t social media free form responses risky? Take for example the very public Twitter faux pas recently committed by a Westpac employee who stated “Oh so very over it today…”. Honestly, this is probably about the worst that it could get on Twitter – and it just isn’t that bad. I hear Compliance departments the world over rejoicing and justifying their stance at the next Social Media strategy review meetings – saying, ‘See, see – we told you so!”. The reality is, that this particular faux pas actually ended up humanizing the Westpac team and probably won them new supporters more than anything else… It is far more likely that a serious breach of customer trust, a poor service or policy decision, or some other very public social media trending topic could do far worse brand damage if left unanswered out in the social media conversation. Classic examples are those of Ann Minch with Bank of America and Citibank with the Fabulis debacle . In observing the Facebook and Twitter effect of such PR nightmares, the lack of timely response by the bank across the social media landscape made these issues far more impactful and damaging than they needed to be. So the real risk is in not responding quickly enough. The reality is that banks are increasingly likely to face a major PR disaster and have it escalated more rapidly than they can every imagine through social media networks. Take the example of BP and the recent Gulf Oil Spill – their lack of maturity in handling PR issues over social media has absolutely punished their brand . The spill is bad enough, but BP’s response to the social media conversation has simply made it much worse than it had to be. No amount of brand advertising and traditional PR can ever undo the sort of reputation damage that is possible to your brand in the social media landscape. Compliance as an enabler Compliance needs to understand the negative risk of increasing workload on the frontline in respect of customer service perception, and decreasing the ability of the organization to respond to social media events in real time. They need to start thinking about their function as an enabler of the core business with customers, rather than just risk mitigation. They can also be lobbying regulators to help regulators adapt and make their processes more user-friendly, while retaining security of identity and the assets of the customer. Customer experience is being hampered by compliance heavy processes that look to reduce risk, but make the engagement unnecessarily complex. Translating the Terms and Conditions from a paper application form onto the first 7 pages of a web-based application process might seem legally sound, but is quite ridiculous from a Usability and Customer Experience perspective. Compliance departments need to learn to stop saying no, and be embedded within social media, customer advocacy and customer experience teams so they understand the implications of ‘risk’ and ‘legal’ decisions that actually hamper the organizations ability to respond to customer needs.

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Steven G. Brant: Wall Street Is Suicidal. It’s Time To Focus On Those Who Aren’t

