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| Volume 8, Issue 3 |
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In This Issue:
 Rescue me: A fed bailout crosses a line
Even experts can't grasp this crisis
The affluent, too, couldn’t resist adjustable rates
 Are you the pointy-haired boss?
Communication for managers 101
 To survive or thrive?
Perfect vision, better dialogues
Are your employees truly engaged?
 Eliot Spitzer's seven deadly sins
 After the mess
Memo to the Fed: Stop those rate cuts
The fine art of sucking up to your boss
Eight healthy reasons to drink beer
 Meet the bosses who could win the ‘Awful’
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Rescue me: A fed bailout crosses a line
WHAT are the consequences of a world in which regulators rescue even the financial institutions whose recklessness and greed helped create the titanic credit mess we are in?
Will the consequences be an even weaker currency, rampant inflation, a continuation of the slow bleed that we have witnessed at banks and brokerage firms for the past year? Or all of the above? Stick around, because we’ll soon find out. And it’s not going to be pretty.
Agreeing to guarantee a 28-day credit line to Bear Stearns, by way of JPMorgan Chase, the Federal Reserve Bank of New York conceded last Friday that no sizable firm with a book of mortgage securities or loans out to mortgage issuers could be allowed to fail right now. It
was the most explicit sign yet of the Fed’s “Rescues ‘R’ Us” doctrine that already helped to force the marriage of Bank of America and Countrywide. But why save Bear Stearns?...
Read the article. Back to top
Even experts can't grasp this crisis
Raise your hand if you don’t quite understand this whole financial crisis.
It has been going on for seven months now, and many people probably feel as if they should understand it. But they don’t, not really. The part about the housing crash seems simple enough. With banks whispering sweet encouragement, people bought homes they couldn’t afford,
and now they are falling behind on their mortgages. But the overwhelming majority of homeowners are doing just fine. So how is it that a mess concentrated in one part of the mortgage business — subprime loans — has frozen the credit markets, sent stock markets
gyrating, caused the collapse of Bear Stearns, left the economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression? I’m here to urge you not to feel sheepish. This may not be entirely
comforting, but your confusion is shared by many people who are in the middle of the crisis.“We’re exposing parts of the capital markets that most of us had never heard of,” Ethan Harris, a top Lehman Brothers economist, said last week. Robert Rubin, the former
Treasury secretary and current Citigroup executive, has said that he hadn’t heard of “liquidity puts,” an obscure kind of financial contract, until they started causing big problems for Citigroup. I spent a good part of the last few days calling people on Wall
Street and in the government to ask one question, “Can you try to explain this to me?” When they finished, I often had a highly sophisticated follow-up question: “Can you try again?”I emerged thinking that all the uncertainty has created a panic that is partly unfounded. That
said, the crisis isn’t close to ending, either. Ben Bernanke, the Federal Reserve chairman, won’t be able to wave a magic wand and make everything better, no matter how many more times
he cuts rates. As Mr. Bernanke himself has suggested, the only thing that will end the crisis is the end of the housing bust. So let’s go back to the beginning...
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The affluent, too, couldn’t resist adjustable rates
They took out adjustable-rate mortgages at the peak of the housing bubble to buy homes they would otherwise not be able to afford. Or they refinanced existing mortgages to take cash out. And now, two or three years later, the day of reckoning is here.
These are not lower- and middle-income borrowers, but more affluent consumers with annual incomes of...
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Are you the pointy-haired boss?
Here he comes again. In Dilbert cartoons, you know him as the pointy-haired boss.
He will parade up to your cubicle to dispense self-serving advice. His logic is as arbitrary as his deadlines. He may sprinkle his language with the latest acronyms, but you know the truth. He is oblivious to day-to-day operations, like Mr. McGoo
wandering through a minefield. Behind your corporate Pollyanna, you resent him sometimes. Still, you follow the drill: stroke his ego and don't make waves. You may have started to tune him out, but he still holds sway over your career. It may be
dispiriting, but you have come to accept your situation: your boss is not equipped to help you and you are on your own. Demonizing then Becoming the Boss In the cubicle culture, it is easy to caricature or demonize the boss. The dizzying speed
of business sometimes makes corporate decision-making seem capricious. When you step into management—and become responsible for the livelihoods of others—your words and actions become instantly magnified. Your world accelerates and expectations are
high. Your credibility is constantly on the line. In this environment, you can quickly become overwhelmed. Some managers choose to insulate themselves; others overcompensate. Either way, you may morph into that person who once made you
snicker. You may not even realize it. Then, like a blinding light on the road to Damascus, it hits you...
