You're in the elevator with the hiring manager of Dream-Job Corporation. As the door slides shut, you feel a combination of adrenaline and slight nausea: you've got 15 seconds, if that, to communicate your value as a potential employee in a compelling way — just 15 seconds to cram in a whole resume's worth of work and accomplishments and late nights and successes. There's so much you want to say, but your message has got to be crisp, tailored, to-the-point. Handle this one right, and you'll be the newest member of the Dream-Job team. Flub it up, and you're back to scanning listings on Monster.com. What are you supposed to say?
Here are the five key things to know and do in order to make your elevator pitch successful:
Practice, practice, practice. Very few people have the oratorical power to make compelling 15-second speech about their entire professional lives on demand and under pressure. Practice your speech 100 times — literally. Know it, get comfortable with it, be able to tilt it effectively for a different audience. Practice your body language with it: how will you give the speech differently sitting down vs while walking down a hall? How will it be different over the phone vs in person?
Focus on impact. Two weeks ago, 60 Minutes aired a segment set at a white-collar job fair. One of the interviewees, a laid-off Wall Street secretary, looked straight into the camera and said, with total conviction, "I can make any boss shine." I wanted to hire her on the spot. Who doesn't want to shine? Describing the impact you've had, and can continue to have, is much more compelling than talking about your number of years of experience.
Ditch the cultural baggage. A lot of us have been taught — by parents, teachers, or team-oriented corporate environments — not to toot our own horns, and to use "we" instead of "I". Elevator pitches are all about "I". You've got to get comfortable with bragging about your own individual contributions (in a graceful way).
Be slow and steady. Whether out of nervousness or a desire to cram in a lot of information, people giving elevator speeches tend to talk at breakneck pace — which is extremely off-putting to potential employers. Speak at a pace that shows your calm and confidence. You want them to think of you as thoughtful and deliberate — not as some manic babbler.
See the whole world as an elevator. Too many people looking for jobs save their elevator speeches for job fairs and interviews. Remember the first rule of sales: ABC (Always Be Closing). Give your elevator speech to everyone — at family gatherings, in the waiting room of the dentist, at coffee hour at your church or temple. You never know where the next job is coming from.
How do you pitch yourself to prospective employers? What advice do you have for other people doing the same? What works — and what doesn't?
Thursday, July 30, 2009
Why Generation X Has the Leaders We Need Now - Tammy Erickson
William Strauss and Neil Howe, coauthors of Generations, posit that each generation makes a unique bequest to those that follow and generally seeks to correct the excesses of the previous generation. They argue that the Boomer excess is ideology and that the Generation X reaction to that excess involves an emphasis on pragmatism and effectiveness.
As many of you know, I've spent much of the last year talking with members of Generation X — those of you born roughly in the 1960s and '70s. The book I've written based on those conversations (What's Next, Gen X? Keeping Up, Moving Ahead, and Getting the Career You Want — safely in the hands of the publisher and due out in December) includes many of your voices — including quotes from your responses to posts on this site. Through this research, I developed a deep admiration for the generational traits evident among most X'ers, particularly in the context of our current challenges.
Future leaders in all spheres will have to contend with a world with finite limits, no easy answers, and the sobering realization that we are facing significant, seemingly intractable problems on multiple fronts. Perhaps the biggest change from the past: leaders will have to listen and respond to diverse points of view. There will be no dominant voice.
In this context, I'm convinced that Gen X'ers will be the leaders we need. The experiences that shaped those of you who were teens in the late '70s and '80s, as I've outlined in past posts, translate into valuable contemporary traits and perspectives.
Your accelerated contact with the real world, for many through a "latch-key" childhood, has made you resourceful and hardworking. You meet your commitments and take employability seriously.
Your distrust of institutions grew as you witnessed the lay-offs of the '80s and has prompted you to value self-reliance. You have developed strong survival skills and the ability to handle whatever comes your way with resilience. X'ers instinctively maintain a well-nurtured portfolio of options and networks.
A sense of alienation from your immediate surroundings as teens, coupled with rapidly expanding technology, has allowed you to look outward in ways no generation before could or did. You operate comfortably in a global and digital world. Many of you are avid adopters of the collaborative technology that promises to re-shape how we work and live.
Your awareness of global issues was shaped in your youth, and you are richly multicultural. You bring a more unconscious acceptance of diversity than any preceding generation. Your formative years followed the civil rights advances of the 1960s. High divorce rates during your youth meant you are the first generation to grow up with women in independent authority roles. You welcome the contributions of diverse individuals.
Your preference for "alternative" and early experience in making your own way left you inclined to innovate. You tend to look for a different way forward. Your strongest arena of financial success as a generation has been your entrepreneurial achievements.
Your skepticism and ability to isolate practical truths have resulted in rich humor and incisive perspective. You help us all redefine issues and question reality.
Your childhood made you fiercely dedicated to being good parents, prompting you to raise important questions about the way we all balance work with commitments beyond the corporation.
Your pragmatism has given you practical and value-oriented sensibilities that, I believe, will help you serve as effective stewards of both today's organizations and tomorrow's world.
The most difficult elements of your past may well be those that provide you with the strongest capabilities for today.
You have traded the idealism of my generation for realism, tempered by value-oriented sensibilities. At mid-life, you are well-prepared to serve as pragmatic managers, applying toughness and resolution to defend society while safeguarding the interests of the young. You will force nations to produce more than they consume and fix the infrastructure.
In today's challenging world, your humor may be your most-valued asset. Czech leader Václav Havel said, "There are no exact guidelines. There are probably no guidelines at all. The only thing I can recommend at this stage is a sense of humor, an ability to see things in their ridiculous and absurd dimensions, to laugh at others and at ourselves, a sense of irony regarding everything that calls out for parody in this world." You help us step back . . . and remind us to laugh.
You will have the opportunity to change the corporate template, and create organizations that are more conducive to your values. As leaders, you will be able to reshape the organizations you lead to make them better places for future generations and yourselves, make them more humane, and break the cultural norms of corporate life — long hours, a focus on full-time work, heterogeneous perspectives, and language of combat. You will bring your desire to create better alternatives, including how to balance work with commitments beyond the corporation and finding meaning in work. Most importantly, your preference for "alternative" and your inclination to innovate will allow you to look for a different way forward.
I'm ready to join the team.
As many of you know, I've spent much of the last year talking with members of Generation X — those of you born roughly in the 1960s and '70s. The book I've written based on those conversations (What's Next, Gen X? Keeping Up, Moving Ahead, and Getting the Career You Want — safely in the hands of the publisher and due out in December) includes many of your voices — including quotes from your responses to posts on this site. Through this research, I developed a deep admiration for the generational traits evident among most X'ers, particularly in the context of our current challenges.
Future leaders in all spheres will have to contend with a world with finite limits, no easy answers, and the sobering realization that we are facing significant, seemingly intractable problems on multiple fronts. Perhaps the biggest change from the past: leaders will have to listen and respond to diverse points of view. There will be no dominant voice.
In this context, I'm convinced that Gen X'ers will be the leaders we need. The experiences that shaped those of you who were teens in the late '70s and '80s, as I've outlined in past posts, translate into valuable contemporary traits and perspectives.
Your accelerated contact with the real world, for many through a "latch-key" childhood, has made you resourceful and hardworking. You meet your commitments and take employability seriously.
Your distrust of institutions grew as you witnessed the lay-offs of the '80s and has prompted you to value self-reliance. You have developed strong survival skills and the ability to handle whatever comes your way with resilience. X'ers instinctively maintain a well-nurtured portfolio of options and networks.
A sense of alienation from your immediate surroundings as teens, coupled with rapidly expanding technology, has allowed you to look outward in ways no generation before could or did. You operate comfortably in a global and digital world. Many of you are avid adopters of the collaborative technology that promises to re-shape how we work and live.
Your awareness of global issues was shaped in your youth, and you are richly multicultural. You bring a more unconscious acceptance of diversity than any preceding generation. Your formative years followed the civil rights advances of the 1960s. High divorce rates during your youth meant you are the first generation to grow up with women in independent authority roles. You welcome the contributions of diverse individuals.
Your preference for "alternative" and early experience in making your own way left you inclined to innovate. You tend to look for a different way forward. Your strongest arena of financial success as a generation has been your entrepreneurial achievements.
Your skepticism and ability to isolate practical truths have resulted in rich humor and incisive perspective. You help us all redefine issues and question reality.
Your childhood made you fiercely dedicated to being good parents, prompting you to raise important questions about the way we all balance work with commitments beyond the corporation.
Your pragmatism has given you practical and value-oriented sensibilities that, I believe, will help you serve as effective stewards of both today's organizations and tomorrow's world.
The most difficult elements of your past may well be those that provide you with the strongest capabilities for today.
You have traded the idealism of my generation for realism, tempered by value-oriented sensibilities. At mid-life, you are well-prepared to serve as pragmatic managers, applying toughness and resolution to defend society while safeguarding the interests of the young. You will force nations to produce more than they consume and fix the infrastructure.
In today's challenging world, your humor may be your most-valued asset. Czech leader Václav Havel said, "There are no exact guidelines. There are probably no guidelines at all. The only thing I can recommend at this stage is a sense of humor, an ability to see things in their ridiculous and absurd dimensions, to laugh at others and at ourselves, a sense of irony regarding everything that calls out for parody in this world." You help us step back . . . and remind us to laugh.
You will have the opportunity to change the corporate template, and create organizations that are more conducive to your values. As leaders, you will be able to reshape the organizations you lead to make them better places for future generations and yourselves, make them more humane, and break the cultural norms of corporate life — long hours, a focus on full-time work, heterogeneous perspectives, and language of combat. You will bring your desire to create better alternatives, including how to balance work with commitments beyond the corporation and finding meaning in work. Most importantly, your preference for "alternative" and your inclination to innovate will allow you to look for a different way forward.
I'm ready to join the team.
The Generation M Manifesto - Umair Haque
My generation would like to break up with you.
Everyday, I see a widening gap in how you and we understand the world — and what we want from it. I think we have irreconcilable differences.
You wanted big, fat, lazy "business." We want small, responsive, micro-scale commerce.
You turned politics into a dirty word. We want authentic, deep democracy — everywhere.
