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September 2007


Western capitalism is fighting a form of business cancer. And the most virulent form of it is short-termism.

 

In physical cancer, some cells go haywire and turn viciously against the body. This is also what happens when certain core beliefs are perverted or taken to extremes.

Some examples—the beliefs that:

  • greed is good (Hollywood simplification).
  • individual pursuit of selfish aims yields public good (mis-translated Adam Smith).
  • pursuit of short-term corporate goals ends in long-term social success (what’s good for General Motors hasn’t been good for America for some time now).

Those and other beliefs have resulted in rampant short-termism.

A few examples, “ripped from the headlines:”

  • The trend in private equity toward front-end deal fees. Gretchen Morgensen’s NYTimes article quotes Michael Jensen, emeritus of Harvard Business School and the “father of private equity:”
    “…these fees are going to end up reducing the productivity of the model . . . People are doing this out of some short-run focus on increasing revenues.”

    In other words, private equity is good when it subjects bureaucratic managers to the pressure of markets, with say a 3-5 year timeframe. But when the privateers themselves succumb to the lure of instant front-end fees, the greed snake is eating its own tail.

  • The trend in the mortgage industry to convert relationships to transactions—from integrated loan-making and loan-holding, to separating the entire process into various stakeholders—most of whom get their money up front, now. Short term.
  • The IBGYBG mentality in investment banking during several market crashes detailed by Richard Bookstaber in his book A Demon of Our Own Design, that resulted in people making fast deals that would explode on investors down the road, but that paid off nicely up front for the dealmakers, who said not to worry, because—”I’ll be gone, you’ll be gone,” it’ll be someone else’s problem then.
  • Young financiers opting out of an MBA because the opportunity exists to make so much more money in the short term: “With the growth of hedge funds, you’re getting a lot of really smart people who are getting paid a lot very young,” says Arjuna Rajasingham, 29, an analyst and a trader at a hedge fund in London. “I know it’s a bit of a short-term view, but it’s hard to walk away from something that’s going really well.” Yup on both counts.
  • The current residential real estate recession, driven heavily by speculative buyers betting well beyond their means on continued high prices—“I’ll pay off the loan when I flip it.”
  • The longer term trend in business toward “alignment” of processes—which often assumes the only way to long-term profit is to ensure that every short-term measure is itself profitable.
  • Quarterly earnings pressure, which was one of the original drivers of private equity, back when PE was doing some good.
  • Private equity firms selling equity to the public: “a non sequitur in both language and economics,” according to Gretchen Morgensen’s paraphrase of Michael Jensen. The private equity movement initially shook up stodgy companies that were permanently-funded by stock, where inefficient managers could hang out draining away value for decades. Private equity would buy them and insist on returns in 3-5 years; it left managers no place to hide, and produced real value returns. But when the 3-5 year people themselves start selling permanent stock to investors, they have become what they started out to fight. Which means they’re either stupid or venal. And while I usually opt for stupidity in explaining conspiracy cases, in this one I’d put money on venal.

Is there any relief? Or is this just another case of cheap hustlers exploiting weak human nature that goes with every business cycle?

Three antidotes can work against short-termism. One is pain. Suffering may not be a sufficient condition for social change, but it’s usually a necessary one.

Second is education. Awareness creation can help.

The third is leading thinkers, and there are some hopeful signs. Martha Rogers has begun talking about a lifetime financial perspective on customers:

“Creating maximum value from your customers involves optimization — balancing current-period profits against decreases or increases in customer lifetime values, to maximize your “Return on Customer.”

This isn’t new in finance, accustomed to present-value thinking in pricing financial assets. But it’s new to management thinking, accustomed to quarterly EPS. Robbing future customers robs enterprise value, says Martha. And she’s right.

The aforementioned Michael Jensen announced last month a paper he wrote with Werner Erhard = (the controversial founding father of EST training, and more recently of Landmark Forum) on the subject of—get—integrity.

Here’s a tasty quote from the abstract:

We demonstrate that the application of cost-benefit analysis to one’s integrity guarantees you will not be a trustworthy person (thereby reducing the workability of relationships), and with the exception of some minor qualifications ensures also that you will not be a person of integrity (thereby reducing the workability of your life). Therefore your performance will suffer. The virtually automatic application of cost-benefit analysis to honoring one’s word (an inherent tendency in most of us) lies at the heart of much out-of-integrity and untrustworthy behavior in modern life.

They are right too. You can’t fake trust; trust is a paradox; motives matter. The act of justifying trust by its economic value destroys not only trust, but its economic value. The best economic results come as byproducts, not goals.

Can clearer business thinking beat short-termism? It can’t hurt.

