Dollars – Stanley M. Herman

Over the forty or so years that I have been a “people specialist” I have read many books covering the subject matter of the discipline. But I can truly say that no other book has made a lasting impression on me as I have traversed the vagaries of this so called “profession”,  as Stan Herman’s book – “The People Specialists”. Stan wrote this book in 1968 just when I was starting off in this business. The book is sadly out of print. Its a contrarian book. But it got me thinking and I have never stopped. I have referred to this book quite often over the years.

In this oped piece, I want to introduce the readers to what Stan talked about with respect to pay management. It is not a conformist viewpoint but does encourage thought, which I like.

Stan aptly titles the chapter “Dollars”. But in a globalized world it is Pounds, Rupees, Dinars, Liras and on and on.

He says, “MONEY IS FUNNY. Most people like it a lot. Wise men who speak with the voice of enterprise, say that money provides The Incentive, and that men’s hands and brains work best only when they see clear and immediate relationship between how hard they strive and how much they get paid.”

Well, I do not think this thinking has changed since Stan wrote these lines. As a matter of fact, this is main justification still given by Corporate Boards for the exorbitant pay packages that they dole out to the big wigs of corporate giants. The bailed out bank executives are hiding behind this principle as they rake in the big bucks while we all pine away in misery and anger.

Stan continues, “Other people say that money is not really much in itself, but rather, that its real importance comes from the fact that it is a symbol of grander or deeper things, like power, prestige, and security. The truly wondrous aspect of money, they believe, is that it can be made to represent almost anything people want it to represent”.

This is a profound a statement and still quite relevant.

The question then Stan discusses is how does this “money” we all are paid get distributed to all of us who work in various organizations. What is the rationality in the methods and processes of the great “giveaway”?

Stan muses then that some in the Human Resource field postulate that people are paid “according to their contribution”. Stan then says that, “from this pronouncement and its amplified echoes have grown the majority of the dilemmas, incongruities, and overstretched rationalizations of the salary administration specialty”.  ”The trouble begins when you try to decide what “contribution” means, and it gets worse after you make the decision.”

Here is the main challenge in Stan’s words, “How, for instance, do you compare the contribution of the teacher versus the television announcer,  (as an update let us now identify the television “talking heads” – I am told Bill O’Reilly at Fox earns in the hundreds of millions of dollars – wow! – what is is his contribution can someone enlighten me, please?) the fireman versus the fashion model, or the President of United States versus the Chairman of the Board of (updated – the Chairman of the Board of AIG Insurance) General Motors? And then, how do you explain the differences in their pay?”

Then Stan goes on to provide us with a litany of discrepancies in dollars paid against a general rational consensus of occupational contribution. He then concludes “The Contribution hypothesis just does not hold up very well”.

I do not think that during the last forty one years that has gone by since Stan Herman first discussed this issue we have progressed an iota in rationalizing the contribution myth. It still glares at us with all its confusing obfuscations.

I now see with President Obama as our respected leader a new mantra being spread around by the neo-conservatives. I have heard this theme in some Town Hall meetings. The outcry now is that the leaders of  governmental bodies (the bureaucrats) are raking in the dough while we the masses are existing with our puny little. True maybe, but let me tell my neo-conservative friends, at least since Stan wrote his book, this irrationality in the distribution equation has not been solved. You, my friends keep listening to rabble rousers on Fox. Please go and discover how much they get paid. Do you really think their contributions justify that kind of dollars? Would you not want some of that dough also? What is different from the leaders of government and leaders of large business, or television and radio talking heads for that matter, as far as how much money they make. It is all greed my friends not contribution.

Stan sums it all up for us quite well, “The quest for a neat correlation between worth and reward is a natural one which fits nicely with most people’s idea of the way things ought to be. But the fact that they ought to be does not mean they are. Money value determinations are not products of fine, dispassionate measurements made in the dust-free, dehumidified atmosphere of a laboratory. Rather, they are continually buffeted and rebuffeted in the turbulent environment of the messy outside world, and not merely on a supply and demand basis, either.”

He also goes on to say, “The answers do not just tumble off those rugged but accurate free-competition scales, either. In itself, the market theory of labor pricing is no more adequate than the contribution theory. A great many factors – supply and demand, subjective and sometimes arbitrary judgements, agreements negotiated from positions of strength (or weakness), Government legislation, and even the ephemeral whims of social conscience – all influence the amounts of money people get paid”.

Thus I conclude by saying we as Human Resource professionals have not progressed in clearing up these murky waters much over the forty plus years since Stan wrote these words. But I do not regret the failure a bit. Because I know “beauty is always in the eyes of the beholder” and not the administrator. We have worked hard to maintain a “limited and transient orderliness”. Thats all we could have done.

What makes a great boss?

Now that I am the end of work life I have been pondering this question in deep earnest. I have worked for forty years in all sorts of venues across the entire world. As such, I am relying on my personal thoughts and observations as I postulate on this subject.

