Welcoming My Newest Sponsor

I would like to welcome a new sponsor for Money and Such. You may have noticed the widget in the sidebar of this blog advertising a company called Regus . My relationship with them goes back several years, to my first executive position.

Back in 2002 I ran operations for a start-up company based out of Denver. My operations were distributed around the country in a way that made it unreasonably expensive to rent an office in each location. That's how I first came across Regus. The company offers high-end offices for rent in a multitude of cities around the country and around the world. I rented two offices from them - one in Chicago (my office had a panoramic view of the runways at O'Hare International Airport - no view is more exciting than watching passenger jets take off at a rate of 1 per minute...) and the other in Dallas.

The offices were high end and the service was great. My customers never knew that our company was small and had highly limited resources. I was able to host them in style.

When Regus contacted me about advertising on Money and Such, I was happy to oblige, since I personally used and appreciated their services.

Anyway, that's the back story behind my new sponsors. Take a look at their services, they know what they are doing.

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When People Take Advantage

Since I moved to my current job over a year ago, I brought three people from my old company to my new one. These are all highly talented, skilled people that I enjoy working with. So far, they have all been very successful in our new company. Recently I tried for number four and so far, things are NOT turning out as well as I had hoped. In fact, results have been dismal.

This most recent person I brought over to my company, Rick, was VP in my previous company. He left that company about 6 months before I did, after getting into some serious disagreements with my former CEO. Nevertheless, he is a very talented individual who added a lot of value to my previous company and I enjoyed working with. I always thought that he got a raw deal when he was let go.

About six weeks ago, when it became apparent that I needed a consultant to assist me in some key projects, I reached out to my network, and it turned out that Rick was available. Since I knew him well, respected his abilities and thought that he would be perfect for the job, I brought him over for a three-month full time consulting stint. My hope was that during this period he would gain a lot of exposure to my CEO, who would then offer him a full time executive position.

Rick's responsibilities and tasks were well defined. I spent a decent amount of time with him, teaching him about our products, introducing him to key people around the company and clearly explaining the results that I needed. On several occasions I asked him whether he understood his role and whether he needed any further guidance or assistance from me. Each time he responded that he had everything under control.

Three weeks into his consulting gig with us, he is failing miserably. And what's worse, he is acting as if he doesn't give a damn. He shows up to work at 10 AM and leaves at 4 PM. One day last week he didn't even bother to show up until noon and when I called him to find out what's going on he explained that he had some errands to run.

In my line of work it's not all black and white. I am VP of Business Development and Marketing for my organization, and I hired Rick to do some business development work for me. This kind of work is all about results, it's not about the time you put into it. For all I care, he could spend three hours a week working and spend the rest at the beach, if he got me the results that I am looking for. You also need to understand that I am not a micro-manager. I am the kind of executive who explains the mission and checks in twice a week to make sure that all is going according to plan. I don't have the time to do anything else, even if I was so inclined. As long as you accomplish the task, you do not need to see me or talk to me more than those two times a week. Until last week, it looked like Rick was on shaky ground, but I decided to give him the benefit of the doubt. Last Friday, I received Rick's weekly written report, and things are not going well. In fact, it looks like there are not that many things GOING at all.

It's time to take action.

On Monday I will meet with Rick and explain to him that his performance is not to my liking. I will lay down the law and explain when I expect him to be in the office and what the results I am looking for are, on a daily basis. I will also explain that if things don't work out for me and VERY quickly, his contract will be terminated.

I don't like it when people think that just because they know me they can cheat me out of what I am entitled to receive. I also don't like it when they interpret flexibility and latitude as a license to slack.

It all comes down to this: if you report to me, your performance reflects on mine, and I will not accept anything short of excellence. Friends or no friends.

I will keep you all posted.

By the way, the worst job in the world apparently has nothing to do with working for me. Meanwhile Money Smart Life talks about a different kind of scam...

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$25 Give Away Reminder

With only a week to go in the first ever Money and Such contest, so far I only have about a dozen valid entries. If you're interested, take a look at the rules and submit a quick entry. The prize is $25 and the odds are looking pretty good right now.

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Gambling Your Finances

We all like to think that our lives are well planned and well thought out. I certainly like to think that I do everything in my power to mitigate the risks and protect myself and my family against the vicissitudes of modern life. From time to time we all make major life decisions which potentially have major financial implications. However, as we make these life changing moves, we rarely consider or care about the financial impact of those decisions. Here are a few examples:

Having Kids - when my wife and I were thinking about starting a family, my main concern was whether I was ready for what everyone described as a major life change. I didn't really consider the financial implications. We have three healthy and fun loving boys - a major expense, but one that we are well equipped to handle. Some of my friends are not as fortunate. One of my friends has a child with down syndrome, another has a child with a mild form of autism, and many others that I know have a kids with a variety of other challenges. When you are planning to have a child, you rarely consider that you are also taking a financial gamble.

Getting Married - talk about taking a financial gamble. Never mind the fact that a large percentage of marriages end divorce, entitling your spouse to half of what you jointly own. The bigger gamble is the fact that from the minute you get married, your financial fate is essentially in the hands of another human being. Their bad financial decisions will reflect poorly on you. Your financial plans may not suit them. That's a big bet you are taking. Luckily, someone else is taking that bet with you. I am fortunate in that my wife and I see eye to eye on most financial decisions. We are both careful with our money and both take our credit and spending decisions very seriously. Having lived with my wife for a few years before we got married, I knew exactly what I was signing up for.

