If You Want to Earn More, You Need to Be Worth More
February 6, 2010
Your financial requirements and what you would like to earn have nothing to do with what you are worth in the market. In running my various organizations, I have hired superstars from the very best universities with the very best work histories who ended up contributing next to nothing to the organization. I have also hired people who started out making close to minimum wage, and whose contributions were so great their salaries doubled, and in some cases even quadrupled. Several years ago, the contribution of one of our departments, which was then around 10 people, was so great I literally doubled each and every member’s salary in one short 15 minute meeting.
Are you someone who contributes so much to your organization your salary merits doubling? Or do you merely have a sense of entitlement and feel you are worth more than you are paid?
I cannot tell you how many times I have heard statements like the following:
“I made this much four years ago; therefore I should be making more right now.”
“My wife told me that I need to get a raise.”
“I think it is really important that I get this car because it will show some outward sign of success.”
“I know of someone who makes even more money than this in [some other city] and, therefore, I need to make that much as well.”
“This is an expensive city, and I need to be paid that much to live well.”
“I would like to have some extra spending money for travel and other things, after paying the mortgage on my house.”
“I need to make enough money to afford to send my kids to a private school.”
These are actual statements I have heard from people over the years. The sense of entitlement that drives people to make these sorts of demands needs to have a basis in reality.
Again, your financial requirements have nothing to do with how much you are worth in the market. Unless you are truly indispensable, your employer simply does not care what those requirements are. You are paid a certain amount based on your ability to generate value for your employer, and, with very few exceptions, that value generally must be far greater than what you are paid. Your contribution to any organization must generally be at least three times greater than the reward you are seeking.
Far too many people fail to realize what they are paid is based on the company’s profitability. Organizations have overhead, such as rent, advertising, and the cost of manufacturing the products or services they provide. Organizations need to have reserves in order to pay you when money is not coming in. Organizations need money for research and development. Organizations need money to pay for your health benefits and social security taxes, to print brochures, pay for office machine maintenance and more.
Since I am a legal recruiter, I would like to share with you some information about how partners are traditionally compensated in law firms. There are numerous compensation systems. However, the one I am about to share with you is the most prevalent.
When many young attorneys graduate from elite law schools, they tell themselves when they join equally elite law firms they will one day make astronomical amounts of money. About 10 years ago, I remember the number young attorneys my age were throwing around was $1 million. How does an attorney make $1 million a year?
Remember: any amount of money you are paid will have to add much more than that to the firm’s bottom line. Typically, the rule is that for every $1 a partner makes they have contributed at least $3 to the firm. That means that the partner is lucky to receive only 33 percent of what he or she brings in as business to the firm.
How does a partner contribute a total of $3 million to the pot for a firm? The partner brings in loads of business, works extremely hard, and then collects the money that has been billed. The partner also has associates doing work, he ensures their work is getting done and that all invoices are getting paid.
If partners in the world’s largest law firms are lucky to receive only a 33 percent return on the contribution they are making, you should understand you will need to make a giant contribution to any organization you are part of in order to justify the amount you would like to be paid. In order to justify a high salary, it is important you begin concentrating on what you can do to make your contribution even greater than it is now.
You need to make yourself indispensable to your employer by virtue of your hard work and contribution. There are certain people within any organization who are indispensable, and others who are not. These employees usually don’t last very long in organizations.
I want to tell you a quick story about one of the worst hiring mistakes I ever made. It involved hiring a manager to lead a small company I was starting at the time. In order to try out for the job and show me what he could do, I asked the man to put together some financial figures that took into account the potential performance of the company and what he believed he should be paid if each milestone was met. Since it would take several hours to go over these figures, I agreed to meet the man at my home on a Sunday afternoon to go over them until we could reach an agreement.
After three to four hours of reviewing these figures with him, I realized there was absolutely no way the company could make any money and that, no matter how well or how poorly the company did, the man would end up making plenty of money from the business. It really didn’t make a lot of sense, and I saw immediately this man was not interested in making a contribution to the company. He was only interested in taking money from the company as quickly as possible.
There were many warning signs I should have noticed early on. The man was extremely flashy in the way he dressed. He bragged about always getting stuff for free. His car had been modified, and was very over-the-top. Basically, the man made me feel uncomfortable.
By 10 p.m. that Sunday, I realized I could not reach any sort of agreement with this man. Instead of offering him the job to lead the company, I offered him a commissioned sales-type job in another company. The man had stellar qualifications and had formerly been the leader of a large division of a national company.
The man responded by telling me how he had a home in Beverly Hills with an expensive mortgage payment, a nanny he needed to pay, a private school he sent his daughter to, and that his wife really liked to shop for expensive shoes. Therefore, he told me, he needed to bring home a certain amount of money every two weeks to pay all these extravagant expenses. I told him I understood and I agreed to loan him a massive amount of money against his future commissions over the next several months, as he started his job.
This man ended up being the worst performing salesman in the company’s history. He failed like no other and disappeared with all of the money he was lent. To this day, I still do not know where he is.
The primary mistake I made here was not paying attention to the various signs this man would make an extremely bad hire. Mainly, he was entirely focused on what he believed he deserved, and not at all focused on what he could contribute. The most revealing thing was his business plan, which basically did not permit the company to make money and survive.
In order to thrive in your job, you need to be the sort of person who over delivers and provides incredible value to your employer and organization. You need to focus on over delivering in order to be worth more than the other people who are doing similar jobs.
I am from Detroit and an interesting subject to me is the decline of the American automobile industry. I remember in 1984, when I was 14, my mother purchased a Honda Accord. Before she purchased the car, we went and looked at numerous other, American cars. Even then, I realized that the quality of the Honda far surpassed any American car in the same price range. You could tell by the way the car started, the way the doors closed, the way the lights clicked when you turned them on, the way the radio fit into the dashboard, the hue of the paint, the tightness of the ride, and more. As a young teenager, I thought someone would have to be an absolute idiot to purchase an American car in the same price range.
