Employees are your most valuable assets, and the cost of replacing a worker can sometimes exceed the employee's salary by one-and-a-half times. Therefore, fostering a workplace environment that's conducive to employee loyalty can only help your business.
A national survey conducted by RoperASW for Randstad North America uncovered the following seven steps that bosses can take to improve employee morale, loyalty and productivity in the coming year.
1. Communicate with workers. The survey found that 83 percent of employees who rank their bosses as excellent communicators say morale is excellent or good where they work.
2. Tell the truth. Instead of wondering if the boss is capable, workers today wonder if the boss is honest. And while 71 percent of supervisors say most people in business are honest, only 53 percent of employees agree with that assessment. Expect employees to ask the tough questions. Be prepared to tell them the truth.
3. Deliver the news clearly and simply. Employees want clear and easy-to-understand information about what's happening. Clarity is critical. During periods of change, half of employees say things at work seem unorganized. Don't try to spin bad news into innocuous twaddle.
4. Provide a road map. Give workers an idea of where the company is headed. While 83 percent of employers say they give workers that kind of information, only 68 percent of employees report receiving it.
5. Say something good once in awhile. Sixty-seven percent of employees say management communicates the good news as well as the bad. Workers need to hear the good news from the boss as much as they need to take the bad.
6. Get personal. Whatever the news is that you're providing, employees want to know what it means to them personally. That means you'll have to tailor the information in such a way that it is in context to their jobs and roles within the company.
7. Listen. Last but by no means least, take the time to gather input from your people. Employees want to be heard. Sometimes they actually have good ideas. In companies that take action on employee feedback resulting in positive change, 78 percent of employees say morale is excellent or good.
As Randstad North America's managing director of human resources, Gail Auerbach is responsible for recruitment and retention of the company's more than 2,000 employees in more than 500 locations in the U.S. and Canada. Reach her at firstname.lastname@example.org. For more information about Randstad's Employee Review, visit the company's Web site at www.us.randstad.com.
It was Sept. 13, 2001, just two days after the terrorist attacks in New York, Washington D.C., and Pennsylvania, and Buckman had assumed the role two weeks ahead of schedule. It also happened to be a zero revenue day.
Not long after, airplanes returned to the skies. But all wasn't fine in the corporate air travel business. The terrorist attacks hit just as people were realizing the economy had entered a recession. Corporate travel budgets were slashed, meetings were cancelled or sparsely attended, and the airlines faced some of the worst financial woes in their histories.
All of which made Buckman's first few months on the job challenging, to say the least.
"My planned start date was Oct. 1," Buckman says. "But knowing the whole world was going to change and that we had to change with it, I thought it was time to get started right away."
But rather than react swiftly to the uncertain marketplace, Buckman held off, waiting until the situation became clearer.
"One of the decisions we made early on was to overcome the urge to act right away," he says. "Perhaps one of the biggest mistakes we could (have made) was making a quick reaction that, in hindsight, we would find to be very wrong."
Instead, Buckman chose to bear numerous hard costs that he believed the company would need to reduce later.
"We felt like that was going to be a more prudent decision than to immediately start cutting back, then finding it wasn't really a necessary action to take," he says.
And, because the company's Dutch owner, BCD Holdings, was financially sound and preferred viewing its business holdings with a more long-range perspective, Buckman was given the latitude to use a methodical approach to analyzing and dealing with the new industry landscape.
That, he says, was one of the keys to his success.
"We sat down the first week after 9/11 and said, 'It's going to take a little while to take inventory and really understand what the implications are.'"
That strategy benefited WorldTravel on several fronts. It allowed Buckman, who previously served as CEO of Worldspan and held senior positions at American Airlines and Homestore.com, to reassure customers that the company would work with them to handle ongoing travel needs and gave him the time he needed to deal internally with the effects of the sudden economic impact on his company's operations.
"It helped us make better decisions," he says. "(And) it helped us have better credibility with our employees. We did have to go through a number of reductions and cutbacks, but we tried to do it in a prudent fashion. We were going to do it once; we weren't going to have the water torture of six or seven different cuts."
Because of the drop in revenue, Buckman was forced to cut his staff by 25 percent. At the same time, he looked to counter the loss in business by pursuing new revenue streams through other means.
"We immediately began looking at potential acquisitions so that we could maintain our level of activity and volume," he says. "We had some good people we knew we could apply to these things, so it was early in the following year that we acquired McCord Travel. That brought us back to the same level of activity or actually a little bigger than we were going into Sept. 11. It helped balance a lot of things out."
With the immediate issues of the company under control, Buckman turned his attention to its long-term needs, which had changed drastically.
"Our industry, post 9/11, is a lot different than it was before Sept. 11," Buckman says, adding that it wasn't until the beginning of 2004 that corporate travel returned to its pre-9/11 levels. "It's very competitive, and a business that's gone through a lot of consolidation. It probably will go through a good bit more. In 2000, there were close to 33,000 travel agencies in the United States. Today, if we're lucky, there are half that.
"A lot of people have left the business. A lot of people like us have continued to acquire and grow. You've got bigger, stronger competitors today. The online (competitors) have come into the business (by starting ) on the leisure side. Expedia, Orbitz, Travelocity, they've all set their sights on the corporate market."
And that means Buckman's brave, new world includes several well-funded players that see WorldTravel as a market they'd like to take over. Each of them represents a threat.
"It's a business that has very thin margins," Buckman says. "We know we've got to stay very close to the customers. We've got to try to anticipate the changes in the business and what tools and technology we're going to need. It's certainly one that we think is very competitive."
Staying competitive against the coming players means staying innovative and providing customers with new options. In Buckman's case, he viewed the new threats as an opportunity. To keep its customers engaged, WorldTravel developed a software package that allows corporate customers to maintain and track their travelers.
"Prior to 9/11, most of the profiles and information we kept on travelers didn't include cell phones," he says. "Now, it's in just about all the records because you want to make sure that you have a way to get ahold of them. Prior to 9/11, when we would have our negotiations or bids on getting new business, corporate security was rarely a participant in those meetings. Today, it's common to see the head of security be part of those meetings because they have a greater concern about how we are going to protect and make them aware of what is happening to their travelers."
