On Nov. 19, 2008, the U.S. Labor Department reported a 1 percent drop in the consumer price index for October 2008. The drop marked the largest decline in 61 years, and it was the first decline in that measure in nearly a quarter of a century. The 1 percent drop was twice as large as many mainstream analysts had forecast. Such a large decline in consumer prices is forcing U.S. policymakers to rethink the possibility of deflation in America.

For more on deflation, we turn to Robert Prechter, the man who literally wrote a book on how to survive it. The following article, adapted from Prechter’s book Conquer the Crash – You Can Survive and Prosper in a Deflationary Depression, will help you understand exactly what to expect from deflation. 

In addition to the following article, visit Elliott Wave International to download the free 8-page report, Inflation vs. Deflation.  It contains details on which threat you should prepare for and steps you can take to protect your money.

By Robert Prechter, CMT

Before explaining the price effects of inflation and deflation, we must define the terms inflation, deflation, money, credit and debt.

Webster's says, "Inflation is an increase in the volume of money and credit relative to available goods," and "Deflation is a contraction in the volume of money and credit relative to available goods."

Money is a socially accepted medium of exchange, value storage and final payment. A specified amount of that medium also serves as a unit of account.

According to its two financial definitions, credit may be summarized as a right to access money. Credit can be held by the owner of the money, in the form of a warehouse receipt for a money deposit, which today is a checking account at a bank.  Credit can also be transferred by the owner or by the owner's custodial institution to a borrower in exchange for a fee or fees – called interest – as specified in a repayment contract called a bond, note, bill or just plain IOU, which is debt.  In today's economy, most credit is lent, so people often use the terms "credit" and "debt" interchangeably, as money lent by one entity is simultaneously money borrowed by another.

When the volume of money and credit rises relative to the volume of goods available, the relative value of each unit of money falls, making prices for goods generally rise.  When the volume of money and credit falls relative to the volume of goods available, the relative value of each unit of money rises, making prices of goods generally fall.  Though many people find it difficult to do, the proper way to conceive of these changes is that the value of units of money are rising and falling, not the values of goods.

The most common misunderstanding about inflation and deflation – echoed even by some renowned economists – is the idea that inflation is rising prices and deflation is falling prices. General price changes, though, are simply effects of inflation and deflation.

The price effects of inflation can occur in goods, which most people recognize as relating to inflation, or in investment assets, which people do not generally recognize as relating to inflation. The inflation of the 1970s induced dramatic price rises in gold, silver and commodities. The inflation of the 1980s and 1990s induced dramatic price rises in stock certificates and real estate. This difference in effect is due to differences in the social psychology that accompanies inflation and disinflation, respectively.

The price effects of deflation are simpler. They tend to occur across the board, in goods and investment assets simultaneous.  For more information on deflation and inflation, including money-saving steps for protecting your wealth, download Elliott Wave International’s free 8-page report, Inflation vs. Deflation.

Robert Prechter, Certified Market Technician, is the founder and CEO of Elliott Wave International, author of Wall Street best-sellers Conquer the Crash and Elliott Wave Principle and editor of The Elliott Wave Theorist monthly market letter since 1979.

An overwhelming number of companies are lackluster because they culturally replicate fear-based behaviors, reacting to events rather than driving toward a vision.  An atmosphere of judgment and criticism prevails.  These companies stifle human potential and behave in ways that lead to mediocre outcomes.

Successful companies are most often led by leaders concerned with the well-being of everyone who works in the organization.  Research shows such companies have leaders who are humble, inclusive, inspirational and willing to demonstrate innovative/visionary leadership.

Leaders First

Human behaviors are notoriously difficult to change, but attitude and cultural adjustments are the only ways to differentiate yourself long term.  To have a meaningful effect, leaders’ attitudinal changes must precede actual organizational changes, which ultimately herald social and employee shifts from stress behaviors to positive performance.

It takes focus and tenacity to improve corporate culture, instill attitudinal changes in positive thinking and routinely express appreciation.  You must find a few actionable principles that truly make a difference and revolutionize workplace culture.  You must take specific steps to drive these principles deep into the company, at every level and into every behavior.

This is a tall order, which begins at the top.

The Healthy Road Ahead

Health-optimizing programs are needed to develop physical and psychological resilience.

The proper tools and techniques—relaxation therapies, cognitive therapies to teach optimism, strategies to find positive meaning in fundamental aspects of work—can help individuals reshape internal functioning mechanisms and achieve optimal emotional and psychological states.

Such programs cultivate a positive corporate culture that can save hundreds of thousands of dollars a year through stress reduction.

Too many companies purchase the health plans they can afford and then hope to maintain costs, without realizing that corporate culture and individual responsibility have a dramatic impact on overall employee health and healthcare costs.