As a fun exercise I decided to take an inventory of all the bosses I have had in my long career. And to my surprise I realized I have had over twenty nine different bosses. They all had different personalities, temperaments and leadership styles.

There has been an endless amount of work done in academic circles and much has been written about what makes a good leader. College classes and seminars about leadership abound. Professional training organizations are constantly inundating us with a bewildering array of seminars and training programs all of them professing to teach us to be great bosses. Among academic pundits there is a plethora of theories and opinions as to what are the characteristics of effective leaders. Organization Development experts all profess to make each of us great bosses and leaders. Leadership skills are judged, assessed and decried. There are even leadership coaches all eager to make us the greatest of bosses.

As a tour de force I decided to do an analysis from a very personal point of view. I do have a good sample of my own bosses to draw some conclusions  as to what characteristics make a great boss, at least from my viewpoint as a subordinate. Let me tell you among all the twenty nine bosses that I land up having the opportunity to work for, only one of them stand out much taller than the rest. So in this piece I plan to elaborate on the characteristics that made this one boss stand way out among the rest.

First of all, let me tell you some of descriptive characteristics of this person. He was a finance professional by background, but he was not an accounting type. He had a MBA from a very ordinary school – Wayne State University (he did not need an Ivy league education to be successful). He was the CFO of a major corporation. He worked at General Motors for many years and actually thats where he got started. He guided the company he and I worked for to unbelievable success. The company he guided along with its CEO, went from zero revenue to $500 million in revenue in less  than five years. We hired a lot of people into the company. He raised large sums of money for the company. During his tenure the company went public. Everybody who worked for him gave him a A+ as a boss. This was not the only company he worked for. A lot of people who worked for him in various companies formed a networking group which met regularly,  the sole connecting factor was that all members of the network had worked for this person sometime or the other.

So what made this boss so great. Upon contemplation I have determined the defining characteristics. Here they are:

1. He was humble, never talked about his achievements publicly.

2. He was quiet. He did not say much. He listened.

3. He chose the “right” team and he encouraged all who worked for him in a very quiet unassuming way.

4. He had no show business surrounding him. He was not pompous and boastful in any way. He did not need PR support.

5. He was a very clever resource manager. He did not swing at the extremes. Spend a lot at one moment and then clamp down to nothing at the next moment. There were no wild gyrations with him.

6. He was strategic. He discussed and explained to his staff the strategic vision, purpose. objectives and goals and then he completely let his staff execute. At the execution stage he did not interfere at all. He had a very simple follow-up process with which he kept track of what his staff was up to, i.e. whether they were achieving their goals and action plans i.e. whether they were doing what they were supposed to.

7. He had no favorites among his staff. He gave all equal time and attention.

8. He regularly had staff meetings with the entire team present. But none of his meetings were long drawn out sessions. They were brief and to the point. He did not watch the clock.

9. He was keenly aware of the need for staff development. He always encouraged his staff to develop themselves.

10. He created a real team effort among his staff and lead the team spirit and culture in the company.

11. He was the glue that kept the executive team of this company very close together at work and even on social occasions.

12. He encouraged creativity. If any of his staff suggested a new creative solution, he would encourage that creative spirit.

13. He was fundamentally empathetic to the concerns of others. He listened actively.

14. He generously rewarded employee contribution.

14. He is the only boss my wife of thirty eight years still talks about.

This list should be sufficient at this stage. I think my listing them it gives a very clear picture of what characteristics make a great boss. To have all these characteristics in one person is rare. This boss of mine was truly unique. And I feel privileged to have had him as my boss. And he does stand out among the rest. I guess to have had one great boss in my long career is really a blessing. Because as Lee Iacocca says, “Where have all the leaders gone?”.

No long-term savings from work force reductions!

Nowadays, more than ever,  we see a widespread use of a very short-term business practice – workforce reductions. This practice is quite in vogue. Business pundits have even coined extraordinary words to describe this practice. Words such as rightsizing, restructuring, downsizing, delayering are now making this practice sort of legitimate. Delayering is a wrong word. Because are we talking about delays or layers? And the dictionary does not have a word called delayer. The widespread global use of these practices has  climbed steadily over the last two decades. This has resulted in a wider acceptance of these practices as a common management practice. But when is common practice used along with common sense.

The contention of this essay is to suggest that such a practice is “evil” from the human side of the enterprise. The widespread use of reductions in force has emotional, psychological, economic and social consequences that are far reaching. Use of this management practice destroys people and communities.

In addition to the devastating human consequences, I contend that this practice does not fulfill its intended purpose and that is to save money. Sure it saves expenses in the short-term. It makes income statements look good now. But I am not sure about the impact on the balance sheet. Of course, accountants in their narrow minded thinking are yet to look at human capital investments as assets and not expenses.

Thus the use of this practice can make business leaders look competent in the eyes of shareholders in the short-run. But if you invest capital for the long haul this practice does not save money. On the other, hand it lands up increasing long-term costs. Yet it seems that this business practice has become a reality in business modernity. Especially in bigger organizations.