Charles H. Green, author of Trust-based Selling and co-author of The Trusted Advisor (with Maister and Galford), is a speaker and trainer on the subject of trust-based relationships in business. Charlie spent 20 years in management consulting, with The MAC Group and Gemini Consulting. His firm is Trusted Advisor Associates, and he writes the blog Trust Matters.

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Another basic principle of Slow Leadership

Fragmented, distracted attention is the curse of today’s workplaces. People are continually interrupted by phone calls, emails, instant messaging, meetings, and all manner of people demanding instant attention. The result is frustration and exhaustion, while nothing is ever properly completed. Since how you direct your attention controls what you think and what you do, it’s important always to know where you’re placing your attention.

Your attention is precious. You have only a finite amount of it, so how you use it is important. Don’t be taken in by all the nonsense about multitasking. Multitasking never adds to your attention. It’s just a fashionable term to hide an ugly reality: that people who multitask fragment their attention between many, many actions, thus passing each one off with less than it deserves.

The correct use of attention is critical both to avoiding stress, when you can, and limiting its effects when you cannot. A distracted mind is stressful in itself. So is jumping from task to task, never having the time to do more than apply a quick fix before moving to the next crisis.

Many people act is if their attention is not their own—as if others can demand it at any time, then take it where they want it to go.

Not so. This happens only because you allow it to—because you surrender control of your attention to others. Just because the boss demands that you jump, you don’t have to do no more than ask “how high?” If that’s your attitude, it’s because you have chosen it to be—obedience in return for . . . what? Money? Status? Imagined security? Not being hurt?

Understanding that your attention is always yours, to apply where you choose to apply it, is the first stage in realizing that your experience is as much determined by your own choices as by the action of others or blind chance. It’s a vital step to turning yourself from a passive victim into a human being, fully accountable for his or her own choices and their outcomes.

Your attention is finite

You have only 100 percent. So if you split it between two actions, whatever you earmark to each one must add up to 100 percent. Split it evenly and each gets no more than 50 percent. Favor one task over the other and one gets maybe 60 or 70 percent and the other 30 to 40 percent. People who way they juggle four or five tasks at once, can’t give any of them more than about 20 percent of attention. Ask yourself this question. What tasks can you do well on 10 to 20 percent attention—or less?

We’re already seeing how the fashion for instant availability by cellphone and texting is causing road accidents. Every time some driver cuts me up or makes a dangerous maneuver, I look to see if he or she has a cellphone jammed against an ear. Sure enough, most times that’s the case. When states and cities have to pass laws to force drivers to put the cellphone down while driving, you know something is badly out of line. Only morons believe that they can give their attention to driving and handle a cellphone at the same time.

How to get it right

To practice Right Attention, the Slow Leadership way, the first step is to stop sleeping with the enemy. Don’t collude with any practice that fragments or distracts your attention, or prevents you using it as you decide it needs to be used at the time.

  • Control distractions. Make it clear you are not always available, save in a true emergency. Shut off the cellphone. Check emails only at set intervals. The world won’t end.
  • Avoid multitasking like the plague it is. Take tasks in sequence and try to complete each one (or reach a sensible point to pause) before moving to the next. Multitasking is a badge of stupidity, not a mark of toughness.
  • Pay attention to your attention. Learn to direct it where you want. Don’t let it be hijacked by other people.
  • Set priorities and stick to them. Other people will always want attention instantly, but if you’re patient in making it clear this isn’t the norm, they’ll get the message. Very few things truly cannot wait.
  • Schedule time for thinking and reflection. You need it. It’s necessary to keep your mind working and your creativity available. Don’t allow yourself to put it at the bottom of your agenda. You’ll never reach it.

Why it matters

The first duty of a leader is to set priorities and manage resources. Your attention is the scarcest resource you have. Overwork and fatigue reduce the attention you have available. Interruptions and distractions fragment it into parcels too small to be useful. Allowing anyone to contact you at any time scatters what’s left until it becomes lost and hopelessly confused.

Yes, there are pressures. Yes, other people do expect instant answers. Yes, people do keep piling more and more tasks on you. Yes, people who rush about yelling how busy they are often do seem to be the organization’s darlings. And no, you can’t blame any of these for your problem. Joining in the general foolishness is no way to stop it—or protect yourself from its effects.

Whose attention is it? If you don’t do what’s right, who will? Only if enough people are willing to resist what has become a mindless fashion, will things change.

It’s surely worth trying.

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Why change is mostly a simple process of cause and effect

It’s amazing how little attention people pay to the simple process of cause and effect. There’s a common saying that the best definition of insanity is, “Doing the same thing again and again, while expecting the outcome to change.” By that definition, maybe the majority of working people—and nearly all their managers —today are insane. Here’s how to recover your wits.

