There is no such thing

Having lived sixty years, you do glean experiences from the important to the pedestrian. Here are a few thoughts to ponder.

– there is no such thing as a squirrel-proof bird feeder; the inventive four legged creatures will find a way. We have tried many feeders and watching the squirrels shows they are the best safecrackers around.

– there is no such thing as an honest autocrat; power corrupts, absolute power makes you protective – the truth is a commodity. Beware of those who want more autocratic power. Turkey’s parliament gave Erdogan more power – that was not the best of moves in any country, regardless of the perceived veracity of the leader.

– there is no such thing an unbigoted person; we all have our prejudices, the key is to recognize them and listen to people who do not look, worship, believe, or love like you. A black man named Daryl Davis has talked over 200 KKK members into leaving the KKK and giving him their robes. He does it by asking them questions and starting a conversation.

– there is no such thing as clean coal; it can be made cleaner, but it will pollute the environment and humans in its acquisition, transport, burning and its residual ash storage. Fortunately, we are passed the tipping point on coal energy’s demise with renewable energy surpassing coal energy in the US and Germany this year.

– there is no such thing as an apolitical politician; some are less political than others, but be wary of fear-mongers and name-callers. The inability to make a logical, fact based argument is a tell-tale sign. Ask many why questions to ferret out the truthtellers. My favorite quote is from former Arizona Senator Jon Kyl, when he was caught in a lie by a reporter who asked questions. The Senator said in paraphrase you mistake my words with the truth (in other words, it is your fault I am lying).

– there is no such thing as a redeemable domestic violence abuser (there are very few success stories) as it is power based. If your significant other is beating you, leave. He will not change. One-third of the homeless families an agency I supported helped were due to domestic violence. A friend said none of his six siblings knew their sister was being beaten by her husband until he killed her. He also beat their kids by lifting them up and bashing their heads into the ceiling. Summon the courage, find an advocate and leave. He…will…not…change.

– there is no such thing as a free award; there is always a catch or a cost. Be wary of the more strident offers as it is indicative of a better deal for the one making the offer. As the cartoon character Ziggy once said, the nicer the presentation, the worse the message. There is a correlation between the marketer’s zeal  and the size of the profit potential. Stores where salespeople are on commission greet you at the door, e.g. while salaried sales people will greet you later.

I hope those in the US have a safe and enjoyable holiday. Stay hydrated. For those abroad, thanks for bearing with us as we sort our mess of politics and I wish you the best in your endeavors.

 

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Don’t be difficult to work with

A lesson I have witnessed often is the more difficult you make it to work with you, people will find other resources. Challenging employees better be good at what they do or they may be shown the door or encouraged to leave. If a company makes it difficult to work with them, buyers from and sellers to the company, will seek other options.

Here are a few real examples:

– A company known for shopping for services annually eventually ran out of bidders because the cost of doing business became too high (one company would just throw their Request For Proposal in the trash can). Sellers and buyers who promote relationships have more fruitful long term experiences.

– When Master Service Agreements became commonplace, the attorneys in our headquarters were as difficult to work with as attorneys at some of our clients. We lost a $1 million sale on an idea we raised and the client loved because of our legal obstinance. The second bidder got the work on our idea. That hurt.

– An employee of ours could never be satisfied and complained often. After she complained in my office for the tenth time about how her last employer did better at something, I said to her “We are obviously not meeting your needs. You are doing good work, but why don’t you look elsewhere.” She did and left. What she did not know is we had a continual growth mindset, so we were always talking with people. Her replacement was one of the best project managers I ever worked and she was a very congenial person and eventually an effective manager.

– A fellow consultant had an arduous client who was always asking for added scope services, which he often refused to pay for. After many months of this, the client called our CEO to complain. My colleague pulled up three competing consultants contact information and provided them to this client. In essence, he fired the client. He said it was one of the best decisions he ever made.

A US farmer noted on PBS Newshour yesterday, we cannot just turn off the tariff spigot and start the pipeline again. His buyers have found other options. As a business person, I have noticed this president fails to appreciate what it takes to get things done. We have witnessed this repeatedly in rash mandates that have people (even his own) scurrying. That is poor leadership and worse management.

Do you have any examples?

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.

A little bird and a big crow

While at a stop light, I saw a flying metaphor. A little bird (about three inches in height) chased off a big crow who is closer to a foot in height. The little bird chased the bigger one for well over 100 feet, most likely a mother defending her nest from an egg stealer.