May 6, 2010

The debate over whether the DOW dropped today because of Greece or because someone pushed “billion” rather than “million” in trading Proctor & Gamble stock doesn’t matter. What does is the market’s response to bad news, whether that news is real or an accident. Our Suicidal Market The current market psychology is suicidal. Bad new arrives, and Wall Street immediately starts to drive our economic system off a cliff… again! This should tell you and me… and our representatives in Washington… all we need to know. Since I don’t think any of us want suicidal people determining the fate of our economy or of our nation ( No Matter How Wealthy Those Suicidal People Are ), it’s time to change who we put front and center when looking at the fate of our nation. “It’s the response, stupid!” is what people should keep in mind. We are living in the most challenging period since The Great Depression. Maybe even more challenging, because the fate of America is tied more directly – and more immediately – to world events than ever. WWII may have been global in scope, but it took years for the winners and losers to be decided. Cooler, More Forward-Thinking Minds Needed Because today’s challenges involve economic transactions that happen in nanoseconds (rather than weeks, months, and years), the time has come for the most forward thinking people in America to come to the fore, both politically and economically. We now know that the people on Wall Street are not those people. We now know that people on Wall Street do not know how to responsibly control how they respond to current events. “Responsibility” = “Response Ability” = The ability to control your response. And Wall Street doesn’t have any such ability. The people on Wall Street react like rats fleeing a sinking ship. And this after “we the people” gave them $Billions to keep their stupidity from crashing the system two years ago. Well, now we know the people on Wall Street are both stupid and chicken . I’d say we’ve found out not a moment too soon. What To Do? Where To Look? It’s time to change how we measure the well-being of America. It’s time to change which people’s behavior we watch. The DOW is not America. Wall Street is not America. What is America are the innovators amongst us. And I don’t mean the innovators on Wall Street who create new forms of nothing – nothing of social benefit to society – to make money from. Here are the kinds of innovators I’m talking about: I am not associated with this event , but I did hear about it today. These two quotes from the larger event description are why I think you should know about it too: Federal agency deciding how to better inform citizens? Engage. Social entrepreneur trying to spread the cause? Sign up for a heaping serving of good. Securing the homeland? Fast track through the security line. TRDC is designed for a diverse mix of business strategists, designers, developers and communication professionals from media; government agencies and service providers; NGOs, associations and non-profits; device-makers; designer-developers; techies, marketers, investors, as well as mobilecom, telecom, social media and entertainment transformers. So, this isn’t just about making money without caring who you hurt in the process. There’s a strong ethical element built into the agenda. Here’s the complete description. I have some closing thoughts after it. Tabula Rasa DC what’s your app? A million iPads have been unboxed in just a few weeks. 2300 pay-for apps are now creating cash flow on the iTunes store. Only one question remains: What’s your app? We’re bringing Tabula Rasa to the Gannett-USAToday campus from 1-4:30 pm on June 14 to help you answer the question. Media-maker competing for audience? Jump the competition. Developing apps for your business or service? Get an edge. Designer or developer? Show off. Federal agency deciding how to better inform citizens? Engage. Social entrepreneur trying to spread the cause? Sign up for a heaping serving of good. Securing the homeland? Fast track through the security line. We’ve been preparing for this creative moment since we bought our first Mac II back in the Dark Ages. Read our Right> Brain agenda for achieving meaning in the Conceptual Age. What to do We’re assembling another master cast (see our group in NYC ) of innovators, developers and visionaries — we call them Davincis — for hands-on guidance, creative inspiration and how-to maps for apps on the iPad and the wave of mobile, high-concept, high-touch personal computers. We’ll demonstrate how first-movers create advantage. We’ll show how the app-savvy can expand engagement. We’ll flash forward to the shiny new things that will make your eyes pop in the exciting years to come. But mostly we’ll help you figure out what to do now, as well as in your flash-forward future. Who should attend? TRDC is designed for a diverse mix of business strategists, designers, developers and communication professionals from media; government agencies and service providers; NGOs, associations and non-profits; device-makers; designer-developers; techies, marketers, investors, as well as mobilecom, telecom, social media and entertainment transformers. A nutritional disclosure: We eat our own cooking. Tabula Rasa is hands-on, presented on the iPad. Bring yours. Our experts will show how to get the most out of it, make you aware of its limitations, and disclose what’s coming next. We’ll also provide a glimpse of other shiny new things headed our way, as well as what they mean. There’s nothing mushy about TR. It’s not one of those me-too conferences with posers who sit on panels and complain about Facebook. Save the five-hundred bucks (or more) for those conferences; buy an iPad instead. At $200, Tabula Rasa is less than half of what the iPad-come-lately conferences charge. We know where this moment leads. Check out our agenda here and join us. You get the point Washington. Space is limited, so register today and watch this blog for updates on the program and participants. Interested in throwing down your app? Contact dale@wemedia.com What’s your app?: The program 12:30 pm: Registration at Gannett conference center (directions below) 1 pm: The Apportunity In just a few weeks, a stunning future has emerged with new markets, audiences and opportunities. We’ll describe how it both disrupts and enhances personal computing and digital communications. We’ll demo the best, early responses and measure their success. And we’ll show where this moment of creativity, innovation and entrepreneurship leads. – Design-driven innovation – Shiny new things – Everyone, everything, everywhere – Right> Brain Rules 1:45: Apponomics Please don’t ask “where’s the money?” Play and prosper in the App Economy. – How to profit – Open vs. Apple – The balance sheet – Creating good – Engagement 2:30: Meet the DaVincis: Networking and coffee break at our Genuis Bar 3:00 Apptitude How to get it. Get down with developers. – Fast company – What to do. And with whom. – Test drives 3:30: Throwdown DC Demo your so-cool app and get some good back from DC’s top innovators Want to throw down your app or idea? Email dale@wemedia.com to get on the program. We Must Look To The Future, Not Just The Past So, the innovative culture surrounding the Apple iPad – (and maybe the upcoming HTC EVO 4G ?) – will meet to continue figuring out what the world – both business and social – is going to look like. I’m thinking of going. And I hope the mainstream media decides to cover it. Why? Because it’s time we stopped thinking that what happens on Wall Street is the most important thing happening in America. I constantly hear talk about how “We need to grow our way out of this recession.” Well, Wall Street is not where that growth is going to come from. In fact – as we saw today – it’s where that growth can be killed in a manner of minutes! The real growth is in the entrepreneurial sector. It’s where the innovators who work with real products and services can be found. It’s where a future that produces both profit and increased well-being for all is being born! We Must Reform Wall Street Too Just to be clear, I know how important it is to reform Wall Street. I favor strongly regulating the banking industry and creating an independent consumer financial protection agency. But part of what will make reforming Wall Street possible is to move Wall Street out of the center of our focus… to take away the celebrity element that has been part of the Wall Street culture for the last 30 years. I want the celebrities in our society to be those who are helping make society work better, not those who are so psychologically unstable that they are ready to jump ship at a moment’s notice… taking the American economy with them. That is short-term thinking – which we already know runs rampant on Wall Street anyway – taken to the limit: to the point where it really could kill the American economy. Here’s to a more hopeful future… where we all start watching those people who want to help rather than hurt America.