Achieving reductions in healthcare costs without employees’ buy-in is difficult, as many health issues are related to lifestyle.  Obesity, smoking, lack of exercise, poor nutrition and an inability to manage stress are associated with 50 to 70 percent of all illness and medical problems.

Wellness programs provide structured efforts to improve employee lifestyles, and screenings before the onset of disease enhance health and reduce costs.  But less than 5 percent of the $1.8 trillion that Americans spend on healthcare goes toward prevention, and even progressive companies spend 80 times more on cure than prevention.

Corporations have a responsibility to reduce stress, but health packages are affordable and effective only when employees take responsibility for managing their own lives and bodies.

Source: Baker, Greenberg and Hemingway: What Happy Companies Know: How the New Science of Happiness Can Change Your Company for the Better There are four paths to counteracting stress and disease at work: two personal and two organizational.

There are four paths to counteracting stress and disease at work: two personal and two organizational, according to research in the book What Happy Companies Know, by Baker, Greenberg and Hemingway.

An individual’s or organization’s failure to take responsibility can quickly destroy a team.  The organization must refrain from imposing unreasonable productivity requirements, and individuals must recognize their limits—a difficult prospect for high achievers.  A company can reduce stress by changing its corporate culture, including increased awareness of the value of appreciation and positive emotions.

Personal Mastery

Personal mastery of stress begins by recognizing that it’s a palpable force in the workplace—one for which we must proactively prepare.  Of course, a certain amount of stress is the norm in business, but recognizing its signs and symptoms is essential for diminishing and controlling detrimental reactions.

Accepting a degree of chaos becomes part of the challenge.  Instead of looking at change and uncertainty as a series of calamities, we can reframe these situations as exhilarating experiences that provide opportunities.

Resilience

We can also reduce stress by inducing a positive mental state before or during stressful situations.  We can learn techniques to refocus the mind before we succumb to stress, thereby reducing the time and energy needed to reestablish a calm, thoughtful state.

Studies show appreciation-generating techniques can reduce the production of cortisol (the stress hormone), lower blood pressure, improve hormonal balance and increase the body’s production of antibodies that fight pathogens.

Recognizing employee strengths and expressing appreciation are key stress-management components.  Coaching and mentoring programs can help companies develop corporate cultures that foster creativity, productivity and optimal performance.

Source: Baker, Greenberg and Hemingway: What Happy Companies Know: How the New Science of Happiness Can Change Your Company for the Better There are four paths to counteracting stress and disease at work: two personal and two organizational.

Work is a common source of unhappiness and stress. 

Studies have concluded that the number of burned-out, stressed-out or chronically stressed individuals is between one-fourth and one-third of the work force.

Leaders and workers must be fully present and engaged at work, in a state of health and well-being.  Problems at work are more strongly associated with health complaints than any other factor in people’s lives, even financial or family troubles.

While they may fail to realize the health implications, people at work are acutely aware of stress.  A Northwestern National Life survey shows 40 percent of workers report their jobs are very or extremely stressful, and 25 percent of employees view their jobs as the top stressor in their lives.

Stress happens when:

• We fail to meet deadlines, budgets or other goals.
• We have ambiguous job responsibilities.
• We perceive a lack of control over tasks.
• We have a sudden upsurge in tasks.
• We have conflicts with others.
• We feel we have little control over our work lives
  

The Costs of Stress

Stress depletes our physical, emotional and mental resources, which ultimately reduces companies’ productivity and profits.

Healthcare costs for stressed workers are 46 percent higher.  Total stress-related business costs (disability, death, insurance, medical expenses, accidents, loss of employees, sick leave and reduced/lost productivity) total between $250 billion and $300 billion annually in the United States.

When we are asked to sustain too great a load for too long a time, there’s an undeniable detrimental outcome.  Executives and leaders are particularly at risk for putting themselves in highly charged environments, where expectations of surviving successfully are high and there are few timeouts for recuperation.

46% of U.S. middle managers polled in mid-September 2008 said switching employers in the current environment is risky, according to a survey by Accenture Ltd.

Just 13% of respondents said they were actively looking for a new job, down from 30% the last time Accenture conducted a similar survey in 2005.  Yet, unemployment claims are at a seven year high with many employers reducing headcount to control costs during this recessionary period.

Automakers, brokerages, retailers, airlines, home builders, banks, newspapers and countless other ailing industries are slashing staff.  Your job could disappear tomorrow.  Getting ready for your next career transition should be part of your workday schedule today.

Both unemployed and employed managers would be wise to learn some effective career transition tips to pay attention to long before he or she is walked out of their workplace.

When unemployed executives finally receive a job offer from a new employer, to protect themselves, he or she should try to request that a severance package be included in any employment contract.

Propose the same size package your current employer has promised you if you were to be dismissed, advises Paula Marks, an executive coach and managing partner at Gilbert Tweed Associates, an executive-search firm in New York.  If your request is rejected, consider turning the offer down.  "You have to protect yourself," says Marks.