Switching Jobs - now that's one where the financial implications are very clear, and most people switch jobs primarily for financial reasons. However, even where the primary motivation for the decision is financial, I find that many people don't consider the possible implications of their decision. For example, I often meet individuals that take a job that pays more in the short term but that does not offer promising career prospects. There is also considerable risk in the very act of switching a job - e.g. there is always the risk that you will not get along with the new boss. Regardless of how well you think you understand the opportunity, you must recognize that you are taking a risk.

Getting an Education - yes, yes, getting an education is not only about improving your career prospects, and I agree that studying philosophy may be good for the soul, but I find it difficult to understand folks that choose an undergrad major (for example) without due consideration for the financial implications and career implications of their decisions. True, you may be able to find a job outside of your chosen field of study, but you must recognize that there is some level of risk here.

Now here is my point. I am not advocating that decisions must always be made for financial reasons. That would make for a very dull and sad life. However, what I am saying is that many times our decisions have very large potential financial implications which we choose to ignore.

When I moved to my current job in March 2008, I was very conscious that I was placing a financial bet. So far, I seem to be winning this bet. Back in 1999, I was very aware that by going to business school I was placing a bet on the health of the economy two years later. I lost that bet, at least in the short term, with the dot com crash. When we decided to have kids I was aware of the financial implications of having a healthy child, but did not even want to contemplate what having a child with special needs would to do our life, never mind to our finances. We all make financial gambles, more often than we would like to admit.

May your gambles pay off more often than not.

Here are a few other interesting posts about financial gambles that I spotted around the web:

My blogger friend Frugal recently wrote about a financial gamble that paid off. OK, it wasn't really a financial gamble, but she got some money in an unexpected way. It's nice when nice things happen.

Brip Blap talks about the differences between his old neighborhood and his new and about how taking some financial gambles and starting a business may have a nice pay-out.

Talk about the financial gamble of having kids. Clever Dude has a post (and video) about a man who is completely disregarding the cost of childcare. Some people should not be allowed to have kids.

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What's Wrong with Bond Ratings

There has been much talk in recent months about how bond rating agencies are at least partially to blame for the economic crisis. The argument is that these agencies have granted AAA bond ratings to bonds that belong on the junk pile, thus encouraging folks to take risks that they really should have avoided and inflating asset prices to unreasonable levels. Maybe that argument is sound and maybe it isn't, however there is something clearly wrong with the way bond ratings work and here it is: bond ratings are paid for by the sellers of bonds...

Yup, that's right. The good people who rate bonds get paid by the very people who stand to gain most from a favorable bond rating. This is so absurd that it boggles the mind and it goes back to my own thesis about the cause of the economic crisis: misaligned financial incentives. If you are buying a house, would you consider having the seller pick and pay for the home inspector? If you intend to sue someone, would you feel your interests are served if the defendant chooses the judge and pays for his salary? How about when you buy a used car. Would you feel comfortable taking the recommendation of the seller's mechanic? I sure wouldn't.

And yet, bond rating agencies are paid by the very people whose bonds they are required to rate. Since bond issuers get to pick their own rating agency, do you think rating agencies would risk losing business by protecting the interests of bond buyers rather than the interests of the ones who pay their bills? I don't think so.

Now here's where it gets REALLY fun. Last week I was listening to an NPR radio news item and heard the head of this or that rating agency describe his bond ratings as "the world's shortest editorial", thereby trying to invoke the first amendment and turn his agency's ratings into protected speech... how about that for a good deal? Give bullsh** recommendations, get paid princely sums for your supposedly objective statements, and make sure that investors who relied upon your due diligence cannot sue because all you did was express an opinion which is protected by the constitution... give me a break.

I'll get off my soap box now, but here's one good way in which the risk for future financial crises can be diminished: align the economic interests of all participants in the market. Make sure that the ones who are supposed to be honest brokers are indeed honest brokers, and those that are supposed to be neutral evaluators do not have a financial stake in the end result. It just seems like common sense, no?

As a complete aside, the same case can be made against political contributions by corporations, institutions and large private donors. While our politicians have an economic interest in listening to the special interests who fund their campaigns, we will never be able to get decent work out of Congress.

Here are a couple of other interesting posts about the economy:

All Financial Matters brings up a timely item: how can the administration tell how many jobs it is saving through the stimulus spending, if any? Yeah well, it can't. It's all about political parties and pundits playing the political game and looking for an edge. The better question to ask is, "are they doing the right thing". By and large, I think that the answer is "yes".

Frugal of My First Million has a gloomy view of the economy and complains about financial institutions paying back TARP money to escape government regulation of their compensation plans. I don't share his opinion about the banks. I think they are in a hurry to get out of TARP because Congress has changed the rules on them after they got into the program. And please remember that the government literally FORCED some of these institutions to take TARP money. On the other hand, it's too true that many of these institutions would have failed without the government. It's a difficult problem, but I for one think that the faster the government gets out of private sector business ownership, the better...

Finally, check out this post from Weakonomics about how credit card companies make money.

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