At the time I did not even know about things like resale value, how long the car would last, and overall brand reliability. Purchasing the Accord would actually be even more valuable to someone in the long run, once reliability and resale were factored into the equation. In this respect, it made even less sense to purchase an American car. Ten years later, I sold that Accord to a classmate of mine for around $4,000. If it had been an American car (assuming it were still running), the sale price would have probably been around $400.
My main point is the Honda provided far more value than its competitors at the time. It was worth far more than its American counterparts, even though it was priced less. It is no wonder, then, the market share of Japanese manufactured cars has grown rapidly in the United States, while the market for American cars has declined. It is an issue of providing more value for the money.
Since your labor is a commodity to your employer, you should aim to become a higher-priced commodity that is worth far more than your competition. In order to merit raises and other employment related benefits, you need to shine and really stand out as someone who provides tremendous value. Do not expect to be paid a certain amount simply because it is what you want. Get paid more because you are worth more and because you deserve more.
Your Job is a Game: Make Your Opponents External
December 29, 2009
What You Will Learn
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After being in the workforce for many years, I’ve come to realize that all of our jobs are, quite simply, games. In every job you have ever had you are part of a game. Your ability to play the game and be part of the team will determine your success or failure. The ability of your employer to externalize the game and the opponent will determine the success or failure of the enterprise. Games consist of rules, freedoms, barriers, and opponents.
Every organization has a certain set of rules by which it operates. These rules determine how you should do your work. If you violate these rules, you can be kicked out of the game (fired) much like a soccer player can be ejected from a game for doing something improper. Your employer will typically have a set of rules for when you are supposed to be at work, how the work is to be done, and the number of tasks you are required to complete (in a sport we might call these points).
Every organization and business also has a series of freedoms and barriers. The freedoms are the actions you can take and the things you are allowed to do. The barriers are the things you cannot do. The freedoms are given much like a sport assigns different freedoms. For example, in soccer the goalie is the only one allowed to touch the ball with his hands (a specially designated freedom), while the other players are not allowed to do so (a barrier). In corporations, different people typically have different rights, depending on their given position within the corporation.
The most significant part of any game is the presence of an opponent. If you don’t have an opponent, it’s not a game. It’s just practice.
One of the most interesting things I have seen in the workforce is that organizations tend to have opponents who are both external and, unfortunately, internal. A business and its people are “fired-up” and motivated primarily by the presence of outside opponents, and the need to overcome them. Businesses and their people also become more cohesive by coming together against their opponents. If this does not occur, the organization most often fails.
Most companies have a series of external opponents. For example, Yahoo!’s external opponent would be Google and vice versa. Amazon’s would be Barnes & Noble. Apple’s is Microsoft. The presence of external opponents serves to bring people within corporations together to fight for a common purpose, and to motivate the people in the company to work hard and believe in what they are doing. Fighting the good fight helps motivate people to get up in the morning and to get excited about going to work.
Organizations generally operate under the belief there is an external opponent to be fought (i.e., the “established company”) in a given space. However, if there is no established force for the organization to fight against, problems often develop.
Another issue that develops in virtually all companies – especially companies with no external opponent – is that people inside the company start manufacturing internal opponents instead of external ones. This most often occurs in companies without well-defined external competitors. In my opinion, the internal opponent phenomenon is among the more important things to understand when it comes to work and your success in both getting and keeping a job.
Several years ago, I started getting calls from associates in a large law firm in Los Angeles that, at the time, was called Troop Meisinger. This was a very successful law firm that was also considered a very good place to work in Los Angeles. While I am not aware of the specifics of how the firm was run, many parts of the firm had been pieced together from numerous other law firms (i.e., groups had joined from other firms or through mergers). When these groups joined, they were often viewed as competitors for the firm’s work and profits, and were treated as outsiders by the senior staff attorneys. Eventually, the firm became a group of numerous factions that were all working against one another. Instead of competing against outside law firms, all of these factions were competing against one another.
The calls that came to me from the firm’s associates were always about a different internal opponent within the firm. With so many internal opponents, the firm eventually imploded. When many of these groups found new jobs at other firms, they started creating the same sort of problems out of habit and did a lot of damage to the firms they joined.
As the old adage states, “Two is company and three is a crowd.” This is often true. A group of two people often collaborates better than a group of three. I think what tends to happen in a group of three is two of the people will find a slight to major degree of fault with the third person and, as a consequence, will come together to exclude the third person in some way.
The same thing happens in many organizations. Someone always seems to be on “the outs.” When someone is on “the outs”, they become an opponent to the group. It is like an athlete who is playing badly. The team members start talking about how this player is harming the team’s overall chances for success. The team may make the decision to sideline the player unless he or she changes and rises to the occasion.
I read somewhere that every year General Electric ranks its employees, and that the employees in the bottom 10 percent each year are given one year to improve. If they fall into the same bottom 10 percent the next year, they are dismissed. This is a method by which the company ensures that people who are not performers are eventually excluded from the team.
Unhealthy organizations can also find opponents in a paranoid way from time to time. These organizations allow rumors to flourish and enemies proliferate. If a manager arbitrarily fires people (regardless of whether or not they have been playing by the rules), people in the organization may start manufacturing internal opponents, often for no reason at all. No one knows who can be trusted in unhealthy organizations, and the process can get out of control.
This brings us back to you, and how you can find success in your career. You do not want to imagine the people you are working with as opponents, but as teammates. Externalize the opponent. Don’t look for an opponent among your co-workers. You want to ensure you are playing by the rules in your company, and that you are always seen as part of the team. If you’re not, then the team will quickly turn against you.
