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A city of the future?

hopsuz — Sun, 22 Jan 2012 20:05:22 +0000

Hartford had an inaugural ball last night for our newly elected Latino Mayor, Attorney Pedro Segarra. His spouse, Charlie Ortiz, accompanied him. The ballroom of 900 diverse people (with proceeds to charity organizations) was filled with business people, non-profits, government, neighborhood people, city and suburban residents of different ethnic, cultural, economic, religious, experiences, educational backgrounds, ages, and political beliefs, all giving Mayor Segarra their rousing and vocal support. We have many challenges, but if last night is any indication, we have come together around a leader who came to the city as a 15-year-old runaway and has made a solid contribution ever since. Our differences don’t matter. The challenges we face do. The energy and commitment to work together and overcome the barriers/hurdles was evident throughout the evening. Are we a city of the future? We may be.. We’re not bogged down in pettiness and I hope we can continue to expand upon that energy. It was a magical evening and spawned so much hope for the future.

http://www.courant.com/news/connecticut/hc-hartford-mayoral-ball-0122-20120121,0,6170563.story

Is it "Bain" or about "doing the right thing"?

hopsuz — Fri, 13 Jan 2012 18:49:31 +0000

Who is asking “is this the right thing to do” when business or political decisions are made? Big banks and mortgage lenders had bet against their own customers, taken chances comparable to playing the roulette table, and gambled away our future. Certain Congressmen used insider information to bet against our country. Isn’t that the issue today? When egregious executive compensation is granted, while the workers receive little or no increases and reduced benefits, who is asking “is this the right thing to do?” When a F-500 company sells a product on-line, verifies the sale and charges for it…EXCEPT they don’t actually offer what they’ve sold, who is asking “is this the right thing to do?” Whether it’s Bernie Madoff or any other business engaged in deceitful practices, isn’t this the question we’re all asking, “is it the right thing to do?” The question isn’t whether Bain operated within the law. It most likely did, but did anyone ask, “is this the right thing to do?” I think that’s the fundamental question we’re all asking today that’s made Bain the scapegoat. What’s happened to our culture that the person asking “is this the right thing to do?” has been silenced.

I served on the board of PointBlank Solutions, Inc which was faced with extremely challenging times. After every discussion and before a decision was made one of the board members would ask, “is this the right thing to do?” It’s a wonderful question to ponder as we’re making decisions that impact a wide variety of people’s lives.

I grew up in a family owned business. No decision was ever made solely to make money. My dad had the opportunity to purchase the A+ location in town, but he would have had to tear down an old New England church in order to use the site. The church is still standing. His answer clearly was “no it’s not right to destroy a landmark, much-loved church so I can make more money.” Is that what’s missing in our business and political environment today? Has making money become the only consideration in making business decisions? Have the ones who might have asked “is it the right thing to do?” been silenced?

I’m working through my third fraud experience in the past twelve months and I know how pervasive fraud is, which is a different issue from operating within the law but without regard for doing right. I watch employees who need their jobs in order to support young families wrestle with doing things they know are wrong, but they need the job, especially in this environment. I watch their actions take a nick out of their soul every day and I hope they can someday regain the ground they’ve lost. They hate it!

Aren’t these the fundamental questions we’re asking about our own culture and the culture of the businesses we so want to succeed and grow and employ more people?

Is it the right thing to do?

A Model for 2011 Executive Comp changes

hopsuz — Thu, 05 Jan 2012 15:00:58 +0000

The following was provided by Lawndale Capital:

“In an 8-K filing on January 4, 2012, P&F Industries (O-PFIN) disclosed it has entered into a new 3-year Employment Agreement (“New Agreement”) with current Chairman and CEO Richard Horowitz replacing one that expired at the end of 2011 (the “Expired Agreement.”)

