Tuesday, December 18, 2007

Three Signs of a Miserable Job

This book definitely could be taken as touchy feely. As a soft approach to management. As what managers should not waste their time with. Anytime spent on this crap is not focusing on the revenue growth or how it moves to the bottom line. Now maybe that is true, but in the services industry; restaurants, hotels, consultancies, auto-mechanics…anyone working with anyone else, other than revenue and profitability margins, customer service and satisfaction are directly or indirectly correlated to employee satisfaction and enjoyment with their job. “The dissatisfaction of employees has a direct impact on productivity, turnover, and morale, all of which eventually hit a company’s bottom line. What we learn is it’s not always about the money (or at least, just about the money).

Patrick Lencioni (the Author) proceeds to discuss how many CEO’s and professional athletes can feel the same sense of dread going to their jobs as a fry-cook or Tupperware salesman. People making millions of dollars a year can be miserable in their jobs, while some people who make little or no money can love what they do – like a volunteer or a high school volleyball coach. The author decides it is not a problem of ‘bad’ employees, that some jobs just aren’t as glamorous as others, or that if only a person made ‘x’ amount more an hour or a year- he’d be much more happy with his job.

Lencioni argues that instead, it is the manager’s job and responsibilities to not only motivate and train their employees, but to actually help them become aware of how they fit into the bigger picture. There is no reason the most adults who work over 8 hours a day at their jobs are dissatisfied. Patrick goes on to argue that the ‘Three Signs’ are Anonymity, Irrelevance, and Immeasurement. He feels that these three factors will make any job miserable, and it is the manager’s responsibility to help employees measure their contributions and find how what they do is relevant while also finding a way to be genuinely interested in their lives. People sometimes have some of one or two of these at their work but those truly happy with their jobs have a great balance and culture that addresses these issues.

Anonymity – People cannot be fulfilled in their work if they are not known. All human beings need to be understood and appreciated for their unique qualities by someone in a position of authority.

Irrelevance – Everyone needs to know their job matters, to someone. Without seeing a connection between the work and the satisfaction of another person or group of people, an employee simply will not find lasting or fulfillment.

Immeasurement – People need to be able to gauge their progress and level of contribution for themselves. They cannot be fulfilled in their work if their success depends on the opinions or whims of another person, no matter how benevolent the person may be. Without a tangible means for assessing success or failure, motivation eventually deteriorates as people see themselves as unable to control their own fate.

What is amazing about the problem and remedy that Lencioni describes is that it is effective and simple, but barely used. It seems obvious and ridiculously simple that most people might think that it doesn’t need to be said. Well it does. Everyone deserves to find fulfillment in their job and not spend their Sunday’s fretting over the upcoming week.

Thursday, December 6, 2007

Money and Banking - Subprime Crisis

Thanks to a good friend, I was able to sit in on a special guest lecturer, Kent Vickery from Carrington Capital, discussing the reasons, importance, causes, and predictions of the recent subprime situation. In Alex Gould's Econ 111: Money and Banking Course.

To preface the lecture - Alex discussed how 1. you don't want to be in a subprime mortgage - so keep the FICO score above 650 (a score between 720-850=99% chance to pay back) and 2. the psychological impact of the herd mentality. (They also compared the VC community to lemmings...another topic :) )

*for scale - in today's terms - the S&L Crisis would be $800B of losses

Kent's Points of Subprime:
1. Subprime Crisis is Nasty - $400 Bil of estimated losses
2. $300 Bil losses in US markets already
3. Ripple effect - A. US: property meltdown - 44.5M households will lose approximately $223Bil in wealth over 2008 and 2009
B. Globally - technical default after subprime resets
4. Disgruntled investors will be leading in litigation's to Investment Banks
5. History and How - went through 2/28 arm loans and just with a house of $675k house value and a loan of $417k, the difference in payments over 3 years between a conforming vs. a non-subprime borrower is $59,000 after taxes! At resets, price jump is too high and people cannot make their payments. "When things get tight, the BEAST must eat."
6. "Shadow Banking Bomb" CEO of PIMCO, anatomy of subprime CDO. People's ability to refinance/repay increases as their equity and value increases.
7. GSAMP Slide - Deutsche Bank Trust Reports: 12 Tranches, 10 investment grade
7/10 downgraded to junk, 4 have been wiped out. Cramer video - "no idea how bad it is", Idea: let market wash itself out, but election year so not politically possible. Goldman Sachs may have shorted the market when they saw the tranches slump.
8. Ripple turns into a tidal wave - like Enron crisis - or fall of LTCM

In banking "devil is in the details,"
Interesting idea from Ben Stein - investment banks (Goldman) center point for class-action lawsuit. Necessary information for litigation: EMAIL TRAFFIC: b/t Goldman and Deutsche Bank, outside underwriters, and credit agencies. They had default information and were still selling CDOs - so they made money on the shorts...shady.

Alex ended the final class with four points:
1. Cherish your relationships
2. Options are valuable
3. Trust your gut
4. Go out and get it

The worst thing that could happen to you; too rich, too beautiful, and peak too soon.

He then ended with a great speech. Anna Quindlen's commencement address to Villanova University, Friday 23 June 2000.