If you can establish a link between an action and a corresponding result, repeating the action is extremely likely to repeat the result. When the connection is positive and short-term—so people see a certain action quickly produces an outcome they like—they seem fully aware of the link and follow it consciously. But when the outcome is negative and occurs some time in the future—behaving in a certain way now could well lead to unpleasant long-term consequences—they seem to find the link harder to grasp, especially if the action itself is pleasant or comforting.

Smoking is a good example. The negative consequences of smoking are well known and factual. Yet millions still smoke. Logically, being aware of the health consequences of smoking should make any sane person give it up, if they smoke already, or refuse to start an addictive habit they are very likely to regret. It doesn’t happen like that. Instead, people admit to the insanity of smoking, then go on doing it.

The reason has to be that the pleasure is real and here today, while the threat seems theoretical and far off in the future, if it ever happens at all. Many smokers admit the danger, then quickly point to someone they know, or have heard of, who smoked heavily all his or her life and lived to be 90. You could equally logically point to someone who smoked for a week and contracted lung cancer. When you’re dealing with probabilities, any single instance is statistically irrelevant.

Choosing a game plan for life based on short-term gratification

What has all this to do with business life, work, and slowing down? The answer can be expressed in a simple equation:

Old Habits + Old Thinking + Short-term Viewpoint = Predictable Consequences

This seems to be the game plan for life and career that many people follow. It’s definitely the basis of the Hamburger Management game plan.

But if you want to build a better, less stressful business, a better, more enjoyable, and more satisfying career, or a better, happier life, you won’t do it by sticking with the way the majority think and act today: following current fashion while looking only to the immediate future.

A short-term, conservative mindset is not your friend if you want your life to change for the better. Nor is clinging to security. That was my point at the start of this post. If you stick with habits and thoughts that are comfortable and undemanding, and don’t look much further ahead that next week or next month, expecting any different outcome from what you’ve experienced up till now is so illogical it must be described as form of insanity.

A game plan for positive change

To produce slow, measured change you should try changing one, or perhaps two, of the terms in front of the equals sign in the equation above. For example:

Old Habits + Old Thinking + Longer-term Viewpoint = Potential for Different Consequences

I say “potential” because those old habits and thinking will still hold much of your life in place until the longer-term viewpoint starts (fairly slowly) to change them.

The same would be true if you changed your habits, but kept your current ways of thinking and short-term outlook. There would be some change, but your old-style, short-term thinking would keep pulling you back towards the way you’ve always reacted to events until now—and thus to very similar consequences.

To make major changes, you must change habits and thinking and viewpoint at the same time:

New Habits + New Thinking + Longer-term Viewpoint = All New Consequences

If you do that, the “law” of cause and effect will ensure different outcomes and paths through life. When people have some life-changing experience, they often describe it as having turned their lives upside down. They can’t think as they did before, nor can they bring themselves to fall back on their old habits or see the world in the old way. They have new thinking, new habits, a new outlook, and therefore their life is totally changed.

Life-changing experiences . . . on demand

Armed with this insight, you can create your own life-changing experiences. Open your mind to new thoughts, lengthen and broaden your outlook, and try new ways of behaving. You can definitely expect different results to come about if you do that. The major drawback to a short-term, conservative, risk-averse mindset is not that it’s always wrong (though often it is), but that it’s static.

When you choose to alter your life in a controlled manner, inner change precedes outer change. You change yourself and how you choose and new consequences arise as a result. When outer change forces inner change on you, it’s nearly always due to some traumatic life event. That’s what happens when you stay fat, dumb, and happy until the universe forces you to make a major course correction.

If you wait until that happens, it’s likely to be painful. Wouldn’t it be far better to choose change than be compelled to experience it through a life-altering trauma?

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A reminder of one of the basic ideas of Slow Leadership

It’s a while since I have written about the eight basic principles of the Slow Leadership approach to life and work. Over the next few weeks, I propose to revisit each one. Today, I will begin with the idea of “right tempo.”

There is a correct speed for every activity. Some you need to do quickly, many are much more effective if handled at a slower speed. Whatever tempo is the right one should be the tempo you choose. Getting the tempo wrong always ruins the result. That is why today’s obsession with speed is often so counter-productive: faster is not always better. There are times when it is very much worse.

If a piece of music is played too quickly or too slowly, the melody is spoiled. If a speaker talks too fast, the words become garbled. If too slow, the meaning is lost and the talk becomes boring. It’s no different for work. Rushing comes from habit and poor organization and often leads to lowered quality and a sense of incompleteness. When you’ve rushed something, you know you haven’t done it justice. Going too slowly is much less frequent, but usually results from procrastination, perfectionism, and bureaucratic not-picking.

Choosing the right tempo is an important leadership skill. Good leaders know when to move fast and when to wait on events. By rushing when it’s inappropriate, poor leaders make bad decisions and unforced errors. By procrastinating when they need to act right away, they miss important opportunities.