Previously, Lawndale Capital Management, P&F’s largest independent shareholder, in a May 25, 2011 13D filing and letter to P&F’s board, called for a reduction or elimination of egregious compensation terms in any new contract with Mr. Horowitz, in particular lower “guaranteed” base compensation. Lawndale’s 13D filing and this May 25, 2011 letter can be found at: http://www.sec.gov/Archives/edgar/data/75340/000093583611000074/pf13da.htm

It appears that the New Agreement differs from the Expired Agreement in several material respects:
Mr. Horowitz’ Base Salary has been reduced from the Expired Agreement’s minimum $975,000/year to $650,000/year;

Mr. Horowitz’ “Target Bonus” has been reduced to 50% of Base Salary vs. 90% of Base in the Expired Agreement and, in addition, PFIN’s Compensation Committee has the right in Year 2 or 3 of the New Agreement to reduce the Target Bonus % (from 50%) and apply such Target amount into a long-term cash or equity incentive plan;

Mr. Horowitz’ “maximum bonus”, based on exceeding performance targets, is established at 150% of Base Salary vs. no apparent maximum in the Expired Agreement at all; and

The New Agreement allows someone, other than Mr. Horowitz, to be elected Chairman of P&F’s Board without triggering an onerous and costly “Termination Without Cause or for Good Reason” event. In the Expired Agreement any removal of Mr. Horowitz as Chairman triggered the same costly Termination/severance provisions. “

What a tangled web we weave when attempting to deceive..

hopsuz — Mon, 02 Jan 2012 18:19:20 +0000

Twice in 2011 I suspected parties with whom I had business relationships of stealing money. Both times I asked for specific documents over a 5-12 month period until I had sufficient information to prove the fraud and take further action. Both times I have been shocked to receive what I requested, including specific lists of unauthorized/inappropriate payments made and who they were made to, which confirmed the fraud. I’m fascinated that over time I have received all the evidence I’ve needed to show long-term intentional misappropriation of funds simply by asking for the documents which show exactly what was occurring. I equate this process to conducting a very focused discovery process but without litigation. And no I don’t know why people deliver information that could lead to jail time for them. I’m fascinated that this worked twice in 2011.

The first sign of fraud is always in asking for information which should be readily available and not being able to get it. I can only think of one reason not to share information from a legitimate request. Once refused information, it pays to become much more interested, focused, and aggressive about getting the (now mysterious) information.

Remember when there were consistent complaints about people on welfare acting as though they were “entitled”. There are many people today at all levels who believe they are entitled to take what they want to achieve a certain life-style. Employees who are the sole support of their families are particularly vulnerable to supervisors directing them to take inappropriate actions and it becomes harder and harder to extricate themselves from the deceit.

We’re in a time that requires constant diligence in order to protect our investors, the company, and ourselves.

“We just want guys like ourselves sitting across the table”

hopsuz — Tue, 20 Dec 2011 16:02:47 +0000

Thank you, TK Kerstetter (TK’s Holiday Boardroom Gift List) for a thoughtful list of gifts for Lead Directors, Compensation Committee Chairs, Qualified diverse board candidates, Investors, Congress, and Public Company Directors. Not surprisingly, I particularly like TK’s comments about Qualified diverse board candidates: “I’d like to gift this group a jackhammer. I’m really frustrated when I hear that there are no qualified diverse candidates to recruit to their company’s board. I’d rather someone just come out and say, “We just want guys like ourselves sitting across the table.” That’s at least being honest. The jackhammer will allow qualified diverse individuals to, once and for all, break through this concrete ceiling and by doing so, open the door for some amazing board candidates (who also happen not to be sitting or retired CEOs). By the way, I’m actually talking about diversity of thought when I say diverse candidate but that can’t help but include gender and ethnicity as well.”

http://www.boardmember.com/The-Board-Blog-TKs-Holiday-Boardroom-Gift-List.aspx

Using Social Media - a personal viewpoint

hopsuz — Mon, 21 Nov 2011 22:12:21 +0000

As promised, here is my explanation of how I use blogs, Facebook, Twitter, and Linked-In.

I first signed up for Facebook so I could communicate with my then 18-year-old Great niece, who was leaving a very small town in Northern NY state for school in LA and I wanted to stay close to her. My “friends” really are friends and family and I post frequently to keep them up to date with what’s going on in our lives and my family (and friends) do the same. Frequently when I see someone I haven’t seen in months, we pick up the conversation from our last post, which may be a trip the other person took or an event we attended, or a family gathering. I post frequently about my Dad, with who our family seems always to be on some adventure. Five of us took him to Dublin for his 89th birthday and we’ve been on adventures (and family golf tournaments) since then, which we’ve posted. Friends are always asking for an update. A frequent concern/question I am asked is people telling me they don’t want to share information, especially personal information, with others. As one lawyer stated, “I don’t want pictures of me wearing a lampshade on Facebook”. Well…. DON’T POST THEM, then!! What each of us posts is totally within our control. Many of my friends don’t post anything but tell me they enjoy reading about my family’s adventures… and our great meals together. In short, it’s a way to keep up with family and friends. I found college classmates from my one year at Northeastern (before transferring), who I have thought about often since then and am so happy to re-connect with them. I am also connected to news outlets (NPR, etc) where I want to be certain I read certain subject or topic-specific information from them. Lastly, our Chief Operating Officer in the city started a group known as Downtown Dwellers, which now has 515 participants. The conversations are wide-ranging from announcing art openings to concerns residents have about an issue to recommendations for specific services. It’s fascinating and it’s fun to then meet people whose postings we’ve been reading.