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Francine McKenna: Are You Gonna Make My Day? The Auditors And SEC Enforcement

February 6, 2010

Any business news in mid january was overshadowed by the devastating news from Haiti. There are a number of ways you can help – from donating via your mobile to the Red Cross to an effort that is local to Chicago, Project Eden . Please help. I watched the Financial Crisis Inquiry Commission hearings in Washington and tweeted quite a bit. One of the Commissioners, Keith Hennessey, solicited questions for the bankers. I added my suggestions to his site. All in all it was a very interesting exchange. I’ll write more later. In the meantime, you can take a look at Mark Leibovich’s article in the New York Times. In the afternoon, the SEC held a news conference to announce several changes and initiatives in their Enforcement Division. After a public news conference, a few select bloggers were invited to a special briefing with Robert Khuzami, the Director of the Division of Enforcement. Doug Cornelius documented the participants and questions here . Edith Orenstein , Bruce Carton , and Broc Romanek have provided some analysis. My focus, as always, is on enforcement actions against the audit firms and their professionals. The Big 4 (and to a lesser extent the next tier firms) and their partners are still pretty lucky, continuing to dodge any truly deadly SEC enforcement bullets. My question: “We have two high profile cases here in Chicago: Deloitte’s lawsuit against their own Vice Chairman Thomas Flanagan for breach of contract related to inside trader charges and the SEC’s recent actions against six Ernst & Young partners regarding the Bally’s fraud. In the Deloitte case, although the lawsuit against their partner was initiated as a result of SEC inquiries at their clients, Mr. Flanagan is reported to have made more than 300 trades over several years. In the Bally’s case, the enforcement actions/settlements are coming more than six years after the fraud occurred. These delays mean the firms and the professionals can use the excuse, “It’s all behind us,” and remedial actions and disciplinary proceeding lose impact. How will the changes announced today help make investigations and enforcement actions more timely? ” Mr. Khuzami answered that I was preaching to the choir. He said he is very focused on bringing investigations and any related actions to a close more quickly. In fact, he said, when he took his current position, he implemented a new rule that required staff to get his personal permission to extend time lines when filed cases may be approaching their statute of limitations. In the past it seems it was routine to drag things out as we saw in Madoff . Finally, he reminded me that the timeline is not always in the SEC’s hands when there is a parallel criminal investigation. Mr. Khuzami’s intention is that organizing the SEC Enforcement Division around key issues and the expertise needed to investigate them will accelerate the process and improve it. It’s a worthy goal…because I know how delays can be tactics rather than just poor follow-through. I was a member of the ” PwC the Client” internal audit team in 2005-2006. In retrospect, I realize that some of the frustrating delays in getting reports out and seeing action on my findings were actually strategic moves to get rid of difficult, sensitive issues by diluting them with time. During my tenure at PwC, I led audits of some interesting internal firm areas, including some legal and regulatory compliance activities. Most of the reports I wrote were issued. However, one report in particular went around in circles, being revised, re-revised, back to the first partner’s version, back to my original version, and eventually issued in a very watered down form. Why? By the time the merry-go-round stopped, I was dizzy and the partners I had cited for violations had ample time to clean up their act or remove evidence of violation. I was accused of making it all up. Oh, and also of being a very bad writer. In the case of the recent settlement by the SEC with Ernst and Young, although six partners were cited in the settlement, three of those partners are now retired. And, of course, EY repeated the tried and true response to such unpleasantness and the prospect of having a monitor futzing around making a good show of remediating their faults: Chicago Tribune: Three Ernst & Young partners who were charged remain at the firm. They are Randy Fletchall, who was in charge of its national office in New York, and two based in Chicago, Mark Sever, Ernst & Young’s national director of area professional practice, and Kenneth Peterson, the professional practice director. The other three from the Chicago office are no longer with the firm. They are Thomas Vogelsinger, the area managing partner until October 2003, William Carpenter, engagement partner for the 2003 audit, and John Kiss, the engagement partner for the 2001 and 2002 audits…In a statement [Ernst & Young] said, " These settlements allow us and several of our partners to put this matter behind us and resolve issues that arose more than five years ago.” While we’re at it … A few more comments about the Ernst & Young/Bally’s enforcement actions. Jim Peterson over at Re: Balance comes down, I think, in sympathy with Ernst & Young and what he sees as the make-work required by the settlements. What messages are sent to the profession’s quality and risk functions? Ought they to reduce the exposure of their senior personnel, by hanging out the line operators to struggle on their own? And by the way, who would aspire to the headaches of a consultative role, if only to finish a long career by dangling from the SEC’s noose? One of E&Y’s undertakings in Bally is to re-visit, under the scrutiny of an outside examiner, its documentation of higher-level issue consultations. So, under a sanction that only a bureaucrat could love, Ballywill impel the Big Four’s national office boffins to “re-audit” information they receive from the field, and to build a fortress of memoranda to defend against the assaults of later second-guessing. Let’s take a look back at the Ernst & Young risk and quality process employed in this case by the three partners who remain at the firm. They are leadership partners whom others look to for advice and guidance. Rather than being independent, experienced, objective consultants with a “buck stops here” attitude of upholding firm, professional, and legal/regulatory standards, these three were portrayed in the SEC press release of the settlement as conflicted and self interested. The SEC shames them, and in very damningly specific terms, because they were clearly seeking to protect not only their colleagues’ reputations but their own. Ernst and Young now has three strikes against them for SEC enforcement actions, sanctions, and fines related to independence violations. Two of the three leadership partners held leadership and committee positions in the AICPA and PCAOB. Famous Floyd Norris at t he New York Times quotes an anonymous “veteran SEC official” who says he believes the EY/Bally’s sanctions are the first time an audit firm’s National Practice Partner was cited by the SEC. This “official” admits he had not checked the records. Floyd quotes him anyway. Not true. Floyd…next time call me. Mr. Fletchall, who remains with Ernst, was in charge of resolving technical accounting issues in the United States. He was censured by the commission. A veteran S.E.C. official, speaking on condition he not be named because he had not checked records for the entire history of the commission, said he knew of no previous enforcement cases in which a partner of a major firm was cited for his actions as head of a national office. Back in September of 2007 I wrote about KPMG and Xerox and an SEC investigation that had been going on since 2003 that also named their National Practice Partner as a defendant. Mr. Conway had also been a partner on the account. The fraudulent activities had occurred in 1997-2001. KPMG finally settled the SEC case in 2005 and the shareholder litigation in early 2008. The sanctions against Mr. Conway were more severe than Mr. Fletchall’s. Is he already back auditing again? Did he ever leave KPMG? The firms are so forgiving of bad accountants. A re: The Auditors reader, commenting on the Flanagan inside trader case, made the following observation and I responded as best I could: Mr. Khuzami: If I don’t start seeing faster, stronger, more decisive once-and-for-all enforcements against the audit firms and their partners, I’m going to start believing that the snowjob is more often due to evil plans rather than benign neglect. Main Page Photo Credit “Do you feel lucky, punk?” Clint Eastwood Dirty Harry (1971)

