Money, Markets, Stress and Productivity

You work hard to get ahead and ideally put yourself in a better financial situation and ultimately to retire to a comfortable lifestyle.

You know that saving and putting money away is important and you do it when you can. You wonder if you are doing the right thing.

You are bombarded all day everyday by the 24 hour news and the investerati that you need to do this and you better not do that. It’s confusing to say the least.

Studies show that employees waste a lot of time. Some studies put the figure at as much as one hour a day. In addition, those same studies show that as much as half of that time is spent on personal finance.

Opportunity cost or economic opportunity loss is the value of the next best alternative foregone as a result of making a decision.

When employees choose to engage in activities other than work while at work, they have made such a choice. Besides the time and productivity decrease, it is virtually impossible to know what they may have achieved during that time.

When the activity chosen at work is personal finance however, we can say beyond any reasonable doubt that they have chosen an activity which is not only detrimental to their employer but detrimental to themselves as well.

While it is great to see people taking an interest, it is entirely unhealthy for a business to have its employees re-balancing their 401k, day trading, calling their stockbroker, stock picking and monitoring the stock market.

And what’s worse is that it’s all likely to no avail since every study on the subject shows that passive investing beats active investing over any reasonable time-frame, especially given the lowering of index fund fees.

Engaging in an activity at work that isn’t work is a waste of valuable productive time but to engage in an activity that has been proven to be counterproductive is hard to imagine but it happens every day in every office.

The solution is simple. Consider the fact that over 90% of professional money managers cannot beat the simple S&P 500 index.

There is an abundance of evidence that suggests that simply buying an index fund (either ETF or mutual fund) will not only save you a fortune in fees over a lifetime but increase your investment results. Furthermore, you will personally be better off as well having more time and less stress.



About our Guest Author:

Scott Barclay is the author of ‘How the Investment Business Really Works’ (www.htibrw.com) and is a sought after speaker and workshop facilitator.

Mr. Barclay worked for some of wall street’s biggest firms and knows how the investment business really works. He graduated from the University of Alberta in Psychology and Physics and has completed graduate work in both finance and organizational behavior from McMaster University and the University of Texas at Dallas.

Play Now, Pay Later

By HR-Worldview Regular Columnist: George Krafcisin

* * *

We went to our granddaughter’s third birthday party on Sunday. We gave her some cute new outfits, a book about cars and trucks, and a bill for $40 trillion.

Huh? Yes. By now you’ve heard that she and her older sister will be paying their share of a national debt that will grow from today’s $10 trillion to $40 trillion or more over the next few decades if we don’t do something about it today. I’m willing to bet that Congress (responding to YOU) will do nothing about it.  The decisions are too painful to address, so they’ll be ignored. And my granddaughter will end up sending most of her paycheck to Washington to service federal debt.

Why do we put off thinking about difficult issues? In your life, have you put off setting up a budget?  Talking to your spouse about something they do that bugs you? Planning for taking care of your elderly parent when they can’t drive any more? Cleaning out the garage? Starting a diet? Going to the gym?

I think we put things off because we all have a built-in procrastination filter. When confronted by an unpleasant future problem, we subconsciously shut it out. “Maybe something will change, or the problem will go away, or I’ll die before I have to face it.” There’s pain in facing the problem, no immediate pain to ignore it.  Instead, we watch football, eat pizza,  or go shopping. The pain comes later.

It isn’t just bad things we push off – we put off thinking about how good the future might be, if we start now.  Many of my coaching clients have no definite thoughts about what they want to be doing five or ten years from now. They come to me with an immediate problem – their company’s sales are slow, or they hate their job, or they can’t keep up with their workload. But when they stop and think about what the future could be, rather than how miserable the present is, they discover possibilities and a path to a more satisfying future. They learn that today’s to-do list is the first step towards that really satisfying career five years from now.

So the first thing to do about avoiding difficult problems is to give some thought to what you should be doing, but keep ignoring.  Talk it over with a good friend, your spouse, a trusted co-worker, or your coach.  But DO something about it.

About Our Columnist:

George Krafcisin is the President, coach and trainer of Mosaic Management, Inc. He writes regular installments on the topics of leadership and management here on HR-Worldview. 

His last article "Breaking the Rules" can be found here.

Breaking the Rules

As part of our series of articles by exceptional HR professionals, today we present another article by our regular guest author, George Krafcisin.

