The stubborn 7% unemployment rate here in the United States tends to masks a larger issue of underemployment, which today might be in the neighborhood of 18%. In the 1990’s and early 2000’s, with unemployment rates at near historic lows, there was a demand for work life balance with a popular cry of “work to live don’t live to work”. Weirdly this sentiment applies today as well when perhaps 1/4 of the US working population either unemployed or underemployed. These people really do need to work to live. But with so many Americans struggling, the US traditional growth engine of consumerism can’t fix the problem. With limited disposable income American can’t spend their way out of this employment problem. So what will happen? How can companies and how can workers revision themselves to prosper under these “new normal” conditions?
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Articles by Michael Dennis Graham
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Board Compensation: How To Know What’s Reasonable?
Expert Perspective from Grahall’s OmmiMedia Editorial Board
In his January 14, 2011 article for the New York Times Deal Book (Community Health Seeks to Oust Tenet’s Board) Michael J. De La Merced quotes Community Health Care’s chairman and chief executive, Wayne T. Smith, as saying: “Tenet’s highly paid board has clearly demonstrated its entrenchment” when Tenet’s board rejected Community’s “$6-a-share cash-and-stock bid as undervalued…”. So we asked ourselves, are Tenet’s board members really “highly paid”?
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Leading From the Top
Expert Perspective by Grahall’s OmniMedia Editorial Board
Rory Cellan-Jones’ November 14, 2010 article for the BBC (Can brain scans tell us who makes a good chief executive? Brain scans could reveal leadership ability) got our editorial board thinking about what we have seen as important characteristics of effective leaders. Cellan-Jones writes: “Neuroscientists and psychologists believe they can make a real contribution to our understanding of what makes leaders tick.” So until advanced technologies can scan a baby’s brain at birth and let us know if he or she will be a leader or a follower, here are a few things to consider:
1) Leadership is highly situational and cannot be defined in a limited way. Like an animate organism, a company goes through a lifecycle that bring changes. From start up to decline and all the steps in between, the company’s leaders will help to dictate continued success (or failure). The characteristics of the individual who will effectively lead a start-up differ from the characteristics of the individual who will effectively lead a mature organization. If the leader does not evolve and develop the skills necessary to address the company’s changing needs, the company will suffer.
2) Even within those broad strokes of life cycles, the culture of the company can dictate the characteristics necessary for a leader’s success. Take for example the New York Jets and the New England Patriots. Both are very successful, mature franchises, but their cultures and the style of their leaders (coaches and quarterbacks) could hardly be more different.
The danger, of course, in determining the characteristics of “good leaders” and applying that with advanced technologies to single out a privileged group of individuals is that it probably won’t work, in part for the reasons discussed above, and in part for two other very critical reasons.
There is a lot of luck associated with the identification and assent of leaders. Warren Buffet himself said that his success is fundamentally based on the time and place he was born and raised. Will the individual with the greatest potential for leadership always be identified? Absolutely not. And applying expensive technologies to help determine the best leaders will reinforce an already inequitable system.
Last but not least, the criteria used to identify leaders will be based on the group of leaders in place today. Will those characteristics be right for the rapidly evolving companies of tomorrow? Or will reinforcing the “status quo” of leadership characteristics impair the ability of companies to compete in the new and different economies we will face in the future?
As we said on our blog “In His Own Image: How Competency Models Compel Uniformity” recognizing and assessing important and unique talents and capabilities in potential leaders may be difficult for those whose personal and leadership styles provided the basis for existing competency models. But, competitive advantage does not come from leaving unrecognized leadership talent on the table.
Contact Grahall’s Omni Media Editorial Board at edie.kingston@grahall.com
Pay for Performance is More than Pay for Shareholder Return
Expert Perspective by Grahall’s OmniMedia Editorial Board
Several articles were published in the Wall Street Journal drawing from the Journal’s Survey of CEO Compensation conducted by the Hay group.
The articles all tout the fact that CEO pay is up (according to the survey) but so too is shareholder return. As Joann Lublin writes in her article Paychecks for CEOs Climb, “The chief executives of the largest U.S. public companies enjoyed bigger paydays in their latest fiscal year, as share prices recovered and profits soared amid the country’s slow emergence from recession.” Is this really “pay for performance” as the articles seem to suggest or is a “rising tide lifting all boats”?