Buckman has also expanded WorldTravel's offerings in other areas.
"We felt like we needed to put more emphasis and resources behind them," he says. "The meetings business has been very successful; it's the fifth-largest business (of its type) in the country. Technology has always been one of our company's strengths, and I think it's one of the differentiators.
"In the meeting area, we've got some very good software called Plan to Attend that helps customers who want to consolidate a lot of their meeting activity. We think we can bring them significant savings as a result of using these tools, usually in the 15 to 20 percent range."
Balance sheet manager
Spending money on technology and acquisition is one way to grow, but Buckman insists the company is also prudent at the other end of the balance sheet.
"Managing costs -- we're 25 percent smaller in terms of size of people (than we were pre-9/11), even though we're a bigger business today," he says. "Looking for new revenues and new services, we've invested a lot more in the meetings incentive business. We've been able to grow that so it's a good place where we can grow.
"We've been involved in building technology to provide our customers with hotel merchant inventory, not only to give them better prices on some of their hotel bookings but (also to) provide a new revenue stream for us. We've expanded our travel procurement solutions, our consulting business. We're looking for other revenue streams to offset some of those declines from the traditional travel business."
Technology has always played a huge role in the industry, and Buckman expects another two to three years of turmoil and change, which will drive an increased reliance on technology.
"If you aren't comfortable with change, you don't want to be around this business," he says. "We're going to continue to see a significant portion of our transaction activity go online. Three years from now, my feeling is that more than half of it will be online. We're going to have to continue to find new and better ways to efficiently support and assist in that effort.
"The global thing is going to continue to be driven; we're going to have to end up being more places, own more places and continue to invest in technology so we can provide that consistency throughout the network."
Buckman believes there will be fewer suppliers moving forward, which will make WorldTravel an even stronger player than it is today. And WorldTravel is already a force to be reckoned with.
"We're one of the bigger players, depending on how you measure it," he says. "American Express is the largest. The next three (including WorldTravel) are all relatively about the same size. In today's world, our revenues don't come from commissions.
"To say what our sales volume is 'in air' or other things doesn't really mean too much, but we will do in the U.S. about $3.8 billion in air travel sales (in 2004). Then you can add hotel and car and all the other things on top of that."
To keep growing, Buckman is tasked with ensuring the company stays focused on its goals.
"Acquisition is clearly one," he says. "You want to be able to grow, but if you can't grow organically, we found ways to do it through acquiring others. You want both."
Another way to grow is to sell new business to WorldTravel's existing customer base while pursuing new customers.
"We try very hard and set high goals for ourselves in terms of retaining the existing business," Buckman says. "I'm sure from the economic side it's cheaper to retain new business than it is to sell new business. We want to grow, so we've got to be able to do both.
"Our retention rates have been in the high 90 percents year after year. It's not that we don't want new business, but we take a lot of pride in the companies we've served for a long time. Frankly, that's our best judge. Our success is just the names of companies that we can list as our customers."
That list includes such Fortune 500 companies as Siemens, Turner Broadcasting Systems, The Gillette Co., EMI Music North America, Textron, Weyerhaeuser, the American Cancer Society and Harris Corp.
"It's not rocket science," Buckman says. "We spend a lot of time asking them what's important to them, what we can do better. We survey our customers every year. It's not the only form of feedback we get, but it's the benchmark.
"We're pleased that we've seen those survey scores go up every year, year after year, even after 9/11. We then go back to each customer and build an improvement plan based on feedback so we can do a better job for each and every one."
And for that, Buckman gets to sit in first class.
HOW TO REACH: WorldTravel BTI, www.worldtravel.com or (800) 342-3234
Although not a major talking point in this election, health care may be President Bush's largest and most ambitious campaign during his next term. The price tag on his future health care programs could make the war in Iraq look like a minimal expense.
Many people believe the health care problem is too big to correct or that any action will have to be implemented slowly to ease the pain of a transition. That's true when you have time, but health care does not have that much time.
In another four years, health care will be the most debated item in the presidential debate. The Republicans will be vulnerable with a transition of leadership, and Hillary Rodham Clinton is preparing now for the next campaign, which will begin in three years or sooner.
The Republicans know they could have a distinct advantage if they have a plan underway and not just a promise. If that's the case, something needs to happen next year.
President Bush has the secret ingredient in this complicated problem -- government funding. No matter how you slice it, the government is going to pay more.
With the groundwork already established in his Health Savings Account programs, Bush is promising the following.
* Expanded Health Savings Accounts (HSAs). President Bush will propose a tax credit for low-income families and individuals to purchase health insurance. Families will receive up to $2,000 for their premiums and $1,000 cash to put in their HSAs to help meet the deductible. Individuals will receive up to $700 for their premiums and $300 for their HSAs.
* An above-the-line deduction for health insurance premiums. Individuals who purchase low-premium, high-deductible insurances policies can deduct the premiums.
* An HSA tax credit to help small business employees. Small businesses and their employees who set up an HSA will get a tax rebate for contributions of up to $500 per worker with family coverage and $200 per worker with individual coverage.
Although we have been telling clients that HSA plans are the real solution, the story becomes more believable when the government gives you money only if you have an HSA plan.
* Affordable health care for children. The president will launch a nationwide, billion-dollar Cover the Kids campaign to sign up more children for quality health care coverage. The campaign will combine the resources of the federal government, states and community organizations, including faith-based organizations, with the goal of covering all State Children's Health Insurance Program-eligible children within the next two years.
* A tax deduction for long-term care. This is a new above-the-line tax deduction that individuals could claim for long-term care insurance premiums.
In addition to throwing money in the pot, Bush is proposing the following regulatory changes.
* Allow small businesses to establish Association Health Plans (AHPs). To give small employers and their workers more purchasing power, the president has proposed allowing small businesses to band together and negotiate on behalf of employees and their families.