You wanted financial fundamentalism. We want an economics that makes sense for people — not just banks.
You wanted shareholder value — built by tough-guy CEOs. We want real value, built by people with character, dignity, and courage.
You wanted an invisible hand — it became a digital hand. Today's markets are those where the majority of trades are done literally robotically. We want a visible handshake: to trust and to be trusted.
You wanted growth — faster. We want to slow down — so we can become better.
You didn't care which communities were capsized, or which lives were sunk. We want a rising tide that lifts all boats.
You wanted to biggie size life: McMansions, Hummers, and McFood. We want to humanize life.
You wanted exurbs, sprawl, and gated anti-communities. We want a society built on authentic community.
You wanted more money, credit and leverage — to consume ravenously. We want to be great at doing stuff that matters.
You sacrificed the meaningful for the material: you sold out the very things that made us great for trivial gewgaws, trinkets, and gadgets. We're not for sale: we're learning to once again do what is meaningful.
There's a tectonic shift rocking the social, political, and economic landscape. The last two points above are what express it most concisely. I hate labels, but I'm going to employ a flawed, imperfect one: Generation "M."
What do the "M"s in Generation M stand for? The first is for a movement. It's a little bit about age — but mostly about a growing number of people who are acting very differently. They are doing meaningful stuff that matters the most. Those are the second, third, and fourth "M"s.
Gen M is about passion, responsibility, authenticity, and challenging yesterday's way of everything. Everywhere I look, I see an explosion of Gen M businesses, NGOs, open-source communities, local initiatives, government. Who's Gen M? Obama, kind of. Larry and Sergey. The Threadless, Etsy, and Flickr guys. Ev, Biz and the Twitter crew. Tehran 2.0. The folks at Kiva, Talking Points Memo, and FindtheFarmer. Shigeru Miyamoto, Steve Jobs, Muhammad Yunus, and Jeff Sachs are like the grandpas of Gen M. There are tons where these innovators came from.
Gen M isn't just kind of awesome — it's vitally necessary. If you think the "M"s sound idealistic, think again.
The great crisis isn't going away, changing, or "morphing." It's the same old crisis — and it's growing.
You've failed to recognize it for what it really is. It is, as I've repeatedly pointed out, in our institutions: the rules by which our economy is organized.
But they're your institutions, not ours. You made them — and they're broken. Here's what I mean:
"... For example, the auto industry has cut back production so far that inventories have begun to shrink — even in the face of historically weak demand for motor vehicles. As the economy stabilizes, just slowing the pace of this inventory shrinkage will boost gross domestic product, or GDP, which is the nation's total output of goods and services."
Clearing the backlog of SUVs built on 30-year-old technology is going to pump up GDP? So what? There couldn't be a clearer example of why GDP is a totally flawed concept, an obsolete institution. We don't need more land yachts clogging our roads: we need a 21st Century auto industry.
I was (kind of) kidding about seceding before. Here's what it looks like to me: every generation has a challenge, and this, I think, is ours: to foot the bill for yesterday's profligacy — and to create, instead, an authentically, sustainably shared prosperity.
Anyone — young or old — can answer it. Generation M is more about what you do and who you are than when you were born. So the question is this: do you still belong to the 20th century - or the 21st?
Everyday, I see a widening gap in how you and we understand the world — and what we want from it. I think we have irreconcilable differences.
You wanted big, fat, lazy "business." We want small, responsive, micro-scale commerce.
You turned politics into a dirty word. We want authentic, deep democracy — everywhere.
You wanted financial fundamentalism. We want an economics that makes sense for people — not just banks.
You wanted shareholder value — built by tough-guy CEOs. We want real value, built by people with character, dignity, and courage.
You wanted an invisible hand — it became a digital hand. Today's markets are those where the majority of trades are done literally robotically. We want a visible handshake: to trust and to be trusted.
You wanted growth — faster. We want to slow down — so we can become better.
You didn't care which communities were capsized, or which lives were sunk. We want a rising tide that lifts all boats.
You wanted to biggie size life: McMansions, Hummers, and McFood. We want to humanize life.
You wanted exurbs, sprawl, and gated anti-communities. We want a society built on authentic community.
You wanted more money, credit and leverage — to consume ravenously. We want to be great at doing stuff that matters.
You sacrificed the meaningful for the material: you sold out the very things that made us great for trivial gewgaws, trinkets, and gadgets. We're not for sale: we're learning to once again do what is meaningful.
There's a tectonic shift rocking the social, political, and economic landscape. The last two points above are what express it most concisely. I hate labels, but I'm going to employ a flawed, imperfect one: Generation "M."
What do the "M"s in Generation M stand for? The first is for a movement. It's a little bit about age — but mostly about a growing number of people who are acting very differently. They are doing meaningful stuff that matters the most. Those are the second, third, and fourth "M"s.
Gen M is about passion, responsibility, authenticity, and challenging yesterday's way of everything. Everywhere I look, I see an explosion of Gen M businesses, NGOs, open-source communities, local initiatives, government. Who's Gen M? Obama, kind of. Larry and Sergey. The Threadless, Etsy, and Flickr guys. Ev, Biz and the Twitter crew. Tehran 2.0. The folks at Kiva, Talking Points Memo, and FindtheFarmer. Shigeru Miyamoto, Steve Jobs, Muhammad Yunus, and Jeff Sachs are like the grandpas of Gen M. There are tons where these innovators came from.
Gen M isn't just kind of awesome — it's vitally necessary. If you think the "M"s sound idealistic, think again.
The great crisis isn't going away, changing, or "morphing." It's the same old crisis — and it's growing.
You've failed to recognize it for what it really is. It is, as I've repeatedly pointed out, in our institutions: the rules by which our economy is organized.
But they're your institutions, not ours. You made them — and they're broken. Here's what I mean:
"... For example, the auto industry has cut back production so far that inventories have begun to shrink — even in the face of historically weak demand for motor vehicles. As the economy stabilizes, just slowing the pace of this inventory shrinkage will boost gross domestic product, or GDP, which is the nation's total output of goods and services."
Clearing the backlog of SUVs built on 30-year-old technology is going to pump up GDP? So what? There couldn't be a clearer example of why GDP is a totally flawed concept, an obsolete institution. We don't need more land yachts clogging our roads: we need a 21st Century auto industry.
I was (kind of) kidding about seceding before. Here's what it looks like to me: every generation has a challenge, and this, I think, is ours: to foot the bill for yesterday's profligacy — and to create, instead, an authentically, sustainably shared prosperity.
Anyone — young or old — can answer it. Generation M is more about what you do and who you are than when you were born. So the question is this: do you still belong to the 20th century - or the 21st?
Wednesday, July 29, 2009
“The final thing is – and it comes back to the notion of leadership – it's empowering other people,” he says. “And entrepreneurs are people who have a sense of empowerment, of doing things better. They have the courage of the innocents, which is to ask, ‘Why are we doing it this way? Because we've always done it that way?' But not just why, why, why – but why not? Having put forth the question, what's the resolution?”
Saturday, July 25, 2009
Technology a favourite for Templeton - Shirley Won
Templeton Growth is one of the oldest mutual funds in Canada, launched 55 years ago by the late Sir John Templeton, who died last year. Since its inception, the storied fund has posted an average annual return of 11.9 per cent. Like its peers, however, Templeton Growth suffered during last year's market collapse.
Lisa Myers took over the helm of the fund nearly three years ago. From her perch in Nassau, Bahamas, she is the fifth manager with Franklin Templeton Investments to run the fund. Despite its strong history, the fund wasn't left unscathed by the market turmoil. It posted an compounded annual loss of 8.3 per cent for the three years ended June 30, compared with a loss of 6.2 per cent for the MSCI World Index in Canadian dollars.
We asked Ms. Myers, who was in Toronto yesterday for Franklin Templeton's annual investment outlook forum, about her strategies in the current market environment.
In last year's market collapse, your fund lost 30 per cent. Were you shocked?
The Templeton discipline has been around for 60 years. Buying undervalued stocks and taking advantage of opportunities to buy stocks in those times has historically shown to be a way of generating strong returns for shareholders over time. The discipline has never permitted us to participate in market bubbles or trends - whether it was the Japanese bubble in the 1980s, the technology bubble in the 1990s or the recent commodities bubble and China bubble. Last year, it was very anomalous time. There were very few stocks that went up in that market.
Stock markets have rallied from the March lows. Is it a rally in a bear market or is it the start of another bull market? We don't have an answer to that. There is lot of mixed data out there right now. Corporations were announcing their earnings this week and last week, and they are beating expectations. On the other hand, unemployment is still rising. Industrial production is better, but small companies are still having difficulties to get access to credit ... What we know is that we want to own companies because when the market is rallying you want to participate. You don't want to be out of the market.
Where are you finding the bargains?
We like technology, telecommunications, heath care and media. We like technology in general. There are big companies in the world cutting their costs. They are under pressure from slowing revenues because of the global economic environment. When they get to the point where they can no longer reduce head count and cut expenditures, they start making technology investments, which tend to be productivity enhancing. That helps companies generate earnings growth when the revenue line is not necessarily increasing as fast as it was, or at all. We also think the media space is really undervalued. Media companies, like News Corp., have become big acquirers. By diversifying their asset bases, they have continued to generate a lot of free cash flow.
What about the financial stocks that have been rebounding?
We were very underweight financials going into the crisis, but own some. We think the ones that we hold are better positioned, and didn't hold the toxic assets. One of the largest holdings is DBS Group Holdings Ltd., which is a large Singaporean bank that has a large exposure to the emerging markets. We are still very underweight financials - particularly in the United States. There are certain U.S. and European financials that will continue to see rising default rates, and rising issues for their assets for which they will have to raise more capital. It means dilution for shareholders ... We think [financial stocks] have gotten ahead of themselves.
What advice can you give investors shell-shocked by last year's steep market declines, and those in your fund?
I would tell them that they need to take a long-term view ... The bursting of these bubbles often cause recessions. Markets are quite volatile coming out of those recessions. Generally the things that go down the most will go up the most initially. Then, what happens is that the market reverts to a more value-oriented, normalized market. Investors start paying attention to valuations again, and we get out of this bubble or extreme macro-trading mentality like we have seen over the last month ... That's when the Templeton Growth Fund and the undervalued investments in the fund tend to outperform.