It's wise to weigh the pros and cons of a job change with a professional career coach or mentor, says Ms. Marks.  "Don't discuss it with friends and family.  They bring their own baggage, their own fears."

Source: The Wall Street Journal, November 13, 2008

For 21 Career Transition Tips or a year's subscription to effective Job Coaching Tips delivered to your laptop or desktop every week, go to: www.JobCoachingTips.com 

With big bank bailouts dominating the news, there’s no better time to get the truth about bank safety.

This informative article has been excerpted from Bob Prechter’s New York Times bestseller Conquer the Crash. Unlike recent news articles that are responding to the banking crisis, it was published in 2002 before anyone was even talking about bank safety. However, you may find the information even more valuable today than ever before.

For even more information on bank safety, visit Elliott Wave International to download the free 10-page report, Discover the Top 100 Safest U.S. Banks. It contains details on how you can protect your money from the current financial crisis, updated for 2008.

Risks in Banking

Between 1929 and 1933, 9000 banks in the United States closed their doors. President Roosevelt shut down all banks for a short time after his inauguration. In December 2001, the government of Argentina froze virtually all bank deposits, barring customers from withdrawing the money they thought they had. Sometimes such restrictions happen naturally, when banks fail; sometimes they are imposed. Sometimes the restrictions are temporary; sometimes they remain for a long time.

Why do banks fail? For nearly 200 years, the courts have sanctioned an interpretation of the term “deposits” to mean not funds that you deliver for safekeeping but a loan to your bank. Your bank balance, then, is an IOU from the bank to you, even though there is no loan contract and no required interest payment. Thus, legally speaking, you have a claim on your money deposited in a bank, but practically speaking, you have a claim only on the loans that the bank makes with your money.

If a large portion of those loans is tied up or becomes worthless, your money claim is compromised. A bank failure simply means that the bank has reneged on its promise to pay you back. The bottom line is that your money is only as safe as the bank’s loans. In boom times, banks become imprudent and lend to almost anyone. In busts, they can’t get much of that money back due to widespread defaults. If the bank’s portfolio collapses in value, say, like those of the Savings & Loan institutions in the U.S. in the late 1980s and early 1990s, the bank is broke, and its depositors’ savings are gone.

Because U.S. banks are no longer required to hold any of their deposits in reserve, many banks keep on hand just the bare minimum amount of cash needed for everyday transactions. Others keep a bit more. According to the latest Fed figures, the net loan-to-deposit ratio at U.S. commercial banks is 90 percent. This figure omits loans considered “securities” such as corporate, municipal and mortgage-backed bonds, which from my point of view are just as dangerous as everyday bank loans. The true loan-to-deposit ratio, then, is 125 percent and rising. Banks are not just lent to the hilt; they’re past it.

Some bank loans, at least in the current benign environment, could be liquidated quickly, but in a fearful market, liquidity even on these so-called “securities” will dry up. If just a few more depositors than normal were to withdraw money, banks would have to sell some of these assets, depressing prices and depleting the value of the securities remaining in their portfolios. If enough depositors were to attempt simultaneous withdrawals, banks would have to refuse. Banks with the lowest liquidity ratios will be particularly susceptible to runs in a depression. They may not be technically broke, but you still couldn’t get your money, at least until the banks’ loans were paid off.

You would think that banks would learn to behave differently with centuries of history to guide them, but for the most part, they don’t. The pressure to show good earnings to stockholders and to offer competitive interest rates to depositors induces them to make risky loans. The Federal Reserve’s monopoly powers have allowed U.S. banks to lend aggressively, so far without repercussion. For bankers to educate depositors about safety would be to disturb their main source of profits. The U.S. government’s Federal Deposit Insurance Corporation guarantees to refund depositors’ losses up to $100,000, which seems to make safety a moot point. Actually, this guarantee just makes things far worse, for two reasons. First, it removes a major motivation for banks to be conservative with your money. Depositors feel safe, so who cares what’s going on behind closed doors? Second, did you know that most of the FDIC’s money comes from other banks? This funding scheme makes prudent banks pay to save the imprudent ones, imparting weak banks’ frailty to the strong ones. When the FDIC rescues weak banks by charging healthier ones higher “premiums,” overall bank deposits are depleted, causing the net loan-to-deposit ratio to rise.

This result, in turn, means that in times of bank stress, it will take a progressively smaller percentage of depositors to cause unmanageable bank runs. If banks collapse in great enough quantity, the FDIC will be unable to rescue them all, and the more it charges surviving banks in “premiums,” the more banks it will endanger. Thus, this form of insurance compromises the entire system. Ultimately, the federal government guarantees the FDIC’s deposit insurance, which sounds like a sure thing. But if tax receipts fall, the government will be hard pressed to save a large number of banks with its own diminishing supply of capital. The FDIC calls its sticker “a symbol of confidence,” and that’s exactly what it is.

