http://www.pearlmeyer.com/top10/Top10Trends.pdf
Perl Meyer & PartnersTrends & Issues
Staying One Step Ahead: The “New” Top Ten Issues in Executive Compensation
Perhaps the best motto for Compensation Committees these days is, “Be Prepared.” Simmering complaints about executive pay tend to come to a boil whenever the economy stumbles; and the past two proxy seasons of expanded disclosure have provided current critics with new ammunition. More than ever, Compensation Committee members can expect and should be prepared to respond in detail to questions about their oversight of executive pay programs.Among the biggest topics of attention:
See article here: http://www.pearlmeyer.com/top10/Top10Trends.pdf
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Wednesday, December 31, 2008
Again, YEA!!! Advisen Forecasts End Of Soft Market In Commercial Insurance Premiums Followed By A Gradual And Prolonged Hard Market >
INSURANCE NEWSCAST for Wednesday, 12/31/08 from
http://www.insurancebroadcasting.com/insurance-news-123108-9.htm
Advisen Forecasts End Of Soft Market In Commercial Insurance Premiums Followed By A Gradual And Prolonged Hard Market >
PRICE INCREASES TO VARY BY INSURANCE PRODUCT >
New York. December 30, 2008 – Advisen Ltd., the leading provider of information, analytics, and technology to the global commercial insurance industry, today released a report predicting that the commercial insurance premium market cycle is close to its bottom and that general commercial insurance prices will begin increasing by the fourth quarter of 2009 or the first quarter of 2010. Advisen research is based on its own industry-leading database of premium history and its database of the financial performance of 13 million companies.>
“In years past, insurance companies recouped underwriting losses with investment income, but in 2008 the combination of underwriting losses and material investment losses means a five-year soft market is coming to an end,” said David K. Bradford, Advisen Executive Vice President and Chief Knowledge Officer. “The global recession may delay the return of hard market conditions by keeping demand for insurance down, but once the hard market sets in, it is likely to last longer than was the case in recent cycles.>
“In previous hard markets, price increases attracted new capital investment to the market, and the increase in insurance supply led to short hard market cycles,” continued Bradford. “In the current economic environment, where credit markets are essentially frozen, capital to create new insurance and reinsurance capacity may be in short supply. With capital scarce, the coming hard market could be longer in duration than those of the past several decades.”>
The full report is available below and covers the impact on pricing of many factors including the AIG crisis, the global economic crisis, and how buyers of commercial insurance are reacting to the market changes.>
Notes to editors:>
Rights are granted for republication in part or in full. The author is available for further quotes or comments. Contact David Bradford on dbradford@advisen.com or +1.212.897.4776. >
About the author: >
Dave Bradford is a co-founder of Advisen and leads the Research and Editorial team. He is Advisen’s senior insurance industry analyst and editor-in-chief of Advisen’s various publications. Prior to founding Advisen in 2000, Dave spent twenty years in underwriting, marketing and strategy development roles in the reinsurance industry. Most recently he was a senior vice president with Swiss Re and led the Global & National Division of Swiss Re America. Prior to Swiss Re, Dave was a senior vice president with Reliance Reinsurance Corp. He began his career as an actuarial analyst with Allstate’s Assumed Reinsurance Division. >
About the reports: >
Primary research for these reports was conducted using the Advisen.com information and analysis platform and its underlying databases, including data from its subscribers and from vendors to create the leading source of premium history. Headquartered in New York with subscribers to its information and risk analytics platform in North America, Bermuda, Europe, Asia and the Pacific Rim, Advisen serves the global commercial insurance marketplace. Call Advisen on +1.212.897.4800 in NY or +44(0)20 7929 5929 for more information about the source data used to formulate this report or to study premiums by peer group (market sector, size of company, public/private, etc.) or e-mail us on info@advisen.com. >
About Advisen >
Advisen manages business information and market data for the commercial insurance industry and maintains critical risk analytics and time-saving workflow tools for over 530 industry leading firms. Through its work for the broadest customer base among information service providers, Advisen delivers actionable information and risk models at a fraction of the cost to have them built internally. Designed and evolved by risk and insurance experts, and used daily by more than 100,000 professionals, Advisen combines the industry’s deepest data sets with proprietary analytics and offers insight into risk and insurance that is not available on any other system. Advisen is headquartered in New York For more information, visit www.advisen.com or call +1.212.897.4800 in New York or +44(0)20.7929.5929 in London. >
December 30, 2008 >
The Hard Market is Coming (But Don’t Hold Your Breath) >
An Advisen Special Report >
Executive Summary >
A five-year soft market, fueled by chronic overcapacity, is coming to an end. Following two years of record profits, losses from both underwriting and investment activities are destroying excess insurance capacity, signaling that the bottom of the commercial insurance pricing cycle is near. >
Average rate levels for commercial insurance will level off by the second quarter of 2009 and will begin to creep higher beginning the fourth quarter of 2009 or the first quarter of 2010. However, a deepening global recession may delay the return of hard market conditions by suppressing demand for insurance. In the absence of major natural catastrophes, which could trigger skyrocketing premiums, the hard market will be more gradual, and also more prolonged, than has been the case in recent cycles. >
Economic recession and the commercial insurance pricing cycle >
The commercial insurance pricing cycle is a function of the law of supply-and-demand: when the supply of insurance – as measured by the capital held by insurers to support underwriting – grows faster than the growth in demand for insurance, rates fall. Between the fourth quarter of 2003 and the second quarter of 2008, capital to support underwriting grew rapidly, driven by underwriting profits and strong investment returns. The rapid accumulation of risk capital fueled competition, driving down rate levels. >
In mature economies such as the U.S., Canada and Western Europe, the demand for insurance grows roughly at the same pace as the growth in the overall economy. Until the collapse of the U.S. subprime mortgage market thrust the global economy into a recession, economic growth was robust, though the increase in insurance supply far outstripped the growth in insurance demand. >
The present economic crisis impacts both the supply of and the demand for commercial property & casualty insurance. On the supply side of the equation, plummeting stock markets, frozen credit markets and, in some cases, investments in “toxic” mortgage-backed assets, caused many insurers to post investment losses in the third quarter. These investment losses are on top of underwriting losses driven by five years of price cutting, higher than average catastrophe losses ($24.9 billion, higher than the full year totals for both 2006 and 2007), and reserves for directors and officers liability (D&O) and errors and omissions liability (E&O) claims resulting from the subprime mortgage meltdown and the subsequent credit crisis ($9.6 billion in ultimate losses over accident years 2007, 2008 and 2009, according to Advisen forecasts). Through nine months of 2008, the U.S. property & casualty industry's net income after taxes fell 85 percent to $7.3 billion according to A.M. Best. After-tax return on equity (return on surplus), was only 1.4 percent for the nine month period; down from 9.5 percent for the same period of 2007. Best projects the first full-year underwriting loss since 2005. >
Advisen estimated the property and casualty insurance industry was roughly $100 billion overcapitalized as of the end of 2007. In other words, policyholders’ surplus – statutory accounting terminology for the capital supporting underwriting operations – needed to be reduced by about $100 billion through losses, dividends, share buy-backs or other means to bring insurance supply in line with demand. U.S. policyholders’ surplus declined $36.8 billion, or 7.0 percent, for the 12 months ended September 30, 2008, according to A.M. Best. Consultancy Towers Perrin forecasts as much as an $80 billion decrease in surplus by the end of 2008. >
While $80 billion represents a significant chunk of the $100 billion in excess capacity – and moves the market much closer to the bottom of the soft market cycle – the demand side of the supply-and-demand equation also has changed since the end of 2007. According to the International Monetary Fund, the global economy is now in a recession, with growth projected at 2.2 percent for 2009, down from 3.7 percent projected for 2008. The IMF projects that advanced economies as a group will contract 0.3 percent, with the U.S. contracting 0.7 percent. >
As companies downsize, the demand for insurance not only decreases, it decreases at a pace faster than the contraction of the overall economy. While going without insurance is not an option for most companies, many will look for ways to slash their insurance bills. An obvious option is to raise retentions (though perhaps a short-sighted one in a soft market, when some policies are priced below cost). The use of captives and other alternative risk financing mechanisms will increase. More companies will gravitate to low-cost providers, even if it is necessary to loosen financial security criteria. These are typical responses to hard market conditions, but it is likely companies will resort to them even before the market turns as they are squeezed by a deteriorating economy. All these factors will help prolong the current soft market. >
Advisen forecasts that the present soft market will have a “soft landing” in the second quarter of 2009. In the absence of very large insured natural catastrophes, underwriting losses combined with anemic investment returns should begin to exert upward pressure on rates by the fourth quarter of 2009 or the first quarter of 2010. One or more large catastrophes could accelerate the process. Conversely, deeply deteriorating economic conditions could delay the turn in the market.>
The AIG effect >
“AIG has intensified its efforts to increase its market share, or at least preserve it,” complained Liberty Mutual Group chairman, president and CEO Edmund F. Kelly during a conference call with analysts. “In fact, it's fair to say they are doing some very stupid things in the market.” Kelly isn’t alone in his criticism of American International Insurance Group insurance companies. Senior executives from several other companies made similar observations to analysts. >
After narrowly averting bankruptcy in September, AIG has had to reassure nervous policyholders that the insurance operations are viable while fending off attacks by newly emboldened competitors. With an 11 percent market share, AIG is the largest commercial lines insurer in the United States. If the company were to slash premiums to retain market share, the short term impact would likely be an intensification of soft market conditions. However, based on a recent Advisen poll of 17 commercial lines brokers, AIG appears to be competing vigorously, but not irresponsibly. Brokers generally concurred that AIG should not be singled out for driving down rates – other insurers also are fueling the soft market. One broker commented that some insurers are so obsessed with winning AIG customers that they, not AIG, are more responsible for cutthroat competition. >
A weakened AIG battling for renewals could prolong soft market conditions in some competitive sectors. AIG is perceived by its competitors as vulnerable. As a result, competition for its clients will remain intense. This heightened level of competition may keep price levels in some segments of the commercial lines market depressed after economic factors indicate the market should be hardening. >
The coming hard market >
One or more very large catastrophe losses could trigger a sudden and sharp increase in insurance prices. If, however, catastrophe losses are mild-to-moderate in 2009, average commercial insurance prices will begin to slowly creep higher in the fourth quarter of 2009 or the first quarter of 2010. Not every line of business will increase at the same pace. Premiums already have increased for financial institution D&O and E&O, where claims are up sharply because of the meltdown of the subprime mortgage market and the ensuing credit crisis. The reinsurance market will firm up sooner than the overall primary insurance market, placing upward pressure on heavily reinsured lines such as excess liability. Workers compensation, which saw premiums fall steeply as a result of reforms in several large states in 2005 and 2006, has largely stabilized and is likely to see premiums begin to drift higher by mid-2009. Property insurance pricing will remain soft through 2009, with premiums in some catastrophe-prone regions, which experienced triple digit increases in many cases after the 2005 hurricanes, continuing to fall into 2010 if there are no major loss events. >
Typically, rising premiums attract new capacity to the insurance market. Business-friendly offshore domiciles – especially Bermuda – make it comparatively simple to quickly launch new insurance and reinsurance companies to take advantage of higher rates. Between 2000 and the end of 2003, for example, investors pumped over $20 billion into new companies in the U.S. and Bermuda formed specifically to capitalize on the perceived opportunities of a hardening market. Additionally, new forms of short-term capacity such as catastrophe bonds and reinsurance sidecars attract opportunistic investors that may not be interested in longer-term commitments of capital to traditional insurance companies. >
The influx of new capacity, though intended to take advantage of rising premiums, increases competition and eventually chokes the hard market. In the current economic environment, however, skittish investors, dysfunctional credit markets and deleveraged hedge funds may mean that much less capital will be available to fund new insurance and reinsurance companies or for investments in alternative sources of capacity. As a result, the coming hard market may last longer than has been typical of past cycles. >
This Advisen Special Report was written by David Bradford, Executive Vice President, 917-445-3088, dbradford@advisen.com >
Headquartered in New York with subscribers to its information and risk analytics platform in North America, Bermuda, Europe, Asia and the Pacific Rim, Advisen serves the global commercial insurance marketplace. Advisen’s research team headed by 25-year market professional David K. Bradford, assembles data from its subscribers and from vendors to create the leading source of premium history. Call Advisen on +1.212.897.4800 in NY or +44(0)20 7929 5929 for more information about the source data used to formulate this report or to analyze trends in premiums, limits and retentions by peer group (market sector, size of company, public/private, etc.), or e-mail us on info@advisen.com . >
Advisen Ltd. equals success for insurance professionals, driving growth and profitability through the broadest platform of analytics and information services. Designed and evolved by risk and insurance experts, and used daily by more than 100,000 professionals, Advisen combines the industry’s deepest data sets with proprietary analytics and applications that drive the risk and insurance lifecycle. Advisen is headquartered in New York with offices in London. For more information, visit http://www.advisen.com/ or call 212.897.4800. >
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
http://www.insurancebroadcasting.com/insurance-news-123108-9.htm
Advisen Forecasts End Of Soft Market In Commercial Insurance Premiums Followed By A Gradual And Prolonged Hard Market >
PRICE INCREASES TO VARY BY INSURANCE PRODUCT >
New York. December 30, 2008 – Advisen Ltd., the leading provider of information, analytics, and technology to the global commercial insurance industry, today released a report predicting that the commercial insurance premium market cycle is close to its bottom and that general commercial insurance prices will begin increasing by the fourth quarter of 2009 or the first quarter of 2010. Advisen research is based on its own industry-leading database of premium history and its database of the financial performance of 13 million companies.>
“In years past, insurance companies recouped underwriting losses with investment income, but in 2008 the combination of underwriting losses and material investment losses means a five-year soft market is coming to an end,” said David K. Bradford, Advisen Executive Vice President and Chief Knowledge Officer. “The global recession may delay the return of hard market conditions by keeping demand for insurance down, but once the hard market sets in, it is likely to last longer than was the case in recent cycles.>
“In previous hard markets, price increases attracted new capital investment to the market, and the increase in insurance supply led to short hard market cycles,” continued Bradford. “In the current economic environment, where credit markets are essentially frozen, capital to create new insurance and reinsurance capacity may be in short supply. With capital scarce, the coming hard market could be longer in duration than those of the past several decades.”>
The full report is available below and covers the impact on pricing of many factors including the AIG crisis, the global economic crisis, and how buyers of commercial insurance are reacting to the market changes.>
Notes to editors:>
Rights are granted for republication in part or in full. The author is available for further quotes or comments. Contact David Bradford on dbradford@advisen.com or +1.212.897.4776. >
About the author: >
Dave Bradford is a co-founder of Advisen and leads the Research and Editorial team. He is Advisen’s senior insurance industry analyst and editor-in-chief of Advisen’s various publications. Prior to founding Advisen in 2000, Dave spent twenty years in underwriting, marketing and strategy development roles in the reinsurance industry. Most recently he was a senior vice president with Swiss Re and led the Global & National Division of Swiss Re America. Prior to Swiss Re, Dave was a senior vice president with Reliance Reinsurance Corp. He began his career as an actuarial analyst with Allstate’s Assumed Reinsurance Division. >
About the reports: >
Primary research for these reports was conducted using the Advisen.com information and analysis platform and its underlying databases, including data from its subscribers and from vendors to create the leading source of premium history. Headquartered in New York with subscribers to its information and risk analytics platform in North America, Bermuda, Europe, Asia and the Pacific Rim, Advisen serves the global commercial insurance marketplace. Call Advisen on +1.212.897.4800 in NY or +44(0)20 7929 5929 for more information about the source data used to formulate this report or to study premiums by peer group (market sector, size of company, public/private, etc.) or e-mail us on info@advisen.com. >
About Advisen >
Advisen manages business information and market data for the commercial insurance industry and maintains critical risk analytics and time-saving workflow tools for over 530 industry leading firms. Through its work for the broadest customer base among information service providers, Advisen delivers actionable information and risk models at a fraction of the cost to have them built internally. Designed and evolved by risk and insurance experts, and used daily by more than 100,000 professionals, Advisen combines the industry’s deepest data sets with proprietary analytics and offers insight into risk and insurance that is not available on any other system. Advisen is headquartered in New York For more information, visit www.advisen.com or call +1.212.897.4800 in New York or +44(0)20.7929.5929 in London. >
December 30, 2008 >
The Hard Market is Coming (But Don’t Hold Your Breath) >
An Advisen Special Report >
Executive Summary >