Twitter: My only regular postings on Twitter are from feeding both of my blogs into Twitter and I seem to be accumulating followers. I also use Twitter to keep up to date with emergency notifications. Our city Chief Operating Officer, a local weather man, Fire Chief, and Mayor are local Tweeters and are good communicators on Twitter in a crisis. News journalists who followed the trial of former Mayor Perez Tweeted from the courtroom so we could follow the action as it was happening. Twitter is the best location for “breaking news” pieces that are relevant to my life. The trick is to “follow” people who make valuable, interesting, and timely contributions. It’s our choice who we follow. Delta has a Twitter account whereby you can contact them by Twitter and they will respond to the issue you’re having immediately. That’s very helpful.

Linked-In consists of my business connections. Again, you connect with people who want to connect with you and vice versa. There is useful information and contacts on Linked-In as on FB and Twitter, depending what you want to know and how you want to use the site.

Blogs: I have two blogs: hopsuz.wordpress.com and hopgoodgroup.wordpress.com. hopsuz is my personal blog and I post mostly bicycle information about trips or packing or traveling. hopgoodgroup is more business focused and I post my own insights from my experiences or thoughts about articles from others I find worthwhile.

For each and every one of my posts, I ask myself if I were in a deposition how I would feel about answering questions about a post I’m about to make and it causes me to think carefully about what I’m saying, which I think is good.

Nick Bilton’s book about social media suggested that in the new world, we would use these vehicles to be always current on the topics we care about, which could be world news, or sustainability, or whatever… I didn’t understand it at the time, but I understand much better. As the world is overloaded with data we need a filter and our social networks serve that purpose. We don’t have to sit through the evening news which is already outdated, much of the time is spent on advertising, and the rest of topics we don’t much care about. We can stay current on topics of interest in choosing carefully who we “follow” or connect with on our social networking sites.

There is much that I’ve missed and I will update this as topics occur to me, but it’s a start for those who would like to hear one person’s reason for participating and how I use the sites available to me.

For boards of directors, knowing that someone is monitoring sites so if there’s a video or posting that has the opportunity to impact the reputation of the company or “go viral”, someone will be reacting quickly should cause numerous questions to be asked at the board. Conversely the marketing and sales opportunities are endless as are the opportunities to learn more about the customer.

Social Media Challenges & the Board - Social Media Guru, Doug Chia

hopsuz — Thu, 17 Nov 2011 21:34:25 +0000

Doug Chia is Corporate Secretary and Assistant General Counsel for Johnson & Johnson. His interview with TK Kerstetter addressed “Educating Board Members on Social Media Challenges”. Board members need to understand how Social Media is being used by the company AND against the company. Social Media sites such as Twitter and Facebook will become, if they’re not already, part of everyday life. Facebook has more than 800 million users, which would make it the third largest country in the world if it were a country. If companies are not using social media tools to drive business, their competitors are. Boards need to understand both how companies are using social media to drive business and connect with customers. They also need to know the reputational risks arising from those using social media outlets to share negative information about the company and how to address those concerns.

Doug actively participates on Social Media sites and is knowledgeable about the great benefits of participating as well as the need for companies to have policies and procedures around a social media strategy.

As individuals, we all need to develop our own personal social media strategy: how much do we share, do we post comments, who are our “friends”, how do we use Facebook, Linked-In, Twitter, etc.? I will share my own strategy on the next posting.

