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2012-01-17T07:11:00.001-08:00

2012-01-03T04:52:00.001-08:00

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Distortions and deceptions in strategic decisions

2010-11-29T05:02:00.000-08:00

Companies are vulnerable to misconceptions, biases, and plain old lies. But not hopelessly vulnerable.
Dan P. Lovallo and Olivier Sibony
2006 Number 1
The chief executive of a large multinational was trying to decide whether to undertake an enormous merger-one that would not only change the direction of his company but also transform its whole industry. He had gathered his top team for a final discussion. The most vocal proponent of the deal-the executive in charge of the company's largest division-extolled its purported strategic advantages, perhaps not coincidentally because if it were to go through he would run an even larger division and thereby be able to position himself as the CEO's undisputed successor. The CFO, by contrast, argued that the underlying forecasts were highly uncertain and that the merger's strategic rationale wasn't financially convincing. Other members of the top team said very little. Given more time to make the decision and less worry that news of the deal might leak out, the CEO doubtless would have requested additional analysis and opinion. Time, however, was tight, and in the end the CEO sided with the division head, a longtime protégé, and proposed the deal to his board, which approved it. The result was a massive destruction of value when the strategic synergies failed to materialize.

Does this composite of several real-life examples sound familiar? These circumstances certainly were not ideal for basing a strategic decision on objective data and sound business judgment. Despite the enormous resources that corporations devote to strategic planning and other decision-making processes, CEOs must often make judgments they cannot reduce to indisputable financial calculations. Much of the time such big decisions depend, in no small part, on the CEO's trust in the people making the proposals.
Strategic decisions are never simple to make, and they sometimes go wrong because of human shortcomings. Behavioral economics teaches us that a host of universal human biases, such as over optimism about the likelihood of success, can affect strategic decisions. Such decisions are also vulnerable to what economists call the "principal-agent problem": when the incentives of certain employees are misaligned with the interests of their companies, they tend to look out for themselves in deceptive ways.

Most companies know about these pitfalls. Yet few realize that principal-agent problems often compound cognitive imperfections to form intertwined and harmful patterns of distortion and deception throughout the organization. Two distinct approaches can help companies come to grips with these patterns. First, managers can become more aware of how biases can affect their own decision making and then endeavor to counter those biases. Second, companies can better avoid distortions and deceptions by reviewing the way they make decisions and embedding safeguards into their formal decision-making processes and corporate culture.

Distortions and deceptions
Errors in strategic decision making can arise from the cognitive biases we all have as human beings.

These biases, which distort the way people collect and process information, can also arise from interactions in organizational settings, where judgment may be colored by self-interest that leads employees to perpetrate more or less conscious deceptions (Exhibit 1).

Distortions
Of all the documented cognitive distortions, over optimism and loss aversion (the human tendency to experience losses more acutely than gains) are the most likely to lead people who make strategic decisions astray, because decisions with an element of risk-all strategic ones-have two essential components. The first is a judgment about the likelihood of a given outcome, the second a value or utility placed on it.

When judging the likelihood of potentially positive outcomes, human beings have an overwhelming tendency to be overoptimistic or overconfident: they think that the future will be great, especially for them. Almost all of us believe ourselves to be in the top 20 percent of the population when it comes to driving, pleasing a partner, or managing a business. In the making of strategic decisions, optimism not only generates unrealistic forecasts but also leads managers to underestimate future challenges more subtly-for instance, by ignoring the risk of a clash between corporate cultures after a merger.

When probabilities are based on repeated events and can therefore often be well defined, optimism is less of a factor. But loss aversion is still a concern. Research shows that if a 50-50 gamble could cost the gambler $1,000, most people, given an objective assessment of the odds, would demand an upside of $2,000 to $2,500.

Over optimism affects judgments of probability and tends to produce over commitment. Loss aversion influences outcome preferences and leads to inaction and under commitment. But the fact that over optimism and loss aversion represent opposing tendencies doesn't mean that they always counteract each other. Over optimism and loss aversion, though opposing tendencies, don't always counteract each other

Loss aversion wouldn't have such a large effect on decisions made in times of uncertainty if people viewed each gamble not in isolation but as one of many taken during their own lives or the life of an organization. But executives, like all of us, tend to evaluate every option as a change from a reference point-usually the status quo-not as one of many possibilities for gains and losses over time across the organization. From the latter perspective, it makes sense to take more risks. Most of the phenomena commonly grouped under the label of risk aversion actually reflect loss aversion, for if we integrated most gambles into a broader set, we would end up risk neutral for all but the largest risks. This truth has important implications for strategic decision making.

Deceptions
The strategic decisions that companies make result from interactions among their executives: a manager proposes an investment, for example, and an executive committee reviews and evaluates it. In this kind of setting, a conflict of interest often arises between an "agent" (in this case, the manager) and the "principal" (the corporation) on whose behalf the agent acts.

Such "agency problems," which occur when the agent's incentives aren't perfectly aligned with the principal's interests, can lead to more or less intentional deceptions-misleading information provided to others-that compound the problem of the agent's unintentional distortions. Recall the CEO who was grappling with the big merger decision: trusting the protégé (the head of the largest division) exposed the CEO to the risk that the merger's proponent was not only over optimistic but also attempting to further his own career by exaggerating the deal's upside or underestimating its risks.

When companies evaluate strategic decisions, three conditions frequently create agency problems. One is the misalignment of time horizons between individuals and corporations. Several consumer goods companies, for example, have noted that brand managers who rotate quickly in and out of their jobs tend to favor initiatives (such as introducing new product variants) with a short-term payback. These managers' deception, intentional or not, is to advance only certain projects-those aligned with their interests. The development of radically new products or other important projects with longer payback times can rarely succeed without a senior sponsor who is likely to be around longer.

Another problem that can generate harmful deceptions is the differing risk profiles of individuals and organizations. Consider a real-life example. A midlevel executive at a large manufacturing company decided not to propose a capital investment that had a 50-50 chance of either losing the entire $2 million investment or returning $10 million. Despite his natural loss aversion, the chance of a 5:1 gain should have enticed him into accepting the bet, and his superiors, for the same reasons, would have deemed it attractive. Instead, he worried that if the investment failed, his reputation and career prospects would take a blow, though he didn't anticipate being punished if the investment was forgone. As a result, he decided not to recommend it and thus in effect acted deceptively by not promoting an attractive investment. This asymmetry between results based on action and inaction is called the "omission bias," and here it magnified the executive's loss aversion.

The final agency issue arises from the likelihood that a subordinate knows much more than a superior does about a given issue. Higher-ranking executives must therefore make judgments about not just the merits of a proposal but also their trust in the person advancing it. This is unavoidable and usually acceptable: after all, what more important decision do CEOs make than choosing their closest associates? The tendency, however, is to rely too much on signals based on a person's reputation when they are least likely to be predictive: novel, uncertain environments such as that of the multinational that went ahead with the megamerger. We call the tendency to place too much weight on a person's reputation-and thus increase the exposure to deception-the "champion bias."

Furthermore, the multinational's merger decision exhibited an element of "sunflower management": the inclination of people in organizations to align themselves with the leader's real or assumed viewpoint. The CEO had expected to find dissenting voices among his senior executives. But except for the CFO, they believed that the CEO favored the deal and that the merger would proceed no matter what they said and thus kept their doubts to themselves for fear of harming their careers. In effect, they misled the CEO by suppressing what they really thought about the deal.

Improving individual decisions
Knowing that human nature may lead decision making astray, wise executives can use this insight to fortify their judgment when they make important decisions. To do so, however, they must know which bias is most likely to affect the decision at hand. Exhibit 2 offers a road map for the types of decisions where over optimism or excessive risk aversion will probably be the determining factor.

In general, the key to reducing over optimism is to improve the learning environment by generating frequent, rapid, and unambiguous feedback. In the absence of such an environment-for instance, when companies face rare and unusual decisions, which, unfortunately, are the most important ones-there is a bias toward optimistic judgments of the odds. The size of a decision determines the appropriate degree of risk aversion. For major ones, a certain amount of it makes sense-nobody wants to bet the farm. For smaller ones, it doesn't, though it often prevails for reasons we'll soon explore. Companies should see minor decisions as part of a long-term, diversified (and thus risk-mitigating) strategy.

As Exhibit 2 shows, companies don't always rationally factor risk into their decisions. In the large, infrequent ones

(for instance, the industry-transforming merger that went horribly wrong) represented in the exhibit's upper-left quadrant there is a tendency to take an overly optimistic view. In essence, faulty judgments lead executives to take risks they would have avoided if they had had an accurate judgment of the odds. Since executives facing such a rare decision can't benefit from their own experience, they should learn from the experience of other companies by collecting case studies of similar decisions to provide a class of reference cases for comparison.

Dissecting global trends: An example from Italy

2010-11-29T05:00:00.000-08:00

Research in Brief
Dissecting global trends: An example from Italy
Executives should examine the impact of trends on sub industries, segments, categories, and micro markets before placing their bets.

Stefano Proverbio, Sven Smit, and S. Patrick Viguerie, March 2008

Executives know they must incorporate social and environmental trends into their strategies, but few act on trends in ways that would allow them to ride the waves successfully. Our experience, backed by recent research, suggests that companies should navigate important trends by first studying their impact on sub industries, segments, categories, and micro markets. That kind of analysis breaks down megatrends into micro trends that companies can invest in with confidence. When they do, they are applying an approach similar to the one they should use when targeting growth opportunities in any market.

Indeed, we find that the importance of taking a granular view of where to compete can hardly be overestimated. We compared the global growth rates of industries with those of an international sample of 416 large companies, from 1999 to 2005. We found that we could explain why some companies grew faster than others only by measuring their exposure to sub industries and product categories.

To show what that approach looks like in practice, we analyzed the market impact that an important trend-aging populations in developed economies-will have in Italy, which has one of the world's most rapidly aging populations, because of low birth rates and a high life expectancy. The starting point for a granular growth and trend analysis is to break down market information into increasingly fine-grained levels (Exhibit 1)-from the world market (which we call G0); to 24 broad industry groups, such as health care equipment and services (G1); to 151 individual industries (G2). These, in turn, can be divided

G0. At the world-market level, we estimate that aging populations will reduce global GDP by 0.1 percent a year until 2020. In Italy, the impact will be virtually neutral-lowering GDP by just 0.03 percent a year. This gap offers no useful information for an executive considering whether to ride Italy's trend to aging.
G1 and G2. At the level of industry groups and individual industries, the impact of aging clearly varies across the Italian economy (Exhibit 2). We estimate that changes in the age mix will increase demand for health care, housing, energy, and food and beverages by 0.15 percent (food and beverages) to 0.30 percent (health care) between now and 2020. Conversely, industries such as apparel, furniture, and automobiles are all likely to suffer a drop in demand of around 0.15 percent a year over that period. Games, toys, and sports will likely be hardest hit, with an annual decline of 0.4 percent. Aging will therefore have a positive impact on some Italian industries and a negative one on others. But industry averages don't tell executives enough to make specific decisions about where to compete.

DETERMINATON

2010-11-29T04:59:00.001-08:00

In 1883, a creative engineer named John Roebling was inspired by an idea to build a spectacular bridge connecting New York with the Long Island. However bridge building experts throughout the world thought that this was an impossible feat and told Roebling to forget the idea. It just could not be done. It was not practical. It had never been done before.

Roebling could not ignore the vision he had in his mind of this bridge. He thought about it all the time and he knew deep in his heart that it could be done. He just had to share the dream with someone else. After much discussion and persuasion he managed to convince his son Washington, an up and coming engineer, that the
bridge in fact could be built.

Working together for the first time, the father and son developed concepts of how it could be accomplished and how the obstacles could be overcome. With great excitement and inspiration, and the headiness of a wild challenge before them, they hired their crew and began to build their dream bridge.

The project started well, but when it was only a few months underway a tragic accident on the site took the life of John Roebling. Washington was injured and left with a certain amount of brain damage, which resulted in him not being able to walk or talk or even move.

"We told them so."
"Crazy men and their crazy dreams."
"It`s foolish to chase wild visions."

Everyone had a negative comment to make and felt that the project should be scrapped since the Roeblings were the only ones who knew how the bridge could be built. In spite of his handicap Washington was never discouraged and still had a burning desire to complete the bridge and his mind was still as sharp as ever.

He tried to inspire and pass on his enthusiasm to some of his friends, but they were too daunted by the task. As he lay on his bed in his hospital room, with the sunlight streaming through the windows, a gentle breeze blew the flimsy white curtains apart and he was able to see the sky and the tops of the trees outside for just a moment.

It seemed that there was a message for him not to give up. Suddenly an idea hit him. All he could do was move one finger and he decided to make the best use of it. By moving this, he slowly developed a code of communication with his wife.

He touched his wife's arm with that finger, indicating to her that he wanted her to call the engineers again. Then he used the same method of tapping her arm to tell the engineers what to do. It seemed foolish but the project was under way again.

For 13 years Washington tapped out his instructions with his finger on his wife's arm, until the bridge was finally completed. Today the spectacular Brooklyn Bridge stands in all its glory as a tribute to the triumph of one man's indomitable spirit and his determination not to be defeated by circumstances. It is also a tribute to the
engineers and their team work, and to their faith in a man who was considered mad by half the world. It stands too as a tangible monument to the love and devotion of his wife who for 13 long years patiently decoded the messages of her husband and told the engineers what to do.

Perhaps this is one of the best examples of a never-say-die attitude that overcomes a terrible physical handicap and achieves an impossible goal.

Often when we face obstacles in our day-to-day life, our hurdles seem very small in comparison to what many others have to face. The Brooklyn Bridge shows us that dreams that seem impossible can be realised with determination and persistence, no matter what the odds are.

Even the most distant dream can be realized with determination and persistence.

George L. Hanbury
Dawgen Public Accountants
5 Melmac Avenue, Kingston 5 Jamaica

Controlling Negative Thoughts

2010-11-29T04:58:00.001-08:00

Athletes regularly carry on an inner dialogue—this is called self-talk. Your self-talk can be negative and self-destructive to confidence or it can be positive and help you remain confident in challenging situations. If you want to be negative with yourself, you have plenty of opportunity to do so in sports. However, I do not think you will perform your best nor have much fun. The key point is that you have control over what you say to yourself and have to work on staying positive.

It is easy to forget someone else's criticism of you, but it's not easy to forget your own criticism of yourself. I ask the athletes I work with to monitor what they say to themselves. If you get negative with your own self-talk and cut yourself down, you have to recognize this behavior and make an effort to change. When you say to yourself "I can't win this fight," "you are the worst", or "Don't lose another match", you are hurting your own confidence. Negative thoughts lead to low self-confidence and negative outcomes. You are the only person who knows when you being negative and the only one who can turn it around.

The first step is to pay attention to what you say to yourself and notice when you begin to have negative thoughts. The goal is to quickly identifying your negative self-talk. After you finish a match, go back and think about when you were negative with yourself. Write down the negative statements and in what situations they occurred. If you have more negative than positive self-talk during a match, this indicates that you need to work on changing your self-talk.

The next step is to modify your typical negative thoughts or doubt. Write down the negative self-statements from the previous exercise. Next to each self-statement, change the negative thought to a positive statement. For example, the negative self-statement: "I can't believe he fooled you on that move, you are the worst fighter in the world" change to "You are human and will make mistakes, next time you will know better". Practice changing your negative thoughts to positive thoughts on paper.

The final step is to apply what you have done on paper to your matches. The next time you become aware of a negative thought or doubt, you will have a positive response ready to put into place and apply. Make the choice to keep your self-talk positive and confidence enhancing.

Closing the Gap between Success and Significance

2010-11-29T04:55:00.000-08:00

Think of the person you most admire. This might be a teacher, a business associate, an inspirational leader, a mentor or friend who made a significant impact on your life. You remember them for what they did for you at a time when you needed their direction.
Contrast this person with the college professor who said, "You can interpret this story two ways, my way and the wrong way."
In the past, accepted business leadership styles resembled the college professor's attitude. Using a command style, executives demanded better, faster, cheaper, more efficient strategies, pushing employees to higher standards and criticizing rather than praising.
As a result, the driver leader struggled, employees refused to make an emotional commitment, the management team did not work in a unified fashion and the organization suffered.

The Changing World
Today's business leaders face a world undergoing change such as we have never seen before. New technology, international competition, lightning information availability, and new legal accountability challenge leaders to make not just directional but transformational changes to remain competitive.
In this environment, it is difficult for a CEO, President, or leader to drive an organization to realize its vision and to deliver sustainable results.

The Changing Leadership Model
Many leaders forget a basic adage of leadership. Their success depends on the success of their employees and co-workers. High level leaders understand that they contribute to this success by making it easier for their employees to do their jobs, by making them feel that their jobs have significant value and by treating them as individuals with valid opinions and suggestions.

Research shows that the organizational climate, the way people think about working for an organization, has a significant impact on human performance. The way employees perceive the leader and his management team drives the organizational climate and employee performance.

In today's world-class organization, people at every level must have a personal stake in the vision of the business. The world-class leader understands that the most important part of his job is to develop an organization where people want to work and want to do their best.

Like the person you admire the most, today's effective business leaders develop significance with their associates. They enjoy continued long-term professional and personal success. They leave an indelible impact on their employees, customers and suppliers because of what they do and continue to do for them.

Becoming a Significant Leader
Turn this around and ask yourself who sees you as their mentor, as their inspiration, as memorable in their life. This may be difficult at first since we seldom see ourselves as making a significant impact on others.
Ask yourself how many people in your life want to help you? How many people have you dedicated your time and energy to help this year? If the answer to both questions is "a handful", you may lead a comfortable life, but you will not develop significance in your relationships.
To create significance, you must develop the attitude of the "Servant's Heart". You must ask how you can help people.

This requires you to shift your focus. You develop a Servant's Heart by dedicating yourself to the success of those who help you achieve your success. A self-centered driver has fleeting success because he builds on too small a foundation.

People walk around with the letters MMFA - Make Me Feel Appreciated – as a figurative imprint on their foreheads. You, as a leader with a Servant's Heart, must ask how you can help these people become more effective and feel more important. You must make your customers, employees and suppliers understand that you have their best interests at heart and that your commitment is unconditional.

All of us aspire to reach our dreams and goals. The leader with a "Servant's Heart" inspires others who realize that he cares about them and wants them to succeed at a personal level. When people realize that they can reach their personal goals through helping the organization reach its goals, they make impressive results possible.

Important Attitudes That Lead to Significance
Empathy, defined as the understanding of others, is the fundamental trait that leads to significance. The three levels of empathy are:
1. Being able to read another's emotions
2. Sensing and responding to a person's unspoken concerns or feelings
3. Understanding the issues or concerns that lie behind another's feelings
People with this ability notice emotional cues, listen well, show sensitivity, and understand others' perspectives.
You, as an empathetic leader, sense others' needs and bolster their abilities by looking past the obvious. You see the next step and how to get there. You want to help subordinates and co-workers build their personal identity and their self-image so they can become more successful and you want them to realize that you too are doing the same thing.

You, as the authentic leader with empathy, give advice that serves the person's best interests. When people understand that you have a sincere desire that they succeed, they respond with great enthusiasm. In an organization where people want to be and do their best, you can obtain great results.

Making Personal Changes Is Not Easy
You can use several proven steps to assist you to become an empathetic leader.
First, you must acknowledge your current attitudes before you can change them. People with strong self-awareness understand emotions, strengths, limitations, values and motives at a deep level. They are honest with themselves and about themselves. They know the direction they want their life to take and why.
Second, to make personal changes you must practice the new actions and thoughts you want to develop. In sports, athletes spend far more time practicing than performing. Tiger Woods hits hundreds of practice shots for every tournament shot. In contrast, we in the business world perform but never practice. To be more successful we must practice skills and attitudes that will further our success.