* Allow shopping for health coverage across state lines. It's easy to use the Internet or toll-free numbers to shop for products. But different rules apply to health insurance. Consumers can only purchase health insurance in the state in which they live. The president proposes giving people the freedom to shop across state lines to find the best rates for their health coverage.
* Promote health information technology (IT). The president has undertaken a new initiative to make electronic health records universally available within the next decade. This will improve health care quality, reduce its cost and improve access to affordable care by applying to health care the same information technology that has transformed so many other industries. Health IT will also help eliminate medical mistakes, leading to increased quality and safety for patients.
With the Republicans in control, they have an opportunity they may not get again. Political scholars and economists have predicted that health care will dominate the next election. One way or another, health care is going to change.
Bruce Bishop (email@example.com) is director of marketing and managing partner of KYBA Benefits. KYBA Benefits provides consulting and administrative services to more than 400 corporate accounts, ranging in size from 20 employees to more than 7,000. Reach Bishop at (770) 425-6700 or (800) 874-2244, ext. 205.
Those are three words you will never hear from New York City, and they are the reason Atlanta has become one of the top destinations for conventioneers.
"As we like to say, 'We're Atlanta, and you're invited,'" says Spurgeon Richardson, president and CEO of the Atlanta Convention & Visitors Bureau, the agency which, according to its Web site, "serves as the liaison between meeting planners, tour operators and individuals and its 1,167 member organizations that provide necessary ingredients for a successful vacation, meeting or convention."
"This is my 13th year at the Atlanta Convention & Visitors Bureau," Richardson says. "We still need to educate people on the importance of tourism and the fact that tourism is economic development.
"I spent 25 years at Six Flags. Half of that was running the marketing department and the other half of it was being general manager and president over Six Flags Over Georgia. That did several things. I learned how to market, I learned how to sell, I learned how to manage and I learned how to communicate.
"When you learn those skills, I think you can transform those skills into just about any organization that comes to mind."
Smart Business spoke with Richardson about how he brought those leadership skills to his role as president and CEO of the Atlanta Convention & Visitors Bureau.
How does the Atlanta Convention & Visitors Bureau enhance Atlanta and the surrounding region?
My mission is to bring business, tourists, meetings and conventions to the city of Atlanta and the state of Georgia. Our job is to work with the state, to work with the city, to work with the metro area to bring in as many meetings as we can and to bring in as many tourists as we can.
I really believe working regionally is important and is going to continue to be important. We work, for example, with New Orleans and Nashville on a big tradeshow that we will do in December, where we will bring meeting professionals and travel planners from Europe and Latin America to the South. What we do is try to sell them on the entire region, which I think is real, real important.
Why is that so important to the region?
On a state tourism level, for example, we've seen numbers that say for every dollar that the state of Georgia invests in tourism, we get a $7.63 return, and they get that in a 90-day period of time. I think that proves the point that tourism is economic development, and for every dollar you spend on tourist development, you are going to get a really good return on your investment.
As I like to say, we are the economic driver in our community. I think that was really brought home after 9/11. After 9/11, when you went to the airport, there was nobody in the airport, there's nobody riding in the cabs and there wasn't anything for the baggage people to do, and people really began to understand our industry, more so than they ever had so before.
When you see a conventioneer come into town, that conventioneer normally is going to spend approximately two-and-a-half to three days and will spend more than $1,000. It adds up real quickly; it's a tremendous economic impact on our community, on our state and, really, on our region.
Last year (the 20-county) Atlanta (area) had almost 19 million visitors. Tourism expenditures in 2003 were something like $8.75 billion.
What can Atlanta do to make sure it keeps getting its fair share of conventions?
When I took this job in 1991, there were six or seven cities in the country that could accommodate big, citywide meetings, where you need to use two or three hotels and a convention center. Today, there are more than 25.
What you're seeing is a tremendous increase in the supply of convention centers, and demand has been rather flat. That has led to really tough, tough competition. We have to compete, more so today than we've ever had to compete before. The No. 1 thing meetings and convention (planners) want us to do is help them grow attendance to their meetings and conventions.
It's competitive not only for meetings and conventions but also it's very competitive to get special events here. We've hosted practically every major special event that I can think of -- two Super Bowls, men's Final Four, women's Final Four, All-Star baseball games, NHL hockey games and the NBA All-Star game. There are a lot of cities out there that would like to host these events.
We had the greatest meeting of all time in Atlanta, Georgia, called the 1996 Olympics, where people from around the world came to our city. The Olympics, by the way, were very, very special because they really put Atlanta on the international map. No longer did we have to worry about people around the world (not) knowing about Atlanta, Georgia.
They knew about Atlanta, Georgia. Before the Olympics, when I traveled to London or Paris or a place like that, I would say I'm from Atlanta, Georgia. They would say, gambling, gambling. I'd say, no that's Atlantic City. Atlanta, Georgia: the home of Coca-Cola, the home of Delta Airlines, the home of CNN, the home of Home Depot, the home of UPS.
Now they know. Now we're on the map, and we have an opportunity to take an advantage of that.
How has that changed the country's view of Atlanta?
When you look at Atlanta as a meeting and convention city, we're one of the four or five top meeting and convention cities in the country. We've got a great package, and that package starts with the airport. We're blessed to have the Atlanta International Airport. Eighty percent of the people in this country can get to Atlanta in less than two hours.
If you want to conduct business in the city, you won't find a better package than you find in Atlanta, Georgia. The thing that we need to work on is our leisure business. We're not known as a leisure vacation destination, like an Orlando or San Diego, for example.
We feel like, in the next three to five years, that that is really going to change, because with the exception of Las Vegas, we've got more construction going on in Atlanta, Georgia, than any other city in the country. We've got a fifth runway that's going in at the airport; we've got a new international terminal that will be part of the Jackson Hartsfield airport.
We've got the new Georgia Aquarium, which is a $200 million aquarium, given to the state of Georgia as a gift by Bernie Marcus, one of the founders of Home Depot. It should bring in an additional 2 million visitors to Atlanta. That opens next year.