For more information on bank safety, including how to choose a safe bank during the current financial crisis, download EWI’s free 10-page report, Discover the Top 100 Safest U.S. Banks.

Today, the U.S. needs a few less-privileged leaders from Washington state to Washington, D.C. and Wall Street to Las Vegas.

Regressing from "adversity & craftsmanship" to "dexterity & speed"

The nineteenth century version of success stressed the value of compensating for disadvantage.  If you wanted to end up on top, the thinking went, it was better to start at the bottom, because it was there that you learned the discipline and motivation essential for success.

Andrew Carnegie insisted that there was an advantage to being "cradled, nursed and reared in the stimulating school of poverty."  According to Carnegie, "It is not from the sons of the millionaire or the noble that the world receives its teachers, its martyrs, its inventors, its statesmen, its poets or even its men of affairs.  It is from the cottage of the poor that all these spring."  He believed that poverty provided a better preparation for success than wealth did; that, at root, compensating for disadvantage was more useful, developmentally, than capitalizing on advantage.

In the 20th Century, human dexterity & speed was all that was needed to mass produce goods and services cheaper if not better.  Henry Ford's mass production of automobiles in Detroit attracted human bodies that could use their muscles with speed.  A high school graduate could easily land a well paying job in the automobile factory, using little brain power.  These factory workers would become the chief consumers of the cars, trucks and recreational vehicles produced.  Generations moved from high school to factory to retirement during this prosperous century....hardy ever having to use their brains.

Success was (and still) seen as a matter of capitalizing on socioeconomic advantage, not compensating for disadvantage.

The mechanisms of social mobility---scholarships, affirmative action, housing vouchers, Head Start---all involve attempts to convert the poor from chronic outsiders to insiders, to rescue them from what is assumed to be a hopeless state.  Nowadays, we don't learn from poverty, we escape from poverty.

My factory-worker father was not the only one who assumed that businesses were based on social ties that reward cultural insiders.  That is one of the reasons we no longer think of poverty as being useful in the nineteenth-century sense; no matter how hard you work, or how disciplined you are, it is difficult to overcome the socially marginalizing effects of an impoverished background.  In order to do business at the highest levels, it really helps to have been a powerbroker's classmate at Yale.

Yet, the underprivileged minority has none of those advantages or constraints of high society.  The minority is free to keep social and financial considerations separate.  He can call a bad debt a bad debt, or a bad customer a bad customer, without worrying about the social implications of his honesty.  You can't tell the chairman of a FORTUNE 500 company that he's an idiot if you were his classmate at Yale.  That is why truthtelling is easier from a position of cultural distance.

The idea that outsiders can profit by virtue of their outsiderness runs contrary to our understanding of minorities.  But there are clearly also times and places where minorities benefit by asserting and even exaggerating their otherness.  The election of the first African-American president of the United States, is the latest example of otherness wanted and needed in a time of global crisis.

Source: The Uses of Adversity by Malcolm Gladwell in The New Yorker, November 10, 2008

Few organizations recognize the degree to which managers are the vessels of a company's culture, and even fewer work diligently, through training and coaching programs, to ensure that their vessels hold the knowledge and skills that motivate employees to perform, feel satisfied and love their jobs.

The TalentSmart Study (www.TalentSmart.com) analyzed more than 150,000 managers in every industry, at every level of management, and in a wide variety of job functions, and found that superior managers--those who lead their teams to the greatest levels of performance and job satisfaction--often share three critical habits.  These habits ensure that positive and negative feedback are delivered in small, digestible doses.

Expectations:  Ensure that employees' efforts are spent doing the right things, the right way, at the right time.  There is a big difference between telling people what's expected of them and making sure that what they'll be doing is completely understood.

Communication:  Observe what employees say and do, and speak openly with them about their work.  A manager's interaction with his or her employees delivers the resources, guidance, and recognition they need to succeed.  Communication clicks when it is frequent and in a language that everyone understands.

Performance:  Pay attention to each employee's performance and offer praise as frequently and emphatically as you do constructive feedback.  Keeping your focus on performance pushes your team to new heights by positively reinforcing successful endeavors and realigning efforts that become misdirected.

The three virtues of good managers are intricately linked, with communication serving as the linchpin of the manager's efforts.

People join companies, but they leave bosses.

If your manager doesn't listen to your ideas, then who will?

One way to probe the clueless leader's self-awareness, is to give him or her a gift that allows this important message to surface: if you aren't staying in touch, you aren't doing your job.  This book can help to do just that:

Travis Bradberry: Squawk!: How to Stop Making Noise and Start Getting Results

If you can't meet profit expectations and other metrics, start asking yourself serious questions about your company's pricing strategy.