TOP PICKS
Oracle Corp.
The U.S. business software giant will benefit from firms needing its products to generate efficiencies and earnings growth, said Lisa Myers, head of Templeton. "Oracle throws off $8-billion (U.S.) in cash each year, and has $2.5-billion in cash on its balance sheet. It is a consolidator in the sector ... It acquired PeopleSoft Inc., Siebel Systems Inc. and it just recently bought Sun Micro Systems."
Microsoft Inc.
Microsoft, whose software drives more than 90 per cent of the world's personal computers, has more than more than $25-billion in cash on its balance sheet, Ms. Myers said. If its new Bing search engine can increase market share in that space beyond the current 8 per cent, "that's a huge uplift for Microsoft," while China is a potential growing market for its PC software, she adds.
Amgen Inc.
Biotechnology firms have been hit as hard as pharmaceutical companies, whose stocks are under pressure because of drug patent expiration and generic competition, Ms. Myers said. "Amgen doesn't necessarily suffer from [the same] stresses because biotechnology drugs are not as susceptible to patent expiration and to things that chemically-based drugs are subject to because of the way they are formulated."
TOP TEN HOLDINGS
Oracle Corp. 3.19%
Microsoft Corp. 2.97
Singapore Telecom. Ltd. 2.54
UPS Inc., B 2.34
Vodafone Group PLC 2.30
Telefonica SA 2.22
Amgen Inc. 2.20
Comcast Corp., A 2.09
DBS Group Holdings Ltd. 2.08
News Corp., A 2.06
Lisa Myers took over the helm of the fund nearly three years ago. From her perch in Nassau, Bahamas, she is the fifth manager with Franklin Templeton Investments to run the fund. Despite its strong history, the fund wasn't left unscathed by the market turmoil. It posted an compounded annual loss of 8.3 per cent for the three years ended June 30, compared with a loss of 6.2 per cent for the MSCI World Index in Canadian dollars.
We asked Ms. Myers, who was in Toronto yesterday for Franklin Templeton's annual investment outlook forum, about her strategies in the current market environment.
In last year's market collapse, your fund lost 30 per cent. Were you shocked?
The Templeton discipline has been around for 60 years. Buying undervalued stocks and taking advantage of opportunities to buy stocks in those times has historically shown to be a way of generating strong returns for shareholders over time. The discipline has never permitted us to participate in market bubbles or trends - whether it was the Japanese bubble in the 1980s, the technology bubble in the 1990s or the recent commodities bubble and China bubble. Last year, it was very anomalous time. There were very few stocks that went up in that market.
Stock markets have rallied from the March lows. Is it a rally in a bear market or is it the start of another bull market? We don't have an answer to that. There is lot of mixed data out there right now. Corporations were announcing their earnings this week and last week, and they are beating expectations. On the other hand, unemployment is still rising. Industrial production is better, but small companies are still having difficulties to get access to credit ... What we know is that we want to own companies because when the market is rallying you want to participate. You don't want to be out of the market.
Where are you finding the bargains?
We like technology, telecommunications, heath care and media. We like technology in general. There are big companies in the world cutting their costs. They are under pressure from slowing revenues because of the global economic environment. When they get to the point where they can no longer reduce head count and cut expenditures, they start making technology investments, which tend to be productivity enhancing. That helps companies generate earnings growth when the revenue line is not necessarily increasing as fast as it was, or at all. We also think the media space is really undervalued. Media companies, like News Corp., have become big acquirers. By diversifying their asset bases, they have continued to generate a lot of free cash flow.
What about the financial stocks that have been rebounding?
We were very underweight financials going into the crisis, but own some. We think the ones that we hold are better positioned, and didn't hold the toxic assets. One of the largest holdings is DBS Group Holdings Ltd., which is a large Singaporean bank that has a large exposure to the emerging markets. We are still very underweight financials - particularly in the United States. There are certain U.S. and European financials that will continue to see rising default rates, and rising issues for their assets for which they will have to raise more capital. It means dilution for shareholders ... We think [financial stocks] have gotten ahead of themselves.
What advice can you give investors shell-shocked by last year's steep market declines, and those in your fund?
I would tell them that they need to take a long-term view ... The bursting of these bubbles often cause recessions. Markets are quite volatile coming out of those recessions. Generally the things that go down the most will go up the most initially. Then, what happens is that the market reverts to a more value-oriented, normalized market. Investors start paying attention to valuations again, and we get out of this bubble or extreme macro-trading mentality like we have seen over the last month ... That's when the Templeton Growth Fund and the undervalued investments in the fund tend to outperform.
TOP PICKS
Oracle Corp.
The U.S. business software giant will benefit from firms needing its products to generate efficiencies and earnings growth, said Lisa Myers, head of Templeton. "Oracle throws off $8-billion (U.S.) in cash each year, and has $2.5-billion in cash on its balance sheet. It is a consolidator in the sector ... It acquired PeopleSoft Inc., Siebel Systems Inc. and it just recently bought Sun Micro Systems."
Microsoft Inc.
Microsoft, whose software drives more than 90 per cent of the world's personal computers, has more than more than $25-billion in cash on its balance sheet, Ms. Myers said. If its new Bing search engine can increase market share in that space beyond the current 8 per cent, "that's a huge uplift for Microsoft," while China is a potential growing market for its PC software, she adds.
Amgen Inc.
Biotechnology firms have been hit as hard as pharmaceutical companies, whose stocks are under pressure because of drug patent expiration and generic competition, Ms. Myers said. "Amgen doesn't necessarily suffer from [the same] stresses because biotechnology drugs are not as susceptible to patent expiration and to things that chemically-based drugs are subject to because of the way they are formulated."
TOP TEN HOLDINGS
Oracle Corp. 3.19%
Microsoft Corp. 2.97
Singapore Telecom. Ltd. 2.54
UPS Inc., B 2.34
Vodafone Group PLC 2.30
Telefonica SA 2.22
Amgen Inc. 2.20
Comcast Corp., A 2.09
DBS Group Holdings Ltd. 2.08
News Corp., A 2.06
Monday, July 20, 2009
50 Best Employers in Canada - Globe and Mail
For the past four years, BC Biomedical Laboratories has topped our list of the 50 Best Employers in Canada. But in 2006, we crown not one but two new champions. Among medium-sized companies (300 to 1,499 employees), the Winnipeg-based financial services firm Wellington West Capital took the top honour; Cintas Canada, meanwhile, ranked first among larger companies (1,500 employees or more). This is the first year we've separated companies by size, a format that should allow readers to better compare firms.
As always, those that make up our Top 50 this year are a diverse group, ranging from car rental companies like Enterprise to retailers like Wal-Mart, a multinational often portrayed as a foe of labour rather than a friend. In "What can we learn from Wal-Mart..." (next page), writer Steve Brearton explores why employees gave the nod to the store Sam Walton built, as well as to a couple of other firms that occupy less-than glamorous positions in the corporate pecking order—including our co-winner, Cintas. On the following pages, we chart the Top 50 and put a human face on all the numbers, with some key lessons delivered by employees themselves.
Our partner in the 50 Best survey again this year is Hewitt Associates, a leading global human resources outsourcing and consulting firm. Hewitt began work on the project in March, sending out invitations to 1,500 organizations. For each of the 137 companies that ultimately participated, between 200 and 1,000 employees completed a detailed questionnaire; these results account for the lion's share of an employer's ranking. The remainder is based on a survey of leadership qualities among the senior executive. Hewitt also examined how closely employees' and leaders' goals are aligned, and whether workplace practices and programs reinforce corporate vision. All responses were vetted to ensure companies followed the required survey guidelines.
For more information, including instructions on how firms can participate in next year's Best Employers survey, log on to www.hewitt.com/bestcompaniescanada.
Secrets of their success (and failure)
A firm's chances of ending up on our annual Best Employers list often turn on two simple words: thank you. In the seven years Neil Crawford, leader of the 50 Best study at Hewitt Consulting, has been ranking Canada's best employers, several themes have emerged. For one, organizations where managers and leaders show appreciation for their employees—those thank yous are known in HR circles as non-cash recognition—appear in large numbers in our Top 50. Another factor: Companies fare better when managers coach workers up the corporate rungs. Which leads to the final, crucial point, without which all the thank yous in the world are for naught: leadership. If employees have faith in their managers and executive team, if those in power present the corporate strategy clearly and consistently, employees will be engaged and care about the future of the company—the best outcome an employer can hope for.
Building a culture that embraces these ideals every day requires commitment, patience and single-mindedness, but once in place they become self-sustaining, a habit as natural as breathing. This year Hewitt identified a trio of top-ranked companies that have done this particularly well, and organized focus groups with their employees and managers. What follows are capsule descriptions of key characteristics of the 50 Best and ideas on what works from the employees themselves. Just as importantly, Crawford and Hewitt have drawn from their extensive research with other organizations to paint a picture of leadership, career opportunity and recognition practices that, in the end, fall short.
BEST
LEADERSHIP
Every employee has a role in making the organization successful—and each one knows what that role is. What's more, company leaders provide all employees with opportunities to practise their leadership skills.
In practice
* All levels of leadership understand where the organization is headed—and what it will take to get there
* Leaders display passion and enthusiasm for the future
* They build trust by making commitments and consistently delivering on them
* Leaders roll up their sleeves and work alongside employees to get the job done
* They spend most of their time and energy coaching employees
* They listen to what the front-line employees are saying and act quickly to fix problems
* They forge personal connections with employees
*
In the employees' words
* "Our leaders are in the trenches, and they don't see themselves as part of a hierarchy; they make sure we understand the decisions and that we buy into them"
* "The leaders want us to hold them accountable"
* "If we're not doing what management needs us to be doing, they will come right out and tell us—and help us get where we need to be"
* "What I love the most is the motivation that comes from the general manager"
COACHING FOR SUCCESS
Career growth and development is not just about being promoted; it needs to be an organic process whereby employees are encouraged to integrate change and grow, regardless of their position or role within the organization. Broad career development and advancement ensures an organization's future growth and success.