As you practice building empathy and the other skills you need to become significant in others' lives, you must track your new skills. Busy lives make it is easy to delay doing uncomfortable tasks. However, when you hold yourself accountable you will stay on target and make progress towards your goals.
Finally, use a coach or mentor. At the times when you get cranky, a trusted friend, colleague or coach can give you an unbiased perspective. By helping you through rough times, they help you stay focused on your goal.

A Caveat
To build a business culture where employees have a say in the direction of the organization, you do not need to give up leadership. The effective leader understands the importance of building a culture where accountability is expected.

Some might object that working through others as opposed to giving firm direction leads to pressure to lower performance standards, tempting us to make accommodations to personal interests.
Effective leaders understand the importance of building a culture that expects accountability. They hold individuals and the organization accountable every step of the way to reaching the future they envision.
Effective leaders work with individuals without compromising performance. Under such leaders, employees understand and accept the importance of meeting objectives they have helped establish. They understand that when they help the organization meet its goals they meet their own goals. This dynamic has a substantial positive effect on performance by both the organization and the individual.
Successful leaders insist on involving their employees in the planning process as a way to build personal commitment. With a "Servant's Heart," significant leaders have their employees' best interests at heart and will commit to their personal development.

Successful leaders insist on a continuous process of planning and development, of accountability and results, and build the culture of the organization around these cornerstones.

Significance Is a Timeless Concept
People want to feel appreciated. You remember the people you most admire for what they did and do for you. As an empathetic leader, you leave an indelible impact on the lives of others. You accomplish this by developing a "Servant's Heart", helping them become more successful.
In a healthy organization people have a personal stake in the vision of the business. The effective leader develops an organization where people want to work and want to do their best. At the same time he does not sacrifice performance. He builds accountability into the culture of the organization. Everyone understands the performance imperative and this mutual understanding brings great results.
Gaining personal success through helping others is timeless. William Shakespeare said, "The more I give to thee, the more I have."

And to quote Ralph Waldo Emerson, "A man cannot help another without helping himself even more."
To become an extraordinary leader and develop sustainable success, become significant. Make an indelible impact on the lives of others.

Change Management Secrets to Creating a Winning Culture of Change

2010-11-29T04:53:00.000-08:00

Change is occurring all around us everyday. Most changes are small and go unnoticed by us. Think about your daily ride to work and notice what changes are taking place over the course of a week: possible changes in traffic patterns, new stores opening, weather patterns, etc. Each day we adapt to the changing situations without even thinking about it, and we achieve our goals.
The organizations we work for are going through change to adapt to a very competitive marketplace. Most organizational change, much like your daily commute, is subtle. Some changes create a variety of emotions among employees: from joy and enthusiasm to distrust and anger.
The best organizations create a strong culture of change management. In fact, management at these organizations is constantly encouraging change for the good of the overall organization.
The following are seven change management secrets to creating a winning culture of change:

1. Understand the Present
Take the time to ask questions to understand where the culture of change presently stands. Examples of questions great managers of change are consistently asking to ensure the success of change are the following:

Do employees understand the difference they make at work everyday?

Are there strong relationships between employees and management?

Is there an environment of openness and trust?

Is there an understanding of mission, purpose, beliefs, and business goals?

Do we have an environment of learning, growth, and empowerment?

Take the time to ask these and other questions and, most importantly, listen to the answers.

2. Recognize That Change Management Culture Starts at the Top
As a leader, you set the tone for change management. If you express or show a negative attitude towards the change, the culture for change will have negative results. If your attitude towards change is positive, then the culture for change will have positive results. Constantly communicate the positive overall results from the change and how the employee will benefit from this change.

3. Establish Channels of Communication
Before the changes are to take place, implement ongoing channels of communication. This is important for the following reasons: a. Hear and address the concerns and fears of the employees. b. Obtain new innovative ways of implementing the change. c. Gain employee buy in for the changes. d. Address the rumor mill before it spirals out of control. Remember, there will probably be a lot of emotions mixed in with the communication. First, set the parameters for positive, productive communication and really take the time to listen. You will need to separate the emotions from the message and/or questions. Also, if you don't have an immediate answer to the question, promise to find the answer and respond with the answer within a certain deadline.

4. Give Your Employees the Tools for Successful Change Management
Make sure your employees have the tools to successfully implement the organizational changes. This could include training, technology, and additional management help to remove barriers to successfully implementing the changes. Be mindful that with the changes there are new relationships being developed. As the change leader, monitor what work relationships are working and what relationships are not working; and take the appropriate actions to remove any relational barriers to your employees' successful completion of the plan.

5. Build a Change Management Community
Build a sense that we are all in this together and that if one person on our team has a challenge adapting to change, we all have a challenge adapting to the change. Build this sense of a change team so that a positive environment for change and innovation is developed. It makes the road to change so much easier.

6. Understand That Employees Handle Change in Different Ways
Because of stress and emotions, your employees handle change in different ways. The model employee who was once calm may now become disruptive and challenging in the environment of change. Take time to tone into your employees' "emotional change barometer," get their feedback, and provide the guidance so that they are successful in the culture of change.

7. Follow-up to Create Better Change Results
As a change leader, follow-up through meetings, personal coachings, surveys, memos, e-mails, etc., to monitor how the changes are progressing. Embrace and acknowledge the employees' valuable feedback so that you can efficiently implement the changes.
Apply these seven change management techniques and you will create a successful culture of change and achieve your organizational goals.

Can Followers be motivated by Leadership Styles?

2010-11-29T04:52:00.000-08:00

"Wives, submit to your husbands as to the Lord."

This is exactly what companies are expecting from their followers. They are making their followers feel obligated to being loyal and have taken it out of context, just as readers of the cited scripture do. What happened to the rest of the scripture which states in Ephesians 5:21 "submit to one another out of reverence for Christ?" The command advises a two-way relationship and that part of the scripture appears to have been ignored. Companies that serve their
followers will receive superior service from them if they cultivate a serving relationship.

How are results-oriented companies able to compete in a world full of results oriented businesses? They recruit followers as potential future leaders and direct them to be compliant toward a desired goal. The follower's career path is based on the direction of the customer. The training plan is already created and the only thing the follower has to do is select "I commit" to the appropriate training plan. The follower either complies or doesn't have a job with this type of company.

When the goal is to do what is best for the customer, the company conveys behaviors they require to achieve success in a high performance culture. This type of culture is one in which performance goals and commitments are blatantly clear. A high performance culture, according to Reid and Hubbell (March/April 2005), "is based on discipline. This discipline promotes decisiveness and standards of excellence and ensures direct accountability." I currently work for an organization that cultivates a high performance culture. Each employee is provided with a two page template of performance goals. In previous organizations I've worked for, the leader would collaborate with me to determine my performance goals.

In my current organization, my leader emailed me a mandatory set of goals for my review. I deleted those I didn't agree with, put them in my final document and emailed the final document to her. Upon her receipt of my performance plan, she contacted me and stated that the goals were formatted so that they would fit neatly into my document. I was quite shocked by this. Where was the collaboration? Apparently this was a one-way relationship and I am expected to agree with the policies.

In a high performance culture the leader and followers are expected to buy into corporate shared values and policies and are expected to apply these values to work life and interactions with others. Sometimes the values are rejected but many times are accepted as normal behavior. Another way to explain this type of organization is a concept called a Psychic Prison or Plato's Cave.

Gareth Morgan (2006) describes people who are together in an underground cave so that they cannot move. There is a fire burning and they can only see shadows of people and objects on the wall. To those on the inside of the cave, what they see and hear in the cave is reality, but when an outsider comes in, he finds it difficult to accept these conditions and has pity on his fellow cave dwellers/co-
workers. When he tries to share the knowledge of the outside world, it may cause the cave dweller/co-worker to hold on tighter to their familiar ways of seeing things instead of embracing the new knowledge.

A results oriented corporate culture gets that way because it has nurtured its followers through various leadership styles and it encourages submission. Sometimes these strong cultures with powerful visions of the future and expected commitments, can lead to their downfall. The company I work for is the cave and I am the outsider. The cave dwellers are expected to consistently work extra hours at home in order to complete the mandatory company administrative tasks
because they need to be able to bill the customer 100% when they are at work.

When I questioned a leader about this and asked how this was possible considering obligations in the home, the leader told me that "this was reality" and anyone that wants to work for this company has to accept the reality as it is. I cannot assimilate. In trying to understand this particular company and its culture, I began reading the biography about the founder of the company. It all began to make sense. As I began to establish relationships within the organization, I began to share the information from the book. A follower was just as curious as I and I gave him the book to read. He is sharing it with other cave dwellers. Why am I with this company? I am here to open the eyes of the cave dwellers and provoke
others to work together to change this false sense of reality

Business Excellence: Its in the Eye of the Beholder

2010-11-29T04:51:00.001-08:00

At a recent forum the panel the discussion was around programs that lead an organization to excellence. The most consistent views seemed to suggest that few programs on their own will achieve excellence. There needs to be an overall strategy moving an organization towards excellence. Nothing occurs overnight and each piece of the puzzle has its own pitfalls.

Looking at the Ford Motor Company, as an example. They have implemented almost every business improvement or business excellence strategy possible and they recently posted losses of about $12 BILLION. Clearly, the strategies they have implemented (TQM, TPS, JIT, Lean, Six Sigma, TOC, and probably more) as well as new IT systems that have been installed, have not led to business excellence.

I have seen companies get results from each strategy individually but few have had breakthrough results. Each strategy has usually only focused on one aspect of the business, mostly process. Yes, Lean is moving into the office but it is still process. It is now about shuffling paper faster and more efficiently. Big deal. ERP
systems moved companies to think in terms of processes and attempted to break functional silos, but ERPs are transactional systems that move companies forward incrementally, by creating piecemeal savings. Yes in a F50 the numbers are large but relatively speaking they are incremental. People in the business require new skill sets and ROIs are hardly ever equal to those planned or projected by the IT
departments and consultants! Been there seen that.

GE is often mentioned as an outstanding organization. Business owners and managers often mention GEs success and Six Sigma in the same breath. What they fail to realize is Six Sigma was part of an overall plan. Some GE companies only started on their road to excellence and using Six Sigma after many years had been spent re organizing, redesigning, re hiring and focusing the business in minute detail. Six Sigma was not the cause and final end result of their improvement, nor their excellence!

Over the past few years I have been working with companies to achieve their strategies. What this has meant is looking at business in a holistic manner and making sure each piece of a strategic plan is budgeted for and is executed to achieve the desired results, or better. Essentially companies realize that no matter what happens in their strategic planning sessions they are not realizing the results they would like to see. Yes, one can just imagine FORD executives saying" OK guys we are going to drop $12 Billion this next year!

What this means is companies needs to improve their performance in a multitude of areas. This can be done without a name brand process, or a software package. To reiterate, it is not about ERPs, CRMs, Lean, Six Sigma, TQM, or anything else you can think of. Sure you may add one later but that is not the reason for success, although it probably will assist in reinforcing the changes that are made
along the way.

The key to excellence in performance is rather simple; It is not easy but it is simple.

1. Have a great strategy.
2. Surround yourself with people who believe in the strategy.
3. Aggressively execute the strategy.
4. Measure your results along the way.
5. Celebrate your successes

This very simple strategy is often scoffed at as not possibly being able to work. The reasons for chuckles are typically; my business is too complex, we are different, and you dont understand my business, I am sure you have all heard these and more, yet this process has never failed. Its tried and tested. Everything else clouds your vision and makes things seem more complex than they really are.

There are, however, any number of small, middle market, and transitional businesses who have grown 3 - 5x their revenue using this very simple strategy. Again, the simplicity should not overshadow the difficulty of actually implementing it. It is tough. People are the issue. Its about challenging paradigms. Moving through false assumptions and mental models which may have become
ingrained over many years.

So how do you get this right? Get your top team together. For a session with a difference. Develop that strategy that everybody can support from the get-go. Start with assessing and analyzing the things you do well and the things in which you are challenged. Be rigorous and hide nothing. Your failures reversed could just propel you to success. Failures are an indication of trying new things and
just not having figured out all the kinks. Develop working guidelines for achieving success when implementing new approaches. Ensure these are in line with your companies values. This step is all too often overlooked and very quickly leads to discontent and resulting failure.

Next step is letting each team member developing process based, or even functional based priorities for the year. Present these to the group with the rationale as to their inclusion. Once they are all up there select no more than ten as the major objectives for the organization. This is not as simple as it sounds, mind you. A good facilitator will certainly help.

List those top ten objectives. Determine the metrics of success. Define monthly targets. Determine how to get the data in a format to present to your group and the company to show success.

This will be the basis of a monthly review. You will be visiting the exceptions in detail and celebrating successes. This will be the cornerstone of achieving strategic success and corporate excellence. Focused monthly review session based on the top ten objectives will place you squarely on the path to success and excellence.

Like I said, simple. Not easy.

Business Excellence Is in the Eye of the Beholder

2010-11-29T04:50:00.000-08:00

At a recent forum the panel the discussion was around programs that
lead an organization to excellence. The most consistent views seemed
to suggest that few programs on their own will achieve excellence.
There needs to be an overall strategy moving an organization towards
excellence. Nothing occurs overnight and each piece of the puzzle
has its own pitfalls.

Looking at the Ford Motor Company, as an example. They have
implemented almost every business improvement or business excellence
strategy possible and they recently posted losses of about $12
BILLION. Clearly, the strategies they have implemented (TQM, TPS,
JIT, Lean, Six Sigma, TOC, and probably more) as well as new IT
systems that have been installed, have not led to business
excellence.

I have seen companies get results from each strategy individually
but few have had breakthrough results. Each strategy has usually
only focused on one aspect of the business, mostly process. Yes,
Lean is moving into the office but it is still process. It is now
about shuffling paper faster and more efficiently. Big deal. ERP
systems moved companies to think in terms of processes and attempted
to break functional silos, but ERPs are transactional systems that
move companies forward incrementally, by creating piecemeal savings.
Yes in a F50 the numbers are large but relatively speaking they are
incremental. People in the business require new skill sets and ROIs
are hardly ever equal to those planned or projected by the IT
departments and consultants! Been there seen that.

GE is often mentioned as an outstanding organization. Business
owners and managers often mention GEs success and Six Sigma in the
same breath. What they fail to realize is Six Sigma was part of an
overall plan. Some GE companies only started on their road to
excellence and using Six Sigma after many years had been spent re
organizing, redesigning, re hiring and focusing the business in
minute detail. Six Sigma was not the cause and final end result of
their improvement, nor their excellence!

Over the past few years I have been working with companies to
achieve their strategies. What this has meant is looking at business
in a holistic manner and making sure each piece of a strategic plan
is budgeted for and is executed to achieve the desired results, or
better. Essentially companies realize that no matter what happens in
their strategic planning sessions they are not realizing the results
they would like to see. Yes, one can just imagine FORD executives
saying" OK guys we are going to drop $12 Billion this next year!

What this means is companies needs to improve their performance in a
multitude of areas. This can be done without a name brand process,
or a software package. To reiterate, it is not about ERPs, CRMs,
Lean, Six Sigma, TQM, or anything else you can think of. Sure you
may add one later but that is not the reason for success, although
it probably will assist in reinforcing the changes that are made
along the way.

The key to excellence in performance is rather simple; It is not
easy but it is simple.
1. Have a great strategy.
2. Surround yourself with people who believe in the strategy.
3. Aggressively execute the strategy.
4. Measure your results along the way.
5. Celebrate your successes

This very simple strategy is often scoffed at as not possibly being
able to work. The reasons for chuckles are typically; my business is
too complex, we are different, and you dont understand my business,
I am sure you have all heard these and more, yet this process has
never failed. Its tried and tested. Everything else clouds your
vision and makes things seem more complex than they really are.

There are, however, any number of small, middle market, and
transitional businesses who have grown 3 - 5x their revenue using
this very simple strategy. Again, the simplicity should not
overshadow the difficulty of actually implementing it. It is tough.
People are the issue. Its about challenging paradigms. Moving
through false assumptions and mental models which may have become
ingrained over many years.

So how do you get this right? Get your top team together. For a
session with a difference. Develop that strategy that everybody can
support from the get-go. Start with assessing and analyzing the
things you do well and the things in which you are challenged. Be
rigorous and hide nothing. Your failures reversed could just propel
you to success. Failures are an indication of trying new things and
just not having figured out all the kinks. Develop working
guidelines for achieving success when implementing new approaches.
Ensure these are in line with your companies values. This step is
all too often overlooked and very quickly leads to discontent and
resulting failure.

Next step is letting each team member developing process based, or
even functional based priorities for the year. Present these to the
group with the rationale as to their inclusion. Once they are all up
there select no more than ten as the major objectives for the
organization. This is not as simple as it sounds, mind you. A good
facilitator will certainly help.

List those top ten objectives. Determine the metrics of success.
Define monthly targets. Determine how to get the data in a format to
present to your group and the company to show success.

This will be the basis of a monthly review. You will be visiting the
exceptions in detail and celebrating successes. This will be the
cornerstone of achieving strategic success and corporate excellence.
Focused monthly review session based on the top ten objectives will
place you squarely on the path to success and excellence.

Like I said, simple. Not easy.

