Although Sanford Rose Associates tackles some difficult search assignments, even this one may be just beyond our capabilities.
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Posted by Allen Wass | Fri 4/30/2010 12:10 PM
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Mojo - How's yours?
The first quarter is over, and I hope that you are feeling better about your business, your career and your life. We all know that last year was a tough one. I saw many people – friends and neighbors, clients and candidates, fellow recruiters and consultants – lose traction. All of the sudden there was a sharp decline in demand for their company’s products and services, and by extension their self worth and net worth took major hits. The lingering effects of the recession have caused some people to lose their ability to achieve both happiness and meaning – not only in business, but in life.
In this setting, it is timely that executive coach Marshall Goldman released his latest book: Mojo: How to Get It, How to Keep It, How to Get It Back if You Lose It. Goldman opens the book by painting the scene of a girls’ high school basketball team changing the tone of their game to turn a seventeen point halftime deficit into a victory. There was a moment when the team was firing on all cylinders and everyone in the gym sensed it. This is the essence of what Goldman terms “Mojo.”
We have all been there. Goldman says that Mojo is at its peak when we are experiencing both happiness and meaning in what we are doing and communicating this experience to the world around us. He claims that there are four key factors that impact our professional and personal Mojo: identity (Who do you think you are?), achievement (What have you done lately?), reputation (Who do other people think you are?), and acceptance (What can you change – and when do you need to just let it go?).
When I was a manufacturing leader with General Electric, I would perform the annual reviews of my direct reports at this time of year. Within GE’s system this would require me to rate some people in the bottom 10%. I would counsel them that they had two choices: either they could improve their performance to meet expectations or they should find another opportunity where they could be successful. It was important that they felt empowered to improve their situation and not leave it to me or GE to decide. In Goldman’s terms, they had to manage their Mojo.
As a recruiter and search consultant, my advice is eerily similar. People are in control of their life and destiny, and they have the unique power to create significant positive change. By most measurements, business conditions continue to improve, and we all need to recognize this development and take advantage of it. With the right approach, we should be moving forward, making progress, achieving goals, clearing hurdles, passing the competition — and doing so with increasing ease.
If you have a chance to read Goldman’s book, let me know your thoughts. I’d love to hear what you think.
Posted by Allen Wass | Thu 4/1/2010 7:10 AM
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Business as Usual – Time to Focus on Talent Management
“Business as usual.” This is one of my favorite phrases. To me, it means that planned actions will lead to predictable results. A more official definition would be “a situation that has returned to its usual state after an unpleasant or surprising event.” This seems to be an apt characterization of where we’re headed, and although I can’t guarantee that we are there yet, it is clear that we are moving in the right direction:
– The stock market as measured by the DJIA has been reliably around 10,000 for several months.
– Manufacturing output expanded in February for a seventh straight month.
– Executive recruiter confidence is at the highest level in almost 2 years.
The key is that the worst is over and that this is a broad-based recovery. As the first quarter has unfolded, spending and headcount freezes have continued to thaw, and companies have expected AND delivered better results. Now, organizations will focus more on attracting high caliber talent to fill open and newly created positions. Appropriately, the March/April 2010 issue of SRA Update, “Time to Focus on Talent Management,” provides an overview of strategies, concepts, and considerations to utilize in developing a talent management plan. Please enjoy this month’s SRA Update at SRA Update or to download a copy of this article in PDF format, click here.
As always, I welcome your comments about the newsletter, along with your suggestions for future topics. If you enjoyed this month’s topic, please feel free to share the article with others. Meanwhile, Sanford Rose Associates stands ready to assist you with all of your personnel needs.
Posted by Allen Wass | Mon 3/1/2010 2:58 PM
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Growth Strategies in Turbulent Times
Everyone wants to know about today’s hot segments within the chemical and materials markets. Analysts talk about nanotechnology, alternative energy, and anything green, but the reality is that the successful companies are the ones that manage the transformation from being high volume/low margin commodity suppliers to being specialty product producers. These companies serve as problem solvers and solution providers for their customers. They have survived the downturn and are prepared for growth. Surprisingly, they are not necessarily start-up, entrepreneurial enterprises.
