Wednesday, December 31, 2008

The Fruitcakewalk

The final week of the 2008 NFL regular season has concluded, and right on cue, teams have begun to fire coaches. Some of the firings were obvious; Rod Marinelli was at the help of the first NFL team to ever go 0-16, so it’s no shock that the Lions cut him loose. Over in Denver, the Broncos decided that it was better to buy out the three years left on Mike Shanahan’s contract, than to let him continue running the team as head coach. Or in any position there. The Jets canned Mangini, while the Dolphins*, Browns, Raiders and Rams all showed their head coach the door. Oddly, the Dallas Cowboys reacted to their worst finish in memory by promising to keep Wade Phillips, but in a token move fired Special Teams coach Bruce Read. In Houston, Gary Kubiak celebrated keeping his job by firing three coaches who worked for him, including his defensive coordinator. In San Francisco, interim head-coach Mike Singletary lost the ‘interim’ tag and began clearing house for new coaches, firing his offensive coordinator and two other assistant coaches, while many other teams are looking closely at their staffs to decide whether to ax someone, for poor performance, to open a slot for someone else, or just because everyone else seems to be doing it. Tis the season of the pink slip, and it happens every year.

What’s really goofy, though, is that these same teams will be looking for replacements for those coaches, and what they want in most cases is NFL experience at that position. So, the NFL being a closed market, a cartel if you will, most of these fired coaches will end up with another team, doing pretty much the same thing for the same money. Change of wardrobe, not much else. There are a few changes that happen; the 49ers got a real steal by signing Singletary, a real talent on the field and on the sidelines who was snubbed for many years for no reason other than he lacked head-coaching experience. And there are always a handful of NCAA head coaches who could be considered for open slots. But mainly, the NFL fraternity continues to take care of its own, promising far more change than ever really happens.



* Cameron was fired for the 2007 season, I mis-recalled.

Tuesday, December 30, 2008

Just Another Stupid Liar

I used to think rather highly of Mayor Bill White. He showed leadership in a number of high-stress situations during his time in office, but he finally exhibited a crass dishonesty in an area where honesty is in very short supply among politicians; money-making scams by City Hall. A couple years ago, Houston began putting in red light cameras at dozens of intersections around town; 50 cameras at first followed by another 20 soon afterwards. Despite complaints and warnings that other cities had found problems with the cameras, Mayor White assured citizens that the lights would make driving safer and lower accidents.

Well folks, he was wrong. The City of Houston paid for a study on the results of the cameras, which they promptly buried for several months, until a pair of lawyers sued for its release.

As you might have guessed, it turns out that red light cameras in Houston don’t reduce accidents. The study discovered that after installation of red light cameras, accidents at those intersections more than doubled in the next year.

Now, most of us would expect the good mayor to admit that the cameras were a bad idea, maybe try to back off this bad idea. But not Bill White. This guy actually insisted that the cameras were working, claiming that the rest of the city was actually having even more accidents and that putting these cameras in reduced the accidents at those intersections! Remember, the study showed that accidents at those intersections more than doubled, so Mayor White is trying to claim that the entire city has seen accidents skyrocket by even more than that rate. Problem is, there’s not a lick of evidence to support that claim – in fact, the guy who was hired to produce that study for the mayor, Bob Stein, acknowledged that data from the Houston Police Department shows accidents have declined in the city since 2004.

Oops, huh?

White should just admit that he was lying the first time he pushed to have red light cameras installed to bring in more money without paying for more police. Instead he followed it with an even more stupid and obvious lie.

Monday, December 29, 2008

The Right Stuff in Business (Monday)

We’re in a recession. OK, you knew that. My point is, if you are looking for a job – or for a better job – you need to know what the people hiring are looking for. Sadly, in many cases the jobs that are available will be parceled out by people who either are not hiring for their own groups (HR in many cases), or by people who do not understand their needs well enough to hire the best-qualified candidate. The good news is, you would not really want those jobs anyway if you had any choice, because those are the dead-end no promotion high-stress jobs we all hate anyway. The bad news is, of course, that in many cases we take those lousy jobs because we have to find work. So, my advice is for the many people who have a job but know they’re not in the right one, so they’re looking.

One thing I really hate about all the job-search books, articles, and guides is this assumption that you have unlimited time to pour into the search. OK, if you’ve been laid off you have some free time, but not the months that these guides say you need to have available, so you’re likely to have to take a temp job or an undesirable position, in which case you will be working and looking. If you are a student just out of school, you also have a short window before you have to start paying back that student loan, and in any case unless your name is Kennedy you will need to pay bills right away. Fact is, almost everyone looking for a job will eventually be looking and working at the same time. This is bad enough, but no one in the employment assistance field seems to grasp this. After all, it’s not easy to ask your current boss off from work so you can go to an interview, and if you don’t tell your current boss you feel dishonest. And it’s not as if you can go on vacation and conveniently schedule a lot of interviews in that space of time, especially if you do well and they call you back a second and third time … over a couple more weeks? Unfortunately, I cannot tell you how to handle this particular problem, except to say how I am dealing with it. My superior is very supportive, and knows that after I finish my MBA I will be seeing what’s out there, and so if I need a short-notice day off he will work with me. Why would he do that? Because he knows that this is a way for my company to show me that they value me, making it less likely that I would leave, especially if they could make a counter-offer (my company likes to promote from within, so obviously that is my first avenue), and it’s also because he’s a good guy, who treats people the way he’d want to be treated. I know that a lot of folks don’t have that option, but if you do have a pretty good boss in a job that’s just not all you need, it may be a good idea to sound out their opinion. Because while it’s a pain to have to replace a good employee, if they’re leaving it’s best if it happens on good terms with no one caught by surprise. That’s also a good test for the new employer, by the way – anyone who expects you to leave your current job without a decent transition, is not likely to respect you once you become their employee.

But that’s sort of missing the topic. The key to getting a good job, the kind that provides career and growth opportunities in a healthy environment, is to be someone they fell they have to have, someone they are not likely to find very easily. To be that person, you need to know enough about the job to know what they need. Do the research, find out everything you can on the company and on the position. If you’re reading this you know the basics of computers, so put some detective skills to work to see how well the company is doing (a growing company pays more for talent, while a company in trouble will be cheap), what skills are needed (be sure you are being hired for something that the next person is not likely to be able to do; nobody pays well for the ordinary skills) or preferred, and why they are hiring now. After you figure that out to some degree, you play ‘turn around’ and imagine what the person doing the hiring is looking for, and make sure you fit that image.

It may seem hokie, but when I interview people for positions, I always consider them on three levels – can they immediately do what needs to be done, can they get along with everyone in the team, and can they grow, maybe show leadership? Strange as it sounds, a lot of folks hurt themselves by not showing how they can help the company, they seem to be hard to fit into a group, or they show no sense of maturity. Your resume must be accomplishment-specific, include a cover letter, and be focused totally on proving you can and will be the perfect fit. If you get interviewed, dress like you are expecting to meet the person two levels above the job you want. Do not chew gum, and make sure you neither smoke nor drink, even if you are invited to do so. There’s a lot of good books out on how to handle interviews, and so a trip to the library is definitely in order, but remember that the more specific information you have on the company, the better you will look compared to the other candidates.

Sunday, December 28, 2008

Lawyers and Business

I neither like nor trust Barack Obama. I am not saying this at the start in order to attack the man, but to admit that I find him singularly unqualified for the office he has won, his popularity notwithstanding. Given the present set of crises, the nation needs a man who understand how the economy works, and a man who has personal experience with business, especially large-scale business. I agree that President Bush has not accomplished everything that I wanted from him, but at least his MBA from Harvard was evident in many of his actions and decisions. Lawyers, where business is concerned, are best known for a mixed bag – at best they can put much-needed protections in place, but far more often they suck the life out of innovation with red-tape, special-interest bias, and meddling to gain their own advantage. It’s too soon to say which camp President Obama will belong to, but the need for watchdogs on the next White House will be greater than the ones in place now.

On reflection, though, it is inevitable that lawyers will have a lot to say about the mortgage, bank, and automaker crises. Near as I can see, the basic decisions will be as follows:

MORTGAGE: There are three basic types of mortgages in trouble; mortgages where the homeowner simply got into financial trouble which may be blamed at least to some degree on the economy, mortgages which were ill-advised but not fraudulent, where restructuring the terms are likely to improve the repayment of the debt, and deals which frankly should be allowed to fail.

BANKING: Like the mortgages, the key interest should be to protect the innocent. Auditors must determine whether the funds handled were fully disclosed in terms of risk, and what sorts of intervention may be utilized which will effectively improve liquidity and investor confidence while addressing bad debt.

AUTOS: The most simple, yet difficult, mess to sort out. Save the jobs, but do not reward the corruption or the incompetence.

To me, no lawyer can produce the answers needed solely through legal expertise. It will take a successful businessman, or rather the combined wisdom of many successful businessmen to make that happen. It remains to be seen whether President Obama will understand this fact, or whether the image and self-serving rhetoric will continue to be the norm.

