Watch This Space - How a Recruiter Sees the World Today

I have an interview coming soon with Diane Plymale of Convergence, Inc (www.conv.com). Convergence is a recruiting agency and Diane will provide some interesting insights into the current recruiting environment. In addition there will be some how-to advice for finding good candidates or being one yourself. Check back in a couple of days.

You may also want to look in again on a recent interview with Gino Maccaroni to get a career consultant's view of investing in IT.

http://capcom-it.blogspot.com/2009/03/investing-in-information-technologies_07.html

When GroupThink Drives the Narrative

I wish I had the time - or maybe I'm just not smart enough - to disassemble conventional wisdom like some people can. But then, maybe I'm just lazy.

As a former member of the media (yes, I was actually a paid newspaper reporter back in the day) I can testify to the truthfulness of the assertion of GroupThink in the media. I saw it every day in the newsroom.

The linked article has some interesting things to say about GroupThink and the recession. Let's use one example - "It's the worse economy since the Great Depression". Uh, except that it isn't. It may be worse that 74-75 (may, not is) but it's not as bad as 81-82. I was there.

But Rex Hammock thinks the GroupThink of the media scrum may be changing its narrative. As my hero Glenn Reynolds says, read the whole thing.

How am I doing - Parte Tres

Okay, time for another snap quiz. Originally, I predicted that the US stock market would come out of its tailspin in mid-Q1 2009. I later amended that to the end of the first quarter. In mid-March the major indices started to reflect a significant rally, which went into full rocket mode on Monday, March 23.

So it looks like I had the trend but I was off by a few weeks. Now I'll put another marker out there and you can come back later and laugh at me.

The markets will slowly improve over the next few weeks, into late April or early May. Then there will be a major pull back that will last until mid-summer. Then in late July or early August, the real market recovery will begin.

Why do I think this? Well, historical trends would predict this but looking backwards, historic trends are driven by actual facts on the ground. In this case, the federal government has finally finished creating the structure under which the maladies caused by the collapse of the housing market bubble. The public-private plan will begin to remove the toxic assets from the banking system which will rebuild the foundation of the system.

All of this will take time, a long amount of time. I have told friends that this downturn will last a relatively short amount of time - say until early 2010 - but the emotional effects will last a generation. It will take five to ten years before the average person will trust public markets. It is likely that my children will not be comfortable in the markets for a long, long time.

Some other time, I may wax philisophic on what an historic opportunity this moment in time is for investors - smart investors. But that is a useless digression within this post.

For the moment, my adjusted prediction is coming true. Let's see how the rest goes.

Doing Less with Less

Now here's an interesting idea. I'll admit that I'm one of the kind of managers who tries to do more with less. After all, isn't that the challenge executives are always placing in front of us? And yet ... and yet ... the author of this article asks a very interesting question. When times get tough and budgets shrink, maybe it's time to pull in your horns, take better control of your operation, cut costs and improve efficiency and effectiveness. Then when growth returns -- boom! -- you're good to go.

I'll Buy the Drinks

Here are three video clips from CNBC's Squawk Box show on Friday morning of March 21. It's a long interview with three hedge fund giants and it's one of the best television interview and discussion sessions I've ever seen. I wish I could buy these guys dinner and pick their brains for an evening.

www.cnbc.com/id/15840232?video=1066966626&play=1

www.cnbc.com/id/15840232?video=1066940681&play=1

www.cnbc.com/id/15840232?video=1066957901&play=1

The Law of Unintended Consequences

There's an old joke I use frequently and it goes like this, "There are three great lies: the check's in the mail, I'll respect you in the morning, and I'm from the government and I'm here to help."

One of the primary markets of my employer is municipal waste water treatment facilities. We had (as in, used to have) a pretty good order book for April of 2009 but that has evaporated. Inside the business, we're hearing that it's the federal stimulus package to blame. Once the states and municipalities (our customers) knew federal money was coming they put our projects on hold until they can get the stimulus money in their hands.