As a newly minted chemical engineer from Cornell, I started my professional career at General Electric in 1990 and participated in the last half of the Jack Welch era – a period that changed GE from a staid, commodity-oriented conglomerate into an organization that focused more on services. In a 1981 speech, entitled “Growing Fast in a Slow-Growth Economy,” Welch outlined his beliefs in selling underperforming businesses and aggressively cutting costs in order to deliver consistent profit rises that would outstrip global economic growth. Initially, many felt that Welch was ruining an institution, but over time GE saw unprecedented expansion under his leadership. Through streamlining operations, acquiring new businesses, and ensuring that each business under the GE umbrella was one of the best in its field, the company was able to expand dramatically and consistently over a twenty year period. Although it worked at the time, people mistakenly try to apply the cost-cutting portion of Welch’s paradigm today without comparable success.
The current model to emulate may be Dow Chemical. Chief Executive Andrew Liveris has undertaken an ambitious transformation of the 112-year-old chemical company’s product line into more specialized materials. What will make this a more exhilarating story is that the efforts were nearly derailed during 2009. Vacationing in the Caribbean in December 2008, Liveris learned that Kuwaiti officials were scrapping a joint-venture petrochemical deal. He was planning to use the proceeds to help buy rival Rohm & Haas Company, the centerpiece of his strategy to move Dow away from basic commodities and into higher-margin specialty chemicals. Dow delayed the close, and Rohm & Haas sued. Ultimately Dow issued preferred stock and secured short-term loans to finance the purchase. Meanwhile, Dow cut jobs and its once sacred dividend. Now, Liveris is quoted as saying that this next period is about execution on his growth agenda. His strategy is for Dow to anticipate customers' needs better by partnering with their marketing and R&D organizations. In the quest to become a reliable earnings growth company, Dow will be hiring a slew of scientists and engineers in Midland, Michigan to drive this initiative.
Unfortunately, radical change is rarely painless. In the midst of GE’s evolution, people lost familiar environments and sometimes their jobs. Since the Jack Welch era the successful company has coupled a long-term outlook with near-term execution to establish a sustainable enterprise. In addition, it should not be overlooked that making things – real things – still matters despite the collective rush to develop and create service sectors – like the financial and retail and entertainment industries. Under Liveris, Dow intends to build one of the largest advanced materials companies by investing heavily in R&D while continuing to execute relentlessly on short-term objectives. The key will be to stay the course on strategy yet remain nimble and agile enough to change tactics as challenges and opportunities arise.
Dow Chemical, like General Electric before it, just happens to be the visible example of change. Chemical and materials companies of all shapes and sizes are moving to be more market-driven where product portfolios have a primarily specialties and downstream emphasis and where operating margins are greater and more predictable. This is not a short-term tactic, but a long-term commitment to meeting customer needs through innovation and focused technology development.
Posted by Allen Wass | Mon 2/1/2010 8:11 AM
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What to expect in 2010 and the importance of annual planning
What to expect in 2010
Sanford Rose Associates is pleased to present the January/February issue of SRA Update, "The Recovery Has Begun -- What to expect in 2010." This edition highlights recent positive news regarding the economy and looks ahead at hiring trends that will likely result from the recovery in 2010. As I have mentioned previously, the demand for top executive talent will be high, and companies will need to make strategic hires and retain key personnel in order to assemble the right management team to lead them through this period.
You can view this month’s SRA Update at SRA Update or to download a copy of this article in PDF format, click HERE
The importance of annual planning
As I prepared my annual goals for 2010, I completely reviewed my 2006 business plan. It had a category titled, “Where do you see your business in 3 years?” One of the key bullet points was “well positioned for likely economic downturn.” Wow!
I have to admit that despite my intuition, I did not expect that any recession would seem as sudden and deep as this one. Nonetheless, I was able to weather the storm. Yes, in 2009 my business’ net income was lower than I would have liked, and yes, the value of my personal investment portfolio is below my preferred level. The key is that appropriate preparation allowed me to have the wherewithal to manage through even a violent gyration in the business cycle. This is a testimony to the importance of annual planning and thinking about contingencies.
The result is that my business continues to offer full-service custom recruiting based on considerable technical expertise, state-of-the-art technology, commitment to clients and the use of the Sanford Rose Associates' proprietary Dimensional Search® process.
In fact, during 2009, I was able to significantly broaden my network of industry contacts, improve my technology and incorporate process enhancements. Since I remain committed to long term success, my updated business plan now has a bullet point which reads “well positioned for growth.”