What does the business community need to know about your organization?
The economic impact that we have, the number of people that we bring in, the number of dollars that they spend when they come in, the fact that meetings and conventions are becoming much more competitive, the fact that we're growing as a leisure destination. We've got an opportunity. The bottom line is, Atlanta really is emerging as a young, vibrant, dynamic city, and in order to do that, we've got to continue to work together as a team.
How have the airline industry's problems -- particularly those of Delta Airlines -- affected your industry?
We're proud of Delta Airlines. They're going through difficult times now. Atlanta is actually getting more flights right now than ever before on Delta because of how they're reorganizing.
It really hasn't impacted the ability to bring people into Atlanta. We've gotten no calls (from potential visitors) saying, 'I'm concerned about coming to Atlanta because of Delta Airlines.' That's not a factor right now.
Long-term, it could be a factor, but right now, knock on wood, things are going really well. Delta is key and critical to our city, and they are one of our big partners at the Atlanta Convention & Visitors Bureau.
Does the AC&VB involve itself in political issues?
We spend a lot of time working on what I call advocacy issues. Our interest is in supporting the sewer program that went through because we felt that was key and critical to our city. We meet very often with the chamber and Central Atlan ta Progress to talk about projects for Atlanta.
Obviously, police visibility, (being) safe and secure -- a lot of issues that come up -- we're very much involved in an advocacy position, and we will continue to do that. In all the years that I've been at the convention and visitors bureau, every year I'm spending more and more time on those advocacy issues.
Shirley Franklin has been a wonderful, wonderful mayor for the city of Atlanta. She understands tourism. She was on my executive committee; she was on my board. She travels with us. She gets it; she understands the economic impact.
One of my favorite sayings is, 'The speed of the leader determines the rate of the pack.' Shirley really has made tourism as part of economic development a major thrust since she's been mayor of Atlanta.
What does Atlanta need to work on?
We spend a lot time looking at brands. When you think of Orlando, you think of Mickey Mouse; when you think of Nashville, you think of country music. What do you think of when you look at Atlanta? There's not one thing.
We tout ourselves as the sports capital of the world. We tout ourselves as the cultural capital of the South. We're a shopping mecca. We've got great theater; we've got good history, good culture. We're working hard to get the message out about all of the things to see and do when you come to Atlanta, Georgia.
We've got our problems that we need to work on. Transportation is an area that we need to continue to work on. Education is another area that we need to work on. Clean air, clean water, environmental issues -- we need to do that.
And on the corporate side, we need to make sure we keep the Fortune 500 companies located in Atlanta in good shape. We're concerned about Delta, but Delta's working hard to pull through this.
The city and the community are really behind Delta; we need Delta to be strong in our city. We'll make that happen. HOW TO REACH: Atlanta Convention & Visitor's Bureau, www.atlanta.net/acvb or (404) 521-6600
What is a housing bubble? Economists and journalists use this term to describe a scenario in which housing prices increase year after year until the bubble bursts and prices take a dive, thus affecting the appreciation and equity consumers have in their homes.
According to the Coldwell Banker Universal Database, through mid-year 2004, average sale prices in the Atlanta area have increased compared to the same period in 2003. For the 15-county Atlanta area, the overall increase for resale single-family homes was 4.1 percent, with a mid-year average sale price of $218,750; for new single-family homes, the average price was $248,840, an increase of 5.9 percent compared to last year.
The database also reveals that average sale prices vary significantly by location. At mid-year 2004, the highest prices were found in north Fulton, where resale homes had an average sale price of $380,350; new homes averaged $605,200.
The least expensive average sale prices were found in Clayton County, where resale homes sold at an average of $122,300 and new homes sold for $149,000.
Location matters nationally
The National Association of Realtors (NAR) tracks median resale single-family home prices for metro areas around the nation. Among these, Atlanta has an attractive, affordable typical resale price.
Highest median resale prices as of the second quarter 2004 are in California: San Francisco, $647,300; San Diego, $559,700; and Los Angeles, $438,400. The Northeast has the next tier: New York City, $392,200; Boston, $366,500; and Washington, D.C., $352,400. Many of these markets have experienced double-digit price increases several years in a row.
In the south, Atlanta comes in at $156,800; Orlando, $170,100; Tampa, $158,200; Dallas, $141,000; and Houston, $139,200.
Many housing economists list several reasons why this bubble theory is not relevant.
* Strong demographics in key groups -- baby boomers, echo boomers, Hispanics, singles
* Historically low interest rates
* Strong consumer confidence in housing and the economy in general
* Real estate provides tax advantages as well as a place to live - unlike commodity investments.
* Since NAR started gathering statistics in the late 1960s, the national average price of a home sold has never gone down year to year.
* In Atlanta, the largest residential construction market in the United States, demand is in balance with supply.
After job losses in 2002 and 2003, employment in the Atlanta metro area is recovering, with June 2004 employment up 27,100 jobs compared to the same period last year. Forecasts for this year by local university economists show an annual increase of more than 30,000 net new jobs, followed by annual increases in excess of 50,000 in 2005 and 2006.
Among other issues:
* Consumer sentiment rebounded from its low of 74.5 in the first quarter 2003 to 90.4 for the second quarter 2004, and is above the national index.
* Web site traffic to ColdwellBankerAtlanta.com averages 260,000 visitors each month, up 6 percent from last year.
* The Coldwell Banker Builder Developer Services' Subdivision Traffic Quality Index is tracking on the high side of normal after two down years.
* Even though most local economists expect interest rates to slowly rise over the next 18 months, mortgage rates may still be affordable. Look for a shift to mortgage instruments other than fixed rates.
* Expect to see significantly higher new construction prices due to regulatory, land and material cost increases. These higher prices may increase the spread between new and resale homes and have a positive effect on the absorption of resale homes.
Clearly, housing and the economy are linked. All indications are that in Atlanta, we are in for a period of healthy and sustained growth -- jobs, relocation and housing.