Which speed is the right one?

Consider these points to help you get the tempo right:

  • Do you want a quick fix, a purely conventional answer, an answer that works, or one that is innovative? The difference in the outcome probably lies in the time you allow yourself to find that solution.
  • What is causing you to feel you must hurry? Is there a genuine reason? Is it just habit? If you do not need to hurry, why do so?
  • If others are becoming impatient, can you understand why? It may be that you are falling into the traps of perfectionism or procrastination. If so, speed up. But if they are simply impatient out of habit, consider that they will never accept their haste as an excuse for any mistakes that you make as a result.
  • Never equate speed with excellence. Faster is only better if whatever it is is being judged purely on speed. A fast car that constantly breaks down may be far less desirable than a slower one that is reliable.
  • Speed is usually more about glamor than excellence. Do you want a flashy response (plus the risk that people will soon realize that it has little but glamor to recommend it) or one that will solve the problem fully?
  • Speed is rarely the only criterion for success. What else is required? Can you achieve the other criteria fully if you concentrate on speed alone?

Are there benefits to going more slowly?

Taking your time gives you the chance to reflect and consider a topic from many angles. When you rush through a task, you’re forced into a one-dimensional perspective. There’s no time to sit back and take different viewpoints. This is a severe disability. If you only allow yourself time to consider one way to approach an issue, how can you tell it’s the right way?

Today’s over-emphasis on so-called industry best practice is a direct result of unnecessary haste. Faced with continual pressure to decide instantly, leaders look for some way to offset the increased chances of making a poor choice and incurring blame for it. By turning to the most common and fashionable answers, they can claim what they did was what most people would have done, even if it turns out to be wholly unsuitable for their particular case. They sacrifice being right for feeling safe amongst a crowd.

What speed feels right?

You can often feel which speed is the right one, merely by paying attention. Some speeds intuitively produce a sense of excessive haste. Everything feels breathless and unstable at that tempo. Just as you instantly know if you are driving too fast for comfort, you will know if you are pushing your abilities beyond their natural limits.

In the same way, something done too slowly drags and loses all sense of forward momentum. It feels sluggish and heavy. You can sense that far too much detail is being inserted, or those involved are simply trying to avoid reaching some point that they are frightened of.

Slow Leadership doesn’t favor slowness for its own sake. In a world addicted to speed, we try to remind people that doing some tasks correctly always takes time. Sometimes you need to wait to see how events will turn out before reaching a firm decision.

Helping others learn always demands time and patience. So does working through difficult and complex choices. An organization that demands speed over accuracy is gambling with its money and its future. You may as well toss a coin.

Think about the right tempo for every task. When you find it, stick to it, regardless of the pressure to speed up. This is the first and most essential step to being in control of your life and work. Being a leader means setting out to control the way you use your time and the time of those who work for you, not letting external pressures control you. If you allow yourself to be rushed, you’ll quickly find yourself out of control, hurtling towards some future you never chose . . . and a place you don’t want to be.

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Why we need to resurrect an unfashionable virtue

Tolerance is an unfashionable virtue today, especially in parts of American society. Oddly, it’s often associated with weakness, where the opposite in true. To tolerate those who reject, refuse, or actively attack, your deepest beliefs and values takes enormous strength and unshakable faith in what you believe. Show me someone who persecutes those who disagree with their position and I will show you a person whose faith in their beliefs is already shaky.

Few people write about the dark side of our passions: the way they can become so intense they slip from a positive force in our lives into destroying our peace of mind. Fortunately, few of us will ever experience true obsession. Yet there is a little of the dark side of values in everyone. It’s as well to be aware of it and what it can do.

Passion and fear are natural partners. When you feel something as intensely as you feel whatever you are truly passionate about, there is always a sense of uneasiness. What would happen if you lost what is most important to you? How would you cope if it were taken away? Might someone try that?

Behind every strong human desire there is fear. People who become passionate fitting in and being part of the right crowd fear rejection and loneliness. Workaholic achievement freaks fear failure. Loners fear being dependent on anyone who might hurt them, mostly because they’ve been hurt that way before. People like this cling to their viewpoint because any alternative seems likely to be painful and scary. They reject tolerance, not because it would hurt them, but because they fear it might.

The more you cling, the less tolerant you become

The more strongly you cling to what matters most to you, the more fiercely you will respond to any threat, real or imagined, against it. People find it hard to cope calmly with such a slight danger as disagreement with the values they hold. How can someone pose a threat to your beliefs simply by holding different ones? Yet friendships are ended, families disrupted, work teams destroyed, careers derailed, and marriages wrecked by nothing more tangible than a disagreement about what is valued or believed by one of the parties. It makes no sense.