Saturday, December 27, 2008

The N Word Returns

“Nazi”. For over a generation, that’s been a word used to defame someone else, one of the worst things you could call someone. Regardless of where and how the name is used, by consensus a ‘Nazi’ represents a soulless monster, a person with no humanity in his heart, and a certain deliberate viciousness about his actions and intentions. The use of ‘Nazi’ as a pejorative has gone through several incarnations, from the literal accusation that someone was part of the infamous political party and its agenda, to claims that a person’s politics or behavior is compatible with Nazi dogma, to a generic denunciation of an action or policy as inhumane, to the present use where no valid criticism can be found to use against a target, so ‘nazi’ is used as a particularly offensive yet generic name to smear someone with, a word so loosely applied that defense against it is all but impossible, since no specific charge is even made. It should be noted that for the last eight years, it has been pretty much standard for self-anointed “progressives” to address the Bush Administration as “nazi” for just this reason.

Now enters Barack “Change” Obama. Obama claimed to respect the heroism of John McCain, his opponent in the general election, but in fact he did nothing to defend McCain against a flood of unworthy malice from Obama supporters. The O mumbled a few excuses about not being able to control his people, which should be troubling from a man claiming he can bridge the divide between the parties, including their extremist elements, and “get past the politics of division”. I saw the excuse as revealing. In any case, at some point the fa├žade of credibility will fade for the Obama White House, if not crumble away, at which time we may expect a variety of criticisms to be launched Obama-wards. Seeing as his Narcissusness has never had to answer hard questions, especially from his supporters, this will be an intriguing stage of his young relationship with Reality. Since there will be scant evidence on which to indict his work so far, when Obama, as is inevitable, disappoints his minions, the criticism against him will necessarily be generic and non-specific. Will ‘nazi’ be used to describe ‘The One’, if he chooses not to cut and run from Iraq? If Obama decides that raising taxes is not a good idea, after all? If President Obama decides, say, that America’s interests are in fact more important than those of, say, Venezuela?

The word’s been used with less justification many times. It will be interesting to see if it shows up again in the new paradigm, and if not, what weasel word will replace it.

Friday, December 26, 2008

Not Guilty

In reading about the bank, mortgage, auto, and employment crises in the media, I notice a common theme appearing over and over, specifically that everyone must share the guilt. The writers do this, I think, in anticipation of government actions which will, in the main, punish the public. While this may seem a utilitarian answer and therefore the most likely to be chosen, it is morally unacceptable and will likely lead to great resentment among the many millions of Americans who are in no way responsible for causing the problems or guilty of overindulgence.

I speak as one such citizen. My house is a modest one-story home bought for $150,000 in 2005, and my car is a 12-year-old sedan with 145,000 miles on it. My wife’s car is a 10-year old CRV. I pay the mortgage every month, right on time, and we paid off the cars long ago, foregoing flashy cars and luxury vehicles we could easily have bought but always put prudence ahead of ego. We pay the total balance on our credit cards each and every month, and have never spent money on anything that could be called an extravagance. What’s significant is, pretty much everyone in my subdivision could say the same – we work hard for our money and are careful not to buy things we cannot pay for, and we do not cheat anyone. We work hard and build for the future, the future we promised to our children. And I would dare to say we would resent the hell out of being expected to pay for the sins of others, since our children would end up suffering through no fault of their own. I will not help a thief, even and especially if he sits in a taxpayer-provided seat in Washington, D.C.

This is the hard nut at the center of the mortgage, banking, and auto crisis. There are people who took gambles, spent money they knew they did not have and who ignored every warning sign, confident that if everything fell apart, they could still cajole someone else to cover for them. People who buy homes they knew they could not pay for, should not be able to keep them. Companies which made deals they knew would cripple them without government help should simply not receive that bailout. Investors who bought financial instruments and now want someone else to eat the risk that came with their deal should be made to accept the consequences, the full consequences, of their own decision. People who have been careful and frugal should be rewarded, but frankly no one else. And at some point I think the message will be obvious – reward and protect the people who did the right thing, and put the cost on the ones who spent where there was no money, and chose to gamble instead of being careful in their savings and investments. No one has offered to pay me what I lost in stocks I own and I accept that as valid, since I took the risk along with the hope of gain when I bought those stocks. But if a politician plans to slam my kids because it’s a fix that will help him get re-elected, especially with special-interest groups that not only have no interest in changing their behavior or repaying for the damage they did, but who have shown no contrition in the first place for doing what they knew was wrong, well that politician, be he congressman, senator, or even president, is in for a world of hurt, because for all the hype, people can still tell right from wrong, and making innocent people pay for the sins of the guilty is something that should be rejected by all good people, and I think in the end it will be rejected, along with all the mandarins and con men in Washington trying to shill it off on us.

Thursday, December 25, 2008

Christmas 2008


Wishing you all a very merry Christmas!

Wednesday, December 24, 2008

Grade Inflation

I finished the fall 2 for 2, two more A’s in the two classes I took. The GPA is now rolling along at 3.933 (I had a B and 2 A’s my first semester in 2006, during the time of my first cancer surgery, since then all A’s so I am pretty happy). Just great, I finally get grades worth bragging about in my graduate work, but no one cares about the GPA except during your baccalaureate work. There’s no ‘honor roll’ or ‘dean’s list’ for Master’s candidates, although I can hope for a bit of glory if my team places in the Case Competition this coming Spring.

Unfortunately, there’s another probem to deal with. I’ve worked hard to get good grades, but from what I see it’s not exceptionally hard to get good grades. Granted, there’s a floor of credentials to get into an MBA program, but even so it appears that depending on the professor, about 33-40% of any given class earns an A in the course, with about 50-55% earning a B and the rest generally earn C or worse. Obviously, at the graduate level a C is a warning, UHV for example kicks a candidate out of the program if they earn a C more then twice during the program, and any D or F ends the run right there. The problem with that, is that I think this makes the professors a bit reluctant to hand out anything below a B, even for those students who have really earned those grades. This means a kind of discount for the better students, by that I mean the ones who really do everything required for an A, who make up maybe 25% of a class but who see less qualified students receive the same grade. I have to admit that there were one or two classes where a sterner professor might have given me a B instead of an A (UHV does not use B+), but I have seen many more where I worked hard for an A only to see someone get the same grade for far less effort. I don’t want to sound like a snob, but I want the top students of my class to, you know, really be the top students. One thing you will have to consider, if you go back to school for an advanced degree, is what reputation the school will have in the business world for its difficulty and acumen gained by its graduates.

Tuesday, December 23, 2008

Crisis Conspiracy

Over on another site, one of those well-meaning young men who thinks he has discovered secrets hidden from the rest of the world has announced that all governments and religions are owned by a single corporation, which apparently is set on evil tidings for us all. Like most conspiracy theories, it’s high on drama, empty on facts and the writer is unwilling to accept even the mildest criticism of his epiphany. He is convinced that he, and he alone, has uncovered some great secret that we should join in denouncing after, of course, applauding his courage and leadership, even though these are quite as imaginary as his villains.

I am being a bit harsh perhaps, but with so many real problems to address, it seems a bit annoying to have to trudge through the rhetorical muck of Chicken Little. And there are many such birds. The fictions of Global Warming, American Imperialism, Welfare, and such already drag down the business of the nation, and yet there are always more who are happy to pile on new delusions. The present mortgage crisis, for example, is complicated by the paranoia of those who see racist practices where stupidity and greed are quite sufficient to explain what has happened, and those who demand a diversity-focused approach to addressing failed mortgages, a tacit attempt at extortion for holding people responsible for buying a house they knew they could not afford, because demographically this practice was most common among minorities.

The resolution of this problem can be done rather simply and quickly, provided clear heads are in charge and the plans put in place attempt effective solutions, rather than politically correct actions. Most of the homes have real value, if not at the price originally charged, and banks should be enabled and encouraged to renegotiate the financing on those homes to address the principal in a workable fashion, provided the homeowner has reasonable equity in place and the ability to pay down the balance on schedule at the reduced rate. That’s one of the original purposes of the Congressional action already passed, after all. Those homes which cannot be addressed through simple refinancing, must be evaluated on a case-by-case basis, with the homeowner and bank both made aware that they will share responsibility for the lost value, for example if a house sold for $400,000 can now only be considered to be be worth $250,000. The reason this can work, is that homeowners with something to lose in the event of a foreclosure will be motivated to work with the bank, and a bank made aware that a deal will bring in more money than a foreclosed home will sell for, is also motivated to negotiate in good faith. Since the bank and homeowner are both already committed contractually in these situations, government intervention should frankly be minimized – they cannot really do anything to make the deal, and so should focus on situations where their action would save the home and minimize loss, for the taxpayer as much as anyone else. Unfortunately, few in Washington seem to share that opinion these days.