Building an effective change agent team

2010-11-24T05:37:00.002-08:00

A carefully constructed change agent program is essential to any successful operational transformation.
Philippe Arrata, Arnaud Despierre, and Gautam Kumra
2007 Number 4

When a company attempts a transformation focused on its operations, a sound plan and a robust execution strategy are not necessarily enough. Another important factor in the success of this type of initiative-involving everything from simplifying processes and improving the efficiency of equipment to modifying an entire supply chain-is the designation of specific employees as "change agents" who lead the organization through the journey.
Change agents are leaders who cut across the organization and its business units without regard to the traditional hierarchy. Often these men and women are freed from day-to-day tasks in order to focus solely on leading and driving change. Directly or indirectly, they implement new processes, train employees on new procedures, and act as role models to demonstrate new and better ways to work. For example, change agents might spend more than 50 percent of their time visiting areas undergoing change, auditing progress, or advising managers on how to improve performance.
Organizations that overlook the importance of an appropriate change agent program risk paying a high cost. Consider, for example, an Asian pulp and paper company that created a change agent team to drive its lean-operations program. The group reported directly to top management and was staffed with new hires. However, senior executives failed to recognize and combat the tenacity of the operating group's silo mentality and culture. Plant managers, who held the real organizational power, resisted what they saw as intrusion by a team of young outsiders, leaving management with no choice but to abandon the change program after several months. The change agents could not establish themselves as a credible force in an organization that valued experience and seniority over youth and innovation.
Our experience suggests that a carefully constructed change agent program is essential to any reorganization effort. Such a program requires three elements: a thoughtful design, the careful recruitment and development of personnel, and close integration between the change agent team and the organizational areas targeted for transformation.
Designing the program
Two of the most important tasks when creating a change agent team are defining the roles of its members and establishing a reporting structure.
As in any organization, each individual on the change agent team has a specific role. For example, executers are responsible for implementing solutions, experts use their extensive knowledge to solve difficult problems, coaches train line employees in the new processes, custodians ensure that knowledge is shared across organizational units, and controllers track what's been done and what must still be accomplished. How much emphasis an organization places on each of these roles will depend on the nature of the change program and the existing culture of the organization; for instance, an organization with a weak culture of accountability will need more coaches and controllers in order to ensure consistency.
As for reporting structures, there are two possible models. One is to create a centralized change agent team that reports directly to the top team. The other, decentralized option is to keep change agents in their respective groups so that they report through a dotted line to a central change agent leader. In our experience each of these approaches has its advantages and drawbacks, and no one plan will work for everyone. A centralized change agent team encourages new ideas, the thorough development of new thinking, and a standard set of solutions across the organization. Alternatively, the decentralized model tends to foster greater skill building, the quicker dissemination of the program's values, and better customization of solutions for each site or group. Short-term priorities, the long-term rollout plan, and the culture of the existing organization are all factors that must be considered when determining which change agent structure will be most e
Recruiting and developing the best team
With a change agent organizational structure in place, the next step is to identify and recruit the best team possible. A crucial component is spelling out the benefits and opportunities members will receive as a result of moving outside their existing career paths.
Identify credible candidates
A useful litmus test when considering possible change agents is to anticipate the reaction from other staff members when an appointment to the new position is announced. Selecting high-performing people who are already well respected within the company sends a clear signal that management takes the program seriously. Moreover, a credible set of team members will be better able to drive change and implement recommendations.
Change agents need more than raw analytical power to solve complex business problems; interpersonal skills are also critical if they are to lead others through change. Important traits for a potential change agent include empathy, strong communication skills, perseverance in the face of challenge or ambiguity, and an ability to deal with conflict constructively.
Change agent teams must also make a strong effort to hire people with an appropriate mix of skills. A balance should be struck between young "academic types" who have strong analytical capabilities and seasoned managers who have proven track records within the organization. Working together, these two types of employees complement each other, broadening the team's skill base and providing for the two-way transfer of knowledge and capabilities within the team.
Develop a compelling case for team members
Potential change agents need to understand the explicit benefits and career opportunities that will be open to them as a result of joining the change effort. The best employees often hesitate to take an assignment that may last only 18 months-which is usually the minimum amount of time required for a transformation-fearing that it will damage their careers in the long run.
To counter these fears, high-performing organizations tend to develop a formal career plan for change agents. Some make participation a requirement for promotion to senior management; others build a career-development track within the program. Such mechanisms can prove to be highly effective recruiting tools, motivating potential candidates by offering short-term benefits-including opportunities to build new capabilities and exposure to new areas of knowledge-as well as the longer-term payoff of career advancement. Companies with traditionally weak human-resources processes may find it worthwhile to invest in a distinct HR system for change agents, including specific recruiting, development, and compensation schemes.
Integrating with the front line
The third important requirement for a successful change agent program is active support from line management. Time and again, change leaders discover that an "80 percent right" solution embraced and implemented by line managers beats the "100 percent right" solution that fails to win their acceptance. This buy-in rate is a critical indicator of success for a change program. Change agents should typically spend more than half of their time working collaboratively on the "shop floor," maintaining open, two-way communication and keeping abreast of the latest developments on the front line.
Line managers need to be actively engaged from the beginning of the change process, and they should participate in problem-solving sessions with change agents, senior managers, and other employees. Such sessions encourage openness and the sharing of ideas, allow difficult issues to be raised early on in the change process, and build personal connections between line staff and change agents. At one oil and gas company, for example, the change agent team created a group of "sparring partners" staffed with midlevel production managers. The team jointly tested proposed ideas, won approval for standardization of tools and processes, and acted as a conduit to the rest of the organization. In such sessions, communication barriers are removed and collaborative teamwork becomes the norm.
About the Authors
Philippe Arrata is an associate principal in McKinsey's Calgary office, Arnaud Despierre is a consultant in the Singapore office, and Gautam Kumra is a director in the Delhi office.

Broken Eggs and Shattered Glass

2010-11-24T05:37:00.001-08:00

On a recent Saturday evening at around midnight, my wife and I were just about to turn out the light and go to sleep when we heard the sounds of a group of people talking in the street, outside our home. Then out of the blue came two loud thuds above our bedroom window, followed by the noise of laughter and people running away down our street.

We both jumped out of bed, I turned on the external lights and rushed outside unsure of what had caused the two thuds or what damage I could expect to see. The silence of the night was broken by the distant sound of people laughing, and at that moment I was of a mind to chase after them; however, running bare-footed on the road in the dark is not a very wise thing to do.

I could hear dripping noises on the driveway, and the flood light above our garage helped me to identify just what had happened. Our home had been the victim of an egg bombing!

Being faced with the prospect of cleaning up this sticky mess in the early hours of the morning was not a pleasing thought, on top of which I was less than impressed that we had been singled out for this annoying prank. I decided that it was too late to clean up the mess, as it would disturb our neighbours, so it could wait to the
morning.

Early next morning with a bucket of warm water and scrubbing brush in hand, and with the extension ladder placed on the front wall, I was now ready to wash off what was now two dry yellowish, egg grit impregnated, 1 metre long patches above our front bedroom windows.

My task was made even more challenging by the two large canvas awnings which protect our bedroom windows from the heat and glare of the afternoon sun. My annoyance with the late night pranksters was again building to the level of the night before.

After retracting each of the awnings, something we rarely do except when there are very high winds, I then climbed the ladder to clean up the first patch of egg stain and then move the ladder to clean the second patch.

As I climbed the ladder for the second time, I noticed that the glass in a small window just under the roof line was very badly cracked. On closer inspection the crack ran around over half of the outer edge of the window pane. As the awning protected the window, it was clear to me that the damage had not been caused by the egg bombing. As I carefully placed my hand on the glass, I discovered that the pane of glass was very loose and had the window been closed with any force, it would have most likely shattered and the glass dropped to the drive way, some seven metres below.

Just a few metres away, we have a basketball ring and on most days of the week there are up to six young people who play in the immediate area, including both my sons. My thoughts immediately turned to what could have happened if the broken glass in the window had gone undetected for much longer and then suddenly shattered. The likelihood of my two sons and their friends being seriously injured
was extremely high.

After quickly washing the remaining egg stain off the front wall and with the help of Tom, my youngest son, I got to work with some heavy duty masking tape and secured the cracked window as best I could. Within 24 hours the cracked window had been replaced and all was back to normal, except for the small bits of egg shell I kept finding on the front drive way and stuck to our garage doors.

Over the next few days, I realised that had our home not been bombarded by those eggs late on that Saturday night, I may not have discovered the broken window pane before it shattered and came down all over our drive way.

Even though it had been an annoyance at time, the broken eggs and the stains were cleaned up very quickly; however, the pain that could have been caused by the shattering of glass would never have gone away and would have haunted my wife and myself, forever and a day.

The cold shudder that ran down my spine when I first discovered the cracked window and the thought about the consequences of someone being seriously injured or even killed made me realise just how very lucky we had been.

Frequently in life, the small things that happen to us may have a negative impact and cause some form of pain, sadness, discomfort or personal aggravation. It is often said that we should not 'sweat the small stuff' and always look for the positive outcome or the silver lining in those dark clouds of the current circumstance, even though at the time that is not always an easy thing to do.

My personal experience with the egg bombing on that Saturday evening reminded me that in most cases there is always a flip side to everything that happens to us, and that often the flip side can provide a positive outcome or an even greater benefit—if not now, then at some time in the future.

From now on, whenever I see or break an egg, I will think of the egg bombing incident and say a thank you to those late night pranksters. Equally, I will always be reminded of Jean-Paul Sartre's quote:

'What is important is not what happens to us, but how we respond to what happens to us.'

Breaking Through Uncertainty

2010-11-24T05:36:00.001-08:00

We all question our ability at times. Uncertainty plagues us. It is even more intense if the ability we are questioning relates to something we have never tried or not succeeded at in the past.

Set backs are common, but we rarely welcome them. We are inclined to respond negatively to adversity. It may be time to revisit that reflexive response.

I had an experience recently that caused me to reconsider whether a negative response to adversity is always justified when I was confronted with a life-threatening situation.

It was mid-morning on a warm and pleasant Saturday. I was in the midst of my first skydive of the day. It was my 2,123th jump since having taken up the sport fifteen years ago.

After about one minute of freefall and 5,000 above the ground, I parted ways with my fellow jumpers to get far enough away from them to open my parachute safely. I initiated opening around 3,000 feet above the earth.

My parachute opened with some twists in the lines between the parachute and me. This is not that uncommon. What was different this time was that I was not able to clear the twists.

The twists in the lines caused my parachute to take on an asymmetrical shape. Receiving asymmetrical inputs, the canopy did what it is designed to do and initiated a turn -- that's how it's steered. The problem occurred when the turn quickly became a rapid, diving downward spiral that was spinning me a full 360 degrees about once every second. This was a problem.

I looked up to assess my canopy and saw something I don't often see - the horizon clearly visible ABOVE the trailing edge of my canopy. This meant my canopy and I were now on roughly the same horizontal plane. In that I could see the horizon behind it, I was actually above my parachute and it was leading our fast spinning parade rapidly towards mother earth.

My first need was to acknowledge that I was not going to be able to solve this problem. This is not as easy as it seems. Having successfully completed over 2,100 jumps without having to resort to my second parachute, it was hard for me to believe I had really encountered a problem I could not solve. I had a natural inclination to assume I could fix this problem as I had all those in the past.

Sound familiar? It's always easy to lapse into denial when confronted with a problem. Until we acknowledge the problem and our possible inability to solve it - or to use the methods we have used in the past - we don't have a chance of making things better.

Fortunately, the urgency of this situation caused my hard-headed nature to yield much quicker than usual. That decision probably took a second or two.

The next step, having accepted the need to follow a different course than in the past, was to determine the course. Fortunately fifteen years of training and practice before every day of jumping took hold.

I looked straight down at the two handles on either side of my chest - one to release me from my malfunctioning canopy and one for deploying my reserve parachute - and realized I needed to quickly get them in my hands. I could not help but notice when I made eye contact with them, as had been ingrained in me during my First Jump Course way back in 1988, that by now the rapid spins had turned me back to earth and there beyond my toes was once again the horizon. This was bad!

Time was of the essence at this point not only because I was now rapidly progressing toward the horse pasture below me, but also because the centrifugal force I was starting to experience would soon make it impossible to get my hands to those two handles.

With my hands now securely on the handles, I was confronted with a bothersome question, "Now, which one goes first." The wrong order could cause my reserve parachute to deploy into my spinning main parachute which would result in an incurable entanglement.

Fortunately, ingrained training once again took over and I pulled them in the right order. First the handle on the right side which released me from my spinning main parachute followed by the handle on the left side to deploy my reserve parachute.

This brought on a wonderful experience. My malfunctioning black, teal and magenta canopy was replaced with a bright, yellow never before used reserve parachute. What a lovely sight! And all this by 1,700 feet - plenty of time to spare.

Many years ago, I read a book about the challenges and responsibilities of Secret Service agents. One of the sad aspects of that profession is that agents who never have the chance to validate their years of training by responding to a threat sometimes struggle severely in retirement. They are faced with not knowing - with
certainty - how they would respond when faced with the paramount challenge their career can deliver. For this reason, agents who have faced such a challenge successfully are admired within the culture of the Service.

That Saturday morning, I had the privilege of facing a similar, life-threatening and I now realize life-defining challenge. I faced what Secret Service agents call "the dragon."

For all of us the greater dragon is not the external threat, whether it be an assassin's bullet, the unforgiving and fast approaching earth or another challenge. The real dragon is the self-doubt we carry within us.

For those few splendid moments after landing safely, I was able to put my foot firmly on the neck of the dragon ... and it felt great.

Keep this in mind the next time you are confronted with adversity. On the far side of the experiences the adversity presents, there could be a valuble gift - a renewed confidence and certainty.

Birthday Cards with Secret Codes

2010-11-24T05:35:00.000-08:00

I looked at the scrawled handwriting on the envelope. I blinked and read it once again before tears began to tumble. My birthday card had been addressed, sent, and signed by Dad.

I'd not thought about, or expected, a card that year. The prior months had been dreadful as we watched Mother's health spiral downward. At Dad's age, the ordeal eventually took a terrible toll on him as well. Especially when he realized Mom's only option was to live out her final days in a nursing home. She would never come home again and soon Dad would be alone for the first time in his life.

Yet, there it was…a birthday card, and the only one I had ever received without Mom's familiar handwriting. I didn't even feel the need to open it, for Dad's efforts told me all I needed to know, and more. I cradled it like a priceless breakable and wept buckets of tears. Some for a card I would always hold dear, others for the
sorrowful changes taking place in the lives of those I love.

When I did open the card...the sentiment was lovely and it was obvious much thought had been given to the selection. Although it was signed "Mom and Dad," never had I seen my parent's names written by Dad…another gloomy reminder of what was to come. Mom would not be with us much longer.

Six years later, with Dad rapidly approaching 90 years of age, I smiled when my birthday card came today! It always arrives several days early and the birthday check inside holds a brainteaser Dad concocted when greeting cards became one of his duties. The "memo" line at the bottom of the check is where his now-infamous secret code is found. Using capital letters he leaves a birthday message. An example: H. O. A. Y. T. Y. When I call to thank him for my card, you can bet your boots I will be quizzed on the answer.

A year after Mom's death I was on an extended summer visit at Dad's. I yawned as I plodded to the coffee pot one morning, poured a cup, and sat down next to Dad at the kitchen island. He was addressing a card to an old family friend.

"Dad, how do you keep track of all the birthdays and anniversaries? And, your cards are never late. You do a really good job!"

The look he gave me with those big, blue eyes suggested I might be dumb. "It's simple! On the first of the month I get my calendar and write down all the cards I'll need to send that month. The next time I go shopping, I buy them…then I place them in order in the file cabinet drawer."

I grabbed Dad's calendar and yanked open the file drawer. Sure enough, the cards were in perfect order, from the first of the month to the last.

"Wow, you've got quite a system here!" I exclaimed. "Maybe I should set up one just like yours." I teased.

"After Mom died I had to figure out something! I didn't realize how many cards we sent out in a year's time."

I've never asked Dad about his secret codes for I know they began as a witty distraction during a sad and emotional time. They've continued because he's a wise man who knows life goes on regardless of our circumstances…and that a new comical twist along life's path can always lighten our load.

Birds of a feather flock together

2010-11-24T05:29:00.001-08:00

Don't spend major time with minor people. If there are people in
your life who continually disappoint you, break promises, stomp on
your dreams, are too judgmental, have different values and don't
have your back during difficult times...that is not friendship.

To have a friend, be a friend. Sometimes in life as you grow, your
friends will either grow or go. Surround yourself with people who
reflect values, goals interests and lifestyles.

When I think of any of my successes, I am thankful to God from whom
all blessings flow, and to my family and friends who enrich my life.

Over the years my phone book has changed because I changed, for the
better. At first, you think you're going to be alone, but after
awhile, new people show up in your life that make it so much sweeter
and easier to endure.

Remember what your elders used to say,

"Birds of a feather flock together.
If you're an eagle, don't hang around chickens:
Chickens can't fly!"

Better strategy for business units: A McKinsey Global Survey

2010-11-24T05:27:00.000-08:00

Executives are most positive about the outcomes of strategy formulation for their companies' business units when they work at companies that use a collaborative approach. And while they say following best practices yields better results, they use those practices less often than they think they should.
Web exclusive, July 2007
When a company formulates strategies for its business units, it reaps what it sows, executives say. Those who work at companies that frequently apply best practices-such as assessing trends, risks, and competitor reactions-and take on the challenge of fostering collaboration between executives at the corporate and business unit levels are more positive about the outcomes.
The latest McKinsey online survey

of executives around the world reveals tension throughout the process. Corporate-level managers tend to perceive their companies' processes for developing business unit strategy as collaborative, while their colleagues at the business unit level more often see the strategies as mandated by the corporate center.
Most respondents do agree, however, that their companies have some way to go before the formulation of business unit strategy meets the rigorous standards associated with best practice. For instance, while eight executives out of ten surveyed say it is relevant to identify the top business, social, and environmental trends that would affect a business unit's strategy, only half report that their companies frequently do so.
What's more, executives have mixed feelings about the results. While a large majority of respondents say the process aligns business unit leaders with the strategy and makes managers committed to the implementation of strategy, relatively few report that it fosters creativity or incorporates the priorities of employees at all levels.
Three approaches
Equal shares of respondents report taking a collaborative or a corporate-led approach to developing business unit strategy at their companies. Thirty-seven percent say corporate and business unit representatives share the work, and as many say strategy is formulated on the basis of targets set at the corporate level in areas such as growth, profit, or market share. Twenty-three percent report that the business unit formulates its strategic plan, which is then reviewed by the corporate center.
Executives at smaller companies are more likely to report taking a collaborative approach (Exhibit 1). The larger the company, the more likely it is to use a corporate-led process. How executives characterize the process at their companies also depends on their affiliation. Managers involved in strategy on the business unit side more often view strategy development as being led at the corporate level, while corporate-level executives tend to see it as a collaborative effort.
&l

Best practice and real practice
Companies know what steps to take to formulate an effective strategy, but they don't take them as frequently as they should. The survey asked about critical best practices (such as assessing trends, economic drivers, risks, uncertainties, and competitor and stakeholder reactions), as well as others such as providing more than one strategic option and using case studies and analogies to guide decisions.
A strong majority of the respondents describe nine such practices as relevant for the formulation of strategy in their companies' sector or sectors. Explicitly taking into account the organization's strengths and weaknesses is the practice seen as most relevant (Exhibit 2). Two particularly sophisticated practices-the use of case studies in a business unit's own industry and examples or analogies from other industries-are the only two that a majority do not consider relevant.
However, a gap of 15 percentage points or more separates the portion of respondents who consider these best practices relevant from those who say that their companies frequently use the practices. The gap is particularly wide-almost 30 percentage points-for two activities: identifying and assessing the top trends that would affect a business unit in the next three to five years and explicitly defining a business unit's industry and its role within the company's portfolio.
What's more, serious shortcomings emerge when we pressed executives about the specific actions their companies take when applying some of the best practices. For instance, while 65 percent say it is relevant to take the reactions of competitors into account, and 41 percent say their companies frequently do so, no more than 29 percent say their companies often discuss and analyze the prospects of other players entering their markets. Only 10 percent say they frequently conduct gaming exercises to test the probability of such market entries and potential responses to them.
Companies with a collaborative approach do somewhat better overall than those with a corporate- or business unit-led approach. And executives at collaborative companies are significantly more likely to say they frequently take into account expected reactions from competitors and analyze top trends.
Taking the lead
Although there's general agreement on what companies ought to be doing, there is much less agreement on who's in charge.
The overall response indicates a roughly equal split between the corporate side and the business units about who is taking the lead in formulating and monitoring strategy, but while corporate-level executives most frequently see a small group of senior corporate managers as taking the lead, respondents at the business unit level are more likely to see business unit leaders as being in charge (Exhibit 3). Both groups overwhelmingly agree that business unit leaders have the main responsibility for implementing the formulated strategy.

Getting satisfaction
The quality of an approach to formulating strategy can be measured in part by whether participants are satisfied that the process meets goals such as involving those who carry out strategy, identifying growth opportunities effectively, and fostering creativity-all of which presumably increase the chances of making and executing successful strategies.
A clear majority of executives agree that their companies' approaches to formulating business unit strategy help to align business unit leaders with the strategy and guarantee a commitment to its implementation, ensure that those who execute the strategy are involved in making it, and build a shared understanding of market dynamics (Exhibit 4). But only a minority agree that their approaches foster creativity, incorporate priorities of employees at all levels, and effectively identify growth opportunities outside of the core business. What's more, corporate executives hold a consistently rosier view than business unit executives do.
To dig deeper into the satisfaction of executives with strategy development, we combined their levels of agreement with each of the outcomes in Exhibit 4 into a single composite measure

and divided the respondents into three groups: those who are satisfied (in overall agreement with the statements), those who are neutral, and those who are dissatisfied (disagree with the statements). According to this analysis, executives who are satisfied are the likeliest to describe the process at their companies as collaborative. Specifically, executives at companies with a collaborative approach to strategy represent 37 percent of the sample but 42 percent of those who are satisfied with their
In addition, there is a strong and consistent correlation between satisfaction levels and the frequency of using best practices in strategy formulation. For instance, 57 percent of executives who are satisfied with the process say they apply one of the least-used best practices: frequently providing more than one option when making strategic recommendations. Only 31 percent of the neutral executives and 23 percent of the dissatisfied ones report using that practice (Exhibit 5).