Thank you, Doug for an informative program. The link is below.

http://www.boardmember.com/this-week-11-17-11.aspx

Building a board

hopsuz — Mon, 14 Nov 2011 20:45:20 +0000

TK Kerstetter conducted a great interview with Linda Rebrovick, Nom/Gov Chair, HealthStream. She provides valuable information concerning the women’s organizations with directories of experienced women directors. The challenges she faces as Nom/Gov Chair: Board Evaluations guide the company to have the right board with proper skills, expertise, and diversity. Diverse groups drive the board to better answers. Diversity of thought leads to diversity of race, gender, and international expertise. Women’s organizations: ION (15 chapters with 10,000 women), Women Business Leaders in US Healthcare, Women Corporate Directors – the only global women’s director organization - 1350 women on 1500 boards. There is no lack of qualified candidates and these organizations provide qualified candidates for boards to consider.

http://www.boardmember.com/this-week-11-10-11.aspx

Women CEO's/directors, a nod to diversity..or something else?

hopsuz — Thu, 10 Nov 2011 17:58:09 +0000

In July, USA Today reported “Fortune 500 companies that had a woman at the helm for all of 2009 were up an average 50%.” And according to Forbes: “as a group they outperformed the overall market–companies dominated by male chief executives–by 28%, on average, and topped their respective industries by 15% [in 2010].”

A 2007 research report by Catalyst Inc showed that among Fortune 500 companies, those with the greatest number of women on their boards performed significantly better financially than companies with fewer female board members.

http://community.nasdaq.com/News/2011-11/girl-power-list-of-companies-with-female-ceos.aspx?storyid=101171

200 major companies call for action on climate change

hopsuz — Fri, 21 Oct 2011 19:08:28 +0000

Leaders of nearly 200 major companies around the world have called for tougher action on climate change.

The 2C Challenge, co-ordinated by the Prince of WalesCorporate Leaders Group, says that climate change puts society’s future prosperity at risk.

But the window to keep global warming below 2C has “almost closed”, it warns.

Companies signing up include UK retailer Tesco, energy provider EDF, electronics company Philips, chemicals giant Unilever, eBay and Rolls-Royce.

‘Concerted effort’

The corporate leaders communique says that the scientific and economic case for tackling climate change remains clear.

“If we do not act, climate change risks seriously undermining future global prosperity and inflicting significant social, economic and environmental costs on the world,” it reads.

http://www.bbc.co.uk/news/science-environment-15352764

2 CEO's who are sisters - CPB & FTR

hopsuz — Fri, 21 Oct 2011 18:13:36 +0000

Congratulations for a great interview with Maggie Wilderotter, Chair & CEO, Frontier Communications Corp. and Denise Morrison, President & CEO, Campbell Soup Co. The two CEO’s are sisters.

Wilderotter’s board/senior staff mentoring program is a great idea to promote a strong relationship between board members and senior staff. The mentorship changes every 2 years. Over time all board members will have a relationship with all senior officers. When the time comes to decide on a CEO, the board has a strong familiarity with the senior staff.

Transparency and communications were frequently mentioned as high priorities in board/CEO/Chair relationships.

http://www.boardmember.com/this-week-10-20-11.aspx

Board term limits-CEO dream come true

hopsuz — Mon, 17 Oct 2011 18:01:56 +0000

I didn’t know how many CEO’s would love to have term limits for Directors on their company’s Board of Directors. Term limits would solve numerous issues: 1. Many boards have at least one problem director 2. Boards need “refreshing” in a world that is rapidly changing 3. Companies constantly need new skills and experiences but that means directors need to resign or not be re-nominated 4. Nom/Gov committees are reluctant to ask board members to leave the board so many board members who add little value stay on and on, and 5. Many board members have served for too long.

The CEO is the last person on the board to suggest it’s time for a board member to move along. The CEO is only able to participate in meetings where one or more board members either don’t add value, distract from critical discussions, or consume too much time. We all want our boards to be the best so considering term limits seems valid.

Isn’t it a mark of true leadership, integrity, and dedication to put the company first when a board member realizes they are adding less value than someone else would and they therefore announce their intention not to stand for re-election? Two boards I’ve been on did exactly that and we replaced ourselves over a couple of years, recognizing that different skill sets were needed than when we joined the board. In other words, we had resolved the crises and it was time for the company to move in a different direction, out of a crisis mode, and with a different set of skills.