Monday, December 22, 2008

The Law of Money

Nothing has value in a transaction unless all participating parties agree it has value. This is the first law of money, and the reason why bailouts in general are a bad idea. The nation is facing, effectively, four crises at the same time:

1. A general recession of the economy, which boils down to falling production of goods and services, indicating a collapse of consumer confidence;
2. A credit crisis in the banks, as banks are risk-averse to the point that they are making fewer loans and requiring much stricter terms, even from customers who should be considered worth the deal;
3. A mortgage crisis, with high risk of foreclosure and loan defaults; and
4. The major automakers’ crisis, as the three largest automakers plea for aid from Congress.

The last one is the real squirrel. It includes Ford, who claimed to need the money in order to survive, but which backed off once it saw the terms Congress would place on the deal, Chrysler which is still partly owned by Cerberus, a company best-known for sucking cash out of companies it owns and which could have infused needed cash into Chrysler but chose not to, and GM, which annual reports for the last three years’ running have include material changes of their accounting practices, a proven inability to make a profit off their core operations, and a demonstrated arrogance against admitting that their business model is not only insufficient to their needs, it is causing at least some of their most serious problems. Another point to analyzing these crises, is to understand that they are inter-related; you cannot solve them just one at a time, but on the other hand an effective solution for one of the four crises will improve conditions for resolving the others.

Which brings us back to the first law – something does not have value unless both the seller and buyer agree on that value. And that is the nut to be worked out in the whole mess. For mortgages, after all, part of the problem is that many of the homes in trouble simply cannot be sold for anything like the price of the mortgage. If the people who live in those homes now were to work out a way to pay off those mortgages, they would still lose money because the homes’ present value is less than the amount they paid. Similarly, an objective accounting of the true net value of the car companies would produce a number much lower than the billions they hope to receive from Congress over the next several years (because we all know at some level that this crisis will not be resolved quickly or cheaply, not even at the 50 billion dollar level tossed around not very long ago). The bottom line for both the mortgage and auto crisis, is that someone is going to have to take a large loss. Some want everyone to feel pain to some degree, and of course every special interest group puts out an argument that everyone but them should pay. And of course the most common argument is that the taxpayer should pay, simply because the most money is there, never mind that this argument would have innocents paying off crooks. The essential argument in front of Congress is how to spin this last option. It’s the easiest short-term fix, if also the least ethical.

Sunday, December 21, 2008

Value of an MBA Part 3 – Business Needs MBA People

The recession and various related crises have scared a lot of businesses into kneejerk reactions, including production slowdowns and layoffs. That’s not to say these actions may not be necessary in some places, but in too many places these actions are not considered in the context of their need and effect, but as automatic measures. As a result, many companies are allowing themselves to be tossed about by events, out of control with relation to their environment. In far too many situations, companies allow themselves to lose revenue and miss opportunities for sales and growth, which could have been gained through effective management. Those management skills can best be found through acquisition of experienced managers with MBAs.

Frankly, if you earn an MBA you need to be picky about where you work. From my experience, at least half of those businesses which have 1,000 employees or more do not know how to make the best use of their MBA-caliber people. Instead, they rely on policy and formula, which has the advantages of clarity and consistency, but which discourages innovation and recognition of ability. While many of these companies will be glad to hire people who have earned MBAs, it is a bad career choice to take such as post, since you will be locked into a set routine that would not allow you to use all of your tools and ability. The person who earns an MBA should seek a company which not only offers a good salary and position, but which will make use of the full skill set of its MBA class.

How do you find such companies? A good MBA student can actually do this without too much trouble. One of the requirements of any decent MBA curriculum is regular production of research and analysis for all the different classes. Find the industry you want, narrow it down to the region and other particulars which suit your desired work conditions, then that should work it down to sets of private and public companies you would consider. For the public companies, look at the last three annual reports, especially the Management Analysis and Discussion, and see how they make use of their people. Look at trade journals and see who gets mentioned – if you only hear about the chief officers at a public company, that is a sign they are not paying attention or giving credit to their working talent, the phrase I use to describe the people who have experience and ability, but who are all too often neglected by the executives. What you want to see, is buzz about the performers who are making things happen, and you want to see evidence of innovation and development of their opportunities.

In considering private companies, information is harder to find but if you look at the local level, you will still find indicators. Media will discuss companies which are leaders in their industry, which is an indication that they are making good use of their management, and even though they do not release audited financials, there will also be financial data available through trade journals and you can pick up buzz through anecdotal discussions with people in the area.

The point for here, though, is that earning an MBA produces a specific skill set, one which only some companies will make effective use of, and so the candidate seeking a career position must do the same dedicated research in choosing a target company as he or she does in his classwork.

Friday, December 19, 2008

Value of an MBA, or Continuing Education as a Career Boost pt 2

Yesterday, I noted that earning an advanced degree may or may not be worth the time, cost, and effort. Sadly, I believe that some of my fellow students will soon be disappointed when they discover the limits of their new degrees. That said, those who have planned ahead may find the degree will be well worth the investment.

It’s a fact too often missed, that to bring in the big money you have to give the company good reason to believe that you will produce commensurately higher revenue for the company, thus justifying your high price tag. Therefore, you do not just need to be good enough to do the job, you need to be so good that the people considering you feel that they must have you. An MBA can play an important role in that campaign, provided you learn the things you need to be able to reflect in your resume and interviews, and provided you learn from your studies where you are weakest and strongest.

When I first began my MBA efforts, I mentioned that there are basically two roads you can travel; getting into the best school to which you are accepted, or the best school you can afford, in terms of time as well as money. This decision is critical. In my case, I chose the second course because of my experience and prior education. My Bachelor’s degree is from Baylor University, well known for academic excellence. If not a top-tier school, Baylor is certainly known internationally as a school with solid credentials. Further, I decided to go after an MBA to complement 23 years of work experience, which both limits my ceiling and establishes a floor of positional ability. A top-tier school, say the Chicago School of Business or Stanford, would not be a good fit for me because my resume will not make a top CEO position possible for me. That’s not defeatism; almost no one is truly qualified to be a Fortune 500 CEO, including about one-third of those people who actually became such executives. What I mean, is that an effective job search starts with understanding what you can and should target. A lot of frustration people get in hunting, is that they chase some jobs that they either could not get, or for which they are not a good fit. In my case, my experience is sufficient to apply for a mid-level management position, and the MBA improves the profile both for the management position and in promising executive potential for anyone bringing me on board. That is, multiple talents and a proven track record. The kid with no experience, for him a solid internship would be critical. The MBA buys you a ticket to a lower floor in that case, but if it’s a solid school and you do a job that gets you noticed for the right reasons, it can lead to a fast track that the more experienced managers do not get to experience. On the other hand, a more experienced manager gets work contact sooner with upper management, and if that is done well it can lead to opportunities that the kids won’t see for years.

Thursday, December 18, 2008

Worth of an MBA

With the recession likely to be aggravated by the policies of the Obama administration, many people are naturally concerned about not only their jobs, but their long-term prospects as well. Some have asked me, since I am finishing up my work to earn my MBA, what the reason was for earning that degree, and whether I would recommend it for someone trying to move up in a company or improve their income and job security. The answer, like so many times, is ‘that depends …’

MBA, of course, stands for Master of Business Administration, a title which may seem vague to some but which can represent a great deal. The reason that the degree may or may not worth what it takes to earn it, is that you have to do more to use it properly than just have it on your resume. The MBA is an advanced degree, and in most conditions it is expected to be an indicator of advanced position and a complement to advanced experience. If you are just starting out in the world of employment, or if your resume does not already reflect management experience, then the degree will be less valuable as a lever to gain a desirable position. That’s not to say that an MBA does not help you in finding a management position, but in general it is most appreciated when accompanied by evidence that you have done this before.

Inexperienced candidates compensate for that problem in two ways; acceptance to a premier school, or internship at a prominent firm. The problem there, however, is that you are still starting at a relatively low level in the company. Of course, the flip side is also true, that if you go to a less-prominent school but have experience you will be considered for a higher position, but with weaker long-term prospects initially. Or not, depending on the company and how well you do your job. The MBA, then, is a tool, but like all tools you must choose according to what you need to get done what you want.

to be continued

Wednesday, December 17, 2008

Money Only Exists In Motion

People are worried about a number of financial crises this year, and there are a variety of suggested responses. Part of the problem, is that each crisis is covered by the media in excruciating detail, which ironically muddles understanding of the causes and available choices. While a specific situation may require in-depth analysis of all the details, the public needs to comprehend the essentials in order to have confidence in the people making the decisions. Basically, what all these crises (mortgage, banking, auto, outsourcing) have in common are the following:

[] Created by response to prior problems
[] Caused in part or made worse by prior government action
[] Primary effect for the public was fear of unemployment or loss of revenue

Similarly, the resolutions of these crises all have similar qualities, specifically the assurance that employment and the continuation of revenue would be protected. That is, that life as we know it will go on.