Notes

This measure was constructed as an index of the six outcomes in Exhibit 4. Each respondent received an index score ranging from a low of 6 (if he or she selected "strongly disagree" with all six outcomes) to a high of 30 (if he or she selected "strongly agree" with all six). The index values were then grouped into the categories of satisfied, neutral, and dissatisfied.
Achieving strategic targets
In the end, though, the effectiveness of strategy formulation must also be measured by whether the company achieves its strategic goals. The frequent use of best practices in the process seems to help somewhat.
For instance, of respondents who report that over the past three fiscal years their companies performed better than the strategic targets they had set, 62 percent say their processes frequently take these targets into account and assess risks, compared with 56 percent of executives at companies that performed on target and 47 percent of those that performed below target (Exhibit 6). Indeed, the outperforming companies were more likely to make frequent use of 7 of the 11 practices.
About the Contributors
Contributors to the development and analysis of this survey include Jungkiu Choi, a McKinsey alumnus; Dan Lovallo, a professor at the University of Western Australia Business School and an adviser to McKinsey; and Anna Tarasova, a consultant in McKinsey's Waltham, Massachusetts, office.

] Become a Better Communicator by Keeping Your Mouth Shut -Kenny Moore

2010-11-22T05:58:00.000-08:00

In corporate life we are in serious danger of believing that those who talk the loudest win the day. My 20 years in business have taught me that leaders who can actually keep their mouths shut and ears open have a better chance of being heard, believed and followed.

Transplanting Monastic Practices

When I lived in the monastery as a Catholic priest, we had a spiritual practice called the "Grand Silence." Each evening after dinner and night prayer, we would retire to our cells under a cloak of silence that reigned until after Mass the following morning. It was spiritual time spent reflecting on life, death and one's relationship to the Divine. A chance to grapple with the dynamic tension between human frailty and the personal call to holiness. While religious reading was tolerated, we were encouraged to spend the time creatively doing nothing. The Roman philosopher, Cato, once said: "Never am I more active than when I do nothing." Granted, he wasn't a monk, but he was articulating one of life's golden truths. In sacred silence, we have a chance to hear an alternative voice beyond our self-serving subconscious. There are certain messages that will only be revealed in darkness and uncluttered space. Those who have the fortitude and faith to wait there are often copiously rewarded.

I came to understand how valuable this silence was only after I left the monastery and got married. When my wife and I returned from our honeymoon and began our life of marital bliss, she would, each evening, talk about her day at work, planned projects for the house, the number and names of our expected offspring, as well as an endless array of other wifely concerns. It took about a week before I broke under the barrage of words. "Dear," I remember saying, "In the monastery, we didn't talk after dinner; we had the 'Grand Silence.'" I explained that I wasn't used to ongoing evening conversations. "I need some quiet in the house," I whispered. With concern and respect for her new husband, she lovingly replied: "Honey, you're so damn weird!"

This tension between monastic silence and marital discourse went on for years. It eventually got resolved around the dinner table when my wife and I were sharing an evening repast, surrounded by our two young squabbling sons. Milk was being spilt, food was being thrown and parental patience was being compromised. After the ninth foray into a cacophony of sibling rivalry, my wife threw down her napkin and announced: "That's it. Grand Silence! There's no more talking. You boys leave the table, go upstairs and put your pajamas on and get into bed. I've had enough!" As the boys retreated to their lair, I looked at her with deep affection and said: "Honey, you're so damn weird!"

If my memory serves me well, I think I spent that night sleeping alone on the couch.

Silence as an Executive Competency

It's not just our personal life that benefits from silence. So does our corporate one.

I recently had a chance to work with one of our Operating officers. He asked my help in designing a group meeting with his managers to get their input regarding departmental goals. We worked assiduously in crafting a session largely focused on what the employees had to say, and intentionally kept executive remarks to a minimum. During the half-day program, participants broke into small groups to write down their thoughts about organizational needs, operational gaps and suggestions for productively moving the business forward. The employees spent some time writing and a lot of time speaking. The officer largely listened.

There were a few interesting insights. We came to learn that when executives speak, employees rarely listen or if they do listen they don't believe. But co-workers have great credibility and when they talk, they have a significant impact on their peers. Mostly because they're not seen as paid political envoys, but fellow workers laboring in the daily muck and mire. Even though the executive could have waxed eloquently about customer satisfaction and safety, having employees talk about their experiences on the job proved far more compelling.

After unedited conversations about business challenges and operational needs, one engineer remarked: "This is the first time I understand how our department actually fits into the company's Growth Strategy." Thank God the folks from Corporate Planning weren't in the room; they would have reeled in horror.

In the midst of executive silence, we also got a chance to hear about our newly minted performance appraisal program and forced ranking system. Seems we achieved exceptional results in disheartening our employees and marginalizing the workforce. As one brave director said: "I don't mind raising the performance bar, but I personally resent being badgered and threatened by the system." How surprising: our slavish adherence to "Best Practices" had once again ruptured employee relations and compromised intrinsic motivation.

When employees evaluated the half-day program, their one clear and consistent comment was: "How refreshing to be in a meeting with an officer who actually listens. It makes me hopeful about our future."

Additionally, for the last few years my CEO has been hosting informal dinner meetings with a handful of managers once a month. He wants to hear what's working well in the company and what's not. His main contribution to the conversation is silence, coupled with an intense interest in learning about what's really going on at the workplace. Oddly enough, our top-ranking officer has come to learn that he finds out more about the hopes and concerns of our workers when he doesn't speak. Initially, he had me joining him to make sure he didn't talk too much. Over time, he's become a pro at it. My main responsibility now is to pick up the dinner tab and fret over my diminishing value to the company.

Practice Makes Perfect

While silence comes more easily to monks than to Alpha-males, it is a skill that can be learned and honed. Here are some practical steps to get you started:

The next time you're out driving, turn off the radio. Likewise, resist the temptation to use your cell phone. Besides being illegal, it's dangerous to your life: interior as well as exterior. Drive around in the glow of silence and pay attention to what your eyes notice and your soul surfaces. There's inspiration and beauty abounding.

At an upcoming business social, go around the room and hook up with as many strangers as possible. After a brief introduction, ask them what they do for a living, then shut up and listen. Periodically nod your head in agreement and use your eyes to offer support and encouragement.

Occasionally say: "That sounds interesting, tell me more." People will be impressed. By evening's end, attendees will leave the gala affair commenting on your leadership potential and exceptional communication skills.

Stop watching TV. George W. Bush has gotten a few things right, and this is one of them. Television deadens our senses, causes undue anxiety about the future and leaves us feeling sullen and morose. In return for this small sacrifice, you'll receive a dividend of extra time to creatively do nothing. Spend it wisely. Perhaps lighting a candle or expanding your spirit of gratitude for life's little blessings.

Sit still for ten minutes each day in silence. No prayer needs to be said; no mantra recited. Simply be present and be quiet. Mystery in the Marketplace

Mystery is marbled into all of life, and especially that of work. The realm of business is often the place where the drama of life unfolds. The perplexing realities of good, evil, suffering, and injustice are made manifest. The inscrutability of growth, transformation and personal redemption often accompanies our work. As we journey in our jobs, we come to realize that life is not a problem to be solved, but a mystery to be lived.

It's said that upon graduation, doctors are informed that half of what they were taught is wrong. The problem is, the medical establishment's not sure exactly which half it is. When you're dealing with a human being, mystery runs rampant. Working with people is not a mechanical relationship. It's a sacred one.

If you consider that corporations are comprised of hundreds and thousands of human beings, it's unlikely we can readily mandate operating principles that will engage and motivate them. Perhaps simply showing up and listening is a worthwhile strategy for business success.

When confronted with mystery, our most practical response is awe: boldfaced and with abject stupefaction. It's no surprise that "mystery" comes from the Greek verb meaning: keep your mouth shut. If we're looking for an executive role model for the competency of managing mystery, we might want to consider Moses standing before the burning bush. In stark imitation, we're well served to remain silent, remove our sandals and recall that we are standing on sacred ground.

I wonder how long it'll take Stephen Covey to add these to his list of "Highly Effective Habits"?

The Author

Kenny Moore (www.kennythemonk.com) is co-author of The CEO and the Monk: One Company's Journey to Profit and Purpose (John Wiley and Sons, 2004), rated as one of the top ten best selling business books on Amazon.com. He is Corporate Ombudsman and Human Resources Director at a New York City Fortune 500 energy company. Reporting to the CEO, he is primarily responsible for awakening joy, meaning and commitment in the workplace. While these efforts have largely been met with skepticism, he remains eternally optimistic of their future viability.

Be The Full Jigsaw

2010-11-22T05:57:00.000-08:00

Be The Full Jigsaw

"There is no such thing as a perfect leader, either in the past or present, in China or elsewhere. If there is one, he is only pretending, like a pig inverting spring onions into his nose in an effort to look like an elephant".

-Liu Shao-Chi

It may be true that there is no such thing as the perfect leader - leaders are human, after all. However, that is not to say that people who hold leadership positions should not continually seek to improve their leadership skills.

In order to measure managers' leadership capabilities we need to identify what are the essential qualities of an effective leader. In my view they are six in number:

? A Leader is a visionary

? A Leader sets an example

? A Leader understands what motivates each team member

? A Leader builds supportive relationships

? A Leader empowers others to reach their potential

? A Leader understands the power of communications

These are the six components that each leader must work hard at continually and consistently applying and, most importantly, demonstrating in all he or she does. Think of it as a jigsaw - The Leadership Jigsaw.

Unless all six pieces are in place, the leader will not achieve his or her potential, nor will those looking to following their leader. No one aspiring to lead a high-performing team can do so if they are `one piece short of a jigsaw'! Let's consider each piece in a little more detail.

VISION.

Leadership involves taking people on a journey, but if people are to follow it must not be a journey into the unknown. Such destinations may work for Captain Kirk of the Starship Enterprise but they will not work for modern-day leaders with their feet placed firmly on terra-firma! A person holding a leadership position without a clear vision, or the ability to communicate one effectively, will be heading into darkness (probably alone!). When leaders express their vision in a way that touches their followers, they invite strong commitment: a common purpose that focuses people on a shared, mutually beneficial objective.

"A leader shapes and shares a vision which gives point to the work of others"

-Charles Handy

EXAMPLE. People respect and follow leaders whose behaviour mirrors their words; they have no respect for leaders who say one thing and do another. "Do as I say, not as I do" is simply not good enough.Leaders should, therefore, look hard into the mirror and consider what they see. They should ask themselves: "Do I lead in
such a way that I would willingly follow myself? You can be sure of one thing: you may not be continually assessing your performance as a leader, but your followers will be! They will be watching your every move and taking a lead from you.

The leaders acts as though everyone is watching, even when no-one is
watching"

-Brian Tracy

MOTIVATION.

Truly great leaders understand their followers: they understand their needs, their dreams, their fears, their emotions - what `makes them tick'. People need to believe that they are playing their part and successful leaders ensure that they receive the recognition their efforts deserve. In my experience of working with junior managers across the country, a belief that they are not valued for their efforts is one of the most commonly found demotivators.

"Leadership is the art of getting someone else to do something you want done because he wants to do it"

-Dwight D. Eisenhower

RELATIONSHIP.

It is axiomatic that a leader needs followers - a team of people working together towards a common aim. A culture of trust must exist between all members, at all levels, with the leader providing the shining example for all to follow.

Notwithstanding the fundamental changes forced upon organisations in recent years, some departments are still led by managers who busy themselves interfering in the work of their subordinates; are unwilling to share information; and insist on sanctioning every decision. Yet if the modern leader's challenge is to make optimum use of fewer resources (and it is!) this will only happen if people
are encouraged to participate in an open, positive environment based upon mutually-supportive relationships.

"All your strength is in your union.
All your danger is in discord"

-Henry Longfellow
The Song of Hiawatha

EMPOWERMENT.

Enlightened leaders understand that most people naturally want to better themselves and, given the appropriate support and encouragement, will grasp the opportunity to acquire new skills and knowledge. They also realise that the key to getting the best out of people is to give them responsibility for their own actions, rather than creating an environment of control and mistrust. Such leaders are willing to delegate aspects of their role to their subordinates when the situation allows and, moreover, are prepared to empower them to take decisions themselves, within parameters, without recourse to higher authority.

"Treat people as if they were what they ought to be, and you will help them to become what they are capable of being"

-Goethe

COMMUNICATION.

Whilst all managers, without exception, would preach the importance of effective communications, not all practice what they preach. But, yet again, it is the leader who should lead the way by his or her example.

Productive communications are built upon understanding between all parties. A leader who is prepared to get out and `walk the talk' will be in a far better position to both reinforce the vision, and hear how it is being received, than one who remains desk-bound. There are few more potent motivating actions a leader can take than to make the effort to speak to front-line workers and to ask "how
are things going?", and mean it!

"A leader is someone who knows what she wants to achieve and how to
communicate it"

-Margaret Thatcher

THE MESSAGE? The message is that true leaders need to be proficient in a wide range of essential skills that can be represented by The Leadership Jigsaw. Those holding leadership positions should measure themselves against this model of excellence to ensure that they are not `one piece short of a jigsaw'.

About the Author:
The Leadership Jigsaw is a model of leadership best practice created by Alan Cutler, a leadership writer, motivational speaker and mentor. For more details of how Alan can develop the leadership skills of your managers see www.hospitalityleadership.com, or contact him on alan@hospitalityleadership.com. Full details of The Leadership Jigsaw are contained in his book, `One Piece Short of a Jigsaw', obtainable from www.leadershiptalks.com

Bad to the Bone: Dealing With a Bad Boss

2010-11-22T05:56:00.000-08:00

The Unwitting Bad Boss
You're weary. You're frustrated. You're unhappy. You're de-motivated. Your interaction with your boss leaves you cold. He's a bully, intrusive, controlling, picky or petty. He takes credit for your work, never provides positive feedback and misses each meeting he schedules with you. Or he caves immediately under pressure and fails to support you in accomplishing your job.

He's a bad boss, bad to the bone. Dealing with a less than effective manager, or just plain bad managers and bad bosses, is a challenge too many employees face. No matter the character of your bad boss, these ideas will help you deal with your bad boss.

Does the Bad Boss Know?
Start your campaign by understanding that your boss may not know he is bad. Just as in situational leadership, the definition of "bad" depends on the employee's needs, the manager's skills and the circumstances.

A hands-off manager may not realize that his failure to provide any direction or feedback makes him a bad boss.

He may think he's empowering his staff. A manager who provides too much direction and micromanages may feel insecure and uncertain about his own job. He may not realize his direction is insulting to a competent, secure, self-directed staff member.

Or, maybe the boss lacks training and is so overwhelmed with his job requirements that he can't provide support for you. Perhaps he has been promoted too quickly or his reporting responsibilities have expanded beyond his reach. In these days of downsizing, responsibilities are often shared by fewer staff members than ever before.

This bad boss may not share your values. The newer generation of workers expect that they can use their vacation time and take action to make work-life balance a priority. Not all bosses share these views. If your values are out of sync with those of your boss, you do have a problem.

Recommended Approach to the Unwitting Bad Boss

• Talk to this boss. Tell him what you need from him in term of direction, feedback and support. Be polite and focus on your needs. Telling the boss he's a bad boss is counterproductive and won't help you meet your goals.

• Ask the manager how you can help him reach his goals. Make sure you listen well and provide the needed assistance.

• Seek a mentor from among other managers or more skilled peers, with the full knowledge of your current manager, to enlarge your opportunity for experience.

• If you've taken these actions, and they haven't worked, go to your boss's manager and ask for assistance. Or, you can go to your Human Resources staff first, to rehearse and gain advice. Understand that your current boss may never forgive you, so ensure you have done what you can do with him, before taking your issues up the line.

• You may never hear what the boss's boss or the HR staff did to help solve your bad manager's behavior. It's confidential. But, do allow some time to pass for the actions to have their desired impact.

• If nothing changes, despite your best efforts, and you think the problem is that they don't believe you, draw together coworkers who also experience the behavior. Visit the boss's manager to help him see the size and impact of the behavior.

• If you think the problem is that your boss can't – or won't – change, ask for a transfer to another department. This recommendation presumes you like your employer and your work.

Attract Clients With Your Business Card

2010-11-20T05:59:00.002-08:00

Let's say you attend a business function. You meet a top tier prospect, and give her your card. Twenty other people do the same thing. So what will make your card stand out from the collected stack?

Here are twelve ways to assure that prospects will read your card, and will become more likely to do business with you.

ONE: Keep your card "reader friendly" by providing ample white space. Unfortunately, we are tempted to jam as much information on the card as the printer can squeeze in.

However, people don't want to bog down by reading lengthy paragraphs. Note how short this one is, and the one before it. Easy to read, don't you think?

TWO: Display your photo on your card. Think what happens when the prospect you met at the reception flips through the cards she collected. Which people will she remember most easily? The ones with photos, of course. For many years, real estate pros have acted on this assumption, and they are right.

An important caution: Be sure to use a recent picture, no more than five years old. The person who uses an outdated picture raises suspicion. What else about them is obsolete or misrepresented? That's why I had a photographer take a new photo of me, which I will put on my business card and Web site soon.

THREE: Stick with a standard size. You want your card to fit the card collections others maintain. An odd-shaped card might be tossed away as too cumbersome to keep.

FOUR: Never economize on paper stock. The dollars you save won't compare with the dollars you will miss out on because prospects think you may be second rate, like your card.

FIVE: Spend what is needed to include color. Think about it—how many of your potential clients have black and white TV, cameras and magazines?

Avoid psychedelic colors unless you are a designer, artist or entertainer. Your color photo will reflect a warm, vivid personality, so there's no need to shock the senses of readers.

SIX: Include your slogan. My company slogan identifies my purpose: "Helping you finish in first place!" Six words are enough--if they are the right words.

SEVEN: If you have a logo, use it. Picture this in your mind: "Golden Arches." Know the product? I am sure you do. Did you salivate? Probably so. That's the power of symbols.

My logo is a winner's trophy, which fits my motto of helping organizations and individuals finish first. Matches my company name as well: Championship Communication.

EIGHT: Tell readers how to contact you by phone, fax, mail and Internet. This sounds elementary, yet you would be surprised at how many marketers omit this essential data.

NINE: Keep your card current, by printing new ones when you change your office location, phone number or e-mail address. When someone gives you a business card with a new number added in pen, you rate their work second class, or worse.

TEN: Use both sides of your card for information. No need to let half the space go unutilized.

Consider putting your statement of mission on the reverse side. Then you can refer to that when you meet with prospects.

ELEVEN: When you give your card to a potential client, don't offer just one. Instead, ask: "How many of these will you need, to share with your staff?" You will be amazed at how many more cards you will put into circulation with this simple question.

TWELVE: You may want to distribute more than one card, with each card reflecting a different service you offer. Several years ago, a retired executive handed me three business cards, each representing a new venture he had launched, with distinct services provided.

Attitude Is Everything

2010-11-20T05:59:00.001-08:00

Jerry was the kind of guy you love to hate. He was always in a good mood and always had something positive to say. When someone would ask him how he was doing, he would reply, "If I were any better, I would be twins!"

He was a unique manager because he had several waiters who had followed him around from restaurant to restaurant. The reason the waiters followed Jerry was because of his attitude. He was a natural motivator. If an employee was having a bad day, Jerry was there telling the employee how to look on the positive side of the situation.

Seeing this style really made me curious, so one day I went up to Jerry and asked him, "I don't get it! You can't be a positive person all of the time. How do you do it?"