I feel the big crow is analgous to the America First mindset, where we are devaluing our relationships and bullying people into action. Now, some might say we have always thrown our weight around. Yet, our allies are reacting to being treated worse with tariffs and talk of more, our pulling out of multilateral or global agreements, our denigrating respected multinational groups, and telling countries who they can and cannot do business with.

The little bird represents individual countries, businesses and farmers who are doing what they must to perpetuate commerce. When certain avenues are closed or made difficult or costly to use, they have to find new suppliers or customers. They are chasing away the impact of the crow. It is a simple equation – the more difficult an entity becomes to deal with, others will seek other options. Plus, the more difficult we make it for all transactions, then fewer transactions will be made and global trade will suffer.

It is reported the President reached out to former President Jimmy Carter. The reason is Trump’s having concern over an ascendant China. This was happening any way, facilitated by actual long term planning by China. Yet, what Trump fails to realize is his role in greasing the skids. By retrenching from our position of strength, pulling out of a Trans-Pacific trade deal meant to even the playing field with China, he has allowed China to fill the void. By telling countries they will face tariffs if they deal with Cuba and Iran, we are greasing the skids for China to fill the void.

These little birds have to eat. They will look out for their best interests. If they must acquiesesce to the big crow, those actions will be remembered, if they are needed in the future by the crow. It should be noted,  a foreign diplomat said two years ago, the strength of the US is its allied relationships – failing to nurture them comes at a cost.

And, that Chinese bird is getting even bigger and faster than this old crow.

Capitalism and socialism coexists

On more than one occasion, I have seen letters to the editor speak of setting up beachheads in the coming election around capitalism vs. socialism. To me, this is a name-calling gimmick to persuade a voter who does not do much homework. Voters that are prone to listen to name-calling as debate will buy into this logic time and again. The irony in this debate is the United States’ economy is a blend of “fettered” capitalism with socialistic underpinnings. So, both co-exist here.

For readers in the either camp, this observation probably surprises them, especially those who are gung-ho capitalists. But, the word in quotes is also important as we do not have unfettered capitalism. If we did, the US President would have run out of money long ago with his many bankruptcies. I believe in capitalism as well, but we need to understand why we ventured down the path of the socialistic underpinnings.

These underpinnings spoke to a nation that was in a great depression and who seemingly got lost in poverty later on. Social security is a low-income weighted pension, disability and survivor benefit program that is funded equally by employers and individuals. To determine the base level benefit, 90% of average wages are used for the earlier wages then added to 32% of the next tier of wages which are added to 15% of the highest wages up to a limit.

In the 1960s, LBJ’s “War on Poverty” added Medicare and Medicaid to the mix, with Medicare helping retirees and Medicaid focusing on people in poverty. Then, we can mix equal measures of unemployment benefits, workers’ compensation and food stamps which are now called SNAP benefits. Each of these programs are forms of “social insurance” benefits. That is socialism designed to keep people fed, housed and protected.

Taking this a step further, utilities are so needed to our communities, they are either co-ops or fettered capitalistic models where rate increases must get approved by a state governing board. Companies like Duke Energy and Con-Ed must get permission before they change their rates. For the co-op model, the customers own the business.

But, the word “fettered” enters into the mix on other businesses as well. To prevent monopolies, insider trading, interlocking boards, collusion, the misuse of insider knowledge by investors, etc. rules are set up to provide governors on capitalism. Then, there is that bankruptcy thing, where a business or person can claim bankruptcy to pay debtors what they can and restart. I use the President as an example, but his experience is a good one, as he filed for bankruptcy six times on various investments.

I want people to think about our country in this context. We want people to earn their keep and be fully functioning tax paying citizens. Yet, we have programs in place to keep them out of the ditch. As we considering changes to programs, we should consider what they are accomplishing and how changes could make them more effective. And, we must understand that things must be paid for, so how do we get the best return on the investment into those stated goals?

For those that have followed my blog for some time, you know I have been involved for many years in helping homeless working families find a path back to self-sustainability. We help the homeless climb a ladder, but they climb it. Yet, we are also successful in keeping people housed on their own after two years of leaving our program because we measure things and make improvements. The ultimate goal is self-sustainability, so we measure how we can be the best financial stewards toward helping people achieve that purpose.

