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| Volume 8, Issue 6 |
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In This Issue:
 Hiring managers finding decline in job applicant behavior
 Accounting grads flood the job market
Auditor angst [how to drive your Auditor crazy]
Bank gives up on lost money, reassigns CFO
 Too many managers abusing their positions[?]
 Creating people advantage: How to address HR challenges
 The world's most innovative companies
Top management: Interviewing to win
 Keeping it real: 8 steps to an effective evaluation process
 Shocks to the supply chain
A Time to Mourn–or a Time to Mine?
 Doubts raised on big backers of mortgages
Stocks: The double-your-money club
 Warren Buffett's tax fetish
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Hiring managers finding decline in job applicant behavior
Hiring managers who have years of experience interviewing job candidates are reporting a sad decline in applicant behavior.
This observation comes from an "interview etiquette" survey on Vault.com, a career resource site. The survey found that about six in 10 hiring managers are not impressed with what they're seeing. Given the host of "how to ace an interview" advice books, Web
sites and career resource offices at colleges and universities, the survey results are dismaying. About four in 10 of the 105 hiring managers who responded to the survey said they've heard job candidates use...
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Accounting grads flood the job market
Accountants may not be the big men on campus yet, but they're getting there. A new survey on the supply of accounting graduates — and the demand for public accounting
recruits — says that more than 64,000 students graduated with bachelor's or master's degrees in accounting during the 2006-2007 school year.
That's a 19 percent increase since the 2003-2004 school year, the last for which the survey was produced. And while accounting has still not made the list of 10 most popular majors compiled by college prep and research company Princeton Review — or
appeared on Campus Grotto's top-10 list of college majors — this year's tally is the largest number of accounting graduates in the 36 years the American Institute of Certified Public Accountants has been tracking the data. Public accounting firms
continue to be the primary employer for new graduates, hiring 34 percent of the students with bachelor's degrees in accounting and 70 percent of master's-degree recipients. Total hires — by both public and private accounting firms — during the
summer of 2007 reached 36,110, an 83 percent jump over the 2004 count. The firms hiring new accountants are ready to shell out a good starting salary, according to another survey released by the National Association of Colleges and Employers.
Accounting majors from the class of 2008 are being paid the second-highest salary among graduates, says NACE, with the average offer set at...
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Auditor angst [how to drive your Auditor crazy]
Want to drive your auditors crazy?
Try this: First, meet with them ahead of the annual audit and agree on a date when your work papers will be ready. Then, when they arrive for the audit, tell them you're "almost ready" and hand over just enough material to keep them busy until lunch.
Repeat as necessary. Later, suddenly remember a contract or revenue-recognition problem that you haven't previously discussed (the more complex, the better). Finally, as the deadline nears, demand a 24-hour turnaround for the 10-K draft and complain
loudly when the auditors tell you it can't be done. This scenario may sound like a joke, but in fact auditors say it's exactly what many CFOs do every year. Michael Deutchman, managing director at Los Angeles–based accounting firm Kabani & Co., says
he dreams of walking into a client company where "we can test the records and see right away that they are what they're supposed to be."But in reality, he laments,
"there aren't a lot of CFOs who run companies that way." More often, says Ben Neuhausen, national director of accounting for BDO Seidman...
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Bank gives up on lost money, reassigns CFO
After five months of trying to figure out why it couldn't find $6.2 million recorded on its books, a bank has given up, restated its previous financial results, and reassigned its CFO.
On Monday, Willow Financial Bancorp filed an amended annual report for its 2007 and 2006 fiscal years. To make up for the missing $6.2 million, the firm recorded it as a charge to earnings for the first two quarters of fiscal year 2006, when its "out of
balance condition first arose." The holding company for Willow Financial Bank, a Pennsylvania community bank with $1.6 billion in assets, Willow Financial Bancorp announced in November that it had a problem. It then spent more than...
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Too many managers abusing their positions[?]
Few of us resent a colleague taking time off during the working day to cope with a domestic or family crisis. But half of American workers believe their bosses abuse their
positions to take more time off than they should, while expecting everyone else to keep their noses to the grindstone.
And this suspicion that bosses are not being totally honest and open with their teams about the amount of time they take off is deeply damaging to the workplace, research by consultancy Deloitte has concluded. The poll of more than 4,000 people found exactly
half believed bosses set different standards for themselves when it came to exercising flexible work options. Their suspicion is not helped by the finding that...
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Creating people advantage: How to address HR challenges worldwide through 2015
People challenges are greater than ever before at companies, thanks to globalization, an aging workforce, and employee desires for work-life balance.