Our experience suggests that “pay for performance” requires looking at executive compensation in three ways:
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Get Going Whether Times are Tough or Not: Manage Headcount Regardless of the Economy
Expert Perspective from Grahall’s OmniMedia Editorial Board
The Great Recession, Economic Recession, Economic Crisis, or whatever you want to call it has (as Robert Samuelson said in an article for the Washington Post: The Great Recession’s Stranglehold) “…changed American psychology, politically, economically and socially.” Not only have individual psyches been impacted, but also the “functioning psyche” of companies changed as a result of the dramatic and persistent downturn. These changes will certainly be long term and very possibly permanent.
Many companies have weathered the challenges of the economic downturn by focusing on the bottom line: carefully evaluating expenditures to ensure the greatest ROI, outsourcing and off shoring non-essential services, reducing headcount and utilizing contingent and temporary workers. These adjustments have helped many companies stabilize and even increase profits in these difficult times. The question remains why did it take the most significant financial crisis of the past 70 years to get companies to take these logical steps?
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On the Brink: Boards’ Responsibilities and Roles
Expert Perspective by Grahall’s OmniMedia Editorial Board
For companies facing bankruptcy, there is usually plenty of blame to go around and plenty of individuals on whom it should be smeared. The Tribune Company, however, seems to have more than its share of reprehensible characters in its executive ranks, coupled with a Board of Directors that seems unwilling or unable to make swift decisions that would benefit the company.
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Consequences of Heath Care Reform
Expert Perspective by Grahall’s OmniMedia Editorial Board
Richard Alonso-Zaldivar’s article, Could overhaul undermine employer health coverage?, for The Associated Press published by MSNBC October 24, 2010 defiantly raises the issue of possible unintended (or maybe even intended) consequences of Heath Care Reform. He writes: “The new health care law wasn’t supposed to undercut employer plans that have provided most people in the U.S. with coverage for generations. But some employers are weighing the options.”
Frankly, if we had the luxury to “start from scratch” with Heath Care in this country it is certain that all the experts would steer away from a system that is employer based.
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HR Leaders: Are you Managing a Business or Managing a Budget?
Expert Perspective by Grahall’s OmniMedia Editorial Boaard
The fourth calendar quarter of the year is busy time for Human Resources. The iterative budget process is coming to a close and the final effort to lobby for funds, justify expenditures and rationalize programs is at full throttle. For those HR leaders who manage a budget, this is the essential occupation, this is their craft and their trade. As important as securing funds for HR programs may appear to be to these HR “administrators,” the real work of HR has changed. As we said in our blog Who Are You? HR Roles Have Changed, Have YOU?: “HR programs in themselves don’t add value to the enterprise. It’s not what you will do (i.e. run a training program), it is WHY and HOW these programs deliver value to the business. HR needs to be a business partner and, perhaps more importantly, HR leaders need to operate their department like a business as well.
HR needs to transform its thinking from a “cost center” mentality (where success is measured by how big or small the budget is) to a business mentality (where success is measured by effectively allocating scarce resources to achieve critical strategic intent).
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The Business of Business is Business
Expert Perspective from Grahall’s Editorial Board
A couple of points in Gary Hamel’s sales pitch (for Umair Haque’s new book, “The New Capitalist Manifesto: Building a Disruptively Better Business”) disguised as a treatise on the threats to capitalism (Capitalism is Dead. Long Live Capitalism, September 21, 2010 Wall Street Journal) caught the attention of our Editorial Board.
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Unintended Consequences: Could McDonald’s Demand for Reduce MLR Launch a Public Option?
Expert Perspective by Grahall’s OmniMedia Editorial Board
Of course we all know there is no requirement that employers offer their employees heath care insurance or pensions or any of those once imagined “entitlement benefits”. McDonalds, for all they might be contributing to the obesity epidemic in our country is a company that takes care of its restaurant workers. The fact that they provide health insurance to restaurant workers is remarkable especially since their workforce tends to be transient.
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