A five-year soft market, fueled by chronic overcapacity, is coming to an end. Following two years of record profits, losses from both underwriting and investment activities are destroying excess insurance capacity, signaling that the bottom of the commercial insurance pricing cycle is near. >
Average rate levels for commercial insurance will level off by the second quarter of 2009 and will begin to creep higher beginning the fourth quarter of 2009 or the first quarter of 2010. However, a deepening global recession may delay the return of hard market conditions by suppressing demand for insurance. In the absence of major natural catastrophes, which could trigger skyrocketing premiums, the hard market will be more gradual, and also more prolonged, than has been the case in recent cycles. >
Economic recession and the commercial insurance pricing cycle >
The commercial insurance pricing cycle is a function of the law of supply-and-demand: when the supply of insurance – as measured by the capital held by insurers to support underwriting – grows faster than the growth in demand for insurance, rates fall. Between the fourth quarter of 2003 and the second quarter of 2008, capital to support underwriting grew rapidly, driven by underwriting profits and strong investment returns. The rapid accumulation of risk capital fueled competition, driving down rate levels. >
In mature economies such as the U.S., Canada and Western Europe, the demand for insurance grows roughly at the same pace as the growth in the overall economy. Until the collapse of the U.S. subprime mortgage market thrust the global economy into a recession, economic growth was robust, though the increase in insurance supply far outstripped the growth in insurance demand. >
The present economic crisis impacts both the supply of and the demand for commercial property & casualty insurance. On the supply side of the equation, plummeting stock markets, frozen credit markets and, in some cases, investments in “toxic” mortgage-backed assets, caused many insurers to post investment losses in the third quarter. These investment losses are on top of underwriting losses driven by five years of price cutting, higher than average catastrophe losses ($24.9 billion, higher than the full year totals for both 2006 and 2007), and reserves for directors and officers liability (D&O) and errors and omissions liability (E&O) claims resulting from the subprime mortgage meltdown and the subsequent credit crisis ($9.6 billion in ultimate losses over accident years 2007, 2008 and 2009, according to Advisen forecasts). Through nine months of 2008, the U.S. property & casualty industry's net income after taxes fell 85 percent to $7.3 billion according to A.M. Best. After-tax return on equity (return on surplus), was only 1.4 percent for the nine month period; down from 9.5 percent for the same period of 2007. Best projects the first full-year underwriting loss since 2005. >
Advisen estimated the property and casualty insurance industry was roughly $100 billion overcapitalized as of the end of 2007. In other words, policyholders’ surplus – statutory accounting terminology for the capital supporting underwriting operations – needed to be reduced by about $100 billion through losses, dividends, share buy-backs or other means to bring insurance supply in line with demand. U.S. policyholders’ surplus declined $36.8 billion, or 7.0 percent, for the 12 months ended September 30, 2008, according to A.M. Best. Consultancy Towers Perrin forecasts as much as an $80 billion decrease in surplus by the end of 2008. >
While $80 billion represents a significant chunk of the $100 billion in excess capacity – and moves the market much closer to the bottom of the soft market cycle – the demand side of the supply-and-demand equation also has changed since the end of 2007. According to the International Monetary Fund, the global economy is now in a recession, with growth projected at 2.2 percent for 2009, down from 3.7 percent projected for 2008. The IMF projects that advanced economies as a group will contract 0.3 percent, with the U.S. contracting 0.7 percent. >
As companies downsize, the demand for insurance not only decreases, it decreases at a pace faster than the contraction of the overall economy. While going without insurance is not an option for most companies, many will look for ways to slash their insurance bills. An obvious option is to raise retentions (though perhaps a short-sighted one in a soft market, when some policies are priced below cost). The use of captives and other alternative risk financing mechanisms will increase. More companies will gravitate to low-cost providers, even if it is necessary to loosen financial security criteria. These are typical responses to hard market conditions, but it is likely companies will resort to them even before the market turns as they are squeezed by a deteriorating economy. All these factors will help prolong the current soft market. >
Advisen forecasts that the present soft market will have a “soft landing” in the second quarter of 2009. In the absence of very large insured natural catastrophes, underwriting losses combined with anemic investment returns should begin to exert upward pressure on rates by the fourth quarter of 2009 or the first quarter of 2010. One or more large catastrophes could accelerate the process. Conversely, deeply deteriorating economic conditions could delay the turn in the market.>
The AIG effect >
“AIG has intensified its efforts to increase its market share, or at least preserve it,” complained Liberty Mutual Group chairman, president and CEO Edmund F. Kelly during a conference call with analysts. “In fact, it's fair to say they are doing some very stupid things in the market.” Kelly isn’t alone in his criticism of American International Insurance Group insurance companies. Senior executives from several other companies made similar observations to analysts. >
After narrowly averting bankruptcy in September, AIG has had to reassure nervous policyholders that the insurance operations are viable while fending off attacks by newly emboldened competitors. With an 11 percent market share, AIG is the largest commercial lines insurer in the United States. If the company were to slash premiums to retain market share, the short term impact would likely be an intensification of soft market conditions. However, based on a recent Advisen poll of 17 commercial lines brokers, AIG appears to be competing vigorously, but not irresponsibly. Brokers generally concurred that AIG should not be singled out for driving down rates – other insurers also are fueling the soft market. One broker commented that some insurers are so obsessed with winning AIG customers that they, not AIG, are more responsible for cutthroat competition. >
A weakened AIG battling for renewals could prolong soft market conditions in some competitive sectors. AIG is perceived by its competitors as vulnerable. As a result, competition for its clients will remain intense. This heightened level of competition may keep price levels in some segments of the commercial lines market depressed after economic factors indicate the market should be hardening. >
The coming hard market >
One or more very large catastrophe losses could trigger a sudden and sharp increase in insurance prices. If, however, catastrophe losses are mild-to-moderate in 2009, average commercial insurance prices will begin to slowly creep higher in the fourth quarter of 2009 or the first quarter of 2010. Not every line of business will increase at the same pace. Premiums already have increased for financial institution D&O and E&O, where claims are up sharply because of the meltdown of the subprime mortgage market and the ensuing credit crisis. The reinsurance market will firm up sooner than the overall primary insurance market, placing upward pressure on heavily reinsured lines such as excess liability. Workers compensation, which saw premiums fall steeply as a result of reforms in several large states in 2005 and 2006, has largely stabilized and is likely to see premiums begin to drift higher by mid-2009. Property insurance pricing will remain soft through 2009, with premiums in some catastrophe-prone regions, which experienced triple digit increases in many cases after the 2005 hurricanes, continuing to fall into 2010 if there are no major loss events. >
Typically, rising premiums attract new capacity to the insurance market. Business-friendly offshore domiciles – especially Bermuda – make it comparatively simple to quickly launch new insurance and reinsurance companies to take advantage of higher rates. Between 2000 and the end of 2003, for example, investors pumped over $20 billion into new companies in the U.S. and Bermuda formed specifically to capitalize on the perceived opportunities of a hardening market. Additionally, new forms of short-term capacity such as catastrophe bonds and reinsurance sidecars attract opportunistic investors that may not be interested in longer-term commitments of capital to traditional insurance companies. >
The influx of new capacity, though intended to take advantage of rising premiums, increases competition and eventually chokes the hard market. In the current economic environment, however, skittish investors, dysfunctional credit markets and deleveraged hedge funds may mean that much less capital will be available to fund new insurance and reinsurance companies or for investments in alternative sources of capacity. As a result, the coming hard market may last longer than has been typical of past cycles. >
This Advisen Special Report was written by David Bradford, Executive Vice President, 917-445-3088, dbradford@advisen.com >
Headquartered in New York with subscribers to its information and risk analytics platform in North America, Bermuda, Europe, Asia and the Pacific Rim, Advisen serves the global commercial insurance marketplace. Advisen’s research team headed by 25-year market professional David K. Bradford, assembles data from its subscribers and from vendors to create the leading source of premium history. Call Advisen on +1.212.897.4800 in NY or +44(0)20 7929 5929 for more information about the source data used to formulate this report or to analyze trends in premiums, limits and retentions by peer group (market sector, size of company, public/private, etc.), or e-mail us on info@advisen.com . >
Advisen Ltd. equals success for insurance professionals, driving growth and profitability through the broadest platform of analytics and information services. Designed and evolved by risk and insurance experts, and used daily by more than 100,000 professionals, Advisen combines the industry’s deepest data sets with proprietary analytics and applications that drive the risk and insurance lifecycle. Advisen is headquartered in New York with offices in London. For more information, visit http://www.advisen.com/ or call 212.897.4800. >
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Tuesday, December 30, 2008
YEA!!! "Hard market will arrive next year: Advisen"
http://www.businessinsurance.com/cgi-bin/news.pl?newsId=14886
Business Insurance
Hard market will arrive next year: Advisen >
By Sally RobertsDec. 30, 2008>
Underwriting losses and anemic investment returns are putting pressure on rates, and absent a major catastrophe, insurance buyers should expect to start paying more for their commercial insurance beginning in the fourth quarter of 2009 or first quarter of 2010, according to a report released Tuesday by Advisen Ltd.
And while the global recession may delay the onset of the hard market by keeping insurance demand down, once that market sets in, it's likely to last longer than normal, David K. Bradford, New York-based Advisen's executive vp and chief knowledge officer, said in a statement. >
"In previous hard markets, price increases attracted new capital investment to the market, and the increase in insurance supply led to short hard market cycles," Mr. Bradford said. "In the current economic environment, where credit markets are essentially frozen, capital to create new insurance and reinsurance capacity may be in short supply." >
Advisen notes in its report that embattled insurance giant American International Group Inc. should not be singled out for driving rates down and prolonging soft market conditions, despite assertions to the contrary by some of AIG's competitors—assertions AIG has denied.>
According to an Advisen poll of 17 commercial lines brokers, AIG "appears to be competing vigorously, but not irresponsibly," Advisen said. One polled broker, Advisen noted, said that "some insurers are so obsessed with winning AIG customers that they, not AIG, are more responsible for cutthroat competition." >
As the hard market settles in, not every line of business will increase in price at the same pace, according to Advisen. The reinsurance market, for example, will firm up sooner than the overall primary market and will place upward pressure on heavily reinsured lines such as excess casualty. >
Property insurance pricing, on the other hand, will remain soft through 2009, with premiums in some catastrophe-prone areas continuing to fall into 2010 absent major losses, Advisen predicts. >
Premiums have already increased for financial institution directors and officers and errors and omissions liability coverages as a result of the subprime mortgage meltdown and ensuing credit crisis, Advisen said. And workers compensation premiums, which have largely stabilized as a result of reforms in several large states in 2005 and 2006, are likely to begin to edge higher by mid-2009. >
Copies of the full report can be obtained by e-mailing info@advisen.com.
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Business Insurance
Hard market will arrive next year: Advisen >
By Sally RobertsDec. 30, 2008>
Underwriting losses and anemic investment returns are putting pressure on rates, and absent a major catastrophe, insurance buyers should expect to start paying more for their commercial insurance beginning in the fourth quarter of 2009 or first quarter of 2010, according to a report released Tuesday by Advisen Ltd.
And while the global recession may delay the onset of the hard market by keeping insurance demand down, once that market sets in, it's likely to last longer than normal, David K. Bradford, New York-based Advisen's executive vp and chief knowledge officer, said in a statement. >
"In previous hard markets, price increases attracted new capital investment to the market, and the increase in insurance supply led to short hard market cycles," Mr. Bradford said. "In the current economic environment, where credit markets are essentially frozen, capital to create new insurance and reinsurance capacity may be in short supply." >
Advisen notes in its report that embattled insurance giant American International Group Inc. should not be singled out for driving rates down and prolonging soft market conditions, despite assertions to the contrary by some of AIG's competitors—assertions AIG has denied.>
According to an Advisen poll of 17 commercial lines brokers, AIG "appears to be competing vigorously, but not irresponsibly," Advisen said. One polled broker, Advisen noted, said that "some insurers are so obsessed with winning AIG customers that they, not AIG, are more responsible for cutthroat competition." >
As the hard market settles in, not every line of business will increase in price at the same pace, according to Advisen. The reinsurance market, for example, will firm up sooner than the overall primary market and will place upward pressure on heavily reinsured lines such as excess casualty. >
Property insurance pricing, on the other hand, will remain soft through 2009, with premiums in some catastrophe-prone areas continuing to fall into 2010 absent major losses, Advisen predicts. >
Premiums have already increased for financial institution directors and officers and errors and omissions liability coverages as a result of the subprime mortgage meltdown and ensuing credit crisis, Advisen said. And workers compensation premiums, which have largely stabilized as a result of reforms in several large states in 2005 and 2006, are likely to begin to edge higher by mid-2009. >
Copies of the full report can be obtained by e-mailing info@advisen.com.
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
How our expectations hugely influence our decisions, and ultimately, our experience
http://www.sciam.com/podcast/episode.cfm?id=great-expectations-for-2009-08-12-31
Scientific American>
Making decisions for 2009? …[How our expectations hugely influence our decisions, and ultimately, our experience] >
Multiple experiments by Duke University professor Dan Ariely reveal how our expectations hugely influence our decisions, and ultimately, our experiences. Christie Nicholson reports.>
Well maybe consider Duke professor Dan Ariely’s book, Predictably Irrational in which he describes how our expectations can hugely affect our decisions. >
At MIT, he and two colleagues had several hundred students try two different pints of beer. One was Budweiser and the other was Budweiser, but with balsamic vinegar added. >
Students who weren’t told about the “secret ingredient,” vastly preferred the balsamic beer. But those who were informed before tasting the beer, hated it. >
If people think up front that something might be distasteful, Ariely argues, the odds are high that they’ll experience it negatively, no matter how intrinsically good it is. >
But can expectations change the physiology of our experience? >
In a second experiment participants were told about the vinegar after they tasted the beer. If knowledge of the vinegar is merely information, then our perception should be the same regardless of when we get that information. >
But this group loved the beer just as much as those who never heard about the vinegar. >
So our expectations can reshape our sensory perceptions. Then, should you have zero expectations for the future? Not necessarily. Maybe just expect great things in 2009. After 2008, it can’t hurt, right? >
—Christie Nicholson
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Scientific American>
Making decisions for 2009? …[How our expectations hugely influence our decisions, and ultimately, our experience] >
Multiple experiments by Duke University professor Dan Ariely reveal how our expectations hugely influence our decisions, and ultimately, our experiences. Christie Nicholson reports.>
Well maybe consider Duke professor Dan Ariely’s book, Predictably Irrational in which he describes how our expectations can hugely affect our decisions. >
At MIT, he and two colleagues had several hundred students try two different pints of beer. One was Budweiser and the other was Budweiser, but with balsamic vinegar added. >
Students who weren’t told about the “secret ingredient,” vastly preferred the balsamic beer. But those who were informed before tasting the beer, hated it. >
If people think up front that something might be distasteful, Ariely argues, the odds are high that they’ll experience it negatively, no matter how intrinsically good it is. >
But can expectations change the physiology of our experience? >
In a second experiment participants were told about the vinegar after they tasted the beer. If knowledge of the vinegar is merely information, then our perception should be the same regardless of when we get that information. >
But this group loved the beer just as much as those who never heard about the vinegar. >
So our expectations can reshape our sensory perceptions. Then, should you have zero expectations for the future? Not necessarily. Maybe just expect great things in 2009. After 2008, it can’t hurt, right? >
—Christie Nicholson
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
How to Fight Fairly in Marriage
http://ezinearticles.com/?How-to-Fight-Fairly-in-Marriage&id=350434
How to Fight Fairly in Marriage
By George Wood >
How To Fighting Fairly In Marriage >
One of the most important skills you need learn to keep your marriage healthy and strong is fighting fairly. Fighting can happen in all marriages, not only in bad marriages. Researchers estimate that 25% are happy, 50% will never be happy without therapy. 30% of marriages are considered to be empty and having only a little love or joy. 25% of marriages could really be happy if they would communicate better and if they learned how to resolve conflict. >
This latter of 25% is the one that should be focused on. The difference between a bad fight or a bad marriage and a bad fight or a good marriage is learning to fight fair. You can have an overall good marriage even you have a bad fight. Actually, couples who fight in a productive way and end the fight right, report more marital satisfaction. In two words, fight fairly is what separates the couples who fight and make up from the ones who fight and do not. >
As it follows, seven tips for fighting fairly in a marriage are presented:.