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Playboy Surfers Are Targets for VW Polos in $4 Billion Web Video Ads Push

February 5, 2010

By Ragnhild Kjetland Feb. 5 (Bloomberg) — Christian Baudis has profiled the perfect target for Volkswagen Polo online video advertisements in Germany: a man aged 25 to 39 who watches soccer matches, checks out the Playboy site and reads Der Spiegel magazine. So the European head of New York-based Tremor Media Inc., an advertising network, knows which Web sites to market to the German carmaker’s ad agency. “We go to them and say here are 150 sites with video content that is attractive to that target group,” said Baudis, who works with Volkswagen’s ad agency, Mediacom, a unit of WPP Plc , the world’s biggest advertising company. “Targeted advertising is more efficient. It costs less money to reach the target. That’s the beauty of it.” Online video ads are the fastest-growing piece of the advertising industry, aided by their ability to show off products in a feature-rich medium and, increasingly, to zero in on a target audience. Volkswagen and HSBC Holdings Plc are among European companies using online video ads to reach potential customers as television audiences shrink. In Europe, spending on online video ads could triple between 2009 and 2013 to about 1 billion euros ($1.4 billion), said Nate Elliott , an analyst in London for Cambridge, Massachusetts-based Forrester Research Inc. In the U.S., the online video ad market could grow to $3.01 billion in 2014 from $879 million in 2009, according to Forrester. Such ads currently account for just 1.6 percent of what’s spent on TV commercials, says New York-based research firm eMarketer Inc. Still Young HSBC’s two video ads on Web sites including those of the British Broadcasting Corp. and National Geographic, were among the bank’s “best-performing campaigns we ran last year,” said Ceren Dogany , digital account director at Mindshare Worldwide, a WPP unit. “We received a massive number of clicks and a really high click-through rate.” Targeted advertising is in its infancy, Baudis said. Information on consumer preferences is drawn through “cookies,” or a small piece of text stored on a user’s computer by a Web browser. Ad agencies can then post ads based on consumers’ browsing habits. The system relies on consumers accepting the cookies and may be capped by privacy concerns. “Consumers do appreciate targeted advertising, although it will take some time to develop, to convince them because of privacy issues,” he said. “Normally, targeted advertising will mean that you get better ads.” The ads are inserted in a video program on a Web site or occupy space on an Internet page. Program developers in Europe are scrambling to capture this new revenue. ‘Huge Opportunity’ “ Welt der Wunder ,” a German producer of science, technology and educational shows that gets no ad revenue for programs aired on TV, sought the aid of Tremor, which pools several Web sites to make it worthwhile for advertisers. “I liked the idea right away,” said Hendrik Hey , a producer for “Welt der Wunder.” “As a production company it’s hard to set up your own marketing division.” Tremor, which aggregates Web sites for advertisers and provides them technology to place their ads, is among new players spawned by the online video ad trend. It is banking on Europe following a trajectory similar to the U.S. At about 25 million euros, online video ad spending in Germany is miniscule compared with the 3.9 billion euros spent on TV ads, said Baudis . Online video advertising in Germany alone could grow six-fold by the end of 2012, he said. SAP Ventures, an investment arm of SAP AG, the world’s largest maker of software for businesses, last year invested an undisclosed amount in Tremor. ‘Ubiquitous’ “We felt that growth in online video advertising would be one of the strongest online advertising sub-segments,” said David Hartwig , a SAP Ventures partner in Palo Alto, California. “Online video is going to start encroaching on some traditional TV viewing and it’s going to start to pull from TV advertising, making it a really huge opportunity.” Other companies capitalizing on the trend include Cambridge, Massachusetts-based Brightcove Inc., with a platform that publishers use to manage video content. Its investors include General Electric Co. and Hearst Corp., and it manages video content on the Web sites of The New York Times , Conde Nast Publications and Universal Music Group. “Video will become as ubiquitous and pervasive as text on the Web, and if you’re an organization, a corporation, a media company, you’re going to make video a much more central part of how you market, communicate, educate and entertain,” said Jeremy Allaire , its founder and chief executive officer. TV Decline Most online videos, into which ads can be inserted, are between three and five minutes long. Microsoft Corp. recently established MSNmovies in Germany with 200 movies into which it inserts ads in every chapter. “It’s on demand, for free and a continuous experience to the consumer, like on TV,” said Marc Adam , marketing director of Microsoft’s MSN.com. MSN.de in Germany sold all movie ad space for months to come and may now put in two or more ads per chapter, he said. Tremor’s Baudis said advertisers don’t understand the technology and still place the bulk of their marketing dollars in TV. That may change as companies including Ford Motor Co., Mars Inc., and Citibank Inc. earmark a portion of their ad budgets for online media. TV is already feeling the pain. According to Forrester, 2009 was “the worst advertising year since 2001” for broadcasters. Reasons it cites include a shift to online advertising, a shrinking audience share during prime time and increased competition from digital media among younger viewers. Higher Engagement “A lot of big brand advertisers are taking us as if we were a TV station,” Baudis said. Tremor has more than 3,500 Web sites globally where it can stream ads. Advertisers online know exactly how many viewers they’ve reached, unlike with TV, said Brightcove’s Allaire. On TV, it’s a “brand impression,” he said. “On the Internet, a video ad comes up and it’s designed as a call to action for the user and they can click it, taking them to the marketing Web site.” Advertisers can target age groups and gender by analyzing browsing habits. “If Tremor has a client, a big pharma company like Bayer or Novartis , they will come to us and ask what programs we have on health or medicine that can be put on our Web site, with the ad from the company running with it,” Welt der Wunder’s Hey said. On TV and in newspapers, such targeting is harder. “The more it’s targeted, the more advertising becomes information, and the more it becomes information, the higher the engagement and interest in the ad,” Microsoft’s Adam said. “That’s what can happen online.” To contact the reporter on this story: Ragnhild Kjetland in Frankfurt rkjetland@bloomberg.net