When you are interviewing for a position, you need to stress you’ll be part of the team, not someone who will be excluded from the team. When you are doing a job, you need to do everything within your power to ensure you’re always winning favor with the team, and that you are an asset. This means you should be doing things publicly that demonstrate you’re trying to help the team. You should also never speak negatively of your team members.
One of the best ways to tell if someone will be good at a job is to look at their employment stability. This is even more important than where someone went to school, how well they did in school, or even how prestigious their last employer was. Employment stability shows the ability to be a successful team player. Working successfully with most employers is like avoiding a hot ball that is always moving around. If the ball touches you, you will lose favor with the team, and you’ll be ejected from the game. The best workers are always the people who have the most stability, and who are able to consistently avoid the hot ball. I think this has a lot to do with the simple fact they’re able to work well with a team.
The people who have the most employment stability have very similar profiles. These people join “teams” rather than get jobs. When they are looking for a new job, it is usually because the owner of the company retired, or due to some other factor beyond their control. When they are hired, it is almost like their presence alone brings positivity to the organization they are joining. I have seen the résumés of people who have joined one company after another that failed. I’ve hired people like this and it’s almost as if they’ve brought a cancer to our company. They are negative and polarizing. I wonder sometimes if extremely negative people inside a corporation can actually cause that company to fail.
When I observe people who’ve had a lot of employment stability, I notice they never participate when people start speaking negatively of others. They simply do not get involved. I’m amazed at how well they navigate the waters and stay employed when others around them do not. It is also worth noting the people who tend to do well are also the people who consistently work hard and play by the rules. The team always views them as valuable players.
In order to become employed and stay employed you want to be part of the team. You do not want to be on the outs with the team. Instead of talking about internal opponents, find external ones to concentrate on. External opponents bring you and the team closer as you work toward a common goal. In order for your company to succeed it’s important it has an external opponent to drive it towards victory.
My career advice is to leave it to other people to get involved in the political innuendos and other negative goings-on in your company. Work hard and do not participate in the politics. This is a sure way for you to score big in your career.
Concentrate on the Process, Not the Results
November 4, 2009
What You Will Learn
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Some time ago, I was listening to a seminar about a company that was in the furniture business. This company decided that because it was doing so well, it should expand into the piano business, and also sell pianos. They went out and purchased a Steinway and took the piano apart to study all of the pieces. Then they made the same pieces themselves and built a piano. When they finally had built their own piano and tried to play it, nothing but thuds came out of the instrument. Discouraged, not knowing what they possibly could have done wrong, they decided that they would no longer go into the piano business.
They reassembled the Steinway Piano so they could return it as well. When they reassembled the piano, however, the same thing happened: only a thud came out when they tried to play it.
This is how it is with many people and businesses. We only look at the results, and not the process that goes into creating a particular result. In order to build a piano, you need to have studied instrument- making for some time, and to really understand a lot about the process. You also need to understand and study musical theory. It could take generations for a family to become proficient in making a great piano. There is just so much that goes into it.
This is how it is with everything. You cannot just call yourself a piano company and start making pianos. You cannot just decide that you want to do something and expect immediate success just by trying to copy an outcome. You need to understand the complete process that goes into what you are trying to do.
My first year as a legal recruiter, I generated over $1,000,000 in fees. This means, essentially, that for the work I did personally, I sent out over $1,000,000 in bills to law firms for my services. Since the average bill for recruiting back then was probably around $30,000 or so, this means that I made a tremendous number of placements. When you are doing well, it tends to attract more business to you.
Within a few months, I had hired various people to help me with recruiting, and pretty soon the word had gotten around that our team was really good. Soon after that, various local attorneys around Los Angeles started calling me. Several people I know of copied me and went into the business only to fail pretty quickly.
I loved recruiting and I am sure I had some natural skills for it. However, by the time I started recruiting in an office, I had already essentially been doing the job in one capacity or another for almost 15 years. Since a young age, I had run an asphalt business that had required me to sell door-to-door to people, businesses and others. Sales skills were really important in that business. While asphalt and recruiting are very different in many respects, in actuality they have a tremendous number of similarities. Here is the biggest similarity:
If you emphasize the process over the results in the recruiting and asphalt business, you will succeed.
One of the biggest mistakes many people make in business is emphasizing results over process, or style over substance. The more people concentrate on the process and substance of their work, the better they do:
- The more people concentrate on their intended results, the worse they do in the long run.
- The most successful job seekers are the ones who have the ability to excel in their work process.
- The most successful companies are the ones who have the ability to excel in their work process.
- The most successful workers and employees are the ones who have the ability to excel in their work process.
- The most successful asphalt contractors are the ones who concentrate on their work process.
- The most successful legal recruiters are the ones who concentrate on their work process.
I am not saying that results do not matter; they do. But what ultimately matters most, and what makes people successful is focusing on the process and how things are done.
A lot of the problems in the American economy have been caused by a massive emphasis on results rather than process. For example, the Wall Street practice of emphasizing quarter-by-quarter profits and gains has been extremely dangerous to our company in numerous respects.
I believe that in business, in your job search, and in everything else–process is the most important thing. It is how you do things that matters, and not just the result you hope to attain.
Process in the Asphalt Sealing Business. In the asphalt sealing business there is essentially one thing you are doing: You are putting black stuff on people’s asphalt and then leaving.
This is the result of what happens when you do the work. This is what most contractors and others concentrate on, and it is why most of them fail or eek out poor livings at best.