To some degree, everyone in the modern world is concerned with money, particularly income. To the individual, the first concern is making sure money will come in to pay his needs, and the company or corporation has basically the same worry – make sure they can pay the bills. And this focus reveals the true first law of money – it only really exists when it’s in use, when people are buying and selling goods and services. The Great Depression of the 1930s did not happen merely because of the stock market collapse, or even because of bank failures, nor even because unemployment shot up, but because of the cause of these symptoms and others – the public confidence in the economy collapsed. People stopped spending, which caused businesses to fail, which took down banks and further lowered confidence, repeating the cycle again and again. Regardless of political party or doctrine, the primary focus here is to improve and protect consumer confidence. If the people continue to buy and consume, then the economy continues. If that confidence fails, so does the economy. This is not to say that consumption and spending is all to the good – just as an individual cannot afford to live beyond his means, so too the nation must be careful in how much it spends and where. But right now that discussion is set to the side, in the same way that a patient fighting to recover from injuries received in a car accident does not worry about trying to trim down to fit in his old college clothes.

Consequently, the response from the new Administration will focus on improving consumer confidence, and will be judged strictly on that measure, regardless of other effects.

Tuesday, December 16, 2008

No Immortals

Question for the day – people do not live forever, why should corporations?

Monday, December 15, 2008

Hail Now A Defender of Camelot



Last week I wrote about a wedding. Today, I must write about a funeral. Or rather, about a man whose death should not pass without remark. And about the sort of ideals and purpose which make such a man.

Sunday, December 7, 2008, Houston police officer Timothy Abernethy was gunned down by a man who fled after being stopped for a traffic violation. After surprising the officer and shooting him three times, witnesses say the suspect walked back to the fallen officer and shot him again at point-blank range in the head.

By itself, this would be a tragedy, a public servant killed by a young man throwing his own life away. But Tim Abernethy was not ordinary by any means. A twelve-year veteran of HPD, Abernethy had volunteered to work overtime to help fight crime in the community. Abernethy was also a veteran of the US Navy (his son also enlisted, and attended his father’s funeral in his navy uniform), who had worked on bike patrols and community support groups in order to help folks directly.

About four thousand people attended Officer Abernethy's funeral on Friday. When trying to give a sense of what kind of man Timothy Abernethy was, Chaplain Montgomery "illustrated the theme by telling of his encounter with a Houston policeman who had been comforting members of the slain officer's family at a local hospital. As Montgomery approached, the officer bolted. Concerned, Montgomery followed, finally finding the officer in a hallway with his face pressed to the wall. Under gentle coaxing, the officer confided his emotions.

"He looked at me and the look in his eyes bespoke the love he had for this man," Montgomery said.

"He would do anything for me, any day," the officer told Montgomery. "He would do anything for anybody. He truly cared about what he was doing that day. ... It wasn't fair that his life was taken."


After Abernethy's murder, hundreds of citizens held a candlelight vigil where he died, promising that his death would have meaning. The next day it snowed in Houston for the first time in two decades. "One fellow officer recounted how Abernethy loved the snow but did not live to see this week's rare Houston snowfall. He told mourners this snowfall is a sign that Abernethy is OK now in heaven."

Timothy Abernethy was a good man, who loved his family and was a devoted husband and father. He was a very good officer, who loved his community and the people of Houston. He was a veteran and loved his country. Timothy Abernethy gave up his life in service, and we are all the poorer for the cost but we must remember the value of such a man,

Roger Zelazny once wrote a story about a man whose ideals never dimmed, even when the things he prized were forgotten or mocked by all around him. Zelazny called that man 'The Last Defender of Camelot', and in this I disagree slightly with Mister Zelazny. Men like Timothy Abernethy prove that ideals such as personal honor, valor, sacrifice for a worthy cause, and dedication to the defense of community and nation, while rare and always in too short a supply, have not died out nor even diminished to the one last futile stand, but remain vital and alive, the mantle taken up by the new generation in honor and memory of the fallen heroes who taught them these ideals. In this way Camelot never dies, the hopes and integrity built upon the past deeds of integrity and courage, in defense of and in support for the people who depend, as always, on the few who truly face evil and fight it every day.

(photos courtesy of KHOU and HPD, respectively)

Sunday, December 14, 2008

Ideas and Lost Socks

I think we have all run across the question about where ideas come from. Every so often, something just pops into your head on its own, a fully-formed idea. Since all matter comes from someplace, all matter (per Einstein) is derived from energy and energy like matter cannot really be destroyed but only transferred in form, it follows that concepts and intellectual constructs, formed from energy, are similarly eternal in existence, changing only in form and use. It’s not a big leap, therefore, to conclude that ideas have an essential existence apart from creation in our craniums.

But what else is interesting to me, is the question about where ideas go? We’ve all had ideas just about to finish forming in our head when –poof- they just disappear. This seems to happen the most often during exams and important conference meetings, but we’ve all had it happen; we sense the arrival of a great idea, when … it’s gone.

Whenever they finish that Grand Unified Theory, it won’t be done unless it explains where ideas come from and go to … and what really happens to all those lost socks?

Friday, December 12, 2008

You Know Things That God Himself Does Not

I mentioned in a previous post that with school out for the semester, I am catching up on my elective reading, especially theological essays. It strikes me, just how similar the tone is at times between the stridently religious and the stridently political, even when the authors are atheist or intensely secular. There is a habit in both groups to demand agreement and to launch invective at people expressing contrary opinions. Huh.

Anyway, reading through this stuff it hit me that doctrine and dogma are very often overstated, and the major lessons are sometimes missed. What’s odd is that people so obviously familiar with Scripture, nonetheless miss the clear examples where God warns us not to become legalistic, to work to persuade through love rather than threats, to offer hope rather than contempt. Look at the lessons in the biblical book of Ruth, a Moabite woman through whom the lineage of King David runs. Look at the first Pharaoh in Genesis, the one who rose up Joseph to privilege and power through respect for his ability and integrity. Switching to the New Testament, many people vaguely recall the Roman Centurion whose faith was praised by Christ, but they forget that he was not only no Jew, there is no evidence that he became a formal disciple of Christ either. And then, of course, there is the loudest message – the one we know as the Good Samaritan. Jesus warned people many times that God looks at the heart, not the sign on the door – remember how he said that when a tax collector and a Pharisee both prayed to God, only the tax collector was reconciled, because he asked for mercy and was contrite, while the Pharisee was arrogant?

I am not saying that doctrine and dogma are not important in their own right, but we need to make sure we have our hearts right first. And nowhere is that more obvious, than when we consider the strange paradox that while God is omniscient and Man is not, we know things that God does not know!

Here’s how that works: God is absolutely pure, and therefore no sinful man may enter into His presence. As a result, even the slightest sin is an eternal barrier between us, and so represents a formidable problem, which Christ resolved by taking the penalty unto Himself on our behalf. Therefore, promises the Lord, our sins are not merely forgiven as humans think of the word, but taken away as if they never were, so that they may not in any way be a barrier between God and the people He loves. If any of us were to see God in Heaven and mention our sins from the past, he would tell us frankly and honestly, ‘I do not know what you mean. What sin?’

We, however, do remember our own sins (and many of us make a point to remember as many sins committed by other people as possible); even the Bible details sins by such heroes as David and Paul. I say ‘heroes’ not to excuse their sins, but to point out that those two are clear examples of men whose sins were forgiven, yet we also know, thousands of years later, what some of those sins were. As a result, we mortal humans actually know some things which God has denied to Himself. Oh, the logic of it makes sense to me, but it means that the Almighty has chosen to accept limited omniscience in order to be true to His word. The implications of that choice are frankly staggering, but also for another place and time.

For here, we humans might do well to ask ourselves whether our moral bearings are as true as we like to claim, and whether we ourselves might do well to put aside details and choose to see each other according to grace and hope rather than indictment and accusation.

Thursday, December 11, 2008

God in Poopy Diapers

I like reading about a variety of opinions, and I often find religious debates invigorating. This week I am brushing up on eschatology, and I found some very interesting essays. But I noticed as I read, that many of them were hostile to interpretations other than their own. One Lutheran writer not only held the amillenial position, he regarded all others as “devilish” and “heretical”, and went to so far as to say that anyone who wrote in defense of an opinion different from his own was working for Satan. Rather a strident tack to take in discussing the words of fellow Christians. I do indeed understand that the fellow is convinced that the subject is of great importance and that he has great confidence in his own interpretation of things, but I could not help but wonder if he had stopped to test his own assumptions, while denouncing such behavior in other writers.

That’s not a knock on Lutherans, but on anyone so sure they are right that they figure it’s time for the rest of the world to agree with them or just shut up. And as the last several thousand years of human history shows, that’s been as common in religion as in any other place. The Gospel accounts warn us that the Jewish religious officials had become stiff-necked and legalistic, just as the Egyptians were during their day, the Babylonians during theirs, the Romans during theirs, the Roman Catholics before the Reformation, and so on. Pretty much every religious group which gets a bit of power, abuses it, whether the Baptists, the Lutherans, the Anglicans … et cetera, et cetera ad nauseum. This is one reason why so many people reject religion altogether, being put off by the worse elements in the world of faith, but that ignores the great good done by people of faith, and to my mind the essential truth of God. Not that I have it all figured out, but I do respect the many works done by people who claim allegiance to a creator and holy person. If we should note those who claim God as if he were a possession of theirs or their employee, so also we should respect the humble yet worthy efforts to increase understanding and goodwill done by those who think and act in terms of love and compassion. Which brings me to Christ Jesus.