* * *

Working with people is frustrating - they don’t follow neat, logical rules. If you’re an analytical type, comfortable with flow charts and equations, but have to manage or work with people, you have to learn as much as you can about behavior and then make your best guess as to what to do. It would be nice to have an idea of what people factors most affect productivity and profit.

That’s why I was pleased to run across some usable data from the Gallup Organization – the pollsters.  Their book First, Break All the Rules, by Marcus Buckingham and Curt Coffman, gives statistically rigorous data correlating how people feel about their workplace and the profit performance of the companies they work for. The study found that worker’s positive answers to six questions were strongly statistically correlated with productivity, profitability, employee retention and customer satisfaction. The six questions are:

1. Do I know what is expected of me at work?
   
2. Do I have the materials and equipment I need to do my work right?
   
3. Do I have the opportunity to do what I do best every day?
   
4. In the last seven days, have I received recognition or praise for good work?
   
5. Does my supervisor or someone at work seem to care about me as a person?
   
6. Is there someone at work who encourages my development?
   

Some of these seem obvious – if you don’t know what’s expected of you, how can you perform well? – but believe me, they can get lost in the fog of everyday struggles to meet schedules. And of course, it’s obvious that people need to feel cared about.  But are you doing your best to get Yes! answers to the six questions? Is your boss doing the same for you?

The book has a lot more information, including six more questions less strongly correlated with good performance, and some opinions on how to make the most of the information. I highly recommend it.

About Our Guest Author:

George Krafcisin is the President, coach and trainer of Mosaic Management, Inc. He writes regular installments on the topics of leadership and management here on HR-Worldview. 

His last article "Workplace Confessions" can be found here.

WPM Software Industry Worth $2.6 Billion?

By 2012, the workforce-performance-management software services industry will reach nearly $2.6 billion according to an IDC report entitled Worldwide Workforce Performance Management Forecast 2008-2012.

We’ve been hearing a lot lately about “economic downturn”, “slowdowns”, and the unemployment rate. At the same time, the IDC is forecasting somewhat rapid growth for software services that provide workforce-performance-management solutions.

This can be explained easily enough: HR executives are hedging their bets that a software solution is a cheaper solution than a human solution (i.e. a consultant or a new hire), and (working in the workforce-performance-management software services industry) I am inclined to agree.

Lisa Rowan, the IDC’s HR and Talent-management services program director says that “Despite a potential business downturn, employee retention will continue to be a key concern for HR executives in 2008, given the very real demographic shifts occurring in the workforce” and that “[e]mployers will be seeking ways to both automate and integrate talent functions, with the goal of identifying and retaining top performers. Performance management is a linchpin in this process”.

On a small scale, might such services (as implemented in, say, a paper company) be a first step in the direction of better fostering a relationship between Connectivity and Productivity?

Connectivity and Productivity

I recently read an interesting report in The Economist that really got me thinking about something that many HR executives are coming to see as a problem: how do we foster a more portable, “always on”, virtual type of working style for our employees while, at the same time, retaining the kind of cohesiveness and sense of control that made the last century so unbelievably productive?

The argument has always been that as technology grows more sophisticated (and perhaps sophisticated isn’t the right word), we grow more productive, we break free of “Malthusian equilibrium” and so, from a very modern historical prospective, we are liberated from the arduous nature of “labor”. And, to a certain extent, we’ve really seen this kind of evolution.

Computers have changed everything, right? Well so have cellular phones, fax machines and the internet. The necessity of the vast cubical farms that make Dilbert cartoons so funny, from a technical standpoint, really isn’t there anymore.

But there is still that practical standpoint. Technically, we could save hundreds of thousands of dollars by doing away with the vast majority of our office space, and sending our employees home with their “terminals” and getting them all a Blackberry and an HP C1340 All-in-one printer. Done. We might even save enough to pay a percentage of their rent or mortgage and upgrade their health coverage.

But will they work?

My guess, along with virtually everyone else’s, is that, no, they will not work. So if we are going to actually make use of our new gizmos in the work place, we need to find some way to reconcile the more recent advances in mobile technology, bandwidth, and mobile computing with the stationary, “conventional” (and this is perhaps the focus for change), work arrangement; to knit the two together with some rather unconventional Human Resources Management.

We all know how they are doing it at Google, Yahoo and Microsoft. But how do we do it at the insurance company, the consultancy, the paper distributor?