Happy New Year!
Posted by Allen Wass | Mon 1/4/2010 7:20 PM
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Hiring in 2010 – a renewed sense of urgency
This year has been a tough one for hiring. We started 2009 with companies looking for ways to cut costs which included reducing headcount. Then, many businesses took a “wait and see” approach for the balance of the year.
When an organization did want to fill a strategic role, they often had a misconception that finding the exact, right candidate for their position would now be easy – they had heard about the vast quantities of unemployed people. The rub was that individuals with the company’s specific requirements were not readily available. Meanwhile, the hiring manager did not always want someone else’s castoff. Many candidates were considered to be “overqualified” and desperate; therefore, the person would lack commitment and would be looking for better opportunities when the hiring environment inevitably improves. This logic – even when flawed – is often tough to refute.
At the end of the day, organizations were frequently unable to move forward quickly with their searches. Some were still extremely cost conscious and concerned about committing financially to a new employee. Others felt compelled to continue looking for the absolute “perfect candidate” – they were apprehensive about making the wrong decision and were ultimately not ready to hire yet. This lack of urgency was also apparent when members of the interview team were too busy with other objectives to meet with candidates in a timely manner. In the meantime, some companies faced the reality that they could not provide the necessary financial incentives (salary, bonus, relocation assistance, etc.) to attract the person they wanted. Moreover, many firms limited their options because they lacked an appropriate recruitment strategy.
Adding to the difficulties is that hiring organizations faced cautious candidates – people who were wary of changing from a known situation. This included a tentativeness to relocate; a situation exacerbated by the housing crisis that left many with significantly less equity in their homes.
What does this mean for 2010?
The fact is that there is a limited pool of talent for key positions, especially executives with specific technical and/or industry expertise. Nevertheless, the recent stability in the economy will lead more of these people to explore new career opportunities. They will be looking for positions that fit with their skills and interests and allow them to be engaged and rewarded in a successful venture. Of course, everyone wants more total cash compensation, but it is the longer term prospects that motivate people to change jobs.
In 2010, companies will need to be more aggressive at filling roles. Organizations will not tolerate having open positions for long periods of time when additional goals have to be met. Moreover, expecting more from current staff is not a winning long-term strategy. The watchword will be urgency. Once businesses feel an urgency to deliver on growth objectives, the urgency to recruit and hire will follow. This is already happening at some firms and will continue to spread in the first quarter of the new year.
Posted by Allen Wass | Tue 12/1/2009 7:35 AM
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The Increased Importance of Finding Global Talent
Sanford Rose Associates is pleased to present the November/December issue of SRA Update, “The Increased Importance of Finding Global Talent.” This edition observes that, despite the global economic crisis, the globalization of operations and worldwide movement of human capital will continue. Whether companies are seeking to expand into emerging markets or looking to enhance their core competencies in existing regions, they must have the resources necessary to find and recruit top-tier talent to fill critical positions.
You can view this month’s SRA Update at SRA Update or to download a copy of this article in PDF format, click HERE
Recently, we sent out the announcement that Sanford Rose Associates is now a proud member of the International Executive Search Federation (IESF), the world's largest retained search organization with offices in more than 40 countries and 160 cities worldwide. This global reach is increasingly critical as foreign companies continue to invest in the United States and American firms expand worldwide. As an example, Toyota's total direct investment in the U.S. has now grown to more than $17 billion. Meanwhile, numerous businesses have leveraged their presence in China and other developing countries to deliver positive results during this recession – a wise approach that mitigated additional corporate job losses, considering that China’s third quarter GDP growth was reported to be 8.9%.
Overall, the concerted efforts of the Group of Twenty (G-20) Finance Ministers and Central Bank Governors has unleashed the global recovery with the U.S. third quarter GDP growth of 3.5% as a testament. The result provides fodder for the claim that we will have a V-shaped recovery, defined as a severe downturn in the economy followed by a strong upturn in economic activity. Although several recent reports on employment and manufacturing were disappointing, it does appear that we are in the beginnings of the up-stroke of a recovery. If the growth from the last three months is sustained over the next nine months, there will be a more complete V-shape.
