While alluring…

…it’s regular use invites the demise of your career.

I’m sure that each of us has, at one time or another, bemoaned the fact that we didn’t have the power to change something.  If only we had the power to…, we could solve this problem quickly.

The reality is that those who have the power and use it regularly often limit their career advancement.  Why?  There are several reasons.  Most employees:

• Hate being told what to do
• Resent not having their ideas heard and acted upon
• Despise the arrogance their leader exhibits
• Will do “exactly” what the boss requests even though they know it will fail
• May harbor desires that the boss’ idea fails or, worse yet, work toward that end

Yet, despite all of these negative consequences some people achieve lofty positions using positional power.  I’m sure each of you could point to autocratic leaders who have enjoyed great success.  Or have they?  What price did they pay for that success?

Imagine the pressure autocratic leaders must feel as they:

• Manage the most minute details of their direct reports‘ work
• Assume the risk for every decision that gets made
• Work diligently to see that blame for an errant decision doesn’t land on their doorstep
• Are constantly on the alert for potential sabotage
• Work countless hours because they don’t trust their employees

Is that the career you desire?

So what’s the alternative?  Influence!  By engaging people in the decision-making process, you get greater buy-in, quicker implementation and better results.  Indeed, a former chairman of Porsche, said that his mantra was “Decide democratically, delegate dictatorially.”  He went on to say that “a poor idea, implemented well, will produce better results than a great idea implemented poorly.”

It’s counter-intuitive, but the foundation for career advancement doesn’t lie in positional power; it lies in your ability to influence the thinking of others.  How do you do that?  Remember that persuasion is a myth.  We can’t persuade anyone of anything, they have to persuade themselves.

The best we can do is:

• Shine the light on new information
• Allow employees to process that information and reach their own conclusions
• Allow them to validate their conclusions with their own experiences

If our conclusion is correct, our employees will reach the same conclusion we have and they’ll be excited about the idea because they know it will work.  If, however, we’ve overlooked something in our analysis, our employees can pull our bacon from the fire by shining the light on new information for us.

Fortunately, as a consultant, I never have positional power.  I have no authority in any client organization.  As a result I’m never tempted to use positional power.  Instead I rely on influence.  The ability to influence others‘ thinking serves me equally well in my personal life as it does in my work.  I would never trade that skill for positional power.  Indeed, like the Chairman of Porsche, I didn’t use that power when I had it.

Do yourself a favor.  Use the steps outlined above to influence others’ thinking instead of exerting positional power.  You’ll quickly discover that leadership can be fun and exciting instead of stressful and draining.  The choice is yours.  Which will you choose?

The 7 Steps to Becoming INVALUABLE program is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 5, Contrarian Mindset, to demonstrate the often overlooked disadvantages of positional power, Step 6, Eclectic Education, to provide insights from an incredibly successful former Chairman of Porsche and Step 2, The Persuasion Myth, to help you see how easy it is to gain influence.  For more information on the 7 Steps to Becoming INVALUABLE visit www.furtwengler.com/7steps.htm.

If you’d like to receive a weekly email reminder with a link to The Invaluable Leader blog or if you’d like me to address specific topics, please send me an email at dale@furtwengler.com.  Please share your experience with our readers by posting a comment below.

Good news – My latest book, Pricing for Profit, was released 9.9.09 in the United States, Canada, U.K., Italy, France, Germany and the Netherlands.  It’s available in all the major bookstores – Borders, Barnes and Noble and Amazon.

This one comes under the heading…

…what were they thinking?

As I was scrambling from one appointment to another I realized I hadn’t eaten so I stopped at a fast-food franchise that will remain nameless.  I wanted something quick – a burger and small shake.  Here’s the exchange that took place at the counter.

• “I’d like a cheeseburger and small chocolate shake.”
• “Sir, if you add fries to your order you’ll save money.”
• “I don’t want fries; I’m clogging enough arteries with the cheeseburger and shake.”
• “Sir, if you add fries you’ll save $1.70.  You don’t have to eat them, just order them.”

I couldn’t believe what I was hearing.  They were lowering their price to give me something I didn’t want and increasing their costs to boot.  Ouch!  Ouch!