This report, which is based on a worldwide survey of more than 4,700 executives, lays out a comprehensive approach to enable companies to understand the HR environment and
how they can create a people advantage. When companies that understand how to measure the effectiveness of their people and harness their talents, they will achieve a lasting edge...
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The world's most innovative companies
Suddenly, innovation has a bull's-eye on its back.
As the recession debate shifts from "what if" to "how long," slashing research and development budgets just got a lot more tempting. That high-risk product in your pipeline? It's about to get much more scrutiny. And the "chief innovation officer" your
CEO brought in last year to show his commitment to creativity? He'd better start proving his worth. Outside consultants are starting to pick up on the effects of such belt-tightening. "I'm seeing it in my business," says Jeneanne Rae, president of
Alexandria (Va.)-based consulting firm Peer Insight. "There's this sense of which shoe's going to drop next." Others are seeing two camps emerge. "One is saying times are tough, so it's the most important time for us to innovate," says Scott Anthony, president of
Innosight, a consultancy founded by Harvard Business School professor and innovation guru Clayton M. Christensen. "The other is saying 'we simply don't have the ability to think about innovation right now.' There's a real separation between the innovation
haves and have-nots." Among the haves are the companies that make up the 2008 BusinessWeek-Boston Consulting Group ranking of the World's Most Innovative Companies. They nurture cultures that value creative people in good times and bad. They develop a
diverse portfolio of projects that helps them weather dud ideas. And no finger-wagging Wall Street analyst is going to keep them from doubling down on smart bets that will position them well when the economy rights itself again. "Strong companies understand
this, and during a recession, they invest," says Eric Schmidt, chairman and CEO of Google, No. 2 on our list. "And they get pummeled for it: `How could you do this? You're arrogant. The world is falling apart.'" The good news: There can be an upside to the
downturn. Low-cost methods for creating new products are easier than ever as emerging markets provide both cheap labor and booming pockets for growth. That's something No. 4 General Electric is finding...
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Top management: Interviewing to win
Joseph Daniel McCool is a writer, speaker and advisor on executive recruiting and corporate management succession best practices. He is the author of Deciding
Who Leads: How Executive Recruiters Drive, Direct & Disrupt the Global Search for Leadership Talent, which has been recognized as "one of the 30 best business books of 2008" by Soundview Executive Book Summaries.
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How do you measure the cost of the big fish that got away?
How do you measure the cost of the big fish that got away? If your organization is competing to recruit world-class management talent (perhaps because it has failed to develop potential successors from within), the cost of seeing top prospects bail out of
the executive search process can seem very high indeed. Consider what those individuals might have achieved for your company had they taken their candidacy to the next level. Then think about what they might deliver for one of your chief rivals. Pretty
disheartening, isn't it? Yet this is what organizations face when senior management fails to recognize the importance of the executive candidate interview process and the effect it can have on the company's performance trajectory. Not surprisingly, corporate
bosses usually want to play a role in interviewing and assessing top candidates' experience, qualifications, and fit with senior leadership. [Even the hiring of a
top-notch executive recruiter can't guarantee there won't be bumps along the way. Yes, your company may be doing the buying, but you can't assume it's a buyer's market... ]
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Shocks to the supply chain
Last summer, when The Boeing Co. announced it would delay the introduction of its 787 Dreamliner, CEO Jim McNerney blamed the problem on the company’s supply chain.
A large product like an airplane uses thousands of individual parts, but Boeing attempted to mitigate the smaller, individual supply chain quandary by using major suppliers to construct large pieces of the plane. Parts of the wings, for example, are
being assembled as far away as Japan. McNerney reported to the press that the delays were attributed to a “slowing up in the supply chain rather than a fatal flaw in the supply chain.”Boeing’s problem with its supply chain is emblematic of a challenge all
U.S. companies now face: managing supply chains that are longer and more convoluted than ever before. For any given product, raw materials can be sourced in Africa, refined in India, produced in China, assembled in Mexico and finally distributed in the U.S. Today,
however, the biggest problem—faced not only by manufacturers but also by service companies like restaurants—is the rising cost of the supply chain. This is not necessarily because of the manufacturing piece of the chain, which can be performed in
low-wage countries such as China, but because of the rapid rise in transport costs.[“Businesses will continue to span supply chains across the globe,” avers Dan Brutto, president of UPS International. “However, rising fuel costs are driving
companies to move away from a ‘one-size-fits all’ approach to transportation management and toward implementing a multi-modal strategy that reflects product value, life cycle
and handling characteristics at stock-keeping unit level. The side effect is that supply chains are becoming more agile and more closely matched to strategic business plans...”]