I contend there are long-term consequences and costs directly associated with this practice. Very few organizations have creatively explored alternatives to save expenses before letting the axe fall on employee livelihoods.

It becomes “evil” and cruel more so when we have seen instances of business leaders who have massacred their organizations through repeated downsizing exercises and at the same time earned enormous sums of compensation and also fame and glory. Examples of such so called business leaders are Jack Welch and Carly Fiorina. Ms. Carly according to HP insiders has the dubious reputation of a CEO who destroyed HP’s culture of no lay offs. She strode into the HP culture as an outsider and reduced large numbers of excellent long-term HP employees. In the process she destroyed a legendary company and then when she was fired, she walked off with a $60 million severance package. What makes her worth that much? This is a question we will ponder in this blog later.

My contention and arguments are based on my long years as a HR specialist. Of course, I participated in the devastation of human lives by laying off hundreds as well. But also as an analytical person I have found that long-term cost savings accruing out massive lay-offs is not a reality.

I will lay the ground for this argument in this blog.

Thirty-nine years ago fresh out of university with a MBA in hand I started working as a Research Analyst in the Corporate Personnel Research department of a very large computer company. By the way, this great company has been buried in the cemetery of failed companies forever. One can argue through repeated workforce reductions this company facilitated its own demise.

My first assignment as a twenty five old new MBA was to do the analysis for the planning of a workforce reduction exercise. I was the number cruncher preparing reports for management as to how much will be saved in the short-term if the company laid-off x, y or z numbers of people. I must have crunched good because within fifteen days of my starting a career, the company laid off of four thousand employees. This included all the members of my department. But I was spared, I guess I was the cruncher. What a way to start your work life?

But that very first experience has left me scared forever . The scaring is evidenced through a deep concern with job security and self preservation. But also at that time I used my freshly acquired knowledge of a concept called “human resource accounting” to develop a financial model which can prove that over an extended period of time RIFs do not save any money at all as a matter of fact they cost more. I used the present value concept to develop this model.

In this blog I present the conceptual framework for this model:

Principle vs Reality – conventional wisdom (may not be true) vs a research based conclusion – An Exercise in Freakonomics!

—Savings from lay-offs (immediate short-term impact):

> Direct Labor Expenses (-)

> Associated Benefits Costs (-)

—Additions to Consider:

> Separation payments (+)

> Replacement hiring costs (+)

> In/Out additional Compensation Costs (+)

> Replacement hire training costs (+)

> Replacement productivity ramp-up costs (+)

> Loss from unused office and other facilities (+)

> Key employee additional retention costs (+)

> Remaining employee demoralization cost (+)

> And there are others also (+)

Now do a PV analysis:

yr 1                        yr2                    yr3                      yr4                    yr5

Savings

Costs

Net Savings:

PV Net Savings or Costs @ an appropriate discount rate

I contend here if one calculates the impact of workforce reduction exercises using this model, one may see a different reality.

Readers who are further interested in the model can contact me on my email address bbiswas@aol.com

We learn from our adversities!

“Life breaks you and makes you stronger in the broken parts”

A reader of this blog recently sent me a question asking me as to where I find the subjects of my  postings. I answered him that these topics are usually derived from my thoughts. Thoughts that have been lingering in the inner parts of my thinking mind. But the topic of this posting is from my inner being.

The topic is our need to bounce back from the adversities that we all encounter in our lives. Adversities come to us in our careers and in our personal lives all the time. In addition, we humans face adversities in aggregate. That is, we face adversities as a team, as a group, as an organization, as a nation and as a global community along with those adversities we face individually. Now the whole world is facing a severe economic adversity.

Adversities are a part of life. These adversities come to us in many forms small. medium, large and very large. I have faced a very large adversity in my life about eleven years ago.  I want to talk about this adversity in this blog.

The reason for discussing my large adversity is to opine as to what lessons I learnt from this huge hurdle that was put in front of me. My hope here is that those who read this blog will gain some insights for themselves on how to deal with adversities that we will all face sooner or later both in our professional and personal lives.

In 1998 my only son died at age twenty four of a rare disease. He all on a sudden was overcome by the deadly disease called acute aplastic anemia. It is acute because it comes on all on a sudden. He was a smart, handsome, energetic, intelligent and sensitive young man. At that time he was in his final semester in college. He wanted to become a teacher. He and I had many a philosophical discussions about life.  He lived alone (I am sure he had a few girlfriends here and there) in an apartment near his college. He used to come home over the weekends. One weekend he came home and we saw some bruises on his body. He told us that they were “football” bruises. The next weekend there were more bruises and on the third weekend he was bleeding all over. I rushed him to the hospital. The general physician immediately diagnosed that he had acute aplastic anemia. He needed specialist care and so he was sent to a very famous University hospital where he was seen by a very famous oncologist. This doctor told me that the disease he had is very rare ( 0ne in two million people get this disease – hearing that my son proclaimed to me – “Dad I won the jackpot!” – a morbid sense of humor if I may say so) and that the cause of the disease was unknown (idiopathic) and therefore there is no known treatment. Strong experimental drugs would be used, and if that does not work then the doctor would try bone marrow transplant as a last ditch effort. By the way. this disease kills the immune system totally. So over the next few months my son went on a huge cocktail of very strong experimental drugs. The drugs did not work and after about nine months he was admitted into hospital for a bone marrow transplant. Luckily his sister was a 100 percent match. My daughter donated her bone marrow to her brother. But that did not work also. So after six weeks in the hospital on January 18th, 1998 he died leaving us his surviving family devastated. Talk about a huge adversity. Me the father had to bury my son. It is supposed to be the other way around. Isn’t it?