I speak from the perspective and experience of a Christian, and therefore my opinion is that the man Jesus of Nazareth is the Messiah, who redeemed Mankind from sin and evil for all time, the only begotten Son of the Most High God. I mean no disrespect to any other beliefs, but speak from what I know as true. Anyway, one of the great truths about Christ, but one which often is quickly forgotten by believers, is that despite His right to glory and power, Jesus lived a life of hardship and poverty, one He accepted without complaint, indeed one he specifically chose. I believe He did so for many reasons, including the proof that anyone can be truly good if their heart is pure, and money or power or influence are convenient luxuries, but not really essential for doing good works. I also think this ties in to something Christ warned His disciples about, that to enter what he called the ‘kingdom of Heaven’, that they must “become as little children”. As in helpless, totally dependant on their parents, completely open and honest in all things. Imagine a toddler, unable to even change his soiled diapers on his own, and then imagine the Lord God deliberately choosing to subject His very person to such a condition, dependant on the creations to whom he had granted life and free will, and who had inevitably screwed up everything given to their trust. For all the doctrines of authority and power, of ultimate destiny and so on, the creator of all Creation once laid in a manger, wholly dependant on the love of humans for His own survival and welfare. He walked among ordinary people and shared all of their common experiences, including the ones which involved pain and loss. Jesus lived as a man, honest and without offense against any other person. The worst true claims His enemies could make against Him, included the admission that he helped people, as in ‘Jesus healed on the Sabbath’.

This is the season Christians call ‘Advent’, when we might do well to consider Christ the child, who chose the life of a poor itinerant preacher as the model for true goodness.

Wednesday, December 10, 2008

I Need A New Word

I need a new word, one which can describe two apparent contradictions existing at the same time, like an oxymoron but carrying more the emphasis of the extreme nature of the opposites. Such a word might be used to describe Rod Blagojevich, a man who was smart and savvy enough to get himself elected governor of Illinois, yet stupid enough to not only think selling a seat for the United States Senate for personal gain was a winning idea, but moronic enough to think he could get away with it. Aside from the ethics of his apparent crime, one wonders how Governor Blagojevich could have been so short-sighted. As governor of one of the nation’s most important states, Blagojevich certainly held many attractive personal opportunities for his life after leaving office, but he threw them away for the chance at relatively small short-term gains. This guy crushed every hope for his own future, to say nothing of staining the honor of his office, through an ignoble and frankly stupid decision.

This is hardly the first time that smart people have done stupid things. Politically, the most infamous case would have to be Richard Nixon, who was caught covering up crimes committed by friends of his because of his own secret tape recording system – it somehow never occurred to Nixon to destroy the tapes before they were discovered, or better yet, not to say incriminating things in a place he knew would record everything said. The man brilliant enough to play the communist regimes in Moscow and Beijing against each other, was too stupid to remember his own tape system. Go figure.

Other Presidents have shown symptoms of the same disorder. George W Bush thought he could trust the Democrats to keep their word on agreements, just as his father did. Honorable but dumb. Bill Clinton thought he could lie his way out of the Lewinsky scandal, forgetting the Watergate lesson that the cover-up is worse than the crime. Ronald Reagan even fell into that trap, making a deal with Iran that he wrongly believed would never become public knowledge. Carter, despite his doctorate, was conned into believing that the Ayatollah was a man of peace. And so on through the pantheon of ‘great’ men.

So, what should we call this behavior, this odd habit of capable and intelligent people doing stupid things, of nominally honorable men giving in to poor judgment or poor morals? I wanna know.

Grief, Honor, Prayer

Monday, a Marine Corps F/A-18D crashed into a San Diego neighborhood, killing four family members, including two children. The incident is under investigation.

Dong Yun Yoon, a naturalized citizen who was born in South Korea, lost his wife, mother-in-law, and his two children, ages 15 months and 2 months. From the CNN report, Yoon said “"I cannot believe that they are not here right now. I know there are many people who have experienced more terrible things, but please, tell me how to do it. I don't know what to do."

By itself, this story would be a horrific tragedy, a man who has lost everything due to something he could never have possibly foreseen or prevented. But what struck me was the character of the man, speaking even in his grief about the pilot of the plane:

"He is one of our treasures for the country," Yoon said in accented English punctuated by long pauses while he tried to maintain his composure.

"I don't blame him. I don't have any hard feelings. I know he did everything he could,"


I try to be a good man, but I have to say that I do not know if I could find such honorable words for the pilot, were I standing in Mr. Yoon’s shoes right now. I could forgive the pilot, maybe, but it would be hard to show the grace that Mr. Yoon did in this place and time. It only reinforces the fact to me that here is a good man who is suffering a terrible, unbearable pain unjustly, even if it is no one’s fault.

If you are a praying person like me, please add Dong Yun Yoon to your prayer list, a good and kind man who needs and deserves solace and comfort in this time.

Tuesday, December 09, 2008

True Power

I like to read for relaxation, and occasionally watch movies. I have noticed that a lot of them like to show a person as powerful by demonstrating their ability to kill and destroy. Certainly that is a kind of power, but when you think about it not so great a power. Killing, for example. Certainly I regard a person as dangerous, who would kill someone for no good reason, or who could carelessly cost lives. But I do not really consider that kind of person as truly powerful. After all, sooner or later we all die, and that includes the killers. And a small shift in circumstances can easily change who has the greater killing power. The same Nazis who thought themselves so powerful while they ran death camps for Jews and other sorts of people they wished to remove, found they could not stop either the Soviet or American armies, nor the judgments of those courts which considered their actions heinous even by human standards. In the end, murder and all the gruesome lot of deliberate death are shown to be useless or worse, a mental disorder. The power to kill is only truly a power when it is combined with a worthy ideal, such as removing the Nazis was worth the cost.

Similarly, other crimes prove, on reflection, to be no demonstration of puissance. A man who can rape a woman is only an animal, and a sick one at that. The ability to enslave people only proves the lack of humanity, not a superior quality of such. In the end, all coercive and destructive force tends to detract from the person, not validate their authenticity. There are several qualities that a real person exhibits, qualities which manifestation defines and demonstrates their true power. They are integrity, credibility, trustworthiness, selflessness, duty, valor, wisdom, faith, and hope. Few enough people have any of those qualities to any great degree, and it is a rare person indeed who exhibits them all, but we should all be minded to seek out and develop those qualities in our own lives, for in them we find the tools to true power, the ability to create, to heal, to teach, to defend, to uplift, to set right and to make community. In short, to make what is, better.

Monday, December 08, 2008

It’s Only Money --- And Your Hopes, Dreams, and Future

My older daughter Andrea got herself married yesterday. Kind of a strange situation there, being that she is my wife’s daughter from her first marriage, which is only important in that as the step-dad I had no official role in the event; her birth father walked her down the aisle, my wife is the bride’s mother, and my birth daughter Jagan was the flower girl. Me, I got to hold the coats and various accessories and stay out of the way. On the positive side, I think I stayed out of the way pretty well. Got a few good pictures too. The wedding was at the A.D. Bruce Chapel on the campus of the University of Houston, and the weather was perfect.

Seeing your kids get married is always bittersweet. On the one hand, it’s a great day to see them commit to a life together with the one they have chosen. On the other hand, you really worry about all the things your kid still needs to learn, especially the mistakes you made and hoped you could keep your child from making. Without going into details, there are many places where I would have hoped that my daughter would have listened to good advice, usually from her mother, which is of course the reason she ignores it – I believe that a lot of kids resist admitting that their parents are right about anything, or that they could need their parents once they are themselves adults. Been there myself, y’know?

That ‘don’t listen to anyone else’ mindset is not limited to kids, though. In business, I often see new managers decide to rip up and replace everything and everyone. Many times that means destroying the good with the bad, and what comes in may not be as good as what was lost. In discussing the problems with the automakers, some astute readers pointed out that some of the executives have not been there long, and have actually been working effectively at problems which are simply too big and which have been around too long already to be answered quickly with a few smart moves. What I have found to be the most effective practice, is for the new boss to take some time to be sure of what’s going on and who’s doing what before taking action or committing to a decision – you cannot depend on just what you think is the case, or what some people tell you is going on. You often need a broader and deeper perspective than what you have coming in, which is why you should consider the contribution your predecessor may be able to offer. Despite the partisanship, many outgoing presidents are able and willing to assist the new chief executive with what they know about the most important issues and policies. While a changing administration may well mean a sea change in policy direction, it is nonetheless important to understand how and why the prior president reached the decisions he did. I am curious to see if President Obama proves to be as wise as I hope my 24-year-old daughter will be.

Sunday, December 07, 2008

No Blogging Today - No Wallet Tomorrow

My oldest daughter gets married today.

I, with or without my sanity, will be back on Monday ... hopefully.

Saturday, December 06, 2008

Where Are The Leaders?