The Wizard of Lies

hopsuz — Wed, 28 Sep 2011 14:39:02 +0000

I shared the stage with Diana Henriques, author of “The Wizard of Lies”, who shared her insights about Ponzi perps. We’re hard-wired to trust people, so we need guiding principles to follow: invest only with funds which have third-party consultants, know your risk tolerance (for directors this has a familiar ring), and understand the risk(s) we’re taking. Diana is a senior financial writer for the New York Times and it is very easy to understand why she is so successful. She interviewed Madoff in prison and she shares valuable insights.

R.E.M & Board Composition

hopsuz — Thu, 22 Sep 2011 20:16:38 +0000

The best board member is the one who knows when it’s time to leave. The question we all need to ask ourselves every year is “am I adding value to the board?” and “is there someone else with a different skill set and different background and experiences who could add greater value?” R.E.M. just decided to split up causing distress among their fans, but they decided it was their time to leave the stage.. As we look around the board room can we say the same for the individuals in the room. Will each of us know when it’s our time to leave and when someone with a different set of experiences and skills would add greater value to the company, the board, and the CEO? We’re seeing some very high-profile boards making some curious decisions today and it seems like a good time to ask ourselves these questions. If we had voted to hire a CEO, arguably our most important responsibility, without ever having met him, are we really adding value to the company? What is our understanding of our fiduciary duty to put the company first in all of our decisions? It’s a good time to think about how we add value….or not.

R.E.M & Board Composition

hopsuz — Thu, 22 Sep 2011 16:03:59 +0000

A communication disaster during crisis

hopsuz — Tue, 06 Sep 2011 14:10:34 +0000

During a crisis, communications need to be clear and succinct and inspire confidence in the listener, who may be employees, customers, constituents, vendors, shareholders, government regulators, etc. Communications also must be accurate and consistent. Contrary points of view need to be settled and the organization needs to speak with one voice before communications are sent in order not to confuse an already worried constituency. Communicating through social media is powerful. I alerted my “friends” on Facebook to wrongdoing in the Registrar’s Office during a voter registration drive and was contacted by three reporters within 1/2 hour of posting the issue. The results: a front page article in the local newspaper and an interview on WNPR. That can work to a company’s advantage…. or disadvantage in distributing a message to a constituency.
There’s no better example of communications disasters right now than our two political parties who think that daily finger-pointing is a message we hear and side with the finger pointer. What we hear very clearly is: an inability to lead, dysfunction, lack of results, self-serving behavior, and individuals who are putting themselves first instead of acting in the best interest of the country. (Boards of Directors are required by law to act in the best interest of the organization). Each individual doing the finger-pointing thinks they’re scoring points instead of adding to the overall static and impression of dysfunction. Imagine how other countries are viewing us right now as we’re reduced to a daily series of slingshots. It’s a valuable lesson for us all in messaging and communications. Our constituents would be no less disgusted with the company we serve if that’s how we were communicating to them in a crisis.

Reflecting on Crisis and Crisis Planning

hopsuz — Tue, 06 Sep 2011 00:57:30 +0000

Hurricane Irene followed a winter of blizzards, a tornado, and an earthquake and served as a reminder that crises don’t always announce when they’re coming or how they’ll leave you. Tornado warnings require quick decisions. Our top priority was our safety. If our building was hit, because we have nine 4′X 7′ windows, we knew all our personal belongings would be destroyed. Our second highest priority is our data. While we have 3 backup drives, with one in NH which we rotate about every 2 months, the two in the condo are with the computers they’re backing up… hmmmm.. so another one is on the way which will be rotated in the safe deposit box weekly. We’re also using the Cloud more. Next was a look around to see if there were other things that are truly important to us like 125+ year old family jewelry, which has been passed down through generations. That needs to be in a convenient but more secure location. Next, we need an emergency kit to grab on the way out the door with water, first aid kit, a few snack bars, and a few clothes and we need to grab the bag with cellphones and chargers so we can communicate.
When Irene knocked out power to WFSB, our local CBS affiliate, we watched our TV screens go blank as they lost power and their generator didn’t work. They had moved out of downtown Hartford, which has an underground grid and never loses power and were apparently unprepared for the ramifications of that decision.
Our companies need sober and thoughtful reflection on how effective emergency plans are in protecting lives and the company itself in a crisis. We have seen vivid examples of what happened with companies who didn’t focus sufficiently on safety and especially the safety of their employees in a crisis and the fatalities from that lack of diligence.
This is a good time to review both our corporate and our personal crisis plans.