In practice
* Leaders continuously talk about the importance of growth and development. They ensure the appropriate resources are in place to support career development
* Leaders and managers are truly excited at the prospect of grooming their successors and helping employees reach their career goals
* The most qualified people inside the company are promoted. People are hired based on their potential
* Managers are properly equipped and trained to coach employees. Discussions about career development are ongoing
* Leaders and managers actively work to remove barriers to career development and advancement
In the employees' words
* "They pull out your great potential"
* "I'm a woman who wants a career and a family, and I was concerned this might jeopardize my career. But I don't worry about that here; the managers know my goals, and we worked out a game plan together"
* "There's an openness to learning here—a push to learn"
A RECOGNITION CULTURE
People feel emotionally connected to the organization because their personal contributions are recognized by managers and leaders alike. Moreover, the ways in which employees are recognized are tailored to the individual.
In practice
* Leaders and managers are always looking for ways in which employees can be recognized for their achievements—something that is especially important for those people who are new to the organization
*
* Extra work rarely goes unnoticed
*
* Recognition is delivered with an expression of sincere appreciation
*
* Employees' family members are recognized when appropriate
In the employees' words
* "We had a challenge to meet a specific goal. When we exceeded that goal, the executive team had to wash our cars and we were invited to the CEO's house for dinner"
* "Someone always gives us recognition when we do something extra. They expect us to do overtime, but they also appreciate it and thank us. A little 'thank you' goes a long way"
* "Some individuals are uncomfortable with public recognition, so we're very cautious about who we recognize publicly. Sometimes we just send a handwritten note"
* "People here take their cue from senior management, who have been publicly appreciating people for years"
WORST
LEADERSHIP
Employees are not clear on how day-to-day tasks affect the success of their company; they let their managers take the lead while they sit passively on the sidelines. Meanwhile, managers focus most of their time and energy on pumping up their own status within the company, rather than building their reputations on their workers' accomplishments.
In practice
* Messages from the most senior leaders become distorted as they descend through the layers of management
* Trust collapses as leaders consistently fail to deliver on their commitments
* Leaders tell employees what they are doing wrong but give them no help in fixing problems
* Management imposes its own solutions to problems without considering the advice of front-line employees
* Leaders maintain distance from employees
In the employees' words
* "'Leading by fear' would be an accurate description of our executive management style"
* "Leadership is not open to criticism or question.
* They humiliate the guy who asks questions"
* "A lot of employees feel that if they say too much or provide an opinion they'll get the cold shoulder from supervisors, a situation that persists for days and poisons the workplace environment"
* "In the last four years, we've never seen a business plan.
* The only plan we've seen is what profit margin was required"
COACHING FOR SUCCESS
Career growth and development is fragmented and inconsistent. Employees receive little encouragement to grow and learn, especially the people on the front lines. Career advancement and development is limited to those employees whose experience happens to fit profiles of positions that are hard to fill.
In practice
* Rather than promoting from within, leaders and managers hire from the outside
* Leaders constantly talk about the importance of growth and development, but provide no resources
* Managers and leaders set aside little time to groom successors
* The promotion process is rife with nepotism
* Managers appear to be uncomfortable when they have to discuss career development with their employees
In the employees' words
* "I know of several examples where suitable internal hires were rejected in favour of external people. In most cases, the position would have been ideal for the internal candidate, but the decision for an external hire was made 'because external requisitions are harder to get and we don't want to waste the opportunity'"
* "There are barriers to moving people around in different jobs"
* "Career development does not seem to be a priority in my organization. They've cancelled all the management and staff development programs; the attitude now seems to be all about reducing the cost of training, conferences and travel"
A RECOGNITION CULTURE
Workers are recognized inconsistently if at all, and some groups of employees seem to be recognized more often than others. Recognition is often confined to formal programs like awards for long service; in other cases, recognition attempts backfire because the type of recognition doesn't fit the employee's personality.
In practice
* Planned extra work is treated as business as usual, and goes unrecognized
* Praise is delivered as an afterthought and without sincerity
* Leaders and managers don't know enough about the personalities of their employees to be able to choose the right way of showing appreciation
In the employees' words
* "Some VPs encourage recognition, but they don't practise it"
* "I'm a relatively new people manager, and there's not much support to tell me what should be recognized, how to recognize and how the company feels about recognition"
* "Our recognition plan is flawed at best. It creates the impression that you have to know the right people to get enough recognition to win an award"
* "It's the local sales and service in each region that drives this company, but recognition always seems to happen at the corporate level. There are many more local success stories that could be recognized and communicated to the entire company"
As always, those that make up our Top 50 this year are a diverse group, ranging from car rental companies like Enterprise to retailers like Wal-Mart, a multinational often portrayed as a foe of labour rather than a friend. In "What can we learn from Wal-Mart..." (next page), writer Steve Brearton explores why employees gave the nod to the store Sam Walton built, as well as to a couple of other firms that occupy less-than glamorous positions in the corporate pecking order—including our co-winner, Cintas. On the following pages, we chart the Top 50 and put a human face on all the numbers, with some key lessons delivered by employees themselves.
Our partner in the 50 Best survey again this year is Hewitt Associates, a leading global human resources outsourcing and consulting firm. Hewitt began work on the project in March, sending out invitations to 1,500 organizations. For each of the 137 companies that ultimately participated, between 200 and 1,000 employees completed a detailed questionnaire; these results account for the lion's share of an employer's ranking. The remainder is based on a survey of leadership qualities among the senior executive. Hewitt also examined how closely employees' and leaders' goals are aligned, and whether workplace practices and programs reinforce corporate vision. All responses were vetted to ensure companies followed the required survey guidelines.
For more information, including instructions on how firms can participate in next year's Best Employers survey, log on to www.hewitt.com/bestcompaniescanada.
Secrets of their success (and failure)
A firm's chances of ending up on our annual Best Employers list often turn on two simple words: thank you. In the seven years Neil Crawford, leader of the 50 Best study at Hewitt Consulting, has been ranking Canada's best employers, several themes have emerged. For one, organizations where managers and leaders show appreciation for their employees—those thank yous are known in HR circles as non-cash recognition—appear in large numbers in our Top 50. Another factor: Companies fare better when managers coach workers up the corporate rungs. Which leads to the final, crucial point, without which all the thank yous in the world are for naught: leadership. If employees have faith in their managers and executive team, if those in power present the corporate strategy clearly and consistently, employees will be engaged and care about the future of the company—the best outcome an employer can hope for.
Building a culture that embraces these ideals every day requires commitment, patience and single-mindedness, but once in place they become self-sustaining, a habit as natural as breathing. This year Hewitt identified a trio of top-ranked companies that have done this particularly well, and organized focus groups with their employees and managers. What follows are capsule descriptions of key characteristics of the 50 Best and ideas on what works from the employees themselves. Just as importantly, Crawford and Hewitt have drawn from their extensive research with other organizations to paint a picture of leadership, career opportunity and recognition practices that, in the end, fall short.
BEST
LEADERSHIP
Every employee has a role in making the organization successful—and each one knows what that role is. What's more, company leaders provide all employees with opportunities to practise their leadership skills.
In practice
* All levels of leadership understand where the organization is headed—and what it will take to get there
* Leaders display passion and enthusiasm for the future
* They build trust by making commitments and consistently delivering on them
* Leaders roll up their sleeves and work alongside employees to get the job done
* They spend most of their time and energy coaching employees
* They listen to what the front-line employees are saying and act quickly to fix problems
* They forge personal connections with employees
*
In the employees' words
* "Our leaders are in the trenches, and they don't see themselves as part of a hierarchy; they make sure we understand the decisions and that we buy into them"
* "The leaders want us to hold them accountable"
* "If we're not doing what management needs us to be doing, they will come right out and tell us—and help us get where we need to be"
* "What I love the most is the motivation that comes from the general manager"
COACHING FOR SUCCESS
Career growth and development is not just about being promoted; it needs to be an organic process whereby employees are encouraged to integrate change and grow, regardless of their position or role within the organization. Broad career development and advancement ensures an organization's future growth and success.
In practice
* Leaders continuously talk about the importance of growth and development. They ensure the appropriate resources are in place to support career development
* Leaders and managers are truly excited at the prospect of grooming their successors and helping employees reach their career goals
* The most qualified people inside the company are promoted. People are hired based on their potential
* Managers are properly equipped and trained to coach employees. Discussions about career development are ongoing
* Leaders and managers actively work to remove barriers to career development and advancement
In the employees' words
* "They pull out your great potential"
* "I'm a woman who wants a career and a family, and I was concerned this might jeopardize my career. But I don't worry about that here; the managers know my goals, and we worked out a game plan together"
* "There's an openness to learning here—a push to learn"
A RECOGNITION CULTURE
People feel emotionally connected to the organization because their personal contributions are recognized by managers and leaders alike. Moreover, the ways in which employees are recognized are tailored to the individual.
In practice
* Leaders and managers are always looking for ways in which employees can be recognized for their achievements—something that is especially important for those people who are new to the organization
*
* Extra work rarely goes unnoticed
*
* Recognition is delivered with an expression of sincere appreciation
*
* Employees' family members are recognized when appropriate
In the employees' words
* "We had a challenge to meet a specific goal. When we exceeded that goal, the executive team had to wash our cars and we were invited to the CEO's house for dinner"
* "Someone always gives us recognition when we do something extra. They expect us to do overtime, but they also appreciate it and thank us. A little 'thank you' goes a long way"
* "Some individuals are uncomfortable with public recognition, so we're very cautious about who we recognize publicly. Sometimes we just send a handwritten note"
* "People here take their cue from senior management, who have been publicly appreciating people for years"
WORST
LEADERSHIP
Employees are not clear on how day-to-day tasks affect the success of their company; they let their managers take the lead while they sit passively on the sidelines. Meanwhile, managers focus most of their time and energy on pumping up their own status within the company, rather than building their reputations on their workers' accomplishments.
In practice
* Messages from the most senior leaders become distorted as they descend through the layers of management
* Trust collapses as leaders consistently fail to deliver on their commitments
* Leaders tell employees what they are doing wrong but give them no help in fixing problems
* Management imposes its own solutions to problems without considering the advice of front-line employees
* Leaders maintain distance from employees
In the employees' words
* "'Leading by fear' would be an accurate description of our executive management style"
* "Leadership is not open to criticism or question.