Dick Hearin is senior vice president for Coldwell Banker Builder Developer Services, a division of Coldwell Banker Residential Brokerage in Atlanta. His research and guidance provide the basis for marketing, concept and design expertise for many builder/developer clients in the metro Atlanta area. Coldwell Banker Residential Brokerage includes 27 real estate offices as well as specialty divisions - The Condo Store, Builder Developer Services, Commercial and Corporate Relocation. Additionally, its affiliated companies offer mortgage, title and closing services. Coldwell Banker Residential Brokerage is a member of the NRT family of companies. NRT Inc., the nation's largest residential real estate brokerage company, is a subsidiary of Cendant Corp. For more information call (404) 705-1500 or visit www.ColdwellBankerAtlanta.com.
Never mind that I was already down at least a half dozen strokes. I ended up in a sand trap, and not the green side bunker; the one 50 yards in front of the green. It must have been the wind, right?
Playing to win can be tough; any golfer who has tried to reach a long par five green in two strokes can attest to that. But a difficult shot can suddenly become impossible with the addition of adverse conditions like strong wind, pouring rain or the lack of golf skills.
Investing can be viewed in a similar light.
Few would turn down the opportunity to invest when the markets are yielding eye-popping returns. It is human nature to want to invest when we feel good about our jobs, our family, the economy and the financial markets.
However, when the stock market moves south and we no longer have that warm, fuzzy feeling, most people don't invest as prudently as they should. Human nature often dictates that we do the exact opposite of what we know is in our best long-term interest, and we pull out of the market. Yet dropping out of investing altogether is as absurd as quitting a round of golf because you don't like the placement of the pins.
Instead, investors should re-examine their long-term plans, risk tolerance and investment mix, and make changes only as necessary. The important questions remain the same regardless of the market conditions: How much money do I need? When do I need it? What do I need it for? Am I still on course to get there?
Here are some tips to help you through unstable times, which are as inevitable as sand traps.
First, despite what the 24/7 financial news channels tell you, never panic. Market corrections and volatility are a fact of life. They can be severe, but when it comes to investing, what goes down usually comes up again. In fact, there has never been a bear market that we did not recover from and ultimately attain new highs.
Second, adjust your expectations. Many investors set unrealistic investment goals when they do not factor in current market conditions; don't fall prey to the same mistake.
Next, buy well and often. Down markets present potential opportunities to buy more with your hard-earned money. For example, if you always invest the same amount, you accumulate more shares when the market is down. When the market stabilizes, your return can rise proportionally. This investment principle, known as dollar-cost-averaging, may enable you to get more for your money.
However, dollar-cost-averaging does not assure a profit and does not protect against loss in declining markets. Since it is a strategy that involves continuous investments in securities regardless of fluctuating markets, consider your financial ability to continue purchasing during market downturns before implementing this strategy.
Finally, spend wisely. In an effort to increase your available cash, estimate your expenses and track your buying habits. Write down your expenditures for the next month. This will help you get a handle on your purchase patterns.
You can then highlight areas that are needs vs. wants, and evaluate remaining items to determine where you could spend less. Any excess that you discover can subsequently be redirected to your investments so you may take full advantage of dollar-cost-averaging.
The roller-coaster market that we are experiencing is more than just frustrating. For most, it is causing great concern, even fear. Investing, like golf, can be tough and requires great discipline. And like golf, the most consistent investors usually make the most successful investors in the long run.
Here's hoping that you get up and down in two. I didn't.
J. Preston Byers II, CPA CFP, a vice president with Consolidated Planning Corp. in Atlanta, is a Certified Financial Planner and Certified Public Accountant with more than 14 years of experience and expertise in the financial planning and investment industry, providing sound advice to individuals, families and small business. He specializes in investments, income tax planning, estate and gift planning, retirement planning and charitable gifting strategies. Reach him at (404) 892-1995 or firstname.lastname@example.org.
The 58th mayor of the city of Atlanta began her public life as the commissioner of cultural affairs under then-Mayor Maynard Jackson. That was the beginning of an education process that would continue under the leadership of Andrew Young, who named Franklin chief administrative officer and city manager and made her responsible for the day-to-day operations of Atlanta, a city with a $1 billion budget and nearly 8,000 employees.
"With Andy, I would come in with a list of issues to brief him on," Franklin says. "If I could not discuss those issues in a conversational way -- if I wasn't familiar with the facts, if I wasn't familiar with the circumstances versus handing him voluminous memos - then he was never persuaded.
"He thought that I needed to know the information; that I had thought about it, not just have facts and figures at my fingertips all the time. Many people are surprised by that. We could cover 20 issues in an hour-and-a-half because we could talk about it."
It's a lesson Franklin took to heart and incorporates in her own administration.
"I engage in dialogue about public policy," she says. "I am interested in probing the issues. It has to make sense to me; the pieces have to fit together. You can't gloss over the facts and you can't gloss over the interrelationships between one issue and another. And you can't forget the history. You lead in the moment that you are leading. You're not leading in the previous moment. And you're not leading in the future.
"You lead in the historical moment. At this time, there are certain things that people are concerned about that are different than they were 10 years ago or are likely to be different 10 years from now."
Smart Business spoke with Mayor Franklin to learn how she runs the city in the present and prepares it for the future.
What was it like working in the administrations of mayors Maynard Jackson and Andrew Young?
Those were great experiences. It was like reading a leadership book every day. It gave me the opportunity that was completely focused on making Atlanta the best place that it could be. Their leadership styles are very different, so I had that opportunity, too.
They are mentors of mine; they helped me develop self-confidence, they helped me hone my skills. They ensured that I had experience in public administration. It was like a double master's degree and a Ph.D.
What did you learn from them?
The work that I did with Andy Young was basically running the day-to-day operations of the city and having a chance to interact with him on literally hundreds of different initiatives. I had the advantage of his world perspective, combined with his love of this city.
Andy encouraged me during my service to the city, in that eight-year period, to lead a balanced life, to stay connected with my family and friends and community, not to be so consumed with my work that I, myself, lose my values, lose my interests.