So what have I learnt from this very large adversity.

Lesson 1. We do not have all the answers. There is much that we do not know anything about. Yet now more so than ever we are continuously being talked down to by so many ” so called know-it- alls” – i.e. experts. I have learnt there is nobody who is an expert. Life is a learning journey. We have to learn till we leave this planet. So when our President says that he is putting a panel of experts together or when news TV brings together a panel of so called experts, I turn off. We do not have all the answers.

I have found that some answers may come from those who have toiled much, paid their dues, gotten their hands dirty, journeyed a lot, studied a lot, seen a lot and have a lot of experience. All of this comes with age. I am now very skeptical if someone says they are an expert and they are hardly forty years old. It takes time to know and certainly it takes a lot of time to profess expertise. There are no quick paths. Do not believe the so called experts. Gain the knowledge yourself for yourself.

Lesson 2. We have to live in the NOW! I urge you to read Eckhart Tolle. He has discussed NOW quite brilliantly. Live life in one day compartments. Because what happened to you today had nothing to do with what happened yesterday and you cannot go to tomorrow without going through today. All yesterdays and tomorrows are in essence NOW. Focus on the NOW.

Lesson 3. Again as Eckhart says there is no use to carry our past pain bodies with us going forward. Because if we let yesterday’s pain bodies dictate our todays, then we will not let our true human potential to flow from our self conscious beings. We all have many talents and it is up to each of us to let loose our talents. There is absolutely no sense in being deterministic in our thinking. We should choose our paths and follow our dreams with a singular focus.We one wants something badly and has passion for it, then results will follow.

Our past adversities roll into our aggregate past pain bodies. And if we let our past dedicate our lives then like a rolling snow flake it will form a huge pain body snow ball that might have the capacity to destroy us going into our “Nows”. Just like Tiger we need to focus on each and every “Now” shot. Good golfers know that if they hit a three bad shots in the holes completed, then they need to completely erase the memory of those bad shots if they ever are going to give themselves a chance to recover. If they let their minds linger on those bad shots then forget it.

Lesson 4. We need to keep our fun meter on red hot. If our past adversities steal our humor then we might as well give up. We need to laugh and laugh heartily. We need to give ourselves joyful mini vacations. We need to enjoy the moments. We need to laugh at ourselves. No wonder my dentist,  the last time he was doing a root canal he had me  lie in his chair and looking straight up at a TV where he had Don Rickles on. I laughed and laughed and I felt absolutely no pain. We need laughing therapy. Humor is our gift for each day!

These are main lessons I have learnt from my very large adversity. These are huge career management lessons also.

Hope readers have gained some insight.

Economic Recovery – a different paradigm

All politicians take the path of least resistance! They are leading us through the wrong paths, for the most part, during this recent severe economic times, across the entire world. Their paths only follow down economic or material trails. They proudly sound the horn of economic stimulus, tax code changes, fed lending rate gyrations, and other noble economic incremental adjustments covering the entire landscape of our current troubled human landscape. But is what our leaders, politicians and TV “talking heads” pontificating incessantly about, the real key to economic recovery? I say an absolute no! These measures, these well meaning people advocate are mere adjustments. None of them are truly transformational.

In this essay I implore readers to consider an alternative recovery path. And if you think this path is more appealing lets all start talking about this alternate path. Let all of us consider whether this less travelled path can be the route to total recovery. This elevated path is the rejuvenation of the human spirit in our working lives.

My contention is, as soon as we see the human spirit recovering in our “work a day” world, then we will truly see economic recovery. Economic recovery is a lagging variable to the leading variables such as, spirit, attitude, commitment, passion and care. These are behavioral dimensions. A lot of research has shown the heart and soul has to recover before the mind can. 

So, you may now ask, how will the recovery of the human spirit lead to economic recovery. Consider my stance in the next few paragraphs. All of these paths are imbued with the excellence of the human spirit. I discuss a few of these paths. Others will come up with many other more creative paths all within this directional ethos. So here are my suggestions:

a) Throughout the economic history of the USA, the inventor, the person who loves (human spirit) to tinker with new innovations, gizmos, contraptions, have created products and things that have generated new businesses and even new industries. They have added significantly to the GDP. Need I say more! Apple -Jobs/Wozniak, Gates – Microsoft, Henry Ford, Thomas Edison, my friends at Xerox Park who came up optical recording technology, defying physics, Earl Bakken of Medtronics, my friends in South San Francisco. These noble souls were all drenched to the tilt with the showers of the human spirit, which motivated them to discover, make and innovate. They all put in the 10000 hours (Galdwell). Igniting this human creative spirit is the fastest way to economic recovery. 

