management

Sion Owen: Investors, Business Schools and Financial Crisis

by Sion Owen on January 18, 2012

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Investors, bankers, regulators: who is responsible for the financial crisis? The Financial Crisis Inquiry Commission (http://fcic.law.stanford.edu/report) underestimated the role of investors and focused too much on ‘financial institutions’ and ‘regulators.’ The commission’s minority, or ‘dissenting,’ report only partially resolved the imbalance as it blamed investors for creating a ‘credit bubble’ which made their role seem transient. In reality, the behavior of investors is the long-run driving force behind the financial crisis and financial markets. It is investors’ money that financial institutions manage, and it’s investors’ demand for a rate of return on capital that is the source of, now discredited, ‘financial innovation,’ including mortgage-backed securities. The mentality that characterizes investors is purely monetary, or ‘capitalist,’ and because the financial services industry acts as their agents, investors become detached from real business issues such as quality of product and service. This detached mentality is also connected with their inability to judge risk. Low wages across the globe have helped investors accumulate wealth, and if an investor has $100 billion, a $10 billion investment does not seem such a big risk. The FCIC blamed reckless risk taking on financial institutions, but the root of it is investors and their need for returns. Focusing too much on banking and financial institutions is not limited to FCIC. Charles Ferguson’s award winning documentary Inside Job (2010) blamed financial institutions for buying off business school economists. Ferguson is right to highlight business school failings, but wrong to blame financial institutions. The process of shaping economic ideas in ways that are congruent with the accumulation of capital has a long history. Professor Rob Bryer of The University of Warwick traces the process back to Irving Fisher who developed the concept behind modern financial theory, the ‘time value of money.’ The years between 1880 and 1930 were characterized by labor unrest in the U.S. William Jennings Bryan, a presidential candidate, declared: “You shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.” Irving Fisher developed a theory of interest and profits calculated to calm the situation by presenting a picture of economic harmony. Recent efforts made by the banking sector to buy off economists look relatively minor when viewed historically. The independence of business schools is important, and they should strive for a high level of professional detachment, but the finance industry alone is not the cause of the problem. The root of the matter is the powerful economic interests of investors. Modern economics has become an ideological tool, seeming to promote the free market and economic opportunity, but doing so in ways that actually perpetuate wealth and privilege. Economists’ focus on ‘utility’ and ‘time value of money’ generates a partial and inadequate understanding of economic reality, clouding the balance between cooperation and conflict that exists in all societies. As Naomi Klein has shown ( The Shock Doctrine ), ideologues and zealots pursue extreme policies when the natural counterbalancing fabric of society is temporarily damaged. Appreciating the depth and the historical roots of the ideological tendency in economics and society makes it easier to comprehend how governments are brought within the sway of investors. Here again, Inside Job tends to overemphasize the role of financial institutions in corrupting politicians and regulators. Although economists’ ideologies divert attention from social processes, events such as the financial crisis reveal the true picture. Prosperity and inequality have increased the importance of investors and their ideologies have, to an extent, permeated society, but the tide is turning. Managers and knowledge workers realize that value creation is not purely monetary but depends on quality of product. Economists’ theories are retreating and new ideas like political economy interpret the ‘free market’ in its social context. Politicians can see the damage done to businesses and communities and they are looking for ways to rebuild. Consumers can see the limits of borrowing and are putting their personal finances back on a sustainable footing. Investors can see the danger that their elaborate veil of secrecy may be slipping. It is not just Wall Street that needs to be occupied and reformed, but Main Street, and the process is already underway in finance, retailing, manufacturing, education and politics. Perhaps this is the time for business schools to step forward and take a radical lead. Managers have the powerful combination of technical knowledge and commercial experience and business schools can help shape a new breed of manager that understands business in its social context and uses this perspective to shape sustainable, ethical and long term business growth.

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Fred Wilson: The Management Team While Building Product: Keep It Small

by Fred Wilson on January 3, 2012

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The first stage of a startup, what I call the Building Product stage is management light. The team should be small. We have portfolio companies like del.icio.us and duck duck go where the Building Product stage was accomplished by one person, the founder of course. That is not typical. What is typical is a team of five or less. The founder/CEO is usually the product manager. There is often a technical co-founder who leads the development team. And there are often several developers (two or three). There can be a designer unless the founder is capable of doing the design. That is about it. There are quite a few of our portfolio companies that had a two person founding team. Both members of the team built the product. Zach Sims and Ryan Bubinski of Codecademy are a good example. As are Daniel Ha and Jason Yan of Disqus . Both of these teams came out of Y Combinator. But two person teams are not limited to Y Combinator. Dennis and Naveen built Foursquare as a two person team. Greg Yardley and Jesse Rohland built Pinch which is now part of Flurry as a two person team. Billy and Yang built and launched Turntable.fm as a two person team. David Karp and Marco Arment built, launched, and ran Tumblr for well over a year as a two person team. I am sure there are other examples in our portfolio of two person founding teams. Three person teams are also common. Etsy was built by Chris, Haim, and Rob. That is in many ways the classic founding team. Rob was CEO and product lead including all design. Chris and Haim were the dev team. They built and launched Etsy in about three months if I rememeber correctly. Hopefully you get the point. Building product is not about having a large team to manage. It is about having a small team with the right people on it. You need product, design, and software engineering skills on the team. And you need to be focused, committed, and driven. Management at this point is all about small team dynamics; everyone on board, working together, and getting stuff done. Strong individual contributors are key in this stage. Management skills are not a requirement. In fact they may even be a hindrance. Next week we will talk about the Building Usage stage where team building and management skills start becoming necessary. This post originally appeared on AVC.com .

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Fred Wilson: The Management Team While Building Product: Keep It Small

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Lisa Earle McLeod: Performance Reviews, Santa, and the Slack Factor

January 3, 2012

They slack off all year, avoiding chores like the plague, whining and complaining every time you ask them to do anything. Then, two weeks before the big guy comes to town, they’re suddenly enthusiastic and eager to please. I’m not talking about kids sucking up for Santa. I’m talking about employees a few weeks before their performance review. The question is: Do you reward someone for sudden improvement just before review time? Believe it or not, there are two good reasons why you might want to reward people who make a big show of hard work right before their review. 1. They’ve proven that they know what good performance looks like. 2. You want to reinforce good behavior, not penalize them for it. It’s natural to be annoyed. People should do the right thing all year long, not just make an 11th hour effort when they think someone’s watching. But one of the main reasons we do performance reviews, or give feedback of any kind, is for improvement. A last minute razzle-dazzle might not qualify them for Employee of the Year, but it should at least be recognized. After all, isn’t this the kind behavior you want to see more of? Human beings are pretty simple creatures. Praise them for something, and you increase the likelihood that they’ll keep doing it. Ignoring their improvement, or getting angry because they didn’t do it earlier, decreases the likelihood that they’ll sustain it. The “Slack Off Until You Think Someone’s Watching” phenomenon isn’t limited to the workplace. It’s the reason our spouse cares more about the house just before their parents visit and the cleaning service scrubs behind the toilet just before the holidays. But be honest, doesn’t your driving improve when you pass a police car? Aren’t you more likely to go on a diet before your class reunion? We’re human. We’re all a bit more motivated when we think someone else is watching. That’s why Weight Watchers has weekly weigh-ins and companies do performance reviews. The secret is to use that external pressure to bring out the best in people. Feedback that emphasizes everything we’re doing wrong rarely inspires us to do better. Contrary to the way many people conduct them, an effective review process isn’t about berating people for past failures; it’s about setting the stage for future success. If they were a great performer all 52 weeks of the year, do the glory dance together and celebrate the fact that you have a fabulous employee. But if they were mediocre most of the year, yet had a sudden burst of energy at the end, give them some credit for trying. Say something like, “I love what you’ve done in the last two weeks. When you did X (specific example), I was so impressed. You’ve really upped your game, let’s talk about how we can keep it there.” You don’t have to give them the top rating. Save that for the people who busted it all year long. But give them at least some reward for improvement. And most importantly, paint a picture of what their future will look like if they perform that way all the time. It would be great if people were self-motivated to do their best all year long. But if someone shows remarkable improvement right before evaluation time, they’ve proven that they know what good looks like. Your job is to reward and reinforce it. Lisa Earle McLeod helps organizations win the hearts and minds of customers and employees. She is the author of three books included the best-seller, The Triangle of Truth: The Surprisingly Simple Secret to Resolving Conflicts Large and Small, A Washington Post Top 5 Book for Leaders. She is an international keynote speaker and consultant who has been seen on The Today show and featured in Forbes, Fortune, CEO Read and The Wall Street Journal. You can reach her at www.LisaEarleMcLeod.com .

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American CEOs Netting Huge Pay Raises Last Year

December 14, 2011

While the incomes of so many Americans remain the same size or get smaller, corporate chiefs can’t say they’re suffering in quite the same way. American CEOs saw pay increases of between 27 and 40 percent last year, according to a GovernanceMetrics International survey cited by the Guardian . In addition, the median value of CEOs profits on stock options jumped to $1.3 million from $950,400 — a 70 percent boost. This, even after Congress passed financial reform regulations that included provisions aimed at making CEO pay more transparent by allowing shareholders to weigh in. The survey’s findings may resonate with Occupy movement activists , who have been railing against income inequality since the protests first started. Indeed, CEO pay by itself exceeded the amount that his or her corporation paid in income taxes in at least 25 cases last year. And in the year before America’s highest-highest-paid corporate chief netted more than $145 million , U.S. median income fell to below $27,000 , meaning half of all earners made less than that. But John Hammergren, CEO of healthcare provider McKesson, isn’t the only boss taking home the big bucks. JPMorgan Chase Chief Jamie Dimon got a $19 million raise in 2010 and Goldman Sachs CEO Lloyd Blankfein netted an extra $3.6 million in bonuses last year . The news is a good sign for people in the top one percent of earners, who saw their incomes drop by roughly a third in the official years of the recession, according to a recent report by The New York Times. Still, even after that fall, the net worth of one percenters remained 200 times higher than that of the median national income, according to the Economic Policy Institute. Some CEOs even got huge pay packages for not doing their jobs. Eugene Isenberg took home $100 million for dropping his title as CEO of Nabors Industries in October. While Dougless Foshee, the CEO of natural gas pipeline operator El Paso , became eligible for an exit package worth $95 million after the company was acquired by rival Kinder Morgan. Still, some don’t seem to mind the huge CEO paydays. The vast majority of corporate shareholders say that CEOs are being compensated correctly , according to an October study from research firm Equilar.

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Jack E. Kosakowski: Giving Our Young People the Gift of Smart Money Management

December 14, 2011

One thing is certain this holiday shopping season: consumers are willing to spend the extra money to buy that perfect holiday gift. This year’s Black Friday sales set an all-time high with consumers spending $11.4 billion, a rise of seven percent over last year. According to ShopperTrak, which gathers stores’ data, this is the largest amount ever spent on Black Friday. With Americans spending more, it is important that consumers are armed with the information they need to make smart financial choices. These record-high spending numbers demonstrate the imperative need for today’s youth to understand the importance of creating and using a budget. Junior Achievement (JA) programs help young people establish a solid financial foundation; in addition, children and teens today need to learn from their parents and role models why it is important to maintain fiscal health. With the holiday shopping season in full swing, now is the perfect time to have that conversation with your children and discuss the importance of saving, budgeting and setting financial goals. In Junior Achievement’s 2011 Teens and Personal Finance Survey sponsored by The Allstate Foundation, 92 percent of teens said that they learn money management from their parents, however, less than half said that they discuss money management as a family. Junior Achievement urges parents to talk to their children and teens in order to help them become responsible consumers as adults. Junior Achievement has provided parents with fun, age-appropriate resources to help them discuss money-management concepts with their children. Junior Achievement $ave, USA provides children and their parents important lessons on budgeting, the value of saving, the role of insurance and other important financial security matters. Junior Achievement programs have been shown to positively affects students’ futures: programs such as JA Personal Finance ®, JA Finance Park ®, JA Economics for Success ®, JA BizTown ®, and JA More than Money ® are designed to teach financial literacy as a pillar of student success. These programs also support the skills and competencies identified by the Partnership for 21st Century Skills such as teamwork, critical thinking and leadership. Research shows that JA programs positively affect youth attitudes and that impact on youth attitudes drives student behaviors. Junior Achievement remains focused on equipping students with the knowledge and skills they need to own their economic success, just as we have done for nearly a century. For more information on Junior Achievement’s financial literacy programs, go to www.ja.org .