We need social underpinnings to help people be fed, housed and protected. Some need to be temporary in nature, while others are longer term like Medicare and Social Security. There is a cost-benefit to these equations, but we should understand that we have poverty problem in our country. We must also understand technology advances will continue to change the paradigm on employment as it has throughout the industrial age placing additional pressures to even more wage earners. Not providing ladders out of poverty or ways to avoid it would be a bad path to follow for our country.

 

A simple economic question

As the US President seeks to close our borders and retrench from global markets, there is a simple question to ask. Let’s set aside what’s right or wrong from a humanity and safety standpoint. Let’s focus on a simple economic one.

Do we grow our economy more by letting people bring their ideas, work ethic and entrepreneurial spirit to our country and making it easier to do business with us, or do we accomplish more economic growth by closing our borders and forcing other countries and businesses therein to look to other markets for sales and supplies?

This thought struck me Sunday morning as I caught the Women’s Open Championship in the UK. What struck me is there were not any American golfers among the top two pages of the leader board. Thinking back to the World Cup in Russia last month, the American team was not present for this global event.

I recognize these are sporting events, but they are metaphors. If you don’t keep up, the world will move on. But, not keeping up does hit our economy, as well. In the US, unemployment is low, but we are having a hard time filling higher tech manufacturing jobs. US customer service jobs abound in Asia and the Philippines. And, many of our IT jobs are being done by people in India or who have moved here from such locations.

The first book which spoke to this is The World is Flat,” by Thomas Friedman. We live in a global economy with a global workforce. Employers need the best, cheapest talent they can find. The more commoditized the job, the pendulum swings to cheapest. The less commoditized, the pendulum swings to best. If we cannot fill the jobs here, they will be filled elsewhere. And, it should be noted that companies are leasing robots for $18 an hour, if they cannot fill the job.

We must be mindful of a key data point, immigration is accretive to our economy. Since Innovation is portable, new talent coming here brings more innovation. And, jobs are created around the Innovation. So, we need to be welcoming with better governance over immigration.

We also need to be easier to work with than we have become. When an entity makes it more difficult and less profitable to partner with, its trading partners look to other sources of sales and supplies. This has been happening for the last several months. And, as one farmer said, a subsidy won’t help if the customers go away.

Sadly, this issue has now been politicized, with fear and over-emphasis of causes. As I briefly noted above, the key reasons some areas are suffering are due to chasing cheaper labor and technology. The last issue is the larger concern as a CFO noted  in the book “The Rich and the Rest of Us,” by Cornel West and Tavis Smiley, “employers would do without employees if they could.”

So, look back at the simple economic question. What kind of country do we want to be? Then, add in the seasonings of doing the right thing and being safer. Global commerce actually makes the world safer, as you are less likely to go to war with your trading partners.

 

The unraveling accelerates

The finance ministers of the G7 met in British Columbia last week and gave the US Secretary of the Treasury, Steve Mnuchin, an earful. They told him the US is forsaking its global economic leadership.

Not only are we treating our allies and trading partners poorly, the chaotic style of the US President has worn thin. Depending on which fractious voice is in favor on a given day, the President is routinely changing his mind. This quote from Hua Chunying, the Chinese Foreign Minister, which was reported by The New York Times, is telling:

“In international relations, every time you change your face and turn your back is another loss and squandering of your country’s credibility.”

In the same article, an anonymous European official noted the short-sighted nature of the President and his Commerce Secretary Wilbur Ross, who are looking for “photo opportunities at American steel factories.”

The official noted “European negotiators regard that stance as an unsophisticated, zero-sum view of trade, in which one country that sells more goods to its partner is the winner – an outlook that makes a trade deal difficult to achieve.”

There is a sadness in reading these words. Many have seen this retrenchment tactic as troubling. Conservative pundit David Brooks called the tariffs on allies as “ruinous” on PBS Newshour. On the same show, more liberal pundit Mark Shields called them “reckless.” Shields added that Trump has tended to not respect relationships and views the world as “me and the enemies.”

Zero-sum transactional thinking is a narrow minded view. In global trade, the deal must be fair to stand the test of time. Of course, any deal must be reevaluated over time, but it must be done out of mutual respect. In Trump’s view on anything, he must defeat the other. That is not conducive to building a relationship.