Apparently it’s counter-intuitive, but driving up costs and reducing your price at the same time isn’t an effective business model.   Giving customers a discount to take something they don’t even want is even more ludicrous.  It would seem that the intent was to help their customers feel that they were getting more for their dollar.  Even that’s a questionable goal if you’re already providing good value, which they were.  I, frankly, couldn’t find a worthwhile reason for this “pricing strategy.”

If you’re going to give up some of your price to entice a customer to try something, make sure it’s something they want or something they might not normally try.  Otherwise you’re flushing profits down the drain.  Then limit the savings to only the first order.  Once they’ve sampled your wares and like them, let them pay full price.

You’re probably wondering whether or not I took the fries.  I did and I left them on the table as the counterperson suggested.  Was that the right thing to do?  Economically, for me, only in the short-run.  Here are some other considerations?

I trained them to continue inappropriate and ineffective behavior by taking their offer.  I wasted resources (the fries, oil, energy, equipment, packaging and labor that went into preparing them).  Not to mention the costs of removing my garbage, taking it to the dump and the impact on the environment.  When I add all this up, did my actions cost me more in the long run than that immediate savings?  Probably.  Would I do it again?

Absolutely not.  I was obviously part of the problem, not the solution.

I’m not into self-flagellation.  My point in highlighting my failing is threefold.  One is to let you know that no matter how adept we get at counter-intuitive thinking, our humanity will trip us up occasionally.  Second, there are long-term gains to be realized when we evaluate our contributions to really bizarre experiences.  Finally, I hope that you’ll learn from my mistakes and avoid some of the long-term costs we’re all incurring for very small, short-run savings.

The 7 Steps to Becoming INVALUABLE program is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 7, Evaluate Opportunities, to show you how the absence of an effective approach to evaluating opportunities can lead to some ludicrous “pricing strategies.”  I also used Step 1, Contributory Negligence, to demonstrate my contribution to the problem – or at least it’s perpetuation.  Finally, I used Step 5, Contrarian Mindset, to help you see that short-term savings can be very expensive.  For more information on the 7 Steps to Becoming INVALUABLE visit www.furtwengler.com/7steps.htm.

If you’d like to receive a weekly email reminder with a link to The Invaluable Leader blog or if you’d like me to address specific topics, please send me an email at dale@furtwengler.com.  Please share your experience with our readers by posting a comment.

Good news – My latest book, Pricing for Profit, is going to be released 9.9.09 in the United States, Canada, U.K., Italy, France, Germany and the Netherlands.  Prepublication orders are being taken at amazon.com and barnesandnoble.com. Enjoy!

Dale is an internationally-acclaimed author whose work is recommended by the University of Glasgow, University of New South Wales and the Australian Institute of Management.

Can we prevent future occurrences?

If so, how?

In his April 1, 2009 Wall Street Journal article, Preventing ‘Too Big To Fail’ Isn’t Easy, Sudeep Reddy noted that Gary Stern, the president of the Federal Reserve Bank of Minneapolis, had repeatedly warned regulators of allowing banks to get too large.  He also quoted Former Fed Chairman, Alan Greenspan, who said “Knowing when the crisis will happen is not possible for human beings.”  

While I agree that we may not be able to predict the exact time that a crisis will occur, we can certainly get early warning signals that we’re creating one.  Certainly Mr. Stern had that ability.  The key is that the earlier we can identify that an effort is going to fail, the smaller the crisis we’ll face when it does occur.  How can we avoid the “too big to fail” mistake in the future?  There are two questions that I find particularly helpful in discerning whether or not a merger or acquisition will fail.  

The first comes from Juli Niemann, Smith Moore & Co.’s resident economist who asks “Are they investing cash?”  Juli says that managements make more prudent investments when they’re using their company’s cash than when they’re borrowing the money from others.  We need only recall our youth to validate her statement.  Who among us wasn’t more frivolous in our spending when our parents were footing the bill than when we had to cough up the money ourselves?