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Fred Whelan and Gladys Stone: Give Someone a Fresh Start

December 14, 2011

Diane, an employee in a professional services firm, had been going head-to-head with someone she was managing. The situation had escalated to the point where the two were barely speaking. The partners at the firm hired a coach for Diane to help her learn how to resolve conflicts better and to encourage her to attend more networking functions. Networking events helped the company with new business and she needed to step up to the plate. The management team had clear objectives for Diane: improve the relationship with her subordinate and become active in networking. Ideally, she would also contribute more in management meetings. Diane worked hard with her career coach to address these issues. The highest priority was fixing the relationship with her direct report. Diane was given tools to break their negative cycle, for example, saying something positive to her direct report and catching the person doing something right. Diane was encouraged to be upfront with the direct report by letting the person know that Diane was getting coached to improve her management skills. Things were headed in the right direction and her direct report even acknowledged to the partners of the firm that Diane was trying. The coach continued to monitor their situation and moved to the next issue — networking events — an area in which Diane had a lot of anxiety. The coach helped her by role playing and shortly thereafter, Diane decided to get her feet wet by attending an upcoming networking event at her bank. Afterwards, she felt she had done very well. The role playing had given her the confidence to break into groups and introduce herself and her company’s services. Because she was feeling more confident, she made it a point to contribute more in the quarterly management meeting, without even being coached to do this. After the six week coaching engagement ended, the management team met with her coach. The coach was expecting to hear positive feedback on Diane’s progress, however, no one was willing to acknowledge her efforts. The coach asked if they had noticed she had been speaking up in management meetings. They acknowledged that she had, but were skeptical that it would continue. The coach asked what they thought about her attending that networking function. Their response was that the event was small and not at the scale they thought appropriate. Well, surely they would give her credit for repairing the relationship with her subordinate. Unfortunately not, because they felt she shouldn’t have let the relationship deteriorate to the extent it had. To sum it up — she was given zero credit for all the efforts she made. Even though she had met the objectives that were established at the beginning of the coaching assignment, as far as the partners were concerned it was too little, too late. Diane was fired. Diane was flabbergasted by their decision given the progress she had made. It was a case of senior management just going through the exercise of getting her coached, even though they had already written her off. This is, unfortunately, very common in the business world. People get frustrated with a co-worker, boss or subordinate and are no longer open to any changes they are making. It’s important to give people the benefit of the doubt even if they’ve been resistant to change. Any change in the right direction, even a minor one, should be acknowledged. Regardless of who you may have an issue with, be sure to address it before the situation becomes irreparable. Withhold final judgment until the person has an appropriate period of time to try and make changes. Always come from a mindset that you want the situation to ultimately be a positive one. Remember that both of you need to change. If you change your attitude in order to give the other person a fresh start, then you can both move forward with a clean slate. Fred & Gladys Whelan Stone Executive Search and Coaching Authors of GOAL! Your 30 Day Career Plan for Business & Career Success

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Occupy Wall Street Takes On Black Friday Amid Skepticism

November 24, 2011

With Black Friday heralding the start of the shopping season, a bevy of groups identified with the Occupy Wall Street movement are asking consumers to reconsider their spending habits. But unlike other high-profile Occupy efforts of late — such as last week’s march across the Brooklyn Bridge , in which thousands of activists participated, it’s unclear whether the pushback against Black Friday shopping will serve as a show of strength for the movement. “I don’t think that they’re going to gain any traction out of this one,” said Stephen Hoch, a marketing professor at the Wharton School of Business at the University of Pennsylvania. “If I was them, I wouldn’t be investing a whole lot of energy in using this as a poster child for what’s wrong with our country.” Black Friday, otherwise known as the day after Thanksgiving, serves as the unofficial start of the November-December holiday shopping corridor, one of the busiest times of year for retailers. About 152 million people are expected to shop this Friday , in what has become an annual tradition of shoppers mobbing stores in the hopes of getting limited-time deals. This November, a number of Occupy Wall Street groups have publicized plans to oppose Black Friday in one form or another. These efforts are in line with Occupy Wall Street’s overall mission of reclaiming power from major corporations and financial institutions, and come a little more than a week after the cradle of the movement, Manhattan’s Zuccotti Park, was forcibly evacuated on the orders of Mayor Michael Bloomberg . One group, known as Occupy Black Friday , is urging shoppers to bypass chain stores in favor of small and local businesses, while another group, named Don’t Occupy Walmart , is organizing a boycott of Walmart stores in protest of what it calls unjust and anti-union practices on the part of the retail giant. Still other Occupy chapters around the country are planning flash mobs, singing protests and other public demonstrations with the aim of encouraging shoppers to support local merchants. Sean McKeown, a chemist and New York resident who has spearheaded the Don’t Occupy Walmart group, told The Huffington Post that his group’s actions are intended in part to make a statement about the Occupy movement’s enduring presence in New York, now that Zuccotti Park has been cleared. “We’re trying to show that even if we don’t have a park that we’re staying in, we certainly have the ability to do a lot of things,” said McKeown, 31. “This is a way to show the power of the movement.” Still, skeptics question whether the disparate Occupy efforts — which have been unevenly publicized, and do not appear to be centrally coordinated — stand much chance of interrupting the post-Thanksgiving crush at stores and shopping malls. “It will be very difficult for any kind of organization to thwart the efforts of both retailers and consumers as they quest for the perfect deal,” said Marshal Cohen, chief retail analyst at the NPD Group, a market research company. “No one is going to get in these people’s way.” Since the Internet has made it possible to shop from anywhere and at any time of day, Cohen noted — and since seasonal deals are often available not just on Black Friday, but for days and weeks afterward — Occupy protesters could have a hard time making their message as widely heard as they’d like. And since many small and local businesses get their goods from the same corporate suppliers that stock the shelves at Walmart and Target, it’s not clear whether encouraging people to shop locally will strike much of a blow to big business. “You’re basically taking from Peter to give to Paul in many cases,” Cohen said. “What’s the difference if I buy Tropicana orange juice from Walmart or if I buy it from the local grocery store?” Occupy Black Friday, which is among the groups calling for people to spend locally rather than at chain stores, could not be reached for comment. The anti-consumption spirit of the various scheduled Occupy events has a precedent in Buy Nothing Day , the yearly undertaking — always scheduled to fall on Black Friday — in which participants refrain from spending any money. Buy Nothing Day was created some 20 years ago by advocates associated with the Vancouver magazine Adbusters , which also issued the original call for the movement that would become Occupy Wall Street. While it remains a red-letter date on the calendars of many social activists, its effects on retail sales have traditionally been less than earthshattering. “They’re fragmentary, they’re ephemeral,” said Richard Hastings, a macro and consumer strategist at Global Hunter Securities, of Buy Nothing Day and similar campaigns that have attempted to build commercial headwinds on Black Friday. “To really be quite poetic about it, they’re evanescent.” Hastings said that “the Occupy movement in the U.S. can only have some impact if it starts to do boycotts” — but added that he does not expect the anti-Black Friday forces to change many minds this year. “This is not a society where sitting around and obsessing about ideology goes on and on forever,” Hastings said. “We’ve been a consumer society for an extremely long time.” What people bought during Black Friday last year:

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European Bank Using Emergency Facilities To Tackle ‘Very Dramatic’ Problem

November 24, 2011

BRUSSELS (Ben Deighton) – Franco-Belgian bank Dexia (DEXI.BR) is accessing emergency liquidity facilities in Belgium, France, Spain and Italy, a banking source said on Thursday, as analysts described its liquidity situation as “very dramatic.” The source said the bank was making use of the Emergency Liquidity Assistance (ELA) facility of the Belgian central bank as well as “national central banks in France, in Spain, in Italy,” where Dexia has units. One analyst said the fact Dexia was tapping national central banks’ liquidity via the European Central Bank network showed how bad the situation had become for the lender. “The emergency window of the ECB … is very expensive, so it shows that the liquidity situation is very dramatic,” the analyst said, speaking on condition of anonymity. “At some point you run out of unencumbered assets to post at the ECB, and then the only way to fund yourself is via the ELA, which is clearly not a good sign,” the analyst said. Dexia and the central banks of France and Belgium both declined to comment. The source added that Dexia would try to raise money on markets again after the finalization of a 90 billion euro ($120 billion) guarantee scheme agreed in October by France, Belgium and Luxembourg. Belgian Finance Minister Didier Reynders said Wednesday that he hoped to reach an agreement with the European Commission about the restructuring plan for Dexia (DEXI.BR) in the coming days. ($1 = 0.7490 euros) (Additional reporting by Dan Flynn in Paris; Editing by Luke Baker and Will Waterman) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Dag Detter: Women — a Competitive Advantage

October 31, 2011

In war as in sports, ‘organization’ is often the decisive factor that wins the day. Especially when competitors have similar resources and equally well-trained team members, then how we organize ourselves and deploy our resources determines success. The current economic crisis is not just financial; it is just as much a cultural crisis. The social contract has been broken in many countries. A small homogenous elite has lost touch with its role to lead and generate sustainable growth for all. It is time to recharge our culture and with a more dynamic leadership model. One creative way would be to promote women in the business world in a more comprehensive and professional way. For example, women played a decisive role in creating a new corporate culture for the largest corporate owner in Sweden, a portfolio controlling more than 25 per cent of the corporate sector — the Swedish state portfolio. On the back of consecutive deregulations and a rising globalization, the financial crisis in the 1990′s exposed the flaws of state capitalism in Sweden. The portfolio had been a protected part of society and managed by a small elite of people that had lost sight of a common purpose. The financial statements laid bare the fact the model was in desperate need of radical change. Apart from increased transparency and improved capital structure, the tools used to achieve this transformation were, evaluating and recruiting the relevant professionals able to execute the fundamental restructuring of each company. More than 85 per cent of the Non-Executive Board members and 75 per cent of the CEOs in the portfolio were replaced over a three-year period, in total several hundred people. One important factor that made this this vast cultural transformation of the leadership, from self-serving elite to dynamic group focused on serving the company, possible was that almost 30 per cent of these new leaders were women. The objective was clearly to regain the trust in the management of this vast portfolio by improving the performance of the portfolio empowering the only institution that, by law, is responsible and accountable for the development of the corporation — the Board. A board is not a democratic institution that requires equal representation. Every person that is nominated to a board must not only be able to add value to the leadership of the company, but also enhance the dynamics of the board as a team. The Board is a team of people working together, not unlike a football team or a symphony orchestra. Although the captain of the team, the conductor of the orchestra and the chairman of the corporation are incredibly important, it is their ability to inspire a concerted effort that creates the best results. In the corporate world the aim is to create value. Creating value is based on three fundamental strategies; operational, capital structure and business development. With each member being able to contribute along at least one of these strategies and the capacity to share and debate issues from a wealth of knowledge and experience, the board is a competitive advantage when developing an ailing corporation. Resilient group dynamics relies on both intellectual and psychological integrity prevailing in order for a board to be effective and not reduced to a rubber stamp. Trust in the nomination process being based on merit is essential, in order to ensure potential board members feel comfortable relying on each other as they are collectively accountable for the company. Given the relevant professional background, the personal background, outlook and social network are decisive for the relations that determine performance as a group. Women are not a minority and do not deserve to be included for some misplaced democratic reasons, or based on a quota. Naturally, in some countries it may take time to grow a substantial base of female professionals that can gain the relevant experience. Acquiring such experience may warrant not only a wide range of social changes in order to combine work with family in a reasonable way, but most of all a change in attitude. Sweden was fortunate to have an education system, culture and business sector that has fostered generations of women in business. The result in Sweden was overwhelming. The portfolio outperformed the stock market for more than one and a half year. Not a small part was attributable to women, as their professional contribution did not only matter as individuals, but more importantly changed the culture of each team as a whole and thereby the entire portfolio. The aim in the corporate world is clear — to improve the long-term value of the corporation. Including more women in the leadership of business is a creative and strategic step towards sustainable growth.

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Ron Ashkenas: Reorganizing? Think Again

October 27, 2011

If you ask managers to name their favorite sport, you’ll hear a wide variety of answers: Football, baseball, tennis… But what they won’t tell you is the one sport that all managers play the most: The Game of Reorganization. Managers love to reorganize at almost every level. Whether triggered by a leadership transition, a fundamental change in the business, an acquisition, or poor performance; lines, boxes, and people tend to move around. In fact it’s highly unusual to find an organization that has not shifted its structure in some way within the previous six months. But while managers love to engineer reorganizations, most managers (and their people) hate to be reorganized . Much like musical chairs , structural changes provoke anxiety, since people know that the “new and improved” design will often have fewer chairs (i.e., jobs ). More problematic is the fact that a functional organization is only partly determined by structure. Equally important is the web of relationships that people develop over time to get things done. Reorganizations disrupt those relationships, hindering productivity until connections can be rebuilt within the new structure. As one senior executive said to me, “Every time we reorganized, we lost at least a year of innovation.” Despite the downsides, managers will continue to reorganize, since it is one of the most available levers to solve problems . It also creates the appearance of decisive action and buys time until other actions can be taken. And of course they like playing the game. So before you pull the reorganization lever, it will be helpful to ask yourself two questions: What’s the problem you’re trying to solve? Before redrawing your organization chart, make sure you know why you’re doing it. Are you trying to create a sharper focus on customers? Do you want to reduce costs? Are you struggling with performance issues? Do you have too many direct reports to give them sufficient attention? Has the structure become overly complex such that accountability is diffused? Do your people need a wake-up call? These (and many more) might be good reasons to reorganize — but all too often managers leap into a reorganization without being clear about how it will make things better. And without clarifying that basic question, you can’t address the next one. Is reorganization the only possible solution? Reorganization might solve many problems — but it’s hardly ever the only solution. But because it takes little effort to redraw boxes and lines, it’s often the knee-jerk response. For example, the head of a large commercial organization wanted his people to become more focused on targeted customer segments as a way of improving revenue. To solve that problem, he divided up the resources from the various functions (sales, marketing, finance, product management, HR) and created a series of business units. A year later a different manager came in and decided that costs were too high — so she blew up the business units and re-consolidated the functions. In the end, neither manager succeeded because the disruptions and loss of key talent overshadowed any positive results. What’s striking with this case is that reorganization may not have been needed at all. The first manager could have changed incentives for the sales teams, created cross-functional segment teams, or refocused marketing efforts. The second manager could have reduced costs through a more rigorous performance management process, more stringent budget goals, or by asking business units to share certain services with each other. In other words, in many situations reorganization may not necessarily be needed — and may cost more than it’s worth. Given the popularity of the reorganization game, it’s always going to be a favorite part of the manager’s toolkit. And in many cases it may be an appropriate and effective action to take. But to avoid the downside of reorganizations, it’s important to determine what problem is being solved and whether there are less disruptive ways to do so. In your experience with reorganizations, when have they created value — and when have they destroyed it? Cross-posted from Harvard Business Online .