We're shutting down the main plant for two weeks in April because of this.

I certainly don't feel stimulated at the moment.

How am I doing - Part Deux

Here's my second self-report card on my economic predictions as I amended them in early February 2009.

"My prediction for a market move starting in mid-Q1 2009 was wrong. It is now mid-Q1 2009 and the Dow is, in fact, still declining. I'll push this out to the end of Q1."

It seems like I got close on this one. The market has been in a week-long rally and only today is it seeming to make a correction, which is probably mostly profit taking from the rally. There are many indicators of macro economic improvement although we have an awful long way to go to pull ourselves out of this hole.

"The return to growth will be weak at first (maybe 1 percent in all of 2009) but will pick up speed in 2010 as the Federal Reserves money printing takes hold. (I just looked at the Monetary Base numbers for 2009 and the almost-no-growth line up until August 2008 has been replaced with positively explosive growth since then. The Federal Reserve was truly asleep at the wheel regarding the Monetary Base this year --- but at least they seem to have awakened now."

http://research.stlouisfed.org/fred2/fredgraph?chart_type=line&s[1][id]=BASE&s[1][range]=5yrs

Check out this link from the St. Louis Federal Reserve. The monetary base grew explosively from September 2008 into January 2009. Then the growth of the base trailed off, increased again, and is now trailing off again. I wish I had enough insight into the Fed's activity to understand why they let MB decline at all but they did.

Also, for what it's worth, I'm having trouble getting a link to the monetary base velocity charts on the Fed's web site. I can say from memory that the velocity was declining substantially in late 2008. This tracks with the common view that the Fed is pumping out money but the banks weren't lending. From memory, the velocity picked up substantially into February and March. When I can get the link to work, I'll come back and edit this post.

Without the velocity (the lending by banks of the money they get from the Fed), all the Fed pumping won't do any good. That's the wild card in my thoughts on the macro economics of this recession.

Finally, the prediction I didn't publish is that the US unemployment rate would grow to 8.5 percent. I write this only to show you how painstakingly honest I am. I could have ignored what will obviously be a bad call. At this writing it is 8.1 percent and only a fool will say it won't go higher. I'm guessing 9 to 9.5 and I'm hoping for nine. Many in the pundit class are talking double digits but I'm not sure how they get to that number.

So, I'm pretty happy with my revised prediction. I think the market will continue the rally in fits and starts through April, then will decline again before finally going into bull territory in late 2009 as the growth becomes evident going into 2010.

Let's see how the adjusted prediction pans out. Oh, and I need to work out a better way to keep a scorecard on myself. Wish me luck on that one.

Untangling Enterprise Systems

Here is a very, very interesting discussion of one of my favorite topics - acquisitions and divestitures. I've been through both of them a few times from both sides of the transaction. Integrating IT systems post-merger or separating systems post-divestment is one of the tougher things IT managers have to do.

This is almost always complicated by the necessary speed of the transaction. Mergers are often predicted weeks or even months ahead so system inventories can be gathered and plans made (usually in secret, by the way). Divestitures are almost always kept secret by the selling unit to prevent the soon-to-be-discarded from freaking out. (I was once divested - it would be more accurate to say my division was divested - and I was lucky enough to have a friend in the corporate office who tipped me off a couple of months in advance. It helped immensely as I readied my parachute for the jump.)

Both situations provide their own challenges but I've found divestitures to be tougher. How exactly do you plan for slicing off a significant business unit without tipping-off the unit's IT staff? Very carefully.

Add to this the perceived need for speed from executives and the general lack of understanding in the board room of the intricacies and interweavings of systems and the problem becomes even more intractable. The time of a divestiture announcement to the time of actual sale can be measured in days or weeks. Good luck getting that clean separation.

