Mona Lisas and Mad Hatters

I have always appreciated when excellent word smithing matches up with equally marvelous music. And, the pairing need not come from one person, as Elton John and Bernie Taupin demonstrated time and again.

One of their clever songs came off John’s 1972 “Honky Cat” album. “Mona Lisas and Mad Hatters” is John’s matching Taupin’s direct lyrics about a time in New York City, when it was less safe than it is today. The story is Taupin heard a gun shot outside his hotel room and penned a song to reflect his angst. John wrote sad, but reminiscent music which he sings so well.

Here is the middle portion of the song including its famous chorus.

“This Broadway’s got
It’s got a lot of songs to sing
If I knew the tunes I might join in
I’ll go my way alone
Grow my own, my own seeds shall be sown, in New York City

Subway’s no way for a good man to go down
Rich man can ride and the hobo he can drown
And I thank the Lord for the people I have found
I thank the Lord for the people I have found

While Mona Lisas and Mad Hatters
Sons of bankers, sons of lawyers
Turn around and say good morning to the night
For unless they see the sky
But they can’t and that is why
They know not if it’s dark outside or light”

Several references stand out. The commuters of all persuasions not knowing if it is dark or light. While they may have Mona Lisa painted smiles or the hypertension of a Mad Hatter, they do feel safety in numbers or in a cadre of friends who serve as a port in the storm.

The other reference is to Broadway which offers a glitzier image of New York, a polished apple, so to speak. New York has been reborn, but there was a time when the city needed its underbelly to match the hype. It took a lot of effort through leadership and consistency but is once again quite the destination. I am reminded of the story of a paint crew who would paint over graffiti overnight, then do it again. The consistent effort was symbolic revealing more than an attention to detail,

Maybe we should update the song to reflect our Mona Lisa smiles and Mad Hatter hypertension on social media.

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Freezing executive pay opens up money for workers

An article in The Guardian earlier this week caught my eye. CareCentrix CEO John Driscoll penned an editorial “We froze the salaries of 20 executives – and it improved the lives of 500 employees.” Driscoll took the reins of this struggling healthcare company, whose financial troubles included a significant amount of staff turnover.

Driscoll worked with his leadership team and Human Resources to make a number of changes, but he felt that was insufficient to right the ship. So, he made a decision to find more money to keep workers who were struggling and working multiple jobs.

As Driscoll wrote in The Guardian, “What that meant for our company was that if we just froze the wages of our most senior team – less than 20 executives – we could radically increase the wages and improve the lives of nearly 500 of our teammates.

The conversation with our executives was straightforward. We were in the midst of a turnaround. We were demanding much from every corner of the company. Small financial sacrifices from those at the top could be life changing for those at the bottom of our wage scale. We needed to do it to build a real sense of Team CareCentrix. They agreed. With joy, we announced in January 2015 that our minimum base pay for employees would go up to $34,000, or the equivalent of $15 per hour.

Raising wages in the midst of a business turnaround was not easy. We needed our executive team to buy into a vision of business success where every employee had a fair shot at success. It worked.

Our business has tripled over the past five years. Our minimum wage is now approaching $16.50 per hour and last year we broadened profit sharing to all levels of the company.”

This caught my attention as the US far exceeds other nations in the ratio of CEO pay to average worker pay and has for some time. Having been a former Compensation & Benefits manager, manager of people and consultant, executive pay is much more upwardly elastic than that of average workers. Average worker pay has a lid placed on it through the budget process – which often overemphasizes past, current or expected troubles. Also, downsizing at the time of annual raises facilitates the lowering trend on average pay increases as folks who would have received little or no increase are let go – so folks that remain receive suppressed increases to make the percent increase in the budget work.

What I like about this CareCentrix example is the thought process and solicited buy-in from rhe executives. Yet, it need not take a burning platform to make needed change. There is a productivity cost to turnover that impacts the bottom line due to constant churning, replacement, recruitment and training of staff. Keeping more people longer is accretive to profits.

Some larger national companies have recognized this and raised their floor pay levels – Bank of America, Wells Fargo, and Walmart are in this group. So, thoughtful discussions are needed, in my view, around these issues irrespective of or along with governmental imposition on increased minimum wages.