In the asphalt sealing business, there are a lot of tricks that contractors can do. When you are putting asphalt sealer on a driveway or parking lot, essentially what you are working with is a black coating that fills in cracks and pores and makes the surface look good. More importantly, the coating serves to protect the surface from oil spills and other things. This material is typically purchased from a factory in a raw state, when it is very heavy and thick like molasses. The contractor has to water down the material in order to make it the proper consistency to be used on asphalt.
From the consumer’s point of view, it does not matter how much water you put into this concoction, within limits. After the material dries on someone’s asphalt, it is generally going to look quite similar, regardless as to how much water was used in the mix. Contractors can save a tremendous amount of money by watering the material down more heavily. This is something that many contractors do. The difference is that a few months later, the material that has been applied ends up looking very bad, which does not do the customer much good.
There are other tricks of the trade as well. One of the most outrageous scenarios involves people traveling from city to city purchasing used motor oil (which used to be practically free) and then putting this on peoples’ driveways and parking lots. They would get paid for the work, and the customer would have a piece of pavement that looked decent when the “contractors” left, but the asphalt would never dry and the job would end up having been a complete waste of money and time.
Here are some other tricks of the trade:
- There are chemical thickeners you can buy to bulk up watered down sealer, for example.
- Using a squeegee will apply much more sealer than a brush, but it costs more.
- You can fill cracks with sand instead of tar (which is more expensive).
- It is better to put the material on when the asphalt is cool because it can cure longer (but this means you cannot work when the asphalt is hot, unless you have cooled it).
I could create a long list of the various things that contractors do to cut corners when they are doing this work. However, it is really never a good idea to cut corners. This is what most people and contractors do, however.
Asphalt contractors who emphasize the process of the work they are doing always do much better in the long run. They come back and work for people year after year. There is a certain confidence they exude in their work. They are craftsmen, not salesmen. They take pride in their work. They build careers, and meaningful careers at that. You can do very well financially (and in many other ways) as an asphalt contractor. However, very few people truly do well in the asphalt business. In fact, not only do most asphalt contractors fail, the contractors who do not fail end up making mediocre livings at best.
Every year tens of thousands of people go to law school. They all graduate and compete for the same jobs. How many people choose to become asphalt contractors? Hardly any. You could learn most of what you need to know about this job in less than a week. There are some complex areas of the job that require engineers to work on roads and stuff, but basically anyone can do the work or run a business doing this. When a state or city needs to build a road out of asphalt, they will get bids from a contractor. Most times there are only a few people bidding on many of these jobs because there are just not a ton of people in the business with credibility. The reason is that most people get a single job and simply try and make as much money as they can as quickly as they can. They cut corners. The people who do not cut corners get good reputations and end up doing better in the long run.
Process in the Legal Recruiting Business. In the legal recruiting business, there is essentially one thing you are doing: Finding an attorney and making an introduction between the attorney and a law firm or a legal employer.
This is the result that occurs when you do the work. This is what most legal recruiters in the business concentrate on, and it is why most of them fail to even moderately reach their full potential.
When I got into the legal recruiting business, I quickly noticed people cutting corners, just like people do in the asphalt business. If you were looking at the profession from a distance, without any form of understanding, you too would likely think that all that recruiters do is find people and make introductions. I remember one of the most upsetting interviews I ever had was interviewing someone for the job of being a recruiter, who told me that the job sounded great. He told me that he thought he could spend time out on the golf course doing the work, forwarding résumés around on his Blackberry between strokes. This person simply thought that all the job involved was forwarding résumés from one person to another.
Incredibly, the more I learned about the business, the more I saw that most recruiters seemed to feel this way. In fact, this sort of idea was indeed how most recruiters seemed to approach the entire business. They would put a little advertisement on a job site, or in a legal newspaper, and then forward someone’s résumé to an interested employer. Others would simply cold call attorneys. The idea was that they were simply going out and plucking people from one firm, and sending them over to other firms.
This simplistic understanding of the job characterizes the way many people approach it. Without going into too much detail, however, there is a much more in-depth way of looking at the work:
- The best recruiters are constantly writing and lecturing about recruiting-related issues and their industry.
- The best recruiters put together very compelling and in-depth presentations about their candidates.
- The best recruiters meet with employers on a weekly basis.
- The best recruiters know about the industry and the most important things happening in it.
- The best recruiters are constantly networking at industry events.
- The best recruiters have highly developed research skills to find jobs.
- The best recruiters have highly developed research skills to find candidates.
- The best recruiters never compromise their integrity.
- The best recruiter help people, even when it does not mean a short-term reward.
- The best recruiters are committed to working hard throughout their careers.
There are actually thousands of little things like this that the best recruiters are constantly doing in order to excel at their jobs, and all of these details are what make them incredibly good at their job. Most of these things are not, however, related to simply emailing résumés. They are related to the deeper process of recruiting.
When you speak with recruiters who are process rather than results oriented, you can always tell. They are not focused so much on getting résumés out the door or making money. They are doing a good job at all “touch points”.
The importance of process in recruiting also has a huge impact on the bottom line. The best recruiters do well in all economic climates due to their emphasis on process and not results.
Process and Your Career and Job Search. Just as a successful piano maker, contractor or recruiter needs to concentrate on the process in order to be successful at their trade, so too do you in both your career and job search. Good results only come about when you concentrate on the entire process of what you are doing, refine each step of the process, and ensure you are getting better and more skilled each step of the way.
A job search ideally should not start, for example, when you are looking for a job. There are thousands of data points that go into finding a job and ensuring that you get a good job when you are looking for one. For example, you need to consistently be building relationships, and building every single relationship you can over time. The more relationships you build both inside and outside of work, the more people you are going to have to call upon when you are interested in getting a new job.
The harder you work in your existing job, the more people are going to be interested in helping you when you are looking for a job. People will come to your defense and do everything they can to help you when they believe that you are someone who will work hard. When you do the right thing and always make a good effort, this will come back to help you.