There is an unique opportunity before us now and that is in alternative fuels and reduction of our dependence on fossil fuels. If we put in all of the creative innovative spirit that lies within the American soul, certainly we are going to create a whole bunch  of new things that will accelerate economic recovery at speeds that well impress a whole bunch of us and leave us all aghast. 

Let us all celebrate the scientists, engineers, technicians, workers, researchers and of course the inventor. These people all are not afraid to get their hands dirty. Let us all give these noble friends an energy boost. Lets buy them all energy drinks. These folks all add to the GDP. Lawyers, politicians, TV “talking heads, economists, bankers, investment “gurus” governmental desk occupiers are all a drain on the GDP.

b) Another hot bed opportunity for economic recovery, in the realm of the human spirit lies in our classrooms and research universities. Motivated, soulful teachers can lead students to achieve their personal excellence through shear hard work.No pain, no gain.  Teachers can impart to their students not only lesson plans but also all the virtues of the successful behavioral dimensions that can enhance attitudinal recovery.  An spirit and attitude based student revolution will certainly lead to economic recovery at both the individual micro level and additively also at the macro level. Thus here my contention is that when teachers and professors impart to their students, values and positive work habits and behaviors then when these job seekers and job entrants go into their respective work lives they will immediately climb the hilltop of personal excellence, which in turn will create the work energy required for economic recovery one person at a time. Please note here I do not mean working hard, I mean working smart with a whole bunch of spirit. 

c) We need to continue to encourage total entrepreneurial effort. The entrepreneur is by nature spirited. Countless entrepreneurs I have met are covered with enthusiasm, optimism, dedication, and resilience. All of these traits are deep characteristics of the human spirit. So when our governmental and financial institutions realize economic recovery can squarely be dependent of the spirit of entrepreneurship then they will do whatever they have in their powers to encourage these entrepreneurial folks to take the risks and put in the long hours to start adding to the GDP. Lets encourage these folks in a very big way. Entrepreneurs are small business people. When small business recovers the entire economy will rapid follow. The government should encourage all of us to be entrepreneurs. Forget about Federal Bank action lets work on encouraging small neighborhood banks to help the small business people in their communities. Lets pass a fiscal stimulus package for small entrepreneurial businesses. Banks do not cut off their lines of credit. 

I have provided three examples to support my spirit based recovery thesis. I would like to hear other spirit based recovery suggestions from readers. Maybe we can start a spirit based recovery movement!

Jai Ho!

The Joy of Work!

Times are tough in more ways than one. It seems to me that this is the worst period in the working world that I have witnessed during my forty year working life. Millions have lost their jobs and are continuing to so so.  Organizations are engaging in a kaleidoscope of work and job elimination programs. Human Resource personnel and senior executives with the help of high paid “not knowing” consultants have come up with creative words to brand these nefarious activities. Words such as delayering, down-sizing, right-sizing, out-sourcing, to name a few, form is foreboding landscape. In this work life threatening environment I offer hope in the Now! It is time to refocus to renew our work lives. For out of doom and gloom there is opportunity to rejuvenate our ”work  day world”  existence. How do we do this? By building the “joy of work” into our work life paradigm.

We do this because our spiritual selves implore us to create a joyful life in what we do daily to earn a living or even  in our extracurricular activities. It is upto us to create the joy condition in our daily lives, most of which is spent in working for a living. And those who do not have traditional jobs now need to create joy in whatever they do to maintain and sustain our human existence.

So here are my humble suggestions. The intent here is to provide “food for thought”.

• No matter what we do to “bring home the bread”  does not provide us joy then I suggest that we find a side avocation that does turn us on (a narrow definition of work in modern days is that which we do that provides us monetary compensation). This can be a hobby, a sport, volunteer work (nowadays volunteer work is one  of the creative ways to find regular employment), reading, yoga or whatever. I recently read a book where one of the principal characters worked in non-joyful work environment all his life, but he came home every day and spent time in his garden, the creation of which gave him great pleasure and joy. In other words, never be a couch potatoe. If you systematically dedicate time to a side avocation then I assure you will find “joy at work” no matter what you do for the “green back”, or the “dinar’ or the “rupee” or the “birr”.
• Steve Covey’s seventh habit has helped me a lot to traverse the trials, the tribulations, the ups and downs of our paycheck world. He recommends “sharpening the saw”. Keeping yourself fresh and “cool” by excercise, reading, meditation, knowledge accumulation and contemplation. These activities sustain our souls and this creates “joy of work” within.
• Keep your fun meter on red hot. Do not take things too seriously because the “hurdles” are continuous and relentless. So what  does one gain by taking things personally and seriously. I did not adopt this principle during my working life and as such I suffered because everyday when I went into work something or the other aggravagated me. Get my mercury up! But if I had learnt to stride it out then I would only see “joy”. Seeing “joy” around you is also a great talent to develop and cultivate.
• I also suggest spending time with “extravagant” friends. These friends are those that do not need anything from you and you do not need anything from. They are “spend time” buddies. Dont have too many of them. One, two, three is enough. Why do I say that these extravagant friends are important to finding “joy at work”? This is because they will give unadulterated advise on what troubles you in your paycheck world. They will not judge you, condemn you or criticize you negatively. They are “extravagant” friends and they will have your interests in mind. They are  real “soul mates” and not tied into your bloodline. They create joy for you.