The strangest thing

Listening to an interview with New York Times reporter David Enrich on NPR the other night, I heard a story that boggles my mind. When Donald Trump declared bankruptcy on six different enterprises, US based banks stopped lending him money. So, he went to German based Deutsche Bank for business loans.

Even there, Deutsche Bank’s investment bank soured on Trump and refused to lend him any more money. Then, its real estate mortgage bank soured on him and was owed US $50 million after refusing to lend him more. But, after bank leadership mandated no more lending to Trump, the story became even more bizarre.

Trump’s son-in-law, Jared Kushner, introduced him to a private wealth manager in New York for….Deutsche Bank. She arranged a $50 million dollar loan from Deutsche Bank’s private wealth group to pay back the outstanding loan with the real estate mortgage bank group within Deutsche Bank. Robbing Peter to pay Paul does not adequately define what happened. And, this is after Deutsche Bank leadership mandating no future loans with Trump. Enrich was unsure if this loan was still outstanding.

Having worked for a very conservative bank in my past, this is a quite surprising story. As a retired consultant, I am aware of one bank that had to be sold due to one very big loan defaulted. I am also aware of several banks who overextended themselves during the housing crisis that no longer exist. But, for Deutsche Bank to permit one part of the bank to pay off a loan from another part for a persona non grata individual, is quite strange and not in keeping with good stewardship.

It should be noted Deutsche Bank has been investigated and fined for money laundering for members of Russian oligarchy. It is also why there is interest in Trump’s financial dealings with this bank by the US Congress. Enrich noted Deutsche Bank is the “Rosetta Stone” to digging into Trump’s finances. This is why Trump has threatened to sue the bank to prevent such release.

Sully and Ben – right people at right time

Seeing a man in leadership who does not value or have the patience for studying issues highlights those who do and execute that knowledge in times of crisis. In recent memory, two heroic events bear witness to such people – Sully Sullenberger and Ben Bernanke.

Sullenberger is the more recognizable name as the pilot who safely landed a jet plane in the Hudson River. Dealing with a rare double bird strike shortly after take-off his calm, learned presence helped him evaluate options, then choose the best path, but still a dangerous one.

What is less known is Sully volunteered to study previous plane crashes to help all pilots and builders of planes. He took the time to know why planes crashed. In particular, he knew what had to be done to keep a plane landing in the water from flipping sideways when one wing touched the water and the other did not. He was the right pilot for the Hudson landing.

Bernanke is less known as the former Chair of the Federal Reserve. His tenure overlapped the housing recession and banking crisis in 2007- 09. Working with Treasury Secretary Hank Paulsen, they developed a plan to stabilize the banks and keep the economy going.

Like Sully. Bernanke studied why the US went into the Great Depression and how it came out. He studied helpful decisions and others that were not so helpful. He was the right person for the right time, a calming, analytical influence.

It should be noted being studious is not the only similarity between the two men. Their calm nature is also a key similarity. Their calmness is infectious and enables others to do their job and offer input. In times of crisis, those who lose their heads, are the ones not to follow.

From the books and news reports I have read or watched, neither of these two traits would be top of mind in describing the President. Aides lament his lack of interest to study and limited attention span. And, mercurial is a more common definition than calming.

I mention this as it seems far too many issues are contentious. A recent survey noted our nation is more stressed. And, this is without a real crisis, which worries me greatly. I have this looming sense the man will pick a fight for ratings.

So, kudos to Sully and Ben. May we learn from your lessons and example. The only thing I have learned from the President is how not to act.

 

Friday follies

I hope you have had a great week. Since there are several issues bouncing around inside my head, here is a summary review of the follies for the week.

The Brexit clock keeps ticking while the British parliament keeps placing their collective thumbs in their more southern orifices. A second Brexit vote would likely end with a different conclusion, but it would take more time than they have and would involve another decision by an uninformed public. Let me give Parliament its out, but it will take more courage than they have. They should either accept May’s terms or vote to remain. I would urge the Brits to remain, as I would hate to see Northern Ireland and Scotland leave the UK.