Common sense pricing is not always common in practice -- due sometimes to lack of knowledge of how to set prices, but much more frequently simply to bad assumptions based on the unquestioned acceptance of prevailing myths and rules-of-thumb.  Pricing determines the profit of your business both directly -- as the result of revenues less costs -- and indirectly -- in its influence on stakeholder (customer, vendor, employee, investor, etc.) perceptions.

Hiking prices is risky, especially during tough times, but many businesses have little choice.  The trick is to give yourself some breathing room without losing customers to lower-cost competitors.  Here are some ways to make your price increases effective and understandable to your customer base:

Don't raise everyone's prices the same amount.  The simplest tactic is to hike prices only for new customers.

Determine which customers are low-margin clients--those who take up more of your time than is actually cost-effective--and pass price increases, in the form of add-on consulting or handling fees, on to them.  When you are at risk of losing a customer, let it be a low-margin client.

For your services, stop charging by the hour, for example, and move to a half or full day flat fee.  If you are charging by the month, charge by the quarter of a year.

Reduce your unit costs by reducing the size of your product without lowering the price of the product.  Also, look for opportunities to become more efficient in your business operation.

If you believe your customers' loyalty is to price alone, you are destined to wind up in a "How long can we go at low-margin pricing?" battle with your competitors.  If your competitors are larger -- or better financed -- or better connected -- the odds are overwhelming that you'll lose.

Every business must receive an adequate gross profit from each sale to pay for corporate overhead, reasonable wages and the selling expense of telling the market the value of its products and services.  If fact, you must be willing to risk losing orders (regardless of their perceived importance) if the sales revenue can not be obtained at prices that yield a reasonable gross profit.

Source: BusinessWeek, SMALLBIZ, November 2008

As Chrysler Corporation seeks a life-line today, it's most successful product innovation celebrates its 25th birthday.

When an industry or company is restructuring to survive in the global economy, executives are all driven by the fear of not surviving the transitional period and this fear can adversely affect their decision-making abilities.  The turnaround won’t be complete until the fear of failure is confronted in the minds of the executive survivors.  Thirty years ago, lead by Lee Iacocca, Chrysler's cultural transition began by instilling confidence in each employee's ability to meet and overcome workplace challenges...by having a clear vision of what the public wanted to buy. 

At that time, automobiles like my 1973 Ford station wagon (with a trailer towing package) were averaging about 7 mpg while gasoline prices were spiking upward.  The engineering challenge was how to get the weight out of new vehicles to comply with the public's desire to reduce their gasoline consumption and the federal government's higher mpg requirements on automobiles.

Chrysler teamed with the Institute of Social Research (ISR) at the University of Michigan, one of the largest and oldest academic survey and social research organizations in the world, to determine what American families were purchasing at retail.  The answer was they were buying trucks not cars (that were not required to comply with governmental mpg requirements); more specifically "van conversions" through both auto dealers and recreational vehicle dealers.  And this buying trend was headed north.

The product development engineers at Chrysler took this information and designed a "van-like" new automotive product, named the Dodge Caravan with front wheel drive (to reduce vehicle weight and thus raise average mpg ratings)...and...Chrysler prospered.

A recent Gallup survey showed that 49% of people making $90,000 or more a year rated economic conditions as "poor," a 23-point increase since early September.

U.S. demand is falling outright.  It fell sharply in the third quarter, and consumer confidence hit an all-time low to begin the fourth quarter.  Asset-price deflation is especially corrosive.  Those declines are part of a broad deleveraging by financial firms and households.  This forced casting off of debt is fueling the sale of homes, stocks and other securities at fire-sale prices while shutting off new lending in a self-reinforcing spiral that destroys wealth and depresses demand.

Industries from automobiles to home improvement to personal coaching are employing sober, left-brain pitches in special deals, useful features and long-term savings.  Lexus, in September, began running ads with the tagline "Lower Cost of Ownership."  That's a reference to Lexus' decent fuel economy, durability and resale value.  "It's definitely a time to be more rational," says Dave Nordstrom, Lexus North American marketing chief.

Delta Faucets tells us that "less than 1% of the earth's water supply can be used for drinking. All the more reason to design (and buy) a faucet with a conscience."  Delta's "Dryden" faucets are built specifically to have a more efficient flow rate that saves up to 32% more water per minute.  That means every time you turn it on, you'll save a little extra for Mother Nature.

Executive coaches are telling prospective clients that they can hold on to their job by stepping up to leadership or how find a new job in a tough economy through a personal coaching engagement.

"No one wants to look like an idiot who just bought something because it's expensive," says Paul Wilmot, who handles public relations for tony brands.

Source: BusinessWeek, November 10, 2008

We are seldom interested in our "roots" until we discover that we have fallen off-the-track that our ancestors set for us to grow and prosper.  Those that went before us assembled significant experiences and knowledge that can be applied to the situations we find ourselves living today.