I understood what it was like to be a soccer mom. I understood what it was like to grapple with family problems. I understood traffic from the perspective of someone using the roadways with my children. He would encourage me to take time off, to take vacations.
The other thing was that he encouraged daydreaming and blue-skying, as he used to call it. (He was) not satisfied with people who were so mired in the details that they couldn't see the bigger picture.
Brilliant leaders like Andy and Maynard and (William B.) Hartsfield and others can project 10 and 20 years from the present on what life might be. That is the hardest thing I have to do. It's not just to project what decisions I have to make for today based on everything that you know, but how those decisions are going to play out and what opportunities or advantages the community will have or the city will have or the people will have 10 or 20 years (from now) because of a decision today.
Maynard foresaw an international city when Atlanta was not viewed as an international city. That was 30 years ago. His slogan for Atlanta 30 years ago was, 'The next great international city.' Andy foresaw how to do that. Both could see beyond the here and now and pushed themselves to do it. I push myself to do the same thing. I'm not brilliant like they are.
How did running the daily operations of the city help shape your views of business and entrepreneurship?
I viewed this city as a public enterprise, and I learned very quickly the role of the team in accomplishing your goals, whatever they are. It requires everyone at every stage of that process in order to be successful. Declaring it so from the mayor's office wasn't going to get it done.
The value of teamwork and leadership within the team and rotating roles of leadership are among the things that I learned. I also learned to appreciate the value of debate and dialogue and clear communication. The larger and more complex the organization, the clearer the communication has to be both up and down the ladder.
That communication is not just one-sided. It's not just what the mayor or the chief executive officer or the COO has to say. It is also having avenues for people at all stages, at all levels of the organization, to communicate their opinions, their advice and counsel. The person who is actually performing the function knows more about how to do it better than anyone else does.
Do you think that experience of running the city's daily operations puts you more in tune with the business community today?
It's shaped by views, but I think those principles play out in business as well. Being successful in business embraces all of the stakeholders, including employees and the people on the front line, and recognizes the people on the front line are the only ones that most people see.
I'm in tune with them because I listen to them and I value their role in making this city successful. I could have been in tune with them in 1980 and out of step with them now if I were not open to hearing their issues and seeking their advice. I learned that from Andy.
Andy believed, and to this day believes, that government has a very specific role in the delivery of municipal services and supporting business. I concur with that. The success of the city is as much dependent on the success of business as it is on any mayor.
What role should the government play in business?
There is a legislative role in terms of regulations so that there is fair competition. I think we also provide support services through zoning and the building permit process. There are certain legal requirements that are passed to cities from state or federal government.
Our role clearly is in the public infrastructure arena. The important role the city has played in the development and the expansion of the airport; the important role we play in ensuring there is clean water. Those are all services that are provided by the public sector. It is half of the puzzle.
The other half is business. I view my role as mayor as being an advocate for business, not just being supportive, but being an advocate because the majority of people who move to Atlanta and the region move here to go to school or for a job. And many of them then find themselves starting a business. We are a community of entrepreneurs.
Is there a single initiative of which you are most proud?
The initiative that I'm most proud of is not a single initiative. Balancing the city's budget in a very difficult economy -- operating the city in the black -- certainly is something I'm proud of. But the way we have gone about the initiatives is what I'm most proud of.
We build consensus. We seek expertise -- external and internal expertise. And I put a process in place for decision-making that is fact based, research based and where we can be is visionary in its goals.
What has been your biggest challenge?
Tackling the water and sewer issues, and financing $3 billion in water and sewer improvements that should have been done over the last 40 years. It's been the biggest challenge because the number is so big and the time is so short, and it's not a sexy issue.
They are absolutely important and you cannot do it without public health. You cannot do business without water -- quantity of water, quality of water accessibility of water, affordability of water. That has been the toughest issue because it hadn't been tackled comprehensively before.
The public, the business community especially, but the public understands that the city has to tackle this issue. We spent two years in public education and outreach, so people know that this is an issue that we have to tackle. They no longer glaze over when I'm talking about it.
This is not an issue that ever gets done. We're catching up on work that should have been done over several decades. We won't be finished with this issue. We have to have continual investment and reinvestment in clean water that's going to be for the foreseeable future.
What does the future hold for Atlanta?
We are developing a comprehensive economic development plan. It's the first one, we believe, that has been developed by the city, and we are engaging the private sector through a group called the Atlanta Committee for Progress, which is represented by CEO-level and executive-level leadership, as well as our economic development agency.
We are following the lead -- Boston has done similar work; Minneapolis has done similar work; Baltimore has done similar work. It is based on strengthening the growth industries in your community and then finding those opportunities for expansion of those industries. For us it would be logistics and hospitality, banking and financial services. It's also the music industry.
What legacy do you want to leave the city and business communities?
I want the city to be healthier. I want it to be safe. I want it to be economically strong and viable. And I want all people -- poor people, rich people, affluent people, business people and government to buy into a vision of a great community.
I want them to remember that my administration was honest and it was hardworking and that we do what we say we can do. In other words, we are willing to take bold steps and we are willing to do the hard work that accomplishes those. Atlanta is business-friendly. I hope that we would be viewed as business-friendly.
In my heart, I want people to know that Atlanta is the city that cares. We care about the people who live here, the people who work here, the people who invest here, and that we do something about that.
HOW TO REACH: City of Atlanta Mayors office, www.atlantaga.gov or (404) 330-6000
At a time when every other week, the reporter was writing about a company in the midst of a scandal, he asked Huling if he was crazy for making values such a focal point of his company.
"Aren't you afraid in 90 days I might be writing a story about how embarrassed you are because you went public with integrity and then it turned out you, too, were corrupt?" the reporter asked. "How do you know?"
Huling was unfazed.
"I was able to say to him, 'Let me tell you how I know. If we're not living up to that value of integrity, I have 168 auditors and 1,200 consultants who will tell us we're not living up to it,'" Huling says. "I'll know long before the newspaper does, because I give them a mechanism to do it. You can never know everything as one person, so what you must do is enjoin the people of your company in the keeping of your standards.