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Susan Seitel: Creating Organizational Wellness

October 25, 2011

We’ve changed our focus from work-life to organizational wellness. Why? Because we think those two words are now key to workplace success. What do they really mean? Here’s how researcher and consultant Dr. Joel Bennett explains the term: “Traditionally, a lot of energy goes into treating individual employees, while neglecting the health of the organization as a whole. We do a good job of treating an individual, and then we send him or her right back to a ‘sick workplace’… a place with low morale, negative supervision, or poor safety, for example. Instead of treating just the trees … organizational wellness looks at treating the entire forest.” We agree. While work-life looks at helping employees be successful in all areas of their lives, and traditional health and wellness looks at caring for the health of individuals, organizational wellness looks at creating a different kind of health — a healthy and successful workplace — one where employees are engaged, satisfied, productive and effective, and the organization accomplishes its goals. If you happen to be a manager who wants that for your organization, we’re suggesting you concentrate your efforts on six components. Here they are, along with a few suggestions for using each to make positive changes. 1. Stress reduction and resilience Hold a series of focus groups or small group lunch ‘n’ learns with your staff on the subject of stress and resilience, asking these questions for starters: How high is your stress level? How is your work contributing to your stress level? What can we do as an organization or as a business unit to help you alleviate stress? Look at relationships, work demands, career and development, control, management practices and individual characteristics. Take a closer look at your own qualities as a manager. Rate yourself on a scale of 10, with 10 being the highest, in each of the following areas: trust; expressions of appreciation; rewards; interest in employees as human beings; career opportunities; and development and training. Examine workloads. Do you feel pressured to demand more work from your staff than you know is reasonable? Meet with your staff in teams to discuss how the work might be redesigned and duplicative tasks eliminated in order to lighten the workload. Offer our stress-reduction training, “From Stress to Resilience.” 2. Work-life integration Ask your staff how they would rate your organization in the area of work-life balance. Ask for five suggestions for improvement and implement as many of them as you have the power to do. Check to make sure your organization offers resources for the care of ill dependents. Ask your staff if they’re aware of other programs offered by other employers that your organization might offer. When major tasks are assigned, check to make sure the scheduling works for the employee. Ask if any personal issues are likely to present a conflict, and if so, be willing to work creatively to resolve the conflict. Let your staff know that you’re aware that they are human beings, with full lives outside of work and important personal responsibilities to handle. Begin to notice how you approach situations that involve conflicts between work and personal life. Resolve to give employees’ personal responsibilities more respect. 3. Supportive management Begin to ask employees for input and feedback before making decisions that would affect their work. Bring up the topic of respect in a staff meeting and tell your employees of your intention that people, including you, will treat each other with respect. Discuss what that would look like. Ask your staff to assess whether you have shown respect for their ability to handle personal responsibilities, and put their feedback to work in your management style. Give positive feedback often. Acknowledge at least two employees daily for jobs well-done. Express confidence in your staff’s abilities, both generally and specifically. Encourage independence. Help employees learn from their mistakes, encourage them to make decisions on their own. Clarify goals, make sure they have the necessary training and expertise, be available to answer questions, and let them do the work themselves from start to finish. 4. Flexibility and telework Make sure all your employees are aware of and understand all the flexible work arrangements that are available in your organization. If flexible work arrangements are new to your staff, create at least two pilot projects to test how goals might be accomplished working flexibly. Begin to manage as though flexible work arrangements are business strategies that can help you meet your organization’s goals. Let your staff know that you are now open to proposals for flexible or remote work arrangements. Set clear, measurable goals that will make it possible for staff members to work flexible or remote work arrangements. Take your eye off the clock and put it on results, and request that your employees do the same. 5. Organizational values alignment Determine whether areas like work-life, wellness and flexible work arrangements are represented in your organization’s core values. If not, create your own set of core values in which they are represented and let your staff know these are your core values. Ask your staff to list what’s most important to them and then help you link their lists to the organization’s values. List the behaviors you feel are most critical to supporting your organization’s core values. Present the list to your staff, asking them to assess how well they exemplify these behaviors. Ask them for a commitment to improve in areas they agree need strengthening. Examine your performance appraisal system and make sure it’s aligned with your organization’s core values. 6. Results-focused performance management Make a commitment to managing by results. Create a pilot project if the concept is new to you. Work with each employee to make sure he/she is clear about the results they’re intended to produce, and how they (and you) will know success when you see it. Be sure they have the tools and training needed to do their job well and the autonomy to make their own decisions. Meet with each employee involved, and together, determine the desired results and the most appropriate way to measure them, considering coworker surveys, customer surveys, other external sources or internal systems that track transactions. Determine with each employee the kind of support they may need to be successful and how often meetings and communication should take place. Keep an ongoing work plan that will allow employees to see where they stand relative to expectations. Make sure there’s a payoff for employees who meet their goals and fulfill expectations. That’s it. From time to time we’ll use this blog to make other suggestions. And if you have any that have worked for you that you’d be willing to share, please let me know — Susan@wfcresources.com.

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Government Shutdown Looms As House Rejects Short-Term Budget Bill

September 21, 2011

WASHINGTON — The House on Wednesday failed to pass a continuing resolution to keep the federal government funded past next week, a major defeat for Speaker John Boehner (R-Ohio), who was banking on having the votes to pass a package that tied emergency disaster aid to spending cuts. The bill went down in a vote of 195 to 230. Forty-eight Republicans sided with nearly all Democrats in opposing the resolution aimed at keeping the government funded past Sept. 30, when current funding runs out, and through Nov. 18. Two factions of Republicans had major problems with the bill as they headed into the vote: Conservative lawmakers wanted more spending cuts, and GOP lawmakers affected by recent disasters were uneasy with the bill’s provision that tied $1.5 billion in emergency disaster aid to cuts to a fuel-efficiency loan program.

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LIVE UPDATS: Obama Outlines Jobs Plan

September 8, 2011

President Barack Obama is delivering a speech to a joint session of Congress on Thursday night to outline a new plan from his administration to create jobs. With the nation’s unemployment rate at 9.1 percent, the president will make his case on how his proposal aims to get Americans back to work. Details on the reported $300 billion package began surfacing earlier this week. Two new polls released on Tuesday show the president’s approval rating , as well as that of congressional Republicans, at an all-time low. The surveys also delivered bad news to Obama on how the public specifically views his handling of the economy and jobs. Below, a live blog of the latest news on Obama’s jobs plan and speech. RELATED VIDEO:

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Caroline Dowd-Higgins: Career Management Is Leadership Behavior

September 6, 2011

You must take responsibility for your own career future since it’s not your boss’s job to look out for you. Many people are blindsided by lay-offs and downsizings that are economy driven and don’t have anything to do with work performance. We are all expendable so it’s imperative to have a short-term and long-term plan and be in charge of your own career destiny so it never happens by default. Here are some great tips to help you become more pro-active as you develop and implement your personal career action plan. Network Before You Need It — you should always be growing your professional community even when you are not job searching. Think of it as building relationships, an opportunity to stay on top of current trends, and a chance to share your strengths story and abilities with others. The hidden job market is alive and well since approximately 80 percent of jobs are still never posted. People hire who they know and trust so you must not be a well-kept secret. Get out there and meet people face-to-face so you are ready when opportunity knocks, or when you need to rally your troops for advice and counsel. Remember to be a good networker and pay-it-forward to others in need. Have an Exit Strategy — with mergers & acquisitions in the corporate and non-profit arena part of the new normal, you must be ready to leave on your own terms before the pink slips are distributed along with the new company letterhead. Consider where you want to go when things are going well on the job so you have the luxury of thinking clearly, without stress and can plan your next steps well in advance. Always Tell Your Strengths Story — men have been talking about what they do well with confidence for decades and women lag far behind in promoting themselves. You must be your own best self advocate and learn to talk about what you do well so you can articulate your unique special sauce and professional worth. Consider the humble confidence mindset so you can brag comfortably in your own skin about the accolades you have earned. Remember nobody gave you these success stories — you worked your tail off to earn them. Keep Your Resume/Portfolio Current — things change fast so you need to have your resume/CV or professional portfolio polished and ready when opportunity knocks or when you find yourself in job search mode. Share your documents with trusted advisors to get their feedback on what your professional persona is on paper and how effective your materials are at showcasing you at your best. Seek out the services of a professional resume writer if you need expert assistance. Don’t Rely on Your Boss to Grow Your Career — no matter how great you think your boss may be, and many are not, he/she is not in charge of your next career move. You alone have accountability for where you want to go. If your current boss is not star material, giving you opportunities to grow within an organization that you love, it may be time to look for one that is. Re-evaluate Your Goals — life changes (a lot!) so you must evaluate your goals and your plan of action on a regular basis and adjust accordingly. If you find yourself pursuing an advanced degree, for example, you need to build that time into your long-term plan. Be flexible knowing that the only thing constant is change but keep your eye on the prize. Check-in with Your Accountability Master — someone on your personal Board of Directors needs to be charged with keeping you on task with your professional goals. It’s easy to get side-tracked, overwhelmed, and just plain stressed-out so your accountability master will give you a swift kick and the vote of confidence you need to do what you really need to do in order to move forward. Seek Out Professional Development Opportunities — in order to stand out from the pack you must be a lifelong learner. Don’t wait for your organization to invest in your future. Seek out conferences, credentials, workshops, and other opportunities to sharpen your skills and enhance your value-add in the workplace. This is an investment in your future and it’s tax-deductible. Whether you are an official leader in your workplace or not, you must embrace the mindset of a leader when it comes to your personal career management. Stay current in your field, or investigate new ways to play to your strengths. Have the courage and confidence to talk about what you do well and map out a short-term and long-term plan with action steps so you can achieve the goals you so well deserve. You need not do this all alone. Tap the expertise of your personal Board of Directors, especially your accountability master to keep you on track and be in control of your career destiny. You deserve to be in charge of your own career — so assume that leadership role now! Caroline Dowd-Higgins authored the book “This Is Not the Career I Ordered” and maintains the career reinvention blog of the same name ( www.carolinedowdhiggins.com ) She is also the Director of Career & Professional Development and an Adjunct Faculty member at Indiana University Maurer School of Law.

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Fierce Fight Over Hawaiian Hotel Escalates

September 1, 2011

From WSJ.com… A court ordered Marriott back onto the premises of a hotel in Hawaii seized by its owners, but the owners moved to reassert their control, escalating a fierce battle over the trendy, unsuccessful property. Excerpt from: Fierce Fight Over Hawaiian Hotel Escalates Find our Weekly Commercial Real Estate, Private Equity and Fund Newsletters at www.WeeklyBrief.net

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Beantown Scores Trifecta of Deals

August 30, 2011

From WSJ.com… A land swap at Harvard University, Boston’s Mandarin Oriental hotel and Renaissance Boston Waterfront Hotel are in the news. Follow this link: Beantown Scores Trifecta of Deals Find our Weekly Commercial Real Estate, Private Equity and Fund Newsletters at www.WeeklyBrief.net

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Beatrix Dart: Is Success a Choice for Women in Business?

August 22, 2011

I read an interesting blog the other day entitled ” Why Women Should Earn Less ” by Margaret Bogenrief. The author shared her frustrations with all the complaints she heard from women who claim “they do not get their fair shake” or “they are less powerful.” Her conclusion: stop underperforming, make better choices, and in particular stop blaming it all on the men. With 30 years of women’s movements, initiatives and corporate diversity programs under our collective belt, are we simply spinning our wheels? Is it all just a “cottage industry [that] has emerged making girls feel better about underperforming” as Bogenrief claims? I think it is about time to stop talking about “girls” and “women” as if they are all the same. A bit more segmentation of these three billion female inhabitants on earth might allow for better discussion. Clearly, the arguments are focused on the educated woman who was raised in a well-developed country and who has the skill set and the opportunity to work in high-powered positions — or so called “Extreme Jobs,” a phrase coined by Sylvia Ann Hewlett. We are dismissing in this debate the majority of women who stay in the workforce because they cannot afford not to work. We are also dismissing the group of women who will never get the opportunity to live out their ambitions, and there are plenty of reasons why that might happen. So if we focus on the lucky ones, the well-educated woman working in a society where equal opportunities and rights are provided regardless of gender, where she can gain a position with plenty of career potential, what’s going wrong? I can point to plenty of studies showing that women are just as motivated by money and recognition as men. If these women are not moving up into top positions, is it mainly because of their own choices? That would be a convenient answer. In my mind, there are multiple forces at play. Overt discrimination has all but vanished and many companies have been working hard to create patches to plug the “leaky” talent pipeline, which seems to lose women at every transition level up. A recent J. Barsh and L. Yee report produced for the WSJ Executive Task Force for Women in the Economy 2011 surveyed 2,500 men and women and came to the conclusion that the answer is a bit more complex than simply assuming women choose to opt out. They identified structural barriers such as lack of role models, exclusion from informal networks where important connections are made (such as on the golf course), and missing sponsors within the companies who would help to open up opportunities for the women. That is, unfortunately, hardly news. However, studies also indicate that women are looking (and staying) in jobs which allow them to achieve greater satisfaction across all parts of their lives, where they feel deeply connected and able to make a difference, and where they can work collaboratively with others. One of the worst obstacles for women in business seems to be the mindset. We moved on from overt discrimination to carrying implicit biases and stereotypes. We hear assumptions about how women (and men) should behave (“women take care, men take charge”). We hear about their limitations, and we see double standards for male and female performance evaluations. Women become eroded by society telling them they “can’t have it all” — and they believe it. This is where the women’s initiatives and women-specific programs can make a big difference. They help women establish a new perspective on their careers, opportunities and choices. As long as men are still promoted on the basis of their potential, but women only receive promotions on the basis of their actual performance, we need women-specific women programs and initiatives to be in place.