Your best defense is to always be aware that mergers and divestitures are pretty much continuous activities of businesses and try to be prepared. Follow the link for some ideas on how to stay ahead of the situation.

A Depression Primer

This is an interesting article by David Frum regarding the lessons apparently not yet learned by the Obama administration regarding economic policy. I must say I disagree with some of the points made but, still, it is a worthwhile read. I am by no means an expert on the Great Depression. My view is that of an interested civilian who has some graduate education in finance and monetary policy - an educated bystander if you will. Still, as I read this article, there are many conclusions with which I disagree. I may come back later and add my unsolicited opinion to the article.

News & Opinion
Thursday, March 12, 2009

Invited by a reporter Monday to criticize President Obama’s economic plans, the chair of the White House Council of Economic Advisers, Christina Romer, naturally brushed the question aside. “You want me to tell you what's wrong with the fiscal stimulus package?” she said. “SO not going to do that!"

Too late! As it happens, the lecture Romer had just finished delivering at the Brookings Institute on Monday afternoon was criticism enough.

An expert on the Great Depression, Romer organized her lecture around six lessons distilled from the era. The administration she serves seems to be disregarding every one of them.

LESSON ONE: Romer warned that a small fiscal stimulus has only small effects. “While Roosevelt's fiscal actions were a bold break from the past, they were nevertheless small relative to the size of the problem,” she said. Roosevelt’s spending increased the deficit by only 1.5 percent of GDP in 1934. And Obama? His fiscal stimulus is certainly big—almost $800 billion, or “close to three percent of GDP in each of the next two years,” Romer said. But most of that money won’t be spent until 2010 or later, meaning it’s fairly modest right now, when we really need it.

LESSON TWO: Romer argued that monetary expansion can be a powerful tool even when interest rates have reached zero. The Roosevelt administration reflated by taking the U.S. off the gold standard in 1933—and then (unintentionally) by issuing “gold certificates” against the European gold that flowed into the U.S. as war approached in the late 1930s. The Obama administration, by contrast, seems to have written off monetary policy as exhausted, and is betting everything on the power of its inadequate fiscal stimulus.

Romer expressed her concerns on this matter delicately: “In thinking about the lessons from the Great Depression for today,” she said, “I want to tread very carefully. A key rule of my current job is that I do not comment on Federal Reserve policy. So, let me be very clear—I am not advocating going on a gold standard just so we can go off it again, or that Tim Geithner should start conducting rogue monetary policy. But the experience of the 1930s does suggest that monetary policy can continue to have an important role to play even when interest rates are low by affecting expectations, and in particular, by preventing expectations of deflation.”

Behind Romer’s delicate words is a question: Why does the Obama administration talk down the importance of monetary policy? The Federal Reserve still has weapons in its arsenal, including what's called "quantitative easing"—technical jargon for what amounts to printing more money and deliberately inflating. These measures are not only powerful, they are a lot easier to stop when they are no longer needed—unlike, say, the administration's big spending plans.

LESSON THREE: Romer warned against cutting back on stimulus too soon—the mistake that FDR made in 1937. That may sound like a justification for the slow-release Obama fiscal plan. But as Romer notes, FDR’s stimulus was not so much ended as it was counteracted, by the imposition of Social Security taxes in 1937, for example. In the same way, the Obama administration has already announced that upper-bracket income taxes will rise in 2011. More ominously, that’s likely the date at which the administration’s cap-and-trade plan will go into effect, sharply increasing energy costs.

Romer seems worried about this problem too: “We will need to monitor the economy closely to be sure that the private sector is back in the saddle before government takes away its crucial lifeline,” she said.

LESSON FOUR: Romer noted that financial recovery and real recovery go together. But not in this administration! The stimulus plan is already enacted. A huge omnibus spending bill is rolling to the finish line. And big budget increases in fiscal 2010 seem certain. Yet at best the Obama financial plan is still a work in progress. My colleague John Makin from the American Enterprise Institute offers a tougher description: the plan, he says, is “opaque, ad hoc and unsystematic.”