• The second question is one that has served me well both in my personal investments and my client work.  The question is “What’s in it for the customer?”  An industry leader acquiring a relative newcomer to the industry can significantly increase customer value if:
• the newcomer has offerings that the industry leader does not
• those offerings are valued by the industry leader’s customers
• it would take years for the industry leader to develop comparable offerings
• it would take the newcomer years to build the name recognition and gain the level of customer confidence the industry leader possesses
• there are markets in which the industry leader has a presence that the newcomer doesn’t serve

Had these questions had been asked prior to the Bank of America/Merrill Lynch and Wachovia/A.G. Edwards mergers would the regulators have approved them?  We’ll never know for sure, but three things that are obvious is that all four companies had:

•  stellar reputations with strong brand recognition
• wide distribution channels which made them readily accessible to customers and prospects
• a wide array of offerings designed to satisfy virtually any customer need

From that vantage point, was there really any reason for those mergers to occur?  

It’s counter-intuitive, but these two simple questions:

•  Are they investing cash?
• What’s in it for the customer?

can provide regulators with the insights they need prevent a recurrence of the “too big too fail” fiasco we’re currently suffering.

The 7 Steps to Becoming INVALUABLE program I offer is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 1, Contributory Negligence, to demonstrate how simple, inexpensive and easy to implement solutions can be when we break problems down and begin to look at them from the standpoint of what we did to contribute to them.

I also used Step 5, Contrarian Mindset, to look beneath the level of complexity most people see to the lowest common denominator(s) that drive the challenges we face.  In this instance, two fairly simple questions serve as powerful indicators of how to avoid “Too Big To Fail.”  For more information on the 7 Steps to Becoming INVALUABLE visit www.furtwengler.com/7steps.htm. 

Please share your experiences and wisdom with Invaluable Leader readers by posting your comments.  If you’d like to receive a weekly email reminder for The Invaluable Leader blog or if there’s a topic you’d like me to address, please send me an email at dale@furtwengler.com.

How a world-class musician viewed his talent…

…and what it can mean for you.

Concert pianist Artur Schnabel said “The notes I handle no better than many pianists.  But the pauses between the notes – ah, that is where the art resides!”  

It’s the pauses that give listeners a chance to savor the notes – to enjoy them leisurely rather than racing on to the next note, to reflect on them and enjoy the emotional reaction they elicit regardless of whether the emotion is joy or sadness.

In a similar vein authors Jim Loehr and Tony Schwartz in their book The Power of Full Engagement, tell us how they help world-class athletes in golf, tennis, speed skating and basketball dramatically improve their performance.  How?  Not by focusing on the skills associated with the sport, but by educating them on how to use the time between shots, plays and events.  Why?  Because it’s the downtime that allows these athletes to recover from the strain of competition and intensify their focus for the next shot, play or event.

Are you building pauses into your schedule?  Are you using pauses to help you:

• Savor your success?

• Reflect on a skill you acquired and how it can be applied or enhanced?

• Recover from the strain of competing in one of the most challenging environments ever created – the world of business?

• Intensify your focus for dealing with the next growth opportunity or misstep on your way to greater success?

If you’re not, you’re positioning yourself for failure.  It’s counter-intuitive, but it’s the pauses between our activities as much as the activities themselves that help us enjoy greater success.  That’s what Artur Schnabel, Jim Loehr and Tony Schwartz are all telling us.  That’s what has driven their success.

Based on the wisdom of these three gentlemen, I’ve begun building into my day, a 10 to 15 minute break for every 90 minutes I work.  What has it done for me?  Exactly what you’d expect.  I accomplish more in less time than I did previously without feeling exhausted.  

Give yourself the gift of frequent pauses.  The more that you think “I don’t have time for a break”, the more essential it is for you take one.  You’ll find that you’re enjoying greater success, less fatigue and greater joy in living your life.

The 7 Steps to Becoming INVALUABLE program I offer is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 5, Contrarian Mindset, to show you how to pauses are as essential as the activities in which we engage.  I’ve also employed Steps 4, See Similarities, and Step 6, Eclectic Education, by using the disciplines of music and sports to demonstrate how universal these concepts are. For more information on the 7 Steps to Becoming INVALUABLE visit www.furtwengler.com/7steps.htm 

Please share your experiences and wisdom with Invaluable Leader readers by posting your comments.  If there are topics you’d like me to address, please send me an email at dale@furtwengler.com

An often overlooked advantage of specialization…

…staffing 

I recently spoke with Tim Rosenauer, Business Development Manager, with Account Resolution Corporation (ARC).  These folks provide an array of services in the field of medical collection.