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Moody’s managers pressured analysts: ex-staffer

August 19, 2011

By Sarah N. Lynch WASHINGTON (Reuters) – An ex-Moody’s Corp derivatives analyst said the credit-rating agency intimidated and pressured analysts to issue glowing ratings of toxic complex, structured mortgage securities. In a 78-page letter to the Securities and Exchange Commission, William Harrington outlined how the committees that make the ratings decisions are not independent and how managers often intimidated analysts. “The management of Moody’s, the management of Moody’s Corporation and the board of Moody’s Corporation are squarely responsible for the poor quality of previous Moody’s opinions that ushered in the financial crisis,” he wrote. “The track record of management influence in committees speaks for itself — it produced hollowed-out (collateralized debt obligation) opinions that were at great odds with the private opinions of committees and which were not durable for even a short period after publication,” he added. Harrington’s August 8 letter, which was sent in response to a 517-page proposal by the SEC on credit-rating regulations, raises similar issues that are already at the heart of a Justice Department probe into McGraw-Hill’s Standard & Poor’s. “We cannot emphasize strongly enough the importance Moody’s places on the quality of our ratings and the integrity of our ratings process,” said Moody’s Corp spokesman Michael Adler. “For that very reason, we have robust protections in place to separate the commercial and analytical aspects of our business, and our ratings are assigned by a committee — not by any individual analyst.” The Justice Department has been looking into what S&P analysts wanted to do with ratings during the financial crisis, and what they were told to do, according to one source familiar with the matter. A second source has said the department also has been investigating Moody’s in connection with structured product ratings during the crisis, although the exact focus on that probe is unclear. Earlier this year, a U.S. Senate panel led by Michigan Democrat Carl Levin found that Moody’s and S&P helped trigger the financial crisis after the two rating agencies gave overly positive ratings to toxic mortgage-related products and then later downgraded those ratings en masse. Last year’s Dodd-Frank Wall Street overhaul law tightens regulations for raters, including improving the transparency of the methodology used and curbing potential conflicts of interest. The SEC in May issued a proposal seeking comments on many of the Dodd-Frank provisions on rating agencies. Harrington, who said he worked as an analyst in the derivatives group from 1999 until July 2010, said he thinks that if the SEC’s proposed rules had been in place in 2002, they would still not have gotten to the heart of the problems at Moody’s. “Many of the proposed rules still give more license to the management of Moody’s to step up its long-standing intimidation and harassment of analysts, to the detriment of opinion formation,” he said. (Additional reporting by Jeremy Pelofsky)

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Donna Flagg: How to Manage Difficult People

July 26, 2011

If you’re a manager, then you know what it is to have a problem employee and are probably also familiar with how difficult he or she is to handle. It can be perplexing because no matter what you do, he or she doesn’t seem to improve. In fact, more often than not, the situation becomes worse. I can’t tell you how many managers have told me that they wished they hadn’t wasted their valuable time, energy and resources trying to make bad employees into good ones or turn destructive behavior into its constructive counterpart. They talk about the aggravation and frustration that takes its toll only to end up in the same place every time: the employee has to go. Overwhelmingly they say they walked away from the situation having learned the hard way that people don’t change because someone else wants them to, even if it is their boss and even if they cognitively know that the end of their employment could be near. Rather, it is usually a case that proves true the old adage that people only change if — and when — they want to. Most commonly, managers become overly focused on the employee with the performance and/or attitude problem and then expend an inordinate amount of effort trying to “fix” them. We think that by taking disciplinary action, creating performance development plans and engaging in corrective counseling, we will be able to instill incentives in employees that in turn move them forward. Not so. Instead, managers end up chasing their tails, spinning their wheels and banging their heads against the wall, all for naught, most of the time. Despite what we think, we do not have the power we need to intrinsically influence folks at the level necessary, no matter how intricate and well thought out our systems may be. That being said, there are ways to handle problem employees that reduce the stress, minimize their taxing effect, expedite the process and contain the collateral damage they tend to create. All we need to do is flip it. Flip the focus. Flip the strategy. Stop trying to change people and start trying to create an opportunity for them to change themselves, should they decide it is in their best interest to do so. This way business continues as usual while the problem employee makes a choice as to whether he or she wants to jump on board — or off. It’s clean and easy without all the hassle. You don’t waste your time, can invest it in matters more apt to produce a positive return and have a new system in place that fosters a healthy, low-maintenance, low-drama environment, which is better for everyone involved including the business itself. So first, paint a picture that illustrates what you expect and communicate it to the employee. Second, be crystal clear about what is acceptable and what is not and stress in specific, no uncertain terms which behaviors will not be tolerated. And third, explain what will happen when and if the next infraction or incident occurs. Then do your own thing and give him or her the space to sink or swim. Finally, the only way this works is if you follow through on what you say. If you don’t, the wrong message is a mixed message and the situation becomes worse than before. Find Donna on: Krysalis Amazon Facebook YouTube

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Douglas LaBier: Deal with Abusive Bosses and Unhealthy Management Through ‘Engaged Indifference’

July 11, 2011

In my previous post I described how abusive bosses and psychologically unhealthy management harm both employees and business success, and I explained that such behavior in the workplace is increasingly dysfunctional in today’s highly interconnected, interdependent economic and social environment . This follow-up piece offers some suggestions for dealing with such situations when you find yourself within them. Many people struggle to find ways to better cope when subjected to unhealthy, abusive management. Often that means learning stress management techniques . They can be helpful, especially when you don’t think any alternatives exist. But ultimately, they aren’t enough. However, reframing how you envision your situation to begin with can open the door to proactive, positive actions in the situation you feel trapped in. Cathy’s example contains some ways you can do that. She was at mid-level in her company and had a record of steady promotion. At one point, senior leadership in her area changed abruptly, and she was now reporting to a newly appointed boss. “I’m here to shake things up,” he told everyone when he took over. “Everyone’s job is on the line.” Cathy’s assessment of her new boss was that he didn’t really know her area of expertise, nor was he very interested in learning about it. Nevertheless, he freely criticized her work. Moreover, he kept sitting on a promotion that she had been in line for. It wasn’t just her: Her boss stirred up much resentment among others because of his arrogant, controlling, dismissive style. When Cathy researched something he had requested and presented it to him, he exploded, saying that she had wasted her time doing something that had “no relevance.” When she pointed out that he had requested the analysis to begin with, he denied it. But Cathy didn’t just hunker down, become stressed and depressed, or feel disempowered. First, she used a meditative technique to focus her attention on just observing the negative emotions her boss’ behavior aroused in her. That is, she practiced “watching” her emotions as they passed through her. This helped her refrain from being pulled by angry emotions into greater, more debilitating depths, or into unproductive behavior. Doing that enabled her, in turn, to step “outside” herself (that is, outside the narrow vantage point of her own ego). She looked at herself as if she were a character in a movie. She imagined rewriting the dialogue and actions of the character that was herself, and she envisioned how this “character” might create a different scenario. This is a form of what I called learning to “forget yourself” in a previous post (that is, moving beyond and through your immediate self-interest to see yourself in a larger context). Cathy’s enlarged perspective enabled her to accept that her boss was simply acting in accordance with the person he was, regardless of the reasons or how she judged them. Doing that helped prevent her from being drawn into taking his behavior personally, even though it impacted her personally. She rose “above” her situations with, in effect, “engaged indifference.” That is, she remained “indifferent” to her own emotional reactions, yet she stayed very engaged in looking for solutions from within her broadened perspective. She considered the possible viewpoints and agenda of her boss, from within his possible mindset. That added to her capacity to figure out what might be going on — and what might help. For example, she thought about what might be some drivers of her boss’ behavior. Was he simply a jerk? An unskilled manager? Did he have an agenda that she didn’t understand? Was he dealing with some insecurities of his own? Personal issues at home? She did a little sleuthing and learned that her new boss had been brought in under a lot of pressure to create some major changes in that part of the organization. Moreover, she learned that he had a troubled teenager at home. Knowing these things didn’t change her opinion about his behavior, but it helped her realize that it would be useful to both of them if he didn’t think of her as a thorn in his side. And it was up to her to try to make that happen. In essence, she saw the whole picture as a set of circumstances that created a “perfect storm” for her, and that called for an effective solution, from her. So, when her boss criticized a report she had prepared — on the grounds that it didn’t include something that he had previously told her to ignore, but which he now claimed he needed and had told her so — she anticipated that. Rather than reacting with anger, defensiveness or frustration, she simply said she would provide it immediately and asked how she could best help him with anything else that he needed at this point. Now this may sound counterintuitive, or that it’s “giving in” to a tyrant. But from an enlarged perspective of indifference and engagement, it’s not. That’s because you’re taking into account the emotional drivers and needs of the difficult person you’re dealing with. And you can’t do that if you’re driven solely by your own. By stepping “outside” herself, Cathy saw some ways to provide her boss the support he need to feel, which, in turn, could help calm his anxieties. She asked him for ways that she could aid his objectives. At the same time, she decided to cede control of some areas that didn’t matter to her, but which her boss seemed to enjoy micromanaging. Cathy felt secure in the knowledge that her expertise wasn’t diminished by her boss’ agenda or his actions. But there was one more important step that she took: looking down the road, Cathy concluded that her future under him was probably a dead end for the foreseeable future. So she immediately updated her resume and began looking for a new position. She kept her eyes on her own career development objectives, while at the same time navigating through her situation with as little friction as possible. Learn To ‘Enlarge The Problem’ President Eisenhower once said , when speaking about his experience as Allied commander during World War II, that if you have difficulty understanding a problem or figuring out how to solve it, “enlarge the problem.” That’s what Cathy did. Her example provides some general guidelines that can help, at least in some situations. They include: Create an emotional buffer zone. Observe your internal emotional responses to your situation, but recognize that you’re not obligated to act on them. Visualize a “space” between your emotions and how you choose to deal with them in your behavior. If you don’t, you’re likely to say or do something unhelpful or damaging to yourself. That is, stay fully aware of your buttons that your boss is pushing, but separate that from simply reacting to what he’s triggered, or from taking his behavior personally. Don’t get drawn into reacting to your boss’ emotional issues. Recognize that you always have a choice about what you do with your emotions in your conduct. Expand your perspective. By not reacting externally to your internal reactions, you are, in effect, learning to be “indifferent” to them. This allows you to enlarge your perspective about the whole situation: what’s feeding into it, and what’s driving your boss’ conduct. When you expand your vision beyond your personal, narrow vantage point, you can see the problem in a much larger context. That includes the multiple factors that feed into it, such as the role of other players or other organizational issues and politics, regardless of what your opinion is about them. This includes getting inside your boss’ mental perspective to understand what he or she may be sensitive to or reacting to. For example, some of your boss’ controlling or abusive behavior may reflect fear about her or his own security in the position. Create productive actions with “engaged indifference.” That means staying proactively engaged with solving the problem, yet “indifferent” to your own emotional reactions. Then, you avoid getting sucked into unproductive behavior fueled by anger, resentment or self-pity, or staying fixed within too narrow an understanding of the problem, which leads to a dead end. Ask yourself what you can do proactively, even if it means “feeding the dog what it wants to eat,” regardless of your opinion of your boss’ choice of “food.” Visualize alternative takes of the “movie” about your situation, as Cathy did. Use them to identify some new actions that reflect “turns of the plot.” You might decide to go along with some parts of your situation, because your enlarged perspective enables you to see down the road, as you might from the rooftop of a building. You may decide that that’s the best strategy for achieving your longer-range objectives. That might sound like “giving in,” but it’s not when you know what you’re doing and why. For example, you might look for ways to help your boss feel more secure or supported, despite what you think of him or her, because that diminishes your boss’ anxiety and will therefore make your life a bit easier, as long as you remain there. Of course, it’s important to self-examine at the outset, when you find yourself in a bad situation. Look honestly, with outside help, if necessary, at what you might be contributing to the problem. Ask yourself, “How much is it me or the situation?” Without doing that, you might take actions that you later regret or that prove to be unhelpful. Finally, it’s crucial to leave any situation that becomes outright abusive, or if you’re subjected to humiliation and extreme denigration. And then, do the research when considering a new job: look for signs of a potentially negative situation, tune in to what you hear during interviews, ask people within the organization what it’s like to work for that company or that boss, heed any red flags raised by what you hear, and don’t enable history to repeat itself. Douglas LaBier, Ph.D., a business psychologist and psychotherapist, is Director of the Center for Progressive Development in Washington, D.C. You may contact him at dlabier@CenterProgressive.org .