"An honest man is one who knows that he can't consume more than he has produced." Ayn Rand

I was born in Gloversville, NY, a city known for its glovemaking expertise, in the foothills of the Adirondack Mountains during World War II.  My earliest ancestors had settled in this part of the world as early as the 1630s...trading among the American Indians and one, Cornelis Antonissen Van Sleyck, was even adopted into the Mohawk tribe after being married to Otstock, whose mother was American Indian and her father was a Frenchman named Hartell.  The Dutch name of Margretta was given to Otstock and, as a family tradition, has been handed down (as middle name) within the extended family (including my sister, Jill).   

Glovemaking, one of few remaining handicraft industries, began in this country over 250 years ago in an upstate New York community that would be called Gloversville.  Sir William Johnson (who received the only baronetcy ever granted on American soil) persuaded a shipload of Scottish Highlanders from Perthshire to brave the Atlantic to establish the glovemaking industry in the New World.  The Highlanders brought their tools -- needles, thread, and the sword-like shears necessary for cutting leather -- and these artisans also carried with them the closely guarded guild craft techniques of Europe.  Material they found in abundance.  Indians provided deerskin hides that gave gloves a unique durability and feel.  And the U.S. glovemaking craft was born.

"All it takes to make a fine leather glove is a hide and a pair of hands."  an old glover adage

Sir William settled close to Gloversville, then known as "The Gate of the Adirondacks," and later married a full-blooded Mohawk woman.  The crystal-clear water from the Adirondack mountains was perfect for the tanning of deerskin to a velvety soft texture.  The leather gloves and mittens produced were traded with the tin peddlers from Boston and the local economy flourished.   The age-old tradition of glovemaking survived virtually intact in Gloversville, allowing the community to easily weather the Great Depression and World War II because everyone needed gloves.  Glove manufacturing was the stimulus for full employment as one manufacturing job created 5 to 8 other supplier and service jobs throughout the community.

However, in the early 1960s, glove manufacturing began to move outside the country where lower cost labor was available.  Today, most gloves are made offshore, in places like China and Indonesia, where wages are 20 to 30 times less than what American workers must make to survive.  Rather than invest in automating the U.S. glovemaking process, glove manufacturers, with the support of government, chose to move to the lowest cost labor source.

"The encouragement of mere consumption is no benefit to commerce; for the difficulty lies in supplying the means, not in stimulating the desire of consumption; and we have seen that production alone furnishes those means.  Thus, it is the aim of good government to stimulate production, of bad government to encourage consumption."  Jean Baptiste Say

Globalization is not working for everyone. 

Stagnating wages and rising job insecurity in developed countries are creating popular disenchantment with the free movement of goods, capital and people across borders.  If unchecked, popular fears could turn into a political backlash that could lead to protectionism.

A slow-growth world has big implications for companies.  For one, it's likely that the prices of commodities such as oil and copper, already well off their peaks, will continue to fall.  In the past, oil had its sharpest declines in years when global growth was slowest.  Similarly, industries that require long-term investment--aircraft, semiconductors and cars--may find themselves squeezed by slower long-term growth.

Several things need to happen to get the economy off the slow-growth track.  First, the private sector in the U.S. must concentrate on generating more productivity gains at home.  In addition, U.S. companies need to focus on creating more innovative goods and services that can be produced in this country and shipped abroad.

As Americans fall victim to layoffs and downsizing, they're flocking to career fairs, causing long lines and exhausting hiring managers whose booths are overflowing with candidates.

National Career Fairs, a Las Vegas-based company that organizes fairs for job site Monster.com throughout the country, says it has already had a 40.7% increase in attendees this year over 2007, and that's sure to continue as the year goes on.  Job site CareerBuilder.com has seen a 33% increase in job fair attendance this year.  Crowded venues and lines can frustrate attendees looking to get face time with recruiters.

More senior executives are standing in line, even though the caliber of jobs and companies represented at the fairs often isn't appealing to this group.  These unguided out-of-work executives don't have a clue how to go about landing on their feet by engineering the right job offer.  Still, even senior-level career fair attendees are just hoping to make a connection in a marketplace crowded with more people just like them.

After about six months of wandering through career fairs and uneducated personal networking, senior executives realize they have missed their opportunity to make a good first impression on potential employers...and then begin to implement career damage control.

"For someone in my profession and career path, this isn't great," says Brad Birnbaum, a 48-year-old director of finance who was recently downsized from a New York advertising agency. 

An accountant from Staten Island, Steven Seiler, 44-years-old, has been out of work since last September when the firm he worked for collapsed.  It took him 45 minutes to get in the door of the career fair.  Once inside, he was disappointed to learn that most of the companies were offering commission-based sales jobs or part-time work; he left after about 30 minutes.