Finally, now more than ever think about creating your own “joy at work” condition. In tough times times one can really contemplate our true internal needs. If times were good we would be lulled into excuberance and thus miss our “inner needs”. But in bad times we are often forced to face realities both material and spiritual.

My blessings and Jai Ho!

Am I paid fair wages?

Can you help me understand how the pay systems in most companies work. How do I determine whether I am getting a fair and equitable pay for the work I do?

A great question, I am sure there are many of us who cannot quite determine how we get paid. Global pay systems are usually based on three principles; 1) Paying for the job – this is the traditional pay system with salary grades, classifications and pay ranges, and other obfuscations, 2) Paying for skills – this system pays for now what are called competencies which days gone by were called knowledge, skills and abilities, you get paid whether you actually contribute or not, 3) Paying on the basis of purely the market.

Find out what your organization’s pay system is all about within the context given above. If an organization pays for the job, more often than not this organization is traditional, rigid and bureaucratic. Paying for skills, knowledge or competency is actually great, but there is a certification process involved, and this system requires a lot of administration. Paying on the basis of purely the market is the most equitable methodology because it focuses the pay system directly into the economic dimensions of employment, such a system requires that your organization has access to market data and that the data is believable and acceptable. In addition to the methodologies to determine base – or what I call “come to work pay” – there are merit systems that pay incremental increases to cover the “cost of living” and job performance as laid out by senior management. Other types of programs include bonuses, cash profit sharing and long term cash bonuses, milestone bonuses and employee referral payments.

All of these are organizational behavior scenarios which one can learn to navigate through. Then there stock or other equity related compensation programs for some or all employees. This is also a good practice and in the dotcom era made a lot of employees millionaires. Greed populated executives take home astronomical sums of money courtesy of these equity based programs

Whether you are paid equitably or not is quite subjective and it depends on your concept of “felt fair pay”. So compare your pay with others in a similar position within your company or with others in other companies holding similar positions as you and then you can determine whether you are paid fairly or not.

Fairness also depends on whether you understand the processes and methods to determine your starting pay or even when an organization doles out annual increases or bonuses or any other compensation scheme. Fairness depends on what, how and why you are paid. Research evidence shows that if employees do not know the what, how and why of their pay system as it relates to them then the employee’ pay perception does not equate fairness.

The Certainty in Self-Reliance

Have you heard the news lately? Today BBC said that Martin Wolfe, the leading economic commentator of the Financial Times will say in an upcoming BBC radio program that the world is undergoing the worst deep recession in the last seventy five years. And Wolfe, I heard in the radio, says that there is a long time left before the world will see a sustained economic recovery. Some say the worst is yet to come!

To me it has always been very insecure in our World of Work. I remember in 1970 I graduated with an MBA from top rated university, full of bright eyed optimism about the future and my ability to create income and security. I was utterly elated when in the college recruitment process I was selected by a very big and prestigious computer company. I was ready to enter the World of Work and give it my all. But after only fifteen days on the job, this company proceeded to lay-off four thousand employees. Including my whole department except me because I was willing to slog and work extraordinarily long hours. It was all a rocky ride after that. This same company carried on laying off and the cut my salary ten percent two times during a six year stint in that company (by the way this company does not exist at all). It has been downhill ever since. Every company I joined after that laid -off people. Some of these companies, during my stay in those companies, hired hundreds of people and then laid-off hundreds within very short time intervals. The average hard working stiff in any company any where in the world has no job security. I plan to do a study soon where I will prove that worker security over the forty years I have been working has a negative correlation with the rise in the levels of executive pay. I had an executive point blank tell me that during the dark days of the Bush Presidency when salary levels and job security of working stiffs have plummeted, he, the executive became a millionaire. Whoppy! This reflects the attitude of the so called leaders of most companies. Screw you dear average employee! This is currently The World of Work!

Clearly the exchange theory of employment is dysfunctional now. It is NOT working! The exchange theory basically said that in the world of work equilibrium exists when there is balance between what a worker brings to the job by way skill, effort, talent, ability, time sacrificed, knowledge etc. with what they get back from the company by way of wages, benefits, security, promotion, working conditions etc. Now dear reader tell me in which direction the scale is tipping these days. Clearly most employers are not living up to their side of the balance.