Jerry replied, "Each morning I wake up and say to myself, Jerry, you have two choices today. You can choose to be in a good mood or you can choose to be in a bad mood.' I choose to be in a good mood. Each time something bad happens, I can choose to be a victim or I can choose to learn from it. I choose to learn from it. Every time someone comes to me complaining, I can choose to accept their complaining or I can point out the positive side of life. I choose the positive side of life."

"Yeah, right, it's not that easy," I protested.

"Yes it is," Jerry said. "Life is all about choices. When you cut away all the junk, every situation is a choice. You choose how you react to situations. You choose how people will affect your mood. You choose to be in a good or bad mood. The bottom line: It's your choice how you live life."

I reflected on what Jerry said. Soon thereafter, I left the estaurant industry to start my own business. We lost touch, but I often thought about him when I made a choice about life instead of reacting to it.

Several years later, I heard that Jerry did something you are never supposed to do in a restaurant business: he left the back door open one morning and was held up at gunpoint by three armed robbers.

While trying to open the safe, his hand, shaking from nervousness, slipped off the combination. The robbers panicked and shot him. Luckily, Jerry was found relatively quickly and rushed to the local rauma center.

After 18 hours of surgery and weeks of intensive care, Jerry was released from the hospital with fragments of the bullets still in his body.

I saw Jerry about six months after the accident. When I asked him how he was, he replied, "If I were any better, I'd be twins. Wanna see my scars?"

I declined to see his wounds, but did ask him what had gone through his mind as the robbery took place.

"The first thing that went through my mind was that I should have locked the back door," Jerry replied. "Then, as I lay on the floor, I remembered that I had two choices: I could choose to live, or I could choose to die. I chose to live."

"Weren't you scared? Did you lose consciousness?" I asked.

Jerry continued, "The paramedics were great. They kept telling me I was going to be fine. But when they wheeled me into the emergency room and I saw the expressions on the faces of the doctors and nurses, I got really scared. In their eyes, I read, 'He's a dead man.' I knew I needed to take action."

"What did you do?" I asked.

"Well, there was a big, burly nurse shouting questions at me," said Jerry. "She asked if I was allergic to anything. 'Yes,' I replied. The doctors and nurses stopped working as they waited for my reply. I took a deep breath and yelled, 'Bullets!' Over their laughter, I told them, "I am choosing to live. Operate on me as if I am alive, not dead."

Jerry lived thanks to the skill of his doctors, but also because of his amazing attitude. I learned from him that every day we have the choice to live fully.

Attitude, after all, is everything.

Anticipating customer queries in call centers

2010-11-20T05:57:00.000-08:00

An effort to determine the value of specific kinds of customer inquiries shows how companies should decide which channels are best for dealing with each of them.
Raffaella Bianchi
2007 Number 4

Situation
Companies seeking to improve the performance and contain the costs of their call centers by automating customer service interactions enjoy a growing array of options-including e-mail, Web sites, online chat, and voice recognition systems. Deciding what and how to automate is challenging, though, since companies that do so excessively risk alienating their customers and forgoing the revenue opportunities generated by agents. A telecommunications company faced this problem as it investigated ways to ease the pressure on its overwhelmed call centers.
Complication
The company's managers had detailed information about the potential value of various types of customers but didn't know the value of each kind of incoming call, though they suspected that the value of different ones could vary significantly. A customer calling to learn about new products might be open to buying additional services, for example, but the same customer, calling a week later to complain about spotty wireless coverage, would likely be less so. Without knowing the potential value of each inquiry, the managers couldn't determine the best channel for handling it.

Resolution
In response, the company categorized inquiries by mapping their volume and type against the revenues they produced. It found that six kinds of queries accounted for 60 percent of its total call volume but generated 75 percent of its additional profits,

making such queries candidates for live interactions with agents. The company then considered which types of calls were easiest to automate, and it introduced automated systems to route low-value inquiries by category whenever possible. Managers also developed processes for starting calls with live agents and then moving customers to a detail
Implications
The principles underlying the telecom company's analysis of its incoming call-center queries are relevant for businesses making trade-offs between the costs and potential benefits of customer calls much more varied than those the telco received. Business-to-business suppliers, for example, must determine which customer needs merit a live salesperson, a service technician, or a key account team and which can be met effectively through lower-cost Web-based options. Understanding the value of each kind of interaction helps a company boost its revenues by meeting its customers' most exacting needs and sales potential more successfully. And by reducing overall sales and service costs, a company can ensure that resources aren't wasted on interactions with low sales potential and for which customers don't value high-touch treatment.

An Inspirational Story, Motivational Story - The Hospital Window

2010-11-19T05:50:00.001-08:00

Two men, both seriously ill, occupied the same hospital room. One man was allowed to sit up in his bed for an hour each afternoon to help drain the fluid from his lungs. His bed was next to the room's only window. The other man had to spend all his time flat on his back. The men talked for hours on end. They spoke of their wives and families, their homes, their jobs, their involvement in the military service, where they had been on vacation.

Every afternoon when the man in the bed by the window could sit up, he would pass the time by describing to his roommate all the things he could see outside the window.

The man in the other bed began to live for those one-hour periods where his world would be broadened and enlivened by all the activity and color of the world outside.

The window overlooked a park with a lovely lake. Ducks and swans played on the water while children sailed their model boats. Young lovers walked arm in arm amidst flowers of every color and a fine view of the city skyline could be seen in the distance.

As the man by the window described all this in exquisite detail, the man on the other side of the room would close his eyes and imagine the picturesque scene.

One warm afternoon the man by the window described a parade passing by. Although the other man couldn't hear the band - he could see it. In his mind's eye as the gentleman by the window portrayed it with descriptive words.

Days and weeks passed.

One morning, the day nurse arrived to bring water for their baths only to find the lifeless body of the man by the window, who had died peacefully in his sleep. She was saddened and called the hospital attendants to take the body away.

As soon as it seemed appropriate, the other man asked if he could be moved next to the window. The nurse was happy to make the switch, and after making sure he was comfortable, she left him alone.

Slowly, painfully, he propped himself up on one elbow to take his first look at the real world outside. He strained to slowly turn to look out the window beside the bed.

It faced a blank wall. The man asked the nurse what could have compelled his deceased roommate who had described such wonderful things outside this window.

The nurse responded that the man was blind and could not even see the wall. She said, "Perhaps he just wanted to encourage you."

Epilogue:
There is tremendous happiness in making others happy, despite our own situations.

Shared grief is half the sorrow, but happiness when shared, is doubled.
If you want to feel rich, just count all the things you have that money can't buy.
Today is a gift, that's why it is called the present.

An Inspirational Story, Motivational Story - Each Day Is A Gift

2010-11-19T05:49:00.001-08:00

The 92-year-old, petite, well-poised and proud lady, who is fully dressed each morning by eight o'clock, with her hair fashionably coifed and makeup perfectly applied, even though she is legally blind, moved to a nursing home today.

Her husband of 70 years recently passed away, making the move necessary.

After many hours of waiting patiently in the lobby of the nursing home, she smiled sweetly when told her room was ready.

As she maneuvered her walker to the elevator, I provided a visual description of her tiny room, including the eyelet sheets that had been hung on her window. "I love it," she stated with the enthusiasm of an eight-year-old having just been presented with a new puppy.

"Mrs. Jones, you haven't seen the room .... just wait."

"That doesn't have anything to do with it," she replied. "Happiness is something you decide on ahead of time. Whether I like my room or not doesn't depend on how the furniture is arranged, it's how I arrange my mind. I already decided to love it. It's a decision I make every morning when I wake up. I have a choice; I can spend the day in bed recounting the difficulty I have with the parts of my body that no longer work, or get out of bed and be thankful for the ones that do. Each day is a gift, and as long as my eyes open I'll focus on the new day and all the happy memories I've stored away, just for this time in my life."

She went on to explain, "Old age is like a bank account, you withdraw from what you've put in. So, my advice to you would be to deposit a lot of happiness in the bank account of memories Thank you for your part in filling my Memory bank. I am still depositing."

And with a smile, she said:

"Remember the five simple rules to be happy:

1. Free your heart from hatred.
2. Free your mind from worries.
3. Live simply.
4. Give more.
5. Expect less."

An Eye Opener

2010-11-19T05:47:00.000-08:00

One day all the employees reached the office and they saw a big advice on the door on which it was written: "Yesterday the person who has been hindering your growth in this company passed away. We invite you to join the funeral in the room that has been prepared in the gym".

In the beginning, they all got sad for the death of one of their colleagues, but after a while they started getting curious to know who was that man who hindered the growth of his colleagues and the company itself.

The excitement in the gym was such that security agents were ordered to control the crowd within the room. The more people reached the coffin, the more the excitement heated up. Everyone thought: "Who is this guy who was hindering my progress? Well, at least he died!".

One by one the thrilled employees got closer to the coffin, and when they looked inside it they suddenly became speechless. They stood nearby the coffin, shocked and in silence, as if someone had touched the deepest part of their soul.

There was a mirror inside the coffin: everyone who looked inside it could see himself.

There was also a sign next to the mirror that said: "There is only one person who is capable to set limits to your growth: it is YOU."

So my dear friends, You are the only person who can revolutionize your life. You are the only person who can influence your happiness, your realization and your success. You are the only person who can help yourself.

Your life does not change when your boss changes, when your friends change, when your parents change, when your partner changes, when your company changes. Your life changes when YOU change, when you go beyond your limiting beliefs, when you realize that you are the only one responsible for your life.

"The most important relationship you can have, is the one you have with yourself"

Examine yourself, watch yourself. Don't be afraid of difficulties, impossibilities and losses: be a winner, build yourself and your reality.

The world is like a mirror: it gives back to anyone the reflection of the thoughts in which one has strongly believed.

The world and your reality are like mirrors laying in a coffin, which show to any individual the death of his divine capability to imagine and create his happiness and his success.

It's the way you face Life that makes the difference

An Academic Grade of Akademiks

2010-11-18T05:12:00.000-08:00

As for the urban community, there will be only one kind of clothing line that can fit to their preference of style and fashion, and that is the akademiks urban clothing line. The akademiks clothing line is an American brand of urban clothing line highly respected by the loyal devotees of the hip hop music.

Its founders are none other than the brothers Donwan Harrell and Emmet Harrell. The brothers Harrell are famous of designers of clothing lines and accessories. Donwan Harrell is a founder of the New York-based urban clothing company, akademiks. He is also one of the former top 10 designers at Nike. Under akademiks, Harrell has introduced PRPS jeans, a line of "super-premium" denim, much like his brother Emmet Harrell.

Now for those that doesn’t know about the PRPS jeans is. The PRPS jeans are creat akademiks, a New York-based clothing company founded in partnership by a former top Nike designer, Donwan Harrell. PRPS jeans are manufactured in Japan, unlike other jeans which are mostly manufactured in China. The Japanese manufacturer of the jeans uses looms from the 1960s similar to the type that were used to produce denim for Levi's.

The name akademiks is an intentional misspelling of the word academics. The name akademiks is spelled akdmks on many of the company's garments. Also it is sometimes spelled AKS for abbreviation.
The akademiks has gained popularity in the clothing industry due to the number of celebrities who wear the brand's PRPS jeans. The akademiks brand is popular in the growing multi-cultural hip hop scene of today, with artists such as Dizzee Rascal and 50 Cent partial to wearing the akademiks label.

However, other than popularity and fame, akademiks also received some allegations pertaining to unintended malicious act. In 2004, the label achieved a degree of notoriety when its advertisements on New York MTA buses, which included the tagline "Read Books, Get Brain", were banned. Although MTA officials had not originally realized that there was any double meaning in this phrase, it was later pointed out that "get brain" was in fact a slang term for "receive oral sex" along the lines of "get head".

But nonetheless, the akademiks is still the number one urban clothing line in the country.

The akademiks is an American brand of urban clothing line highly respected by the loyal devotees of the hip hop music. The akademiks was founded by none other than the brothers Donwan Harrell and Emmet Harrell.

The brothers Harrell are famous of designers of clothing lines and accessories. Donwan Harrell is a founder of the New York-based urban clothing company, akademiks. He is also one of the former top 10 designers at Nike. Under akademiks, Harrell has introduced PRPS jeans, a line of "super-premium" denim, much like his brother Emmet Harrell.

The name akademiks is an intentional misspelling of the word academics. The name akademiks is spelled akdmks on many of the company's garments. Also it is sometimes spelled AKS for abbreviation.

The akademiks has gained popularity in the clothing industry due to the number of celebrities who wear the brand's PRPS jeans. The akademiks brand is popular in the growing multi-cultural hip hop scene of today, with artists such as Dizzee Rascal and 50 Cent partial to wearing the akademiks label.
The PRPS jeans are created by akademiks, a New York-based clothing company founded in partnership by a former top Nike designer, Donwan Harrell. PRPS jeans are manufactured in Japan, unlike other jeans which are mostly manufactured in China. The Japanese manufacturer of the jeans uses looms from the 1960s similar to the type that were used to produce denim for Levi's.

Not only does akademiks have popularity but also scandals. In 2004, the label achieved a degree of notoriety when its advertisements on New York MTA buses, which included the tagline "Read Books, Get Brain", were banned.

Although MTA officials had not originally realised that there was any double meaning in this phrase, it was later pointed out that "get brain" was in fact a slang term for "receive oral sex" along the lines of "get head".

For more information about the akademiks urban clothing line, then visit Streetzwear, the number one online clothing shop in the United States, at www.streetzwear.com.

Always look on the bright side of life

2010-11-18T05:11:00.000-08:00

"Always look on the bright side of life." I happened to have that song by Monty Python stuck in my head earlier today when I thought of this topic. Always look on the bright side of life, find your happy place, it goes on and on throughout media and literature positive thinking overcomes adversity. It's such a simple concept but so true. If you have a negative outlook on something the likelihood of you succeeding are dim. However with a positive outlook the chances are endless. This article will focus on positive thinking and the advantages to when you approach problems with a positive outlook.

How does motivation affect your performance, and why is a positive outlook and being positively motivated good for you? Well being positively motivated effects your productivity and your performance. If you want to do you, you will do more. If you want to have a great day, you will have a great day. Being positively motivated you realize that you are in control of your life and your actions and you can succeed in reaching your goals. So you've realized you need to be in a positive mind set to accomplish more. For argument's sake we'll say that you're normally fairly apathetic and don't know how to improve your mood. There are a few ways. Analyze your work environment. Is it conducive to work? Do you like working there? Now you may work in some cubicle in the middle of an office, so I'm not saying that I can get you an office with a window view, but how conducive is your workplace to progress? I will assume worst case scenario, you work in a dimly lit cramped cubicle. How do we motivate you? Simple, what motivates you, your family, your idols? Bring in pictures of your family, your pets. Put a big picture of Bill Gates right above your computer. To be positively motivated you need to surround yourself with stuff that makes you want to work. When you feel that you've got the will and desire to succeed few things can stand in your way.

So being positively motivated effects everything from your productivity to your mood to your outlook on future events. Your environment and surrounding directly affect your outlook on events.

However you can control how your environment affects you. You can surround yourself with materials that motivate you and improve your mood. If you are happy and motivated you will let few things impede your success. I wish you a happy and productive day. If you don't feel like you are having a good day just look yourself in the mirror and say "I think today is going to be a good day." Because ultimately, how you perceive your day, is all that matters.

Adversity to Victory

2010-11-18T05:09:00.000-08:00

The following is a true story about a young friend who lives in St. Louis...

Andy was born with a developmental disorder. The two sides of his brain were not joined normally with each other. The right side of his body could not communicate with the left. At age three, it was difficult for him to walk, speak, and play. He could only echo back a few words, and walk slowly while someone held each of his hands.

Then came the struggles. He attended an all-day center where he was enrolled in every imaginable therapy. He struggled, sometimes in tears, to get stronger. Andy hated it when his parents would leave him there in the mornings. However, they believed - against all odds - that he would grow up to live a normal healthy life. They believed it for themselves, and for Andy.

It paid off. Today Andy is a successful 13-year old high school student. His progress has been nothing short of phenomenal. He receives special help with a few things, but joins with his friends in all the activities he loves. Andy overcame enormous odds to move from adversity to victory.

Ask yourself: "What are the seeds of strength hidden in my struggles today? If I get back up when I fall, what will that make possible tomorrow?"

"Overnight success" is the result of years of tenacity and continued learning. Victory is possible for those who decide it's their most compelling option. They'll find the path to their dream. However, they will accept adversities as universities that will foster strength, growth, and skills to attract the victory they seek.

Man is so made that when anything fires his soul, impossibilities vanish - Jean De La Fontaine

2010-11-17T05:56:00.000-08:00

No man or woman is an island. To exist just for yourself is meaningless. You can achieve the most satisfaction when you feel related to some greater purpose in life, something greater than yourself - Dennis Waitley

Set your sights high, the higher the better. Expect the most wonderful things to happen, not in the future but right now. Realize that nothing is too good. Allow absolutely nothing to hamper you or hold you up in any way - Eileen Caddy

I move forward in my life every day, even if it's only a tiny step, because I know that great things are accomplished with tiny moves, but nothing is accomplished by standing still - Zig Ziglar

The harder you work, the harder it is to surrender - Vince Lombardi

We will receive not what we idly wish for but what we justly earn. Our rewards will always be in exact proportion to our service - Earl Nightingale

All of the great achievers of the past have been visionary figures; they were men and women who projected into the future. They thought of what could be, rather than what already was, and then they moved themselves into action, to bring these things into fruition - Bob Proctor

No matter how small and unimportant what we are doing may seem, if we do it well, it may soon become the step that will lead us to better things - Channing Pollock

Better to do something imperfectly than to do nothing flawlessly - Dr. Robert Schuller

Goal-setting illuminates the road to success just as runway lights illuminate the landing field for an incoming aircraft - Nido Qubein

Daring ideas are like chessmen moved forward. They may be beaten, but they may start a winning game - Johann Wolfgang von Goethe

Be daring, be different, be impractical, be anything that will assert integrity of purpose and imaginative vision against the play-it-safers, the creatures of the commonplace, the slaves of the ordinary - Cecil Beaton

The roots of true achievement lie in the will to become the best that you can become - Harold Taylor

I've found that often, just when you think you've hit a wall, you experience a breakthrough that takes you to new heights in accomplishment - Stedman Graham

Achievers rarely, if ever, see a problem as permanent,while those who fail see even the smallest problems as permanent - Tony Robbins

Ambition is the spur that makes men struggle with destiny. It is heaven's own incentive to make purpose great and achievement greater - Donald G. Mitchell

It is time for us all to stand and cheer for the doer, the achiever - the one who recognizes the challenge and does something about it - Vince Lombardi

We are built to conquer environment, solve problems, achieve goals, and we find no real satisfaction or happiness in life without obstacles toconquer and goals to achieve - Maxwell Maltz

Without continual growth and progress, such words as improvement, achievement, and success have no meaning - Benjamin Franklin

The more reasons you have for achieving your goal, the more determined you will become - Brian Tracy

Goals are like stepping-stones to the stars. They should never be used to put a ceiling or a limit on achievement - Dennis Waitley

Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence - Helen Keller

The critical ingredient is getting off your butt and doing something. It's as simple as that. A lot of people have ideas, but there are few who decide to do
something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer. - Nolan Bushnell

Most people never run far enough on their first wind to find out if they've got a second. Give your dreams all you've got. You'll be amazed at the energy that
comes out of you - William James

Look at a day when you are supremely satisfied at the end. It's not a day when you lounge around doing nothing; it's when you've had everything to do, and you've done it - Margaret Thatcher