"I have found a way through this measurement system to share the responsibility for the upholding of our values with every single employee."
Huling's mechanism is a biannual report card in which every Matrix Consulting employee rates the company on its six values -- integrity, respect, excellence, innovation, fun and results-driven.
"We tabulate those results and give ourselves a report card," he says.
What happens next is even more important.
"We post the results in the lobby of every office where we do business," he says.
That dedication and Huling's openness resulted in the company winning the first-ever Turknett Leadership Character Award, presented by the Atlanta-based Turknett Leadership Group. The award recognizes the company that best exemplifies the standards of organizational and individual integrity, respect and responsibility.
Huling has been with Matrix since 1997, but it is his third relationship with the firm. He was twice placed by Matrix in executive positions with other companies. And during his 28 years in the IT staffing and consulting business, he has hired numerous people from Matrix.
Smart Business spoke with Huling to learn how a value system fits into business operations and why it is so important to a company's success.
B>How did this value system come to be such a huge part of Matrix's operations?
In 2001, when everything in the world was changing, we embarked on an internal initiative to solidify and identify those things that were unchangeable in our company. Everything else seemed to be almost catastrophic. So we said, 'We need bedrock to stand on while everything else is swirling around us.'
We found that part of ourselves in our shared values as a company. We did hard work in 2001 to clarify who we are and what we stand for as an organization. And remember, we did that at a time when corporate accountability has never been more in question than it was.
We published the Matrix Charter, which is today the central component of our culture. That codification of our values, that clarification of what we stand for, has literally transformed our company. We became the only company that we know of in the entire world that measures itself against its value system. We post those results in our lobby.
B>Aren't you concerned that those scores could be embarrassing?
It's a little bit like thumb-tacking your college report card outside your dorm room door. I'll (admit) that I wouldn't have done that (in college). Imagine the gut-check you would have had if everybody who walked by was reading your report card. That's how we are.
Every client who comes through our door sees our report card -- every employee, the candidates that we're trying to find jobs for, the consultants who are on our staff, our friends, our families and reporters that come through our door. They all see our report card.
It is a way to utilize public accountability to say that this value system and culture are real. We've done that survey seven times. Every time we've had 100 percent participation. What that also tells you is that the people of Matrix care about this process.
B>So, did you make the dean's list?
We put a very high bar on ourselves. We are striving to have our score on every value be at 5.0 or above (of a maximum 6.0). All of them are above 5.0 except for one, which we are working very hard on.
We are our toughest judges, and we have a score below 5.0 on respect right now because the people of Matrix have been saying that while the market has been picking up and business is getting better, we are getting very frantic and dropping those common courtesies like being patient with each other and saying 'thank you' when we do something great. It's a level of person-to-person respect. We think we can do better.
If you interact with us, I think you'd find us to be the most respectful company you'd ever dealt with. And yet, we're very hard on ourselves. One of our goals operationally is to raise that score on the December Charter checkpoint.
B>Do you hold your clients to the same standards?
We would absolutely turn down a client who asked us in any way, form or fashion, explicitly or implicitly, to violate our value system. We've walked away from business this year where we were asked to deviate from our value system -- sometimes to our economic short-term discomfort.
We've done it, and it's not difficult to do because everything depends on that value system. Those companies that are built to last are those that have a changing strategy and an unchanging core. That's what we're trying to be.
If we allow that core to become changeable and relatively applied, we know that we've begun the downfall of our company.
B>What can other CEOs take away from your value system approach?
We're a $180 million company and we just closed a $240 million contract. How many CEOs in America can say that today? If you try to talk to them about it, what they want to know about is the execution part of it.
But what I've really learned, in a very great way, is execution alone is a very finite strategy. Getting people to do the right thing -- and do more of it -- can only take you so far. But if you approach that focused execution on the platform of a strong value system, the results you can get are truly extraordinary.
B>How has your industry changed in the past three years?
As I look at this broad landscape, I look at an industry where 20 percent of companies in it are no longer in existence. In that same time period, Matrix has remained profitable, has remained debt-free, has strengthened its culture to the extent where we are the winners of the national leadership character award, and we have launched two new lines of business, which are already in their second year of operation and are phenomenally successful. You've got to call that a pretty good period.
B>What changes have you made to the structure of the business?
We have broadened the solution that we offer to our clients. When you only do one thing, and that one thing is not in high demand, it's a difficult time.
The last three years became a catalyst for us to launch two new divisions -- a project solutions division, which does project work, and a managed service division, which is really a contingent labor management offering. Both new lines of business are having phenomenal success.
Our projects business came in at 500 percent of goal for last year. That was pretty good. And then our managed services business has closed a number of major agreements, the most recent of which was a $240 million services contract with a major financial services institution.
We are a $180 million company and we closed a $240 million services contract in a new line of business. That's a pretty good story.
B>Which division is growing fastest?
The fastest in terms of revenue dollars is probably managed services, but the fastest in terms of its overall contributions to the company's financial success is certainly the staffing part of the business, specifically the contract staffing part of the business.
Companies are hiring again, and they are hiring in larger numbers than we have seen in the last three years. But they are hiring people in the beginning on contract assignment and then later converting them to permanent positions. We're doing more permanent placement this year than we have in the last three years. That side of the business is up as well, but I think most companies are starting out by hiring people on a contract to permanent basis.
And as an old CIO, I just see that as a way of being really, really sure before you switch them over to permanent status.
B>How has technology changed your business?
It's been phenomenal. I go all the way back to punched cards and hard-wired CPUs and things like that, so I have a long history with this. The easy answer, the principal thing that has happened is that the Internet's impact on the staffing business has been dramatic and really irreversible, and it works in two dimensions.
It used to be you read the Sunday newspaper to find out what jobs were available in a city or you worked with a staffing company. Those were the only two places. Neither a staffing company nor the newspaper ever had all the jobs that were available, so there was difficulty in learning about the opportunities. Today, you can log onto the Internet and find all the jobs that are available in every company instantaneously.