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A Time to Mourn–or a Time to Mine?
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This is a gem!” exclaimed the MD of a renowned European technology firm as he examined the sample of a perfectly formed piece of plastic lens shown to him by the chief technology officer of a Singaporean plastic injection company.
“Why would your parent company want to sell the company away now that it has finally built up all these technological capabilities?” The CTO could only shrug and explain that the parent company was facing cash flow problems and had little choice but to sell
its subsidiary to raise cash to pay its current bank loans. Like the sample of the cut plastic, many “gems” can be unearthed across the world, especially in Asia and Europe, due to the current credit crisis. They are companies that have great growth potential
when cut and polished and are fundamentally solid, but have been affected by the credit crunch. This presents opportunities for strategic acquirers to dig and buy the gems at a discount, especially now that the miners who had been most active in digging them out
over the past four years—the private equity firms—are finding it increasingly difficult to finance their acquisitions with cheap bank loans. For example, in Europe, the valuations of private company sales to private equity has fallen by 14 percent in the
third quarter of 2007 to a multiple of 15.3 times a company’s earnings. Meanwhile, the valuations of private company sales to corporates fell by just 2 percent to 13.4 times earnings. The private equity buyout premium—which pushed up the price/earnings ratio on
the MSCI-600 of “median” stocks to a record high of 20 in May 2007—has vanished. The P/E ratios on the DOW 30 big stocks are much lower—because they are too big even for the large private equity firms like KKR and Carlyle. [For companies with capital or the
ability to raise capital, a window of opportunity to mine gems from around the world has opened. Warren Buffett, Wilbur Ross and Ron Perelman are plunging into the mine shafts to scoop up companies hit by the financial turmoil after years of being shoved to the
side by high valuations and fierce competition from private equity. These savvy “value” investors believe the financial and capital market crisis now offers a great opportunity to dig out the gems. In fact, Warren Buffett has...]
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Doubts raised on big backers of mortgages
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As home prices continue their free fall and banks shy away from lending, Washington officials have increasingly relied on two giant mortgage companies — Fannie Mae and Freddie Mac — to keep the housing market afloat.
But with mortgage defaults and foreclosures rising, Bush administration officials, regulators and lawmakers are nervously asking whether these two companies, would-be saviors of the housing market, will soon need saving themselves. The companies, which
say fears that they might falter are baseless, have recently received broad new powers and billions of dollars of investing authority from the federal government. And as Wall Street all but abandons the mortgage business, Fannie Mae and Freddie Mac now
overwhelmingly dominate it, handling more than 80 percent of all mortgages bought by investors in the first quarter of this year. That is more than double their market
share in 2006. But some financial experts worry that the companies are dangerously close to the edge...
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Stocks: The double-your-money club
It's an investor's dream: A stock with the potential to double in price.
Finding these stock market gems before they double is difficult but not impossible. According to data provider Capital IQ, there are almost 6,700 stocks that trade on major U.S. exchanges, and less than 100, or 1.4%, have doubled in the past year.
Still, this rare species is worth hunting. BusinessWeek asked fund managers and other market experts to pick stocks that could provide 100% returns in the next couple years. Sixteen of their favorites are listed in the accompanying
slide show...
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Warren Buffett's tax fetish
It may seem a bit odd that Warren Buffett, one of the greatest capitalists the world has ever seen, resides firmly in the liberal camp when it comes to tax policy.
Buffett favors higher taxes on both income and wealth. His writings call for higher income taxes at the corporate level and more progressive income taxes at the personal level. In his 2003 letter to shareholders, Buffett stated that Berkshire was about to
make a $3.3 billion tax payment, or 2.5% of all corporate taxes paid to the U.S. Treasury that year. Buffett said Berkshire was "among the country's top 10 taxpayers." Buffett also made a strong--but perhaps unintentional--case for tax simplification. He
said Berkshire's tax return for the previous year (2002) totaled 8,905 pages. The government is no doubt grateful that Berkshire pays so much tax. Berkshire's shareholders, however, should be at least a little concerned. As Buffett said,
Berkshire's federal tax bill amounted to 2.5% of all taxes collected in 2003. But Berkshire made only 1.2% of total corporate income that year. In other words, Berkshire appears to be paying much more than its fair share of taxes. Yet Buffett
seems proud that Berkshire generates so much money--and so efficiently--for the government. And although he thinks individual taxpayers carry too much of the overall tax burden, in a Washington Post op-ed dated May 20, 2003, Buffett took the Senate to
task for passing a bill that would have eliminated individual taxes on dividend income. Buffett argued that the bill would benefit no one but the rich...
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