This is the opposite of what many people do, however. Many people are only out for short-term rewards and “quick fixes” at every turn. They do not think in terms of building long-term relationships with those around them. In your career, you need to be consistent, to give results and perform over time–not just in the short term.
When you are looking for a job, the quality and the depth of work you put into your résumé matters. The quality of the letters that accompany your résumé matters. Whether or not you apply to enough employers, to increase your odds of getting a job, matters. Your interviewing skills matter. The entire process that you follow matters and the better that you do at each step, the more likely you are to get the results you want.
Think about the manufacturing a world-class piano. A lot of thought goes into each little component of the piano. Whether it is the wood used, the thickness of the wood, the polish of the wood, where the wood comes from, how the wood is sanded, how the wood is fitted into the piano, the glue that is used in the piano, the dexterity of the person working with the wood, the machine that the wood is compressed on (if it is compressed) and more–the thought that goes into each part of the process matters. Every data point is refined and studied and probably has been refined and studied for a long period of time.
You need to make sure that you continually improve every single data point that is involved in the process of your seeking a job, or growing your career.
Several years ago, in the late-1980s, I was taking a test drive of a Corvette with the President of a German car company. He thought the American Corvette was a piece of junk, and did not like the car at all. He told me a story about how his company operates, contrasted with how a typical American automobile company operates.
He said that American car companies build a car model, and then completely change up the model the next year. They may throw a different transmission in the car, a different engine, radically change the styling and so forth–the idea being that they are trying to show progress and innovation, although, in reality not much is really changing. In contrast, he told me that when his company builds a car, over the next decade or so they keep refining it and making it better and better. They figure out a way to make the transmission better and to make small “almost invisible” changes that continually improve the car. They are concentrating on the process of improvement in building a car, and the result is that when you get in one of their automobiles, it feels very different. The cars also last longer. They run better. There are a myriad of powerful things that make these cars superior, and they are all the result of concentrating on the process.
You need to be focused on the process in your job and job search. Pay attention to the small, almost invisible things that collectively make a difference. Think of yourself as an instrument, like a fine piano. It is the attention to everything that goes into you that will ultimately produce the best notes.
Get Security By Concentrating on the Needs of Your Employer
May 2, 2009
If there is a lack of any kind, whether it is need for employment, or for money, or for guidance, or even for healing, something is blocking the flow. And the most effective remedy: Give! Spiritual Economics: The Prosperity Process, Eric Butterworth
What You Will Learn
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Several decades ago, people would start with an employer in the United States, and the chances were quite good that the person would be working with that employer for the majority of their career. This was how it was for my parents for the most part. It was probably also this way for your parents, as well. Both of my parents spent the majority of their careers with just one employer. There are still some pockets of this today; however, for the most part, this is rapidly becoming a thing of the past. Today, most of us will have had several jobs over our lifetimes.
While this means many things, its significance is that there is really no such thing as employment stability and certainty in your job. In fact, with very few exceptions, no job is immune from going away. Most of us crave stability in our lives. Stability in our careers is an incredibly important thing. People search for and get stability in their lives in numerous ways:
- They get married.
- The get educations.
- They participate in certain religions.
- They send their kids to certain schools in the hopes this will give them security.
- They follow a certain routine.
- They exercise because it makes them feel a certain way.
- They eat a certain type of food to get enjoyment.
- They use food for comfort.
- They read.
- They act sick or helpless.
- They smoke cigarettes.
- They control others.
- They show up for work at a certain time each day.
- They buy cars which are safer than others so they do not get injured.
Why do we all do one or more of these things? We do them because we are seeking a certain level of security in our lives. We want to feel secure, and we expect each of these things we do will give us that result. Security is coming home to the same home each night. It is about having a job to go to tomorrow. It is about having people in your life who love you. It is knowing you will be alive tomorrow. It is about being comforted when you are tense and agitated. How we define security is unique to each of us, but something we all have a need for. It is among the most important needs we have as human beings.
The need for security in your career is real, and it is something I am sure is exceptionally important to you. We need to have a purpose in the world, and we need to know that we are going to have the ability to make money and support ourselves in the future. This is the reason people typically chose one profession over another. This is also the reason people typically get educations, for example.
When I was growing up, the most secure career you could go into was medicine. The reason for this was largely due to the fact that doctors typically were guaranteed a pretty good income if they managed to get into medical school and graduate. They could count on making enough money to live in a nice neighborhood and drive a nice car. They could send their children to good schools and be respected in their community. Much of this has been shaken recently and, within the past several months, I have even read some incredible stories about doctors going bankrupt due to being unable to find work. This is not the case everywhere, of course, but it is a sign that there is not as much security in this profession anymore.
The most secure job you could possibly get in the early 1970s in Detroit was a job with an automotive company. If you got a job in a factory, you would get a good hourly wage, health benefits, and a pension. This is, of course, no longer the case at all. Life and business is a continual cycle of creation and destruction. What is alive today may not be alive tomorrow. What goes up often comes down. This is what makes our careers so hard when we are seeking security.
Most people do not realize this fact, but in the Great Depression there was a severe crash with unemployment rising to 25% from 1930 to 1933. These stunning unemployment numbers are a sign that we should never take our future security lightly. Things can change, and any and all security you currently feel could be gone in a heartbeat. One of my favorite economists whom I have been reading for years is Harry S. Dent, Jr. In his most recently book, The Great Depression Ahead, he writes:
Businesses need to understand that a “survival of the fittest” battle is coming between 2008 and 2012 that will determine the leaders for many decades to come. The businesses with the largest market shares or niche dominance and with the lowest costs and strongest balance sheets and liquidity will grow stronger and gain long-term market share, but many more will fail and be taken over by stronger companies. Banks need to understand that they haven’t seen anything yet when it comes it comes to home foreclosures and business failures.