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Andrea Learned: A Diatribe: Engaging Conventional Business Thinkers with Sustainability

January 12, 2010

Sometimes the inevitable is just too hard to get to. Misguided assumptions, traditions and all sorts of randomness can get in the way of doing good business. In both the case of the women’s market and now, the sustainable consumer market, plenty of decision-makers still hesitate to make the effort – even when it is clear that there is no turning back. Yet,having to serve those markets is… inevitable. With that frustration in mind, I turned my attention to a new Catalyst study about engaging men in gender initiatives. And, there are parallels between gender and sustainability initiatives that are worth a look. In fact, Catalyst’s findings about the barriers to men’s engagement with gender initiatives (similar to their barriers to engagement with marketing to women) look suspiciously like barriers to the engagement of conventional business thinkers with sustainability. Consider the following: Myth: Sustainability is something that only matters to a few, Birkenstock-wearing, co-op shopping folks. So, give the pursuit of it a small budget and treat it like an “initiative.” Then, you can safely say “we tried it,” and stop funding it when it doesn’t immediately succeed or make the company loads of money. Reality : Just like a brand’s approach to the women’s market, sticking just a toe in the overflowing waters of sustainability is a big mistake. Sustainability has to be pursued as a long-term commitment, with very clear knowledge of the consumer values around it, or those many people now committing to change their buying ways will not buy your story at all. Myth: Businesses have to go it alone and be “tough” (manly) to be successful. So, never let consumers or your competition see you sweat or stumble. Reality : Just as with the women’s market, you can’t reach the sustainably-minded consumer effectively without taking a few risks, and acknowledging missteps or forming new partnerships to innovate in your industry. As the authors of Women In Green so aptly put it: “Manly green separates; womanly green unites.” Myth : If an issue doesn’t affect the decision-maker(s) personally, it doesn’t matter. Reality : How can workplace gender issues and marketing to women not affect you personally? Most people have a wife, sister, niece or daughter who will be affected or influenced by both. And, the same is all the more the case with sustainability. When you drink water or care how your neighbor is treated on the job, sustainability (in the form of public health and community good) is an issue. In fact, sustainability can’t be separated from an individual’s human-ness, whether in their business or consumer role. It seems safe to say that most humans are driven to be productive and successful. We want to live comfortably now, BUT STILL desire to leave the world in the same shape – if not better – so future generations may also thrive. The Catalyst study mentioned the fact that some men are unaware of gender issues or assume that because they are men it really isn’t a discussion for them (that gender discussions are, in other words, “for girls.”) Conventional business thinkers may also sidestep their responsibility to pursue sustainability because they aren’t informed and/or haven’t taken the time to discover that it IS a discussion for every smart executive (not just “for hippies”). (For an example of a conventional business brain turned very successfully sustainable, read Ray Anderson’s Mid-course Correction ). The point is not to polarize the conventional and sustainable business mindsets away from one another. That gets us nowhere. Instead, the point is for all of today’s business thinkers to innovate as they always have, but to do so within exciting new parameters that serve planet, people and profits. Just like the marketing to women advice I often give: shut up about it, but do it! If the term “sustainability” makes business decision-makers uncomfortable, don’t mention it. Just embrace the inevitable, commit to integrating sustainable development in to your business, and join today’s wise and innovative business pioneers.