Of course, it does once you understand the fear. By refusing to accept your beliefs and values as mine too, I undermine, just a little, your confidence in what you believe. If I go further and openly oppose or denigrate your point of view, the threat is greater and the emotional response will increase in proportion. This is the paradox. The more strongly people believe in something, the less easy it is for them to cope with others who don’t. That’s why clubs become exclusive. That’s why we’ve had centuries of religious and political persecution.

How workplace tyrants develop

Our places of work are still riddled with “command-and-control” ways of thinking: beliefs about the “right” of those in positions of authority to demand that others do what they say. If it stayed at that, it would be bad enough. But it’s a small step from requiring subordinates to follow orders to demanding that they “hold the right attitudes” (i.e. the boss’s) and “show they’re sound” before they can obtain promotion.

Workplaces are social situations and bosses are sadly human. We all like to work with people with whom we feel at ease. But what a workplace needs most is people who can do the job well, not those who fit some boss’s idiosyncratic template for the kind of person they believe is “sound” or “made of the right stuff.”

Tyranny and discrimination don’t come from managers who are at ease and secure in their own beliefs and views. They can ignore anything that isn’t anti-social, illegal, or prejudicial to a good business environment, and focus purely on a person’s skills and capacity to turn in excellent work. It’s the self-righteous, the insecure, and the fearful who cannot.

Greater tolerance matters

Every day, we must all must face people whose view of the world does not match ours. You may have to work with them, serve them as customers, or answer to them as your boss. If you cannot learn to tolerate different—even uncomfortable—beliefs and viewpoints cheerfully, you’ll cause yourself and others continual pain. The dark side of your passions is always there, waiting to disrupt your life.

Strong values are usually seen as something to be applauded. Maybe. They also increase the danger of bigotry, self-righteousness, discrimination, persecution, and obsession. I’ve studied peoples’ values and beliefs for decades. In that time, I’ve met many cases of good, principled people unaware of how they allow the dark side of their passions and fears to turn them into narrow-minded, cruel tormentors of anyone who disagrees sufficiently with them.

St. Paul wrote that without charity we are nothing. He’s not an authority I’m much given to quoting, but in this case I believe he was pointing to something essential. One of the meanings of charity in Webster’s dictionary is “leniency in judging others, forbearance.” In other words, tolerance. If your values are strong but you do not practice charity and tolerance, the steep slope into bigotry, discrimination, and persecution is already under your feet.

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Can you display integrity only when it suits you?

Many people believe that they practice integrity, yet also allow themselves to slip from that standard when that suits them better. Since a calm mind and a clear conscience are major buttresses against suffering workplace stress, anyone who aspires to practice Slow Leadership ought to ask themselves this fundamental question: “Do I really behave with integrity—or do I only do so when I find it convenient?”

Peter G. Vajda, writing recently for Management-issues.com (Integrity at work — how do you stack up?), posed the question of how far you can mix integrity with convenience. Is it acceptable to set aside the demands of ethics, honesty, and truly fair dealing when it is convenient to do so?

My own experience suggests that this is what most of us do. We believe we really are honest people—and we are, most of the time—yet we still allow ourselves the occasional (or not so occasional) lapse from strict standards of integrity when we feel that we need to do so: to meet a deadline, achieve a target, avoid getting into hot water, or butter up some superior.

Mr. Vajda’s view of such lapses in uncompromising:

Integrity is a lot like being pregnant. Either you’re pregnant, or you aren’t. There’s no middle ground. It’s the same with integrity. Either you’re behaving with integrity, or you’re not.

I’m not so sure.

Discovering your own truth

It’s good to have high ideals, but far harder to match them every day. I agree that we would all feel calmer and less anxious if we always behaved in ways that matched our deepest values, but human beings are fallible creatures. the last thing we need to do is add to our stress by feeling guilty because, faced with an impossible deadline or a raging boss, we fudged our consciences to meet our goals.

You might want to try the quiz in Mr. Vajda’s article to see how you match up to his lofty standards. I would use it for another purpose: to help understand what most often causes me to suffer from regrets and a bad conscience.

There’s more to be gained, in my view, by seeking understanding of yourself and your motives than there is from erecting some golden standard of perfect behavior and battering yourself for falling short.

Slowing down offers everyone the chance to take part in a fascinating piece of detective work: to unravel reality from the mess of myths, half-truths, misperceptions, and wishful thinking that makes up our own view of our motivations in life.

Integrity has to begin with a true understanding of who you are and what matters to you most. Only then can you see to what extent to actually live these values in your life and work. And if, as is true of most of us, the answer is that sometimes you do and sometimes you don’t, you can see what effect this has on your life.

