"Do you know how to create a disturbed personality? Constant criticism and luck of affection. Works like a charm …"
Dr. Cal Lightman
"Lie to Me," epizode "The Royal We"
written by David Ehrman
A couple of weeks ago New York Magazine used The Hiring Gap chart (see picture) as their Intelligencer topic. It compares domestic employment powers of ten "most valuable" ( in terms of their market capitalization) public companies in America in 1964 (converted into 2011 dollars) and now. Even though the numbers on their own are very striking and Andre Tartar's few-lines of commentaries and footnotes cut right through the fact that
"being a top American business no longer… means employing lots of American workers,"
the data left my calculating mind somewhat unsatisfied; it begged for further interpretation.
First of all, it's the damned "market capitalization" crap, which nothing more than a perceived value of the company by investing public – the very same public that cannot evaluate companies on its own and follows the leads of their brokers, WSJ analysts, CNBC (especially if they are doled out by sexy Maria Bartiromo or engaging Jim "Mad Money" Cramer), etc. Thankfully, there is an instrument we can employ to make these numbers somewhat more real – Price-Earnings Ratio:
Here is the new ranking of the 2011 listing, based on the companies' earnings.
Only three giants retained their places in this modified view: Exxon, Berkshire and Google. And, by my standards, those three are overpriced anyway: any stock with P/E ratio higher than 11 is overpriced. Google with 20 – ridiculous. Of course, it's not as bad as some other stocks, like Wynn Resorts, for a example, with a preposterous 60. It always shocked me that people buy stocks like that and then act all surprised when their savings go, "Bye-bye."
Another interesting angle of the chart is its reflection of the fundamental changes in industrial mix of Large-Cap companies, which speaks volumes about this country's economic and social environment. The only two companies present on both lists are GE and IBM. In 1964 we did not have any financial institutions big enough to claim not just one, but two spots in the top 10. The three tangible goods manufacturers that drove the US to its economic dominance in the 60s are gone off the list – GM, Dupont and Kodak. So, is the telecommunication super-power of the time – AT&T. Now, we have Apple and Microsoft, dividing the world into two camps of PC vs. Mac users. And isn't it comforting to know that as far as our OIL-dependence is concerned, we are still at the same point as we were nearly half a century ago?
Now, the focal point of the piece – the dwindling number of the jobs infused by these companies into American economy. In accordance with proper statistical rules, let's explain away the two companies with the highest and the lowest number of workers. Walmart employs 2.1 million of people, but it is irrelevant, and not because their average salary rate is one of the lowest in the country, but because their expansion put out of business smaller chains and thousands of independent retailers. Google, on the other hand, generates the majority of its revenue without any human participation, so I am surprised even by the 24K number.
Look at our beacons of stability, though – GE's number practically did not change and IBM employs nearly three times more people now than they did 47 years ago. Holla to that! The rest of them… well, we all know the story – there are three reasons for jobs going away and never coming back:
At the time this issue of New York Magazine came out, the unemployment rate was at 8.8%. Now it's 9%, and I believe that unless something changes fundamentally in our economic structure, it is only going to get worse. The new reality is that we cannot look at the giants whose operations financed through their publicly-traded stocks as the source of new jobs.
As long as investors listen to analysts' opinions and follow the "trends," the large companies' executives will continue applying their hardest efforts to minimization of costs in order to preserve their multi-million compensation packages. The workload will continue being exported abroad and jobs will disappear.
At this point, we can only rely on small and midsize American business for the influx of new jobs. That's where the efforts must be concentrated: helping the existing smaller companies' survival and stimulating creation of new entrepreneurial businesses.
Those who read this blog consistently know that I am developing a product that will help small and midsize businesses in their daily struggle for success, assuming I manage to solicit sufficient venture capital.
"Education is the process of casting false pearls before real swine"
Irwin Edman
If you are a business executive, CFOs and Controllers included, you cannot avoid the necessity of being able to grasp people's motivations based on external behavioral indicators. Every person we encounter has his own hidden agendas and incentives, which we must decipher in order to be successful. I previously talked about the effect people's priorities have on their attitudes (see Priorities and Attitudes). It is a proven fact that humans' motivations can be read from the way they move, talk, look at you, even from the poses they strike.
Filmmakers frequently speak about the subtext. One of the basic rules of screenwriting is "show, don't explain." Some theorists attribute the importance of this aspect to the visual nature of cinematic art. But the truth is exactly opposite: the ability to read subtext is natural. This is what makes a movie believable and real to the audience: people watch an actor perform (especially, if he is a good actor) and pick up on the little clues of the character's inner-workings, because this is what we do in real life too.
Subconsciously, we are all capable of recognizing particular body movements and voice intonations as expressions of motivations and intents. The trick is to find this innate ability in yourself, isolate it, bring it into the prefrontal cortex, perfect it and use it to your advantage. Start by observing people's communication styles – the fastest way to identify their intentions, to read into their primary concerns.
When people speak in a staccato style and quickly move from one subject on to the next one, what can we tell about their intentions? Wouldn't it be reasonable to assume that they are determined to minimize the time consumption of every task they undertake or direct, that they driven by desire of accomplishment?
On the other hand, someone who apologizes for expressing his opinion three times within the same sentence and asks to be corrected if he makes mistakes, obviously is striving for amicability. The ones who wait for your cues or keep quiet all the time are obviously unsure of themselves and don't want to be noticed. Yet, if someone doesn't say anything, but flares his nostrils and drums his fingers on the desk, don't mistake him for anything else but the passive-aggressive about to explode. And so on, and so forth.
So, let's go back to the movie-making. Of course, I had a good reason to bring it up. Films provide us with an enormous cache of visual references familiar to millions of people. I have chosen a trailer for Mike Nichols's "Regarding Henry" to illustrate this topic because the 24-year-old screenwriter J. J. Abrams (yes, that very same J. J. Abrams who screwed us out of a satisfying "Lost" ending) used a dramatic turn in the plot that fundamentally affects the protagonist (played by the great Harrison Ford). His life, attitude, tastes communication style- everything changes within the same movie. It's a stark example of how a person's inner life affects his behavioral traits.
Girl: "Time changes everything."
House: "That's what people say. It's not true. Doing changes things. Not doing leaves them as is."
The Frustrated CFO 