This extreme shakeout process in business, along with the great over-expansion and credit expansion of the bubble, will cause this downturn to see much higher unemployment than in the recessions of the 1970s and the early 1980s; our best estimate is 12% to 15%.
I have been reading Dent for years, and, in my experience, he has always been right on. I believe that there is a strong reason at the moment for you to pause and question whether or not your job, your profession, and your life is secure. I am asking you to do this so that you can understand the forces that are acting on your career. Regardless of how secure you think your job is, regardless of the quality of your education, you do have reason to potentially be concerned with what is about to happen in the economy.
Before I go any further, I want to be very clear about a few things that I believe have a major affect on your life. With the Internet, population growth in various parts of the world, and more–the world is now wide open, and many of the jobs that we formerly did in the United States can be done anywhere. These jobs can also be done much more cheaply and by people who are incredibly enthusiastic compared to many Americans. The jobs can be performed with less bureaucracy and delivered to consumers more cheaply. Businesses must operate as businesses, and the role of all businesses is to provide the best products and services they can at the lowest possible cost. If the business can produce the product or service at a lower cost, then the business will also be able to sell more of the product by lowering the price.
In fact, in practically any office in the United States, most of this work could be taken and moved overseas to a place where the work can be done more cheaply. This also goes for work that occurs in factories. Call centers have been being moved overseas for over a decade. Sophisticated accounting and tax work can be done at a fraction of the cost overseas. Computer programming can be done overseas. I remember 10 years ago, it was difficult for me to hire programmer in the United States because they were demanding incredible amounts of money and stock options–if they knew what they were doing. My experience was no different than the majority of American employers. A decade later, most companies I know have put most of their programming staff overseas in areas where it is much less expensive.
They would be crazy not to.
If you can have something done better and more cheaply somewhere else, why would you not do this? This is something I am confident has eliminated hundreds of thousands of jobs. The same goes for manufacturing. A tremendous amount of manufacturing in the United States (and throughout the world) has now been moved to places like China. Even taking into account the costs associated with taking shipping containers across the ocean, China is still able produce goods at a much lower cost than in the United States and elsewhere.
Not too long ago, I was on vacation in Hawaii and shopping in a store which apparently had “authentic Hawaiian apparel.” Everyone working inside of the store appeared to be genuine native Hawaiians. I started looking at all of the labels, and, within a few minutes, I realized that every single thing in the store–whether it was a straw hat, or a flowered shirt, was from China. There is nothing wrong with this. The business was just doing what any smart business needs to do–it was getting its products from the lowest cost producer so it could make the largest profit margins.
What is going on is not just confined to products and programmers, however. Legal work is now also being increasingly outsourced to places like India. People can now have legal work done there. Imagine what the implications are for the long-term job security of American attorneys due to this. I have heard others say that the education industry is safe; however, this is now even being questioned. I read recently in The Great Depression Ahead, that even this may not be immune:
There are likely to be big changes in education ahead due to this Shakeout Season over the next decade. Just as with the housing or technoloy or emerging market or commodity bubble, there is an education bubble. Does it make sense that education costs should be rising so fast when education is an information-intensive industry during an unprecedented information revolution? Bureocratic management structures, real estate intensity, and tenure-based systems have sustained high costs, while high demand from frantic parents has exacerbated the price spiral. Why can’t parts of education be conveyed online with greater access to experts and peers around the world? Why do we need sprawling campuses with elaborate landscaping, buildings, libraries, etc., in an Internet world? Why should students be restricted to teachers and experts in a local area when they can have video and interactive feedback from around the world from the best experts, peers and blogs?
Education can be delivered at radically lower costs through a combination of online programs, in-classroom programs, and internships with companies. However, it will take a shock to the system to force such changes in the most complacent, academic and tenure-based system in our economy. Page 306.
My idea here is that no industry and no job will necessarily guarantee you the security you crave in the future. One proposal being batted around is that the Obama administration may decide to create a massive number of government jobs. This may very well occur, however, if this does occur, then even these jobs may not have a lot of security because they may be eliminated when a new administration comes in. Everything goes in cycles of creation and destruction.
I believe the next 10 years or so in the present economy are going to witness a massive shakeout that is beyond anything we have ever seen before. In a poor economy, businesses do everything they possibly can to cut costs. This will mean that many of the jobs they have will be relocated overseas, where possible, and done in much cheaper ways. In addition, I believe that productivity enhancing tools are going to increasingly put pressure on the human equation to lower wages. I recently read a September 10, 2008, article in the Wall Street Journal, “Retailers Reprogram Workers in Efficiency Push,” which I am confident is a huge indicator of what lies ahead in most retail jobs:
Retailers have a new tool to turn up the heat on their salespeople: computer programs that dictate which employees should work when, and for how long.
AnnTaylor StoresCorp. installed a system last year. When saleswoman Nyla Houser types her code number into a cash register at the Ann Taylor store here at the Oxford Valley Mall, it displays her “performance metrics”: average sales per hour, units sold, and dollars per transaction. The system schedules the most productive sellers to work the busiest hours.
“We are under the gun to be a much more efficiently running organization,” said Scott Knaul, director of store operations at the women’s apparel retailer, which said earlier this year that it is closing 117 under performing stores over the next few years. There was an initial “ego hit” for some employees, he said at a gathering of retailers in May. But the system, he said, has helped turn more store browsers into buyers.