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Walmart Supreme Court Ruling Being Used By Wall Street

July 8, 2011

WILMINGTON (Tom Hals) – The U.S. Supreme Court’s dismissal of a massive sex-bias case against Wal-Mart Stores Inc may have handed Wall Street a new weapon in its battle against angry investors who lost billions on securitized home loans. At first glance, last month’s ruling in the Wal-Mart case may seem far removed from lawsuits over complex mortgage investments blamed for helping to trigger the global financial crisis in 2008. But attorneys are seizing on the Supreme Court decision as they fight to prevent pension fund investors from banding together as a class to pursue claims they were misled about bonds built from flimsy mortgages. In the Wal-Mart case, the Supreme Court on June 20 found that 1 million current and former female employees from 3,400 of the retailer’s stores had too little in common to form a class. The court’s language about issues of a “common question” could, according to attorneys arguing for the banks, also bar mortgage bond investors from suing en masse. Lawyers defending a unit of Washington Mutual argue that the “commonality” that was missing among the female Wal-Mart workers is also missing among investors in securitized mortgages, even when they invested in the same pool of loans. They made the argument in court papers filed on June 22 arguing against certifying a class of investor plaintiffs suing Washington Mutual. The case is pending in U.S. District Court in Seattle. If successful, the defense tactic could prevent investors in mortgage-backed securities from pooling their resources and bringing a case as a group. That could make it more difficult for them to pursue cases against big issuers of mortgage bonds, such as Bank of America and JPMorgan Chase & Co. The Washington Mutual legal team referred questions to JPMorgan, which bought the bank in 2008. JPMorgan did not immediately return a call for comment on Friday. CLASS SYSTEM The Wal-Mart case was closely watched and the ruling is expected to make it tougher to bring class-action cases, which are often used in drug and product liability lawsuits and have led to mammoth settlements with consumers or shareholders. The Supreme Court decision steers courts away from certifying broad classes of plaintiffs while leaving the door open to breaking out sub-classes later, said James Cox, a professor at Duke University Law School. In the mortgage market, banks securitized home loans by collecting large pools of mortgages and placing them with a trust. The trust then issued bonds cut into “tranches,” each carrying a different credit rating. The higher-rated tranches were paid first from the money flowing from homeowners. Courts already have denied class status to investors who sued on behalf of all others who bought bonds issued by different trusts that were set up by a particular bank or mortgage company, such as Countrywide Financial. The Supreme Court’s Wal-Mart decision may help narrow the class scope further, separating tranches within a particular loan pool trust. In their court papers, Washington Mutual lawyers cite the Wal-Mart decision for their argument that each tranche of the mortgage-backed security needs to be analyzed separately to determine which loans back which tranche, and whether those loans were properly written. “Even if plaintiffs seek to ask the same question across all loan groups and all securities, unless they can be assured of getting the same answer, no class can be certified,” the court filing says. The Wal-Mart ruling is the first case cited in Washington Mutual’s argument. The company’s lawyers also cite the decision to make their point that each tranche must be evaluated separately, not lumped together merely because they have common legal claims, according to the court papers. Thomas Hatch, an attorney who has brought mortgage-backed securities cases but is not involved in the Washington Mutual lawsuit, said courts are right to narrow classes to a single trust, but he disagreed with cutting to the tranche level. “The defendants are wrong in claiming you have to be in the same tranche to be in the same class,” said Hatch, because those various slices of the bond rely on the same offering document. “It isn’t tranche specific, it is trust specific.” The Seattle federal court will take up the Washington Mutual class certification issue on July 27. The case is In re Washington Mutual Mortgage Backed Securities Litigation; U.S. District Court, Western District of Washington, No. 09-00037 (Editing by Martha Graybow, Gary Hill) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Almost Half Of Americans Have Dealt With Bad Bosses

July 7, 2011

Having a dysfunctional boss can ruin any job. And unfortunately for employees across the country, having a bad boss turns out to be a pretty common experience. A recent poll by OfficeTeam , a leading staffing agency with 315 locations across the country, finds that 46 percent of employees reported having worked for an unreasonable boss. Employees often feel trapped by bad managers, too: 59 percent reported having kept the job despite having an unreasonable superior. Still, there’s a lot of American workers who know a bad working situation when they see one. Of those polled, 27 percent said they left their job due to a bad boss immediately after lining up a new job, while 11 percent were bold enough to quit outright without the safety net of another position. . As the executive director of OfficeTeam says: “Friction between supervisors and employees can stem from differing work styles. It’s not possible to control your boss’s actions, but you can change how you respond to them.” If that simply doesn’t work, Steve Tobak of BNET, who has written extensively on problem bosses, offers some other strategies . He writes that employees can put in for transfers, try to regroup with a vacation or fight back by either sabotage or appealing to a higher authority. However, he says taking your boss head-on can be risky and more often than not, it’s best to just get over it . “When you behave like a victim, wallow in self pity, or act like you’re entitled to something better, not only does it do you no good, but you may end up getting yourself fired or doing real harm to your career,” he writes. Below are the poll results provided by OfficeTeam .

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Bessma Momani: Is the IMF a Sexist Organization?

July 7, 2011

We often believe that you can tell a lot about an organization, private or public, by the management style of its leaders. If that were true, then we would be quick to conclude that the IMF must be a sexist organization. Irrespective of the rape charges against him, few would dispute the argument that Dominique Strauss-Kahn, former managing director of the once obscure international financial organization, was a womanizer. No wonder then that the New York Times’ May 19 article depicted a male chauvinist institution rife with harassment and unfavourable work conditions for women. The truth is, however, the IMF is not misogynistic but its technocratic organizational culture is notably conformist and it has a difficult time recruiting female macroeconomists. Based on surveys done by the IMF’s Independent Evaluation Office, the Fund staff have noted that the organization has a technocratic, hierarchical, and conformist organizational culture. Former managing director Michel Camdessus even once quipped that the IMF staff were like soldiers who should not question the institution’s directives when in the field with debtor officials. One does not need to be a management professor to know that this is not the kind of warm and fuzzy work environment of organic companies like Apple and others , which encourage debate and brainstorming sessions. Indeed, Fund staff have often complained that working at the IMF is about conforming to how the IMF wants things done, including how to write reports that use the IMF’s preferred, watered-down terminology. Moreover, it is notably a stressful work environment, involves extensive travelling, requires an enormous amount of paperwork, and is becoming less financially attractive to work in compared to academia, the private financial sector, and in some cases Western governments. One could argue that these criticisms of IMF work life make the institution less hospitable to women who are more likely to carry the added load of children and home life. Putting this all aside, Fund staff will tell you that the most important criteria for a staff member’s success is to be technically strong in macroeconomics. The IMF is an organization that respects macroeconomic skill sets, first and foremost. Now there are plenty of criticisms one could point out for having the IMF overvalue macroeconomic skillsets at the expense of political-economy, diplomatic, or negotiation skillsets, but this does not make the IMF a sexist organization. The reality is that women are grossly underrepresented in economics departments at the post-secondary level as both students and as professors. The field of economics has historically had difficulty in attracting women and the subfield of macroeconomics is perhaps worst off than microeconomics in achieving gender equality. So the problem with low female recruitment at the IMF is far from the fault of the organization and says more about how the economic discipline does not attract women to study it. This has encouraged some to undertake gender analysis of international finance and point out the gaps of traditional macroeconomics in understanding the role of women in domestic and the global economy. These specialists are not, however, in economic departments and are usually found in humanities or other social science departments. The fact remains that the macroeconomic discipline has not attracted enough women to achieve gender equality and so this reverberates in the record of Fund recruitment of its staff. Christine Lagarde, who is not a macroeconomist but a lawyer, had frequently campaigned in the run-up to her election as the current managing director that she would bring more women into the upper echelons of power at the IMF and that her gender would improve the Fund’s poor track record at hiring female economists. This is ambitious at best. Unless Lagarde can encourage more women to study macroeconomics, her attempts to bring women into management will be window dressing. She will soon discover that the IMF is not a sexist institution, but needs to re-evaluate the preferred skill set of its incoming staff and work toward making the organizational culture less technocratic. The benefit of rethinking the IMF’s recruitment policies would not only be better for the organization, but arguably make the Fund better at proposing economic policies that governments can sell to their people.

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UK Vulnerable To Greece Debt Crisis

July 6, 2011

As financial markets brace for the possibility of a Greek debt default, economic officials here are sketching out doomsday scenarios in a grim acknowledgment that even the world’s strongest economies are vulnerable. With Greece shelling out record interest rates, and with some frustrated investors pushing for a default , economists fear that the collateral damage from a credit event could reach these shores. By virtue of our connections to institutions throughout Europe and our reliance on credit, British banks bear heavy indirect exposure to Greece, setting them up for significant losses if the currently perilous Greek debt situation were to evolve into a full-blown crisis, the UK central bank said in a news conference late last month. No one, in other words, is immune. “It’s this issue of interconnectedness in the financial system that policymakers are so worried about,” said Richard Barwell, a London-based economist at Royal Bank of Scotland. “It’s difficult for anyone to be convinced their balance sheet is secure unless they know that the people they’ve lent to, and the people that they’ve lent to, all their sheets are secure, too.” “At the end of the day,” he added, “that’s how you can get those cascades of defaults.” After European finance ministers approved the latest installment of Greece’s bailout package Saturday, concerns remained about the troubled nation’s ability to repay its mounting debt, which is projected to total 160 percent of the country’s economic output this year. For many investors and economists, the question isn’t whether Greece will default, but when. The emergency aid extended to Greece is widely seen as a time-buying measure, and not a long-term solution. Greece likely cannot service its debt on its own, with its 10-year paper yielding nearly 16.5 percent, and its two-year debt throwing off more than 26 percent, according to Bloomberg data. But efforts to hammer out a longer-term fix have been stymied. French President Nicolas Sarkozy outlined a plan last week for banks to stretch their short-term Greek debt into long-term bonds, offering Greece some interest-rate relief. But such a plan would impose losses on creditors and would constitute a default, the ratings agency Standard & Poor’s said Monday. If a default were to spark a broader crisis, weaknesses among Greece’s immediate creditors could quickly spread. “If UK banks are exposed to banks in France which are themselves exposed to a bank in Germany, which is then exposed to Greece, that’s another indirect exposure,” said Mervyn King , governor of the Bank of England, during the news conference. “There’s an infinite regress here.” The direct exposure of UK banks to Greece was relatively small at the end of 2010, at about £12 billion at the time, according to the latest figures from the Bank for International Settlements . But indirect exposure potentially dwarfs that figure. If significant damage were to spread other countries’ private sectors, UK banks could face severe strains, suggests a June report from the Bank of England. The banking sector’s claims on the non-bank private sectors of Spain and Ireland combined constitute about half of those banks’ so-called Tier 1 capital, the money banks set aside to cushion against losses, according to the report. As for UK banks’ claims on France and Germany, those together represent about 130 percent of Tier 1 capital, the report says. “You just don’t know all the interbank connections,” said John Whittaker, an economist at Lancaster University Management School. “It’s like when Lehman went down. Nobody knew who was indebted by how much to who else.” The years after the financial crisis have seen a host of weak European banks become even weaker. Now, the credit ratings on Europe’s 100 largest banks span the widest range in 30 years, according to S&P, the Bank of England said. Calculating the total magnitude of the UK’s exposure to a broader meltdown is impossible, King said. Moreover, any crisis would likely be worsened by a broader loss of confidence, affecting a range of institutions, he added. Creditors would flee and markets would likely freeze, heaping pain on beleaguered governments. “There’s a risk that if something went wrong, you may get a drying of liquidity more generally,” said Simon Hayes, chief economist at Barclays Capital. Or put another way, creditors might decide they “simply don’t understand the complexity of the interconnectiveness of these exposures, and just won’t take the risk of lending,” King said at the June 24 news conference. Such a panic would likely affect the world’s strongest economies. If the crisis spreads here, it would likely also touch the United States, said Barwell, the RBS economist. “The price of a whole range of risk assets would fall,” he said. “There are these huge channels that certainly come into play, which won’t get captured by the simple numbers.”

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Melissa Cordelia: Delegate and Elevate: Tips for Generation Y Managers

July 4, 2011

Many young managers fail to realize when their team is successful, it makes them look good. When you delegate effectively, it gives you the chance to focus on the bigger picture. It gives you more time to set and achieve larger goals for your own professional development. Not to mention, it gives your team a chance to grow and shine. The issue raised among HR professionals is that younger generations: Sabotage the work of others in order to keep the limelight on themselves Keep the “special” projects to gain recognition for themselves Want the title, but they don’t want to work for it (this is true among all generations in my opinion) Lack leadership experience Bully their team mates So I developed a list of tips to help you delegate and elevate: Be confident: It’s important to be secure in who you are and what you bring to the team. Always strive for excellence from within — professional development is always an on-going process. Build a strong and cohesive team: Hire the right talent for the job. Each individual will have their own strengths, and will bring something new to the team. Take it a step further, and hire a consultant to conduct psychometric assessments before you hire someone. Pinpoint their strengths, assess how they respond to a certain environment and assign projects accordingly. Assess ability and/or training needs : Are the individuals on your team capable of executing the task? If not, what type of training would they need? Does the company provide training? If so, encourage your team to utilize training tools offered by the company to strengthen themselves and add value to the team. Recognize a star in the making: Learn how to discern potential within your team; then foster it, and watch it grow. Think of how a parent feels when they watch his/her child do an amazing performance and everyone gives a standing ovation. That’s how you will feel when your subordinates succeed. Motivate and encourage: When you assign a new or difficult task, ensure you provide a sequential process in which the task should be completed. Always be clear on your expectations. Establish a follow-up schedule, provide constructive criticism, and positive reinforcement. When people feel confident, they strive to exceed their own expectations. Encourage creativity in work style: Everyone has their unique learning style, and process for completing tasks. The last thing you want to do his hinder their process by nitpicking. Keep your focus on the final result, not on the details of how the job gets done.

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James M. Lynch: What the Heck Is Corporate Culture?

July 1, 2011

“We know what training is, but what the heck is ‘culture’?” Those words were spoken by the new owners of the company I had spent 10 years helping to build from a small regional player to the recognized national industry leader. These corporate leaders were referring of course to my job title as Chief Training Officer, in charge of training and cultural development. I was at once relieved and scared by their reaction to the ‘culture’ reference and shook my head as I could see the end was near. The relief came from the fact that we were finally selling the business and I could move on, full-time, to expanding my own coaching practice and finding clients that I could help grow and develop the way I’d done it there. I was scared because it was clear to me that the new owners of the company didn’t realize that what made us a success as a company wasn’t just our employees, contracts, reputation and cash flow. What made us great as a company was our culture. In fact I had, as training officer, asked the question many times over the years, and the answer to the question “what’s the best part of our company?” was almost always: “The culture.” As a coach marketing myself to new companies I had to pull back, though, from saying ‘Culture Coach for hire’ and just say ‘Executive Coach.’ It seemed to me that people understood when I told them that I was an executive coach, or a performance coach or even a life coach, but when I told them I was a Culture Coach I was usually met with a blank stare. I realized that in order to have my vision realized and contribute to the way the world works, I’d have to come in as a more user friendly labeled type of coach and it’s worked, so far. But again: culture? Culture is an often overlooked and under appreciated tool for creating successful organizations . The Wikipedia definition of Corporate Culture is ” … an idea in the field of organizational studies and management which describes the psychology, attitudes, experiences, beliefs and values (personal and cultural values) of an organization.” Simple, eh? Maybe not. As in the story of the CEO who says to the head of HR, “I’ve been hearing a lot about the value of an investment in corporate culture: go buy us one!” there is a bit of education to be shared on culture and the value for all businesses, even the smaller ones. Over the next few weeks I’m going to share some ideas on culture and hopefully get some feedback and ideas from readers. I’d like to begin by asking anyone who has a managerial or ownership stake in a business to begin noticing what is the culture they’ve created in their workplace. Ask around, of your employees and customers, vendors and others, “How would you describe the culture of our company?.” I’d be curious to hear the responses. Don’t think you have a culture? You do — every business does. It’s just a question of whether or not it works for you and if it’s a conscious choice you’re making. It’s not something you want to leave to chance and, if you’re interested in growth or creating breakthroughs, focusing on culture can be the best investment you can make BEFORE investing in new employees, machines or marketing. Start here to go there. I welcome any discussion or comments here. It’s a chance to say something good about your corporate culture or tell your horror stories. See you next week.