When I asked Tim what distinguished his company from his competitors, he told me his practice management clients appreciate the fact that ARC specializes in medical collections.  ARC’s collectors know the idiosyncrasies of medical billing and are able to assist practice managers with billing and adjustment codes.  They also are more adept at helping delinquent customers understand the services they received and the value of those services.

This specialization allows ARC to:

1. focus on a narrower set of skills and experience when hiring staff
2. limit the amount and types of training necessary to enhance employee skills
3. create a more flexible workforce because all collectors possess similar knowledge and experience
4. monitor changing practice management needs
5. adapt more quickly to that changing environment

What about the employees?  How do they feel about ARC’s strategy?  ARC touts one of the lowest employee turnover rates in its industry.  Why?  Imagine that you’re a collector and you’re considering offers from two companies, one that specializes in one industry and the other who represents customers from a variety of industries.  On the surface, the company that serves multiple industries might seem attractive because it offers more variety in your job.  But once you’re on the job you realize that this “variety” also adds a great deal of complexity to your job.  How?

Each industry/profession has its on idiosyncrasies, its own language and its own preferred practices.  This not only makes your initial orientation more difficult, it makes keeping current on changes within each industry/profession more difficult.  This complexity typically slows collections at the same time that you’re being evaluated on your ability to collect quickly.  Is it any wonder that the better collectors migrate to firms that specialize?

While many business owners may view this kind of specialization limiting, the reality is exactly the opposite.  It’s counter-intuitive, but specializing allows your firm to:

1. gain a greater understanding of the customers you serve
2. monitor the ever-changing environment in which they work
3. provide higher levels of service to those customers
4. charge premium prices commensurate with the higher service levels
5. recruit, retain and reward staff more effectively

Take a page from ARC’s playbook and specialize.

The 7 Steps to Becoming INVALUABLE program I offer is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 5, Contrarian Mindset, to show how industry specialization can work to your advantage.  Contributory Negligence, Step 1, was used to show how we often inadvertently complicate our lives and add to the cost of doing business by trying to serve multiple markets.  For more information on the 7 Steps to Becoming INVALUABLE visit http://www.furtwengler.com/7steps.htm

Please share your experiences and wisdom with Invaluable Leader readers by posting your comments.  If there are topics you’d like me to address, please send me an email at dale@furtwengler.com.

If not…

…how reliable is history?

Our pastor made the comment that memory is a function of history?  Is it? 

In his book, Stumbling on Happiness, Daniel Gilbert shares scientific studies of memory that show that, contrary to popular opinion, our memories aren’t full-length features stored in exacting detail.  Instead they are more like holograms where what’s stored are the key elements of the story.  The details get filled in as we recall the episode.

Professor Gilbert goes on to say that “the least likely experience” is often the “most likely memory.”  Why is that?  Because the least likely experiences trigger emotional reactions.  Indeed, it’s the emotional reactions that we have to the situations we face that determine what memories we retain.

If you doubt that think of your last trip to the grocery store.  Was it memorable?  If not, there were no surprises; nothing that triggered an emotional reaction.  Conversely, if it was memorable, it’s likely that someone allowed you to go ahead of him in the checkout line, shared a kind word with you or raced to get ahead of you in line.  Each of these actions triggers an emotional response that forms a memory.

Why is this important?  Because, as Professor Gilbert notes, this natural tendency can “wreak havoc with our ability to predict future experiences.”  If our primary recall is of unusual experiences, how accurate is our historical perspective?  How well can we predict future outcomes if we’re focused on the least likely results?

It’s counter-intuitive, but memory is not an accurate historical perspective.  That’s why, when predicting an outcome, it’s wise to recall:

1. The last relevant experience you had
2. What emotions were triggered during that experience
3. Whether this was an isolated instance among many other similar, yet less memorable, experiences

Then ask yourself, “Is this memory an accurate predictor of what I can expect?”  This simple approach will help you avoid creating unrealistic expectations and improve the historical accuracy of your memory. 