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Hedge Funds Win Instant Profit From Chicago Sewer Debt at Taxpayer Expense

December 8, 2009

By Michael Quint and John McCormick Dec. 8 (Bloomberg) — The “fair and reasonable” price financial advisers recommended to the Metropolitan Water Reclamation District of Greater Chicago for the biggest borrowing in its history cost taxpayers $8 million in unnecessary interest and resulted in a bonanza for bankers and investors, according to trading data and to documents initially withheld from the public. Hedge funds bought almost a quarter of the AAA rated debt. Sellers reaped a profit of as much as 2.5 cents on the dollar by immediately trading their share of the $600 million of Build America Bonds because they realized the authority paid higher rates of interest than similarly rated and much less credit- worthy companies. The Texas Transportation Commission, with a credit grade one level below the Chicago agency, sold almost twice as much of the federally subsidized debt the next week at a lower cost to taxpayers. The Aug. 11 Chicago sewer bond sale, arranged without competitive bidding like 84 percent of the $354.3 billion of municipal debt issued this year, “was a very lucrative deal for underwriters and investors and a very poor deal for the taxpayers of the district,” Daniel Kaplan, president of Kaplan Financial Consulting Inc., said in a letter read at the district’s board meeting Nov. 5. “I am angry about that, and so we should all be,” wrote Kaplan, of suburban Wilmette, Illinois, who said he has been a municipal-securities adviser since 1981. “Please don’t let bond sales like this ever happen again.” Shunning Competition By choosing underwriters without soliciting bids, unlike how it selects vendors to refurbish valves and supply toilet paper, the 120-year-old Chicago agency showed the risks of shunning competitive debt sales. Issuers in such transactions save 0.17 to 0.48 percentage point over negotiated deals on average, with other factors being equal, according to the Winter 2008 issue of Municipal Finance Journal. The sewer agency’s underwriters, led by Chicago-based Mesirow Financial Inc., and advisers Scott Balice Strategies and A.C. Advisory Inc. were paid $4.9 million to work on the August issue. “We relied on information from the underwriters as to what they were finding in the marketplace,” said Harold Downs , the district’s treasurer for 27 years. “I’m satisfied with what we got.” When asked why the agency didn’t seek alternative bids from other underwriters, Downs said, “Mesirow is one that I trust because of what they’ve done for us in the past.” Texas Debt While the agency said it saved money by setting the yield on the taxable Build America Bonds 1.25 percentage points higher than Treasuries, the Austin-based Texas Transportation Commission issued $1.15 billion of the securities on Aug. 19 at a so-called spread of 1.2 percentage points. The highway agency is rated Aa1 by Moody’s Investors Service and AA+ by Standard & Poor’s. Its general-obligation issue is backed by the state of Texas and might have been more appealing to investors than the Chicago bonds, said Jose Hernandez, the Texas commission’s debt management director. The Chicago issue depends on property levies and user charges. A sewer authority is 90 times less likely to default than a corporate borrower with a similar credit rating. Yet, the Chicago agency wasn’t able to get a yield similar to those obtained for shareholders by Johnson & Johnson or Microsoft Corp. , both ranked AAA. Bonds issued by the New Brunswick, New Jersey-based medical-products company traded at 0.39 percentage point less than the water district’s debt at the time of the sale, while the Redmond, Washington-based software maker’s 2039 obligations yielded 5.35 percent, 0.37 percentage point less than the Chicago securities. Economic Stimulus The Build America Bond program, part of the $787 billion economic-stimulus approved in February, may be extended past its expiration at the end of 2010, Michael Mundaca , President Barack Obama’s nominee to be assistant secretary for tax policy at the U.S. Treasury Department, said during a Senate Finance Committee hearing on Nov. 4. With the Treasury paying 35 percent of interest costs, Build America securities provide savings compared with the $2.8 trillion tax-exempt municipal market, according to an Oct. 27 report by the Congressional Budget Office and Joint Committee on Taxation. The sewer authority, with 5.3 million customers, said it saved $188 million in interest expense on the transaction. The bonds yielded 0.31 percentage point more than a Moody’s index of corporate debt with similar ratings. First Two Hours Customers sold more than $73.7 million of the issue, or about 12 percent of the deal, in the first two hours of trading, according to data compiled by Bloomberg. No investors sold bonds in the first day of a $206.5 million issue of Illinois Municipal Electric Agency securities on July 15. In another instance, Cook County’s $120.2 million Build America transaction on June 18, with Mesirow as the financial adviser, first-day sales by customers totaled $7 million, at slightly higher than the issue price. Bloomberg filed a Freedom of Information Act request, asking the Metropolitan Water Reclamation District for all documents and correspondence related to its Aug. 11 bond issuance. The agency’s initial response didn’t include evidence that financial advisers provided advice counter to the underwriters. Asked again to demonstrate how the advisers gave independent counsel, the district provided an undated summary that in part stated: “The advisory team advocated on the District’s behalf suggesting that the underwriters tighten up the spread to the 120 to 130 basis