The thing that annoys me the most in this automaker crisis, is the question of leadership. Not the Obama style of leadership, where appearance is all that counts, but the real thing. I think the world of President Bush, but on this issue he’s been sitting back and waiting for someone else to find the answer. Same for President-elect Obama; sure he can say it’s not his problem right now, but considering that he will be at the helm in just a few weeks and therefore whatever is or is not done will bring him the consequences, you’d think he could motivate himself to get moving on a clearly important issue. Of course, the do-nothing Harry Reid and Nancy Pelosi have also been still and quiet in terms of productive suggestions – shrill accusations and rants may play for soundbites, but they don’t move the issue ahead by even an inch. Then of course, we can also look at the recent performances of the automakers’ executives, the UAW, and the many anointed ‘experts’ in the industry, which have amounted to ’help me and let the rest fend for themselves’ - predictable but again not real leadership by any reasonable definition. The reason this problem, which most of us saw coming years ago, has not yet been resolved and may well be addressed in a distinctly foolish manner, is that no one – no one at all – has shown any leadership.

Some decades back, I used to chat with my employees about their long-term plans (still do, of course), and I was struck by how many thought that getting into management would make their lives easy. Just give the orders and make the others work, sweet. Of course the reality is much different. Some managers no doubt try to run their businesses in that way, but that is bad management. Any good manager can tell you, that effective management means you have to direct everyone’s efforts to get the best results, and that responsibility, credibility, and accountability start with you. To my mind, that truth only increases in importance as the rank rises. Look at the top title for most businesses: Chief Executive Officer. It means that the CEO should be the one to state clear priorities, address the top needs, and take full responsibility. That does not mean the CEO is the fall guy for whatever goes wrong, but it does mean that the CEO must take clearly communicated, well-defined actions which protect and improve the company’s long-term health. It’s the same, to a lesser degree, with all of the other chief officers. And in this crisis it’s painfully obvious that the chief officers have been trying to hide from the problems, not address them. It’s also obvious that there are far too many “chief” officers at each of the three companies, for the real chief officers to get a hold of the matter.

The last couple days have shown indications that Congress means to bail out the automakers. As a result, everyone is talking about what conditions should be put in place. For me, it’s obvious that the current set of top officers at each of these companies needs to be replaced, but there’s more. The three automakers need a streamlined, shareholder-controlled leadership design, so here’s what I think needs to be done, as part of any package:

GM – fire all top officers, have the SEC search for new top execs. Do not limit the pay on the new team, but tie it to performance, both short and long-term. Also, limit the number of top officers to ten. And limit ownership by any single person to no more than five percent, or fifteen percent by any family or consortium.

Ford – same as GM, but also change the two-tier system which allows the Ford family to control the company with a minority interest. Ford can turn down the aid if they insist on keeping their structure, but if the public is going to bail them out, it’s overdue for Ford to become a publicly-owned company in every real sense.

Chrysler – same as GM, but require all significant shareholders to sell their ownership down to the 15% cap specified in the GM case, and sell them at the current stock price, not the later price resulting from the aid package. No government aid for a privately-owned company, especially one with a tear-down reputation like Cerberus.

I have a sneaking suspicion that most of the top officers and shareholders will resent and resist this move. But it should be non-negotiable and required prior to receiving any aid. If they need it, these companies should feel the same pain they are or will be inflicting on everyone else around them.

Friday, December 05, 2008

What Color Is Your Accessory

The career book, ‘What Color is Your Parachute’, has been a mainstay for job-seekers and career changers for literally decades. Richard Nelson Bolles has enjoyed a certain niche dominance, as even modern gurus of the field consider this book a “bible” for job-hunting. And like the religious Bible, there are many people who seem to react strongly against even a balanced criticism of the book, so that a person would have to be just a bit reckless and curmudgeonly to speak against it.

Enter the curmudgeon.

Now, even I have to admit that the book has some value, especially since Bolles updates references and resources every year. Of course, that also means he can sell a brand new edition every year, so there’s a money side to it, as well. There are many good things about the book, especially for very young people entering the work-world for the first time, or those who are facing major life changes. My problems come from a number of detailed spots in the book, where Bolles simply ignores what seems obvious to me, and in some places suggests what seem to me either impractical ideas or bad advice. That is the reason for today’s article.

I picked up this book for two reasons – first, my wife hates her job and really wants to make a change for the better. She works as a bank teller, and after thinking the matter through we both agree that bank tellers are universally underpaid and mistreated as employees. Working as a teller means few raises for small amounts, no chance at a career position, and little job security despite years of service. Bank tellers are very similar to call centers in their business practices. This is not to pick on her specific bank; we have learned these conditions pervade throughout the banking industry. But changing careers is difficult, the more so when you are beyond 40 years of age, so I am trying to help find resources to aid in that search for her. Also, as I am about to claim my MBA this spring, I will also be looking around to see what is available. In my case, I like the company I work for, so I may well be moving only in position with the same employer, but you do should always know your options. So, all tools serve some good. And after looking through Mr. Bolles’ book again (I think almost every American has read ‘Parachute’ at least three times in their life by the time they are 45 or more), I see many of the same things I have always liked and disliked about the book. The book serves many good purposes and offers useful tools, but there are four points where I am in sharp disagreement with Mr. Bolles:

1. The book does not offer any guidance to people who have to work to pay the bills, but are searching for better employment - This one bothers me because it’s obvious that Mr. Bolles knows such people are out there; early on in the book he mentions that people may have to work at a job they do not like while searching for the one that they really want. But that’s all he says on the matter. And that is a big failure, from my perspective. While there are people who have been laid-off and people just getting out of school, there are millions of folks who realize their job is a lousy one, and they need to make a change. If I am not picky, I can get a job today, so the question is not about whether I can find work, but what I would be doing, and for how much, and with what future prospects. I think this is one of those places where Mr. Bolles shows just how long it has been since he really had to find a job, because he completely ignores the question of how you can search for a career while working at a bad job. This, even though he notes that the job-searcher should plan to spend at least nineteen weeks in that search, a time frame which will exhaust the savings of anyone I know, making it necessary to keep or take on one of those lousy jobs.


2. The book discusses how to negotiate salary, but makes some assumptions which do not fit my experience, and I find them far more likely to frustrate job-seekers than to assist them - This is an area where I would like feedback from the reader. In my experience, despite a number of summer, temporary, full-time and career positions, I have never yet had a job offered to me where the salary was in fact negotiable. In my present company, for example, when we decide we want to hire someone, we make a written offer for a specific amount, and it’s strictly a yes/no decision; if the candidate does not accept the offer as presented, there is no deal. I have a friend who was recently offered a position with a company, but before accepting the position she asked whether the salary mentioned in the offer might be negotiable; the offer was immediately withdrawn. I expect there are some companies which will negotiate a salary range within reason, but I believe that Mr. Bolles is unrealistic in his assumption that this is the normal condition, especially in a time of recession, where the business has far more leverage than the job seeker. I would like to hear from readers, as to how often you have been able to negotiate your salary, especially during an economic downturn.



3. A major premise of the book, is that the job-seeker can collect specific detailed information about companies by asking folks who work there - This is another area where my experience is exactly the opposite from what Mr. Bolles claims. To be expected to provide confidential information from where we work, is an insult for most people, who understand that being part of a company means protecting its confidential information. My direct reports do not discuss how much they make with each other, yet Bolles thinks they would tell a relative stranger? Mr. Bolles is not correct. And that restraint on discussion only becomes stronger when discussing hiring and positions. Frankly, only someone with the authority to hire a person really knows whether an opportunity exists at all, much less what is desired in that role.


4. One of the strongest points emphasized by Mr. Bolles, is the use of contacts, which he describes as pretty much everyone you have ever met or come into contact with in the course of your life. Mr. Bolles makes a brash set of assumptions regarding the way your ‘contacts’ will be able or willing to assist you in finding work - What Bolles is leaving out, is that there are very good reasons why we do not harass our friends and relative strangers about something that is of little concern to them. There is a certain courtesy in respecting the boundaries of a relationship. It’s the reason we get a little annoyed when a friend falls for the hype and tries to sell Amway or some similar garbage; people do not appreciate being treated as a conduit merely to help someone else get what they want. Yes, if you know someone well enough that you can ask them for a favor, and if they happen to be willing and able to fulfill it (something you should consider well ahead of asking), then you may make the request, but only when done courteously. So, you have contacts who can help you in your job search, but they are people to be respected and whose person demands honorable conduct. Mr. Bolles is exactly wrong to imply, let alone state as he does that you should badger people you barely know about information they may not have or if they do, they may not feel is public property. It fails simple tests of common courtesy and propriety, it disrespects moral boundaries, and in a practical sense it will tag you as a social mooch if you start harassing everyone you know for access to job openings. It makes you look desperate and in the long-term is more likely to harm your prospects than help. I would recommend that the job-seeker be far more selective in whom he/she approaches, and far more courteous in doing so. At the very least, it shows respect for people that you know you will want to meet again.