The 7 Steps to Becoming INVALUABLE program I offer is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 3, Suspend Judgment, to show you that emotions trigger memories and influence our expectations for the future. Then I used Step 1, Contributory Negligence, to demonstrate how we contribute to the outcomes we get – favorable or unfavorable – by our penchant for using “least likely experiences” to predict the future.  Finally I used Step 5, Contrarian Mindset, to show you how to overcome this natural tendency.  For more information on the 7 Steps to Becoming INVALUABLE visit www.furtwengler.com/theinvaluableleader/

Please share your experiences and wisdom with Invaluable Leader readers by posting your comments.  If there are topics you’d like me to address, please send me an email at dale@furtwengler.com.

What can neuroscientists and athletes teach us about reality?

How to choose more effectively!

Nobel-prize winning neuroscientist, Dr. Gerald Edelman, says “we must look at all acts of perception as acts of creativity.”  In other words, we create the reality we’re facing by the way we choose to perceive what’s happening.

Neurobiologist William Calvin, in his book, The Cerebral Symphony says “We create the world we see: We surely modify it with experience, but it’s an invented world.  How we emotionally react to something may, in turn, affect how we see it in the future.” 

World-class athletes echo these themes when they say that their greatest asset is a “short memory.”  These athletes quickly forget both their successes and failures.  They realize that flawless performances and failed attempts are both merely fleeting moments in time.  Dwelling on either their successes or failures can only accomplish one thing – limiting their future success. 

How do these athletes develop a short-memory?  The answer lies in William Calvin’s quote above; it’s the word “emotionally.”  It’s not that these athletes are devoid of emotion.  Indeed, anyone who has watched a sporting event knows how high emotions run before, during and immediately after the game.  The key to these athletes’ success is that they are able to quickly set aside those emotions and focus their attention on the next shot, the next play or the next game. 

Conversely, many of us behave as if we are bipolar when it comes to dealing with our emotions.  We’re reluctant to let go of the emotional highs we experience when things go well.  We find it equally difficult to pull ourselves out of the throes of disappointment when our attempts fail.  In essence, we create realities of incredible joy or staggering disappointment.

Now imagine what your reality would be if you chose to view your successes as affirmation that you’re on the right path and your failures as guideposts directing you back onto the path.  Wouldn’t life be a lot more enjoyable if you could consistently maintain these mindsets?  Isn’t that a reality you’d choose for yourself if you simply knew how?

It’s counter-intuitive that, while we can’t avoid emotional reactions, we can limit the amount of time we spend in any given emotional state.  How?  By first recognizing that we are being emotional, then choosing to set that emotion aside so that we can focus our attention on the next thing we need to do to enjoy even greater success.  This simple two-step process helps you choose a reality that minimizes the periods of self-doubt, fear and anxiety all of us experience and replaces them with a “can do” mindset that makes life a lot more fun and exciting.  The choice is yours.

The 7 Steps to Becoming INVALUABLE program I offer is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 3, Suspend Judgment, to demonstrate how emotions form judgments which, in turn, determine the reality you experience.   I also employed Step 6, Eclectic Education, to offer insights from two different disciplines, neuroscience and sports, to support my point.  Finally, I used Step 4, Seeing Similarities, to show how two different disciplines reach the same conclusion.

You can learn more about the 7 Steps to Becoming INVALUABLE program and how it can help you deal with the business challenges you face by clicking on http://www.furtwengler.com/7steps.htm

Please share your thoughts, whether you agree or not, by posting a comment.  If there are topics you’d like me to address, send me an email at dale@furtwengler.com.

Each of us has a natural propensity for discovering solutions to problems…

…what’s yours?

In his book, The Cerebral Symphony, William Calvin notes that in the scientific community there are experimenters and synthesizers.  Experimenters are people who exploit new techniques for looking deeper into whatever question they’re investigating. 

Conversely, synthesizers take the vast array of discoveries from a variety of disciplines to piece together a holistic view of the way things work.  Calvin goes on to say that, while both approaches contribute to scientific progress, few scientists employ both.