Read the article. Back to top
Communication for managers 101
Employees Stressing Out
While it's no secret that stress contributes to overall worker well-being, what is surprising is that many employers are likely to do little about it.
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Harvard Business Publications recently confirmed what many have always known: effective communication is the number one skill for executives to develop.
But this skill is neglected when it comes to employee development. Companies send their managers and executives to all types of continuing education programs. And yet, communication development goes highly overlooked. Managers and executives need
to be acutely aware of their communication within the organization. A Gallup poll of more than 1 million U.S. workers concluded that the No. 1 reason people quit their jobs is because of problems with their immediate supervisor. Also, surveys show that
over 80% of work-related problems are due to a breakdown in communication (Felber 2002). So how can managers and executives improve their interpersonal communications with their employees? Here are five easy steps that can be taken:...
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To survive or thrive?
If a recession is really on the way, it could spell opportunity for companies that take the right steps right now. Everyone knows the proverb about finding opportunity in chaotic times. But what about lean times?
In the traditional view, an economic downturn is something your business hopes to survive: hunker down, dial back on spending and hiring, and wait for the uptick that signals a return to business as usual. But surviving isn’t good enough, in lean times or anytime. Every
business wants to grow and thrive. And by turning to a set of common-sense strategies now, you can position your company to thrive during a downturn by taking market share away from competitors, and be poised for breakthrough growth when the economy rebounds. Chances are,
the structure you’re currently running is built on a set of circumstances that are already starting to erode. If you wait too long, your ability to make changes may become limited...
Read the article. Back to top
Perfect vision, better dialogues
Correcting “blind spots” can boost decision-making effectiveness. Constructive, efficient debate among executives has never been more necessary.
Globalization and the emergence of a multi-polar world is introducing new competition and requiring companies to operate in completely different ways. Merger and acquisition activity is at a peak, with more and more deals crossing borders and spanning diverse corporate
cultures. Management teams face the challenges of gathering and synthesizing more information from more varied sources, using it to reach defensible decisions— and doing it all faster than ever. Given these challenges, it would be comforting to believe that
decision- making within senior teams is informed by high quality information, rigorous logic and careful consideration of the full range of relevant inputs. Unfortunately, this is far from the truth. The reality is that in truly high-stakes situations, when the leaders of
corporations are asked to make difficult choices about alternative courses of action, their decisions are frequently based on partial information and influenced by simplistic and untested attributions about the competence and motives of those proposing different courses
of action. The explanation lies in our blind spots. We are highly biased by our own perspectives of a situation and miss essential information about what others are thinking and feeling, and how our actions are perceived by them. [The most dangerous feature of our
blind spots is that we are not aware of them. The problem is that many assumptions turn out to be wrong. At the same time, our colleagues have views of us that color their reactions to our proposals, often leading to interpretations that are quite different from what we
intend. Correcting for Blind Spots. Breaking the cycle of destructive dialogue is not easy. But there are a few simple steps that management teams can adopt that will typically lead to a higher quality of debate...]
Read the article. Back to top
Are your employees truly engaged?
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Having the right strategy is good. Aligning your workforce with it is better.
Few industries are more cutthroat than retailing. Competitors are subject to rapidly changing trends, and the whims of a fickle public can make a store that’s hot one year passé the next. Witness the recent demise of CompUSA, only a few years ago a $4 billion computer
retailer, as an example of just how quickly things can turn south. Winning the hearts and pocketbooks of customers is the obvious key to retailing success—and it’s not easy, says Myron “Mike” Ullman III, chairman and CEO of J.C. Penney, the $20 billion Dallas-based
seller of soft goods and clothing. The quality, style and price of the merchandise matter most. No surprise there. But the quality of the interactions people have inside the store runs a close second. “When you look at what makes for that good experience, it usually comes
down to having associates in the store who enjoy being there,” Ullman says. “To me, it’s fundamental to our success.” With that in mind, Ullman embraced the latest hot thing in
Corporate America in 2005: a full-out effort to improve employee “engagement. [Here's what we did and how it turned out...]
Read the article. Back to top
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Eliot Spitzer's seven deadly sins
Lust is the least of it. Here's a look at the mistakes New York's sex-scandal-scarred governor made, and the lessons for any leader—in politics or business.
Stunning, shocking, schadenfreude-inducing. All those adjectives have been used to describe the fall of Eliot Spitzer, "The Sheriff of Wall Street" and the man Time Magazine named "The Crusader." On the surface it seems his involvement with a prostitution ring and other
possible illegal behavior are what doomed him as governor. But really they're only the tip of the iceberg. As a leader and manager, Spitzer made plenty of other mistakes that made it untenable for him to stay in office. Here are Eliot Spitzer's seven deadly sins (with
apologies to St. John Cassian, Pope St. Gregory the Great, and Dante), and the lessons they contain for any leader or manager...