* They humiliate the guy who asks questions"
* "A lot of employees feel that if they say too much or provide an opinion they'll get the cold shoulder from supervisors, a situation that persists for days and poisons the workplace environment"
* "In the last four years, we've never seen a business plan.
* The only plan we've seen is what profit margin was required"
COACHING FOR SUCCESS
Career growth and development is fragmented and inconsistent. Employees receive little encouragement to grow and learn, especially the people on the front lines. Career advancement and development is limited to those employees whose experience happens to fit profiles of positions that are hard to fill.
In practice
* Rather than promoting from within, leaders and managers hire from the outside
* Leaders constantly talk about the importance of growth and development, but provide no resources
* Managers and leaders set aside little time to groom successors
* The promotion process is rife with nepotism
* Managers appear to be uncomfortable when they have to discuss career development with their employees
In the employees' words
* "I know of several examples where suitable internal hires were rejected in favour of external people. In most cases, the position would have been ideal for the internal candidate, but the decision for an external hire was made 'because external requisitions are harder to get and we don't want to waste the opportunity'"
* "There are barriers to moving people around in different jobs"
* "Career development does not seem to be a priority in my organization. They've cancelled all the management and staff development programs; the attitude now seems to be all about reducing the cost of training, conferences and travel"
A RECOGNITION CULTURE
Workers are recognized inconsistently if at all, and some groups of employees seem to be recognized more often than others. Recognition is often confined to formal programs like awards for long service; in other cases, recognition attempts backfire because the type of recognition doesn't fit the employee's personality.
In practice
* Planned extra work is treated as business as usual, and goes unrecognized
* Praise is delivered as an afterthought and without sincerity
* Leaders and managers don't know enough about the personalities of their employees to be able to choose the right way of showing appreciation
In the employees' words
* "Some VPs encourage recognition, but they don't practise it"
* "I'm a relatively new people manager, and there's not much support to tell me what should be recognized, how to recognize and how the company feels about recognition"
* "Our recognition plan is flawed at best. It creates the impression that you have to know the right people to get enough recognition to win an award"
* "It's the local sales and service in each region that drives this company, but recognition always seems to happen at the corporate level. There are many more local success stories that could be recognized and communicated to the entire company"
DESK ORGANIZATION - TAVIA GRANT
BRING ON THE MESS
The view: "A messy desk says that you're a normal human being, and, in fact, that you're like the vast majority of people. It also says that you're not the kind of person who places neatness and organization over actual efficiency, because a messy desk tends to be more efficient than a very neat desk."
Proof: "A survey my co-author and I did found that people who had messy desks spent less time hunting for things than people who had very neat desks. That makes a lot of sense, because, when you have a messy desk, you're arranging things in a way that's customized to the way you think and work."
Caveat: "Some people claim that having a messy desk is a sign of being a more creative person. I don't think it's true that someone who has a very neat desk is necessarily an uncreative person, and I've seen accountants with very messy desks and artists with extremely neat desks. But it's true that creativity is largely about making surprising connections, and a messy desk is certainly a way of mixing and matching things in sometimes interesting ways."
David Freedman, co-author of A Perfect Mess
***
CLEAN IT UP
The view: "We've lapsed into this culture where we believe that the messier we are, the busier we look. Having an untidy desk says you have no sense of priority. ... It damages your ability to make good decisions, and all of that combines to add more stress in the workplace [for you and your colleagues]."
Proof: "Our research found a clear desk space also gives a clear mind space. It helps you prioritize what's most urgent and makes you more efficient. It also helps your ability to make good decisions because you have the information available where you need it."
Caveat: "There are cases where [people can still function well]; it's just about our individual makeup." Also worth mentioning is that messiness nowadays is much less visible: It's become "electronic clutter," or excessive files stored on office computers.
Theo Theobald, co-author of Detox Your Desk
***
FIVE TIPS FOR A CLEANER DESK
1 Contain your stuff
Don't let your belongings spill onto your colleagues' desks, or into the corridor.
2 Don't obstruct daytime traffic
If you need to overhaul your filing system and spread all your possessions out on chairs, do it after hours.
3 Avoid the photo gallery
How much do you really want others to know? Don't display an album of pictures - a few photos will suffice.
4 Avoid extra pairs of shoes, or a change of clothes
Your cubicle is not your home closet.
5 Be cautious with foliage
Plants can drop leaves and leak water; do not cultivate a jungle. Remember that others may have allergies to certain plants.
Source: Diane Craig, Toronto-based workplace etiquette specialist
***
By the numbers
48
Percentage of people who are "pilers" - they organize paper by piling it on their desktops.
38
Percentage of people who are "filers" - they file rather than pile, and tend to have
management titles.
14
Percentage of people who are "tossers" - they keep their desks spare and uncluttered.
Source: 2005 survey by Pendaflex, a New York-based company specializing in organizational solutions
The view: "A messy desk says that you're a normal human being, and, in fact, that you're like the vast majority of people. It also says that you're not the kind of person who places neatness and organization over actual efficiency, because a messy desk tends to be more efficient than a very neat desk."
Proof: "A survey my co-author and I did found that people who had messy desks spent less time hunting for things than people who had very neat desks. That makes a lot of sense, because, when you have a messy desk, you're arranging things in a way that's customized to the way you think and work."
Caveat: "Some people claim that having a messy desk is a sign of being a more creative person. I don't think it's true that someone who has a very neat desk is necessarily an uncreative person, and I've seen accountants with very messy desks and artists with extremely neat desks. But it's true that creativity is largely about making surprising connections, and a messy desk is certainly a way of mixing and matching things in sometimes interesting ways."
David Freedman, co-author of A Perfect Mess
***
CLEAN IT UP
The view: "We've lapsed into this culture where we believe that the messier we are, the busier we look. Having an untidy desk says you have no sense of priority. ... It damages your ability to make good decisions, and all of that combines to add more stress in the workplace [for you and your colleagues]."
Proof: "Our research found a clear desk space also gives a clear mind space. It helps you prioritize what's most urgent and makes you more efficient. It also helps your ability to make good decisions because you have the information available where you need it."
Caveat: "There are cases where [people can still function well]; it's just about our individual makeup." Also worth mentioning is that messiness nowadays is much less visible: It's become "electronic clutter," or excessive files stored on office computers.
Theo Theobald, co-author of Detox Your Desk
***
FIVE TIPS FOR A CLEANER DESK
1 Contain your stuff
Don't let your belongings spill onto your colleagues' desks, or into the corridor.
2 Don't obstruct daytime traffic
If you need to overhaul your filing system and spread all your possessions out on chairs, do it after hours.
3 Avoid the photo gallery
How much do you really want others to know? Don't display an album of pictures - a few photos will suffice.
4 Avoid extra pairs of shoes, or a change of clothes
Your cubicle is not your home closet.
5 Be cautious with foliage
Plants can drop leaves and leak water; do not cultivate a jungle. Remember that others may have allergies to certain plants.
Source: Diane Craig, Toronto-based workplace etiquette specialist
***
By the numbers
48
Percentage of people who are "pilers" - they organize paper by piling it on their desktops.
38
Percentage of people who are "filers" - they file rather than pile, and tend to have
management titles.
14
Percentage of people who are "tossers" - they keep their desks spare and uncluttered.
Source: 2005 survey by Pendaflex, a New York-based company specializing in organizational solutions
Saturday, July 18, 2009
Managing Oneself - Key ideas from the Harvard Business Review article by Peter F. Drucker
The Idea in Brief
We live in an age of unprecedented opportunity: If you’ve got ambition, drive, and smarts, you can rise to the top of your chosen profession—regardless of where you started out. But with opportunity comes responsibility. Companies today aren’t managing their knowledge workers’ careers. Rather, we must each be our own chief executive officer.
Simply put, it’s up to you to carve out your place in the work world and know when to change course. And it’s up to you to keep yourself engaged and productive during a work life that may span some 50 years.
To do all of these things well, you’ll need to cultivate a deep understanding of yourself. What are your most valuable strengths and most dangerous weaknesses? Equally important, how do you learn and work with others? What are your most deeply held values? And in what type of work environment can you make the greatest contribution?
The implication is clear: Only when you operate from a combination of your strengths and self-knowledge can you achieve true—and lasting—excellence.
The Idea in Practice
To build a life of excellence, begin by asking yourself these questions:
“WHAT ARE MY STRENGTHS?”
To accurately identify your strengths, use feedback analysis. Every time you make a key decision, write down the outcome you expect. Several months later, compare the actual results with your expected results. Look for patterns in what you’re seeing: What results are you skilled at generating? What abilities do you need to enhance in order to get the results you want? What unproductive habits are preventing you from creating the outcomes you desire? In identifying opportunities for improvement, don’t waste time cultivating skill areas where you have little competence. Instead, concentrate on—and build on—your strengths.
“HOW DO I WORK?”
In what ways do you work best? Do you process information most effectively by reading it, or by hearing others discuss it? Do you accomplish the most by working with other people, or by working alone? Do you perform best while making decisions, or while advising others on key matters? Are you in top form when things get stressful, or do you function optimally in a highly predictable environment?
“WHAT ARE MY VALUES?”
What are your ethics? What do you see as your most important responsibilities for living a worthy, ethical life? Do your organization’s ethics resonate with your own values? If not, your career will likely be marked by frustration and poor performance.
“WHERE DO I BELONG?”
Consider your strengths, preferred work style, and values. Based on these qualities, in what kind of work environment would you fit in best? Find the perfect fit, and you’ll transform yourself from a merely acceptable employee into a star performer.
“WHAT CAN I CONTRIBUTE?”
In earlier eras, companies told businesspeople what their contribution should be. Today, you have choices. To decide how you can best enhance your organization’s performance, first ask what the situation requires. Based on your strengths, work style, and values, how might you make the greatest contribution to your organization’s efforts?
We live in an age of unprecedented opportunity: If you’ve got ambition, drive, and smarts, you can rise to the top of your chosen profession—regardless of where you started out. But with opportunity comes responsibility. Companies today aren’t managing their knowledge workers’ careers. Rather, we must each be our own chief executive officer.
Simply put, it’s up to you to carve out your place in the work world and know when to change course. And it’s up to you to keep yourself engaged and productive during a work life that may span some 50 years.