I suspect that those who genuinely explore the effects of NOT living with integrity soon reach the conclusion that it isn’t worth it. The benefits from short-term convenience are far out-weighed by the drawbacks of long-term regrets.

Then it becomes merely rational to stick to what your conscience dictates, not a matter of guilt or following anyone else’s standards.

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Deep convictions equal a strong you

 

The Corner Post Principle comes from wire fence building. The deeper you build your corner posts, the stronger the fence’s foundation and thus you can stretch the fence farther.

Expert leaders with solid personal leadership insight view their character as their corner posts. This includes trustworthiness, honesty, collaboration over competition, sticking to commitments, a strong work ethic and, most importantly, integrity.

Stephen Covey on integrity…

One of the most important ways to manifest loyalty is to be loyal to those who are not present. In doing so, we build the trust of those who are present. When you defend those who are absent, you retain the trust of those present.

 

Seven Secrets to Integrity

  1. Know when to say no to projects, ideas, and even jobs that aren’t congruent with your core values.
  2. Especially during your busiest hours, stay committed to a pre-defined list of priorities.
  3. Over-promise and over-deliver. Many times integrity at work and at home manifests itself through your work ethic.
  4. Gain clarity on all time and duty expectations. The clearer you understand what others need from you, the more specifically you can live up to those expectations.
  5. Apologize when necessary. Integrity is not about being right or having the answer all the time. Many times it only takes saying “I’m sorry” when other people would just walk away.
  6. Remember that you aren’t what you do once, you are what you do repeatedly. This is also an excellent metric when examining the other’s behavior.
  7. Respect people’s time and show up early. It is amazing how a person’s core integrity is illuminated in even the smallest of gestures.

Rhett Laubach is a professional speaker, author, leadership expert, and founder/operator of YourNextSpeaker, LLC in Edmond, OK. For 15 years, Laubach has presented interactive, educational programs, in 35 states, to more than 500,000 individuals. He also coaches hundreds of individuals to develop their communication skills. To learn more visit www.YourNextSpeaker.com, PLI Blog: pliblog.YourNextSpeaker.com, & Speaking Blog: speak.terapad.com.

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Adding all the pluses and minuses honestly might produce a different picture

The almost universal assumption that “the bottom line” in business equals the net amount of profit is not correct. That’s merely the accounting version—and generally accepted standards of accounting omit a great many elements of a business that carry significant weight in real terms. If you want to understand the true corporate “bottom line,” you must take account of all those intangible and non-financial items that affect an organization’s growth and progress. It’s the same in your own life: the bottom line needs to be calculated using all the data, not just the parts that are easily turned into numbers. The only version of the “bottom line” that really counts is the one that measures whether you are acting in a way that enhances life . . . or diminishes it.

For decades, businesses have used accounting conventions to provide a picture of their status and progress. If they are being honest, everyone knows that these are inadequate. They omit huge areas of importance, such as the power of a brand, the impact of customer attitudes to the business, and the impact of fashion and the changing nature of society.

There have been some attempts to put a numerical value on a brand, and “goodwill” is used as a financial proxy for the intangibles of customer loyalty and appreciation, but such intangible items play a minor role in reaching a calculation of “the bottom line.” And that is without all the growth in “off balance sheet” items that has been so characteristic of certain corporations—especially those that have later fallen foul of the law.

Corporate intangibles

Organizational types are always attracted to things they can measure numerically. It gives them a feeling of being “scientific.” It makes it easy to produce comparisons and benchmarks. It looks objective.

But what is easy is not always correct, and reaching a “bottom line” figure on purely numerical and financial data tends to distort reality.

What is the true position of an organization that is currently making substantial profits, but alienating its customers by the methods it has chosen to do so? What about one that is maximizing short-term gains by mortgaging—or compromising—long-term growth necessities? As the world finally wakes up to the size of the problem of the human impact on the environment, what is the “bottom line” for an organization that relies on old, polluting technologies to make its profits?

The rash of Chinese imports to the USA that break US standards of product safety shouldn’t surprise anyone. All these Chinese companies are doing is copying their Western models by finding ways to maximize short-term profits at the expense of quality and safety standards. The main difference is that they aren’t nearly as practiced at doing it, so they are caught out more easily. Western companies have been sacrificing ethical and environmental standards for over a hundred years in their belief that immedaite financial profitability is the only “bottom line” that matters.

Personal calculations

For individuals too, those “bottom line” calculations are far trickier than they look.

The writers of the Christian Bible were aware of this thousands of years ago. “What shall it profit a man,” they asked, “if he gain the whole world yet lose his own soul?”