So what should the average working person to do?

I think that the only solution is a concept of career self -reliance. The modern worker has to change their work paradigms and vociferously adopt career self-reliance.

Let me define career self-reliance first: ”Career self-reliance was originally defined as “the attitude of being self-employed, whether inside or outside an organization.” (Collard, Epperheimer & Saign, 1996).  The Career Action Center, an independent, non-profit career center based in Cupertino, CA which coined the term, later modified their definition to make it more palatable to the consumer:  “the ability to actively manage one’s work life and learning in a rapidly changing environment.” (Collard, Epperheimer & Saign, 1996). In either definition the underlying assumption is clear -  that the individual must think of him or herself as his/her own corporation.” This definition has been taken from an article: Critique of Career Self-Reliance, Diane Byster, MFCC,
NCC.

From my point of view here are the dimensions of career self-reliance. Over the course of the next few posts I will expound on these dimensions.

The dimensions of career self-reliance are: entrepreneurship, controlled job effort, a personal career risk/reward analysis, career SWOT analysis,a second income source, networking, life-long learning, job based practical intelligence, leader management, career positioning, a clear career plan, a self-sufficient life-style and finally personal power.

Look out for future posts where I will describe all of these dimensions in detail.

Most people learn from their mistakes!

Young people, the best way to learn the lessons of life is to ask those who are older and more experienced than you, as to what mistakes they made in their careers and what lessons can to be derived from those mistakes. This is a different advise paradigm from one that always puts a positive twist to everything by asking people to do this, that or the other unproven universal methods – or in other words, cook book solutions to life’s challenges.

Quite often in the vast realm of “self help” books all you get are statements of what is the “right” path to follow. You are preached at with quick and easy certain number of steps that can be followed to achieve “success nirvana”. Authors like Deepak Chopra, Anthony Robbins, Wayne Dwyer, Dale Carnegie, Steven Covey just to name a few (and there are countless others) are writing book after book and giving expensive lectures telling you to follow their steps to success. Do you buy all the hype?

Well, I will tell you what. The person you should carefully listen to are those people who are in the trenches of life and trying to survive in this tough day to day world. Listen to the person who has made mistakes in their lives and are willing to tell you about their most expensive, stupid and serious mistakes. These are the people who will give you valuable insight into the perils of life’s real journey- i.e. what to avoid. They will provide you the real warning signals. Heed and learn from these people.

One such mistake that I made early on in my career is not to have personal financial intelligence, personal financial integrity and thus total financial independence.

What I learnt from my many mistakes on this subject is that I should have saved as much as I could have from every pay check I earned. The temptation to spend and be subject to the infinite attractions of our consumer society is quite acute. We measure our self-worth with “what” we have by way of material things. We forget that the word consume means to destroy. squander, and use up. Warren Buffet gives very sound advise to young people by suggesting that one should never get a credit card. You certainly can do without them. Getting a credit card with a balance on it puts you in the hole right away. A hole that gets harder and harder to claw out of. If any of you readers carry credit cards now, gather them all and light a bon fire!

Save for a rainy day and save for your senior years. One should always have a year’s salary saved up. I suggest to young professionals to be an aggressive saver and save up to 20% of your paycheck if you can. This can be done with careful planning and a fine tuned execution of the plan. Do not fall into the “get bonus and buy new car” trap!

But most of all save for when you cannot work in your old age. Here you younger professionals need to be very aggressive. And there are many reasons for creating a retirement fund very early on in your professional lives.

Here are some of the resaons:

1. The world population is becoming older and people are living longer so most likely the younger generations will have to deal with a significant portion of their lives where the earning potential will be next to nothing. 

There is a  corollary to the contention that the world population is becoming older and that is we simultaneously see a decreasing proportion of those who are younger. The result of these trends will be that more and more people are going to be demanding payouts from their government pension schemes and there will less and less people to pay into the fund. This is a real doomsday scenario!

2. To effectuate a solid retirement (which includes a very early retirement) a young professional needs a three legged stool approach.

The first leg being an aggressive on-going personal savings plan. If you start saving and start saving early the law of compounding comes into play and within about twenty years a significant amount of money piles up for your benefit.

The second leg, is government social security. This I am afraid will get smaller and smaller as time goes by. Most governments around the world have not done a good job as a trustee of the funds that are put aside by most of us to receive retirement assistance when the need arises.

The third stool is private organizational retirement programs – the defined benefit pension plans and the defined contribution pension plans. We have seen and we will continue to see a rapid decline of defined benefit pension plans and ab increase in defined contribution plans – the 401 (k) types of plans.

Thus my advise to young folks in a very direct straight forward manner is that the future of the world is not that secure because of  growing populations, increasing diminution of natural resources, scarcity of investment funds, large government deficits, world wide corruption, decreasing education standards, and on and on. So an young professional has no choice but to take the bull by the horns and create a solid financial security plan for themselves and by themselves.