1. Fair fighting involves focusing on the behavior not the person.>
2. Direct requests are also used in a fair fighting couple. They ask if they want their partner to behave differently. This way the whole idea would be exposed clearly. For example, instead of saying I need you to change you can say Please place your dishes in the sink from now on.>
3. If you want a fair fight, limit your focus in arguments. Instead of kitchen sinking an argument (meaning when a person is complaining about everything at the same time, and throw in the kitchen sink for good measure) you can focus on one issue at a time. >
4. Healthy respect and good nonverbal communication are maintained by fair fighting couples. A well known marital researcher at the University of Washington, John Gottman, has highlighted the importance of good nonverbal marital communication, and has identified four behaviors leading to relationship distress. Contempt is one of these behaviors. Non-verbal contempt (eye-rolling, avoiding eye-contact, shaking their heads) can be a cause for relationship distress if this shows up in a couple. >
5. The end of a fight is allowed by fair fighting couples. Letting the fight be over when it is done with it, is one important element of fighting fairly. This way is easier to forgive if not to forget. Just to prove a point, they do not bring up old issues again and again. This way the couples take the chance to make up and reconnect at the first opportunity. >
6. It is recommended that in a fair fight, couples discuss issues sooner rather than later, because it is easier to talk about a small issue, before it becomes too big and overwhelming or leads to extreme resentment. >
7. The couples, in a fair fight should focus on winning in the relationship not on winning the fight for them just to prove they are right. They must remember that they are allies rather than enemies, and they must remember that they are on the same team and working on the same goals. Instead of focusing on their personal ego, they should rather focus on keeping the relationship as their main focus. >
The skill of fair fighting can be learned. It is likely that fewer marriages would end in divorce if more people learned to do it. It is a true fact that all marriages will have fights, but it matters how you handle each fight, and this will determine whether your marriage is a happy or unhappy one. >
Always remember this: Success in marriage does not come merely through finding the
right mate, but through being the right mate. – Barnett R. Brickner
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
How to Fight Fairly in Marriage
By George Wood >
How To Fighting Fairly In Marriage >
One of the most important skills you need learn to keep your marriage healthy and strong is fighting fairly. Fighting can happen in all marriages, not only in bad marriages. Researchers estimate that 25% are happy, 50% will never be happy without therapy. 30% of marriages are considered to be empty and having only a little love or joy. 25% of marriages could really be happy if they would communicate better and if they learned how to resolve conflict. >
This latter of 25% is the one that should be focused on. The difference between a bad fight or a bad marriage and a bad fight or a good marriage is learning to fight fair. You can have an overall good marriage even you have a bad fight. Actually, couples who fight in a productive way and end the fight right, report more marital satisfaction. In two words, fight fairly is what separates the couples who fight and make up from the ones who fight and do not. >
As it follows, seven tips for fighting fairly in a marriage are presented:.
1. Fair fighting involves focusing on the behavior not the person.>
2. Direct requests are also used in a fair fighting couple. They ask if they want their partner to behave differently. This way the whole idea would be exposed clearly. For example, instead of saying I need you to change you can say Please place your dishes in the sink from now on.>
3. If you want a fair fight, limit your focus in arguments. Instead of kitchen sinking an argument (meaning when a person is complaining about everything at the same time, and throw in the kitchen sink for good measure) you can focus on one issue at a time. >
4. Healthy respect and good nonverbal communication are maintained by fair fighting couples. A well known marital researcher at the University of Washington, John Gottman, has highlighted the importance of good nonverbal marital communication, and has identified four behaviors leading to relationship distress. Contempt is one of these behaviors. Non-verbal contempt (eye-rolling, avoiding eye-contact, shaking their heads) can be a cause for relationship distress if this shows up in a couple. >
5. The end of a fight is allowed by fair fighting couples. Letting the fight be over when it is done with it, is one important element of fighting fairly. This way is easier to forgive if not to forget. Just to prove a point, they do not bring up old issues again and again. This way the couples take the chance to make up and reconnect at the first opportunity. >
6. It is recommended that in a fair fight, couples discuss issues sooner rather than later, because it is easier to talk about a small issue, before it becomes too big and overwhelming or leads to extreme resentment. >
7. The couples, in a fair fight should focus on winning in the relationship not on winning the fight for them just to prove they are right. They must remember that they are allies rather than enemies, and they must remember that they are on the same team and working on the same goals. Instead of focusing on their personal ego, they should rather focus on keeping the relationship as their main focus. >
The skill of fair fighting can be learned. It is likely that fewer marriages would end in divorce if more people learned to do it. It is a true fact that all marriages will have fights, but it matters how you handle each fight, and this will determine whether your marriage is a happy or unhappy one. >
Always remember this: Success in marriage does not come merely through finding the
right mate, but through being the right mate. – Barnett R. Brickner
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Dorthy.com Survey Reveals Findings Around New Year`s Resolutions
Dorthy.com Survey Reveals Findings Around New Year`s Resolutions
Mon Dec 29, 2008 8:30am EST>
Poll Reveals Men More Likely Than Women to Keep Their New Year`s Resolutions> NEW YORK--(Business Wire)>
A study commissioned by Dorthy.com and conducted by Harris Interactive® reveals that, while women are more likely than men to make New Year`s resolutions (74% of women versus 58% of men) among adults who have ever made a resolution, men are more likely than women to always or often keep them (22% of men versus 14% of women). Men who have ever made a New Year`s resolution are also more likely than their female counterparts to always or often share their resolutions with their spouses (41% of men versus 29% of women). >
Conducted in November, the survey polled more than 2,000 adults in the U.S. ages 18+, asking how the U.S. population sets and achieves their New Year`s resolutions. >
The study also revealed the following about dreams and New Year`s resolutions: >
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Mon Dec 29, 2008 8:30am EST>
Poll Reveals Men More Likely Than Women to Keep Their New Year`s Resolutions> NEW YORK--(Business Wire)>
A study commissioned by Dorthy.com and conducted by Harris Interactive® reveals that, while women are more likely than men to make New Year`s resolutions (74% of women versus 58% of men) among adults who have ever made a resolution, men are more likely than women to always or often keep them (22% of men versus 14% of women). Men who have ever made a New Year`s resolution are also more likely than their female counterparts to always or often share their resolutions with their spouses (41% of men versus 29% of women). >
Conducted in November, the survey polled more than 2,000 adults in the U.S. ages 18+, asking how the U.S. population sets and achieves their New Year`s resolutions. >
The study also revealed the following about dreams and New Year`s resolutions: >
- * 66% of adults have ever made a New Year`s resolution but only 17% always or often keep them >
- * Men and women who have dreams in life cited financial limitations as the number one obstacle (36%) preventing them from achieving their dreams, followed by lack of time and/or motivation (14%) >
- * 33% of adults who have dreams in life have used online tools such as search engines and social networking sites to help them achieve their dreams >
"My own research shows that 50 percent of individual differences in happiness are governed by genes, 10 percent by life circumstances, and the remaining 40 percent by what we do and how we think," says Sonja Lyubomirsky, professor of Psychology at UC Riverside and author of the How of Happiness. "The secret to happiness lies in that 40 percent. If we observe genuinely happy people, we find that they do not just sit around being contented. They make things happen. They pursue new understandings, seek new achievements, and control their thoughts andfeelings." >
Dorthy.com is a destination site that empowers people to achieve their dreams - which can be everything from running a marathon to buying a first home. By pulling not only demographic data but also psychographic data, Dorthy.com is a new kind of site that filters and focuses all the information on the web around a user`s interests providing hyper- targeted content and connections based on each users ideals and philosophies. >
"The New Year is often the one time of year when people start thinking about their goals and dreams, only to end up back where they started the following year," says Jordan English Gross, COO and founder, Dorthy.com. "Dorthy.com was founded on the belief that we all have dreams, but may not know how to make them happen. We are here to help people discover what is possible and ultimately achieve whatever their interest is - big or small." >
About the Survey>
The New Year`s Resolutions survey was conducted online within the United States by Harris Interactive on behalf of Dorthy.com between October 31 and November 4, 2008, among 2,256 U.S. adults ages 18+, of whom 1,495 have ever made a New Year`s resolution. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables, please contact Diane.Hepps@bitepr.com. >
About Dorthy.com > Dorthy.com is a new destination site that provides people with the relevant content, connections, and tools needed to achieve their dreams. The site filters and focuses the web around a user`s interests providing targeted information based on their distinct ideals and philosophies. Visit http://www.dorthy.com to sign up for the exclusive private beta. >
About Harris Interactive > Harris Interactive is a global leader in custom market research. With a long and rich history in multimodal research that is powered by our science and technology, we assist clients in achieving business results. Harris Interactive serves clients globally through our North American, European and Asian offices and a network of independent market research firms. For more information, please visit www.harrisinteractive.com. >
Bite CommunicationsDiane Hepps, 212-857-9385diane.hepps@bitepr.com > Copyright Business Wire 2008
***********************************************************************This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Monday, December 29, 2008
The Conference Board Finds Changes Underway in CEO Compensation
http://www.conference-board.org/utilities/pressDetail.cfm?press_ID=3547
Press Release, The Conference Board 12/24/2008 >
Press Release / News >
The Conference Board Finds Changes Underway in CEO Compensation >
Dec. 24, 2008>
While the recent catastrophic events in the U.S. financial markets will most certainly dramatically affect CEO compensation reported in 2009, The Conference Board Top Executive Compensation report released today shows that changes are already underway. >
Key findings of the report include:>
Compensation mix is reallocated towards stock. Almost all industries show a reallocation of compensation towards stock and away from total cash compensation and stock options. In financial services (non-banks), for example, the average percent of total compensation delivered in non-equity incentives fell by 2.62 percentage points (from 24.19 to 21.57). >
Cash may be losing share-but the median CEO still earns more of it. Median cash compensation increased in more than two thirds of the industries studied (as did total compensation overall). The largest median gainer in cash compensation is insurance (up by 34.39 percent to $1,227,371). The only notable negative is construction, an outlier showing a 22.36 percent decrease. >
Food and tobacco executives are the top earners. Among the 22 industries represented, food and tobacco shows the highest median CEO total compensation. It tops the list with $6.34 million in median total compensation, and $2.7 million in median total cash compensation, followed by utilities, insurance, and financial services (non-banks). >
CEOs already have plenty of "skin in the game." Of the largest 10 percent of companies in the sample, the median CEO holds almost 100 times (99.97 percent) of his/her salary in total stock and stock options holdings in the company. Across industry, the largest median multiple (94.44) is seen in the financial services industry (non-banks), the smallest is commercial banks (23.31). >
"Companies must assume their top executives' compensation will come under greater scrutiny from within >and without," says Linda Barrington, Research Director, The Conference Board. "The financial market crisis and U.S. recession have contributed to eroding public trust in business leadership.">
Certainly, from a macro-perspective, median CEO compensation should fall during a recession if such compensation is based on U.S. revenue performance. Since the current recession did not start until December 2007, it won't be until next year's proxy data that this hypothesis can be best tested. "Whether or not this year's upward trend in cash compensation continues will bear watching in 2009 when the data reflecting a year of economic downturn are available," adds Kevin Hallock, co-author of the report and Professor, IRL School, Cornell University. >
Using data reported from firm proxies as of June 2008, The Conference Board 2008 Top Executive Compensation Report provides extensive analysis of median compensation by industry, revenue, and compensation type, for CEOs and companies' five highest-paid executives.>
Defining Terms — Elements of Compensation >
To provide a consistent view of total compensation, compensation data were compiled from proxy statement tables filed as of June 2008 for fiscal year 2007. The terms used in this report are defined as follows:>
Cash Compensation — Cash compensation is the sum of annualized salary, bonus, and non-equity incentive compensation. These data are from the Summary Compensation Table. >
Total Compensation — For this report, "total compensation" was calculated using the sum of the individual elements from a combination of tables as described below, not the "Total Compensation" column from the Summary Compensation Table. Total compensation is the sum of annualized salary, bonus, non-equity incentive compensation, the reported grant date present value of options, the value of stock awards, the change in pension value and earnings on non-qualified deferred compensation, and all other compensation. >
Salary — The annualized salary, regardless or whether paid or deferred, as reported in the proxy. Salary is reported in the Summary Compensation Table "Salary" column (c).>
Bonus — Cash bonus awards, regardless of whether paid or deferred, as reported in the proxy that are discretionary or subjectively determined; bonuses that are not based on pre-established, substantially uncertain criteria; bonuses that are guaranteed and not strictly performance-based (see non-equity incentive compensation for strict performance-based compensation). For example, "bonus" includes sign-on bonuses which are paid before performance can be judged. Any award paid above and beyond salary and formula-based incentive compensation is defined as "bonus." Bonus payments are reported in the Summary Compensation Table "Bonus" column (d).>
Non-Equity Incentive Compensation — Short-term and long-term awards (cash-not denominated in stock) that are based on pre-established, performance-based criteria where the outcome is substantially uncertain at the time established. The SEC requires companies to report all performance-based cash awards, both long-term and short-term, in the year in which they are paid. These payments are reported in the Summary Compensation Table "Non-Equity Incentive" column (g). This is payment above and beyond salary and is awarded based on performance against pre-determined criteria. While not called "bonus," it is a performance based award paid in addition to both salary and "bonus" as previously defined. (Confusion may arise for the layperson because in common lexicon non-equity incentive is often informally referred to as a bonus, which it technically is not.) >
The Value of Stock Options Granted — This is the reported grant date present value of options (from the "Grant of Plan-Based Awards Table" of the proxy statement). >
The Value of Stock Awards — This is the value as reported in the Summary Compensation Table "Stock Awards"column (e). >
Change in Pension Value and Non Qualified Deferred Compensation Earnings — The amounts reported represent the actuarily determined change in the value of defined benefit pensions and nonqualified deferred compensation earnings, including supplemental plans. This is reported in Summary Compensation Table "Change in Pension Value and Non Qualified Deferred Compensation Earnings" column (h). >
All Other Compensation — Incremental cost of perquisites ($10,000 or more), tax gross-ups, company contributions to qualified and non-qualified defined contribution plans, preferential stock purchase, relocation, etc. Reported in the Summary Compensation Table "All Other Compensation" column (i). >
Data Source >
The data used in this report were taken from the Summary Compensation Table and the Grant of Plan-Based Awards Table in proxies filed as of June 2008 for fiscal year 2007. As stock is treated differently according to the requirements of each proxy table it is important to note that the value of option awards was taken from the "Grant of Plan-based Awards Table" to capture the company's estimate of the present value of options granted to the executive at the time of the grant. The annualized salary, bonus, non-equity incentive compensation, value of stock awards, change in pension value and earnings on non-qualified deferred compensation, and value of all other compensation were taken from the Summary Compensation Table. All underlying data used for this analysis were provided by Salary.com. >
Source: Top Executive Compensation in 2008Report #1438-08-RR, The Conference Board >
Read this report > http://www.conference-board.org/publications/describe.cfm?id=1583 >
For further information contact: > Frank Tortoriciat (1) 212 339 0231.f.tortorici@conference-board.orghome
/ about us / press / contact us / help / site map
Copyright©2008 - The Conference Board, Inc. All rights reserved.The Conference Board torch and logo are registered trademarks of The Conference Board, Inc.terms of use privacy policy