That question is just as relevant today as then. Is it a fair calculation of your personal “bottom line” to look only at getting and spending? Is it enough to make as much personal profit as possible, if the cost includes wrecking relationships, threatening your own health, and reaching the end of your life rich, alone, and despised? What if your personal profit comes mostly by exploiting others or pillaging the environment? Is that acceptable, merely because it makes sense in financial terms? What value do you put on a clear conscience and a civilized world?

A fresh calculation

The assumption that profit and financial success are the only “bottom line” calculations that matter, even to corporations, seems to me to be hopelessly superficial and naive. The rise of Hamburger Management, with its mindless mantra of “faster and cheaper,” has merely made matters worse.

The most effective corporations have never subscribed to a view that short-term profitability is all that matters. Costco, for example, provides employee wages and benefits well in excess of what proponents of financial-bottom-line-only thinking believe is correct; and still makes substantial profits. Before it lost its way and gave in to the supposed financial gurus (and not incidentally nearly went bust by doing so), Marks & Spencer in Britain was noted for putting product quality and high ethical standards at the top of its list of priorities. So long as it did so, it appeared impregnable to competition. When it dropped such “antiquated” notions in favor of fashion and profit, it soon lost its premier place.

What about your “bottom line?” How are you calculating it?

Is your personal “bottom line” calculation based on nothing but the size of your bank balance, the number of expensive toys you own, or your prospects of promotion? Where do peace of mind, sound relationships, trust, ethical standards, and good health rate? You cannot put a monetary value on them, but many people have found after a while that they would give all the money they have to bring back these intangibles of a civilized life . . . if only they could.

The true “bottom line” is the value your life has. Does your presence on this earth enhance it or harm it? Are others glad that you are alive, or do they blame you for diminishing their lives?

Until you make that calculation—and make it honestly—you are nowhere near the real “bottom line” of existence.

(5 votes, average: 4.6 out of 5)
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Work/life balance is NOT what you think

It’s easy to assume working less will inevitably make you happier or that spending 60 hours or more each week working is BAD. What is bad is betraying your identity: working longer hours that fits who you are; pretending to be a hard-driven, achievement-oriented workaholic to win approval, when you’re nothing of the kind. The true meaning of finding the correct work/life balance—correct for you that is—comes from selecting a game plan for your life that correctly fits your identity.

Work/life balance isn’t simply about allocating time: it’s mostly about creating a game plan for your life that works for you in your present circumstances. It’s about your identity and authenticity.

How much of your identity, your sense of self, and your self-esteem, is linked to your work?

For many people starting out on a career, the answer is nearly all of it. That’s understandable, since work is usually a continuation of education in terms of a field for achievement, and most young persons long to establish themselves as people of worth.

Later, especially if you gain family commitments, things get more complex. You likely want to be able to give your family a good life, which usually means higher earnings and probably regular promotions. At the same time, if all you do is work, they’ll hardly see you—except as some exhausted, harassed person who appears late at night and spends the weekends locked away catching up with work. Being a “good provider” isn’t sufficient. You have to be able to give your family regular, quality time. What was your authentic identity earlier (the rising star), no longer works. A new game plan is needed.

Later still, you may find yourself dissatisfied with your life so far. Many people find that what seemed such an obviously desirable career path in their 20s appears, in their 40s, to have been the wrong choice. They long to make a change, even if that means sacrificing some financial benefits. Yet another game plan is needed, with a different balance between work and other life goals.

Job or vocation?

Work has considerable advantages as a forum to establish personal standing: objectives and criteria for success are clear; lots of people are keeping score; rewards are well-known and visible to others. It has many disadvantages too: you are rarely in control of your own destiny; the criteria for success may change without warning; economic downturns half a world away may suddenly deprive you of your job; your organization’s goals will never include more than the most incidental interest in providing you with the avenues you need to meet your personal goals.

It’s much less easy to judge success in many other parts of life. The time-scales tend to be longer. How long will it take to know if you have been successful as a parent or a spouse? How can you judge whether you’ve fulfilled your potential as a human being outside the purely economic realm of existence? How can you compare the benefits of basing your personal identity on things outside of work with the benefits you can expect for making work your life?

I suspect many people focus on work success as much because it’s easy to estimate as because they truly see it as the center of their lives. In our achievement-dominated world, deciding not to pursue a path of economic and financial success is usually represented as something of a cop-out: an excuse to cover the fact that you knew you wouldn’t make it. We claim to admire those who follow a vocation rather than hard cash, but fail in many cases to translate this supposed admiration into a living wage.

It’s as if society assumes that those who aren’t primarily motivated by money don’t need the stuff anyway. Most of the jobs that are classed as vocational—teachers, social workers, police, fire, nurses, and the like—are abysmally underpaid. In contrast, guys assumed to be interested solely in money, like hedge-fund managers, are allowed to take home oodles of the green stuff.