Accordingly, this environment will lead to more capital investment and hiring, and will ultimately cause U.S. unemployment rates to begin to subside in early 2010. Then, we will all realize again that specific specialized talent remains in short supply. During this transition period, successful organizations will pursue a renewed growth strategy while being vigilant in sticking to their strategic plans and being forward thinking and opportunistic in their hiring decisions.
Posted by Allen Wass | Sun 11/1/2009 8:17 AM
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Finally, the 4th quarter is here!
From the beginning of 2009, I have been biding my time, eager for this year to quickly pass. I foresaw that this would be a tough period requiring greater effort to yield lower returns. Now, as we enter the last quarter, business activity is starting to pick up, and I am not in such a hurry for the year to end.
I talk to many industry leaders who are cautiously optimistic and expect companies to beat their third quarter earnings estimates. The great news is that sales are going to be an even bigger shocker than profits. During the first half of the year, sales have been slow to recover as consumer spending has remained subdued and companies have been holding up profits by cutting costs. Now, as the recession shows signs of ending, sales have stabilized and shown a bit of an uptick. Although revenues will be down from last year, the exact level will pleasantly surprise the analysts. And the earnings picture is all but guaranteed to improve further in the fourth quarter since last year's final quarter was so bad.
Nonetheless, many experts remain skeptical about the likelihood of a strong and sustainable economic recovery. They claim that we will lose some momentum in the final three months of the year as rising unemployment and still hard-to-get credit weigh on consumers. These experts are like the weather forecaster who only predicts blizzards after a record snowfall. Just like it can’t storm forever, there is some sustainable amount of business activity that can be realistically anticipated, and it will be more than last quarter’s level.
In support of this argument, Dirk Hofschire, Vice President of Market Analysis at Fidelity Investments, claims that “if past historical patterns are any guide, it is possible that current expectations for the early stages of the U.S. economic recovery may be too low.” He points out that “in the post-WWII period, there have been four severe recessions during which the U.S. economy contracted by 2.5% or more. In each case, the subsequent pace of growth during the first two quarters of recovery was robust, averaging more than 6% on an annualized basis.”
What does this mean for hiring? Despite the rising unemployment numbers, firms have been hiring throughout this recession. The tough part is that the amount of people who have been let go has exceeded the number who have been added. This will soon change. Because their sales and earnings are better than they anticipated, some firms will decide to finally fill a gap in the organization before the end of the year. Realistically, most companies will simply talk about filling the role or half-heartedly try to find the right person. The broader hiring will occur during the first and second quarters when managers, and by extension their organizations, feel the pain of goals not being achieved because a key person is not in place.
Returning to our premise, we don’t want to simply rush through the last quarter of the year and miss opportunities for growth. During the next several months, winners and losers will be determined by which companies have the right resources readily available.
Posted by Allen Wass | Thu 10/1/2009 1:35 PM
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SRA Update—Managing the Web 2.0
The September / October issue of SRA Update, “Managing the Web 2.0,” discusses the issues that confront companies today as a result of their employees’ use of blogs and social networking sites and the importance of developing an intelligent and reasoned approach to addressing those issues. Prior to reading the article, you may want a quick primer on the relevant terms: Please enjoy this month’s SRA Update at SRA Update or to download a copy of this article in PDF format, click here.
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"Web 2.0" refers to web development and web design that facilitates interactive information sharing and collaboration on the World Wide Web. Examples of Web 2.0 include social-networking sites, video-sharing sites, and blogs. A Web 2.0 site allows its users to interact with other users or to change website content, in contrast to non-interactive websites where users are limited to the passive viewing of information that is provided to them. Although the term suggests a new version of the World Wide Web, it does not refer to an update to any technical specifications, but rather to cumulative changes in the ways software developers and end-users use the Web.
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A blog is a type of website, usually maintained by an individual with regular entries of commentary, descriptions of events, or other material such as graphics or video. Entries are commonly displayed in reverse-chronological order. "Blog" can also be used as a verb, meaning to maintain or add content to a blog.
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Twitter (www.twitter.com) is a social networking service for friends, family, and co–workers to communicate and stay connected through the exchange of quick, frequent messages. People write short updates, often called "tweets" of 140 characters or fewer. These messages are posted to your profile or your blog, sent to your followers, and are searchable on Twitter search.