Finally, I respect Mr. Bolle’s skill as a writer and salesman (never forget that he wants you to spend money on his book), and as a teacher of certain skills that may be useful in a job search. But I consider my own experience as a manager and a person who has hired, trained, promoted, counseled, praised, disciplined, fired, recommended, and otherwise had significant direct influence with hundreds of employees in my career, and I find it appropriate here to speak to the needs and desires of the hiring manager – many managers do not like hiring people, and so anything that looks like a problem will mean rejection of the application. Unless you are applying for a sales position, the last thing you want to look like is a salesman – no manager ever believes the applicant is as good as he claims. At best, he finds no reason not to hire you and gives you a chance because you were better than the rest, but don’t get cocky about that. I have seen managers hire people on the definition of ‘best’ that in various times has meant the best dressed, the first person to include a cover letter with their resume, the person who uses up the least time in the interview, the person who went to the same school at the manager, the person who happens to fill an understaffed demographic, the first person who does not exaggerate his resume, the person who asks the best questions, the person who manages not to ask stupid questions, the person who already works at the company and wants to switch departments … you get the idea. Finding a good position is never easy nomatterwhat, and there are many good tools you should find and use, but never forget that just as no job is really perfect, neither is any tool complete in itself.

Thursday, December 04, 2008

Strategic Needs – Why Congress Is helping the Financial Markets

Through the first half of this week, I have been explaining why the Congress is right to decline granting the demands of the three major US automakers. Having done so, it seems appropriate to consider why the government was willing to spend so much more to address the crisis in the financial sector. There have been complaints that it appears to make no sense to agree to spend 700 billion dollars on one sector, but deny 50 billion to another that needs it just as much. To understand the decision, we must sort out the relevant conditions and probable effects of any money applied to the sector.

There are significant differences between the financial and automobile manufacturing sectors, so that is where we begin. With over a half-million employees directly impacted by a possible failure of the major automakers, plus as many more possibly affected by the supply chain effects of such a failure, there is clearly a great impact from the decision to assist or not. However, there is no compelling evidence that the manufacture of automobiles is a strategic asset for the United States, nor that the requested assistance would address the fundamental forces causing the crisis. If GM, Ford, and Chrysler were all to fail, the ramifications would be serious but not catastrophic. The domestic auto industry has not been shown to be strategically different from the American companies involved in consumer electronics, textiles, mills or ironworks, indeed it appears to be of a lower priority than several industries which left the country in the past several decades. This is not to say that a federal response would not be needed, but that the requisite actions by the government should focus on a different goal than perpetuating an inefficient system which cannot promise a reasonable return for the investment.

Before considering the financial sector, it is important to note that although the word “bailout” has been in common use by the media regarding each industry, its application to the different crises is not consistent. In the case of the automobile industry, company executives are asking the government to give money directly to the companies, to use as they choose, without credible guarantees of performance. In the case of the financial sector, the money granted by Congress went to the Federal Reserve Board, not directly to the banks, and the Fed will decide how to apply the money on a case by case basis. Further, there are significant assets now in the control of the Fed, which justify the limited risk being taken despite the size of the action. For instance, the combined assets of Fannie Mae and Freddie Mac are over five trillion dollars; in even a worse-case scenario less than a third of those mortgages would fail, meaning that for a commitment of approximately one trillion dollars, the Fed controls guaranteed assets of at least 3.35 trillion dollars, and which under good management could appreciate to over six trillion dollars. When you step away from the panic dance being spun by the media, the two truths about real estate and home mortgages are that some properties are worth nothing close to what they are selling for, but also that many home mortgages have a floor value that will eventually bring back the market. In other words, what is needed in the case of the mortgage crisis is a short-term solution to protect the liquidity of banks and support confidence in mortgage viability, because in the long term prices and purchasing will inevitably return to nominal performance. While it will not be like the heady days between 1995 and 2006, prudent supervision by the Fed could potentially improve President Obama’s re-election chances, as the Fed may be able to release some acquisitions back to private ownership and show a respectable profit in doing so by mid-2012. Certainly, there is every reason to expect that the Fed’s actions with regard to mortgages will be repaid in full in the long term. Therefore, the risk in relation to the money entrusted to the Fed is effectively low with relation to the likely results of not acting, and the prospect of full recovery of costs makes the action even more attractive. In practical terms, the Fed action is a set of loans, not a bailout in the true sense.

It must also be understood that the financial sector is in fact a strategic necessity to the United States. Evidence of this was made apparent with foreign reaction to Treasury bills, notes, and bonds. When the liquidity of the U.S. banking system became unstable, foreign confidence in U.S. Treasury securities also fell, indicating that failure of major U.S. banks would lead to collateral failures of government resources. The scale of this risk made government intervention in the financial sector a critical necessity. Where failure of the major automakers could worsen a recession, failure of the U.S. Treasury would create unprecedented economic conditions, which could not be controlled or corrected by the United States. The closest example would be the collapse of the Argentinian economy between 1998 and 2002, with the distinction that the U.S. economy could not expect effective IMF assistance.

In the case of the financial markets, the government assistance was built in three stages – first, the Fed received approval to spend approximately 700 billion tax dollars in cash infusions, commodity purchases, and other discretionary expenditures. The 700 billion dollar figure was not a specific amount planned to be spent, but an agreed ceiling for indebtedness at any one time. People who claim that Paulson did not understand the amount or know what he wanted to do, simply misunderstood the plan’s framework. It should also be noted that the 700 billion is made available in stages, with 250 billion immediately and the rest made available at a later date, to protect Congressional oversight in the main. Also, the bill included creation of a Financial Stability Board (similar in concept to the RTC) and a Congressional oversight panel.

The second stage is the hiring of asset managers by the Fed to select and acquire the appropriate instruments, which could range from specific mortgages to companies, but which would prohibit acquisition of hedge instruments and insure viable plans of recovery and coordinated actions.

The third stage would be the direct acquisition and direction of the purchased assets and instruments. The significance of this three-stage approach, is that each level has its own oversight and coordination, without becoming overly unwieldy.

The reason for laying out this framework, is to understand that the action is neither haphazard nor careless; the revenues used in this initiative are specific, planned, and accounted for. In comparison, the bailout request by the automakers lacks all of these safeguards, amounting to no more than a desire for the government to simply hand over billions of dollars to men who have shown neither the aptitude to protect assets, nor the proper moral priorities needed to keep their companies solvent.

Wednesday, December 03, 2008

Worse Than You Think – Part 3

The three largest automakers in the United States have clearly been deficient in their diligence and results. While there are structural and procedural differences between them what is common between General Motors, Ford, and Chrysler is an inability to produce a viable core product. The key question that absolutely has to be answered, and in full, is how these companies can credibly promise that all money loaned to them will be paid back, not only in full but with interest. If the car companies want an exceptional package to help them, their credibility and logic for requesting it must be just as excellent.

So, with that in mind, let’s examine the latest arguments from the CEOs of GM, Ford, and Chrysler. The information presented here comes from the Detroit Free Press:

First, admitting that they blundered in taking private luxury jets to Washington in their earlier visit, the executives this time promised some symbolic signs of humility, including salaries of $1 a year and the elimination of corporate jets. I will give them a small nod there, but also note that those steps were late and now appear to be reluctant, rather than the actions of truly concerned leaders.

Second, GM’s CEO said if they do not immediately receive what they want, as in almost twenty billion dollars before the end of the month, “the company will default in the near term, very likely precipitating a total collapse of the domestic industry and its extensive supply chain, with a ripple effect that will have severe, long-term consequences to the U.S. economy." That was the wrong thing to say, for many reasons, but topping the list is the sense of extortion implied in it – they are effectively saying ‘give us lots of money without getting any guarantees we’ll behave, or we’ll make sure lots and lots of innocent people get hurt.’ It does not matter if they meant it that way, it’s a threat and a stupid one. It’s also the wrong thing to say, because it highlights how badly these nimrods have bungled their companies; if they cannot keep their businesses running for more than a month if they are not babied, there is no sane reason to give them billions of tax dollars, period. And third, like their previous behavior, this statement demonstrates no sense of personal responsibility, no humility, no remorse for the damage that their poor management has done up to now. By all rights, the first condition of any assistance to these companies would be the complete and permanent replacement of their boards of directors and all chief officers (CEO, CFO, CIO, CAO, etc), on the grounds of clear dereliction of duty. But moving on for a moment, let’s look at what the companies promise to do to become successful again:

GM's total request now tops $18 billion, with $12 billion in loans and an additional $6 billion as an emergency line of credit should the economy continue to worsen. In return, GM pledged to shed four of its U.S. brands, nine factories, up to 31,500 workers and roughly $30 billion in debt through 2012, all to make a profit excluding taxes by 2011.”

Addressing GM’s proposal for a moment, the reader might want to note that GM’s suggestions do not address any core issues – the management practices, structure of labor agreements, or the image problems for American carmakers. These proposals come down to just firing people and shutting down factories. Historically, companies that do this most often produce one of two results – they become smaller players in the industry, or they go out of business. Therefore, while reducing payroll and the number of brands may well be necessary, GM needs to do a lot more if they want to truly become competitive, and that begins with finding and addressing the real causes of their present condition.