What does that have to do with you?  First it affords new insights into the way you prefer to work – your natural style.  Here’s a quick question to gauge your preference.  Given a choice of projects would you prefer to tear apart a process to discover ways to improve it or would you rather gather information from someone who has done that analysis and use it to establish new procedures? 

Some people enjoy the investigative intrigue problem-solving affords.  Others prefer to learn from others and use that knowledge to get ahead of the curve by establishing new policies and procedures to avoid the problem in the future.

It’s counter-intuitive, but awareness of your natural style (experimenter or synthesizer) and the style of your colleagues prefer, can help you, your boss and your team enjoy greater success.  Helping guide the delegation of tasks based on natural preferences can increase job enjoyment, reduce cycle times and dramatically improve results now and in the future.

The 7 Steps to Becoming INVALUABLE program I offer is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 6, Eclectic Education, to demonstrate how to import insights and ideas from other disciplines.  In this case I drew from the field of neurophysiology.  I also employed Step 4, Seeing Similarities, to apply those insights to business.

As you share these insights at work don’t forget Step 2, The Persuasion Myth.  Your natural tendency will be to try to convince your colleagues and boss how valuable this approach is.  The more you try to persuade them the more resistance you’ll get. 

Step 2, The Persuasion Myth, suggests that you share the concept with your colleagues, then ask them how they think this approach could be used in your organization.  You’ll find that they’re more likely to embrace the concept once they’ve had a chance to do their own evaluation of it.

You can learn more about the 7 Steps to Becoming INVALUABLE program and how it can help you deal with the business challenges you face by clicking on http://www.furtwengler.com/7steps.htm

Please share your thoughts, whether you agree or not, by posting a comment.  If there are topics you’d like me to address, send me an email at dale@furtwengler.com.

Why the sudden interest in unionization?

Is it in America’s best interest?

This is one of the most controversial acts being considered today.  Why?  Two reasons. 

There is concern among business owners and leaders that the new rules, which eliminate the need for secret ballot votes by employees, could result in some employees being coerced by their colleagues into signing.  The second concern is the 120-day mandatory arbitration rules which could leave businesses with economically untenable contracts.

Before we get into these issues, let’s take a look at what’s spawned this interest in unionization.  For decades we’ve been seeing the erosion of the middle class.  When the middle ground is washed away you’re left with a chasm bordered by competing factions on each side of the chasm.  Part of the interest in unionization is the desire to stop the erosion of the middle class and avoid a much costlier “economic civil war” later.

This interest in rejuvenating the middle class has been heightened by the recent outrage over rising CEO pay and executive bonuses despite poor performance, something that Fortune magazine has been railing about since at least 2006. 

Whether or not it will achieve this goal the Free Choice Act is an attempt to reconstitute the middle class and avoid the inevitable civil war that’s developing.  If anyone doubts that a war is coming, review some of the recent news broadcasts highlighting threats of violence against the AIG executives who received bonuses.

With such a lofty goal, why would the business community fight unionization?  They fear loss of control.  Unfortunately, these leaders fail to realize that control is an illusion.  We can’t control anyone’s activity unless they grant us permission to do so.  Anyone who’s spent more than a few hours in a management role knows how readily employees ignore our requests, and even more so, our demands.  If they feel sufficiently threatened, they’ll “agree” to our demands and provide what we requested instead of what we wanted.  

What’s the solution?  It’s counter-intuitive, but whether you’re dealing with a CEO, individual workers or a union, the issue of compensation revolves around one question.  That question is “How are you going to produce results in excess of the compensation you’re requesting?”  You see it doesn’t really make any difference how much a person makes as long as the value of what they produce exceeds what they make.

For those who have grown up in the union environment the concept of providing more than what your being compensated may seem foreign, but in business we realize that we have to provide more value than the consumer is paying for if we want them to part with their dollars.  The same should be true of workers, after all the companies that employ them are their customers.

With those thoughts in mind, let’s assume you’re a business owner sitting at the table with the union representatives and they say they want their workers to get a 6% annual increase in pay and benefits each year for the next three years.  Your response should be “That’s fine, we’re happy to honor that request if you can tell us how you’re going to increase productivity by 6.5% per year.  What’s your plan?”