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Facebook (www.facebook.com) is a social networking website where users can add friends and send them messages, and update their personal profiles to notify friends about themselves. Additionally, users can join networks organized by city, workplace, school, and region. You can update your status, add photos, videos and other application content to your own profile while you are able to see real-time posts from your friends.
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LinkedIn (www.linkedin.com) is a business-oriented social networking site which allows registered users to maintain a list of contact details of people they know and trust in business. The people in the list are called Connections.
If we are not already connected on LinkedIn:
Click here to connect: LinkedIn - Allen Wass enter aswass@sanfordrose.com and click Send Invitation.
Stay connected!
Posted by Allen Wass | Tue 9/1/2009 4:37 PM
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How’s your business doing?
What are you hearing out there? How’s your business doing? Are you seeing any improvement?
These are common questions that I am asked during my daily discussions with my wide network of contacts.
My answer, which summarizes numerous opinions and experiences, begins with the obvious. Like the industries that I serve, my business is down from last year. Nevertheless, the searches that companies have undertaken with me tend to be strategic roles that represent succession planning or a deliberate effort to improve a functional area for the long-term success of the organization. These have been well-thought out positions with full company support. This is good news to many who wonder whether the economy is operating at all, let alone with any level of rationality.
Moreover, managers continue to express that their business has already bottomed out. Depending on their product, this cautious confidence is justified by a couple of weeks of increased sales activity or a noticeable uptick in requests for quotes, which historically lead to more sales. It will take a quarter or two of additional experience for companies to appreciate where they stand, but the trends are promising.
The fact remains that many corporations saw their sales drop from 30 to 50% or more year-over-year. It is hard to accept that this is the new demand level, but companies have reduced costs to meet this reality. Now, consider a very reasonable scenario: an increase of 10% over current sales volumes would still leave a company down 45% from the peak if their sales had dropped 50% originally. Nonetheless, wouldn’t we all welcome a 10% increase to the top line? Just think about how much confidence industry would have if sales increased 10%. Just think about how much new flexibility a company would have to pursue investment objectives or other long-term organizational goals. Just think about how Wall Street would react, let alone the pundits on cable television.
Executives have told me that plans to hire needed staff or spend investment dollars have been delayed as they wait and see how this recession plays out. All the same, companies and managers are going to continue to compete, and they will use the current depressed sales numbers as their basis. They will plan for some level of growth, albeit probably less than will really happen. These plans will assume that sales will come off of their troughs and will include appropriate actions and tactics to achieve short- and long-term goals. This normal behavior will truly demonstrate that we are at the end of this recession.
Posted by Allen Wass | Thu 7/30/2009 5:13 PM
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SRA Update July/August 2009
In a conference call with investors, Mark Hurd, CEO of Hewlett-Packard said that "great companies excel in tough times, and in tough times customers turn to great companies."
With this in mind, we need to view the current economic environment as an opportunity to further solidify our strong presence and reputation, to reaffirm and recommit to our successful strategies, and to increase market share. Well-respected companies use these times as an opportunity to build momentum and best position themselves for the inevitable economic recovery.
From personal experience, my clients are looking to fill strategic positions that will offer short-term benefit and moreover, will definitely contribute to the organization's long-term success.
Hurd said that "the measure of great companies in this kind of environment is how you do, relatively speaking, within it, and how do you emerge stronger, relatively speaking, at the end of it?"
Throughout this downturn, businesses have tried to conserve cash in every way possible, but in some situations penny-wise can mean pound foolish. As the July / August issue of SRA Update points out, there are few shortcuts to finding good people - while the costs of hiring less than the best remain as significant as ever.
You can view the latest issue at SRA Update or to download a copy of this article in PDF format, click here.
Posted by Allen Wass | Tue 6/30/2009 11:18 AM
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Get ready for the turnaround
The recession is over. Indicators point to an end date: May 2009.
New claims for unemployment insurance are probably the very best single indicator of the end of a recession. The monthly average for claims normally peaks one or two months before the economy bottoms, and it appears to have peaked in March. Unfortunately, the end of the recession does not mean that we will immediately see lower unemployment rates; employment is always a lagging indicator.
Meanwhile, more than 90 percent of economists in a recent survey concurred that the recession is drawing to a close. And consumer confidence continues to increase. And the stock market has experienced its third consecutive monthly gain. These signals must be viewed as a wake-up call for manufacturers and suppliers: Get ready for the turnaround.