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After the mess
Dennis Zeleny is a regular contributor to Forbes.com and a veteran HR consultant. He has headed human resources for some of the world's largest companies, including Honeywell and DuPont, and most recently served as executive vice president of administration and services for Caremark Rx, until its merger with CVS.
Whether it's a post-meltdown financial services giant or any other crisis-hit company, what's the first thing a new CEO needs to do to restore a reputation?
At least you can count on one thing if you're the post-Kozlowski CEO of Tyco or the post-Galvin head of Motorola or the post-meltdown chief of a financial services giant these days: You've got a big opportunity to improve things. But there's no guarantee that
you will, because restoring the reputation of a badly tarnished company requires decisiveness, determination--and putting your own career and reputation on the line. Once your fallen predecessor is gone and the crisis PR managers have departed, as CEO of a
damaged vessel, the board is expecting you to lead the corporation (on a successful new course), and to do it quickly and confidently. Time is of the essence, but so are sure steps. The goal is nothing less than for you to right the ship, change its course and return
it to full-speed ahead. Every move you make will be examined with a microscope. For every change you institute, the stakes will be high because of the pre-existing fragility of employee morale, customer relations, brand image and investor confidence. And as difficult
as things might get, leadership in a turnaround situation is something you can't delegate.[Here are 7 steps to success...]
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Memo to the Fed: Stop those rate cuts
Lee Hoskins is a senior fellow at the Pacific Research Institute and a former Cleveland Federal Reserve president.
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Robert P. Murphy is a senior fellow in business and economic studies at the Pacific Research Institute.
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The markets rallied last Tuesday in response to the Fed's growing assistance to holders of mortgage-backed securities.
Yet many onlookers are convinced that an aggressive cut in the federal funds rate at the upcoming March 18 meeting is still necessary to avoid a painful recession. In our view, further loosening at this time would be a mistake, and would also send an alarming signal
regarding future monetary policy. he Fed needs to quit chasing declining GDP growth and instead focus on...
Read the article. Back to top
The fine art of sucking up to your boss
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Forget about complimenting the boss' tie or her choice in shoes. And if you're thinking of picking the head honcho up a scone and coffee on your way into work, think again.
Forget about complimenting the boss' tie or her choice in shoes. And if you're thinking of picking the head honcho up a scone and coffee on your way into work, think again. There's an art to sucking up, and if the boss--or your co-workers--can
figure out what you're up to, you're not doing it right. More importantly, it will backfire. Your goal is to develop trust between you and your manager since the projects you work on and whether you get promoted is directly tied to your
relationship with him or her. So while everyone calls it something different, it's key to your success at work. "I call this self-survival," says Faith Ralston, an
organizational leadership coach. "It's not fun to play the game, but if you do it to succeed then you're not just doing it to make the boss feel good." The key is...
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Eight healthy reasons to drink beer
Looking for a good excuse to tip back a beer? You don't have to wait for St. Patrick's Day. That's because a decade's worth of health research shows that regular, moderate beer intake--one to two 12 ounce glasses per day for men and one for women--can be good for you,
especially if you're facing some of the most common diseases related to aging. Experts say wine tends to get most of the attention when it comes to the health benefits of alcohol primarily because of the French paradox, a reference to the relatively low rate of heart
disease in France in spite of a diet high in saturated fat. The idea is that daily sips of Merlot make the difference. But a number of studies are showing that moderate consumption of
alcohol, including beer, can have similar...
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Meet the bosses who could win the ‘Awful’
When bad boss behavior occurs, it generally happens in an atmosphere in which the law is ignored, company policy is ignored and the line separating good business
practices from boorish conduct—and often unlawful conduct—is crossed. A dose of stupidity, mixed with a larger dose of arrogance—that’s the formula for winning an Awful Award.
Dressed in their Sunday best, everyone leaned forward to hear the words: “The envelope, please.” Anticipation grew. Who would win and who would lose? The room was hushed. The envelope loomed large in the announcer's hand. "And the winner is
..."This could be a scene from the Academy Awards. Or it could be a scene from any courtroom in the country, any day of the week. Actors who receive an Oscar are honored for their behavior on-screen. Employer-defendants who receive a jury verdict
in favor of a plaintiff are also recognized—for their bad behavior in the workplace. Here, in no particular order, are this year's nominees for the Awfuls—my Bad Boss Behavior of the Year Award. First: American Apparel CEO Dov Charney, noted for his
role in the lawsuit Mary Nelson v. American Apparel, Inc., et al. Mr. Charney often referred to women as...
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