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Yahoo CEO Blasted By Shareholder, Called ‘Lame Duck’

June 23, 2011

SAN FRANCISCO — Yahoo Inc. Chairman Roy Bostock sought to defuse speculation about CEO Carol Bartz’s job security at the Internet company’s annual shareholders meeting Thursday, only to have it ignited again at the end of the session by an exasperated investor. After Bostock opened the meeting with an endorsement of Bartz’s performance, the unhappy investor ended it with a five-minute condemnation of Yahoo’s CEO and the entire board of directors. The investor identified himself as someone who personally owns some Yahoo stock and advises funds that own several million of the company’s shares. The Associated Press couldn’t verify his identify because Yahoo banned reporters from the meeting held at a Santa Clara hotel, telling the media to listen to a webcast of the event instead. During his unflattering critique, the investor described Bartz as a “lame duck” who should be immediately bought out of a four-year contract that expires in January 2013. He also called upon Yahoo’s board to consider a variety of dramatic steps, including breaking up or selling the company to lift the stock. Yahoo’s shares have been lagging the rest of the market for so long that Bartz still hasn’t hit any of the price targets set for her when she was hired nearly 2 1/2 years ago. “It’s time for a sense of urgency,” the investor said. Bartz thanked him for his opinion and then added, “That was certainly a downer.” No other shareholder lambasted Bartz during the 75-minute meeting. Shareholder backlashes contributed to the resignations of Yahoo’s two previous CEOs, Terry Semel and company co-founder Jerry Yang. Semel stepped down in June 2007 a week after he came under attack at Yahoo’s annual meeting. Yang stepped aside to make way for Bartz after months of ridicule for the way he handled a takeover bid from Microsoft Corp. Before Thursday’s question-and-answer period, Bartz defended the steps she has taken to streamline Yahoo’s operations and focus the company on delivering more services that will keep its audience of more than 600 million people on its website for longer periods. Sounding a familiar theme of her tenure, Bartz also asked for patience. “Companies don’t’ turn around just because someone wants them to turn around,” she said. “They turn around through hard work.” In his opening remarks, Bostock made it clear he intends to give Bartz more time to finish what she started. “This board is very supportive of Carol and this management team,” Bostock said in his opening remarks. “We are confident that Yahoo is headed in the right direction.” Bartz, 62, has boosted Yahoo’s earnings by cutting costs during her first 2 1/2 years as CEO, but so far hasn’t been able to revive the company’s revenue growth, even amid an upturn in Internet advertising that has enriched rivals Google Inc. and Facebook. The financial lethargy has dragged down Yahoo’s stock, which has been trading in a narrow range since Bartz’s arrival, while the market values of many other Internet companies have been soaring. Yahoo shares fell 14 cents to close Thursday at $15.08. When she was hired in 2009, Bartz received 5 million stock options that won’t start vesting until Yahoo’s stock closes at $17.60 or higher for at least 20 consecutive trading days. It looked like the shares might remain above that threshold until last month when Yahoo disclosed a surprising move that threatens to diminish the value of its 43 percent stake in the Alibaba Group, one of China’s most promising Internet companies. The investment suddenly looked less golden after Yahoo announced Alibaba had spun off its payment service, Alipay, into a company controlled by its CEO, Jack Ma, without compensating Yahoo. Yahoo’s stock price has plunged nearly 20 percent since the May 10 disclosure of the Alipay spinoff. Echoing remarks she made at a meeting with analysts a month ago, Bartz told shareholders Thursday that Yahoo is encouraged by the negotiations seeking compensation Yahoo for the loss of Alipay in its Alibaba investment. Bartz didn’t address unconfirmed media reports that Yahoo is interested in buying Hulu, a service that streams television shows on the Internet. Hulu, whose current owners include Walt Disney Co., News Corp. and Comcast Corp., has said it got an unsolicited buyout offer without identifying the bidder. The investor who spoke out against Yahoo urged the company not to buy Hulu unless the deal meant that Hulu’s CEO, Jason Kilar, would replace Bartz. Bostock faced stinging criticism three years ago when he was just starting out as Yahoo’s chairman and the company balked at a chance to sell itself to Microsoft for $47.5 billion, or $33 per share. Most shareholders are still backing Bartz and Bostock. Based on a preliminary count announced Thursday, Yahoo said about 80 percent of shareholders favored their re-election to the board. About 90 percent favor the re-election of the remaining eight members of the board. After the squandered Microsoft opportunity, only about 60 percent of shareholders backed Bostock’s election to the board in 2008.

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Maddisen K. Krown: Yes, You Can Start Your Financial Plan at Midlife

June 21, 2011

Here’s a question from a reader about financial planning: I’m 55, divorced, and I work hard to pay my bills and stay above water. I’m tired of just getting by, and honestly, I have no idea how I’ll care for myself when I get too old to work. I’m scared just thinking about it. Do you have any tangible advice? I appreciate this reader’s sobering honesty and straightforward question. I’m sure there are a good number of people who can relate. I myself have had similar concerns and fears come up around this. In addition to my usual recommendations for mental, emotional, physical, and spiritual nurturing and empowerment, I believe that we must focus on and take actions in support of our financial health and well being. Positive, tangible actions. Start Your Financial Plan That is why I work with a Financial Planner. And it’s the best move I’ve made in support of my financial health and security as I move through midlife and into my later years when I may be too old to work. The important key here is to find a financial planner who cares and who understands your age-specific concerns, and not one who is only interested in investing or insurance — especially if you’re ‘just getting by’ when you start. I found mine by referral, first by asking trusted friends for recommendations, and then by making my selection after an introductory meeting. Together, my financial planner Augustine Choi and I have constructed a short-term, mid-term, and long-term life plan that is based on my core values and goals for financial management, security, and growth, and he is definitely working to make sure we stick with it. He’s not a midlifer himself yet, but has great compassion for those of us who are, and a passion to support us in moving out of mystery and fear, and into empowered financial awareness and more financial freedom. We practice what I call soul-centered financial planning, acknowledging that who I truly am, my core values, heartfelt desires, and resulting conscious actions, are the actual roots that feed my financial abundance, and not the money alone. This may not be the solution for everyone, but too many people have never even tried working with an expert companion for financial health and well being. We enlist the support of doctors, lawyers, fitness trainers, and a myriad of other professionals to support our well being — so why not a financial planning expert to guide us in setting up a specific system for budgeting and managing the money upon which our very survival depends! And we don’t have to be wealthy to get this support; on the contrary, I began when I was ‘just getting by’ as well. Money — Let’s Face It — Together For many — money, and the management of income and expenses — is the most avoided and most difficult area to face. Yet it may be the most important area to face simply because money is required for living, for example, to pay for our rents, mortgages, car payments, groceries, gas, clothing, medical care, etc. etc. Therefore, my personal program for financial health and well being includes working with my financial planner; regular use of Quicken to keep track of money and statements; plus keeping myself educated through reading and being aware, at least on a high level, of what’s going on with our economy. For example, personal finance expert Suze Orman’s books are useful for learning financial basics, and Drs. Ron & Mary Hulnick’s classic book, Financial Freedom in 8 Minutes a Day is one of my favorites. Plus there are so many resources available on the internet. Good financial health requires awareness, positive focus, planning, discipline, dedication, and a giant dose of optimism, and is so worth the effort. May you begin your journey into greater financial security by taking tangible actions such as working with an expert to create a financial plan that supports your life and those who depend on you. I also welcome input from readers — what positive and tangible actions are you taking that you’d like to share in support of financial health and well being? Your Life Coach, Maddisen Copyright 2011 Maddisen K. Krown M.A.

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Geography of Risk: Helping HNW Families Trim Costs, Boost Protection – AdvisorOne

June 17, 2011

Geography of Risk: Helping HNW Families Trim Costs, Boost Protection AdvisorOne Many wealth families and their family office managers discover that insuring each home requires navigating special conditions imposed by different state regulations and contending with different insurance company preferences. …

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Schultze Asset Management Founder George Schultze Delivers Key Comments in … – PR Newswire (press release)

June 16, 2011

Schultze Asset Management Founder George Schultze Delivers Key Comments in … PR Newswire (press release) PURCHASE, NY, June 16, 2011 /PRNewswire/ — George Schultze, Founder and Managing Member of Schultze Asset Management, LLC (“SAM”), was a key speaker at today’s European Family Office & Private Wealth Management Forum in Geneva, Switzerland. … Schultze Asset Management Founder George Schultze Delivers Key Comments in … SunHerald.com (press release) all 7 news articles »

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Video: Kedrosky Says Groupon Isn’t a Technology Company

June 4, 2011

June 3 (Bloomberg) — Bloomberg News contributor Paul Kedrosky and A.B. Mendez, senior research analyst at Greencrest Capital Management LLC, discuss prospects for Groupon Inc. Groupon, the biggest provider of online daily-deal coupons, said yesterday that it plans to raise $750 million in an IPO, the most yet for a U.S. social media company. Mendez and Kedrosky speak with Julie Hyman and Cory Johnson on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

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Video: Alpert Sees Global Economic Forces Behind U.S. Jobs Data

June 3, 2011

June 3 (Bloomberg) — Dan Alpert, managing partner at Westwood Capital Management, David Semmens, U.S. economist at Standard Chartered Bank, and Michael Purves, chief market strategist and head of derivatives research at BGC Financial LP, talk about today’s May U.S. jobs report and the outlook for the labor market. They speak with Pimm Fox on Bloomberg Television’s “Taking Stock.” Duke Lane, president of Lane Packing Co., and Fort Worth, Texas, Mayor Mike Moncrief also speak. (Source: Bloomberg)

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Steve Ressler: The Myth of "Rightsizing" the Federal Workforce

June 3, 2011

Guest Post by Alicia Mazzara President Ronald Reagan was no fan of big government. But would the man who famously said, “As government expands, liberty contracts,” agree with the latest efforts to contract the federal government? One week ago, the House Subcommittee on the Federal Workforce met to discuss “rightsizing” the federal government. So just what is “rightsizing”? It’s a politically correct way of saying cutting people’s jobs. In other words, rightsizing is the new downsizing. While the House debates how many federal jobs are needed to keep the country running, government agencies are taking steps of their own to save on labor. Earlier this month, the Department of Agriculture became the first cabinet-level agency to offer “buyouts” that encourage employees in certain positions to retire early . Smaller agencies, including the U.S. Postal Service, Federal Trade Commission, and Air Force Material Command, also began offering buyouts earlier this year. We are living in austere budgetary times, and government has a reputation for being bloated and inefficient. No one, not even the average federal worker , disagrees that we need to do more with less. However, it’s exceptionally difficult to figure out what the “right” size is. Moreover, shrinking the federal workforce often means increasing the number of contractors, which does not translate into cost savings. This past week, federal workers have been mulling the following Washington Post article by Joe Davidson. Davidson highlights the following statistic: There are currently 2.1 million federal workers and approximately 10.5 million government contractors and grantees. This growing imbalance is a big deal considering that contractors are usually costlier than federal employees: Carol Davison, a Human Resources Specialist at the Department of Commerce, explains : [R]eplacing Feds with contractors is not more effective or efficient because government employees do the same work for less money. Additionally, they are the subject matter experts on programs under analysis and should perform it because they will be responsible for providing the service. In fiscal year 2010, the federal government spent $537.5 billion dollars on contracts. In other words, rightsizing is starting to look like we’re just robbing Peter to pay Paul. Carol also raises a second important point: federal workers have specialized knowledge that a contractor may not have. By cutting federal jobs or encouraging federal workers to retire early, government runs the risk of losing critical institutional knowledge. Learning takes time, and the benefits of this knowledge are often difficult to quantify. Moreover, trading federal workers for contractors doesn’t really shrink government or our costs. The question should not be about size, but about creating well-functioning government. Federal employees have plenty of ideas on how to save the government money. Kathryn S., a Strategic Affairs Officer at the Mississippi Department of Employment Security, offered several alternatives : Streamlining processes, eliminating deadwood employees, crafting retirement options, combining (truly) duplication programs would all reduce costs. Applying the same models to the sacred cows of security and defense would also reduce costs. None of these options are being explored. Anita Arile, a Management Analyst for the government of Guam, brought up the role of technology: Today’s government must find balance between technological resources and human resources. Although technology can replace several human resources, it is the agency’s responsibility to ensure that the human resource available are knowledgeable and capable of continuing the processing flow manually. Through technology, many agencies are capable of minimizing paperwork by sharing common data. This has proven to benefit both the public and the employees of several California health care agencies. As Davidson points out, the question of workforce size depends on the task at hand. Ultimately, any conversation about “rightsizing” must address the intended role of federal government. You can’t figure out how many people are right for the job if you don’t know what it is. But most importantly, it is not really “rightsizing” if we are simply swapping out federal workers for more expensive contractors. To say that we can fix government simply by reducing its size is an oversimplification. As President Obama said in his commencement speech at the University of Michigan: “What we should be asking is not whether we need ‘big government’ or a ‘small government,’ but how we can create a smarter and better government.” Alicia Mazzara is a Graduate Fellow at GovLoop and is currently pursuing her master in public policy at the George Washington University. In a past life, Alicia worked in consumer protection at the Federal Trade Commission.