LESSON FIVE: Romer urged that the recovery efforts must be global. Too bad, then, about this report in Tuesday’s Washington Post: “ Even as world trade takes its steepest drop in 80 years amid the global economic crisis, the administration is preparing to take a harder line with America's trading partners. It will seek new benchmarks before supporting already-written trade agreements with Colombia and South Korea and is suggesting that it will dig in its heels on global trade talks, demanding that other countries make broader concessions first.”

LESSON SIX: Romer’s final lesson may be the least reassuring: Despite the chaos, loss of faith and lost wealth, the Great Depression, she said, “did eventually end.” So it did. And so did the dinosaurs. In the long run we are indeed all dead. In the short run, however, it would be nice not to be poor.

In an administration that increasingly seems baffled by the financial crisis, a White House official who is willing to pierce the illusion of happy consensus can do a real service. We don’t need jolly, bogus reassurance. We need real thinking and a more open and productive debate. The administration’s top economist has now publicly, if elliptically, served notice of the likely inadequacy of the administration’s plans. Better to correct course early rather than too late!

The Challenge of Return on Investment

Here's an interesting article published by an architectural news organization. Although my personal interest is in mid-size manufacturing and distribution, many of the concepts hold true. What I found interesting is the author's focus on cash flow as an indicator of success. If, after a new technology is introduced, then the organization's cash flow position improves then the project is a success.

That's a simple and useful measure. However, teasing out the effects of a new IT project and separating them from other business conditions is difficult, at best, in all but the largest and most disciplined organizations. (Find me a mid-sized company that audits its capital projects - please!)

Still, the author has interesting things to say and he may tickle some useful thoughts in your head.

Finally - a Dog in the Fight

I have been saying that the best time to invest in IT (or any properly vetted capital investment) is when business is slow. Successful companies with good balance sheets have long used these periods as opportunities to pin their opposition to the mat. And, by the way, I think Ford Motor Company is doing that right now to GM and Chrysler.

Well, it seems that IBM is getting feisty, "We will not simply ride out the storm," CEO Samuel J. Palmisano said ... "Rather we will take a long-term view, and go on offense."

The link above is to an on-line Wall Street Journal article which may require a subscription. I'll cut-and-paste the text so follow the "read more" to see the rest.

By JESSICA HODGSON

The chairman and chief executive of International Business Machines Corp. issued an upbeat message to stockholders Monday, in marked contrast to the mood of other large tech companies.

IBM, whose stock has outperformed its large cap tech peers, said in a letter accompanying the company's annual report that it is "positioned to lead in the era that lies on the other side of the present crisis."

"We will not simply ride out the storm," CEO Samuel J. Palmisano said in the letter. "Rather we will take a long-term view, and go on offense."

Mr. Palmisano's letter stresses IBM's global exposure -- nearly two-thirds of the company's business comes from outside the U.S. -- and its investment in cloud computing as two trends which it believes will help the company keep its edge over peers and prosper not just in the current environment but after economic growth returns.

He also talked extensively about the way IBM has positioned itself to play a role in selling "smart meter" technology, underscoring its position at the heart of the company's growth strategy and the central role it is likely to play in rebuilding infrastructure across the world.

Mr. Palmisano said the devices, which plug analytical software into small devices that can be used in everything from traffic management systems to food traceability products, will play a central role in the efforts by governments and corporations to revive the world economy.

"Through pervasive instrumentation and interconnection, almost anything – any person, any object, any process or any service, for any organization, large or small -- can become digitally aware, networked and intelligent," he said.

IBM's focus on smart meters and analytics accompanies a move by many of the world's governments to boost their economies through investment. In the U.S., this has taken the form of earmarking cash for industries such as healthcare technology and other industries which IBM says could improve efficiencies by installing the meters.