What happened to "news"

hopsuz — Mon, 22 Aug 2011 16:55:14 +0000

Ted Koppel was interviewed last week at the Mark Twain House in Hartford and was asked what happened to “news”. The explanation was unsettling and I’ll do my best at sharing his response. He reminded us that a democracy depends upon an informed electorate. TV channels apparently must have a “public good” purpose in order to maintain their license with the FCC, which he says has become a “paper tiger”. That public good was the news, which was never a profit-making venture…. until CBS created 60 Minutes and the “news” channels suddenly realized there was money to be made in reporting “news”. Since then, rather than the “news” reported on events we might not particularly have wanted to hear as in the past, they now report on what Charlie Sheen or Casey Anthony or Kim Kardashian are doing. ABC has only FIVE foreign correspondents so any hope of learning of something bubbling up internationally is not going to happen there. He says the major news networks should have been reporting on the Somalian humanitarian crisis long ago…Foreign correspondents on the ground there would have seen it unfolding. He also added that “news” no longer goes through the vetting process of prior times. Koppel complimented NPR for staying true to the mission of reporting the news. My takeaway was that we all have to work harder at defining what is important to us and our companies, and we must seek out the information that truly matters and is accurate as we work at defining strategy and the future of our companies. The risks of not doing so are great.

The results of ignoring ethics & integrity...

hopsuz — Tue, 02 Aug 2011 20:21:15 +0000

Ethics was a gut course in college and that, by itself, carried a strong message. As we worry about businesses paying taxes, shouldn’t we be much more worried about a business approaching, for example, the City of Hartford under former convicted felon Mayor Perez, to do work for the city. The costs ranged from a $100,000 payoff to the Ward Boss, a $40,000 home renovation, or having to hire “no-show” workers. At least with taxes we know what the bill is. We can decide whether to submit a proposal and bid to do the work knowing what the costs are. In the environment just cited a business doesn’t know how much a project will cost, what it will take to get it done, and how many hands will be out along the way. No organization can be successful without strong ethical grounding and, even though we think the ramifications are only relevant to a small group, all the stakeholders are damaged in the process. Why would any legitimate business do business with an organization that requires bribes and political chicanery to get a job done? Why would a business stay in a community where bribes were commonplace? How does anybody know if the product and/or results will be satisfactory or if they’re accepted because of a payoff? At a corporate level, the lack of ethics and the lack of a strong Tone at the Top was instrumental in the death of 29 miners, the ecological devastation of the Gulf and 11 lives, the “news at any cost” culture at News Corp, and the landscape is littered with numerous companies having to file bankruptcy. These lapses weaken us all, either through higher taxes to pay off bribes or through denigrating our own culture and values by having those in leadership positions have low ethics, integrity, and values. As a board member it’s important to remember the results in these lapses and ask ourselves if we’re doing all we can to ensure high ethical standards and integrity and are we doing enough to ensure the employees will alert us of wrongdoing in the organization? Have we developed a culture of ethics and integrity? Is the CEO open to listening to different perceptions, points of view, and problems within the organization? If not, (s)he will be the last to know if there’s a serious issue and we’ll be the next BP or News Corp.

40% of the lgst 302 co's - negative impact from water disruption

hopsuz — Tue, 19 Jul 2011 14:20:46 +0000

Let’s think about how many companies use water for critical business needs: utility companies, food and beverage products, pharma, manufacturing, agriculture, chemical companies. Discussions about water availability have now reached the board room as global droughts are becoming more common.
“In a water-constrained world, water is, in fact, the new frontier for forward-thinking business leaders who want to increase productivity and improve human prosperity.”
Agriculture has shown the greatest efficiencies with a 100% improvement in water productivity in the past 40 years. With agriculture using 70% of the world’s water, it has had the greatest incentives and impact on water.
A variety of technology improvements including reverse osmosis, innovative desalination, and water treatment processes have increased water productivity.

http://www.fastcompany.com/1766346/changing-how-businesses-think-about-water

Wrong Criteria for Exec Comp?

hopsuz — Thu, 07 Jul 2011 01:27:05 +0000

David Miller from the Princeton Faith & Work Initiative interviews John Bogle*, founder of Vanguard. Bogle says we should be compensating executives for increasing shareholder value. The measurement criteria should be based on increasing the intrinsic value of the corporation by increasing year over year cash flow. Worthwhile interview on a range of topics including, “How do you stay ethically fresh?”
Bogle: “Leave everything you touch a little bit better than you found it.” Good words to live by.