point range with a target of 125.” A basis point equals 0.01 percentage point. Best Practices While Downs is a member of the Government Finance Officers Association , he didn’t follow the group’s best-practices recommendations that advisers help select underwriters in negotiated sales and that issuers use software to track investor orders independently of the banks handling the bonds. “I didn’t see the need for it,” Downs said. “I’m not going to bring anybody back that gives me the short end of a deal.” Downs recommended hiring Chicago-based Mesirow and the financial advisers in July for a still-pending $300 million bond sale before there was an opportunity to evaluate the team’s performance on the $600 million issue in August. Less Incentive The district also stipulated what the 12 underwriters led by Mesirow would be paid, regardless of how much debt they sold, Downs said. This practice is widespread in the municipal market and reduces bankers’ incentive to find as many buyers as possible, said David Johnson , a former executive at Citigroup Inc. and a senior managing director at Ziegler Cos. The Chicago-based investment firm started as a farm lender in 1902, according to its Web site . The sewer district’s president, Terrence J. O’Brien, 53, was first elected as a commissioner in 1988 and is now seeking the Democratic nomination for the Cook County Board presidency. His agency didn’t use bids to hire Mesirow because of the “high degree of professional skill required,” Downs said in a June letter to the board. The firm served as senior managing underwriter on $1.8 billion of municipal-bond sales in the past five years, according to its Web site. The yield on the Build America Bond sale was enough to attract $1.5 billion of orders, or 2.5 times the debt available, according to bond sale documents. Money Managers “Given the time and circumstance, I don’t think they could’ve done better,” said James Tyree , Mesirow’s chief executive officer. The post-sale report showed that in addition to the 23 percent of the bonds sold to hedge funds, money managers acquired 35 percent; insurance companies 34 percent; pension funds 7 percent and individual investors 1 percent. Hedge funds aren’t a staple of every Build America Bond deal. Stefanie Devin, Iowa’s deputy treasurer, said her underwriter, Barclays Capital, “didn’t see any hedge fund accounts” listed after reviewing the initial sale of her state’s issue of the debt on July 14. The authority’s $573 million annual revenue comes primarily from property taxes levied on residents of Chicago and 128 suburbs. Cutting the yield on the Build America Bonds by 0.05 percentage point, to match the spread above Treasuries the Texas Transportation Commission received, would have saved $8 million over their 29-year life, as much as the agency plans to spend to replace electric cables and conduits at a pumping station in suburban Stickney, Illinois. Public ‘Benefit’ “You really want all of this stuff to be bid out,” said Ralph Martire, executive director of the Center for Tax and Budget Accountability, a public-policy group in Chicago. Instead of “insider deals” with favored bankers “you need to max the benefit to the public, which means lowest cost, especially on something as big as a bond finance deal.” Scott Balice and A.C. Advisory pushed Mesirow to lower the yield premium over Treasuries to 1.25 from 1.3 percentage points in the week before the Aug. 11 sale after the district and the advisers reviewed pricing and trading in “several comparative” municipal-bond deals, according to the statement issued by Downs’s office. ‘Withdrawn’ Orders Many potential buyers indicated that if the bonds were priced at a spread less than 125 basis points over Treasuries, “the deal might not get done,” the agency said in a statement. While other underwriters said “their investors had already withdrawn” when the spread narrowed, according to the authority, the bonds’ price rose during the first day of trading. Yields fell to 1.1 percentage points over government bonds. The financial advisers agreed to work on behalf of the district to ensure the “maturity has been optimally priced,” their engagement letters said. The two firms split a $331,000 fee, according to the district’s expense analysis. The 5.72 percent yield on the 29-year bonds was the “best rate,” according to a summary from the district treasurer’s office. After the sale, the authority’s advisers certified in a letter to the board that the figure was “fair and reasonable in light of the current conditions in the market.” The agency’s net interest cost, after the federal subsidy, was the lowest since 1973, according to a Sept. 1 memo from Downs to district commissioners. Underwriter Payment The advisers declined personal, e-mailed and telephoned requests to discuss details of their work on the issue. As the leader of the underwriting group, Mesirow got $1.4 million of the $4.6 million in fees, the expense analysis stated. Mesirow was the district’s financial adviser for sales in 2007 and its underwriter in 2006. The firm’s performance in earlier debt issues made it “natural for us to go with them,” Downs said. Downs said he didn’t know how many investor orders would have disappeared with a narrower spread. To assure officials have this information, the Government Finance Officers Association recommends issuers and advisers “request access to the underwriters’ electronic order entry system in order to observe and evaluate the flow of orders.” The sewer agency didn’t do so, Downs said. He said he relied on bankers’ assurances about investor orders because “they would know the best.” To contact the reporters on this story: Michael Quint in Albany, New York, at mquint@bloomberg.net ; John McCormick in Chicago at jmccormick16@bloomberg.net