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Press Release, The Conference Board 12/24/2008 >
Press Release / News >
The Conference Board Finds Changes Underway in CEO Compensation >
Dec. 24, 2008>
While the recent catastrophic events in the U.S. financial markets will most certainly dramatically affect CEO compensation reported in 2009, The Conference Board Top Executive Compensation report released today shows that changes are already underway. >
Key findings of the report include:>
Compensation mix is reallocated towards stock. Almost all industries show a reallocation of compensation towards stock and away from total cash compensation and stock options. In financial services (non-banks), for example, the average percent of total compensation delivered in non-equity incentives fell by 2.62 percentage points (from 24.19 to 21.57). >
Cash may be losing share-but the median CEO still earns more of it. Median cash compensation increased in more than two thirds of the industries studied (as did total compensation overall). The largest median gainer in cash compensation is insurance (up by 34.39 percent to $1,227,371). The only notable negative is construction, an outlier showing a 22.36 percent decrease. >
Food and tobacco executives are the top earners. Among the 22 industries represented, food and tobacco shows the highest median CEO total compensation. It tops the list with $6.34 million in median total compensation, and $2.7 million in median total cash compensation, followed by utilities, insurance, and financial services (non-banks). >
CEOs already have plenty of "skin in the game." Of the largest 10 percent of companies in the sample, the median CEO holds almost 100 times (99.97 percent) of his/her salary in total stock and stock options holdings in the company. Across industry, the largest median multiple (94.44) is seen in the financial services industry (non-banks), the smallest is commercial banks (23.31). >
"Companies must assume their top executives' compensation will come under greater scrutiny from within >and without," says Linda Barrington, Research Director, The Conference Board. "The financial market crisis and U.S. recession have contributed to eroding public trust in business leadership.">
Certainly, from a macro-perspective, median CEO compensation should fall during a recession if such compensation is based on U.S. revenue performance. Since the current recession did not start until December 2007, it won't be until next year's proxy data that this hypothesis can be best tested. "Whether or not this year's upward trend in cash compensation continues will bear watching in 2009 when the data reflecting a year of economic downturn are available," adds Kevin Hallock, co-author of the report and Professor, IRL School, Cornell University. >
Using data reported from firm proxies as of June 2008, The Conference Board 2008 Top Executive Compensation Report provides extensive analysis of median compensation by industry, revenue, and compensation type, for CEOs and companies' five highest-paid executives.>
Defining Terms — Elements of Compensation >
To provide a consistent view of total compensation, compensation data were compiled from proxy statement tables filed as of June 2008 for fiscal year 2007. The terms used in this report are defined as follows:>
Cash Compensation — Cash compensation is the sum of annualized salary, bonus, and non-equity incentive compensation. These data are from the Summary Compensation Table. >
Total Compensation — For this report, "total compensation" was calculated using the sum of the individual elements from a combination of tables as described below, not the "Total Compensation" column from the Summary Compensation Table. Total compensation is the sum of annualized salary, bonus, non-equity incentive compensation, the reported grant date present value of options, the value of stock awards, the change in pension value and earnings on non-qualified deferred compensation, and all other compensation. >
Salary — The annualized salary, regardless or whether paid or deferred, as reported in the proxy. Salary is reported in the Summary Compensation Table "Salary" column (c).>
Bonus — Cash bonus awards, regardless of whether paid or deferred, as reported in the proxy that are discretionary or subjectively determined; bonuses that are not based on pre-established, substantially uncertain criteria; bonuses that are guaranteed and not strictly performance-based (see non-equity incentive compensation for strict performance-based compensation). For example, "bonus" includes sign-on bonuses which are paid before performance can be judged. Any award paid above and beyond salary and formula-based incentive compensation is defined as "bonus." Bonus payments are reported in the Summary Compensation Table "Bonus" column (d).>
Non-Equity Incentive Compensation — Short-term and long-term awards (cash-not denominated in stock) that are based on pre-established, performance-based criteria where the outcome is substantially uncertain at the time established. The SEC requires companies to report all performance-based cash awards, both long-term and short-term, in the year in which they are paid. These payments are reported in the Summary Compensation Table "Non-Equity Incentive" column (g). This is payment above and beyond salary and is awarded based on performance against pre-determined criteria. While not called "bonus," it is a performance based award paid in addition to both salary and "bonus" as previously defined. (Confusion may arise for the layperson because in common lexicon non-equity incentive is often informally referred to as a bonus, which it technically is not.) >
The Value of Stock Options Granted — This is the reported grant date present value of options (from the "Grant of Plan-Based Awards Table" of the proxy statement). >
The Value of Stock Awards — This is the value as reported in the Summary Compensation Table "Stock Awards"column (e). >
Change in Pension Value and Non Qualified Deferred Compensation Earnings — The amounts reported represent the actuarily determined change in the value of defined benefit pensions and nonqualified deferred compensation earnings, including supplemental plans. This is reported in Summary Compensation Table "Change in Pension Value and Non Qualified Deferred Compensation Earnings" column (h). >
All Other Compensation — Incremental cost of perquisites ($10,000 or more), tax gross-ups, company contributions to qualified and non-qualified defined contribution plans, preferential stock purchase, relocation, etc. Reported in the Summary Compensation Table "All Other Compensation" column (i). >
Data Source >
The data used in this report were taken from the Summary Compensation Table and the Grant of Plan-Based Awards Table in proxies filed as of June 2008 for fiscal year 2007. As stock is treated differently according to the requirements of each proxy table it is important to note that the value of option awards was taken from the "Grant of Plan-based Awards Table" to capture the company's estimate of the present value of options granted to the executive at the time of the grant. The annualized salary, bonus, non-equity incentive compensation, value of stock awards, change in pension value and earnings on non-qualified deferred compensation, and value of all other compensation were taken from the Summary Compensation Table. All underlying data used for this analysis were provided by Salary.com. >
Source: Top Executive Compensation in 2008Report #1438-08-RR, The Conference Board >
Read this report > http://www.conference-board.org/publications/describe.cfm?id=1583 >
For further information contact: > Frank Tortoriciat (1) 212 339 0231.f.tortorici@conference-board.orghome
/ about us / press / contact us / help / site map
Copyright©2008 - The Conference Board, Inc. All rights reserved.The Conference Board torch and logo are registered trademarks of The Conference Board, Inc.terms of use privacy policy
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Saturday, December 27, 2008
[The Rule Of Social Comparison] Why We’re Still Happy >
http://www.nytimes.com/2008/12/27/opinion/27lyubomirsky.html?partner=permalink&exprod=permalink >
New York Times >
December 27, 2008
Op-Contributor>
Why We’re Still Happy [The Rule Of Social Comparison]>
By SONJA LYUBOMIRSKY >
Riverside, Calif. >
THESE days, bad news about the economy is everywhere. >
So why aren’t we panicking? Why aren’t we spending our days dejected about the markets? How is it that we manage to remain mostly preoccupied with the quotidian tasks and concerns of life? Traffic, dinner, homework, deadlines, sharp words, flirtatious glances. >
Because the news these days affects everyone. >
Research in psychology and economics suggests that when only your salary is cut, or when only you make a foolish investment, or when only you lose your job, you become considerably less satisfied with your life. But when everyone from autoworkers to Wall Street financiers becomes worse off, your life satisfaction remains pretty much the same. Indeed, humans are remarkably attuned to relative position and status. As the economists David Hemenway and Sara Solnick demonstrated in a study at Harvard, many people would prefer to receive an annual salary of $50,000 when others are making $25,000 than to earn $100,000 a year when others are making $200,000. >
Similarly, Daniel Zizzo and Andrew Oswald, economists in Britain, conducted a study that showed that people would give up money if doing so would cause someone else to give up a slightly larger sum. That is, we will make ourselves poorer in order to make someone else poorer, too. >
Findings like these reveal an all-too-human truth. We care more about social comparison, status and rank than about the absolute value of our bank accounts or reputations. >
For example, Andrew Clark, an economist in France, has recently shown that being laid off hurts less if you live in a community with a high unemployment rate. What’s more, if you are unemployed, you will, on average, be happier if your spouse is unemployed, too. >
So in a world in which just about all of us have seen our retirement savings and home values plummet, it’s no wonder that we all feel surprisingly O.K. >
Sonja Lyubomirsky, a professor of psychology at the University of California, Riverside, is the author of “The How of Happiness: A Scientific Approach to Getting the Life You Want.” >
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
New York Times >
December 27, 2008
Op-Contributor>
Why We’re Still Happy [The Rule Of Social Comparison]>
By SONJA LYUBOMIRSKY >
Riverside, Calif. >
THESE days, bad news about the economy is everywhere. >
So why aren’t we panicking? Why aren’t we spending our days dejected about the markets? How is it that we manage to remain mostly preoccupied with the quotidian tasks and concerns of life? Traffic, dinner, homework, deadlines, sharp words, flirtatious glances. >
Because the news these days affects everyone. >
Research in psychology and economics suggests that when only your salary is cut, or when only you make a foolish investment, or when only you lose your job, you become considerably less satisfied with your life. But when everyone from autoworkers to Wall Street financiers becomes worse off, your life satisfaction remains pretty much the same. Indeed, humans are remarkably attuned to relative position and status. As the economists David Hemenway and Sara Solnick demonstrated in a study at Harvard, many people would prefer to receive an annual salary of $50,000 when others are making $25,000 than to earn $100,000 a year when others are making $200,000. >
Similarly, Daniel Zizzo and Andrew Oswald, economists in Britain, conducted a study that showed that people would give up money if doing so would cause someone else to give up a slightly larger sum. That is, we will make ourselves poorer in order to make someone else poorer, too. >
Findings like these reveal an all-too-human truth. We care more about social comparison, status and rank than about the absolute value of our bank accounts or reputations. >
For example, Andrew Clark, an economist in France, has recently shown that being laid off hurts less if you live in a community with a high unemployment rate. What’s more, if you are unemployed, you will, on average, be happier if your spouse is unemployed, too. >
So in a world in which just about all of us have seen our retirement savings and home values plummet, it’s no wonder that we all feel surprisingly O.K. >
Sonja Lyubomirsky, a professor of psychology at the University of California, Riverside, is the author of “The How of Happiness: A Scientific Approach to Getting the Life You Want.” >
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
It Pays to Be Pretty [or Handsome]>
http://blogs.psychologytoday.com/blog/mind-my-money/200812/can-you-trust-the-stock-market
Psychology Today
It Pays to Be Pretty [or Handsome]>
By Sam Sommers on December 19, 2008 in Science Of Small Talk >
Riding the bike at the gym yesterday, my glance alternated between the three close-captioned TV screens on the wall in front of me, bouncing between a variety of uplifting news stories on mortgage foreclosures, the auto bailout, unsolved child murder cases, and an impending blizzard in New England. Sufficiently depressed, I was about to call it a day when the following gem came across the newswire and caught my attention: "Good-Looking NFL Quarterbacks Get Paid More." >
The story was based on a study conducted by economist David Berri and colleagues, in which they assessed the facial symmetry of 121 NFL quarterbacks over a 10-year period and determined the relationship between facial symmetry and player paycheck. The results? QBs with greater facial symmetry–a dimension regularly associated with physical attractiveness–tended to have higher salaries. This was especially the case for back-up quarterbacks, the ones at the bottom of the income distribution.>
It's an interesting finding. My guess is that as with other, recent empirical studies of sports-related outcomes, there will be many in the media and general public who will instinctually shrug this off as somehow an inconclusive or manipulated result. That seemed to be the general reaction to last year's findings regarding race and NBA referee foul calls, for example. The idea that the mechanisms underlying our perception and judgments sometimes operate without our conscious awareness is one with which many people, particularly sports fans, seem inherently uncomfortable. >
Mind you, I'm not arguing that this most recent study is without its flaws. In the interest of full disclosure, all I've been able to dig up so far are the media descriptions of the study, not a write-up of the study itself. And the social psychologist in me does come to one immediate question: why rely solely on facial symmetry? Why not actually have a group of people, who don't recognize these quarterbacks, rate each one in terms of attractiveness? >
Sure, facial symmetry is a good predictor of attractiveness. But sugar content is a good predictor of how tasty people find a particular food and you wouldn't conduct a taste test by simply measuring teaspoons of sugar, would you? You'd have people sample and rate the products, right? So why no QB taste test here?>
But I have no reason to suspect the results would come out much differently if such a measure were taken. The finding as reported is consistent with a lot of what we now know about the ways in which we form impressions of other people, even though no football general manager would ever admit that attractiveness played a role in their evaluation of a quarterback. And for good reason–it would be tantamount to admitting that they never would've signed Johnny Unitas (left). >
And, of course, the main reason no GM would admit this is that it isn't a conscious process. Many of the factors that shape our impressions of others operate outside of our awareness. Quarterbacks are supposed to be team leaders and spokesmen, and we have a set of expectations regarding the characteristics that go along with such leadership. Attractiveness. Confidence. Even height, which helps explain why shorter QB prospects like Doug Flutie have often faced such an uphill battle (figuratively and literally).>
If we take this discussion outside the realm of sports, other studies provide converging results. A few years ago, psychologist Alex Todorov of Princeton University and his colleagues showed research participants the faces of individuals running for U.S. Senate. Based on just a 1-second look, respondents were asked to evaluate "how competent" each face appeared. These ratings of competence turned out to be significant predictors of whether or not a given candidate had won the election, as well as the final vote margin.>
Or how about the world of business? Psychologists Nick Rule and Nalini Ambady of Tufts University showed respondents the faces of CEOs from Fortune 500 companies. People's ratings of how "competent" and "dominant" these faces were–again, based on very brief exposure to mere photos–emerged as significant predictors of how profitable that CEO's company was over a three-year time-span.>
What's amazing about studies like these is that they show that we do more than just gauge attractiveness when we first meet someone. We're also forming impressions and drawing reasonably accurate conclusions about how effective a leader they are, just based on a few seconds of interacting with them. Or just by brief exposure to a photo! It's a similar process to the one that allows students who see a brief, silent clip of a professor giving a lecture to make remarkably accurate predictions of how that instructor will be viewed by his or her actual students in end of semester teaching evaluations. >
So consider yourselves warned–there's now a telling new statistic to focus on when you watch football on Sundays. And those of you out there, women and men, who aren't fans of the sport of football per se, but rather aficionados of the physical specimens who engage in it, you no longer need to apologize for your focus being drawn away from the numbers of th scoreboard. Just tell your viewing companions that you're in the midst of conducting your own scientific research study.>
------------------------
Sam Sommers
Sam Sommers, Ph.D., is a social psychologist at Tufts University.
Sam Sommers is an award-winning teacher and researcher of social psychology at Tufts University in Medford, Massachusetts. He earned his Ph.D. in psychology from the University of Michigan, and over the past decade has published dozens of articles on the topics of race and social perception, judgment and decision-making, diversity and group processes, and psychological perspectives on the U.S. legal system.
His research has been covered by Good Morning America, National Public Radio, Harper's Magazine, the London Times, Los Angeles Times, and Washington Post. He has testified as an expert witness on racial bias in murder trial proceedings in Massachusetts, New Hampshire, and Oregon. In 2007 he was the first junior faculty member to win the Lerman-Neubauer Prize for Outstanding Teaching at Tufts, an award given annually to the professor judged by graduating seniors as having had "the most profound effect on them intellectually, both in and out of the classroom." In his free time he enjoys family trips with his wife and two daughters, hits lead-off for the vaunted Tufts Psychology softball team, and exerts far more effort than he should editing Seinfeld and Daily Show video clips for use in the classroom.
His PT blog is Science of Small Talk.