How to set your own game plan

What are your standards for a successful life? It’s a question many people rarely consider in any depth. Most simply accept the conventional standards offered by society. That’s a one-size-fits-all approach that really doesn’t fit anyone too well.

Establishing a satisfactory work/life balance for yourself means first answering these basic questions:

  • What are your fundamental values? What matters more to you than anything else? If your actual game plan—the one you use, not the one you claim to use, but only aspire to—is at odds with your fundamental values, you will never feel satisfied, whatever you achieve.
  • What kind of achievements give you the greatest pleasure? If you ignore these, you may earn a great deal of money, or even reach the executive suite, but life won’t be fun or enjoyable. Why sentence yourself to 40 or more years of hard labor doing something that doesn’t even please you?
  • What do your current circumstances seem to demand? As I noted above, peoples’ game plans need to change as their circumstances change. What worked in college likely won’t work for you as you close in on retirement.

These are vital, life-altering questions and it’s always best to reach your own conclusions, whether or not they fit with what society expects, other people demand, or even what you expected yourself when you began to try to answer them. You won’t be satisfied with any game plan for work/life balance unless it accurately expresses your true sense of your own identity.

Take some time out to ponder (and discuss) the kind of person you see yourself as being and what game plan and type of work/life balance that implies.

You may really love your work and enjoy nearly most of the time you spend doing it. Equally, you may come to realize that work is a substitute for facing up to life’s other demands: it’s always there, it’s easy to get lost in it, it’s socially acceptable, and it prevents you from ever having the time to deal with whatever you’re set on avoiding. You may find that work, for you, is simply an economic necessity and your real love in life is something far from your working environment.

Whatever you find, act on your discovery. Look at the game plan you are following—the one that’s clear from your actions, not the one you maybe talk about—and see if it matches up to who you are. Every game plan implies its own unique work/life balance. And that’s the only one that matters.

(5 votes, average: 4.8 out of 5)
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Why comparisons can so easily lead you astray

Competition and comparison have become shibboleths of our society, but there are times when it makes sense not to compare—especially when the basis for comparison is wrong or distorted.

In today’s society, comparison and competition have become so widely accepted as “good’ and “desirable,” that it seems almost a heresy to suggest than many of them are both false and misleading, and can lead to some very bad decisions.

That is, however, exactly the case. For example, you may compare your own career progress to others around you, without taking into account your different strengths and values. Some people progress faster because they’re more willing to suck up to those in power; or they’re more political; or they’re more ready to knife colleagues and competitors along the way.

Unreal comparisons and imaginary targets

Comparisons about career progress or lifestyle can be especially tricky. Merely because someone else has does something does not mean it is suitable for you. You see other people’s achievements only from the outside. In many cases, they’ve been gussied up for public consumption too. What you see may not be what you think you are seeing. If you set that as the standard, you are pitting yourself against an unreal situation.

People often compare themselves to more-or-less imaginary or invented beings (e.g. media stars or people reported in the media). Role models are chosen—or imposed by fashion —who are ideals of perfection that do not, and could not, exist. Such comparisons cause particular trouble, since they set standards for “winning” that are impossible to reach.

How genuine are the stories that you have been told about such people? Do you know? Or are you chasing a set of criteria that have never existed outside the words of an article, the pages of a book, or the script of a TV show?

Comparison is no substitute for proper judgment

Many businesses are managed largely on the basis of comparisons: comparisons with assumed targets, last year’s results, a competitor’s reported sales or profits. All have the potential to be highly misleading. Any comparison, to be a fair one, requires that whatever is compared is truly and sufficiently similar.

Numerical comparisons, in particular, can miss glaring dissimilarities. Comparisons between this year and last year may well gloss over great differences between the circumstances at the time. Comparisons with points further in the past are usually based on recollections that are faulty. Comparisons with future targets are based on assumptions and expectations that are often unprovable, over-optimistic, or just plain wrong.

In many cases, management by comparisons—or, to use the jargon term, benchmarks—is simply a substitute for judgment. It’s much less demanding, mentally or strategically, to rely on some simplistic comparison with past results than to take the trouble to consider all the circumstances and weigh all the options.

Fair competition

Comparisons—and the competition that they produce— can only be healthy and useful when the targets set are:

  • Appropriate to your situation now.
  • Comparisons against criteria that you have chosen freely because they represent your true aspirations.
  • In line with your actual strengths and talents.
  • Based on realistic and truthful information.

For the rest, it is better to dare not to compare—to be yourself, not some pale imitation of an ideal that never existed. To follow your own best interests, not torment yourself with aspirations that were never truly your own.

Competition is not essential to life, whatever conventional thinkers claim. Use it when it helps and leave it alone at other times. Like all false gods, it easily becomes a devil that can ruin your peace of mind.

(3 votes, average: 4.67 out of 5)
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