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Google CEO: We Won’t ‘Bet The Farm’ On Self-Driving Cars

June 3, 2011

By Alexei Oreskovic and Noel Randewich * Says co doesn’t “bet the farm” on speculative projects * Says cloud technology improves Google security MOUNTAIN VIEW, Calif./SAN FRANCISCO (Reuters) – Google Inc spends its money prudently even as it bets on “speculative” projects like self-driving cars, Chief Executive Larry Page said in his most lengthy public remarks since taking the top job two months ago. “We are very careful stewards of shareholder money,” Page said at the company’s annual shareholder meeting Thursday. ”We started, remember, as a start-up in a garage, and we’re very careful about our spending. Spending at Google, the world’s No.1 Internet search company, has been an area of focus for investors who worry that it might lower the company’s profit margins. Page, who co-founded Google as a graduate student more than a decade ago, has a reputation for advocating ambitious projects with uncertain returns, such as digitizing library books. Shares of Google underperformed the market in 2010 and are down roughly 16 percent since the company said in January that Page would replace Eric Schmidt as CEO. Page unnerved investors again when made his debut as CEO in April and spoke for only a few minutes before signing off from the company’s quarterly financial results conference call. Speaking before shareholders assembled at Google’s headquarters Thursday, the 38-year-old Page gave a progress report on the success of various Google businesses such as its Android smartphone operating system. He said the company accomplished a lot since the management change that put him in the CEO suite in April, particularly in terms of increasing the pace of operations within the company. Referring to the recent attacks on Google Gmail user accounts, which the company disclosed Wednesday, Page said that the incidents were not the result of a breach of Google’s security, but a case of stolen passwords. And he said that Google’s Internet-based “cloud” technology helped Google detect the attacks and would help improve security. Page said search and advertising remain Google’s core businesses and the company’s most significant area of investment. “At Google we have a philosophy that we don’t want to choke innovation. So we want to make sure that we’ve got a lot of things going on in the company that are maybe speculative, maybe there’s few people working on them and they really hope that they’re going to build a billion-dollar business,” Page said. But, he added later, “We’re not betting the farm on a lot of those things.” (Editing by Robert MacMillan) Copyright 2011 Thomson Reuters. Click for Restrictions

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Jeffrey Hollender: The Harms of Regulation Phobia

June 2, 2011

Safe food. Seatbelts. Safety on the job. Clean air and water. A functioning financial system. These are all things that we as Americans have come to take for granted in our daily lives. And, though it has become unfashionable to say so, these are all things provided by robust federal regulation. Regulations are getting a bad rap in Washington these days. Despite the collapse of our financial system, financial regulatory reform has been chastised. Despite the continued need for clean air and water, some in Congress are exploring ways to prevent the implementation of rules to stem pollution. And, Rep. Darrell Issa, chairman of the House Committee on Oversight and Government Reform, has devoted his time not to finding ways to reduce the deficit through duplicity in federal agencies, but instead by rallying against any and all regulations that large corporations have suggested they would like to see go. These misguided efforts distract from dealing with the real issues impacting economic growth. While over-burdensome government regulations may be harmful, those which Congress is currently focusing on will not strangle job creation. This is a myth repeated by politicians and CEOs who stand to increase profits while decreasing safety if standards disappear — standards that ensure product and food safety, protect our environment, and guarantee the proper regulation of our financial, medical, and legal industries. Though the Obama administration recently identified thousands of non-functioning, or wasteful rules that are unnecessary and can burden businesses or agencies, responsible reform must leave in place and ensure proper enforcement of the many hard-won regulations that protect the health and safety of Americans. The anti-regulation mania that’s swept Washington conveniently ignores the positive impact that common sense regulations have on all of our daily lives, while threatening to harm the basic protections that we have come to expect. For instance: Attempts to protect the public from salmonella in eggs faced years of roadblocks even after President Clinton proposed an egg safety rule that would have saved 1.4 billion in medical costs and prevented 79,000 illnesses and 30 deaths a year. Heavy lobbying by big agriculture interests delayed implementation of these rules from their inception in 1999 to the final enactment in 2010 — but not in time to prevent the 2010 salmonella outbreak that left 2,000 Americans sick and led to the recall of half a billion eggs. In 2004, in response to a request, OSHA drafted a rule that addressed the major causes of construction worker injury and death from cranes and derricks (electrocution, collapse and overturning). The final rule established common-sense standards for operator certification, crane inspection, set up and disassembly. But the rule took six years to clear bureaucratic hurdles — a delay that resulted in an estimated 132 unnecessary deaths and 1,050 preventable injuries at a cost of more than 1 billion. Earlier this year, the House took aim at the Environmental Protection Agency’s ability to regulate toxic air pollution. The House bill, designed to “rein in” environmental protection, would block the implementation of the agency’s new mercury emissions rules, designed to prevent up to 2,500 premature deaths, 1,500 heart attacks, 17,000 cases of aggravated asthma and 130,000 days of missed work due to illness. This, despite the fact that many of those members who voted to prevent implementation of the rule, voted for it in the Clean Air Act Amendments of 1990. There are similar stories to be told about industries that affect all areas of American life. Lax regulatory supervision of Massey Energy allowed the company to get away with safety violations that eventually led to a deadly mine collapse in West Virginia. The financial industry’s long campaign to escape government checks led to an epidemic of profiteering from reckless practices and an unprecedented economic crisis. The absence of stringent off-shore drilling safety regulations, and enforcement authorities that were missing in action, led to a catastrophic oil spill in the Gulf that will have repercussions for years to come. The fact is that time and again, the impact of lax regulations is felt more broadly by the country — from the cost of a near depression to the cost of environmental clean-up. This is not good for most businesses, nor the economy. In the short run, regulations require investment, but that does not translate into a drag on the economy — in fact, analyses show that the economic benefits of smart regulation greatly outweigh their costs. The Office of Management and Budget studied all the major regulations issued between 2001 and 2010, and found that compliance costs of $44 billion to $62 billion were dwarfed in comparison to the $136 billion to $651 billion of annual benefits that those rules created. The OMB in part calculates the economic benefits of regulations by assigning monetary values to the human lives saved. We would like to think that the saving of those lives alone would be reason enough to applaud, rather than scorn, the government’s regulatory efforts. Those investments also create jobs. And, if companies began investing earlier, they would reduce overall costs, benefit from early compliance and be in a position to spread out the cost of regulations over a longer period of time, thus dampening any economic impact. While Congress engages in ways to prevent implementation of important health and safety regulations, it is sleeping when it comes to identifying real efforts that can jump start the economy, including: Increasing capital access to small business and entrepreneurs to create jobs; Incentivizing new forms of energy, clean transportation and other technologies that will help us lead in the 21st century instead of lagging behind our worldwide competitors; Passing legislation that would encourage greater use of non-toxic chemicals which help save companies compliance dollars, increase worker safety and reduce costs to state and local governments; and Leveling the playing field by precluding companies from escaping their corporate tax obligations by using tax havens outside of the United States. Too much time has been spent on Capitol Hill arguing over one message or another. When will our elected officials stop the rhetoric, end the charge to implement everything they think their campaign contributors are seeking and start putting Americans first? As supporters and founders of businesses that have proven that we can thrive in a world that encourages a balance in meeting environmental goals, employee goals and profit, we are urging Congress to move away from the lexicon of corporate protection at all costs, and toward the lexicon of protecting the citizens they are supposed to represent. We must work toward this: real, forward-moving regulatory reform that helps to create a new economy — one that values people, planet and profit. David Levine is the co-founder and executive director of the American Sustainable Business Council , a growing coalition of business networks and businesses who represent more than 100,000 businesses and more than 200,000 entrepreneurs, owners, executives, investors and business professionals, advancing a new vision, framework and policies that support a sustainable economy. Jeffrey Hollender is the co-founder and former CEO of Seventh Generation and the co-founder of the American Sustainable Business Council. He also blogs about these topics and more at JeffreyHollender.com .

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John Arensmeyer: New Healthcare Regs Could Unlock Entrepreneurship

June 2, 2011

Before he’d even graduated from college, Arthur Holst knew he was destined to work for a big organization. Not because the corporate culture called to him or because he had an undying love for cubicles, but because at age 19 he had a kidney transplant. He had to work somewhere that offered good health benefits because that was the only way he was going to get the insurance he needed to survive. Starting his own company and running the risk of being denied insurance because of his health condition was not an option. “You’re not thinking in terms of taking risks, you’re thinking in terms of the security the job offered through health insurance,” Arthur said. Many years later, the Pennsylvanian is happy working for the city of Philadelphia, but he would have preferred to have the option of striking out on his own and starting a business — something he could have done if the Pre-Existing Condition Insurance Plan (PCIP) program enacted under federal healthcare reform had been in place. These plans allow individuals with a preexisting condition to obtain health insurance if they’re denied coverage. On Tuesday, the Department of Health and Human Services beefed up the program to make it more affordable and easier to participate in. And although it’s too little too late for Arthur, there are many people out there just like him who will now have the option to see where their entrepreneurial spirit takes them. The PCIP program is run by the Department of Health and Human Services in 17 states and by state governments in the rest. Thanks to the regulations issued on Tuesday, premiums in the states where the federal government administers the plans will drop, some by as much as 40 percent, and eligibility requirements will become less stringent. Instead of requiring applicants to submit rejection letters from insurance companies to prove their eligibility, they can now use a doctor’s note to verify their status. America prides itself on being the land of entrepreneurialism, yet the act of denying people coverage for a preexisting condition discourages that tradition. When someone has a great idea or invention and wants to start a new business, but is forced to stay in their current job to keep health benefits, the potential for a new business flies out the window. This scenario, often referred to as “job lock,” costs our economy startup opportunities and job growth. Small business owners Marsha and Russell Geist, owners of Metropolitan Landscape Management in Dayton, MD, would have found themselves in exactly this situation if Maryland hadn’t been ahead of the curve when it comes to preexisting condition bans. Both Marsha and Russell worked for the federal government while they were starting their landscape business, but were able to quit their government jobs and focus full-time on their start-up. However, Russell had medical issues, including a benign brain tumor, which landed him in the preexisting condition group. If Maryland hadn’t banned denying coverage based on preexisting conditions in the 1990s, Marsha would have had no choice but to continue working for the government to maintain their insurance instead of joining her husband. “It would have directly affected the growth of our business,” Marsha said. “Maryland was very proactive in making that change.” Small business employees are also the frequent victims of coverage denial based on preexisting conditions. Small business owner Rick Poore, proprietor of Shirts 101 in Lincoln, NE, spent a tremendous amount of time trying to get one of his 29 employees who suffered from pancreatitis onto his company’s group plan. If Rick had put the employee on the group plan, the costs would have skyrocketed, and it was likely the carrier would drop them altogether. Eventually, Rick was able to get his worker on the company plan without breaking the bank, but it was time and money that Rick could have spent running his business instead of jumping through one insurance hoop after another. The Department of Health and Human Services made the right decision to lower premium costs and make it easier for people to join these much-needed programs. These new regulations will make it easier for employees like Rick’s and would-be entrepreneurs like Arthur to get the coverage they need while working in the jobs they love.

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ECG Management Consultants, Inc. Welcomes Mr. Robert S. Fries to Its Academic Healthcare Practice

June 2, 2011

BOSTON, MA–(Marketwire – Jun 2, 2011) – ECG Management Consultants, Inc., one of the nation’s premier healthcare management consulting firms, welcomes Mr. Robert S. Fries back to ECG as a Senior Manager within the company’s Academic Healthcare practice . The addition of Mr. Fries, who is based in Colorado, further strengthens ECG’s expertise in guiding leadership across academic medicine, health systems, and physician groups through the complexities of the tripartite mission.

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IT Veteran Wayne Washburn Joins Idera as Director of SharePoint Products

June 2, 2011

Experienced IT Services, Software Development Executive to Lead Idera SharePoint Management Product Strategy

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Jason Alderman: Financial Advice for Graduates

May 31, 2011

If you — or one of your kids — are about to graduate from college or high school, congratulations on successfully navigating the twists and turns of the education system. You don’t need me to tell you what a challenging, rewarding and expensive road it has been. But, as someone who’s learned a few financial lessons the hard way, I would like to share a few steps you can take now to ensure you’ll start the next chapter of life on sound economic footing. First, live within your means . The temptation to go on a spending spree after landing your first full-time job can be overwhelming. But if you’re a college grad, unless you sailed through on a full scholarship, you’re probably already saddled with thousands of dollars in student loan debt. (If you’re about to enter college, avoiding future loan debt is something to keep in mind.) Add in rent, car payments, credit card and personal loan balances and all your other monthly bills — not to mention payroll taxes — and your new salary may not go as far as you’d hoped. If you don’t already have a budget, get started on one now. Numerous free budgeting tools, including interactive budget calculators, are available online at sites such as the U.S. Financial Literacy and Education Commission’s MyMoney.gov , the National Foundation for Credit Counseling , Mint.com and Practical Money Skills for Life , a free personal financial management program run by my employer, Visa Inc. Speaking of student loans, here are a few repayment tips: Most federal loans offer six- or nine-month grace periods before repayment must begin, but many private loans do not. Carefully review your loan documents to see where you stand. Ask if your lender will reduce the interest rate if you agree to automatic monthly payments or after you’ve made a certain number of on-time payments. If you anticipate repayment difficulties, contact your lender immediately to try and work out an agreement to defer payments, extend the loan’s term or refinance at a lower rate. Many people with federal loans who are low-income, unemployed or working at low-paying, “public service” jobs in education, government or non-profits qualify for income-based repayment, where monthly payments are capped relative to adjusted gross income, family size and state of residence. To learn more, visit this Department of Education FAQ or read my previous blog, Federal Student Loan Changes . Also, read IRS Publication 970 for information on deducting student loan interest from federal income tax. In some instances, you can deduct up to $2,500 in interest even if you don’t itemize deductions. Know the score, credit-wise. Many people don’t realize the impact their credit score has on their financial future until after it’s been seriously damaged from making late payments, bouncing checks, opening too many accounts or exceeding credit limits. This can haunt you later when you try to borrow money for a house or car, rent an apartment or apply for a job (many landlords and employers now check credit records and reject applicants with poor credit). Find out where you stand by ordering credit reports from each major credit bureau – Equifax , Experian and TransUnion .You can order one free credit report per year from each bureau from AnnualCreditReport.com ; otherwise you’ll pay a small fee to each bureau directly. To learn more about the importance of understanding and improving your credit score, visit What’s My Score , a financial literacy program for young adults run by my employer, Visa Inc. It features a free, downloadable workbook called Money 101: A Crash Course in Better Money Management , a free tool to estimate your FICO credit score and Welcome to the Real World money guides on topics such as student loan repayment, finding a job, paperwork and taxes, and budgeting. Jumpstart your job search. You’ve probably already held a variety of jobs to help pay for college. Now it’s time to find a position in your field of study. Start with your school’s career counselors, who often provide services to alumni or will at least point you to other resources. While researching jobs and career paths, polish your resume. Make sure yours accurately reflects your accomplishments and shows potential employers you have the experience, drive and qualifications they seek. Use concise, strong language and an organized appearance. Don’t discount the importance of networking with family, friends, former school contacts, business and social organizations — basically anyone who might know of openings in your field. If you find a potential employer you admire, inquire about internships as a way to get your foot in the door. For more tips, see my previous blog, Online Job Search Tools . You’ve worked hard to earn your degree; now put it to work for you. Just make sure you don’t sabotage your efforts by starting out on the wrong financial footing. This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation. To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney

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Federal Tax Rate At Lowest Level In Over 60 Years, Bartlett Says

May 31, 2011

Hearing some politicians talk about taxes, one might be convinced the United States has one of the highest tax rates in the world. But the reality is the federal tax rate, broadly measured, is the lowest it has been in 60 years, Bruce Bartlett writes in a new column. A look at the effective tax rate, which expresses taxes as a share of the country’s economic output, belies the stream of political rhetoric arguing that taxes are relatively high, says Bartlett, who was a senior policy analyst under President Ronald Reagan. Federal taxes will be 14.8 percent of the nation’s economic output this year, according to a recent estimate from the Congressional Budget Office . That’s compared to a postwar annual average rate of 18.5 percent, Bartlett notes. With the nation’s gross domestic product at about $15 trillion, that low effective rate means the federal government is missing out on hundreds of billions of dollars every year. “Revenues have been at a historically low level for three years now, so we’ve probably left a trillion dollars on the table,” Bartlett said in an interview with The Huffington Post. He added that the most recent year when the federal government took less from the economy was 1950, according to the Office of Management and Budget. There’s no evidence, he said, that lowering taxes further would help stimulate the economy. The effective federal tax rate is “low by that historical standard, and it’s rarely been as low,” Mark Zandi, chief economist of Moody’s Analytics, said in an interview. “It’s very hard to understand where the impression has come about that we currently have high taxes, or that our taxes are high in relation to those of other rich countries,” said Gary Burtless, a former Labor Department economist and a current fellow at the Brookings Institution, in Washington. “These are low tax rates that we’re currently facing, in relationship to our incomes, in relationship to the size of the national economy.” The low effective rate, Zandi said, is the result both of the weak economy and recent tax cuts. While Americans suffering in the wake of the recession might feel heavily taxed, the federal government takes a relatively small portion of the country’s income. For American corporations, the tax situation could hardly be sweeter. Measured as a share of economic output, the U.S. enjoys the lowest corporate tax burden of any of the member nations of the Organization for Economic Cooperation and Development, Bartlett notes in his column. And yet, politicians and pundits insist that Americans are overtaxed. One way to do so is to use the statutory tax rate. That’s the number that lawmakers discuss when debating tax cut legislation, and it can be made to seem even bigger if combined with state and local statutory tax rates. But the more relevant measure, economists say, is the effective rate, since it takes the country’s income into account. Here’s Bartlett: The economic importance of statutory tax rates is blown far out of proportion by Republicans looking for ways to make taxes look high when they are quite low. And they almost never note that the statutory tax rate applies only to the last dollar earned or that the effective tax rate is substantially lower even for the richest taxpayers and largest corporations because of tax exclusions, deductions, credits and the 15 percent top rate on dividends and capital gains. Read the rest of the column here .

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Vitaliy N. Katsenelson: The Boulevard of Broken Charts

May 27, 2011

Markets are efficient, or so we’ve been told. I am not here to put a rebuttal to this academic nonsense, but let me give you one of the core reasons why markets are and will remain inefficient: because human beings are efficient. To function in everyday life, our brains are used to simplifying complex problems, through pattern recognition. We become accustomed to drawing straight lines when we see two points, and if we get a third or fourth point that fits the line, our confidence about the longevity (continuity) of the line increases exponentially. We become excited, even certain, about prospects of the company we’ve invested in when its stock has gone up for a long period of time, while we often dismiss stocks that have declined or flat-lined, especially if that happened for a considerable period of time. Imagine an analyst bringing a “fresh” stock idea to a portfolio manager at a large mutual fund. He’d say something among these lines: Cisco is a buy, it has a bulletproof balance sheet with $25 billion of net cash (cash less debt), the stock is cheap — trading at 9 times earnings (excluding net cash), it’s providing double-digit returns on capital and it is a dominant player in the industry, which is poised to grow at a faster rate than the economy, since, thanks to iPads, Androids, Kindles, Hulus, and Netflixes, we’ll all continue to consume digital content. I can just see the portfolio manager’s smile, his laugh and comment that “This stock is a value trap, it has gone nowhere in more than a decade.” I’m glad I’m not that analyst, as I’d have a huge burden to overcome. After all, Cisco has shattered the dotcom dreams of many investors in the years following 1999, when it hit $80 a share and, for a brief moment, was one of the most valuable companies in the world, sporting a modest P/E of 100+. Since then, gravity has caught up with Cisco’s stock (it always does), and it has declined almost 80% from its highs, to $17. Most investors who bought the stock since ’99 either lost or made no money. Draw a straight line through its chart (you have more than a decade’s worth of data points), and you see it’s either going to zero or at least will continue to go nowhere. Now, you add to this performance a few quarters of disappointing Wall Street guidance, and you have an untouchable, un-recommendable stock. However, fundamentals — take any metric: revenues, earnings, cash flows — will tell a very different story: they either tripled or quadrupled since 1999. Through no fault of its own, Cisco’s stock was too expensive in 1999, and it took time for the stock to catch up to its fundamentals. Of course, as usually happens, investors get overexcited on both sides of valuation. The same investors who could not get enough of Cisco at over 100 times a little more than decade ago, don’t want touch it at 9 times earnings with a ten-foot pole. (Here is efficient market for you). The dark shadow of the stock performance hides an attractive investment. Cisco is not a spring chicken anymore, it has over $40 billion in sales. It will likely see some margin compression as parts of its business mature. Its revenue and earnings will grow at a slower rate than they did over the last decade. But at its current price Cisco doesn’t have to do anything heroic to justify its valuation, it just needs to show that it has a pulse. It is very difficult to get a unique insight into Cisco’s business or that of any large-cap stock; after all, they are followed by a small army of analysts (Cisco is followed by some 40 analysts). Some sell-side analysts undoubtedly know what John Chambers’ (Cisco’s CEO) favorite cereal is, and can recite the model number of every Cisco router by heart. Most of us cannot compete with that, nor do we need to. First of all, you need to have a time horizon longer than Wall Street’s. Wall Street is very short-term-oriented, and mutual fund managers are judged and compensated on their monthly and quarterly performance. Sell-side analysts are there to serve their buy-side masters, and thus expend their energy analyzing the next quarter, not the next five years. Therefore a time horizon longer than Wall Street is significant competitive advantage in itself. Cisco’s earnings three, five years from now are likely to be significantly higher than they are today. It is also important to understand that even a much-followed stock like Cisco will suffer from inefficiency (which as a value investor I welcome), due to investors confusing the lousy stock with the company’s fundamental performance. That is how you find high-quality companies at bargain-basement prices. Understanding what happened in the past is important, not because it is the precursor to the future, but because it helps to build the analytical bridge, through our own analysis, from today into the future. Be inefficient – don’t draw straight lines. Vitaliy N. Katsenelson, CFA, is Chief Investment Officer at Investment Management Associates in Denver, Colo. He is the author of The Little Book of Sideways Markets (Wiley, December 2010). To receive Vitaliy’s future articles by email, click here or read his articles here . See also: ■Microsoft Just Pulled Another “Microsoft” with its Purchase of Skype » ■I am back! » Copyright Vitaliy N. Katsenelson 2011. This article may be republished only in its entirety and without modifications.

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Video: Lieberman Says U.S. Economy Is `Gathering Momentum’

May 27, 2011

May 27 (Bloomberg) — Charles Lieberman, former economist at the Federal Reserve Bank of New York and now chief investment officer with Advisors Capital Management LLC, discusses investment strategy and the U.S. economy. Lieberman, speaking with Matt Miller and Carol Massar on Bloomberg Television’s “Street Smart,” also talks about the outlook for Federal Reserve monetary policy. (Source: Bloomberg)

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Video: Lieberman Says U.S. Economy Is `Gathering Momentum’

May 27, 2011

May 27 (Bloomberg) — Charles Lieberman, former economist at the Federal Reserve Bank of New York and now chief investment officer with Advisors Capital Management LLC, discusses investment strategy and the U.S. economy. Lieberman, speaking with Matt Miller and Carol Massar on Bloomberg Television’s “Street Smart,” also talks about the outlook for Federal Reserve monetary policy. (Source: Bloomberg)

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WATCH: Obama Administration Economist Explains Departure

May 27, 2011

WASHINGTON — On the heels of his departure from the Obama administration, economist Jared Bernstein warned that Washington’s political culture misleads the public about basic economic facts, adding that he thought Obama administration economists had not effectively made the case against many conservative economic ideas that currently hold sway in Washington. “What frustrated me was … the real misleading, skewed debate on so many of these issues,” Bernstein said. “Partisans claiming that up was down and you could cut [spending] aggressively today and all these jobs would magically appear … That if you raise any taxes on anybody at any time by any amount, the economy will crumble to its knees. Or the notion that Keynesian stimulus is a bad thing when demand is contracting in the private sector.” “All these basic things that we really kinda know already being challenged, with the electorate being mislead about, that was frustrating. And I felt like I couldn’t do enough from the inside to influence that debate.” Bernstein, who served as chief economist to Vice President Joe Biden until two weeks ago, now works as a senior fellow at the Center on Budget and Policy Priorities, a respected Washington think tank. Bernstein was widely viewed as the most progressive voice on economic policy within the administration, and his departure from the administration was viewed in Washington as a sign that progressive voices were being marginalized within the administration’s economic team. Another progressive economist, former Chair of Obama’s Council of Economic Advisers Christina Romer — whose frequent feuds with Larry Summers, director of the White House National Economic Council, have been widely publicized — left the administration last summer. And former Federal Reserve Chairman Paul Volcker departed under terms indicating that his more aggressive stance on bank regulation was not welcome in a team of policymakers with strong ties to Wall Street. Of the economic advisers who entered office with Obama and Biden, only Treasury Secretary Timothy Geithner and National Economic Council chairman Austan Goolsbee remain (Goolsbee has changed jobs within the administration). Summers and Romer returned to academia, while former Office of Management and Budget director Peter Orszag left the administration for a lucrative position with Citigroup , recipient of an enormous taxpayer bailout. He was replaced by Jack Lew, who made upwards of $1 million at Citigroup running its alternative investments unit, which took massive losses before taxpayers rescued the bank. Bernstein, however, downplayed differences with other members of the economic team, including Summers and Geithner, insisting that his frustration with the job was driven not by internal feuding among the Obama crew, but by the team’s inability to to counter leading economic notions successfully. Faced with the choice between advocating from the Vice President’s office or from the freedom offered as an independent critic at a think-tank, Bernstein chose to leave. Bernstein expressed deep concerns about the path of the economy, saying that overall economic activity is not growing fast enough to make a serious dent in the unemployment problem. He said the government needs to spend more, not less, to create jobs, and worried that it would be extremely politically challenging to achieve that after a host of new members of Congress were elected amid a pledge to cut spending. He said foreclosures were creating a particularly big drag on the overall economy, preventing the recovery from reaching “escape velocity” that will allow the private sector to grow on its own. Bernstein called for banks to clean up their act on the foreclosure documentation so that the housing market doesn’t “break down the whole system” over concerns about the integrity of mortgage and land records. “I think the political system needs to do something,” Bernstein said. “When I was in the administration, we were thinking a lot about what we could do, but there’s also bank regulators … and absolutely, they need to put some pressure on [the banks]. The attorneys general are one very good line of defense here, and some of them are talking about this pretty aggressively, which I think is positive.” Bernstein also weighed in on the debate over raising the federal debt ceiling. He said he believes it is extremely unlikely that the debt ceiling will not ultimately be raised. But given that the alternative to raising the debt ceiling is a global economic catastrophe, the current negotiations should be considered unacceptable. “It’s a dangerous precedent,” Bernstein said. “What purpose is served by even entertaining the possibility of a default?”

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Video: Barings’s Do Likes China Consumer, Health-Care Stocks

May 27, 2011

May 27 (Bloomberg) — Khiem Do, head of multi-asset strategy at Baring Asset Management Ltd. in Hong Kong, talks about the outlook for China stocks and his investment strategy. Do also discusses U.S. stocks and the U.S and European economies. He speaks with Susan Li on Bloomberg Television’s “First Up.” (Source: Bloomberg)

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FST ANZ Summit 2011 To Discuss Wireless Banking, Data Management And Other IT Issues

May 26, 2011

FST ANZ Summit 2011 To Discuss Wireless Banking, Data Management And Other IT Issues

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