A wish is a desire without energy - Paramanhansa Yogananda

You accomplish victory step by step, not by leaps and bounds - Lyn St. James

There is real magic in enthusiasm. It spells the difference between mediocrity and accomplishment - Norman Vincent Peale

Nothing splendid has ever been achieved except by those who dared believe that something inside them was superior to circumstances - Bruce Barton

Obstacles don't have to stop you. If you run into a wall, don't turn around and give up. Figure out how to climb it, go through it, or work around it -
Michael Jordan

Nothing will ever be attempted if all possible objections must first
be overcome - Samuel Johnson

Even a mistake may turn out to be the one thing necessary to a
worthwhile achievement - Henry Ford

All men who have achieved great things have been great dreamers - Orison Swett Marden

Lots of people limit their possibilities by giving up easily. Never tell yourself this is too much for me. It's no use. I can't go on. If you do you're licked, and by your own thinking too. Keep believing and keep on keeping on - Norman Vincent Peale

Champions are propelled by desire, not compelled by fear - Dennis Waitley

Determine what specific goal you want to achieve. Then dedicate yourself to its attainment with unswerving singleness of purpose, the trenchant zeal of a crusader - Paul J. Meyer

I am a big believer in the 'mirror test'. All that matters is if you can look in the mirror and honestly tell the person you see there, that you've done your best - John McKay

Start by doing what is necessary, then do what is possible, and suddenly you are doing the impossible - St. Francis of Assisi

A decision is made with the brain. A commitment is made with the heart. Therefore, a commitment is much deeper and more binding than a decision - Nido Qubein

To show your true ability is always, in a sense, to surpass the limits of your ability, to go a little beyond them: to dare, to seek, to invent; it is at such a moment that new talents are revealed, discovered, and realized - Simone de Beauvoir

If a window of opportunity appears, don't pull down the shade - Tom Peters

Never mistake activity for achievement - John Wooden

The greatest achievement is to outperform yourself - Dennis Waitley

Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence - Helen Keller

Only one thing is ever guaranteed, that is that you will definitely not achieve the goal if you don't take the shot - Wayne Gretzky

Who works achieves and who sows, reaps - Arabian Proverb

Every great work, every great accomplishment, has been brought into manifestation through holding to the vision, and often just before the big achievement, comes apparent failure and discouragement - Florence Scovel Shinn

Life is like riding a bicycle. To keep your balance, you must keep moving - Albert Einstein

I can change. I can live out of my imagination instead of my memory. I can tie myself to my limitless potential instead of my limiting past - Stephen Covey

I have always struggled to achieve excellence. One thing that cycling has taught me is that if you can achieve something without a struggle it's not going to be satisfying Greg LeMond - Cyclist and 3 Times Winner of the Tour de France

What the mind can conceive and believe, it can achieve - Napoleon Hill

Enjoy your achievements as well as your plans - Max Ehrmann

The world cares very little about what a man or woman knows; it is what a man or woman is able to do that counts - Booker T. Washington

Whatever you can do or dream you can, begin it. Boldness has genius, magic and power in it. Begin it now. - Johann Wolfgang von Goethe

If you want to achieve widespread impact and lasting value, be bold - Howard Schultz

A gem cannot be polished without friction - Chinese Proverb

What you get by achieving your goals is not as important as what you become by achieving your goals - Johann Wolfgang von Goethe

The devotion of thought to an honest achievement makes the achievement possible - Mary Baker Eddy

Achievement is largely the product of steadily raising one's levels of aspiration and expectation - Jack Nicklaus

Do what you love, love what you do, and deliver more than you promise - Harvey Mackay

The key to achievement lies in being a 'HOW' thinker, not an 'IF' thinker -
Author Unknown

When a goal matters enough to a person, that person will find a way to accomplish what at first seemed impossible -
Nido Qubein

Kites rise highest against the wind - not with it - Sir Winston Churchill

If we did all the things we are capable of doing, we would literally astound ourselves - Thomas Edison

It is time for us all to stand and cheer for the doer, the achiever - the one who recognizes the challenges and does something about it - Vince Lombardi

Most of the things worth doing in the world have been declared impossible before they were attempted - Earl Nightingale

Achievement seems to be connected with action. Successful men and women keep moving. They make mistakes, but they don't quit - Conrad Hilton

Desire is the starting point of all achievement, not a hope, not a wish, but a keen pulsating desire which transcends everything - Napoleon Hill

Each of us was born with wings and has the ability to go farther than we ever thought possible, to do things beyond our wildest imaginings - Barbara Stanny

Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence - Helen Keller

Destiny is not a matter of chance, it is a matter of choice. It is not a thing to be waited for, it is a thing to be achieved - Jeremy Kitson

The single common denominator of people who achieve great things is a sense of destiny - Author Unknown

Anybody can do just about anything with himself that he really wants to and makes up his mind to do. We are capable of greater things than we realize - Norman Vincent Peale

To accomplish great things, we must not only act, but also dream; not only plan, but also believe - Anatole France

The greatest achievement is to out perform yourself - Dennis Waitley

High achievement always takes place in the framework of high
expectation - Jack Kinder

All great achievements have one thing in common - people with a
passion to succeed - Pat Cash

If we are to achieve results never before accomplished, we must expect to employ methods never before attempted - Francis Bacon

The starting point of all achievement is desire. Weak desire brings weak results - Napoleon Hill

There is real magic in enthusiasm. It spells the difference between mediocrity and accomplishment - Norman Vincent Peale

Cherish your visions and your dreams, as they are the children of the blueprints of your ultimate achievements - Napoleon Hill

To achieve the impossible, one must think the absurd; to look where everyone else has looked, but to see what no else has seen -
Author Unknown

A Tale of Two Salesmen

2010-11-17T05:54:00.000-08:00

"The most pathetic person in the world is someone who has sight, but has no vision." - Helen Keller

"The poorest man is not he who is without a cent, but he who is without a dream." - Pennsylvania School Journal

Maybe you have heard of the tale of the two salesmen who went to Africa. The story goes like this.

A western shoe salesman went to Africa to scout the market. He wired his manufacturer, `I want to come home. Nobody wears shoes in this part of Africa.'

They brought him home and sent another salesman. The new salesman hurriedly wired an order, `Everybody here needs shoes!" Seeing everyone bear-footed in that area of Africa may have discouraged the first salesman.

He must have thought, "Geeesh, nobody uses shoes here, not even a hand-made footwear. How in the world can I sell shoes here when they don't see the benefit of it? I better go home." He missed the opportunity to make it big. He could not see. On the other hand, the second salesman thought, "If I can only convince them to wear shoes. If I can show them the benefit. I can almost imagine whole villages buying my shoes. Wow! Aside from helping them enjoy the benefit of wearing shoes, I am going to make a great profit! I can get married and start a family and I can buy that dream house…"

When I first heard this story, I said to myself, "I am determined to be the second salesman who saw the opportunity rather than the trend."

I must admit though that there were moments in my life that I stayed on the "what is" and accepted it rather than on the "what can be" and dared to make a difference.

Now I cannot imagine life without vision. It is not worth living. Which of the two salesmen are you? The one who could not see the potential or the one who could see the vast opportunity? If you choose the former then you have destined yourself to be average or less. But if you wish to be the latter then you have taken the first step to a great life.

4 Key Economic Challenges : Strategic Implications for 08

2010-11-17T05:52:00.000-08:00

By Professor Jean-Pierre Lehmann (January 2008)

It may be a cliché to say that the speed of change of the world economy is absolutely hallucinating, but it is almost an understatement of reality. The news comes in a confusing avalanche of counter-intuitive thunders. UBS, that Matterhorn of the Swiss banking system, needs to be bailed out to the tune of US$11.5 billion by a group of Asian and Middle Eastern investors, while its American cousin Citigroup is rescued with an injection of US$7.5 billion from an Abu Dhabi fund.

The rising tide of emerging market funds and multinationals from the South investing in the rich economies of the North is only one of the many tectonic transformations occurring, heralded in a previous Tomorrow’s Challenges article, “The Times They Are A-Changin’”, exactly a year ago. A key trend I stressed then was the demise of the hub-and-spokes world economy, with the OECD countries as the hub and the emerging markets as the spokes. Not only is there a lot of movement of capital in the other direction (South-North), but also an amazing amount of growth in South-South transactions. Consider (out of an immense array of dizzying statistics) the following: “Trade flows between the Middle East and China last year totalled $69 billion, up from $6 billion in 1995. In 2000, there were only seven direct flights a week from the six Arab states in the Gulf Co-operation Council to China. Today, there are 50.” (Financial Times, 10 December 2007).
While the confusion will continue to reign and uncertainty is the future’s only certainty, it would seem reasonably safe to forecast that the global business environment will be dominated by four key challenges:

Key challenge – China
While all four “BRICs”, Brazil, Russia, India and China, and other key emerging economic players will continue to surprise global business, China will be way ahead in terms of its impact on almost every conceivable facet of the planet one can think of: climate, geopolitics, trade, sport (the Olympics!), finance and forex policy, tourism, energy, commodity prices, infrastructure, etc, etc. On infrastructure alone, China has just over 45,000km of highways, with the goal of reaching 85,000km by 2010. That’s a lot of tarmac! While China’s economy is still small compared to the US, its contribution to global GDP growth is significantly higher (31% for China as opposed to 15% for the US in 2006) and can be expected to become even more so. American multinationals such as GE are looking to China for profits to offset the losses they expect to make in the possibly recessionary US. The question is no longer whether economies can “de-couple” from the
US, but how the process of “reverse coupling” – US dependence on China and other emerging markets – will occur.

Key challenge - Politicization of global business and protectionism
The German business community is hopping mad because the hospitality extended by Angela Merkel to the Dalai Lama may seriously jeopardise German business interests. Meanwhile, Sarkozy eschews the Dalai Lama, embraces Gaddafy, and in the process picks up many possible Chinese and Libyan contracts. That phenomenon is not new, but the pattern will intensify and multiply. As the institutions of global economic governance are experiencing a systemic crisis, a whole spectrum of unhealthy “isms” will be a prominent part of the 2008 global business fare: economic nationalism, mercantilism, bilateralism, preferentialism, unilateralism and protectionism. Earlier incidents such as the aborted attempts by the China National Offshore Oil Corporation (CNOOC) to acquire Unocal and of Dubai Ports’ acquisition of P&O (through which it would have gained control over a few American ports) will multiply.

The Tata Group was rebuffed when it sought to acquire the American luxury leisure group Orient-Express on the grounds of its allegedly un-classy Indian origins, although it would seem that Tata Motors will prevail, in spite of much resistance and reluctance to acquire Jaguar and Land Rover. The French Government had also rejected the Tata Group’s attempt to purchase the iconic Champagne brand Taitinger for the same reasons. Snobbishness, security, identity, pride, national policy, whatever, business will become increasingly politicized and less globalized. It may also, as it already is in many respects in reaction to the “Chinese challenge”, become a sub-theme of the “clash of civilizations” syndrome. And 2008 seems to be a year when American – and increasingly also EU – protectionist sabre-rattling vis-à-vis the Chinese will become more threatening. As the temperature mounts on one side, retaliation can be expected on the other.
Backlashes in one direction generate backlashes in the other. In a highly volatile global political and ideological environment, companies can also expect unpredictable events in which they may find themselves to be “innocent victims”, as happened to the Danish dairy company Arla in the Middle East (its major overseas market), following the publication of cartoons of the prophet Mohamed in a provincial Danish newspaper *.

Key challenge - Poverty, inequality and the “bottom-of-the-pyramid”
Just as the politicization of business is hardly new, neither is poverty or inequality. The differences today are (1) that inequality seems to be increasing everywhere, and especially (2) it is much more visible to the masses in this information age. Though there are encouraging statistics in respect to poverty reduction – especially in East Asia – the fact remains that somewhere in the region of 50% of the planet’s population, some three billion people, are still too poor to participate in the global market economy. One meaningful indicator is that it is estimated that half the world’s population has never made a phone call. As mobile telephony is one of the most poverty "friendly" technologies, that figure should be reducing sharply, but it is nevertheless evocative of our global age. More dramatically, about a third of the world’s population does not have access to drinking water or proper sanitation. The plight of the poor stands in
increasingly visible contrast to the plenty of the very rich. It is said that the Mexican tycoon Carlos Slim has been increasing his wealth since 2005 by US$27 million a day, while 20% of Mexico’s population lives on less than US$2 a day. Not only, however, is there a yawning chasm between the rich and the poor, but even among the “haves”, as opposed to the “have-nots”, there are growing and gaping disparities between those having a-hell-of-a lot-and-more-and-more and those having less-and-less. The Gini coefficient (which measures income disparities in countries) is growing by leaps and bounds virtually everywhere. On the basis of current demographic trends, where the rich are having fewer and fewer babies, and the poor are seeing a population explosion, two main consequences arise: (1) social unrest could become endemic through great swathes of the planet, while (2) the great market opportunities for businesses will increasingly be found in
what C.K. Prahalad termed the “bottom-of-the-pyramid” (BoP). BoP strategies are increasingly an imperative for firms, both for reasons of political and social commitment, in order to “improve the state of the world” (as in the slogan of the World Economic Forum) and thereby decrease risk, and because that is where future profits are to be reaped. From an enlightened self-interest perspective, business strategies should aim at empowering the “aspiring” classes and at reducing inequalities.

Key challenge – A green agenda
The environment issue is another radical recent transformation. Twenty years ago the greens were marginal. Today, environment is a key policy and an increasing strategy priority. But while the public policy process – in environment as in so many other issues – is advancing at a snail’s pace, increasingly the agenda is being driven by visionary businesses. The term “sustainable” has become integrated in the rhetoric, strategy and consciousness of business. As with poverty and inequality, it is probably the case that the private sector may have the most contribution to make in the face of the environmental challenge through innovative green technologies and business practices. This is not to say that ecology-oriented NGOs should relax and cease worrying about the potentially environmentally destructive effects of business activities, on the contrary, but the point now is that corporations –not only in the industrialized countries, but also in developing countries – are much more susceptible to environment-driven external perceptions and pressures. None of these challenges are looming distantly on the horizon. They are very much a reality TODAY. Companies not having proper strategies, structures, and especially people, to address these four key tomorrow’s challenges now, in 2008, may not be around tomorrow!

Jean-Pierre Lehmann is the Professor of International Economy at IMD and Founding Director of the Evian Group. He teaches on the following programs: Building on Talent (BOT), the Program for Executive Development (PED) and the Orchestrating Winning Performance (OWP).

Casa Idaman Project Progress 14/03/2010

2010-03-14T06:49:00.000-07:00

Casa Idaman Project Progress - 27/11/2009

2009-12-05T06:19:00.000-08:00

Casa Idaman Project Progress - 19/10/2009

2009-10-19T05:45:00.001-07:00

Casa Idaman Project Progress - 1/10/2009

2009-10-18T08:04:00.000-07:00

Women's Health and Beauty

2009-09-27T06:55:00.000-07:00

Enhance your Breasts Naturally. More and more women are learning that Breast Actives is the program they need to help them get the attention they deserve. After you’ve responded to the breast enhancing effects of the Breast Actives program you’re sure to turn some heads when you walk into the room.

Casa Idaman Project Progress 2/8/2009

2009-08-02T06:41:00.001-07:00

Casa Idaman Project Progress 14/6/2009

2009-06-14T06:09:00.000-07:00

Singaporean Humour

2009-05-23T09:05:00.000-07:00

Ah Beng was heading for the optician's shop in a shopping mall. He opened the door and told a lady, "I think I need my eyes checked." She answered, ''You're absolutely right. This is the ladies' toilet."

I have personally made the terrible blunder of entering a ladies' toilet by mistake (true stovy). Thank God, no lady was in there, or a thousand explanations wouldn't be enough to explain myself away and prove my innocence.

Casa Idaman 3/5/2009

2009-05-03T06:37:00.000-07:00

Paying For College

2009-04-06T16:38:00.002-07:00

In the last twenty years, the cost of a college education has increased at more than double the rate of inflation. In some Ivy League schools, alumni children are literally paying more for one semester's tuition than their parents paid for four year's tuition thirty years ago.

If you start an educational funding investment plan when your child or grandchild is an infant, it will be much less of a strain on your finances. To begin formulating your investment plan, you need to calculate how much it will cost and how much you will need to invest (either in one lump sum or annually). Most major brokerage firms have computer programs designed to determine the cost for college educations for up to four children in a family. These programs usually have a selection of 1,700 or so colleges and universities, heir associated four-year costs and historic annual increases.

A growing number of people have postponed starting a family until they were in their 40s. Instead of funding their retirement plans, they are now paying college bills and may also be providing support for elderly parents.

Although it can represent a financial challenge to fund a child's education, most people realize the importance of doing so: studies have shown that a college education can help boost lifetime income by $1 million.

Understanding Bonds - Question 102

2009-04-06T16:38:00.001-07:00

Does a T-bill differ from a treasury note? A treasury bond? or are they all the same?

A T-bill (Treasury bill) is a short-term obligation of the U.S. Government. They have maturity lengths of one year or less, are purchased at a discount and mature at face value. At maturity (either 13, 26, or 52 weeks), the difference between your purchase price and maturity value is considered taxable interest income.

Treasury notes and Treasury bonds are also U.S. Government obligations but have longer maturities. The maturities are:

- Treasury notes: 2-10 years
- Treasury bonds: more than 10-30 years

Both Treasury notes and Treasury bonds pay interest every six months and are issued in $1,000 denominations.

When financial broadcasters refer to the interest of the “long bond,” they mean the 30-year U.S. Treasury bond.

Understanding Bonds - Question 101

2009-04-06T16:37:00.002-07:00

What does “secondary market” mean?

After a stock is issued in an initial public offering (referred to as an “IPO”), its shares may be sold and bought again and again. The "again and again" constitutes the secondary market.

Understanding Bonds - Question 100

2009-04-06T16:37:00.001-07:00

On cable TV they talk a lot about the yield curve being normal or inverted. What does this mean and why is it important?

A yield curve is a graph that plots interest rates for a security that is issued with different maturity lengths. Yield curves can be plotted for municipal bonds, corporate bonds and treasury securities. (Interest rate is measured on the vertical axis and the time period on the horizontal axis.)

The yield curve that is generally referred to on TV is the yield curve for Treasury securities. It usually slopes upward because interest rates are higher as maturity lengths increase. This is what is called a "positive" or "normal" yield curve.

When short-term interest rates shoot up because of inflation fears, the yield curve slopes downward because longer-term maturities have lower rates. The yield curve in this scenario is called “inverted.”

In rare instances, short-term and long-term interest rates are almost equal. The yield curve is then called “flat.”

Understanding Bonds - Question 99

2009-04-06T16:36:00.002-07:00

What does “laddering a portfolio” mean?

“Laddering” is a strategy for protection against interest rate risk when buying tax-free or taxable bonds that have different maturities. Think of a portfolio with bonds that have varying maturities as resembling rungs of a ladder. By purchasing bonds that mature at set intervals, the investor has diversified in case of changes in interest rates. In addition the investor can plan for income and reinvest principal at set intervals.

Understanding Bonds - Question 98

2009-04-06T16:36:00.001-07:00

What is a callable bond?

When interest rates drop, an issuer (such as a corporation or municipality) may wish to redeem its outstanding bonds and refinance them at a lower rate. It's similar to an individual refinancing a home mortgage when interest rates drop considerably since the date the mortgage was issued. Bonds with call provisions protect investors from having their bonds called or redeemed before a specified date (such as 5 or 10 year call protection).

Understanding Bonds - Question 97

2009-04-06T16:35:00.000-07:00

I am retired and have recently changed my residence from New York to Florida. Does it make sense for me to “swap” or exchange my New York municipal bonds for Florida ones?

Compare your New York municipal bonds with those available in Florida, and see if the return justifies the swap. If your return in New York is equal to your potential return on a Florida bond, then the additional Florida Intangible Tax may make it worthwhile for you to “swap” into Florida municipal bonds.