IBM has diversified itself successfully over the past decade, emerging from its roots as a hardware maker to become the world's largest I.T. services organization, which also sells high end software to corporations and governments.

Separately, IBM said Mr. Palmisano received $21 million in salary, bonus, perks and stock-based awards in 2008, according to a filing with Securities & Exchange Commission. His compensation included a base salary of $1.8 million and a $5.5 million cash bonus. In May, IBM granted Mr. Palmisano $12.2 million in equity-based awards, a reward for performance in prior years.
—David J. Reynolds contributed to this article.

Investing in the IT Staff and Management - A Career Counselor's View

Investing in information technologies is not just about capital and expenses. Investing in IT is also about people. I hope that each person on your IT staff is an asset to the organization and, like any productive asset, investments in your staff can produce positive returns.

What follows is a discussion with Gino Maccaroni, the owner of Spectrum Life Management. Gino is a career and personal life advisor from Newberry, South Carolina who works with people from all walks of life. Since the topic here is investing in information technologies, I’ve asked Gino about his opinions on IT staff management and how investing time, money, and executive attention into the IT staff can improve a business’s success. With decades of experience in personnel recruiting and counseling, Gino offers his perspective on how to mentor IT staff and managers and develop communications throughout he business. Gino can be reached at 803-321-5999 and you can find more information about Spectrum Life Management at http://spectrumlifemanagement.com/.



Explain a little bit about yourself, Spectrum Life Management, and how Spectrum came to be where it is today.

I was a theologian and minister for several years. I fell into career management and impression management after a traumatic period that began with the kidnapping of my daughter, who was then fourteen years old. She was gone for nearly five years and I can’t explain the depths of that pain. When I finally got her back, I put her in a witness protection program and by then I was angry, bitter, divorced, bankrupt, and broken.

Then I was recruited by a national career consulting firm as an appointment setter, which is the low end of the recruiting scale. Emotionally, mentally, and spiritually I was drained. But I seemed to have a knack for the work. The average appointment setter made three appointments a day with candidates and I was getting twelve to fifteen appointments a day. The company liked my work and promoted me to an executive sales position and I became the person candidates would come to see. The average recruiter will close three client placements in a month and I was closing seven to nine placements a month.

So, I was promoted to the executive team but then the company was acquired by a venture capital firm. Even though I had more money in my pocket, I honestly did not like their values. I liked working one-on-one with my clients and this changed. So, my current wife and I decided to open a private practice which became Spectrum Life Management where we counsel our clients in career management, professional advancement, and image management.

One of the things to which I attribute our success is that I’m sort of like a sponge when it comes into tapping into people. I take it seriously to find mentoring for myself wherever I can from all of the executives and consultants with whom I work side-by-side. Every single one of them gave me something; I’m smart enough to know that I don’t know everything.

I do attribute any success I have to being mentored and coached.

Since you work with managers in transition or through career coaching, how does your success affect the success of the organizations who employ your clients?

Obviously I teach career advancement and impression management. The strategies, tactics, and principles that one uses for career advancement often overlap into actual performance on the job. Just the entire process of monitoring, analyzing, adjusting behaviors, projecting an image, showing confidence, communicating – all of this overflows into a client’s position and makes him or her more productive and useful to the organization.

Most people keep it private that they’ve hired a career coach so the client’s organization doesn’t really know I exist.

What is your general opinion of the quality of executive management today?

I do believe that there is an evolution in the air. I do believe that there are a host of executives who are beginning to wake up on a spiritual level and beginning to understand the value of being green (just as an example) and the benefits of having a good reputation by doing something that’s meaningful to their employees and the surrounding culture in which they live. I’m reluctant to really call that a spiritual awakening but more and more executives I meet are thinking that way and talking that way.

Would you say it has improved or declined in recent years?