Automakers, brokerages, retailers, airlines, home builders, banks, newspapers and countless other ailing industries are slashing staff.  If you haven't lost your job yet, it could disappear tomorrow.  Getting ready for your next career transition should be part of your workday schedule today.  Be smart about how you approach looking for a new job because you could very easily shoot yourself in the foot by not implementing an effective job hunting strategy.

Source: The Wall Street Journal, October 30, 2008

Pre-payment of coaching consultation-1 hour $275. Test drive executive career coaching for four one-hour sessions. Add To Cart For out-of-work executives, get 21 Career Transition Tips at www.NetworkLinchpin.com 

Employees want to have fun at work; turnover among managers who feel pride in their company is 21% lower than among those who don't.

Rudy Karsan is CEO of Kenexa, a Wayne, PA based human resources company that helps companies get inside the minds of their employees.  Karsan says, "When you're in a job that you're good at and enjoy, you're not just a better worker.  You're a better spouse, a better parent, a better citizen."

Yet, knowing employees are passionate is pointless if a company doesn't know how to exploit the passion.

Kenexa's help companies learn what inspires employees by running data through algorithms that identify correlations and possible causations.  Then Kenexa devises strategies to improve work environments and recruit, evaluate and keep talent.

The Bottom Line: Companies with higher satisfaction scores had 700% higher stakeholder return.

Source: FAST COMPANY, November 2008

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Be prepared to look for another job if you cannot agree with your narcissistic boss. Remember, the company is betting on his vision of the future — not yours.

Here are a few tips on how to survive in the short term:

• Empathize with your boss’s feelings, but don’t expect any reciprocal empathy.  Look elsewhere to boost your self-esteem. Be cautious if he asks for an honest evaluation. What he wants is information that will help him solve an image problem.  He will resent any honesty that threatens his inflated self-image, and he is likely to retaliate.
• Give your boss ideas, but always let him take credit for them.  Find out what he thinks before presenting your views.  If he is wrong, show how a different approach would be in his best interest.
• Hone your management skills.  Narcissistic leaders often give subordinates many more orders than can possibly be executed.  Ignore requests that don’t make sense.  Forget about them.  He will, too.

Not all narcissistic leaders are so entrapped by their personalities that they can’t be open to change and willing to learn. 

Harvard anthropologist and psychoanalyst Michael Maccoby, PhD, called such individuals “productive narcissists” when he wrote “Narcissistic Leaders: The Incredible Pros, the Inevitable Cons” for the Harvard Business Review (January–February 2000).  Maccoby's article identifies three basic ways to avoid common traps:

1. Find a trusted sidekick. Many narcissists can develop a close relationship with one person, who can act as an anchor and keep them grounded. But this person must be sensitive enough to manage the relationship.  The sidekick must convince the leader to accept new ideas, showing him how they fit with his views and serve his interests.
2. Indoctrinate the organization. The narcissistic CEO wants subordinates to think as he does about business. He is skilled at converting people to his point of view and indoctrinating managers with his personal ideology.
3. Seek therapy or executive coaching.  If narcissists can be persuaded to undergo therapy or coaching, they can work through their rage, alienation and grandiosity. They can keep their strengths and diminish their weaknesses.
   
   

Narcissists Leading the Future

With the dramatic discontinuities in today’s world, more large corporations are getting into bed with narcissists. They are finding there’s no substitute for narcissistic leaders in an age that requires out-of-the-box innovation and fearless risk-taking.

But narcissistic leaders can self-destruct and lead their organizations terribly astray. Most of the major corporate scandals of the last 10 years were committed by narcissistic leaders who abused their power.

There can be untold rewards, however, for companies whose narcissistic leaders recognize their limitations.

Narcissistic leaders often attain greatness. 

They can see what the future holds; they aren’t analyzers or number crunchers who try to understand or explain it.  They are focused on creating it.

Another compelling quality is their gift for attracting followers. Narcissistic leaders intuitively know how to inspire through their words, speeches and language.

But as narcissists become increasingly self-assured, they act more spontaneously. They feel free of constraints, and ideas flow.  They believe they’re invincible, which further inspires followers’ enthusiasm and feeds into feelings of grandiosity.

The adoration narcissists crave can have a corrosive effect. As their personalities expand, they tune out cautionary words and advice.  Past successes create an exaggerated self-confidence.  If anyone disagrees with them, they feel justified in ignoring them, creating further isolation.  The result is flagrant risk-taking that can lead to catastrophe.

Narcissists selectively listen to the information they seek. They don’t learn easily from others, as they’re overly sensitive to feedback. They are vigilant for signs of disagreement, which are interpreted as betrayal.

They don’t like to teach others, but prefer to indoctrinate or preach.  They dominate meetings.  The result for the organization is greater internal competitiveness.

Narcissistic leaders are uncomfortable with their emotions and keep others at arm’s length. They have walls of defense and generally want to avoid knowing what others think of them.