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Psychology Today
It Pays to Be Pretty [or Handsome]>
By Sam Sommers on December 19, 2008 in Science Of Small Talk >
Riding the bike at the gym yesterday, my glance alternated between the three close-captioned TV screens on the wall in front of me, bouncing between a variety of uplifting news stories on mortgage foreclosures, the auto bailout, unsolved child murder cases, and an impending blizzard in New England. Sufficiently depressed, I was about to call it a day when the following gem came across the newswire and caught my attention: "Good-Looking NFL Quarterbacks Get Paid More." >
The story was based on a study conducted by economist David Berri and colleagues, in which they assessed the facial symmetry of 121 NFL quarterbacks over a 10-year period and determined the relationship between facial symmetry and player paycheck. The results? QBs with greater facial symmetry–a dimension regularly associated with physical attractiveness–tended to have higher salaries. This was especially the case for back-up quarterbacks, the ones at the bottom of the income distribution.>
It's an interesting finding. My guess is that as with other, recent empirical studies of sports-related outcomes, there will be many in the media and general public who will instinctually shrug this off as somehow an inconclusive or manipulated result. That seemed to be the general reaction to last year's findings regarding race and NBA referee foul calls, for example. The idea that the mechanisms underlying our perception and judgments sometimes operate without our conscious awareness is one with which many people, particularly sports fans, seem inherently uncomfortable. >
Mind you, I'm not arguing that this most recent study is without its flaws. In the interest of full disclosure, all I've been able to dig up so far are the media descriptions of the study, not a write-up of the study itself. And the social psychologist in me does come to one immediate question: why rely solely on facial symmetry? Why not actually have a group of people, who don't recognize these quarterbacks, rate each one in terms of attractiveness? >
Sure, facial symmetry is a good predictor of attractiveness. But sugar content is a good predictor of how tasty people find a particular food and you wouldn't conduct a taste test by simply measuring teaspoons of sugar, would you? You'd have people sample and rate the products, right? So why no QB taste test here?>
But I have no reason to suspect the results would come out much differently if such a measure were taken. The finding as reported is consistent with a lot of what we now know about the ways in which we form impressions of other people, even though no football general manager would ever admit that attractiveness played a role in their evaluation of a quarterback. And for good reason–it would be tantamount to admitting that they never would've signed Johnny Unitas (left). >
And, of course, the main reason no GM would admit this is that it isn't a conscious process. Many of the factors that shape our impressions of others operate outside of our awareness. Quarterbacks are supposed to be team leaders and spokesmen, and we have a set of expectations regarding the characteristics that go along with such leadership. Attractiveness. Confidence. Even height, which helps explain why shorter QB prospects like Doug Flutie have often faced such an uphill battle (figuratively and literally).>
If we take this discussion outside the realm of sports, other studies provide converging results. A few years ago, psychologist Alex Todorov of Princeton University and his colleagues showed research participants the faces of individuals running for U.S. Senate. Based on just a 1-second look, respondents were asked to evaluate "how competent" each face appeared. These ratings of competence turned out to be significant predictors of whether or not a given candidate had won the election, as well as the final vote margin.>
Or how about the world of business? Psychologists Nick Rule and Nalini Ambady of Tufts University showed respondents the faces of CEOs from Fortune 500 companies. People's ratings of how "competent" and "dominant" these faces were–again, based on very brief exposure to mere photos–emerged as significant predictors of how profitable that CEO's company was over a three-year time-span.>
What's amazing about studies like these is that they show that we do more than just gauge attractiveness when we first meet someone. We're also forming impressions and drawing reasonably accurate conclusions about how effective a leader they are, just based on a few seconds of interacting with them. Or just by brief exposure to a photo! It's a similar process to the one that allows students who see a brief, silent clip of a professor giving a lecture to make remarkably accurate predictions of how that instructor will be viewed by his or her actual students in end of semester teaching evaluations. >
So consider yourselves warned–there's now a telling new statistic to focus on when you watch football on Sundays. And those of you out there, women and men, who aren't fans of the sport of football per se, but rather aficionados of the physical specimens who engage in it, you no longer need to apologize for your focus being drawn away from the numbers of th scoreboard. Just tell your viewing companions that you're in the midst of conducting your own scientific research study.>
------------------------
Sam Sommers
Sam Sommers, Ph.D., is a social psychologist at Tufts University.
Sam Sommers is an award-winning teacher and researcher of social psychology at Tufts University in Medford, Massachusetts. He earned his Ph.D. in psychology from the University of Michigan, and over the past decade has published dozens of articles on the topics of race and social perception, judgment and decision-making, diversity and group processes, and psychological perspectives on the U.S. legal system.
His research has been covered by Good Morning America, National Public Radio, Harper's Magazine, the London Times, Los Angeles Times, and Washington Post. He has testified as an expert witness on racial bias in murder trial proceedings in Massachusetts, New Hampshire, and Oregon. In 2007 he was the first junior faculty member to win the Lerman-Neubauer Prize for Outstanding Teaching at Tufts, an award given annually to the professor judged by graduating seniors as having had "the most profound effect on them intellectually, both in and out of the classroom." In his free time he enjoys family trips with his wife and two daughters, hits lead-off for the vaunted Tufts Psychology softball team, and exerts far more effort than he should editing Seinfeld and Daily Show video clips for use in the classroom.
His PT blog is Science of Small Talk.
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Randy Pausch Last Lecture: Achieving Your Childhood Dreams
Randy Pausch Last Lecture: Achieving Your Childhood Dreams
A note from Jim:… A truly inspiring story. Follow the links to the video. Carnegie Mellon Professor Randy Pausch
http://www.thelastlecture.com/
http://www.youtube.com/watch?v=ji5_MqicxSo
Achieving Your Childhood Dreams
September 18, 2007: Randy Pausch>
"Almost all of us have childhood dreams; for example, being an astronaut, or making movies or video games for a living. Sadly, most people don’t achieve theirs, and I think that’s a shame. I had several specific childhood dreams, and I’ve actually achieved most of them. More importantly, I have found ways, in particular the creation (with Don Marinelli), of CMU’s Entertainment Technology Center of helping many young people actually *achieve* their childhood dreams." - Randy Pausch, Oct. 23, 1960 - July 25, 2008>
Watch online or order a DVD:>
YouTube>
Carnegie Mellon Professor Randy Pausch, who was dying of pancreatic cancer, gave his last lecture at the university Sept. 18, 2007, before a packed McConomy Auditorium. In his moving talk, "Really Achieving Your Childhood Dreams," Pausch talked about his lessons learned and gave advice to students on how to achieve their own career and personal goals.>
Pausch, a professor of computer science, human computer interaction and design, co-founded Carnegie Mellon’s Entertainment Technology Center and was the creator of the Alice interactive computing program, which is being used by students worldwide.>
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
A note from Jim:… A truly inspiring story. Follow the links to the video. Carnegie Mellon Professor Randy Pausch
http://www.thelastlecture.com/
http://www.youtube.com/watch?v=ji5_MqicxSo
Achieving Your Childhood Dreams
September 18, 2007: Randy Pausch>
"Almost all of us have childhood dreams; for example, being an astronaut, or making movies or video games for a living. Sadly, most people don’t achieve theirs, and I think that’s a shame. I had several specific childhood dreams, and I’ve actually achieved most of them. More importantly, I have found ways, in particular the creation (with Don Marinelli), of CMU’s Entertainment Technology Center of helping many young people actually *achieve* their childhood dreams." - Randy Pausch, Oct. 23, 1960 - July 25, 2008>
Watch online or order a DVD:>
YouTube>
Carnegie Mellon Professor Randy Pausch, who was dying of pancreatic cancer, gave his last lecture at the university Sept. 18, 2007, before a packed McConomy Auditorium. In his moving talk, "Really Achieving Your Childhood Dreams," Pausch talked about his lessons learned and gave advice to students on how to achieve their own career and personal goals.>
Pausch, a professor of computer science, human computer interaction and design, co-founded Carnegie Mellon’s Entertainment Technology Center and was the creator of the Alice interactive computing program, which is being used by students worldwide.>
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Thursday, December 25, 2008
Potential Bias During Face-To-Face Interviewing?
http://www.eurekalert.org/pub_releases/2008-12/cp-nmo121808.php
New research demonstrates that bias toward a potentially more valuable outcome can influence how visual information is processed in the human brain. …"These findings suggest that these brain regions may provide signals to bias visual processing in favor of more valuable stimuli, perhaps so that valuable objects are processed more efficiently and have more of an impact on decision making and behavior," concludes Dr. Serences. >
Public release date: 24-Dec-2008>Contact: Cathleen Genovacgenova@cell.com617-397-2802Cell Press >
Neural mechanisms of value bias in the human visual cortex>
New research demonstrates that bias toward a potentially more valuable outcome can influence how visual information is processed in the human brain. The study, published by Cell Press in the December 26th issue of the journal Neuron, provides insight into how the visual centers encode more valuable stimuli at the expense of less valuable alternatives.>
Acquisition and evaluation of incoming sensory information is absolutely critical for guiding interactions with the environment. There is no doubt that prior rewards have a strong influence on decision making and that the value of a stimulus modulates the activity of neurons involved in initiating movements towards the more favorable of alternatives. >
However, although recent studies have suggested that value also influences areas of the brain involved in processing sensory input, many questions remain. "Little is known about how value influences the acquisition and representation of incoming sensory information, or about the neural mechanisms that track the relative value of different objects to guide behavior," explains senior study author, Dr. John Serences from the Department of Psychology at the University of California, San Diego.>
To examine how value impacts visual processing, Dr. Serences used functional magnetic resonance imaging to estimate changes in neural activity as human subjects selected one of two spatially separated targets (red or green) that varied in value across the course of the experiment. His experimental paradigm was carefully designed so as to measure value-related modulations within areas of the visual cortex and to dissociate the influence of prior rewards and subjective value. >
The study revealed value-related modifications in many different areas of the human visual system. Interestingly, value influenced activation of early regions of visual cortex that are thought to play a key role in representing features of objects in the environment (shapes, colors, etc.). In addition, these modifications of neural activity were primarily driven by the reward history of each stimulus and not to self-reported estimates of stimulus value. "This result raises the intriguing possibility that these value related changes in brain activity operate largely via an implicit mechanism that is not necessarily accessible to the observer," offers Dr. Serences.>
Dr. Serences also observed activation in regions of frontal and parietal cortex that were associated with representing the difference between the value of the two objects; these areas were very active when one choice was much more valuable than the other, and less active when the choices were of approximately equal value. Interestingly, these cortical areas have been previously implicated in the process of anticipating and tracking rewards. "These findings suggest that these brain regions may provide signals to bias visual processing in favor of more valuable stimuli, perhaps so that valuable objects are processed more efficiently and have more of an impact on decision making and behavior," concludes Dr. Serences. >
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
New research demonstrates that bias toward a potentially more valuable outcome can influence how visual information is processed in the human brain. …"These findings suggest that these brain regions may provide signals to bias visual processing in favor of more valuable stimuli, perhaps so that valuable objects are processed more efficiently and have more of an impact on decision making and behavior," concludes Dr. Serences. >
Public release date: 24-Dec-2008>Contact: Cathleen Genovacgenova@cell.com617-397-2802Cell Press >
Neural mechanisms of value bias in the human visual cortex>
New research demonstrates that bias toward a potentially more valuable outcome can influence how visual information is processed in the human brain. The study, published by Cell Press in the December 26th issue of the journal Neuron, provides insight into how the visual centers encode more valuable stimuli at the expense of less valuable alternatives.>
Acquisition and evaluation of incoming sensory information is absolutely critical for guiding interactions with the environment. There is no doubt that prior rewards have a strong influence on decision making and that the value of a stimulus modulates the activity of neurons involved in initiating movements towards the more favorable of alternatives. >
However, although recent studies have suggested that value also influences areas of the brain involved in processing sensory input, many questions remain. "Little is known about how value influences the acquisition and representation of incoming sensory information, or about the neural mechanisms that track the relative value of different objects to guide behavior," explains senior study author, Dr. John Serences from the Department of Psychology at the University of California, San Diego.>
To examine how value impacts visual processing, Dr. Serences used functional magnetic resonance imaging to estimate changes in neural activity as human subjects selected one of two spatially separated targets (red or green) that varied in value across the course of the experiment. His experimental paradigm was carefully designed so as to measure value-related modulations within areas of the visual cortex and to dissociate the influence of prior rewards and subjective value. >
The study revealed value-related modifications in many different areas of the human visual system. Interestingly, value influenced activation of early regions of visual cortex that are thought to play a key role in representing features of objects in the environment (shapes, colors, etc.). In addition, these modifications of neural activity were primarily driven by the reward history of each stimulus and not to self-reported estimates of stimulus value. "This result raises the intriguing possibility that these value related changes in brain activity operate largely via an implicit mechanism that is not necessarily accessible to the observer," offers Dr. Serences.>
Dr. Serences also observed activation in regions of frontal and parietal cortex that were associated with representing the difference between the value of the two objects; these areas were very active when one choice was much more valuable than the other, and less active when the choices were of approximately equal value. Interestingly, these cortical areas have been previously implicated in the process of anticipating and tracking rewards. "These findings suggest that these brain regions may provide signals to bias visual processing in favor of more valuable stimuli, perhaps so that valuable objects are processed more efficiently and have more of an impact on decision making and behavior," concludes Dr. Serences. >
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Wednesday, December 24, 2008
Mihaly Csikszentmihalyi: Creativity, fulfillment and flow
A note from Jim: Truly fascinating. Professor Mihaly Csikszentmihalyi 19 minute presentation on his concept of “Flow”…. >
Flow is the mental state of operation in which the person is fully immersed in what he or she is doing by a feeling of energized focus, full involvement, and success in the process of the activity. Proposed and extensively researched by positive psychologist Mihály CsÃkszentmihályi, the concept has been widely referenced across a variety of fields.
http://www.ted.com/index.php/talks/mihaly_csikszentmihalyi_on_flow.html
Mihaly Csikszentmihalyi: Creativity, fulfillment and flow
Found on TED.com (www.ted.com)
About this talk
Mihaly Czikszentmihalyi asks, "What makes a life worth living?" Noting that money cannot make us happy, he looks to those who find pleasure and lasting satisfaction in activities that bring about a state of "flow."
About Mihaly Csikszentmihalyi
Mihaly Csikszentmihalyi says creativity is a central source of meaning in our lives. A leading researcher in positive psychology, he has devoted his life to studying what makes people truly happy: "When we are involved in [creativity], we feel that we are living more fully than during the rest of life." He is the architect of the notion of "flow" -- the creative moment when a person is completely involved in an activity for its own sake.
Csikszentmihalyi teaches psychology and management at Claremont Graduate University, focusing on human strengths such as optimism, motivation and responsibility. He's the director the the Quality of Life Research Center there. He has written numerous books and papers about the search for joy and fulfillment.
"A man obsessed by happiness."
Richard Flaste, New York Times
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Flow is the mental state of operation in which the person is fully immersed in what he or she is doing by a feeling of energized focus, full involvement, and success in the process of the activity. Proposed and extensively researched by positive psychologist Mihály CsÃkszentmihályi, the concept has been widely referenced across a variety of fields.
http://www.ted.com/index.php/talks/mihaly_csikszentmihalyi_on_flow.html
Mihaly Csikszentmihalyi: Creativity, fulfillment and flow
Found on TED.com (www.ted.com)
About this talk
Mihaly Czikszentmihalyi asks, "What makes a life worth living?" Noting that money cannot make us happy, he looks to those who find pleasure and lasting satisfaction in activities that bring about a state of "flow."
About Mihaly Csikszentmihalyi
Mihaly Csikszentmihalyi says creativity is a central source of meaning in our lives. A leading researcher in positive psychology, he has devoted his life to studying what makes people truly happy: "When we are involved in [creativity], we feel that we are living more fully than during the rest of life." He is the architect of the notion of "flow" -- the creative moment when a person is completely involved in an activity for its own sake.
Csikszentmihalyi teaches psychology and management at Claremont Graduate University, focusing on human strengths such as optimism, motivation and responsibility. He's the director the the Quality of Life Research Center there. He has written numerous books and papers about the search for joy and fulfillment.
"A man obsessed by happiness."
Richard Flaste, New York Times
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Tuesday, December 23, 2008
Perseverance
Leadership Wired, December 2008, Issue 2
Leadership Wired is available via email on a free subscription basis. You can subscribe by clicking here. Questions about document transmission or editorial comments should be directed to feedback@giantimpact.com.