Here in the US, Trump’s campaign manager, Paul Manafort, was sentenced to 47 months in prison. While a much lighter sentence than many felt, he does have another sentence coming in another court. If Trump is as innocent as he proclaims, with the guilt of Manafort and other Trump associates, Trump is not very good at judging friends and associates. Yet, as I have witnessed time and again as a consultant, an organization takes on the personality of its leader. So, if subordinates are guilty of lying, cheating, and criminal behavior…

China’s slowing economy is impacting orher countries as expected. It was reported yesterday that China is buying less from abroad and using those dollars internally. The US trade deficit with China has grown not lessened the past year. And, the EU banks have softened economic projections as a result. What continues to surprise me is how little the US President understands how trade deficits and tariffs work. This may be the best metaphor of his Presidency as economics were supposed to be his strength.

Finally, populists are popping up in more countries in greater numbers. To me, a name that implies a broader appeal should not give greater license to spread hate and bigotry. In spite of all of our many faults here in the US and some leaders who need to find a conscious, we have benefitted greatly from being a melting pot. Diversity is a strength. I fully understand the need to govern the numbers of people immigrating in, yet painting all newcomers as evil, is not appropriate. What frustrates me is issues over immigration should be fact-based and reflective of the country’s mores and ideals and not sold on fear.

That is all for now. I know I have overlooked a great deal. Have a great weekend.

 

 

Farm bankruptcies on the rise

There have been numerous stories on the rise in farm bankruptcies in 2018. Picking one from December 1, 2018 in the Lincoln Journal Star by Matt Olberdin called “As ag economy continues to struggle, farm bankruptcies rise,” through October, bankruptcies in a seven state region including and around Nebraska are up 45% compared to all of 2017.

Trade issues and low crop prices are two main issues driving down farm incomes. Coupled with rising interest rates and property taxes, and it is a tougher road for farmers. Per PBS Newshour, trade issues means tariffs getting in the way of the farmers’ markets.

These farmers use Chapter 12 bankruptcy that makes it easier to file and reorganize. This approach allows a higher debt limit as well. Per The Wall Street Journal, farm bankruptcy filings are the highest they have been in ten years.

As with the shutdown, real people are impacted by ill-conceived decisions by the President. Loyalty to a President becomes tough when you cannot feed your family and may lose your livelihood. With the tariffs blocking markets for the farmers’ products, the buyers must look elsewhere. These farmers will have to dump product or let it go to waste.

This is a key reason economist say trade wars cannot be won. More people lose than win on targeted tariffs. Yet, this does not seem to bother the man in the White House. That is troubling and sad for our country.

America’s Top 40 – 40% turnover that is

Every Sunday for many years, Casey Kasem would play America’s Top 40 pop songs. Earlier this week, NPR reported another, but ignominious top 40. The current White House has experienced an unheard of turnover rate of 40%. In other words, four out of ten staffers who were on the payroll a year ago have departed.

To add some seasoning to this, two of the most difficult jobs to keep people are customer service representatives and bank tellers, which often see turnover rates at or above 40%. So, to see similar turnover is alarming. But, how does this rank to other White Houses?

Earlier this year, an article appeared in the Brookings Institute webpages called “Why is Trump’s staff turnover higher than the five most recent Presidents?” by Kathryn Dunn Tenpans. She focused on A team turnover, but the turnover problem is pervasive. Per the article, “President Trump’s A team turnover is record setting – double the previous leader, Reagan, and more than triple his immediate predecessor, Obama.”

Why is this important? There is a huge loss of productivity in those that leave as  well as those who replace them, as they get up to speed. Plus, there is downtime for the managers as they backfill and take time to interview, hire and coach. In some of my previous work in HR for a large bank, i used average productivity ratios and turnover by group to estimate the cost of turnover at roughly 1 1/2 times the compensation expense of the departed people.

Per the Brookings article, “while some turnover is expected and possibly beneficial, excessive turnover portends a problem.” This data is relevant with more than a few stories about the low morale in the White House. Several sources have cited feuding factions and jealousies as well as a leader who perpetuates and accentuates a highly toxic environment.

When people are not productive in jobs of import, it is harmful to their efforts. It is also harmful to our country. The President has been covered extensively over the years by financial reporters and biographers. His sales skills are envied, but the same cannot be said for his management skills. Trump has said on more than one occasion that he likes to pit  people against each other and does not mind the chaos. Well, that is an absolutely horrible management approach. And, the inconsistent messaging from the White House reveals as much, as well as its turnover.