One serious consequence is failure to listen when they feel threatened or attacked. And while they crave empathy from others, narcissistic leaders are not known for returning the favor.

But narcissists possess a kind of street-smart emotional intelligence. They are acutely aware of whether people are with them wholeheartedly.  They know who they can use and can be brutally exploitative.

We are all somewhat narcissistic, or self-centered. If we lacked this tendency, we couldn’t survive or assert our needs. “Healthy narcissism” allows us to lead a company and its people to greatness.

Narcissists are independent, not easily impressed, and excel at innovating and thinking in original ways. They are driven to gain power and glory.  Harvard anthropologist and psychoanalyst Michael Maccoby, PhD, called such individuals “productive narcissists” when he wrote “Narcissistic Leaders: The Incredible Pros, the Inevitable Cons” for the Harvard Business Review (January–February 2000).

Productive narcissists are experts in their fields and pose critical questions to learn everything that could possibly affect their companies and products. They want to be admired and respected, but not necessarily loved.  They aggressively pursue goals and are less concerned with rules and “the way things have always been done.”

Of all personality types, narcissists run the greatest risk of isolating themselves, especially during  moments of success.  Because of their independence and aggressiveness, they are constantly looking out for enemies and sometimes become paranoid when stressed.

This week, I had a short conversation with an HR manager who had been receiving my weekly leadership tips.  She said she 'loved' the leadership tips but didn't send them on to her narcissistic executives because their egos blinded them from improving their leadership capability. 

Since few HR managers have the power or guts to take the action necessary to improve the leadership ability of those in management, they need outside help in fostering leadership development within their organizations. 

There is an old Yiddish proverb that applies to every organizational leader: "The fish always sinks at the head."   The leader with CEO Disease doesn't know the smell that he or she is spreading throughout the organization.  The personally coached CEO discovers what smell he or she is spreading across the corporate culture and works to make it a productive and positive scent.

Today’s CEOs attempt to emulate superstars like Bill Gates, Andy Grove, Steve Jobs and Jack Welch.  They hire their own publicists, write books, give interviews and actively promote their personal philosophies.  Their faces appear on magazine covers.  They strive to become shapers of their unique brands of leadership style.

Narcissism Defined

We are all somewhat narcissistic, or self-centered.  If we lacked this tendency, we couldn’t survive or assert our needs.  “Healthy narcissism” allows us to lead a company and its people to greatness.

However, an over extension of the narcissism mindset can become a weakness when the executive doesn't get it. 

They just make things worse when they try to solve their direct reports' problems. Their closed mindset results in doubting that the people below them have a clue what the employee is talking about.  They don't realize that you can't manage anyone with vague goals.  Many don't believe that there is a big difference between telling or even showing someone what is expected of them versus actually rolling up their sleeves to make sure employees completely understand what they'll be expected to do in the future.

Narcissistic leaders rarely talk with employees about how their work is going.  They are just too busy and time doesn't allow for such conversations.  Since there is only one of him or her to go around, the leader fears getting bogged down by locked into a discussion with employees takes the leader away from all the 'important' phone calls and emails he or she has to respond to.  The narcissistic leader thinks there are not enough hours in the day to stay connected with the managers and workers in the organization.

And there lies their leadership blind spot.  They get distracted by the laundry list of stuff they think they have to do each day, when their top priority should be communicating with their team.  Not staying in touch with everyone to monitor their progress and letting them know the leader is watching their back, allows tough problems to grow and fester.

If your manager doesn't listen to your ideas, then who will?

One way to probe the clueless leader's self-awareness, is to give him or her a gift that allows this important message to surface: if you aren't staying in touch, you aren't doing your job.  This book can help to do just that:

Travis Bradberry: Squawk!: How to Stop Making Noise and Start Getting Results

The current economic slowdown has forced many business owners to reevaluate their expenses.

Especially during a recession, lower staff costs can be a real competitive advantage.  While larger companies are usually forced to slash overhead by executing layoffs, their nimbler counterparts can evolve constantly.

"Businesses must be faster on their feet," says Eric Siegel, founder of Siegel Management, a consulting firm based in Bryn Mawr, PA, and a lecturer at the University of Pennsylvania's Wharton School.  "We're going to see more small firms that can easily dial up or down in their efforts and resources."   

As evolving business models and technologies enable the growth of the microbusiness sector, more tiny companies are likely to achieve huge profits.  "In many cases, you can make more money as a smaller firm," says Siegel.

How do lean businesses outperform rivals with fatter payrolls?

In 2006, the Georgia Institute of Technology studied the methods that forward-thinking small businesses use to maintain their competitive edge.  Many of the most profitable small firms in the study favored strategic alliances, long-term contracts, close client relationships, and highly efficient manufacturing systems.

Source: Fortune Small Business, November 2008