Understanding Bonds - Question 96

2009-04-05T16:48:00.002-07:00

Am I better off investing in registered or book-entry municipal bonds? Can yon purchase the same bond either way? Is there a price difference?

Most municipal bonds are issued in book-entry form only. You are probably better off buying book-entry municipal bonds because, that way, you will not have to worry about losing your certificates. A bond cannot be purchased both in book-entry and registered form. They are only issued in one form or the other.

Understanding Bonds - Question 95

2009-04-05T16:48:00.001-07:00

What is a money-market account? Now does it differ from an account at a bank? Can you write checks against it?

A money-market account is not guaranteed by the brokerage firm from which you buy it. There is no fluctuation of principal. The interest rate is, in almost all cases, considerably higher than is found at a bank. Many brokerage firms offer accounts that enable owners to write checks against their account.

Understanding Bonds - Question 94

2009-04-05T16:47:00.001-07:00

What are mortgage-backed bonds?

Mortgage-backed bonds or collateralized mortgage obligations (CMOS) are pools of mortgages repurchased by the agencies that issue them. Some of these agencies are better known by their nicknames:

- Ginnie Mae stands for Government National Mortgage Association (GNMA)
- Freddie Mac stands for Federal Home Loan Mortgage Corporation (FNLMC)
- Fannie Mae stands for Federal National Mortgage Association (FNMA)

Each payment the investor receives is for interest only until the returns of principal payments begin.

Understanding Bonds - Question 93

2009-04-05T16:46:00.002-07:00

Is there a rating service for bonds (similar to Morningstar Ratings for mutual funds and Value Line for stocks)?

There are three rating services: Moodys, Standard &Poor's and Fitch. The highest rating is AAA, then AA, A, BBB, BB and B for investment grade quality. When a municipality pays to insure their bonds, their credit rating is enhanced and becomes AAA.

Understanding Bonds - Question 92

2009-04-05T16:46:00.001-07:00

Is there any risk associated with investing in CDs?

CDs (certificates of deposit) are' insured by the Federal Deposit Insurance Corporation (FDIC). There is no risk of default on the principal of a CD, but there is risk that the value of the CD will diminish through loss of purchasing power. Remember, the only true value money has is the value of the items it can buy. If the value of the items an investment can buy is reduced, then there is a risk of inflation. Many retirees are frustrated when their CDs or bonds come due and the amount of purchasing power has been reduced by inflation.

Understanding Bonds - Question 91

2009-04-05T16:43:00.000-07:00

Now can I know whether I'm better off investing in taxable or tax-free bonds?

By computing whether the return net of taxes is greater than tax-free versus tax or vice versa. How do you do this? There is a formula for computing the tax equivalent. Take your tax-free return percentage-wise, divide it by one minus your income tax bracket. That will give you the tax equivalent. Let’s assume somebody has a six percent tax-free investment and is in the forty percent tax bracket. Put 6% in the numerator and then (1 - 40) in the denominator (so you have .06/.60). The answer is .10 or 10%. So, the 6% tax free bond would be the equivalent of 10% before taxes (if an investor is in the 40% bracket).

Understanding Bonds - Question 90

2009-04-05T16:42:00.000-07:00

I'm 68 years old and I understand the benefit of investing in insured tax-free municipal bonds. But are there any disadvantages?

Yes, there are three disadvantages; market risk, inflation risk and call risk. The principal of these bonds is only guaranteed upon maturity.

- If you wish to sell them prior to maturity and interest rates have gone up considerably since you've purchased them, you will find that the principal is less than the purchase price, and you will be taking a loss if you sell them. This is market risk.

- If you hold tax-free bonds until maturity, the money you get back (even though it is equal to the face-value of the bonds) has lost purchasing power over the years because of inflation. Bonds that you've held for thirty years may only have 25% of the purchasing power they had when you purchased them. This is inflation risk.

- When interest rates drop, the issuer of your bonds may wish to call or redeem them and refinance them at a lower rate. This is call risk.

Understanding Bonds - Question 89

2009-03-29T16:44:00.000-07:00

How do bonds work?

When a bond is issued by a corporation or a municipality, it is sold at face value. The investor usually pays $1,000 per bond. The par value also includes the amount that will be redeemed or repaid at maturity.

To calculate the market price of a bond, use the following formula:

current yield = amount of coupon / market price

If a 6% bond is issued at par or $1,000, the amount of
coupon interest = $60

.06 = $60 / $100

When the Federal Reserve raises interest rates to 8% in order to reduce inflationary pressures, the market price is reduced as follows:

current yield = amount of coupon / market price

current yield = .08
coupon (remains constant)= $60
market price = X

.08 =$60/X ; 08 X = $60; X = $601.08; X = $750 market price

When interest rates are lowered, the market price of a bond increases. Let's assume the Federal Reserve lowers interest rates from 6% to 5% to stimulate the economy. The effect of the market price is as follows:

current yield = amount of coupon / market price

current yield = .05
coupon = $60

.05 = $60/X X = $1,200 market price

Understanding Bonds

2009-03-29T16:43:00.002-07:00

Many investors view bonds and bond mutual funds as conservative investments that provide a steady income and represent a minimal risk to principal. That’s because if you hold your bond until maturity, you get the full amount of your investment plus interest. (A bond is an obligation of its issuer to pay the interest and principal as promised.)

Zero-coupon bonds are very popular among parents and grandparents who are funding a child's education. A zero-coupon bond is issued at a discount from its par value (or face value). It only pays interest with principal at maturity or at the time the bond is called. Unlike other types of bonds, interest on zero-coupon bonds is not paid to you every six months; it is automatically reinvested or compounded at the agreed-upon rate at time of purchase. The combination of compounding and the discounted price means that a relatively small investment can multiply significantly before the bond matures. The longer the maturity length of the bond, the deeper the discount usually is.

In addition to being used to fund a college education, zero coupon bonds appeal to many individual investors who are planning for retirement. If placed in SEPs, IRAs or Keoghs, they are not subject to immediate taxation since these accounts are tax-deferred. By making an investment in a zero-coupon bond today, investors know exactly how much they will receive at maturity.

Municipal bonds are debt securities issued by public authorities (such as states or municipalities) to raise funds for building or repairing schools, highways, prisons, bridges, tunnels and other public works. The interest payments you receive on municipal bonds is free from federal income taxes. The higher your tax bracket, the more you will benefit by investing in “munis” and earning tax-free income.

If you live in a high income tax state you may also derive additional benefits from owning in-state bonds that are also state income tax-exempt.

Interest on bonds issued by the U.S. Virgin Islands, Guam and the Commonwealth of Puerto Rico are exempt from federal, state and local taxes in all fifty states.

Corporate bonds complement many investment portfolios especially retirement accounts and accounts with low marginal tax rates.

Many reputable companies raise capital by issuing corporate bonds to purchase or update equipment, build plants, and replace outstanding debt with lower cost issues. Credit rating agencies such as Moody’s and Standard & Poor’s (S&P) study the creditworthiness of the issuer of the bond, and assign a rating to that bond as a general guideline for investors.

Investment grade ratings used by agencies are:
Moody's S&P
Aaa AAA
Aa AA
A A
Baa BBB

These agencies revise their ratings when they feel the creditworthiness of an issue changes.

United States government securities are among the most\ secure of all income-producing investments. They are available in two forms: direct obligations of the U. S. government and those issued by various agencies which are indirect obligations of the U.S. government.

All bonds (U.S. Treasuries, federal agencies, zero-coupons, corporate and municipals) are subject to market fluctuations if you sell them before they mature. Investing in bonds has become more complex in recent years as the choice of taxable and tax-exempt bonds has expanded and volatility in bond prices and interest rates has increased. (Question 89 to 102)

Understanding Equities - Question 88

2009-03-29T16:43:00.001-07:00

Should I invest in retail company stocks?

Your question is very general and, while there are many dynamic retail corporations, there are also retailers who have either been unable to find their markets or have lost them.

An excellent way to judge retail sales is to make a “samestore sales comparison.” To do this, you need to compare sales at-stores that have been open for at least one year. By looking only at stores that have been open for a year or more, you eliminate the effects of increased sales caused by recent new store openings.

When analyzing a manufacturing company, use comparative unit sales rather than dollar sales to get a better indicator of demand for the company's products.

Understanding Equities - Question 87

2009-03-29T16:42:00.002-07:00

What are defensive stocks?

Defensive stocks are stocks that are less vulnerable to the savings of the business cycle than most other stocks tend to be. Some defensive stocks include utilities, tobacco and food stocks. They are considered defensive because consumers need to buy these products or services regardless of changes in their personal incomes or job situation.

Understanding Equities - Question 86

2009-03-29T16:42:00.001-07:00

What is the difference between “technical analysis” and “fundamental analysis” in evaluating stocks?

Fundamental analysis studies the basics of a company’s finances and its economic prospects before making a decision to buy, hold, or sell its stock. Fundamental analysis studies a company's prime earnings ratios, dividend history, rate of return, sales, and profitability history and trends.

Technical analysis uses past and current stock price movements to predict future prices of a company's stock. It relies heavily on charts to plot the price movement of stocks. No consideration is given to any of the components used in fundamental analysis.

Understanding Equities - Question 85

2009-03-29T16:41:00.002-07:00

What is the difference between a limit order and market order?

A “limit order” specifies the highest price you are willing to pay for a stock, or the lowest price you will accept for the sale of a stock you own. If you make a “market order,” you are not specifying a price; your order will be executed for the best price available at the time you place the order. You'll learn the price after the order has been executed.

Understanding Equities - Question 84

2009-03-29T16:41:00.001-07:00

How do analysts evaluate a stock? How accurate are they?

Analysts evaluate stocks by examining the earnings of a company and its prospects for the future. They also analyze the prospects for growth for the industry and economy, and look at the historical data of the company’s finances. They may meet with the company's management and discuss its growth and operations to get a feel for the effectiveness of its leadership. Some analysts meet with the company's competition, suppliers, customers and clients, and look for trends within the industry as well as the company. It is crucial that the analysts study the demand for the company's products or services (both domestically and overseas) so that they can accurately forecast growth prospects. In addition, they must have thorough understanding of the company's finances, profit margins, and areas for improvement.

Analysts who are not accurate in their predictions usually have to change jobs because they're replaced. Analysts stick out their necks by making forecasts and predictions, in black and white, in written reports. They are held accountable.

Understanding Equities - Question 83

2009-03-29T16:40:00.002-07:00

Do you recommend reinvesting the dividends I receive from blue chip stocks I own?

Definitely. The return you get by reinvesting dividends is much greater than you get by receiving cash dividends. The Standard & Poor's Composite Index of 500 widely held common stocks (commonly know as the S&P 500) has increased more than 400% during the past 15 years. If dividends from these stocks had been being reinvested in purchasing additional shares during this period, the return would have soared to 851 %.

Understanding Equities - Question 82

2009-03-29T16:40:00.001-07:00

How can I time the stock market just right?

Trying to time the stock market is something that you should avoid. Historically, it has been proven that individuals cannot time the stock market well. It’s much more important in order to get a high return on your investments over the long term, and to have the proper asset allocation. The proper asset allocation has counted for 91 % of investment returns whereas market timing has only accounted for 2-3%.

Understanding Equities - Question 81

2009-03-27T16:46:00.000-07:00

Florida Power and Light (FPL) cut my dividend by 34%. Is there any indicator that could have alerted me in advance? I don’t have a broker.

One of the indicators that is commonly used to warn investors that a company is going to cut the dividend is that the dividend becomes greater than the earnings of the company. When the dividends of the utilities are approaching 90% or more of its earnings, that dividend may be in danger of being reduced or eliminated. This was the case with FPL.

Understanding Equities - Question 80

2009-03-27T16:45:00.002-07:00

Why were my utilities stocks down almost 30% from a year ago?

Utility stocks are very interest rate-sensitive. Because they borrow heavily to finance their operations as interest rates go up, the value of utility stocks tends to go down, because they have historically, paid a higher percentage of dividends than other stocks do. During the year you mentioned, there had been six increases in interest rates; that had adversely affected the value of utility stocks.

Understanding Equities - Question 79

2009-03-27T16:45:00.001-07:00

What is the origin of the stock market terms bear and bull?

In 18th century England, bear skin traders frequently sold their skins before they had actually caught them. “Bears” came to refer to speculators who sold shares they did not own; hoping for a price drop. They would then buy the stock after it had fallen and would immediately sell it for a higher price. Bull probably came to mean the opposite of bear.

Understanding Equities - Question 78

2009-03-27T16:43:00.002-07:00

What is the difference between the “bid” and “asked” prices I see in the stock quotation listings in any local newspaper?

The “bid” is the highest price an investor is willing to pay for the same security. The "asked" is the lowest price at which an investor is willing to sell a security at a specific time.

Bid and asked confuses many investors. To avoid confusion, rephrase them as, respectively, “What can I buy it for?” and “What can I sell it for?”

Understanding Equities - Question 77

2009-03-27T16:43:00.001-07:00

What does P/E mean? I see it in the paper when I look up my stocks.

PE stands for the price-earnings ratio. To calculate the P/E for a particular company, divide the market price of one share of stock by the annual earnings of one share of stock. For example, if the market price of a specific stock is $30 and the earnings per share are $3, then the P/E = 10.

Investors use the PE ratio as a yardstick in evaluating a company's comparative worth. Some analysts recommend buying stocks with low P/E ratios (under 10) because it may be undervalued. It's a good idea to understand what PE is and realize it is one of many measures to use when deciding whether to invest in a particular company.

Understanding Equities - Question 76

2009-03-27T16:42:00.000-07:00

When should I sell a stock?

This is a common question that has no simple answer. When to sell a stock depends upon your investment objectives. Many people buy a stock and have no idea when they plan to sell it. In other words, they really have no investment goal. What happens is: the stock goes up and they don't want to sell it because they'll have to pay capital gains tax on it. Then, the stock starts to drop below the purchase price, causing great concern. They don't want to sell the stock then because they’ll have a loss. So they decide to wait until it rises up to breakeven and then at that point they plan to sell it. What happens? The stock continues to drop below the lows and reaches new lows.

For fear of paying the tax on the capital gain, these investors have missed a profit opportunity and incurred a loss.

This loss could also have been avoided through the use of a stop loss order. You determine at the time you purchase a stock that if it drops 10-15% below the purchase price, it is automatically sold. So, by having a selling discipline in place, you will limit your loss. As stocks starts to rise and reach new highs, you keep reestablishing your selling discipline to 15% below the new high and when it reaches that new low, the stock is automatically sold. This is one method of locking in a profit and not riding a stock without a plan.

Understanding Equities - Question 75

2009-03-27T16:41:00.000-07:00

What stocks make up the Dow Jones Averages?

The Dow Jones Averages consist of 30 industrial companies (the Dow Jones Industrial Average), 20 transportation companies (the Dow Jones Transport Averages) and 15 utility companies (the Dow Jones Utilities Average).

The breakdown (as of 4-95) is as follows:
Industrials Transports Utilities
Union Carbide Santa Fe Pacific American Electric Power
IBM Alaska Air Detroit Edison
Alcoa XTRA Corp. Peoples Energy
Caterpillar Consol. Freightways Unicorn Corp.

Understanding Equities - Question 74

2009-03-27T02:18:00.000-07:00

What are the various indices listed in the financial section of the newspaper? What do they mean?

- The most commonly quoted index is the Dow Jones Industrial Average (Symbol DJII). Thirty of the largest blue chip common stocks traded on the Big Board (NY Stock Exchange) comprise the Dow Jones Industrial Average.

- The Standard &Poor 500 (S&P 500) consist of 500 blue chip stocks. The S&P 500 symbol is SPX. This is the gauge used by most portfolio managers to compare and measure their performance.

- Dow Jones Transportation Average (symbol DJIT) is used to track 20 large transportation common stocks.

- Dow Jones Utilities Average (symbol DJIU) tracks 15 utilities stocks.

- American Stock Exchange (symbol AMEX) is the third largest stock exchange in the United States. This index tracks stocks on this exchange.

- NASDAQ Composite Index (symbol COMP) consists of smaller, usually more volatile companies traded on NASDAQ's National Market System.

- Wilshire 5,000 (symbol WSX) offers the most comprehensive view because it tracks all major NYSE, AMEX and NASDAQ stocks.

- The index for foreign stocks is The Morgan Stanley Capital International Europe Australia Far East Index (EAFE). It tracks 1,080 stocks in 20 countries.

Understanding Equities - Question 73

2009-03-25T16:47:00.001-07:00

What is the Dow Jones Average? I hear it mentioned on evening news and I don’t understand it.

The Dow Jones Average is an index of 65 stocks. These 65 stocks, (30 of which are in the industrial category) are large companies such as General Electric, Coca Cola, AT&T, General Motors, DuPont, and Merck. 20 transportation stocks and 15 utility stocks are also included - for a total of 65 stocks.

The Dow Jones Industrial Average is the only price weighted index commonly reported. This means that movements of higher-priced stock affect this average more.

The 15-stock index of the Dow Jones Utilities will give you additional insight because utilities need to borrow more heavily than to finance their capital-intensive operations. That's why this index is such an effective barometer of interest rates.

Understanding Equities - Question 72

2009-03-25T16:46:00.001-07:00

What stocks do you recommend that I buy?

It would be presumptuous for me or any other investment advisor to recommend specific investments to you without knowing anything about you. Unless I know your personal background; your name; if you are single, married, divorced or widowed; number of dependents', your occupation, annual income and investment objectives, I couldn't begin to recommend a stack to you. In addition to making specific recommendations, I need to know your investment experience, level of expectations, the types of investments you have and your tolerance for risk. Also, what is the value of your assets? Retirement assets? Debts (including mortgages)? Is there anything unique about your situation? Any health concerns? Legal concerns? Potential inheritances or proceeds for sale of a business or practice?

Obviously if you won a $25 million lottery last year and it is payable over 20 years, your financial situation will have changed dramatically.

These are only some of the reasons why investments that are appropriate for some people are completely inappropriate for others. When a complete stranger telephones you and tries to sell you an investment without discovering fist if it suits your needs, you should politely say “no thank you” and end the conversation.

Understanding Equities - Question 71

2009-03-25T16:45:00.001-07:00

What is the difference between preferred stock and regular stock?

Preferred stock and common stock are issued by companies to investors who wish to own part of the company. Preferred stock holders get preference in payment of dividends and in case of bankruptcy or dissolution of the company. Preferred stocks normally pay a fixed interest or dividend; its price varies inversely with interest rates. An exception is when a preferred stock is convertible into the common stock. Then, there will be more of a direct relationship between the price of the common and the price of the preferred stock. Both preferred stock holders and common stock holders have voting rights.

Understanding Equities

2009-03-25T16:44:00.000-07:00

Investments in common stocks have proven to be the best long-term protection against inflation. Numerous convincing studies have concluded that proper asset allocation is responsible for more than 90% of the return for individual portfolios. Asset allocation is the process of determining which classes of assets to invest in. Dividend reinvestment plans are an excellent way to improve returns.

Many investors are apprehensive about the ups and downs of the stock market and want a “safer, less-risky investment.” They believe the safest investments for them, as conservative investors, are insured bank accounts, CDs, and United States Treasury bills. But the fact is this: These investments are not designed for growth or inflation protection; they are secure only in that you will be guaranteed return of your principal.

Stocks usually perform better than bonds over the long run even though their value tends to fluctuate more over the course of any given week or month or year. There are various types of stocks designed to meet the needs of all investors: conservative, moderate and aggressive.