Companies large and small faced up to the business downturn by quickly cutting payrolls, reducing plant capacity and forgoing new spending. As a result, they significantly lowered industrial output and finished goods inventories.
When the logjam breaks, a flood of new orders will flow to factories. Manufacturers will have to be able to gear up quickly or lose out. Now – while customer orders remain soft – is when companies need to fine-tune their operations to prepare for the recovery.
Readying to meet future demand when business is slow is no easy task, but manufacturing companies that started preparing for the future during the downturn will have a huge advantage. On the other hand, those that remain in survival mode have significantly more work to do.
During my conversations with industry leaders, I hear rising optimism as business stabilizes and orders cautiously pick up. Meanwhile, recruiting this year has focused on filling strategic roles for my client companies so that they will be better positioned for the long-term. As the second quarter comes to a close, more hiring managers and human resource professionals have been contacting me to discuss these types of assignments in their organizations. Again, this clearly points toward growing optimism and an impending upturn, so we better all get ready.
Posted by Allen Wass | Fri 6/1/2009 7:31 AM
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SRA Update—May/June 2009
For the past couple of months, I have been beating the drum that this recession will ease as confidence builds.
The data is out there that this process has started. The Reuters/University of Michigan index of consumer sentiment rose to 65.1 in April, the second straight monthly gain.
Meanwhile, the expectations gauge—which more closely predicts the direction of consumer spending—rose to 63.1, the highest level since last September.
Furthermore, during the first quarter consumers came back to life, boosting their spending after two straight quarters of reductions. The 2.2 percent growth rate was the strongest in two years.
Nevertheless, companies continue to tightly manage their costs. The economy shrank at a worse-than-expected 6.1 percent pace during the first quarter of this year as sharp cutbacks by businesses overwhelmed the rebound in consumer spending.
These divergent numbers are not unexpected. Companies are going to react to changes in consumer habits. Therefore, prior decreases in consumer spending resulted in cuts by businesses. Now, the increase in consumer spending should yield a positive change in business behavior.
As proof, consecutive months of stock market gains cannot be ignored but must be considered a harbinger of better corporate performance.
The consensus is that the most severe phase of the recession is behind us and that companies will begin to realize that sales have stabilized and will increase. At this point, many firms have already aligned costs to match a depressed revenue level. By the fourth quarter, organizations will be able to properly plan for 2010. This year was all about how to quickly remove cost to manage the steep decrease in revenue. As annual plans are created for next year, the focus will be back to defining key growth objectives for the coming year and re-establishing the longer-term plan.
As one vice-president of a precision metal parts manufacturer recently told me, the challenge is keeping people motivated through these stressful times. This is especially true as the tide turns and employers want employees to remain loyal and project a positive image of the company.
As the May / June issue of SRA Update observes, employers – like the products they market – have a distinct brand image for better or for worse. With the exponential spread of Internet blogs and other online commentary, companies need to be especially attuned to employee opinion and how it may affect future job acceptances.
You can view the latest issue at SRA Update or to download a copy of this article in PDF format, please click here.
Posted by Allen Wass | Fri 5/1/2009 8:31 AM
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Don’t miss the recovery
“Everything will be all right. We do have the greatest economic machine that man has ever created, I believe. We started with four million people back in 1790 and look where we've come and it wasn't because we were smarter than other people, it wasn't because our land was more fertile or we had more minerals or our climate was more favorable. We had a system that worked. It unleashed the human potential. Didn't work every year, we had six panics in the 19th century, in the 20th century we had the Great Depression and World Wars, all kinds of things. But we have a system, largely free market, rule of law, equality of opportunity, all of those things that cause the potential of humans to get unleashed, and we're far from done. So I think your kids will live better than mine, your grandchildren will live better than your kids. There's no question about that. But the machine gets gummed up from time to time and it's – if you take the bulk of those centuries, probably 15 years were bad years, but we go forward.”
~Warren Buffet on CNBC ~ Monday, March 9, 2009, the day the stock market hit a 12-year low
“Don’t miss the recovery.” That was my mantra coming out of the last recession. Now, after 3 weeks of stock market gains, I am singing that tune again.