If you look at the economy, you see a major decline because of what I call eros-centered thinking, the attitude that says, “I need mine”. I think that has been the undercurrent of corporate America for many decades. I have felt a ship to agape energy; a more forthright and giving attitude.

Can you give some specific examples to back this up?

I can only give you specifics based on clients I’m talking to but this is what I’m hearing.

Since this blog is about investing in information technologies and keeping in mind that the purpose of the organization is to maximize profits, do you have any general thoughts on how executives should invest in their IT staffs?

Yes, I do. One of the factors that really needs to be considered is top management’s commitment to and personal involvement with their IT staffs. This means that senior managers need to communicate to the rest of the organization their support for the approaches carried out by the IT staff. This includes the strategic vision that the players follow the proper processes and actually use the information to make sound business decisions. I also think that it means that senior managers accept information technologies as an investment and not an expense.

I can compare that to what I do an a career consultant. Wise people see working with me as an investment in success – not an expense. It also implies that, as an investment, IT takes time to implement and that changes, projects, and systems are not short term things but are there for the long haul.

How do you think IT managers can best invest in their staffs?

They have to be proactive in seeking out the top dogs in their industry. Don’t rely on human resource departments but investigate and hire the good people, the top people. It’s important that they offer challenging, meaningful work and that they provide opportunities for a staff to grow and develop. They need to help staff members be all they can be my mentoring them. Challenge and train your staff and give them the respect and trust that they need.

It’s also a major home run for the company and it often means tolerating mistakes because they lead to personal growth.

How can IT managers invest in themselves?

They need to see the strategic picture and to learn to communicate better about their needs, visions, and goals with the CEO of the organization. They can invest in themselves by learning how to communicate with the business. The majority of IT managers tend to just get locked into one way of thinking and oblivious to the fact that they need to communicate ideas to line managers who don’t think as they do.

How can IT staff professionals invest in themselves?

They would certainly benefit from what we are talking about – learning to have a strategic view. IT managers tend to be narrow-minded and expert at what they do but not at all good at seeing the big picture. They need to understand the value of what they do and how it relates to the big picture. They would really benefit from indulging themselves in a greater sense of purpose. They should also assess, learn, improve, and adjust to the strategic vision that their fellow managers and executives have and this will make a positive impact on their personal lives while making their work more meaningful..

How is IT management different from line management like sales or operations?

This question goes right to the heart of what I was just saying. Typically, IT managers do not see the big picture. The sales manager is completely dependent on the IT manager. The IT manager has an enormous responsibility as he or she is the grease in the wheel that makes the organization turn. Because information technologies managers do not tend to see the big picture, and they have poor communications skills, instead of working as a cohesive unit everything is chopped up and fragmented and the organization does not work as well as it should. I would also recommend to IT managers that they show respect to other managers and be sensitive to their needs.

Do you have any thoughts on how individual managers can encourage their organizations to invest in IT staff development?

Mentoring is definitely one area I recommend from the corporate staff. Mainly, executives should be putting some kind of structure on how the organization needs to align itself with the IT department to make sure that it achieves the organization’s strategic goals. And take into consideration other stakeholder interests. That means there should be some kind of actively designed governance process.

As a tactic, they should actively design IT governance around the organization’s overall objectives and performance and they should include the IT department in decision making and strategic thinking. Executives should keep the channels of communication wide open. Resource allocation, attention, and support should be given throughout the entire process.

From what I’ve gleaned it is very, very important to the IT side to clarify the exceptions or what I call the exception handling process. There is always a department head that wants something done that isn’t normal. From my experience that destroys the whole thing. If it’s planned ahead of time there are going to be exceptions to the rules then it goes a long way towards building good relationships and communications within the organization.

Gino, thanks for your time and insights.

You’re welcome and thank you.

Comparing Recessions

I'm sure Time Magazine doesn't need a link from me to drive traffic to their website ... yet here's a link. Girard Sagmiller of CST Industries passed it on to me so a tip-of-the-hat to Girard.