Perseverance
By Dr. John C. Maxwell
Perseverance is not an issue of talent. It is not an issue of time. It is about finishing. Talent provides hope for accomplishment, but perseverance guarantees it.>
Running Past Failure>
As a small child, Vonetta (Jeffrey) Flowers dreamed about being in the Olympics. She ran everywhere she went, and gained a reputation among her school friends for being quick. At age nine, Vonetta learned she had special talent. While trying out for an inner-city track club in her hometown of Birmingham, she shocked coaches by posting the best sprint time for Jonesboro Elementary School - running faster than boys two years older than she was! >
Vonetta's immense talent carried her to the University of Alabama-Birmingham on a track-and-field scholarship. While at the university, she continued to pursue her goal of gaining a spot on the Olympic team. She practiced meticulously to perfect her stride, spent hours in the weight room adding strength, and ran grueling intervals to shave seconds off her sprint times. Thanks to her combination of talent and discipline, Vonetta ended her college career as a 7-time All-American, competing in the 100 meter and 200 meter sprints, long jump, triple jump, heptathlon, and relays.>
With her college career finished, Vonetta set her sights on the 1996 Olympics. Unfortunately, she failed to qualify for the team, running slightly behind the leaders. The failure stung, but Vonetta was determined not to give up. She found a job as an assistant coach and continued her regimen of training.>
For the next four years, Vonetta put her body through punishing workouts with an eye on the 2000 Olympics in Sydney. In her words, "I devoted countless hours to lifting weights, eating right, and staying mentally tough. I knew that my time as an athlete was coming to an end, and I'd hoped that the 2000 Olympic trials would prove to be my year to finally find out what it's like to be an Olympian.">
In June 2000, Vonetta lined up again to run at the U.S. Olympic Trials. Unfortunately, Vonetta placed 13th, and she failed to make the Olympic squad. Although one of the fastest women in America, she wasn't in the select group to represent the United States in Sydney. After 17 years of training, she had come up empty in her quest for the Olympics.>
Two days after her second painful failure in the Olympic Trials, Vonetta's husband spotted an advertisement for tryouts for the United States Olympic bobsled team. He convinced her to go to the tryouts. Growing up in the South, Vonetta was not accustomed to cold and snow, and she knew next to nothing about bobsledding. However, at the tryouts her unusual blend of speed and strength proved to be ideal qualities for a brakewoman (the person who pushes the bobsled to give it initial momentum and then hops in with the driver). Vonetta was chosen for the team.
Vonetta's decision to join the bobsled team came with a price - two more years of a strict diet, sore muscles, and countless hours dedicated to attaining peak physical fitness. It also meant delaying her dream to be a mom. However, her years of perseverance paid off. Not only did Vonetta achieve her lifelong goal of competing in the Olympics, but she also became the first African-American to win a gold medal in the winter Olympics!>
Perseverance punctuates talent>
Vonetta's talent seemed almost limitless, but it wouldn't have carried her to the Olympics without an admirable measure of perseverance. Life seems designed to make a person quit. For even the most talented individual, obstacles abound, and failures are commonplace. Only when a person matches talent with perseverance do opportunities become avenues of success.>
Perseverance means succeeding because you are determined to, not destined to
If Vonetta had seen her Olympic dream as a matter of destiny than she likely would have given up after her second failure to make the track and field team. After 17 years of training, the results signaled that her dream wasn't meant to be. She had no natural reason to be hopeful about her prospects. However, she pressed on, determined to find a way to take hold of her goals, and in the end, she was rewarded with success.>
Perseverance means stopping, not because you're tired, but because the task is done
Perseverance doesn't come into play until a person is tired. A year or two after college, Vonetta still was riding the excitement of her collegiate track and field championships. She was young, energetic, and optimistic about the future. Nothing was telling her to stop, and consequently she needed nothing extra to keep going.>
However, after a taste of disappointment at the Olympic Trials, fatigue and discouragement crept up on Vonetta. The mountain of work in front of her began to look more and more daunting, and her dream began to be a little harder to imagine. Nonetheless, Vonetta persevered. She kept believing, she kept training, and she kept running until she finally caught up with success.>
About
John C. Maxwell is an internationally recognized leadership expert, speaker, and author who has sold over 16 million books. His organizations have trained more than 2 million leaders worldwide. Dr. Maxwell is the founder of EQUIP and INJOY Stewardship Services. Every year he speaks to Fortune 500 companies, international government leaders, and audiences as diverse as the United States Military Academy at West Point, the National Football League, and ambassadors at the United Nations. A New York Times, Wall Street Journal, and Business Week best-selling author, Maxwell was named the World's Top Leadership Guru by Leadershipgurus.net. He was also one of only 25 authors and artists named to Amazon.com's 10th Anniversary Hall of Fame. Three of his books, The 21 Irrefutable Laws of Leadership, Developing the Leader Within You, and The 21 Indispensable Qualities of a Leader have each sold over a million copies.>
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PerseveranceBy Dr. John C. Maxwell
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***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Leadership Wired is available via email on a free subscription basis. You can subscribe by clicking here. Questions about document transmission or editorial comments should be directed to feedback@giantimpact.com.
Perseverance
By Dr. John C. Maxwell
Perseverance is not an issue of talent. It is not an issue of time. It is about finishing. Talent provides hope for accomplishment, but perseverance guarantees it.>
Running Past Failure>
As a small child, Vonetta (Jeffrey) Flowers dreamed about being in the Olympics. She ran everywhere she went, and gained a reputation among her school friends for being quick. At age nine, Vonetta learned she had special talent. While trying out for an inner-city track club in her hometown of Birmingham, she shocked coaches by posting the best sprint time for Jonesboro Elementary School - running faster than boys two years older than she was! >
Vonetta's immense talent carried her to the University of Alabama-Birmingham on a track-and-field scholarship. While at the university, she continued to pursue her goal of gaining a spot on the Olympic team. She practiced meticulously to perfect her stride, spent hours in the weight room adding strength, and ran grueling intervals to shave seconds off her sprint times. Thanks to her combination of talent and discipline, Vonetta ended her college career as a 7-time All-American, competing in the 100 meter and 200 meter sprints, long jump, triple jump, heptathlon, and relays.>
With her college career finished, Vonetta set her sights on the 1996 Olympics. Unfortunately, she failed to qualify for the team, running slightly behind the leaders. The failure stung, but Vonetta was determined not to give up. She found a job as an assistant coach and continued her regimen of training.>
For the next four years, Vonetta put her body through punishing workouts with an eye on the 2000 Olympics in Sydney. In her words, "I devoted countless hours to lifting weights, eating right, and staying mentally tough. I knew that my time as an athlete was coming to an end, and I'd hoped that the 2000 Olympic trials would prove to be my year to finally find out what it's like to be an Olympian.">
In June 2000, Vonetta lined up again to run at the U.S. Olympic Trials. Unfortunately, Vonetta placed 13th, and she failed to make the Olympic squad. Although one of the fastest women in America, she wasn't in the select group to represent the United States in Sydney. After 17 years of training, she had come up empty in her quest for the Olympics.>
Two days after her second painful failure in the Olympic Trials, Vonetta's husband spotted an advertisement for tryouts for the United States Olympic bobsled team. He convinced her to go to the tryouts. Growing up in the South, Vonetta was not accustomed to cold and snow, and she knew next to nothing about bobsledding. However, at the tryouts her unusual blend of speed and strength proved to be ideal qualities for a brakewoman (the person who pushes the bobsled to give it initial momentum and then hops in with the driver). Vonetta was chosen for the team.
Vonetta's decision to join the bobsled team came with a price - two more years of a strict diet, sore muscles, and countless hours dedicated to attaining peak physical fitness. It also meant delaying her dream to be a mom. However, her years of perseverance paid off. Not only did Vonetta achieve her lifelong goal of competing in the Olympics, but she also became the first African-American to win a gold medal in the winter Olympics!>
Perseverance punctuates talent>
Vonetta's talent seemed almost limitless, but it wouldn't have carried her to the Olympics without an admirable measure of perseverance. Life seems designed to make a person quit. For even the most talented individual, obstacles abound, and failures are commonplace. Only when a person matches talent with perseverance do opportunities become avenues of success.>
Perseverance means succeeding because you are determined to, not destined to
If Vonetta had seen her Olympic dream as a matter of destiny than she likely would have given up after her second failure to make the track and field team. After 17 years of training, the results signaled that her dream wasn't meant to be. She had no natural reason to be hopeful about her prospects. However, she pressed on, determined to find a way to take hold of her goals, and in the end, she was rewarded with success.>
Perseverance means stopping, not because you're tired, but because the task is done
Perseverance doesn't come into play until a person is tired. A year or two after college, Vonetta still was riding the excitement of her collegiate track and field championships. She was young, energetic, and optimistic about the future. Nothing was telling her to stop, and consequently she needed nothing extra to keep going.>
However, after a taste of disappointment at the Olympic Trials, fatigue and discouragement crept up on Vonetta. The mountain of work in front of her began to look more and more daunting, and her dream began to be a little harder to imagine. Nonetheless, Vonetta persevered. She kept believing, she kept training, and she kept running until she finally caught up with success.>
About
John C. Maxwell is an internationally recognized leadership expert, speaker, and author who has sold over 16 million books. His organizations have trained more than 2 million leaders worldwide. Dr. Maxwell is the founder of EQUIP and INJOY Stewardship Services. Every year he speaks to Fortune 500 companies, international government leaders, and audiences as diverse as the United States Military Academy at West Point, the National Football League, and ambassadors at the United Nations. A New York Times, Wall Street Journal, and Business Week best-selling author, Maxwell was named the World's Top Leadership Guru by Leadershipgurus.net. He was also one of only 25 authors and artists named to Amazon.com's 10th Anniversary Hall of Fame. Three of his books, The 21 Irrefutable Laws of Leadership, Developing the Leader Within You, and The 21 Indispensable Qualities of a Leader have each sold over a million copies.>
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Leadership Lessons Driven Home by the Struggles of U.S. AutomakersBy Justin Pinkerman
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Industry trends in recessions...(And consumer outlays on insurance}
https://www.mckinseyquarterly.com/newsletters/chartfocus/2008_12.htm
McKinsey Quarterly
DECEMBER 2008
..."expenditures for groceries, reading materials, and other options that substitute for more expensive ones actually rose. So did outlays on insurance, health care, and, above all, education. "
Industry trends in recessions
Many companies can anticipate the performance of their sectors in a recession. McKinsey research shows that during the 1990–91 and 2001–02 downturns, for example, US consumers reprioritized their spending rather than cutting it across the board. Consumer spending dropped in discretionary categories like dining out, personal care products, and charitable donations. But expenditures for groceries, reading materials, and other options that substitute for more expensive ones actually rose. So did outlays on insurance, health care, and, above all, education.
To learn more about how long-term currents will probably affect the performance of the consumer goods, steel, technology, and chemical sectors during the present recession, read “Industry trends in the downturn: A snapshot” (December 2008). http://www.mckinseyquarterly.com/Industry_trends_in_the_downturn_A_snapshot_2264
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
McKinsey Quarterly
DECEMBER 2008
..."expenditures for groceries, reading materials, and other options that substitute for more expensive ones actually rose. So did outlays on insurance, health care, and, above all, education. "
Industry trends in recessions
Many companies can anticipate the performance of their sectors in a recession. McKinsey research shows that during the 1990–91 and 2001–02 downturns, for example, US consumers reprioritized their spending rather than cutting it across the board. Consumer spending dropped in discretionary categories like dining out, personal care products, and charitable donations. But expenditures for groceries, reading materials, and other options that substitute for more expensive ones actually rose. So did outlays on insurance, health care, and, above all, education.
To learn more about how long-term currents will probably affect the performance of the consumer goods, steel, technology, and chemical sectors during the present recession, read “Industry trends in the downturn: A snapshot” (December 2008). http://www.mckinseyquarterly.com/Industry_trends_in_the_downturn_A_snapshot_2264
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
"Arrange To Exchange" [Mastering the Rule of Reciprocity]
http://www.insideinfluence.com/current/article_dec.html
Inside Influence Report
Issue 90: Dec. 2008
"Arrange To Exchange" [Mastering the Rule of Reciprocity]
By Dr. Robert Cialdini
In this time of the year, often called “The Season of Giving,” it is worthwhile to consider certain aspects of the giving process that can lead to desirable outcomes, not just with family and friends but also with colleagues and coworkers.>
Research has long demonstrated the value of a generous spirit. After providing gifts, favors, services, or assistance to others, we become more liked, more appreciated, and even physically healthier. What’s more, those who have received from us typically stand ready to repay when we need something from them. This last benefit flows from the rule for reciprocation, which prescribes the willingness of people to pay back the form of behavior they have received. All human societies install this rule in their members from childhood for a simple reason: It confers great competitive advantages on a group it by encouraging profitable exchanges, mutually beneficial tradeoffs between group members in vital arenas of interaction such as commerce, defense, and care. In the workplace, this means that if you’ve complied with my request for help with one of my projects—let’s say by providing effort, resources, special information, etc.—I should be significantly more willing to comply with a request for help that you might make of me later on a project that’s important to you.>
With so many of the reasons for being a giver securely in the plus column, it would be easy to think that a large amount of giving on the job is a sure route to success there. Alas, human psychology is almost never so simple. Too much of a good thing can be a bad thing, even in the case of assistance. Take as evidence, a study done by Frances Flynn now at Stanford’s Graduate School of Business, who examined the consequences of favor-doing among employees at a large telecommunications firm. He measured the number of favors that workers did for one another along with a pair of noteworthy consequences. The first was the effect of favor-doing on the giver’s social status within the organization—the giver’s perceived worth to the company in the eyes of his or her coworkers. As we might have expected, those employees rated as more generous with their time, energy, and assistance were seen as more valuable. Achieving acknowledged social status in the workplace is no small feat and is a testament to the interpersonal gains that come from being a prodigious giver.>
But the second consequence of giving that Flynn examined, productivity on the job, did not paint so sunny a picture. Eight measures of individual productivity, including assessments of both the quantity and quality of assigned work, showed that those employees with the highest rated levels of assistance were significantly less productive than their colleagues. Why? Because they were so busy lending aid to others’ projects that they were unable to pay sufficient attention to their own. The Great Optimizer >
What are we to make of this state of affairs? If being a particularly openhanded giver on the job results in high social status but simultaneously reduces one’s personal productivity on assigned tasks, what are we best advised to do? It turns out that there is a clear answer, one that emerged from another component of Flynn’s study. It identified a single factor that amplified both social status and individual productivity. As we’ve seen, that optimizing factor wasn’t the number of favors done. Instead, it was the number of favors exchanged. Employees who first provided beneficial aid on coworkers’ projects and then got beneficial aid in return maximized the profitable effects of the giving process—not just for themselves but for all concerned—by rating high on status and production. Recall, this outcome is very much in keeping with the rule for reciprocity that is vital to all successful groups precisely because it fosters mutually advantageous exchanges.>
The implications of these results for each of us are clear. First, we should be liberal and proactive givers on the job. If we aren’t vigorous prime movers in the process, we can’t boost the number of favor exchanges that are so central to double-barreled success in the workplace . Second, and just as importantly, we should characterize our assistance in ways that heighten the likelihood that it will be reciprocated fully. How can we do that? I have three suggestions for possible such characterizations, each to be offered upon receiving thanks for our aid from the recipient. We could reply:>
1. “I was happy to help because I know how valuable it would be to get your help if I ever need it.”
2. “You’re welcome. It’s what colleagues do for one another.”
3. “Of course. I know that if the situation were ever reversed, you’d do the same for me.”