Such “workforce-management” systems are sweeping the industry as retailers fight to improve productivity and cut payroll costs. Limited Brands Inc., Gap Inc., Williams-Sonoma Inc. and GameStop Corp. have all installed them recently. Some employees aren’t happy about the trend. They say the systems leave them with shorter shifts, make it difficult to schedule their lives, and unleash Darwinian forces on the sales floor that damage morale.
“There was a lot of animosity” toward the system, says Kelly Engle, who worked at an Ann Taylor store in Beavercreek, Ohio, until late last year. “Computers aren’t very forgiving when it comes to an individual’s life.”
Tools like this are enabling retailers to squeeze as much work as they possibly can out of their workers. They are also shaking inefficiencies out of the system and making our jobs less secure and certain. In this article it was discussed that this efficiency increasing tool is creating tremendous downward pressure on the wages of the most marginal sales people in the stores.
The quest we have for security is there because we are all trying to survive. How do you do this, however, when the world around you is constantly changing? We fight for security in our jobs. Unions are there, for the most part, to give people employment security. Most of the worry and anxiety people experience is due to them worrying about what may happen or not feeling secure. There are a lot of ways people try and get security:
- They save money.
- They limit their relationships to people where they are not likely to be disappointed and continually experience security.
- They look for people, situations, substances and other things to calm their anxiety and make them feel secure.
- Some people consistently underachieve because they believe there is more security in being average than being extraordinary and taking risks.
- Many people isolate themselves.
- A salesperson does not take risks and make certain calls to get new clients for their firm so they do not have to feel rejection, for example.
- We do not take the risks we should in meeting as many people as we should so we do not experience rejection.
- We do not apply for jobs we are likely to be rejected for so we can experience security.
- We do not follow up with applications we have submitted because this makes us feel more secure.
Not all of these things may apply to you, but I am sure many of them do. You know that you have a need for security. The problem with this need is that you should understand that there is no such thing as security. Every inefficiency in every business and job you could possibly have will eventually be eliminated. This is especially so in the current economy where employers will do everything within their power to reduce and eliminate unnecessary expenses. This is something that happens in all recessions, and it is happening at the moment, and is likely to be severe. Many people you know are about to lose their jobs if they have not already.
Where does this leave you? What about your security?
You are not going to be able to find security in almost any career you go into. I do not say this to you to frighten you, but it is a stark reality. Concentrating on security and searching for this is the wrong approach to your career. What you really need to be concentrating on is yourself and the value that you can provide an employer.
- How you can reduce your employer’s costs.
- How you can make your employer more money.
- How you can create efficiencies where you work.
- How you can present a better image for your employer.
- How you can outsource work and save your employer money.
- How you can look out for and defend the employer’s interests.
- How you can improve your skills in your chosen profession for the benefit of your employer.
All of these ideas (and I could write them down all day) are things that you can do that are meant to give someone else (i.e., your employer) security. When you concentrate on the needs of your employer and being exceptional at your job, very good things happen to you. I have been faced before with the choice between letting one or another person go in our company during cutbacks. If there is someone out there I know is always trying to cut costs and increase the revenue of one of our companies, then I will do everything within my power to save this person’s job. Other people do not seem to care, and these are the people who are let go. People who are constantly improving themselves are also kept around over those who are not. People who are aware of inefficiencies in various operations and point these out to the employer are valued.
In 1927, Bruce Barton, the co-founder of the BBDO advertising agency wrote: “If a man practices doing things for other people until it becomes so much a habit that he is unconscious of it, all the good forces of the universe line up behind him and whatever he undertakes to do.”"
In order to experience the security you are seeking, you need to focus on the needs of others. Focusing on your own security is something that is often counterproductive. There is a chance you could lose any job that you are doing, even after having done the job for decades. We are going into a frightening economy where a lot of bad stuff is about to happen. It will be, in many respects, a true survival of the fittest. The fittest are, and always have been, the ones who are providing the most value. They are anticipating and catering to the needs of other and, due to this, they are staying ahead of the game.
This is what I want for you as well. You need to give your job your all and be seen as a productive unit that is working on behalf of your employer and creating immense value. Not the opposite. This is the only way to true security.
Noah, Floods, Creative Destruction and Your Career
February 19, 2009
What You Will Learn
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One of the most important stories in the Bible, from the book of Genesis, is the story of the flood. According to this story, God looked down upon the Earth and became angry at what he perceived to be mankind’s sins. He regretted creating people and decided that they all needed to be destroyed. In reviewing the Earth, however, God noticed that Noah was someone who was blameless and and he told Noah that in seven days he would make it rain for forty days and forty nights. God told Noah that this rain would cause a giant flood. God instructed Noah to build an ark that was large enough to hold himself, his wife, his three sons and their wives, and a male and female species of every type of animal that existed. With these animals, Noah would be able to replenish the Earth after the flood.
This story is part of Western Religious tradition and my purpose here is not necessarily to debate the truth of this story in one way or another–indeed, a myriad of interpretations have been given to this story in Christianity, Judaism and Islam. Instead, what is most interesting about this story, is the importance of the “flood” and how the concept of a “flood” and “renewal” has shaped the thinking of so many people and cultures throughout the world. According to a 1996 book by Norman Cohn, Noah’s Flood: The Genesis Story in Western Thought, around 300 cultures throughout the world have flood stories and they are almost all similar to the story in Genesis. Flood stories that are very similar to the Noah story are also prevalent in many other cultures. For example, one of the earliest flood stories is from Sumeria in around 1600 BC and is almost identical to the story of Noah.
The idea of a “flood” is a very powerful metaphor in our own lives and careers for starting over, washing away the past and starting from zero. We sometimes need a fresh start and to clean away the past. We all do and there is a certain happiness and “rebirth” that comes about when we can do this. There is nothing more important for many of us than a fresh start. I think it is for this reason that stories of “floods” are so prevalent in so many cultures: the idea of a fresh start gives us hope.