- Blue-chip stocks comprise large, well-established corporations that have more predictable earnings. Ironically, these are companies that have been reducing their work forces to try to become more globally competitive.
- Growth stocks are more volatile than blue-chips, but offer higher potential for appreciation.
- Small company stocks have the greatest risks and potential for appreciation.

You can offset your,risk by the following:

- diversifying among several classes of stocks
- having proper asset allocation
- staying invested over the long run in spite of temporary down markets
- being diversified in your employer sponsored 403(b) or 401(k) plan.

Value Line and Morningstar are rating services that, respectively, publish comprehensive one-page reports on common stocks and mutual funds. These reports are usually available in your local library or from your brokerage firm. (Question 71 to 88)

Retirement - Question 70

2009-03-25T16:43:00.002-07:00

What do you suggest that I do with my 401(k) plan distribution if my job is eliminated through downsizing?

The best option is to retain the tax-deferred status of your retirement plan by opening an IRA rollover account.

Another option is to take personal receipt of your 401(k) plan distribution and arrange to deposit these funds into your IRA. (If you choose to receive the funds directly, your former employer is required to withhold 20% for federal income tax.) You then may roll over the remaining funds (80%) into your IRA. You are required to roll over these funds within 60 days of receipt. When you file your income tax return, you then file for a refund of the 20% of your distribution withheld.

By electing the first option (a direct rollover), you will avoid the mandatory 20% withholding and have your total lump sum distribution fully invested. Approximately 70% of individuals eligible to receive a lump sum distribution because of a change or loss of jobs elect to receive these funds.

The amount received is considered income and taxed accordingly. If you are younger than 59-112 when you receive this distribution, there is an additional a 10% penalty.

Retirement - Question 69

2009-03-25T16:43:00.001-07:00

How can I make sure that I get all of the Social Security benefits to which I'm entitled when I retire in four years?

You can request a statement listing your estimated benefits and total annual earnings. Request a "Personal Earnings and Benefits Estimate" (PEBES) form by calling 1-800-772-1213. The Social Security Administration will send it to you within one week.

Retirement - Question 68

2009-03-25T16:42:00.002-07:00

Why is it that some people do not purchase long term care insurance?

Many people believe that Medicare will cover their nursing home costs. The fact is Medicare pays. less than 3% of these costs. It was established to provide for short-term medical attention and not intended to be used for basic care such as bathing and dressing. In rare cases that Medicare covers skilled care costs it pays only up to 100 days. In the United States, the average stay in a nursing home exceeds 450 days.

Some people think they will qualify for Medicaid coverage if they transfer their assets to family members and thereby, become reduced to a state of poverty. But Medicaid has strict regulations against transferring assets to others in order to qualify for Medicaid benefits. In addition, many people would prefer not to see their-life savings wasted to pay their nursing hone bills.

Others do not wait to face the prospect 0f.needing long term care insurance and deny this possibility by saying “it won’t happen to me.” It is estimated that approximately 50% of all Americans age 65 and over can expect to reside in a nursing home at one time or another.

Retirement - Question 67

2009-03-25T16:42:00.001-07:00

What should I look for when checking out the facilities of adult communities?

If you know people who are living at a community you’re considering, you have an excellent source of information. Visit at different times of the day and week, talk to the residents, and ask what they like. Ask them if they had to do it over again, would they select this community? If there was anything they would like to change, what would it be?

- Find out what happens when and if health problems occur. What facilities are available? What are the costs?
- Learn about annual fees and the rate of increases for these fees.
- What transportation facilities are available when residents can no longer drive their cars?

The more information you have, the mo.r. e comfortable you will probably feel making a decision.

Many senior citizens, when visiting a community for the first time, say, “This is a great idea, but I'm just not ready.” Once they make their move, though, they are likely to say, “I wish I had done this sooner.”

Senior communities provide people with adult cornpanionship and help eliminate anxiety about being victimized by crime or being alone when one becomes injured or ill. As baby boomers enter their 60s, these living arrangements will probably grow in popularity.

Retirement - Question 66

2009-03-24T16:37:00.002-07:00

What do you think of senior life care centers for retirees?

Today's senior citizens are very different from their parents. Technological, medical, and social changes occurring during the past generation have modified the lives and expectations of senior citizens in the 1990s. When many of us were growing up, it was common to have one's grandmother living with the family. As grandmothers became widows and grandfathers became widowers, they moved in to their children's homes. This was the norm.

During the past 20-30 years, more families have become two-working-parent households. Both parents struggle to keep up with the increasing costs of living, the uncertainties caused by down-sizing or lack of job security, and galloping cost of medical services and college tuitions. These people are less able to take care of their elderly parents than prior generations were. Coupled with this dilemma, people are living much longer these days.

The major concerns of today's seniors are:
1. Maintaining their independence and not being a burden to children or spouse.
2. Outliving their savings.
3. Not being able to sustain their standard of living as they become older.
4. Not being able to drive, maintain their home, or feel safe and secure in their home.

Today's economic realities have created a need for life care centers for senior citizens to live in while they are healthy. These are not nursing homes designed for those unable to care for themselves, but are adult communities that provide complete freedom for its residents. The arrangement seems to satisfy a need for companionship. The responsibilities and hassles of home-ownership are eliminated.

Since many retirees relocate to warmer climates, their children may be more than 1,000 miles away. These communities provide a way to be independent for those having the financial means and good health.

Retirement - Question 65

2009-03-24T16:37:00.001-07:00

Can I open an IRA (Individual Retirement Account) for my infant daughter?

Yes, you can open an IRA for your daughter- if she earns income. For instance, if she earns income as a child model or actress that would be considered earned income. The amount of her earned income (up to $2,000) could be used to open an IRA, and the portion up to $2,000 would be deducted from her taxable income taxes.

Because of the benefits of compounding, opening an IRA account for children who have earned income is an excellent idea. For example, let's look at a grandparent with a grandchild who earned $2,000. If this IRA was opened when the child was 14, and every year $2,000 was contributed to this IRA for the next six years, the total contributions would be $12,000. Through compounding, and earning a 10% return annually, the earnings would grow tax-deferred. When that grandchild becomes 65 years old, he or she will have earned more than $1 million.

Retirement - Question 64

2009-03-24T16:36:00.002-07:00

What happens to my 401(k) retirement plan if I change jobs?

If you wish, you can leave your 401(k) retirement plan in place at your former employer or you can roll over your retirement plan into an IRA rollover plan. In order to avoid a tax consequence, it is essential for you to roll over your 401(k) plan directly to an IRA rollover at a brokerage firm, mutual fund, or bank. If you take a distribution, twenty percent will be withheld for taxes.

Retirement - Question 63

2009-03-24T16:36:00.001-07:00

If I withdraw funds from my retirement plan, what are the tax consequences?

If you are under age 59 1/2, there is a 10% penalty on the amount withdrawed plus regular income tax on the amount withdrawn. In addition to the tax consequences, premature withdrawals from investments earmarked to provide for your retirement deny you the benefits of compounding - and of feeling financially secure about your future.

Retirement - Question62

2009-03-24T16:35:00.002-07:00

We have a 401(k) plan at work and I haven't participated because I just don't understand it. It seems so complicated. Would you explain what a 401(k) plan is and how it works in simple terms so that I can understand it?

A 401(k) plan is a voluntary retirement program sponsored by your employer. It provides you with an opportunity to save for your retirement through payroll deductions, which are made before taxes are withheld. In addition to deferring taxes on the amount of your contributions, the earnings on these amounts will compound even faster than they would otherwise because all taxes are deferred until you start withdrawing them from your 401(k) retirement plan.

Some companies match employee contributions up to a certain amount or percentage. This is an excellent opportunity to double your money instantly. According to Kiplinger’s Personal Finance magazine, approximately 25% of eligible employees do not participate in their companies’ 401(k) plans.

Retirement - Question 61

2009-03-24T16:35:00.001-07:00

As a retiree, how can I maintain my current income (while interest rates we declining) without increasing my risk?

This depends upon what your current investments are. If your current investments are CDs and money market funds, and you wish to increase your return, you will have to increase your risk. There is a strong relationship between risk and reward. You can’t avoid some risk of principal if you try to increase your return. However, if you have no risk of principal and your return is less than the rate of inflation, you will lose money each year.

Retirement - Question 60

2009-03-24T16:34:00.000-07:00

I work for a Fortune 500 company and have enrolled in its 401(k) retirement plan. There are about a half dozen investments for me to choose from. What should I do?

A lot depends upon your investment objectives and your age. If you have five or more years until retirement, you may wish to look for growth. Don't keep most of your money in money market funds, government obligation or bond funds. Rather, invest your money in growth funds (both domestic and international). This will keep you ahead of inflation.

Since there are more than 5,600 mutual funds available on the market today, it is very hard to recommend funds without knowing first which funds are offered on your 401(k) selection menu. But if you do have a financial consultant, let him or her knows about your 401(k) plan and ask for recommendations. Even though your consultant does not directly benefit from your 401(k) plan, I believe that he or she will probably extend the courtesy of helping you since you give him other business.

Retirement - Question 59

2009-03-24T16:33:00.000-07:00

What is a SEP Retirement Plan? Does it require a lot of paperwork to open?

SEP stands for “Simplified Employee Pension Plan” (it is sometimes referred to as a SEP-IRA). A SEP is an employer-sponsored retirement savings program; the paperwork required to open one only consists of a one-page agreement.

SEPs are much less complicated to establish and maintain than traditional pension plans are, and they offer more benefits than a standard IRA. A standard IRA only allows annual tax-deductible contributions of up to $2,000, whereas a SEP permits contributions up to 15% of annual compensation (up to $22,500).

Contributions to a SEP are a tax-deductible expense. Even if you are in a one-man or one-woman business, you're eligible for a SEP.

Retirement - Question 58

2009-03-23T06:52:00.001-07:00

What would happen to my IRA (Individual Retirement Account) if I died before 1 cashed it in? What about taxes?

After your death, your beneficiary will have several choices for receiving the proceeds from your IRA. The 10% penalty tax doesn't apply to these distributions, regardless of your age or your beneficiary's age. The distribution is subject, however, to income taxes (except for amounts that represent a return of nondeductible contributions). Thus, how your beneficiary elects to receive the proceeds can have a significant effect on the tax bill.

For example, if you had already started taking the required distributions because you were over age 70-112, your beneficiary could continue to take periodic distributions on the same schedule. If distributions had not yet begun, the relationship of the beneficiary to the owner will determine how the funds can be withdrawn.

The greatest number of options is available to surviving spouses. Your spouse can cash in all or part of the IRA without paying the 10% penalty. Or your spouse can roll over the IRA to his/her own IRA, making the money subject to the same rules as their own IRA. (Thus he or she would pay a 10% penalty tax if the funds were withdrawn before the age of 59 - ½ and withdrawals must start by age 70 – 1/2.) Another option is to allow the funds to remain in your IRA. The funds can remain in your IRA until the year you would have turned 70-1/2, at which time your spouse would have to start taking distributions based upon his or her life expectancy.

If your beneficiary is not your spouse, he or she has two basic options. Either funds can be withdrawn from the IRA within five years, or the beneficiary can start to take withdrawals within one year of your death (based upon his or her life expectancy). It is important that you name a beneficiary for your IRA in order to make these options available to your heirs. If you don't have a beneficiary and someone inherits your IRA under a will, their only option is to cash in the entire balance in the IRA within five years.

Retirement - Question 57

2009-03-23T06:51:00.001-07:00

I am48 years old, self-employed, recently divorced and have been unable to start saving for retirement. Is it too late to start a retirement program?

It’s never too late. Many people have been interrupted in their retirement planning due to divorce or loss of a job. Start saving now. If you look at your alternative, you can’t afford not to start saving for your retirement.

Retirement - Question 56

2009-03-23T06:47:00.000-07:00

What is the cost of procrastinating in beginning an investment plan?

Many people intend to contribute to their retirement plans or establish a college education for their infant son or daughter but fail to follow through.

The price of this procrastination can be staggering. The chart below shows the difference in growth between an individual who makes a one-time $10,000 contribution to a retirement plan at age 25 and an individual who makes that $10,000 contribution10 years later, at age 35. (This assumes a tax sheltered investment with an annual rate of 10%). In addition, the benefits of compounding are severely reduced by procrastinating.

Retirement - Question 55

2009-03-23T06:46:00.000-07:00

What can I do so that I don’t outlive my retirement’s sets?

This is the #1 concern for most investors. People are living longer and longer, and they're rightly afraid that they might outlive their savings.

To put it in a nutshell, if you can ensure that your retirement assets grow faster than the rate of inflation, then you will never outlive your retirement assets.

One way to ensure that you will not outlive your retirement assets is to have long-term health care insurance, so that your assets are not depleted in order to provide living expenses in case you’re ill or incapacitated. You need to get this insurance while you are healthy and insurable.

Retirement

2009-03-23T06:45:00.001-07:00

In the last decade, we have been forced to assume more and more responsibility for our comfortable retirement as employers have increasingly switched from retirement plans with defined benefits to defined contribution retirement plans. Most of these plans are different than government pensions – they lack cost-of-living adjustments (COLAS). Under these plans, you- not your employer- are solely responsible for ensuring that your investments will adequately fund your retirement.

With the average retirement now spanning 20 to 30 years, the major concern for most investors is the danger of outliving one’s assets. Taxes have increased and investors are concerned about reduced earnings on their future income. Increased taxes have affected Social Security recipients; 85% of Social Security benefits are currently taxed for retirees with joint incomes of $44,000 or more and individual incomes of $34,000 or more.

The most-asked questions at these seminars at libraries and book stores are from retirees and pre-retirees. Many are exasperated by the effects of inflation but are too risk-averse to put a major part of their portfolios in investments that normally grow faster than the inflation rate. Playing it too safe by investing in CDs is threatening their purchasing power.

Many brochures printed by banks, mutual fund companies and brokerage firms are entitled “How Can I Afford Retirement?” or “Are You Prepared To Live To Age 85, 90 or 95?” “Are You Saving Enough Or Investing Enough For Retirement?” “Will You Be Able To Afford To Send Your Children To The College Of Their Choice?” We recent ad by a major brokerage fm caught my attention with its dramatic message. “Imagine the cost of putting 15 kids through an Ivy League college and you'll have some idea of what you’ll need for a comfortable retirement.” By taking advantage of 401(k) and other employee-sponsored plans, you reduce your taxable income by the mount you invest via payroll deductions.

If you are self-employed, take advantage of the benefits of establishing a qualified retirement plan such as an Individual Retirement Account (IRA), Simplified Employee Pension Plan (SEP) or a Keogh Plan. (Question 55 to 70)

Economic Influences - Question 54

2009-03-23T06:44:00.002-07:00

Can you recommend some magazines H can read to be better informed about my investments?

A lot depends upon your background, education, investment experience, available time and financial situation.

Some of the magazines to which 1 subscribe are Forbes, Fortune, The Economist, Florida Trend, Consumer Reports, US News & World Report, Barron's, South Florida Business Journal, Business in Broward magazine, Wharton, Newsweek and Bottom Line newsletter. In addition, I read two local newspapers and The Wall Street Journal each morning. At my office, there are company publications that help keep me informed about the markets.
I confess that I am frequently frustrated because I don’t have enough time to read all of them. If you’re just starting out and have no prior investment experience or knowledge, Kiplinger’s Personal Finance magazine is an excellent choice. I suggest you attend seminars that are not pushing a specific product, and try watching the CNBC channel on cable television or the Nightly Business Report on public broadcasting television stations.

Economic Influences - Question 53

2009-03-23T06:44:00.001-07:00

Can yon recommend any books on investing?

“Making The Most Of Your Money” by Jane Bryant Quinn is an easy-to-follow step-by-step guide about organizing your financial affairs. (You can even learn while commuting; it is available in four audio cassettes which are read by the author.) Ms. Quinn is a columnist for Newsweek magazine and is syndicated in 250 newspapers nationwide.

There are many other excellent books on investing, such as Peter Lynch’s “Beating The Street.” He writes in an easy-to-understand manner, avoids jargon-and makes sense. Mr. Lynch earned his reputation as a manager of the Fidelity Magellan Fund.

Another book is "St n: A Guide For Selecting Markets for Lo Jeremy Siegel, professor of finance at the Wharton School, University of Pennsylvania. The book makes a strong case for investing in stocks rather than bonds over the long run, by showing that a 40-year old saving for retirement can expect much higher returns from stocks than bonds. Dr. Siegel was recently voted “Best Business School Professor” by Business Week magazine.

“The Great Boom Ahead” by Harry S. Dent, Jr. is an upbeat forecast for investors on the reasons they will prosper during America's protracted boom. After reading this book I felt very positive about our economy. Dent believes that as the baby boomers reach their peak spending years (ages 45-50), this spending wave will result in a Great Boom. Dent presents a very persuasive case for investing in equities to capitalize on “The Great Boom Ahead.”
In addition to reading these books, you may wish to enroll in an adult education course at your local high school or college.

Economic Influences - Question 52

2009-03-22T06:40:00.001-07:00

How can I learn more about investing so that I don’t have to depend upon others for my financial well-being?

Attend more seminars, enroll in a basic adult education course in your community; get an overview by reading some of the “How to” books in this store or from your local library.

Economic Influences - Question 51

2009-03-22T06:39:00.002-07:00

Would you explain the difference between growth stocks and income stocks?

Growth stocks, as their name suggests, offer above-average growth that exceeds the rate of inflation. If you are seeking to benefit from your investments in five years or more and don’t need current income, you'll probably benefit more by investing in growth stocks, especially if they are in a tax-sheltered retirement account such as IRA or 401(k) plan.

Income stocks provide relatively high-paying dividends; utilities used to be in this category until 1993-1994. There is a trade off between income and growth. Many retirees in their 60s mistakenly seek to maximize their current returns or current incomes by forsaking growth in their portfolios. These retirees are positioning themselves to be victimized by inflation if they live a normal or longer than-normal life span.

Economic Influences - Question 50

2009-03-22T06:39:00.001-07:00

I’ve heard the term “sandwich generation.” What does it mean?

The “sandwich generation” refers to the generation (usually in their 40s or 50s now), who are supporting elderly parents as well as providing financial support for their children (usually by paying for their college educations). This generation is sandwiched between an older and younger generation.

In addition to be sandwiched between parents and their children, many are trying to provide for their own retirements. They may also be faced with the possibility of downsizing within their own companies and are concerned about the possible loss of their livelihoods. All this pressure to balance conflicting demands creates considerable stress. To compound this problem, their adult children may be part of the “baby boomerang” generation. (These are adult children who have left the family nest and later return to live with their parents.)

Economic Influences - Question 49

2009-03-22T06:38:00.001-07:00

Do you think Social Security will be around when I am ready to retire? I am 29 years old.

A recent survey asked Americans in their 20s - your age group - about their attitude and opinion of Social Security. More of them believed in the existence of UFOs than that they would someday receive Social Security benefits. Social Security will survive - but benefits will probably decrease as older eligibility ages are established. The normal retirement age of 65 years will begin to change in the year 2000. This will affect those born after 1937 and the eligibility age will gradually increase to 67.

You must take responsibility for your retirement by realizing Social Security will provide only a base level of income during your retirement years. It was never intended to function as a retirement plan but only as a supplement. You need to shoulder your retirement needs by starting to invest in tax deferred investments such as IRAs, 401(k) plan, SEPs, and Keogh when you are young so that time and compound interest will make your retirement nest egg multiply. Never before has a comfortable retirement depended more on personal financial planning and disciplined savings.

Economic Influences - Question 48

2009-03-22T06:37:00.002-07:00

Isn’t most of the U.S. national debt in the hands of foreigners?

No. Approximately $750 billion worth of U.S. Treasury bonds are in the hands of foreigners. This figure seems immense, and it is. But it is only 15% of the national debt, which is currently about $5 billion. The largest holders of the national debt are domestic pension funds.