In sum, the key to optimizing the giving process in the workplace is to arrange for exchange, which involves two-steps: (1) giving favors first and (2) being sure to verbally position the favors as part of a natural and equitable reciprocal
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Inside Influence Report
Issue 90: Dec. 2008
"Arrange To Exchange" [Mastering the Rule of Reciprocity]
By Dr. Robert Cialdini
In this time of the year, often called “The Season of Giving,” it is worthwhile to consider certain aspects of the giving process that can lead to desirable outcomes, not just with family and friends but also with colleagues and coworkers.>
Research has long demonstrated the value of a generous spirit. After providing gifts, favors, services, or assistance to others, we become more liked, more appreciated, and even physically healthier. What’s more, those who have received from us typically stand ready to repay when we need something from them. This last benefit flows from the rule for reciprocation, which prescribes the willingness of people to pay back the form of behavior they have received. All human societies install this rule in their members from childhood for a simple reason: It confers great competitive advantages on a group it by encouraging profitable exchanges, mutually beneficial tradeoffs between group members in vital arenas of interaction such as commerce, defense, and care. In the workplace, this means that if you’ve complied with my request for help with one of my projects—let’s say by providing effort, resources, special information, etc.—I should be significantly more willing to comply with a request for help that you might make of me later on a project that’s important to you.>
With so many of the reasons for being a giver securely in the plus column, it would be easy to think that a large amount of giving on the job is a sure route to success there. Alas, human psychology is almost never so simple. Too much of a good thing can be a bad thing, even in the case of assistance. Take as evidence, a study done by Frances Flynn now at Stanford’s Graduate School of Business, who examined the consequences of favor-doing among employees at a large telecommunications firm. He measured the number of favors that workers did for one another along with a pair of noteworthy consequences. The first was the effect of favor-doing on the giver’s social status within the organization—the giver’s perceived worth to the company in the eyes of his or her coworkers. As we might have expected, those employees rated as more generous with their time, energy, and assistance were seen as more valuable. Achieving acknowledged social status in the workplace is no small feat and is a testament to the interpersonal gains that come from being a prodigious giver.>
But the second consequence of giving that Flynn examined, productivity on the job, did not paint so sunny a picture. Eight measures of individual productivity, including assessments of both the quantity and quality of assigned work, showed that those employees with the highest rated levels of assistance were significantly less productive than their colleagues. Why? Because they were so busy lending aid to others’ projects that they were unable to pay sufficient attention to their own. The Great Optimizer >
What are we to make of this state of affairs? If being a particularly openhanded giver on the job results in high social status but simultaneously reduces one’s personal productivity on assigned tasks, what are we best advised to do? It turns out that there is a clear answer, one that emerged from another component of Flynn’s study. It identified a single factor that amplified both social status and individual productivity. As we’ve seen, that optimizing factor wasn’t the number of favors done. Instead, it was the number of favors exchanged. Employees who first provided beneficial aid on coworkers’ projects and then got beneficial aid in return maximized the profitable effects of the giving process—not just for themselves but for all concerned—by rating high on status and production. Recall, this outcome is very much in keeping with the rule for reciprocity that is vital to all successful groups precisely because it fosters mutually advantageous exchanges.>
The implications of these results for each of us are clear. First, we should be liberal and proactive givers on the job. If we aren’t vigorous prime movers in the process, we can’t boost the number of favor exchanges that are so central to double-barreled success in the workplace . Second, and just as importantly, we should characterize our assistance in ways that heighten the likelihood that it will be reciprocated fully. How can we do that? I have three suggestions for possible such characterizations, each to be offered upon receiving thanks for our aid from the recipient. We could reply:>
1. “I was happy to help because I know how valuable it would be to get your help if I ever need it.”
2. “You’re welcome. It’s what colleagues do for one another.”
3. “Of course. I know that if the situation were ever reversed, you’d do the same for me.”
In sum, the key to optimizing the giving process in the workplace is to arrange for exchange, which involves two-steps: (1) giving favors first and (2) being sure to verbally position the favors as part of a natural and equitable reciprocal
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Monday, December 22, 2008
Private equity firms looking at reinsurance
http://uk.reuters.com/article/marketsNewsUS/idUKN1947153420081219
Private equity firms looking at reinsurance
Fri Dec 19, 2008 10:39pm GMT>
(Refiles to add "DEALTALK" to headline) (For more Reuters DEALTALKS, please click [DEALTALK/]) >
By Dan Wilchins>
NEW YORK, Dec 19 (Reuters) - U.S. private equity firms are looking at starting up reinsurance companies, after an active U.S. hurricane season created demand for coverage and stormy financial markets have weakened many potential competitors.>
The conversations are still in early stages, but consultants to the insurance industry say their phones are often ringing.>
"Before we used to get calls from hedge funds, but now we're mainly hearing from private equity firms," said Andrew Barile, an insurance consultant in Rancho Santa Fe, California.>
Hedge funds including Citadel Investments set up reinsurers in 2005, as newly flush funds looked for investment opportunities and harsh hurricanes like Katrina increased reinsurance demand.>
But hedge funds are broadly facing massive investor redemptions, and are hardly in a position to pour hundreds of millions of dollars into new companies. George Soros, one of the world's first hedge fund managers, estimates the industry will shrink by a half to two-thirds.>
Even reinsurers with no connection to hedge funds still have problems: they suffered significant losses from hurricanes this year. And with the U.S. stock market down by about 40 percent and the U.S. corporate bond market down more than 7 percent this year, reinsurers' investment portfolios have been hit hard.>
Anyone starting a reinsurer from scratch, without payouts to make and investment losses to bear, has a real advantage, Barile said.>
Demand for reinsurance -- which is basically insurance for insurance companies -- is increasing now after a tough hurricane year that cost insurers billions. Swiss Re said on Thursday that insured losses soared to $50 billion in 2008, making it among the costliest years ever, second only to 2005.>
Hurricane Ike alone cost the industry $20 billion this year, the reinsurer said.>
After a year like that, said Chris O'Kane, chief executive of Aspen Insurance, "There is a near infinite demand for Florida hurricane capacity." Aspen sells both insurance and reinsurance, and was founded in part by Blackstone Group (BX.N: Quote, Profile, Research) in 2001, during a big wave of private equity investment in reinsurers.>
NOT A SURE THING>
To be sure, any new reinsurer would face obstacles. Borrowing to help capitalize the firms could be difficult. And reinsurance is a tough business, so there is no guarantee that private equity firms, or any other startups, will make money where others have stumbled.>
"New entrants often come into the market, and learn three to five years down the road how hard it is to underwrite," said Bill Bergman, senior analyst covering reinsurers at Morningstar in Chicago.>
But it does make sense for private equity firms to consider pouring capital into the sector. By some estimates, they have more than $600 billion of capital to put to work now. Their standard way of making money, namely buying up companies using a good deal of debt, does not work very well during a credit crunch.>
A startup reinsurer that is properly capitalized could generate returns of more than 20 percent a year, said Barile, the consultant.>
That kind of performance is in line with what private equity investors look for, and could make any investor salivate in a year of plunging asset values.>
"There are a lot of reasons to look at something like this now," said one private equity fund manager. (Additional reporting by Megan Davies and Lilla Zuill, editing by Matthew Lewis) >
© Thomson Reuters 2008. All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.>
Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Private equity firms looking at reinsurance
Fri Dec 19, 2008 10:39pm GMT>
(Refiles to add "DEALTALK" to headline) (For more Reuters DEALTALKS, please click [DEALTALK/]) >
By Dan Wilchins>
NEW YORK, Dec 19 (Reuters) - U.S. private equity firms are looking at starting up reinsurance companies, after an active U.S. hurricane season created demand for coverage and stormy financial markets have weakened many potential competitors.>
The conversations are still in early stages, but consultants to the insurance industry say their phones are often ringing.>
"Before we used to get calls from hedge funds, but now we're mainly hearing from private equity firms," said Andrew Barile, an insurance consultant in Rancho Santa Fe, California.>
Hedge funds including Citadel Investments set up reinsurers in 2005, as newly flush funds looked for investment opportunities and harsh hurricanes like Katrina increased reinsurance demand.>
But hedge funds are broadly facing massive investor redemptions, and are hardly in a position to pour hundreds of millions of dollars into new companies. George Soros, one of the world's first hedge fund managers, estimates the industry will shrink by a half to two-thirds.>
Even reinsurers with no connection to hedge funds still have problems: they suffered significant losses from hurricanes this year. And with the U.S. stock market down by about 40 percent and the U.S. corporate bond market down more than 7 percent this year, reinsurers' investment portfolios have been hit hard.>
Anyone starting a reinsurer from scratch, without payouts to make and investment losses to bear, has a real advantage, Barile said.>
Demand for reinsurance -- which is basically insurance for insurance companies -- is increasing now after a tough hurricane year that cost insurers billions. Swiss Re said on Thursday that insured losses soared to $50 billion in 2008, making it among the costliest years ever, second only to 2005.>
Hurricane Ike alone cost the industry $20 billion this year, the reinsurer said.>
After a year like that, said Chris O'Kane, chief executive of Aspen Insurance, "There is a near infinite demand for Florida hurricane capacity." Aspen sells both insurance and reinsurance, and was founded in part by Blackstone Group (BX.N: Quote, Profile, Research) in 2001, during a big wave of private equity investment in reinsurers.>
NOT A SURE THING>
To be sure, any new reinsurer would face obstacles. Borrowing to help capitalize the firms could be difficult. And reinsurance is a tough business, so there is no guarantee that private equity firms, or any other startups, will make money where others have stumbled.>
"New entrants often come into the market, and learn three to five years down the road how hard it is to underwrite," said Bill Bergman, senior analyst covering reinsurers at Morningstar in Chicago.>
But it does make sense for private equity firms to consider pouring capital into the sector. By some estimates, they have more than $600 billion of capital to put to work now. Their standard way of making money, namely buying up companies using a good deal of debt, does not work very well during a credit crunch.>
A startup reinsurer that is properly capitalized could generate returns of more than 20 percent a year, said Barile, the consultant.>
That kind of performance is in line with what private equity investors look for, and could make any investor salivate in a year of plunging asset values.>
"There are a lot of reasons to look at something like this now," said one private equity fund manager. (Additional reporting by Megan Davies and Lilla Zuill, editing by Matthew Lewis) >
© Thomson Reuters 2008. All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.>
Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Your brain on shopping
http://www.boston.com/news/health/articles/2008/12/22/your_brain_on_shopping?mode=PF
Your brain on shopping
Neurscientists expose inner battle between pleasure and pain centers
By Carey Goldberg, Globe Staff December 22, 2008>
Shopping is war.>
The battle is not just among the jostling crowds at the sale bins and cash registers in these pre-Christmas days; it is also between warring factions of our own brains, some economists and neuroscientists say.>
Recent studies suggest that each buying decision plays out in the brain as a fight between a pleasure center seeking the bliss of acquisition and an aversion center seeking to avoid the pain of paying.>
In the hot field of neuroeconomics, MRI scans have turned up heightened activity in deep, primitive areas of the brain as subjects shop. The nucleus accumbens, a seat of pleasure, lights up when they are contemplating a purchase, and the insula, a seat of disgust and pain, lights up when they are thinking about how much that purchase is going to cost.>
As such findings accumulate, they suggest potential strategies for spending less - or at least, more wisely - at this difficult juncture of dark economy and season of light.>
"Your purchasing decisions are largely emotional, driven by very inarticulate feelings you have, this pain-versus-pleasure tug of war," said Jonah Lehrer, author of the forthcoming book, "How We Decide.">
"So it's very important to impose a little bit of deliberation onto that emotional process, force yourself to think long-term, and rationally think through the consequences of what is ultimately a very emotional decision," he added.>
How might that be done?>
Cash is best: First and foremost, researchers say, if you want to spend smarter, avoid using your credit card.>
"One of the pernicious qualities of credit cards is that they anesthetize the pain of paying, which is ordinarily your first defense against overspending," said George Loewenstein, professor of economics and psychology at Carnegie Mellon University.>
Need convincing? In a 2001 study, two professors at MIT's Sloan School of Management held an auction for tickets to a sold-out Celtics game, and divided subjects into those who must pay cash within 24 hours and those who must pay with credit cards. The credit-card buyers were willing to bid on average up to twice as much as the cash buyers, they found.>
Know your feelings: Be aware that emotions that do not penetrate conscious awareness, and that have little to do with an actual buying decision, may still affect it. One study found that shoppers tended to spend much more when they were feeling down. Another found that men who had just been exposed to erotic pictures were more willing to take economic risks, and the trick seemed to be that the erotica set the nucleus accumbens, the pleasure center, on a roll.>
"The idea is that if you can just change activation in these areas, no matter what the stimulus is, you might be able to push around financial decision-making," said Brian Knutson, an associate professor of psychology and neuroscience at Stanford.>
So how can you fight back against your unconscious emotions? Perhaps shop with a buddy who can supply reality checks, Knutson said. Others suggest shopping with a list and vowing not to deviate from it.>
To avoid the stimulating atmosphere of stores, you might want to shop online. But that also has its dangers. "I would say one-click shopping on the Internet is a lot more dangerous than paying cash at the store," Loewenstein said. "You can do a lot of damage in a short time.">
Lehrer also advises staying away from the free treats offered at Costco, Whole Foods, and elsewhere. As they activate the pleasure center, "they put you in the reward mood" for buying, said Lehrer.>
Keep your distance: Avoid flirting with items you cannot afford, trying them on or carrying them around until they start to feel like yours, to avert what neuro-economists call "the endowment effect.">
Knutson explains it like this: In his classes, he'll give a student a coffee mug, then ask how much he must pay to get the student to part with it. They usually reply that they'll sell it for $4 to $6. But if he asks the other students how much they'd pay for such a mug, they usually price it at $2 or $3. Though it makes no economic sense, we tend to value things more highly simply because they're ours. In a recent study, Knutson noted, brain scans bore out the phenomenon: the insula, the pain center, tended to kick in when subjects contemplated selling items they viewed as theirs.>
Keep moving: Some researchers warn against buying too much in one store. "You may experience something called 'decreasing sensitivity to losses,' " said Loewenstein. "Especially if you've spent a large amount, say $100, at a store, you don't want to start buying a bunch of small stuff, because it will start feeling free. If you go to another store, it won't feel free.">
Tightwads, in particular, need to watch out for this, he said, because they are prone to spending binges when they finally loosen their pursestrings.>
Beware of bargains: As with credit cards, studies have found that the feeling of getting a bargain blunts the pain of payment. Call it the "You can't go wrong at this price" effect. The insula lights up when people pay a price that seems high, and shuts down when they think they are getting a good deal, Loewenstein said: "That can interfere with rational decision-making just as much as the excitement about the good itself.">
Know why we buy: We give presents to foster social bonds, points out Dan Ariely, professor of behavioral economics at Duke and author of the recent book Predictably Irrational - and realizing that can help us refocus how we spend. Ariely says he tries to buy gifts that people wouldn't have bought for themselves, either because they would feel too decadent or because they lacked knowledge about the item.>
Get over the idea that it's about money, Ariely said, and "You might be able to spend much less and get much more meaning out of it.">
Carey Goldberg can be reached at goldberg@globe.com.