To do all of these things well, you’ll need to cultivate a deep understanding of yourself. What are your most valuable strengths and most dangerous weaknesses? Equally important, how do you learn and work with others? What are your most deeply held values? And in what type of work environment can you make the greatest contribution?
The implication is clear: Only when you operate from a combination of your strengths and self-knowledge can you achieve true—and lasting—excellence.
The Idea in Practice
To build a life of excellence, begin by asking yourself these questions:
“WHAT ARE MY STRENGTHS?”
To accurately identify your strengths, use feedback analysis. Every time you make a key decision, write down the outcome you expect. Several months later, compare the actual results with your expected results. Look for patterns in what you’re seeing: What results are you skilled at generating? What abilities do you need to enhance in order to get the results you want? What unproductive habits are preventing you from creating the outcomes you desire? In identifying opportunities for improvement, don’t waste time cultivating skill areas where you have little competence. Instead, concentrate on—and build on—your strengths.
“HOW DO I WORK?”
In what ways do you work best? Do you process information most effectively by reading it, or by hearing others discuss it? Do you accomplish the most by working with other people, or by working alone? Do you perform best while making decisions, or while advising others on key matters? Are you in top form when things get stressful, or do you function optimally in a highly predictable environment?
“WHAT ARE MY VALUES?”
What are your ethics? What do you see as your most important responsibilities for living a worthy, ethical life? Do your organization’s ethics resonate with your own values? If not, your career will likely be marked by frustration and poor performance.
“WHERE DO I BELONG?”
Consider your strengths, preferred work style, and values. Based on these qualities, in what kind of work environment would you fit in best? Find the perfect fit, and you’ll transform yourself from a merely acceptable employee into a star performer.
“WHAT CAN I CONTRIBUTE?”
In earlier eras, companies told businesspeople what their contribution should be. Today, you have choices. To decide how you can best enhance your organization’s performance, first ask what the situation requires. Based on your strengths, work style, and values, how might you make the greatest contribution to your organization’s efforts?
Thursday, July 16, 2009
How to Make People Passionate About Their Work - John Baldoni
I know two CEOs: one in publishing is a friend; the other in manufacturing is an email correspondent. There is a common bond between the two; both are in their sixties and both act as if they are closer to twenty-two. Their sense of vitality springs from their passion for what they do.
Each feels a sense of pride in the businesses he leads; more importantly, each is pushing his respective organization to new heights with a vigor found typically in much younger men. Their can-do attitudes seem almost corny, as if sketched from an earlier age or at least from musicals like The Music Man. But both men are in exactly the right positions at the right time.
Generating enthusiasm, or passion, for what you do is essential. It is doubly so in perilous times. When everything around us seems to be coming apart, a leader who has a passion for what he does is essential. Such a spirit fuels the engine of enthusiasm needed to spark the enterprise. More importantly, such passion is vital to convincing others that the work matters. It is easy to get discouraged by today's market news and so it is vital that someone, be it the CEO or another senior leader, serves as the organization's designated cheerleader.
Ultimately instilling passion for the work is not an exercise in rah-rah; it is a search for meaning and significance. So how can you cultivate passion for work in others and do it in ways that have significance? Here are some suggestions.
Focus on the positive. Passion in leaders can be palpable; you know in an instant that the executive cares about the company. In my experience, those senior leaders who stroll through the halls with a nod or good word to say to all are those executives who get things done. And it is because they are out and about, not cloistered in their offices on mahogany row. Rather, they are meeting with employees and customers, vendors and investors, getting to know issues and concerns. They also use these times to talk up the good things.
Address the negatives. Passionate leaders are not Pollyannas; they know the score, precisely because they spend so much time out of their offices. They see firsthand what is working and what is not, and because they have a relationship with people in all levels of the company, they can more readily mobilize employees to solve problems.
Set high expectations. Those who care about the work and set a high standard challenge others to do the same.
As much as generating passion for the work matters, it is no guarantee of success, or even survival. Radiating passion is no excuse for ignoring attention to the fundamentals.
Yet successful organizations are more than the sum of fiscal prudence. Good ones are the collective values and aspirations of dedicated men and women who have made a choice to work there. Such organizations, be they in healthcare or manufacturing, consumer goods or government, ultimately depend upon the commitment of individuals pulling together to make things work. That's why you need leaders who have a passion for what they do and are able to spread that passion to others so that people feel better about what they do, and ultimately, what they can do better.
Each feels a sense of pride in the businesses he leads; more importantly, each is pushing his respective organization to new heights with a vigor found typically in much younger men. Their can-do attitudes seem almost corny, as if sketched from an earlier age or at least from musicals like The Music Man. But both men are in exactly the right positions at the right time.
Generating enthusiasm, or passion, for what you do is essential. It is doubly so in perilous times. When everything around us seems to be coming apart, a leader who has a passion for what he does is essential. Such a spirit fuels the engine of enthusiasm needed to spark the enterprise. More importantly, such passion is vital to convincing others that the work matters. It is easy to get discouraged by today's market news and so it is vital that someone, be it the CEO or another senior leader, serves as the organization's designated cheerleader.
Ultimately instilling passion for the work is not an exercise in rah-rah; it is a search for meaning and significance. So how can you cultivate passion for work in others and do it in ways that have significance? Here are some suggestions.
Focus on the positive. Passion in leaders can be palpable; you know in an instant that the executive cares about the company. In my experience, those senior leaders who stroll through the halls with a nod or good word to say to all are those executives who get things done. And it is because they are out and about, not cloistered in their offices on mahogany row. Rather, they are meeting with employees and customers, vendors and investors, getting to know issues and concerns. They also use these times to talk up the good things.
Address the negatives. Passionate leaders are not Pollyannas; they know the score, precisely because they spend so much time out of their offices. They see firsthand what is working and what is not, and because they have a relationship with people in all levels of the company, they can more readily mobilize employees to solve problems.
Set high expectations. Those who care about the work and set a high standard challenge others to do the same.
As much as generating passion for the work matters, it is no guarantee of success, or even survival. Radiating passion is no excuse for ignoring attention to the fundamentals.
Yet successful organizations are more than the sum of fiscal prudence. Good ones are the collective values and aspirations of dedicated men and women who have made a choice to work there. Such organizations, be they in healthcare or manufacturing, consumer goods or government, ultimately depend upon the commitment of individuals pulling together to make things work. That's why you need leaders who have a passion for what they do and are able to spread that passion to others so that people feel better about what they do, and ultimately, what they can do better.
Monday, July 13, 2009
Monkey Business - Sarah Lolley
The botanical gardens in Dalat, Vietnam, were a total bust – as scrappy and uninspired as a miniature golf course, despite the inflated entry price for foreigners. My boyfriend, Jack, and I were about to leave when we spotted the monkey enclosure, where five scruffy monkeys hoped around in individual cages.
As we approached, one of them climbed up the bars of his cage to our eye level. Jack laughed in surprise and leaned in to get a better look at the monkey. The monkey leaned in to get a better look at Jack. The two stared at each other for a moment. Then, in a flash, the monkey reached through the bars, snatched the sunglasses off Jack's face, and retreated to the middle of its cage.
The sunglasses weren't expensive – we'd bought them at a gas station in the Australian Outback earlier on our backpacking trip – but Jack loved them, mainly because of the cheesy race car-esque flames down the sides. Glumly, we watched the monkey chew on one of the arms of the sunglasses.
Figuring someone might have a key to the enclosure, Jack headed off in the direction of the ticket booth. He was already out of sight when I remembered the banana in my bag.
Seeing me take it out, the monkey lost all interest in the sunglasses, dropping them in the dirt and jumping up to my level again.
“So,” I addressed the simian, in the voice of a stern librarian. “You're an intelligent animal, and what I'm proposing is a simple trade. You have something I want,” I said, pointing at the sunglasses. The monkey looked down at them, then back at me.
“And I have something you want,” I concluded, holding up the banana. I brimmed with self-confidence. This plan is brilliant, I said to myself.
A young Vietnamese couple wandered over. They watched me for a few moments, then called out to another Vietnamese couple, who came rushing over.
That's right I thought, proudly. Come see how amazing we Canadian travellers are I kept up my assertive negotiations.
A group of five Vietnamese men in business suits joined us. A rapid-fire Vietnamese exchange ensued between the couples and the businessmen. The men all looked at me, incredulous. Two started giggling.
A crack formed in the bedrock of my poise. I tried to ignore it, but nothing doing.
Suddenly, I saw myself as my audience must have. “Give me the damn glasses,” I snapped at the primate.
Over the next few minutes of fruitless, one-way conversation with the monkey, my confidence was replaced with burning shame. It became clear that I wasn't going to get the sunglasses back. Even worse, I now had a group of spectators to face up to.
It was at that exact moment that the monkey hopped down to retrieve the sunglasses, ambled over to the side of the cage, extended his little monkey arm outside the bars and let go. He then ran back up the bars to my level and reached for the banana.
There was a stunned silence. All eyes, including the monkey's, were on me.
Was it a trick? Slowly, I retrieved the sunglasses. For a brief second, I thought about leaving the monkey high and dry, but fair was fair. I placed the banana in his tiny paw.
“Sarah”
I turned to see Jack approaching, two Vietnamese groundskeepers in tow. I smiled victoriously, suddenly loving the Dalat Botanical Gardens, and held up the sunglasses for all to see.
As we approached, one of them climbed up the bars of his cage to our eye level. Jack laughed in surprise and leaned in to get a better look at the monkey. The monkey leaned in to get a better look at Jack. The two stared at each other for a moment. Then, in a flash, the monkey reached through the bars, snatched the sunglasses off Jack's face, and retreated to the middle of its cage.
The sunglasses weren't expensive – we'd bought them at a gas station in the Australian Outback earlier on our backpacking trip – but Jack loved them, mainly because of the cheesy race car-esque flames down the sides. Glumly, we watched the monkey chew on one of the arms of the sunglasses.
Figuring someone might have a key to the enclosure, Jack headed off in the direction of the ticket booth. He was already out of sight when I remembered the banana in my bag.
Seeing me take it out, the monkey lost all interest in the sunglasses, dropping them in the dirt and jumping up to my level again.
“So,” I addressed the simian, in the voice of a stern librarian. “You're an intelligent animal, and what I'm proposing is a simple trade. You have something I want,” I said, pointing at the sunglasses. The monkey looked down at them, then back at me.