*http://www.princeton.edu/faithandwork/media/ethics-in-the-executive-suite/bogle/

Can we ignore the risks of violent weather?

hopsuz — Tue, 05 Jul 2011 13:41:26 +0000

The violent weather we’ve been experiencing with hurricanes, tsunamis, tornadoes, earthquakes, drought, flooding, and volcanoes have exposed risks that we hadn’t previously considered. “Last week, the Chinese government estimated that more than four million people were having trouble finding drinking water, owing to a drought along the Yangtze River. In Columbia more than two million acres of land have been submerged after almost a year of nearly continuous rain.”*
We need to add the higher potential of devastating weather conditions to our list of risks companies will face in doing business. How do we communicate with employees and others if the headquarters is destroyed by a tornado or hurricane? Do we rely on a single vendor for any of our products? What happens if they are impacted? Do we have a product which can create a toxic result to the environment or the nearby population if impacted by severe weather? Are we addressing the probable increases in energy costs by implementing cost saving measures? What if violent weather impacts just one piece of the supply or transportation chain? What are the key pieces of our business that could cause a failure in our ability to deliver our service or product?

* The New Yorker, June 13, 2011

As CEO, lying resulted in firing

hopsuz — Tue, 07 Jun 2011 12:53:57 +0000

Character matters. It really really does. Lying or lying by omission, causes priorities to be categorized differently, and potentially ineffectively. It has the potential to create a crisis of trust and reputation as well as making a small crisis much larger. There is usually both a short and long-term impact. At the very least, lying causes different actions to be taken than might otherwise be taken by knowing the real facts. Corporate board members have a fiduciary responsibility to “act in the best interest of the company” and not in our own self-interest. It’s a good reminder for all of us as we consider our actions and the results of our actions and how those actions impact our employees/constituents, company, our community, and/or our country. How we define standards of behavior in our companies is what “Tone at the Top is all about”. Every time a “leader” lies or cheats, people know and those people absorb the standards being set by the “leader”.

They needed research to show women increased the intelligence of the group?

hopsuz — Fri, 03 Jun 2011 12:48:10 +0000

From HBR: “The finding: There’s little correlation between a group’s collective intelligence and the IQs of its individual members. But if a group includes more women, its collective intelligence rises.

The research: Professors Woolley and Malone, along with Christopher Chabris, Sandy Pentland, and Nada Hashmi, gave subjects aged 18 to 60 standard intelligence tests and assigned them randomly to teams. Each team was asked to complete several tasks—including brainstorming, decision making, and visual puzzles—and to solve one complex problem. Teams were given intelligence scores based on their performance. Though the teams that had members with higher IQs didn’t earn much higher scores, those that had more women did.”
“The standard argument is that diversity is good and you should have both men and women in a group. But so far, the data show, the more women, the better.”

http://hbr.org/2011/06/defend-your-research-what-makes-a-team-smarter-more-women/ar/1

There is always someone who knows!

hopsuz — Fri, 20 May 2011 15:18:59 +0000

Peggy Noonan’s article in today’s WSJ says “They were open secrets. Everyone knew. And maybe the lesson this week is that people should pay more attention to what they know.” This goes for companies who are engaging in illegal, unethical, unsafe, or just plain bad behavior as well as the behavior of Schwarzenegger, DSK, and Gingrich. Someone always knows. As board members, the question is, how do we get them to alert us or what “Red Flags” do we truly focus on as “Red flags”? Now more than ever the question might be, how do we get them to tell us before they tell the SEC? This all goes back to ensuring the company has a culture that rewards sharing information, especially concerns employees may have. Companies that operate in silos, prohibit cross-communication, and/or the CEO or Senior Management make it clear they do NOT want to hear bad news or problems and they create a culture where employees are more likely to alert the SEC, law enforcement or other agencies, then they would be to share concerns with their superiors, Senior Management, or the Board. Bad behavior is rarely restricted to specific situations. Bad behavior tends to leak into many different aspects of leadership and employee functions.
“…we wouldn’t be so surprised if we paid more attention to what we know, and built our expectations from there”.

http://online.wsj.com/article/SB10001424052748704904604576333702189763560.html?mod=WSJ_hps_sections_opinion