So how did they get into this mess? There are a number of myths floating about, which need to be cleared away first:

1. The US market does not make hybrids.
Well, they were slow getting into the game, but Ford and GM make a lot of hybrid models now, more in fact that many foreign carmakers including Honda. American hybrids are not only small sedans, but also include some luxury sedans, trucks, and even a couple sports car models.

2. Detroit only builds inefficient cars.
Not true. While there are some gas hogs out there – what is the moral argument for having a Hummer, anyway – a lot of American cars get 30 mpg or better, and in many cases better than their asian counterparts. GM had some fun pointing out that their Tahoe hybrid gets better mileage than a Toyota Camry, for example. Recent tests indicate that American cars are of equal quality to most popular foreign makes, are often safer and cost less to own and maintain.

3. American cars are unpopular.
GM alone sold nine and a half million cars last year, and is the world’s largest seller of automobiles. In the United States (the largest single-country market), Ford sold almost nine hundred thousand more cars last year than Honda, and Chrysler’s US sales beat those of Nissan and Hyundai put together.

4. It was stupid for the companies to invest so heavily in trucks and SUVs.
Not at all. Historically, trucks and off-road vehicles have been the most profitable segment for the industry, which is one reason why Toyota, Honda and Nissan have been trying so long to make popular SUVs and light trucks.

Part of the problem, then, is getting down to the facts of the matter. From the earlier financial reviews of the companies, we see that the cost of making these vehicles, on average, exceeds the revenue they bring in. So, trite as it sounds, the first major plan would have to address either justifying raising prices to cover the costs and a reasonable margin, reducing costs to the point where the company makes a reasonable profit margin, or both to achieve that necessary goal. A lot of people get worked up by that word, but profit is a company’s pulse, a vital need. And for all the sophistication of modern management, it’s amazing just how many people forget the first need – if the company does not make money, it can do no good for anyone.

We’ll come back to that. For here, let’s go back and see what the executives plan to do to make their companies competitive.

Ford's recovery blueprint said it would invest $14 billion over the next seven years to boost its vehicles' fuel efficiency, and it said it would improve the overall efficiency of its fleet by an average of 14 percent next year. And Ford is calling for a partnership among automakers, suppliers and government to develop new battery technologies.”

Well, it’s a plan, sort of. The problem is, Ford’s cars and trucks have been increasingly efficient for more than a decade now, but it’s lost ground anyway. This plan does not do anything really new, so it’s not likely to solve Ford’s long-term problems.

GM would focus on four brands — Chevrolet, GMC, Buick and Cadillac. It would sell Saab, shrink Pontiac to a niche brand and consider selling or closing Saturn, GM President Fritz Henderson said Tuesday. GM plans to trim U.S. dealerships from 6,450 to 4,700.”

As I said earlier, this is nothing more than dumping payroll and facilities. By itself it can assure GM of nothing more than reduced revenues and the prospect of corporate death. It may be necessary to take these steps in order to drastically cut costs now, but they do nothing to address the root causes of GM’s condition.

Chrysler said it would cut costs by slashing employee benefits and terminating its lease car program. Of the three companies, only Chrysler left open the possibility of a merger.”

Note that Chrysler has the lamest proposals of all three, doing nothing to address the costs of making their vehicles.

All three automakers plan to meet with the United Auto Workers union today in Detroit to debate what cost savings could be wrung from the union contracts. Up for discussion was the possibility of scrapping a much-maligned jobs bank in which laid-off workers keep receiving most of their pay.”


It took a while to get there, but here we finally see a step that could make a substantive difference to the survival prospects of these companies. The question here, is whether the UAW truly understands the decision before it; if they refuse to agree to major concessions, the union could do serious and permanent harm to all of its members, and obliterate the union itself as a significant labor force.

Looking at the numbers, it appears that 640 thousand employees work at the three companies. That by itself is an interesting number, but it’s important here because if the average pay and benefits total per employee were reduced by, say, twenty thousand dollars a year, that would create savings of 12.8 billion dollars. What that means, is that even if the UAW agreed to massive pay cuts across the board, this would not bring in all the savings that the three companies say are immediately necessary to survive.

Stepping back to the basics, again, any business needs to do a number of things in order to survive. Making a profit, of course, is the first goal, but to do that you have to make a product, market it in a way that creates demand, and transact the sale to bring in the money. That works for everything from lemonade stands to car makers. Having addressed the myths before, we have to ask just why efficient, attractive, well-made cars for reasonable prices are not selling as well as their competitors. Well, some of that is a lag in image – I’m old enough to remember when Toyotas and Hondas were not very good, and they only sold because they were cheap. In 1978 there was no high-end Honda or Toyota sold in the US; it was all cheap cars all the time. And even when their cars began to improve in quality and comfort, it took a while to win over American car buyers. The domestic companies would seem to be facing the same situation now, an image problem that won’t go away in the short term, not least because these companies continue to reinforce the negative impressions. GM’s mistakes include holding on to GMAC (what, pray tell, is the rationale for a car company holding mortgages?), threatening to raise prices in 2009 after a similar claim in 2007 failed, and as I mentioned in part 1 they wrote off a slew of tax credits (39 billion dollars in all) in the tacit admission that they may never have taxable income in the forseeable future to apply them against. The combination of those three blunders would scare off just about any investor doing his homework, let alone a CPA deciding whether this is a viable business which can be expected to repay a loan in eleven figures. As for Ford, well just yesterday I mentioned that the company revisited its horrific Pinto design and coverup escapade with the incredible F150 flambe’. Nothing like torching your top model, to create similar results in your net income reports. And as for Chrysler, can anyone think of a single model from this company in the last quarter-century, where it was the clear leader? Whether cars, trucks, or SUVs, there is not one Dodge or Chrysler product which is clearly superior to the field in quality, value, or features. Yes, they made the 300, the Dodge Ram, and some of the Jeeps are pretty good, but that’s as good as they manage – even the Dodge Charger is just a ‘good’ car, not great by anyone’s definition.

And then there are the management structures. Take a look at GM’s org chart – there are fifty-two “chief” officers and “general” officers of the company, and we are not even out of the C-suite yet. Can you say ‘Peter Principle?’ Sure you can, and here is a prime example. What stands out here, is that there are ten direct reports to the CEO, all of whom have more power than a CEO at 95% of all other corporations. This alone can help explain why GM puts out so many redundant models and brands, and cannot find a way to reach a cogent, clear business plan.


The Ford org chart is no better; fifty-seven top corporate officers, many of which seem to have some less-than-vital roles. And let’s not forget that while this is ostensibly a public company, the Ford family have arranged things so that in the end, they make the calls. Nothing like having a position with lots of responsibility, but in the end no real authority, huh?


There is no org chart available for Chrysler, although from what I read in trade magazines, the ghost of Lee Iococca is as big on sprawling confusion of well-dressed mandarins, as anyone at GM or Ford. Let’s not forget that Chrysler is technically a private company, answerable much more to Cerberus and Daimler (who still hold 19% of the company) than to the public.

As harsh as it sounds, the fact is that none of the three companies in trouble has the right management team in place to deal with the problems. None of the three companies, for example, has explained where the money – if granted – would be applied, apparently hoping to just use it in general operating expenses. In fact, GM’s CEO as much as said that he wants a no-strings gift of billions of dollars to be applied directly to current payroll and accounts payable. The desire may be understandable, but this clearly does nothing to address the root causes of the crisis. And so, the only rational response is to refuse that trap. In the final analysis, so many problems exist that only a complete reorganization can possibly address them effectively.

Yet, GM’s CEO says that in the case of bankruptcy, debtor-in-possession may not be possible for GM. There are a number of reasons for that. First are the reasons put out by CEO Rick Wagoner himself:

1. The size of GM’s debt and needs would make financing very difficult, even without the current credit crisis going on;

2. Bankruptcy would be used, he says, to address legacy costs and capacity utilization, two areas where GM is already making improvements and planning ahead; and

3. There is a likelihood that the weak consumer interest in a trouble American carmaker, would collapse completely in the event of a bankruptcy.




There are additional reasons to think that GM does not want to go through bankruptcy, however, and one of the biggest I can think of went into effect in the middle of 2002. Chief officers of every public corporation in the United States sign quarterly reports confirming their personal and specific responsibility for the material accuracy of their financial statements. Where in the past an executive could claim he had no knowledge of unethical practices turned up in an audit or SEC investigation, the provisions of Sarbanes-Oxley closed off that loophole and set guards at the door. A bankruptcy for GM would mean a set of forensic audits at the minimum, and any substantive violation would lead to fines and criminal charges for everyone in the C-suite. I’d lay odds right now that there are things in GM’s numbers that no executive wants to have to explain.
So let’s be clear: It may well be that General Motors, Ford, and Chrysler are not looking at a Chapter 11 Bankruptcy and reorganization, but at liquidation and a lot of very bad legal troubles. Given the conditions discussed above, a Congress determined not to reward businesses that fail, and a public mistrust of these companies, it appears unavoidable now. And yet, there is still no solid indication that the executives at any of these three corporations is prepared to address that reality.