“And I have something you want,” I concluded, holding up the banana. I brimmed with self-confidence. This plan is brilliant, I said to myself.
A young Vietnamese couple wandered over. They watched me for a few moments, then called out to another Vietnamese couple, who came rushing over.
That's right I thought, proudly. Come see how amazing we Canadian travellers are I kept up my assertive negotiations.
A group of five Vietnamese men in business suits joined us. A rapid-fire Vietnamese exchange ensued between the couples and the businessmen. The men all looked at me, incredulous. Two started giggling.
A crack formed in the bedrock of my poise. I tried to ignore it, but nothing doing.
Suddenly, I saw myself as my audience must have. “Give me the damn glasses,” I snapped at the primate.
Over the next few minutes of fruitless, one-way conversation with the monkey, my confidence was replaced with burning shame. It became clear that I wasn't going to get the sunglasses back. Even worse, I now had a group of spectators to face up to.
It was at that exact moment that the monkey hopped down to retrieve the sunglasses, ambled over to the side of the cage, extended his little monkey arm outside the bars and let go. He then ran back up the bars to my level and reached for the banana.
There was a stunned silence. All eyes, including the monkey's, were on me.
Was it a trick? Slowly, I retrieved the sunglasses. For a brief second, I thought about leaving the monkey high and dry, but fair was fair. I placed the banana in his tiny paw.
“Sarah”
I turned to see Jack approaching, two Vietnamese groundskeepers in tow. I smiled victoriously, suddenly loving the Dalat Botanical Gardens, and held up the sunglasses for all to see.
Sunday, July 5, 2009
Recommended Reading from Sprott
Books - General
The Richest Man In Babylon, George S. Clason, 1991
Stock Market Logic: A Sophisticated Approach To Profits on Wall Street, Norman G. Fosback, 1998
One Up On Wall Street: How To Use What You Already Know To Make Money In The Market, Peter Lynch, 2000
When Genius Failed: The Rise and Fall of Long-Term Capital Management, Roger Lowenstein, 2001
Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression, Robert R. Prechter, 2003
Irrational Exuberance, Robert J. Shiller, 2001
Irrational Exuberance: Second Edition, Robert J. Schiller, 2005
The Coming Generational Storm: What You Need to Know about America’s Economic Future, Laurence J. Kotlikoff, 2005
Book - Energy
The Long Emergency, James Howard Kunstler, 2005
Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, 2005, Matthew R. Simmons, 2005
Beyond Oil: The View from Hubbert’s Peak, 2005, Kenneth S. Deffeyes, 2005
The Coming Oil Crisis, C. J. Campbell, 2004
Sleeping with the Devil: How Washington Sold Our Soul for Saudi Crude, Robert Baer, 2003
The Party’s Over: Oil, War and the Fate of Industrial Societies, Richard Heinberg, 2003
Hubbert’s Peak: The Impending World Oil Shortage, Kenneth S. Deffeyes, 2003
The Oil Factor: How Oil Controls the Economy and Your Financial Future, Stephen Leeb and Donna Leeb, 2004
Out of Gas: The End of the Age of Oil, David Goodstein, 2004
Books - Gold & Precious Minerals
Gold Wars: The Battle Against Sound Money as Seen From a Swiss Perspective, Ferdinand Lips, 2002
What Has Government Done To Our Money?, Murray N. Rothbard, 1990
The Dollar Crisis: Causes, Consequences, Cures, Revised and Updated, Richard Duncan, 2003
Financial Reckoning Day: Surviving The Soft Depression of the 21st Century, William Bonner, 2003
The Coming Collapse of the Dollar and How to Profit From it: Make a Fortune by Investing in Gold and Other Hard Assets, James Turk and John Rubino, 2004
Tomorrow’s Gold: Asia’s Age of Discovery, Marc Faber, 2002
The Richest Man In Babylon, George S. Clason, 1991
Stock Market Logic: A Sophisticated Approach To Profits on Wall Street, Norman G. Fosback, 1998
One Up On Wall Street: How To Use What You Already Know To Make Money In The Market, Peter Lynch, 2000
When Genius Failed: The Rise and Fall of Long-Term Capital Management, Roger Lowenstein, 2001
Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression, Robert R. Prechter, 2003
Irrational Exuberance, Robert J. Shiller, 2001
Irrational Exuberance: Second Edition, Robert J. Schiller, 2005
The Coming Generational Storm: What You Need to Know about America’s Economic Future, Laurence J. Kotlikoff, 2005
Book - Energy
The Long Emergency, James Howard Kunstler, 2005
Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, 2005, Matthew R. Simmons, 2005
Beyond Oil: The View from Hubbert’s Peak, 2005, Kenneth S. Deffeyes, 2005
The Coming Oil Crisis, C. J. Campbell, 2004
Sleeping with the Devil: How Washington Sold Our Soul for Saudi Crude, Robert Baer, 2003
The Party’s Over: Oil, War and the Fate of Industrial Societies, Richard Heinberg, 2003
Hubbert’s Peak: The Impending World Oil Shortage, Kenneth S. Deffeyes, 2003
The Oil Factor: How Oil Controls the Economy and Your Financial Future, Stephen Leeb and Donna Leeb, 2004
Out of Gas: The End of the Age of Oil, David Goodstein, 2004
Books - Gold & Precious Minerals
Gold Wars: The Battle Against Sound Money as Seen From a Swiss Perspective, Ferdinand Lips, 2002
What Has Government Done To Our Money?, Murray N. Rothbard, 1990
The Dollar Crisis: Causes, Consequences, Cures, Revised and Updated, Richard Duncan, 2003
Financial Reckoning Day: Surviving The Soft Depression of the 21st Century, William Bonner, 2003
The Coming Collapse of the Dollar and How to Profit From it: Make a Fortune by Investing in Gold and Other Hard Assets, James Turk and John Rubino, 2004
Tomorrow’s Gold: Asia’s Age of Discovery, Marc Faber, 2002
PIMCO Investment Outlook - "Bon" or "Non" Appétit?
“Kill the umpire,” the fan cried to open the 1996 baseball season in Cincinnati, and eight pitches later, the man behind the plate, John McSherry, was dead, all 320 pounds of him screaming for more and more oxygen to feed his spastic heart. He’d been killed by a billion molecules of sink-clogging, Drano-resistant cholesterol that fed on his coronary artery and sucked up his life’s blood like a vampire in the heat of the night. The next day Howard Stern had characteristically railed that the antidote was obvious. It was the same for all fat people: “DON’T EAT,” he howled. As if the ump hadn’t known. The fact was, he couldn’t stop. He loved the taste of food – every sugary, fat-ladened, carbohydrated morsel. The first bite was a special ecstasy, as was the last, and everything in between. The man, it seemed, was a Cuisinart with four limbs.
Franz Kafka wove a tale 100 years earlier that was a mirror image of McSherry’s tragedy. His “A Hunger Artist” described a professional faster – a sideshow freak in 19th century Europe who attracted attention and spare coins by withering away inside a wooden cage. The gapers marveled at his shriveled skeleton, stuck their hands through the bars to nudge his boney ribs, and awed at his resolve to starve himself to the precipice of self-extinction. “I always wanted you to admire my fasting,” confessed the hunger artist, “but you shouldn’t have. The fact is, I have to fast, I can’t help it. I couldn’t find the food I liked. If I had found it, believe me, I would have made no fuss and stuffed myself like you or anyone else.”
The juxtaposition: one man who couldn’t stop and another one who couldn’t start – eating, that is. Their stories, though, are really not about food, but life itself – what compels us to do what we do, what forces us to act or not to act, what makes us who we are: is personal behavior really beyond our control? Shakespeare would retort that the fault lies not in our stars, but in ourselves. On the other hand, who are we other than this amorphous, gelatinous blob of moving flesh and bone molded primarily without our input, first by DNA, and then by environment into the living person we know as ourselves? Are we all just walking Cuisinarts, or better yet, mobile computers with a consciousness? Modern science has progressed to the point of asking, “Can machines think?” and if they can, it might well ask the corollary, “Are people machines?” The fact is that sophisticated modern machines can do just about anything a human being can do. The difference between “us” and “them” may only be our consciousness. We are “aware” whereas they are not. But if true, who wants to be a machine that simply knows it’s a machine? Who wants to walk the Earth as a preprogrammed robot with no input or free will? Unless the John McSherrys of the world can stop eating and the hunger artists can start, we might as well just turn out the lights.
Our economy’s lights, if not switched off in a rehash of the 1930s Depression, have certainly been dimmed in a 21st century version likely to be labeled the Great Recession. Much like John McSherry, U.S. and many global consumers gorged themselves on Big Macs of all varieties: burgers to be sure, but also McHouses, McHummers, and McFlatscreens, all financed with excessive amounts of McCredit created under the mistaken assumption that the asset prices securitizing them could never go down. What a colossal McStake that turned out to be. Now, however, with financial markets seemingly calmed and an inventory-based recovery in store for the balance of 2009, there is a developing optimism that we can go back to the lifestyle of yesteryear. PIMCO’s driving thesis however, if not a juxtaposition, is succinctly described as a “new normal” where growth is slower, profit margins are narrower, and asset returns are smaller than in decades past based upon the delevering and reregulating of the global economy, which in turn should substantially inhibit the “gorging” of goods and services that we grew used to in decades past.
Forecasts based on econometric models inevitably miss these secular/structural breaks in historical patterns because it is impossible to quantify human behavior, and long-term trends involving risk-taking and in turn derisking are decidedly human in their origin. Bell-shaped curves with Gaussian/random distributions fail to anticipate that human beings do not make decisions by chance or independently of each other, but in many cases in reaction to one another. Humanity’s personal and social computers appear to be programmed that way. And so, instead of “normal” distributions, economists and investors must learn to be on the lookout for “black swans,” and if not, then certainly “fat tails,” which differ from the measurement of natural phenomena accepted in science. “New normals,” flatter-shaped bell curves, and structural shifts in previously accepted standards become not only possible, but probable as human nature reacts to itself and its prior behavior. The efficient market hypothesis was always dead from the get-go, but academic tenure and Nobel prizes were food for the unwilling or perhaps unthinking.