One of the most miraculous changes I ever witnessed in a human being was my own mother. For years she lived in Detroit in a small house, in a pretty insular neighborhood. She had been in an on-and-off relationship with the same man for the past 20 years that was very tumultuous. The home was run down and she was quite unhappy for the most part. Over the years, she had many terrible experiences in the home and the home was full of a lot of bad memories for her. One day her house was taken over by the bank and with mine and my sister’s help, she moved to be closer to my sister in Rochester, New York. I moved her into a small retirement community and she set up a completely new life. Within weeks she quit smoking, which was something she had done for the past 40 years. She started exercising every day. She made numerous friends. Her appearance began to change and she started to look much younger and happier. She became a nicer person and began to take more interest in her children and the world around her. She is a completely different person and very happy now. All of this has come about from simply picking up and starting in a different location. This happened to her in her 60s and the change I witnessed in her was nothing short of miraculous.
“If she hadn’t moved she would be dead by now,” my sister told me one day. The more I thought about this the more true I realized it was. What saved my mother’s life was a complete and massive change in venue from where she has been living.
I remember another person I know who had been in a terrible relationship for several decades. One day their mate died and after the funeral, someone I knew remarked that the person was now completely different. “I looked outside and I saw the sun for the first time in years,” they said. While this seems like a pretty harsh sort of statement to make about someone, the idea is that when a profound change comes into some of our lives we end up being better for it. Sometimes a profound change is the most beneficial thing there is for us.
Losing a job is a profound change. It is like a flood coming over our lives. We have no idea what the world will be like after the flood.
There is a real case to be made to simply start over and stop doing something when we are not having any success, not enjoying ourselves or not doing well at what we are doing. In fact, many of us toil for years and years doing something that we are not good at and do not enjoy. Arguably the greatest and most beneficial thing that can happen to many of us is to lose our jobs, or be forced into doing something completely new. If you are in a position where you have lost a job, or you believe that you may be about to lose a job, this may actually be one of the best things that could possibly happen to you. The ability to start over and start something from scratch gives you an opportunity to rebuild your career and life.
In the 1940s the Austrian economist Joseph Schumpeter came up with the term “creative destruction” to describe something that is a backbone of all of capitalism. In capitalist societies, old forms of value creation are continually being destroyed by new ones that are more efficient and preferred. This is how “life” in capitalism progresses. For example:
- Someone may start out manufacturing shoes by hand and have a business doing this
- Another person may come along and figure out how to manufacture better shoes cheaper and faster, and put the first person out of business
- Then another person may come along and with a machine to manufacture shoes and put the second person out of business
- A fourth person may come along with an even better machine and put the third person out of business
Creative destruction occurs in numerous ways:
- New sources of labor
- New markets
- New ways of organizing or managing
- New equipment
- New methods of marketing and advertising
- New methods of transportation
- New ways of producing products
- New products that are more effective than previous products
This creative destruction process is continually occurring in all businesses and in all economic environments. When a growing industry or business is successful, it starts to attract the attention of many others. After some time a company may begin to rest on its laurels, and when this occurs the company stops innovating or slows down its innovation. The company stops attracting customers at the same rate because it has stopped creating value and it’s focus is now on the status quo. Companies in this position may try and attract people to them through legislation or marketing tactics, or by offering less for more to increase profit. Slowly (or sometimes quickly) the company begins to go into a downward spiral as the best talent leaves and customers go to other companies.
Companies that once dominated and were the chief innovators in various industries, such as Kodak, have seen their dominance fall and profits go away as rivals have manufactured digital camera products. However, just as Kodak has been undone by various innovators, the companies who have replaced Kodak face the exact same sort of threat. Other modern examples include the ability of people to get their news online. Online news is leading to the destruction of traditional newspapers. Innovation and destruction is a cycle that occurs in all companies and across all industries. Creative destruction is something that is also very painful for the people who are affected by it. Workers who are replaced by machines are likely to lose their jobs. In the current economic environment, for example, newspapers seemingly cannot lay people off and let them go fast enough. People do not like losing their jobs. While a continually innovating economy can create opportunities for people to participate in newer and more productive enterprises, it can also cause a tremendous amount of pain in the short term.
The cycle of creative destruction is something that is also relevant to your career and where you are going. Just as companies are forced to innovate and are destroyed by innovation and outside forces in the economy, your career and job are continually under threat from outside forces and innovation within your own employer. Your life is the same way: Your life can stagnate and start withering away. When they are growing, companies tend to hire people very quickly and without a lot of regard to costs. As the growth of companies slows down they begin looking for ways to cut costs and save money. Machines may be introduced into the work place to save money. Moreover, jobs will be eliminated directly and certain functions may even be eliminated in order for the company to experience more profit. When this start occurring, your job and your career may actually be at risk.
You goal in your life is to be in the position “after the flood” when the destruction has occurred and new growth is occurring. You want to be on the side of new growth. Cycles are always occurring in the world and the most important cycle is the one when new growth and opportunities are occurring. Every new cycle starts when someone is doing things a new way and starts creating value. When new things are emerging ,there is a lot of excitement and companies start growing. Word eventually catches on that there is a new way of doing things that is profitable and people are drawn to opportunity. The best people start flocking to this new way and resources are given to support it. The growth stage is where the most opportunities lie.
This process is being repeated all over the world, not just in companies but in our careers and lives. Your goal needs to be to find where the opportunities are being created, where growth has taken hold and things are moving upward. You also need to do the exact same thing with your life–you need to do everything within your power to ensure the structures and ways of doing things are not outdated and ineffective for you. Your goal in life needs to be to be happy and be growing–in just about everything that you do.
Shoot for the moon. Even if you miss it, you will land among the stars.