Let’s say that the union doesn’t come up with a plan, the 120 days elapse and you’re forced to go to arbitration.  The union states its demands as it did to you.  You, again, state that you’re willing to agree to those raises if the union could demonstrate how it was going to increase employee productivity by 6.5%.  After all, any fair exchange requires that each party receive comparable value.  What’s the likelihood that, if the union fails to present a plan, their demands will be granted?  Arbitrators are schooled in the art of creating equity between competing parties and they look at the reasonableness of each party’s position.  The party that seems to be doing the most to create equity, in this case you, typically gains the arbitrator’s favor. 

You can further enhance your position with the union if you use the same question in negotiating pay with non-union employees.  If your records show that pay increases in your company are always accompanied by the employees’ indication of how they can improve their performance to produce more than their increase, you go along way to building a strong case for the arbitrator and a stronger company as well.

The 7 Steps to Becoming INVALUABLE program I offer is designed to help you see more effective ways of doing business – ways that dramatically improve your bottom line while making your life easier.  In today’s blog I used Step 3, Suspend judgment, to demonstrate how to avoid judging unionization as being either good or bad.  Judgment leads to bias which limits the number of alternative solutions you see.

Then I used Step 2, The Persuasion Myth, to show you how to craft a negotiation that makes sense for both parties.  The Persuasion Myth is equally effective in demonstrating to an arbitrator that you’re approach is fair and equitable, thereby increasing your odds of gaining an economically feasible contract.  You can learn more about how the 7 Steps to Becoming INVALUABLE program and how it can help you deal with the business challenges you face by clicking on http://www.furtwengler.com/7steps.htm

Please share your thoughts, whether you agree or not, by posting a comment.  If there are topics you’d like me to address, send me an email at dale@furtwengler.com.

We’ve reached bottom…

…what do we do next? 

In the March 2^nd Invaluable Leader blog, Will Stimulus Package Work?, I said that there were three signs that would let us know when the economy reached bottom.

1. We achieve price stability
2. We achieve employment stability
3. The banking community finds a bold leader

Two of the three have occurred.  News reports no longer carry announcements of huge price cuts or massive layoffs.  These are strong signs that the economy has reached bottom.  Once price stability is achieved people resume spending.  When spending rebounds, employment stabilizes then rises modestly as confidence in the economy returns. 

The one missing element, based on news stories and Obama administration reports is that we haven’t yet found that bold banking leader.  Indeed, I attend a meeting last week in which a panel of bankers admitted to having been to aggressive in their lending practices, so much so that many of them wouldn’t renew their own customers’ loans.  That attitude does not indicate the strength of leadership we need in the banking community.

• Step 1 of the 7 Steps to Becoming INVALUABLE is to understand and acknowledge your contribution to the problem; then change your behavior to eliminate the problem.  I implore the banking community to take that final step.  They’ve already admitted their contribution to problem, now it’s time to become part of the solution.  How?

1. Work with the borrower to identify a loan program that is economically sound
2. Agree on a plan to move them from the current loan arrangement to the economically sound version over the course of 12 to 18 months
3. Jointly set milestones for the borrower to achieve every 90 days
4. Renew their loan for 90 days; assuming they achieve the agreed upon milestones, renew the loan for another 90 days at terms that are closer to the economically sound version, but still affordable for the borrower
5. Within 12 to 18 months, the bank will have a fiscally sound customer who appreciates the bank that helped them survive bad decisions made by both the banker and borrower

In addition, this program will prevent or minimize further losses in employment, spending and economic stability.

It’s counter-intuitive, but when banks just walk away from a difficult situation they not only irreversibly damage the borrower, they slow their own economic recovery. 

If the leaders at the major banks don’t adopt this approach, I recommend that the Obama administration stop giving TARP type money to these banks and, instead, offer it to the smaller local and regional banks at a rate that allows them to refinance the problem loans using the approach outlined above.  It’ll be a more effective use of the money.

Please share your thoughts with our readers by posting a comment.  If there are topics you’d like me to address, send me a note at dale@furtwengler.com.

The 7 Steps to Becoming INVALUABLE program is now available in print and electronic formats.  Click on http://www.furtwengler.com/7steps.htm to learn more.