Last month, I stated that “confidence will build as markets start to function normally again.” Currently, we must be alert that this normality has started to emerge, and the stock market is reflecting that fact. In other words, we are beginning to see the light at the end of the tunnel.
In what may become the definitive line about our current economic crisis, Warren Buffet said on CNBC that the United States economy has “fallen off a cliff.” Even so, on that same segment, he affirmed the last line of his company’s annual report: “America's best days lie ahead.”
Many economists believe that gross domestic product (GDP) will keep contracting until the second half of this year. Nonetheless, the consensus is that the recession, which began in December 2007, will ease by the end of this year and economic indicators will improve, signaling the end of the worst economic downturn since the Great Depression.
Recent data supports this sentiment …
The Commerce Department reported that consumer spending edged up 0.2 percent in February, in line with expectations. That followed a huge 1 percent jump in January that was even better than the 0.6 percent rise originally reported.
Orders to US factories for big-ticket manufactured goods unexpectedly rose in February after a record six straight declines.
Sales of previously owned US homes rose at their fastest pace in nearly six years in February.
Sales of new homes rose for a second straight month in February.
Consumer confidence held steady in March, with a slight blip upward, halting three months of declines.
Early in a recession businesses try to position themselves to survive the downturn. Then, once the bottom is in sight, firms who foresee recovery try to position themselves for that as well. Meanwhile, this time, the fundamentals are in place for a v-shaped recovery. The argument is that this downturn came abruptly, so companies turned things off quickly. Manufacturers have cut back production more than current demand dictates, so inventories are low and getting lower. As a result, pent up demand combined with depleted inventories will produce a sudden recovery.
The challenge for companies will be in stimulating a stagnant supply chain and ramping up idled production. Meanwhile, the marketing and sales forces have to be aligned to take advantage of this demand spurt.
The primary key to sustainable success for any business is hiring the right people to run it. We may be in the midst of a recession with increasing unemployment and fewer jobs, but that is not likely to have much long-term impact on the shortage of talent. We have all read about the aging of the population and other demographic factors. The likely effect of these dynamics on the availability of skilled people has been extensively covered by the media.
Business leaders are painfully aware of the consequences of being on the wrong side of the talent equation – of the instability and disruption it causes internally and with customers. A CEO may have a brilliant strategy for making the numbers better every year, but over time, people will make it happen. Company leaders can put together aggressive marketing, sales, production and business development plans, but their enterprise cannot win in the marketplace if they don’t have the right people to implement them.
Although many companies may not yet be willing to fill open positions or take on new initiatives that need to happen to achieve growth, now is the time to plan for these anticipated events. Every organization ought to define the missions and roles so that people can be identified who combine the right skills and experience with a personality and communication style that match the corporate culture.
Recognizing the overwhelming importance of talent recruitment and retention in today’s marketplace is only the beginning. The key is to determining when to turn awareness into action and avoid missing these vital early stages of recovery.
Posted by Allen Wass | Wed 4/1/2009 12:27 PM
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SRA Update—March/April 2009
We are truly in unprecedented times. Consumer confidence has hit a historic low and the issue of lost confidence – and how to revive it – is playing a more pivotal role in this recession than in others. The reason is that today's problems are centered on the markets for credit, which is really just another word for trust.
Already, some signs suggest that steps taken by the Federal Reserve, and the Bush and Obama administrations, have been helping. The market for commercial paper – short-term loans to businesses – has improved markedly in the past few months, for example. Meanwhile, fewer small businesses have reported being affected by tightening credit and fear of going out of business has receded since October. In fact, Federal Reserve chief Ben Bernanke raised the prospect of better times ahead during his recent report to Congress. He said that the Fed anticipates a "gradual resumption of growth" in the second half of this year and a "moderate expansion" next year.
Confidence will build as markets start to function normally again...or maybe it should be stated the other way around...markets will start to function normally again as confidence builds. Either way, companies are challenged to operate in the current environment of uncertainty, while they need to position themselves for the anticipated growth and expansion that is part of recovery.
As the March/April issue of SRA Update observes, the downsizings and restructurings that have accompanied every recession in the past three decades provide two important reminders: 1) Done wrong , they can wreak havoc with an organization's strength and stability; and 2) Done right, they can pave the way for future growth and competitive advantage.
You can view the latest issue at SRA Update.
Posted by Allen Wass | Sun 3/1/2009 1:41 PM
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