The Current Economic Crisis: A Translation for the Rest of Us

There is an organization called HSM Global, maybe you have heard of them. They have been around for more than 20 years and among other things, produce some of the most well respected world-class business conferences on the planet.

On October 16th, they hosted a conference in New York called the World Finance and Economy Summit - talk about timing!

The conference featured speakers such as: Martin Feldstein, Jeremy Siegel, Barton Biggs, and Alan Greenspan as well as Carly Fiorina.

Since the audiences we serve are similar, HSM came to ExecuNet and asked us if we would prepare an executive summary of the conference for their attendees. We were happy to do it.

The summary was written by ExecuNet Vice President & Executive Editor Lauryn Franzoni. After I had read it and despite the fact that she is an over-the-top Redskins fan I was blown away at how she was able to take the comments of these icons and turn them into a document that someone like me could easily understand (and we are talking here about someone whose last math course was in the 8th grade.)

In any case, we shared this document with our membership as we felt it would provide much needed clarity to a situation of interest to us all, and since we spend a lot of time telling members that the currency of networking is information and that truly effective networking is about giving and not getting, we wanted to try and continue to lead by example.

The title of the executive summary is Understanding the Current Economic Crisis and What to do About it.

If you are interested in reading it, you need only click here.

Some Purchases May Still Be Worth the Price

We continue to wade through an economic outlook that feels like trying to run through hip deep molasses and with little if any encouragement finding its way to the surface it makes neither going to sleep very easy nor waking up with a smile much of a probability.

Even as this is written, out comes the Conference Board's consumer confidence index for October at 38.0 - the lowest ever. Cool. It's always nice to be part of a record breaking performance.

So where is there some perspective? Read on:

A couple of Sunday's ago I think I found at least some in the form of the Your Money column in the NY Times. It is written each week by a guy named Ron Leiber.

In this particular piece he did what I thought was an especially good job of helping readers to look at this mess in a somewhat different, and I felt, very intelligent and positive way.

In short, the article is about a family in Ann Arbor, Michigan who have two kids (both of whom are just a couple of years away from heading off to college) and who in the middle of a "sky is falling" environment went out and dropped 55 large on a boat.

If you decide to read the article in full you might be inclined to say well hell, they could afford it! Maybe yes and maybe no which is really the point to start with.

These are super uncertain times whether you are working or not, and just because you are doesn't mean you will be at the end of next week.

They bought the boat anyway.

The Best of Times - The Worst of Times

Be it in print or electronic, the events and the "spin" being put on the events of the past month or so are anything but uplifting.

Not that the news is good by any means or that for sure we are faced with challenges from one end of the business horizon to the other. All that is true, but there is also the concept of perspective, and I have to say that is one of the things that is nice about having a partner who may be our President and COO in terms of his day job, but he also brings to that role the under pinning’s of an economist.

I am talking about Mark Anderson who has indeed led all of us at ExecuNet through the best of times and worst of times for the past 15 years.

While it is a brief segment (under two minutes) I thought what Mark had to say when he appeared on Fox News last week might help to bring some perspective to the current goings on.

This isn't to say by any means that we are not all in for a rough go of it, I think everyone knows that by now, but even in recessions there are pockets of opportunity both for businesses and the individuals who lead them. Indeed, maybe even more so for the individuals, because when it comes to the need for leadership, there is no such thing as a recession.

Defining Worth II

Last week I posted some thoughts which for lack of something more clever I labeled Defining Worth. The point I was trying to make was that for every executive whose DNA is made up totally of greed, there remains the vast majority of others whose approach to life is actually based on value systems that most would admire.

That said, along come $400,000 boondoggles for the "heroes" of a company which clearly should have spent that amount and lots more on management education programs with an emphasis on risk management was just one other piece of news that kept me thinking about this subject.

At the same time I was still digesting the fact that my 401(k) was finishing up the week gasping for air when as you might expect through the wonders of modern telecommunications comes another post from What Would Dad Say called “The Greatest Fraud in American History”: Uncovered Last Week in Minneapolis.

The story by itself comes under the heading of "you can't make this stuff up" and is told as only can tell it. It is one of those stories about a crook that defies belief. Were it not for the mother of all market meltdowns plus an election, as the piece reports, we all would likely have heard much more about it.

Be all that as it may, when I read it, "Dad's" closing comment struck me yet once again with the thought of "Boy I wish I had said that because it really says a lot of what I was trying to say when I posted Defining Worth in the first place.

"...Nearly every top executive I have ever met sets unbelievably high standards for themselves, maybe just because they know down deep that if it is fuzzy in the pulpit it is foggy in the pews. Plus they just know right from wrong. I believe customers as well as employees can tell if a company is being built on the right ’stuff.’"

Wishful thinking?

Defining Worth

When I talk about the quality of our Roundtable discussions, those who read this blog who are ExecuNet members will understand immediately when I say that given the financial and economic turmoil boiling around us it is both educational and comforting to be able to listen to and learn from an audience that, while deeply concerned, continues to bring much needed perspective, and dare I say it - hope.

When confronted with the headlines that blind us with one disaster after another in 60 point font and right underneath one reads about the unconscionable compensation connected to the "leadership" of these organizations, it is easy to understand the profound disappointment and anger that millions of us feel at the betrayal of leadership.

Over the past couple of weeks we have seen discussions ranging from members sharing their thoughts with a reporter from the Wall Street Journal who wanted to get their reactions to the impact of all this chaos on a manager's ability to support and motivate staff through such uneasy times to, as you might guess, executive compensation packages that to any rational being seem to be a total disconnect between reward for performance and anything else.

I wish there were space here to share all of the dialogue that went back and forth on this issue, but 21st century attention spans being what they are (even ones that might actually have an interest in the subject) would clearly make that prohibitive.

In following the thread of this discussion, there was, however, one response in particular that stuck with me and which I am happy to say its author Greg Davall graciously gave me his permission to share here.

Executive Compensation For High-Flying Executives - Excessive or Not?

I have been on the Board of Directors of a publically held company, worked for a closely held privately owned company and owned my own manufacturing company. I agree that the majority of compensation should be based on performance; but is stock performance the best measure? It is relatively easy to slash and burn for near term profit at the cost of sacrificing the long term competitive position and future value of the company. CEO spin doctors can convince their shareholders and sometimes even themselves that the near term unrealistic gains that are achieved by non-sustainable practices are what is "best" for everyone; only to cash out and leave it to others to pick up the pieces.

IMHO treating the company as if it were your own, communicating with clarity at all levels and accomplishing what you say you are going to for the reasons that you publically stand behind reinforces the values and integrity that will sustain American industries into the future and longer term continue to differentiate us from others with less transparent agendas. The correct compensation in this scenario is the true long term value added by the management team and should be able to stand the public scrutiny of all stakeholders... Being able to look employees, owners, suppliers and customers in the eye and tell them what you are worth because of the value you have brought to the table. If one can honestly apply this test and still sleep at night without praying for forgiveness then chances are good that you are worth what you are getting paid!

Point? At the end of the day, "worth" and how one defines it is among those subjective subjects that will always surround a lot of things in our lives and as Charlie Brown says "Happiness is different things to different people." All true to be sure.

Did you get far enough to digest Greg's last sentence? It speaks volumes on behalf of the thousands of those working as hard as they know how to lead organizations where all those associated with the enterprise can both make a living and, as Greg put it so well, sleep at night.