I suggest the start of the journey is “deferred gratification”.

The Knowledge Scarcity in the Global Workplace!

The premise of this “think piece” is a belief based on experience that the business workplace is seeing a gradual decrease in the “real knowledge”. 

I define for the purpose of this essay “real knowledge” as that knowledge that provides a thorough understanding of the principles, theories and concepts behind the systemic practices one engages in an organizational setting. For example,  a lot of business entities spend enormous amount of money engaging in something called “change management”. This term is used in the vernacular as sought of a knowledge based principle. My contention is that it might be, but in order to practice or espouse these concepts one has to deeply study and understand the cultural, anthropological, psychological, financial and sociological dimensions of how change happens within organizations involving human interaction from both the macro and micro viewpoints. My contention also is that most people who claim to be experts in assisting organizations in implementing “change management” have rarely studied all the dimensions of the subject stated  in the illustrative example.

“Real knowledge” in my opinion is distinguished from “nominal knowledge” in that “nominal knowledge” means cursory knowledge – a little knowledge that is enough to get by. I see most people at work today possessing more “nominal knowledge” than “real knowledge”. Also over the last forty years of my working life I have observed a downward sloping trend line in the “real knowledge”  while the “nominal knowledge” trend line has sloped upward.

There are many possible contributory causes to this phenomena. Let me propound on some of these causes. Of course, these are all opinion and conjecture on my part. But opinion and conjecture that is based on practical work experiences and supervision of employees over a span of almost twenty seven years. 

First , the introduction of the personal computer and following that the advent of the internet is a leading cause of the decrease in the “real knowledge”. Computers make things easy. Vast amount of nominal knowledge short cuts are available for people to exploit. One can know a little about a subject and sound real knowledgeable but not necessarily have an in depth understanding of the subject matter. Computers deprive individuals of the pleasures of real and deep devoted study and understanding. Computers are convenience based productivity tools and are not necessarily the means to achieve real in depth subject matter understanding. To achieve real understanding one has to read and study books, articles, engage in concept based dialogue and spend the necessary scholarship time to absorb the subject matter.

Today we live in times of first impressions, image, visual pleasures, deferred gratification, presentation skills, behavioral dimensions and all these success factors are antithesis to a deep study and understanding of any subject matter. Now it is not required to be an expert in any subject. If one knows how to play the game and say enough about a subject then one can get by quite successfully. These days it is more important to get along with others than to really know the subject. Because of these necessary key success factors individuals do not see the need for a deep understanding of any subject matter.

The wide increase of external subject matter expertise through the convenient access to high priced consultants has diminished the need to develop real internal expertise. Consultants, for their very survival, are reluctant to transfer the “real knowledge”. They horde the “real knowledge”.

During these recent years many authors and so called thought leaders have introduced concepts that are to say the least cursory. Here is a list of few of these recent terms that are loosely talked about in businesses – Emotional Intelligence, Change Management, Balanced Score Card, Behavioral   Indicators to name just a few. With the force of an effective marketing apparatus, the authors of these concepts have succeeded in capturing the imagination of  a “real knowledge” starved audience. This has greatly enhanced the knowledge scarcity environment we live in. Many people buy these books as mere tokens of success and do not spend the time and effort to deeply devour the understanding that these books intend to impart.

Another reason for the declining “real knowledge base” is the softening of the business workplace. Recent management practice has centered around form rather than substance. It is important to be so called “culturally” attuned  than to possess the “real knowledge”.   Getting along with people is more important than hard knowledge. Being politically correct is more important than hard knowledge based facts. What is now being valued is behavior rather than measurable results. No wonder we see a disaster scenario in corporate performance in many companies.  Gone are the days of cigar chomping bosses like Lee Iaccoca who demand rather than merely ask. (Those interested please read his most interesting book – “Where Have All The Leaders Gone”.) Now leaders have to be sensitive , empathetic  and emotionally intelligent. This certainly sounds like a softening of the workplace. This softening might have been caused by the  fairly recent readjustment of the global business social structure.

Finally, the extreme focus on short-term quick greed based gains in the corporate world has greatly enhanced by the “nominal knowledge” environment. Why build a solid knowledge based foundation when the desired objective is make as much money as quickly as possible. Just witness the devastation caused by this “nominal knowledge” based work environment. Sad is it not,  to see sound corporate entities like General Motors, AIG, Citibank, Cryshler, Meryl Lynch  etc. etc. all languishing  in the throes of extinction or even totally extinct. When I started working as a fresh graduate there were the BUNCH (Burroughs, Univac, NCR, Control Data and Honeywell) versus IBM. Out of the BUNCH I do not think even one survived the vagaries of the computer industry. 

So, based on the reasons I have postulated here I suggest there is a true scarcity of real knowledge. We now more so than ever we need to bring back the good old days of “real knowledge” We need to value and reward those within our organizations that provide solutions and ideas that are “real knowledge based” and we need to discredit those that obfuscate their way to corporate success.