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North Korea `Weaponizing’ Plutonium, Says It’s Open to Disarmament Talks

September 4, 2009

By Heejin Koo Sept. 4 (Bloomberg) — North Korea said it is in the final stages of “weaponizing” plutonium and can either engage in negotiations or accelerate its nuclear program, indicating the communist state hasn’t given up on disarmament talks. “We are prepared for both dialogue and sanctions,” the official Korean Central News Agency said, citing a letter sent to the United Nations Security Council. “If some permanent members of the UNSC wish to put sanctions first before dialogue, we would respond with bolstering our nuclear deterrence.” The ultimatum may signal Kim Jong Il’s regime is trying to improve its hand before rejoining talks to dismantle the nuclear program after vowing to abandon them forever. In the past month North Korea has indicated its willingness to make concessions by releasing two detained U.S. journalists and several South Korean citizens, and sending a delegation to the South. “North Korea wants a face-saving gesture from the United Nations that would provide the basis for them to return to nuclear talks,” said Ryoo Kihl Jae , a professor at the University of North Korean Studies in Seoul. “It appears to be a tactic of provocation and placation, which is common practice for North Korea.” Reprocessing of spent fuel rods is “at its final phase and extracted plutonium is being weaponized,” KCNA said in the letter. “Experimental uranium enrichment has successfully been conducted to enter into the completion phase.” ‘Need to Verify’ “We will need to verify North Korea’s claims, which won’t be easy because it’s not as if North Korea has shown the uranium to the public,” South Korean Defense Ministry Spokesman Won Tae Jae told reporters in Seoul. The letter “could be a type of a tactic for negotiations in the future.” North Korea fired more than a dozen missiles this year and tested a second nuclear weapon in defiance of international pressure, prompting the Security Council to impose sanctions in June. The communist country said in April it would never return to nuclear disarmament talks involving the U.S., China, Russia, South Korea and Japan. Stephen Bosworth , the U.S. special envoy on North Korea’s nuclear program, met Chinese Foreign Minister Yang Jiechi and Vice Foreign Minister Wu Dawei in Beijing to discuss how to resume disarmament talks. He plans to meet South Korea’s chief nuclear negotiator Wi Sung Lac in Seoul tomorrow before heading to Tokyo on Sept. 6. He has no plans to visit North Korea during this trip, according to the U.S. State Department. Open to Engagement “We would be open to bilateral engagement as well but only within the context of the six-party process and as an effort to help rejuvenate and restart the six-party process,” Bosworth told reporters today before leaving Beijing for Seoul. He and the Chinese officials “agreed that complete, verifiable denuclearization of the Korean peninsula remains our core objective in our ongoing efforts” regarding North Korea, Bosworth said. North Korea’s permanent mission sent the letter to the UN Security Council president yesterday, KCNA said in its report. It didn’t mention by name either the North Korean Ambassador to the UN, Sin Son Ho, or the U.S. Ambassador Susan Rice , who currently holds the council’s rotating presidency. North Korea “will never be bound” by the UN sanctions resolution imposed in June, KCNA said. “We have never objected to the denuclearization of the Korean Peninsula and of the world itself,” it said. “What we objected to is the structure of the six-way talks which had been used to violate outrageously the DPRK’s sovereignty and its right to peaceful development.” The Democratic People’s Republic of Korea is another name for North Korea. Plutonium Stockpiles Kim’s regime, which tested the second nuclear device May 25, said in June it will continue its nuclear weapons program, including the use of plutonium stockpiles for weapons and developing a program to produce highly enriched uranium. The Security Council voted unanimously in June to adopt a U.S.-backed resolution punishing North Korea for its nuclear test. The measure seeks to curb loans and money transfers to North Korea and step up inspection of cargoes containing material that might contribute to the development of nuclear weapons or ballistic missiles. “Japan and the international community can never tolerate North Korea possessing nuclear weapons,” Japanese Foreign Minister Hirofumi Nakasone said today in Tokyo. “North Korea should refrain from taking actions and making remarks that could escalate tension.” A leading official in the party that takes power in Japan this month said the new administration will take “a tough stance” with North Korea. “The goal of taking a tough stance is, needless to say, to get them to the negotiation table,” Katsuya Okada , the secretary-general of the Democratic Party of Japan , said at a press conference today in Tokyo. The DPJ defeated Prime Minister Taro Aso ’s Liberal Democratic Party this week. “It is deeply regrettable that North Korea is taking an attitude that is contrary to the UN Security Council resolutions,” South Korean Foreign Ministry spokesman Moon Tae Young said in Seoul. “We will take a stern and consistent response to North Korea’s threats and provocations.” To contact the reporters on this story: Paul Tighe at ptighe@bloomberg.net ; Heejin Koo in Seoul at hjkoo@bloomberg.net

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