What that means to the staffing company is you have to offer more to the candidate than simply knowing about the jobs. You have to know a deeper level about the company, environment and the person that they'll be working for.
And you also have to do more to prepare the candidate and help them be successful. It's forced us to raise our game beyond that major competitive advantage we had of just knowing the jobs.
HOW TO REACH: Matrix Resources Inc., (800) 627-3533 or www.matrixresources.com
- Solutions to protect against inflation, even in bond portfolios
- The use of investment vehicles other than stocks and bonds as part of any substantial portfolio
- How to bridge the difference between value investing and growth investing
- Why 40l(k) plans can benefit from having mutual funds which invest in all capitalizations and that do not readily fall into the value and growth styles
- That in selecting an investment counselor, one should emphasize proven judgment and a person who will be responsible to you.
The reader has also received a timely warning that the measures used to stimulate the economy posed a threat to the length of the economic upturn, and that the risk of rising interest rates had to change fixed income strategy. In this, the final article of the series, I will revisit these issues.
So how do I see the next five years?
The current economic upturn should prove more short-lived than normal. Domestic consumption will likely suffer much more in the next downturn than it did in the last recession. Lower consumer spending is both necessary and helpful.
The U.S. trade deficit now exceeds 5 percent of gross domestic product, and no country has ever reached that level without a significant adjustment taking place. If we are to avoid the financial crisis and devaluation that often results from this, our consumption must decline or the government deficit must be rapidly closed. I am confident that in the next five years, we will see a major reaction to the ever-widening trade deficit.
Turning to the investment world, I am more tentative. While the U.S. stock market will continue to be the home of many of the largest, most profitable companies in the world, its return may lag behind those of many countries when measured in U.S. dollar terms. The Japanese and British markets may rank among the best in the industrialized world.
For those managing their own portfolio, it will be important to ignore the zigs and zags of the market and remain with those companies that can maintain their profitability. For those who let others manage their money, stick with proven, dedicated investment people. The firms that cover a wide spectrum and are exclusively focused on money management will do best.
The first generation of a firm is often the best.
Test the business knowledge of the person managing your money. Stay away from those who claim they have discovered a short-cut formula. And avoid those who charge more than they are worth -- especially when considering hedge fund managers.
As I write in late August, the median return for hedge funds so far this year is about zero. Yet the hedge fund industry, now widely promoted, has seen record inflows, which have lifted its size to $870 billion. The hedge fund manager still charges a normal fee and gets expenses paid. When they do better than break even, the hedge fund manager typically gets 20 percent of the profits. No wonder the number of hedge funds is soaring. There are quite a few hedge fund managers among the lists of the very wealthy, but I know of no wealthy person who attributes his wealth to an investment in a hedge fund.
The challenge of managing funds for others is a great privilege. It requires a strong sense of responsibility and depends on your ability to learn constantly about the world. In the end, investing is a field that requires an ability to understand our environment. For that reason, it is a wonderful occupation.
Marc Heilweil (email@example.com) is president and CEO of Spectrum Advisory Services Inc. The firm manages approximately $282 million in assets, including the Marathon Value Portfolio mutual fund. Reach him at (770) 393-8725.
But where will your child live when he or she leaves the nest for college? Many campuses require students to live in university housing during their freshman year. After that, they are often on their own.
From fraternity or sorority houses to off-campus apartments or group houses, the choices are many and the costs high. But there is a solution that might be a win-win for both your student and your investment portfolio -- purchase a condo or home in your child's college town.
With interest rates still at historic lows, favorable tax laws and the notion that housing is one of the best investments you can make, this option is looking better and better for some parents. You may be able to lower the cost of housing for your child, help them get off to a good start in terms of building a credit history, give them a sense of responsibility and give you peace of mind that your child is in a safe living environment.
Here are a few questions to consider before making a college-area home purchase for your child.
- Is the area around the college growing? Research the city or town where the school is located to see if it has suitable housing at a reasonable price. Check out prices to see if they are appreciating. Find out whether there is economic growth and other industry in the area. A local real estate professional can give you a clearer understanding of the housing picture.
- Will other family members or friends be attending the same college over the years? While college selection is unpredictable, you can sometimes gauge whether the college is popular with your child's peers or siblings. Buying a home for your child now may become a long-term investment (and savings) if you have other children who may attend the same school. If you choose wisely, you may be able to rent the home after your own children have graduated.
- Can owning a home or condo help with tuition fees? Some out-of-state students can establish residence if their parents purchase a home for them in the college town. This may enable students to pay in-state tuition rather than the more costly out-of-state tuition.
- What about the size of the home or condo? It does matter. You may be inclined to buy a one-bedroom residence because the purchase price is lower. But look at the possibility of a home with several bedrooms and baths. If your child has roommates who pay rent, you may be able to generate income above the mortgage payments, giving you a nice return on the investment now. Additionally, multiple bedroom properties may have a higher resale value, making your investment that much more lucrative.
- How can this affect my child's credit history? Consider including your child's name on the contract and loan. This can have several positive outcomes. For one, there are many first-time homebuyer assistance programs that make it easier for students to qualify for a loan. This will help your child establish a credit record, and it may enable you to get a lower loan rate than you may have had on a comparable investment loan. By putting your child's name on the loan, you are also giving him or her a feeling of pride of ownership.
Everyone's situation is different, and professional advice is required. Be sure to consult with your tax or financial planner before you move forward. College is a place for your children to learn new things and prepare for the future. Buying a home in their college town may be a way for you to do the same.
Jim Schmidt is president of Coldwell Banker Residential Brokerage, the No. 1 residential real estate firm in metro Atlanta. The company includes 27 real estate branches plus specialty divisions - The Condo Store, Builder Developer Services, Commercial and Corporate Relocation. Affiliated companies offer mortgage, title and closing services. Coldwell Banker Residential Brokerage is a member of the NRT family of companies. NRT Inc., the nation's leading residential real estate brokerage company, is a subsidiary of Cendant Corp. For more information, call (404) 705-1500 or visit www.ColdwellBankerAtlanta.com.