PIMCO and yours truly are not masters of the antithesis, a subjective approach which might derisively be called “crystal ball gazing,” but we try to focus on what might be legitimate changes in the way economies and financial markets are affected by seemingly irrational or “non-normal” behavior and events. The supersizing of financial leverage and consumer spending in concert with the politicizing of deregulation describes in fifteen words our most recent brush with irrational behavior and inefficient markets. Greed will come again. But for now, the trend is the other way and it promises to persist for a generation at a minimum. The fact is that American consumers have suffered a collapse in wealth of at least $15 trillion since early 2007. Global estimates are less reliable, but certainly in multiples of that figure. And when potential spenders feel less rich by that much, the only model one can use to forecast the future is a commonsensical one that predicts higher savings, lower consumption, and an economic growth rate that staggers forward at a new normal closer to 2 as opposed to 3½%. There’s no magic in that number, and no model to back it up, just a lot of commonsense that says this is how people and economic societies behave when stressed and stretched to a near breaking point.
I was impressed this weekend by an article in the Op-Ed section of The New York Times by staff writer Bob Herbert. “No Recovery in Sight” was the heading and his opening sentence asked, “How do you put together a consumer economy that works when the consumers are out of work?” That is really all one needs to ask when divining our economy’s future fortune. Unless an optimist can prescribe how to put Humpty Dumpty back together again and shuffle him/her back to work then there can be no return to an “old normal.” As unemployment approaches 10%, what is less well publicized is that the number of “underutilized” workers in the U.S. has increased dramatically from 15 to 30 million. Those without jobs, as well as those individuals who only work part-time and have become discouraged and stopped looking, total 30 MILLION people. The number is staggering. Commonsensically, one has to know that many or most of these are untrained for the demands of a green-oriented, goods-producing future economy. Imagine a welding rod in the hands of an investment banker or mortgage broker and you’ll understand the implications quicker than any economist using an econometric model.
What this all means to you as an investor is near obvious as well. Unsurprisingly, what still can be modeled is the direct correlation of real profit growth to real economic growth, assuming a constant division of the “pie” between profits, labor and government. If long-term economic growth declines by 1½% then profit growth will as well. This, after settling at perhaps half of absolute peak profit levels of 2007, because of the rise of savings rates from 0 to 8% or higher. But to add to the woes of the investor class, one has only to observe that their share of the pie is shrinking. What does the General Motors example tell us all about the rebalancing of power between the investor class and the proletariat? What do trillion-dollar deficits and the recent reinitiation of PAYGO government programs tell you about the future of corporate tax rates? They’re headed higher. Do you really think that a national health care program can be paid for with cost-cutting as opposed to tax hikes at insurance companies and benefit-paying corporations throughout all sectors of the American economy? The new normal will not be investor-friendly unless your forecasting dial is turned to “Pollyanna” or your intelligence quotient is significantly less than 100.
Investors who stuffed themselves on a constant diet of asset appreciation for the past quarter-century will now be enclosed in a cage featuring government-mandated, consumer-oriented fasting. “Non Appétit,” not Bon Appétit, will become the apt description for the American consumer, and significant parts of the global economy, including the U.S. Because this is so, short-term policy rates will be kept low for longer than cyclical norms, and the outlook for risk assets – stocks, high yield bonds, and commercial and residential real estate will involve just that – risk. Investors should stress secure income offered by bonds and stable dividend-paying equities. Consumer Cuisinart consumption is a relic of the past.
William H. Gross
Managing Director
Franz Kafka wove a tale 100 years earlier that was a mirror image of McSherry’s tragedy. His “A Hunger Artist” described a professional faster – a sideshow freak in 19th century Europe who attracted attention and spare coins by withering away inside a wooden cage. The gapers marveled at his shriveled skeleton, stuck their hands through the bars to nudge his boney ribs, and awed at his resolve to starve himself to the precipice of self-extinction. “I always wanted you to admire my fasting,” confessed the hunger artist, “but you shouldn’t have. The fact is, I have to fast, I can’t help it. I couldn’t find the food I liked. If I had found it, believe me, I would have made no fuss and stuffed myself like you or anyone else.”
The juxtaposition: one man who couldn’t stop and another one who couldn’t start – eating, that is. Their stories, though, are really not about food, but life itself – what compels us to do what we do, what forces us to act or not to act, what makes us who we are: is personal behavior really beyond our control? Shakespeare would retort that the fault lies not in our stars, but in ourselves. On the other hand, who are we other than this amorphous, gelatinous blob of moving flesh and bone molded primarily without our input, first by DNA, and then by environment into the living person we know as ourselves? Are we all just walking Cuisinarts, or better yet, mobile computers with a consciousness? Modern science has progressed to the point of asking, “Can machines think?” and if they can, it might well ask the corollary, “Are people machines?” The fact is that sophisticated modern machines can do just about anything a human being can do. The difference between “us” and “them” may only be our consciousness. We are “aware” whereas they are not. But if true, who wants to be a machine that simply knows it’s a machine? Who wants to walk the Earth as a preprogrammed robot with no input or free will? Unless the John McSherrys of the world can stop eating and the hunger artists can start, we might as well just turn out the lights.
Our economy’s lights, if not switched off in a rehash of the 1930s Depression, have certainly been dimmed in a 21st century version likely to be labeled the Great Recession. Much like John McSherry, U.S. and many global consumers gorged themselves on Big Macs of all varieties: burgers to be sure, but also McHouses, McHummers, and McFlatscreens, all financed with excessive amounts of McCredit created under the mistaken assumption that the asset prices securitizing them could never go down. What a colossal McStake that turned out to be. Now, however, with financial markets seemingly calmed and an inventory-based recovery in store for the balance of 2009, there is a developing optimism that we can go back to the lifestyle of yesteryear. PIMCO’s driving thesis however, if not a juxtaposition, is succinctly described as a “new normal” where growth is slower, profit margins are narrower, and asset returns are smaller than in decades past based upon the delevering and reregulating of the global economy, which in turn should substantially inhibit the “gorging” of goods and services that we grew used to in decades past.
Forecasts based on econometric models inevitably miss these secular/structural breaks in historical patterns because it is impossible to quantify human behavior, and long-term trends involving risk-taking and in turn derisking are decidedly human in their origin. Bell-shaped curves with Gaussian/random distributions fail to anticipate that human beings do not make decisions by chance or independently of each other, but in many cases in reaction to one another. Humanity’s personal and social computers appear to be programmed that way. And so, instead of “normal” distributions, economists and investors must learn to be on the lookout for “black swans,” and if not, then certainly “fat tails,” which differ from the measurement of natural phenomena accepted in science. “New normals,” flatter-shaped bell curves, and structural shifts in previously accepted standards become not only possible, but probable as human nature reacts to itself and its prior behavior. The efficient market hypothesis was always dead from the get-go, but academic tenure and Nobel prizes were food for the unwilling or perhaps unthinking.
PIMCO and yours truly are not masters of the antithesis, a subjective approach which might derisively be called “crystal ball gazing,” but we try to focus on what might be legitimate changes in the way economies and financial markets are affected by seemingly irrational or “non-normal” behavior and events. The supersizing of financial leverage and consumer spending in concert with the politicizing of deregulation describes in fifteen words our most recent brush with irrational behavior and inefficient markets. Greed will come again. But for now, the trend is the other way and it promises to persist for a generation at a minimum. The fact is that American consumers have suffered a collapse in wealth of at least $15 trillion since early 2007. Global estimates are less reliable, but certainly in multiples of that figure. And when potential spenders feel less rich by that much, the only model one can use to forecast the future is a commonsensical one that predicts higher savings, lower consumption, and an economic growth rate that staggers forward at a new normal closer to 2 as opposed to 3½%. There’s no magic in that number, and no model to back it up, just a lot of commonsense that says this is how people and economic societies behave when stressed and stretched to a near breaking point.
I was impressed this weekend by an article in the Op-Ed section of The New York Times by staff writer Bob Herbert. “No Recovery in Sight” was the heading and his opening sentence asked, “How do you put together a consumer economy that works when the consumers are out of work?” That is really all one needs to ask when divining our economy’s future fortune. Unless an optimist can prescribe how to put Humpty Dumpty back together again and shuffle him/her back to work then there can be no return to an “old normal.” As unemployment approaches 10%, what is less well publicized is that the number of “underutilized” workers in the U.S. has increased dramatically from 15 to 30 million. Those without jobs, as well as those individuals who only work part-time and have become discouraged and stopped looking, total 30 MILLION people. The number is staggering. Commonsensically, one has to know that many or most of these are untrained for the demands of a green-oriented, goods-producing future economy. Imagine a welding rod in the hands of an investment banker or mortgage broker and you’ll understand the implications quicker than any economist using an econometric model.
What this all means to you as an investor is near obvious as well. Unsurprisingly, what still can be modeled is the direct correlation of real profit growth to real economic growth, assuming a constant division of the “pie” between profits, labor and government. If long-term economic growth declines by 1½% then profit growth will as well. This, after settling at perhaps half of absolute peak profit levels of 2007, because of the rise of savings rates from 0 to 8% or higher. But to add to the woes of the investor class, one has only to observe that their share of the pie is shrinking. What does the General Motors example tell us all about the rebalancing of power between the investor class and the proletariat? What do trillion-dollar deficits and the recent reinitiation of PAYGO government programs tell you about the future of corporate tax rates? They’re headed higher. Do you really think that a national health care program can be paid for with cost-cutting as opposed to tax hikes at insurance companies and benefit-paying corporations throughout all sectors of the American economy? The new normal will not be investor-friendly unless your forecasting dial is turned to “Pollyanna” or your intelligence quotient is significantly less than 100.
Investors who stuffed themselves on a constant diet of asset appreciation for the past quarter-century will now be enclosed in a cage featuring government-mandated, consumer-oriented fasting. “Non Appétit,” not Bon Appétit, will become the apt description for the American consumer, and significant parts of the global economy, including the U.S. Because this is so, short-term policy rates will be kept low for longer than cyclical norms, and the outlook for risk assets – stocks, high yield bonds, and commercial and residential real estate will involve just that – risk. Investors should stress secure income offered by bonds and stable dividend-paying equities. Consumer Cuisinart consumption is a relic of the past.
William H. Gross
Managing Director
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