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Your brain on shopping
Neurscientists expose inner battle between pleasure and pain centers
By Carey Goldberg, Globe Staff December 22, 2008>
Shopping is war.>
The battle is not just among the jostling crowds at the sale bins and cash registers in these pre-Christmas days; it is also between warring factions of our own brains, some economists and neuroscientists say.>
Recent studies suggest that each buying decision plays out in the brain as a fight between a pleasure center seeking the bliss of acquisition and an aversion center seeking to avoid the pain of paying.>
In the hot field of neuroeconomics, MRI scans have turned up heightened activity in deep, primitive areas of the brain as subjects shop. The nucleus accumbens, a seat of pleasure, lights up when they are contemplating a purchase, and the insula, a seat of disgust and pain, lights up when they are thinking about how much that purchase is going to cost.>
As such findings accumulate, they suggest potential strategies for spending less - or at least, more wisely - at this difficult juncture of dark economy and season of light.>
"Your purchasing decisions are largely emotional, driven by very inarticulate feelings you have, this pain-versus-pleasure tug of war," said Jonah Lehrer, author of the forthcoming book, "How We Decide.">
"So it's very important to impose a little bit of deliberation onto that emotional process, force yourself to think long-term, and rationally think through the consequences of what is ultimately a very emotional decision," he added.>
How might that be done?>
Cash is best: First and foremost, researchers say, if you want to spend smarter, avoid using your credit card.>
"One of the pernicious qualities of credit cards is that they anesthetize the pain of paying, which is ordinarily your first defense against overspending," said George Loewenstein, professor of economics and psychology at Carnegie Mellon University.>
Need convincing? In a 2001 study, two professors at MIT's Sloan School of Management held an auction for tickets to a sold-out Celtics game, and divided subjects into those who must pay cash within 24 hours and those who must pay with credit cards. The credit-card buyers were willing to bid on average up to twice as much as the cash buyers, they found.>
Know your feelings: Be aware that emotions that do not penetrate conscious awareness, and that have little to do with an actual buying decision, may still affect it. One study found that shoppers tended to spend much more when they were feeling down. Another found that men who had just been exposed to erotic pictures were more willing to take economic risks, and the trick seemed to be that the erotica set the nucleus accumbens, the pleasure center, on a roll.>
"The idea is that if you can just change activation in these areas, no matter what the stimulus is, you might be able to push around financial decision-making," said Brian Knutson, an associate professor of psychology and neuroscience at Stanford.>
So how can you fight back against your unconscious emotions? Perhaps shop with a buddy who can supply reality checks, Knutson said. Others suggest shopping with a list and vowing not to deviate from it.>
To avoid the stimulating atmosphere of stores, you might want to shop online. But that also has its dangers. "I would say one-click shopping on the Internet is a lot more dangerous than paying cash at the store," Loewenstein said. "You can do a lot of damage in a short time.">
Lehrer also advises staying away from the free treats offered at Costco, Whole Foods, and elsewhere. As they activate the pleasure center, "they put you in the reward mood" for buying, said Lehrer.>
Keep your distance: Avoid flirting with items you cannot afford, trying them on or carrying them around until they start to feel like yours, to avert what neuro-economists call "the endowment effect.">
Knutson explains it like this: In his classes, he'll give a student a coffee mug, then ask how much he must pay to get the student to part with it. They usually reply that they'll sell it for $4 to $6. But if he asks the other students how much they'd pay for such a mug, they usually price it at $2 or $3. Though it makes no economic sense, we tend to value things more highly simply because they're ours. In a recent study, Knutson noted, brain scans bore out the phenomenon: the insula, the pain center, tended to kick in when subjects contemplated selling items they viewed as theirs.>
Keep moving: Some researchers warn against buying too much in one store. "You may experience something called 'decreasing sensitivity to losses,' " said Loewenstein. "Especially if you've spent a large amount, say $100, at a store, you don't want to start buying a bunch of small stuff, because it will start feeling free. If you go to another store, it won't feel free.">
Tightwads, in particular, need to watch out for this, he said, because they are prone to spending binges when they finally loosen their pursestrings.>
Beware of bargains: As with credit cards, studies have found that the feeling of getting a bargain blunts the pain of payment. Call it the "You can't go wrong at this price" effect. The insula lights up when people pay a price that seems high, and shuts down when they think they are getting a good deal, Loewenstein said: "That can interfere with rational decision-making just as much as the excitement about the good itself.">
Know why we buy: We give presents to foster social bonds, points out Dan Ariely, professor of behavioral economics at Duke and author of the recent book Predictably Irrational - and realizing that can help us refocus how we spend. Ariely says he tries to buy gifts that people wouldn't have bought for themselves, either because they would feel too decadent or because they lacked knowledge about the item.>
Get over the idea that it's about money, Ariely said, and "You might be able to spend much less and get much more meaning out of it.">
Carey Goldberg can be reached at goldberg@globe.com.
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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
The Secrets to Successful Strategy Execution
http://harvardbusinessonline.hbsp.harvard.edu/hbsp/hbr/articles/article.jsp?_requestid=27614&value=BR0806&ml_subscriber=true&ml_action=get-article&ml_issueid=BR0806&articleID=R0806C&pageNumber=1
Harvard Business Review, Jun 2008
The Secrets to Successful Strategy Execution
Research shows that enterprises fail at execution because they go straight to structural reorganization and neglect the most powerful drivers of effectiveness—decision rights and information flow.>
by Gary L. Neilson, Karla L. Martin, and Elizabeth Powers>
♦ INTERACTIVE TOOL: Use this simulator to test the effectiveness of various change initiatives.>
A brilliant strategy, blockbuster product, or breakthrough technology can put you on the competitive map, but only solid execution can keep you there. You have to be able to deliver on your intent. Unfortunately, the majority of companies aren’t very good at it, by their own admission. Over the past five years, we have invited many thousands of employees (about 25% of whom came from executive ranks) to complete an online assessment of their organizations’ capabilities, a process that’s generated a database of 125,000 profiles representing more than 1,000 companies, government agencies, and not-for-profits in over 50 countries. Employees at three out of every five companies rated their organization weak at execution—that is, when asked if they agreed with the statement “Important strategic and operational decisions are quickly translated into action,” the majority answered no.>
Execution is the result of thousands of decisions made every day by employees acting according to the information they have and their own self-interest. In our work helping more than 250 companies learn to execute more effectively, we’ve identified four fundamental building blocks executives can use to influence those actions—clarifying decision rights, designing information flows, aligning motivators, and making changes to structure. (For simplicity’s sake we refer to them as decision rights, information, motivators, and structure.)>
In efforts to improve performance, most organizations go right to structural measures because moving lines around the org chart seems the most obvious solution and the changes are visible and concrete. Such steps generally reap some short-term efficiencies quickly, but in so doing address only the symptoms of dysfunction, not its root causes. Several years later, companies usually end up in the same place they started. Structural change can and should be part of the path to improved execution, but it’s best to think of it as the capstone, not the cornerstone, of any organizational transformation. In fact, our research shows that actions having to do with decision rights and information are far more important—about twice as effective—as improvements made to the other two building blocks. (See the exhibit “What Matters Most to Strategy Execution.”)>
What Matters Most to Strategy Execution
Take, for example, the case of a global consumer packaged-goods company that lurched down the reorganization path in the early 1990s. (We have altered identifying details in this and other cases that follow.) Disappointed with company performance, senior management did what most companies were doing at that time: They restructured. They eliminated some layers of management and broadened spans of control. Management-staffing costs quickly fell by 18%. Eight years later, however, it was déjà vu. The layers had crept back in, and spans of control had once again narrowed. In addressing only structure, management had attacked the visible symptoms of poor performance but not the underlying cause—how people made decisions and how they were held accountable.>
This time, management looked beyond lines and boxes to the mechanics of how work got done. Instead of searching for ways to strip out costs, they focused on improving execution—and in the process discovered the true reasons for the performance shortfall. Managers didn’t have a clear sense of their respective roles and responsibilities. They did not intuitively understand which decisions were theirs to make. Moreover, the link between performance and rewards was weak. This was a company long on micromanaging and second-guessing, and short on accountability. Middle managers spent 40% of their time justifying and reporting upward or questioning the tactical decisions of their direct reports.>
Armed with this understanding, the company designed a new management model that established who was accountable for what and made the connection between performance and reward. For instance, the norm at this company, not unusual in the industry, had been to promote people quickly, within 18 months to two years, before they had a chance to see their initiatives through. As a result, managers at every level kept doing their old jobs even after they had been promoted, peering over the shoulders of the direct reports who were now in charge of their projects and, all too frequently, taking over. Today, people stay in their positions longer so they can follow through on their own initiatives, and they’re still around when the fruits of their labors start to kick in. What’s more, results from those initiatives continue to count in their performance reviews for some time after they’ve been promoted, forcing managers to live with the expectations they’d set in their previous jobs. As a consequence, forecasting has become more accurate and reliable. These actions did yield a structure with fewer layers and greater spans of control, but that was a side effect, not the primary focus, of the changes.>
The Elements of Strong Execution
Our conclusions arise out of decades of practical application and intensive research. Nearly five years ago, we and our colleagues set out to gather empirical data to identify the actions that were most effective in enabling an organization to implement strategy. What particular ways of restructuring, motivating, improving information flows, and clarifying decision rights mattered the most? We started by drawing up a list of 17 traits, each corresponding to one or more of the four building blocks we knew could enable effective execution—traits like the free flow of information across organizational boundaries or the degree to which senior leaders refrain from getting involved in operating decisions. With these factors in mind, we developed an online profiler that allows individuals to assess the execution capabilities of their organizations. Over the next four years or so, we collected data from many thousands of profiles, which in turn allowed us to more precisely calibrate the impact of each trait on an organization’s ability to execute. That allowed us to rank all 17 traits in order of their relative influence. (See the exhibit “The 17 Fundamental Traits of Organizational Effectiveness.)>
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Harvard Business Review, Jun 2008
The Secrets to Successful Strategy Execution
Research shows that enterprises fail at execution because they go straight to structural reorganization and neglect the most powerful drivers of effectiveness—decision rights and information flow.>
by Gary L. Neilson, Karla L. Martin, and Elizabeth Powers>
♦ INTERACTIVE TOOL: Use this simulator to test the effectiveness of various change initiatives.>
A brilliant strategy, blockbuster product, or breakthrough technology can put you on the competitive map, but only solid execution can keep you there. You have to be able to deliver on your intent. Unfortunately, the majority of companies aren’t very good at it, by their own admission. Over the past five years, we have invited many thousands of employees (about 25% of whom came from executive ranks) to complete an online assessment of their organizations’ capabilities, a process that’s generated a database of 125,000 profiles representing more than 1,000 companies, government agencies, and not-for-profits in over 50 countries. Employees at three out of every five companies rated their organization weak at execution—that is, when asked if they agreed with the statement “Important strategic and operational decisions are quickly translated into action,” the majority answered no.>
Execution is the result of thousands of decisions made every day by employees acting according to the information they have and their own self-interest. In our work helping more than 250 companies learn to execute more effectively, we’ve identified four fundamental building blocks executives can use to influence those actions—clarifying decision rights, designing information flows, aligning motivators, and making changes to structure. (For simplicity’s sake we refer to them as decision rights, information, motivators, and structure.)>
In efforts to improve performance, most organizations go right to structural measures because moving lines around the org chart seems the most obvious solution and the changes are visible and concrete. Such steps generally reap some short-term efficiencies quickly, but in so doing address only the symptoms of dysfunction, not its root causes. Several years later, companies usually end up in the same place they started. Structural change can and should be part of the path to improved execution, but it’s best to think of it as the capstone, not the cornerstone, of any organizational transformation. In fact, our research shows that actions having to do with decision rights and information are far more important—about twice as effective—as improvements made to the other two building blocks. (See the exhibit “What Matters Most to Strategy Execution.”)>
What Matters Most to Strategy Execution
Take, for example, the case of a global consumer packaged-goods company that lurched down the reorganization path in the early 1990s. (We have altered identifying details in this and other cases that follow.) Disappointed with company performance, senior management did what most companies were doing at that time: They restructured. They eliminated some layers of management and broadened spans of control. Management-staffing costs quickly fell by 18%. Eight years later, however, it was déjà vu. The layers had crept back in, and spans of control had once again narrowed. In addressing only structure, management had attacked the visible symptoms of poor performance but not the underlying cause—how people made decisions and how they were held accountable.>
This time, management looked beyond lines and boxes to the mechanics of how work got done. Instead of searching for ways to strip out costs, they focused on improving execution—and in the process discovered the true reasons for the performance shortfall. Managers didn’t have a clear sense of their respective roles and responsibilities. They did not intuitively understand which decisions were theirs to make. Moreover, the link between performance and rewards was weak. This was a company long on micromanaging and second-guessing, and short on accountability. Middle managers spent 40% of their time justifying and reporting upward or questioning the tactical decisions of their direct reports.>
Armed with this understanding, the company designed a new management model that established who was accountable for what and made the connection between performance and reward. For instance, the norm at this company, not unusual in the industry, had been to promote people quickly, within 18 months to two years, before they had a chance to see their initiatives through. As a result, managers at every level kept doing their old jobs even after they had been promoted, peering over the shoulders of the direct reports who were now in charge of their projects and, all too frequently, taking over. Today, people stay in their positions longer so they can follow through on their own initiatives, and they’re still around when the fruits of their labors start to kick in. What’s more, results from those initiatives continue to count in their performance reviews for some time after they’ve been promoted, forcing managers to live with the expectations they’d set in their previous jobs. As a consequence, forecasting has become more accurate and reliable. These actions did yield a structure with fewer layers and greater spans of control, but that was a side effect, not the primary focus, of the changes.>
The Elements of Strong Execution
Our conclusions arise out of decades of practical application and intensive research. Nearly five years ago, we and our colleagues set out to gather empirical data to identify the actions that were most effective in enabling an organization to implement strategy. What particular ways of restructuring, motivating, improving information flows, and clarifying decision rights mattered the most? We started by drawing up a list of 17 traits, each corresponding to one or more of the four building blocks we knew could enable effective execution—traits like the free flow of information across organizational boundaries or the degree to which senior leaders refrain from getting involved in operating decisions. With these factors in mind, we developed an online profiler that allows individuals to assess the execution capabilities of their organizations. Over the next four years or so, we collected data from many thousands of profiles, which in turn allowed us to more precisely calibrate the impact of each trait on an organization’s ability to execute. That allowed us to rank all 17 traits in order of their relative influence. (See the exhibit “The 17 Fundamental Traits of Organizational Effectiveness.)>
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Friday, December 19, 2008
People 'still willing to torture' ...why apparently ordinary people can commit atrocities
http://news.bbc.co.uk/1/hi/health/7791278.stm
Abstract: "May help explain why apparently ordinary people can commit atrocities..."What we found is validation of the same argument - if you put people in certain situations, they will act in surprising and maybe often even disturbing ways."... when placed under pressure, people will often do "unsettling" things... "It's not that these people are simply not good people any more - [rather]there is a massive social influence going on."..."They tend to identify massively with the 'experimenter', and become very engaged and distracted by the research
BBC News
Page last updated at 10:41 GMT, Friday, 19 December 2008
People 'still willing to torture'
Decades after a notorious experiment, scientists have found test subjects are still willing to inflict pain on others - if told to by an authority figure. >
US researchers repeated the famous "Milgram test", with volunteers told to deliver electrical shocks to another volunteer - played by an actor. >
Even after faked screams of pain, 70% were prepared to increase the voltage, the American Psychology study found. >
Both may help explain why apparently ordinary people can commit atrocities. >
Yale University professor Stanley Milgram's work, published in 1963, recruited volunteers to help carry out a medical experiment, with none aware that they were actually the subject of the test. >
A "scientist" instructed them to deliver a shock every time the actor answered a question wrongly. >
When the pretend 150-volt shock was delivered, the actor could be heard screaming in pain, and yet, when asked to, more than eight out of ten volunteers were prepared to give further shocks, even when the "voltage" was gradually increased threefold. >
Some volunteers even carried on giving 450-volt shocks even when there was no further response from the actor, suggesting he was either unconscious or dead. >
Similar format >
Dr Jerry Burger, of Santa Clara University, used a similar format, although he did not allow the volunteers to carry on beyond 150 volts after they had shown their willingness to do so, suggesting that the distress caused to the original volunteers had been too great. >
Again, however, the vast majority of the 29 men and 41 women taking part were willing to push the button knowing it would cause pain to another human. >
Even when another actor entered the room and questioned what was happening, most were still prepared to continue. >
He told Reuters: "What we found is validation of the same argument - if you put people in certain situations, they will act in surprising and maybe often even disturbing ways." >
He said that it was not that there was "something wrong" with the volunteers, but that when placed under pressure, people will often do "unsettling" things. >
Even though it was difficult to translate laboratory work to the real world, he said, it might partly explain why, in times of conflict, people could take part in genocide. >
Complex task >
Dr Abigail San, a chartered clinical psychologist, has recently replicated the experiment for a soon-to-be-aired BBC documentary - all the way up to the 450-volt mark, again finding a similar outcome to Professor Milgram. >
"It's not that these people are simply not good people any more - there is a massive social influence going on." >
She said that the volunteers were being asked to carry out a complex task in aid of scientific research, and became entirely focused on it, with "little room" left for considering the plight of the person receiving the shock. >
"They tend to identify massively with the 'experimenter', and become very engaged and distracted by the research. >
"There's no opportunity for them to say 'What's my moral stand on this?'" >
Story from BBC NEWS:http://news.bbc.co.uk/go/pr/fr/-/1/hi/health/7791278.stmPublished: 2008/12/19 10:41:36 GMT© BBC MMVIII
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
Abstract: "May help explain why apparently ordinary people can commit atrocities..."What we found is validation of the same argument - if you put people in certain situations, they will act in surprising and maybe often even disturbing ways."... when placed under pressure, people will often do "unsettling" things... "It's not that these people are simply not good people any more - [rather]there is a massive social influence going on."..."They tend to identify massively with the 'experimenter', and become very engaged and distracted by the research
BBC News
Page last updated at 10:41 GMT, Friday, 19 December 2008
People 'still willing to torture'
Decades after a notorious experiment, scientists have found test subjects are still willing to inflict pain on others - if told to by an authority figure. >
US researchers repeated the famous "Milgram test", with volunteers told to deliver electrical shocks to another volunteer - played by an actor. >
Even after faked screams of pain, 70% were prepared to increase the voltage, the American Psychology study found. >
Both may help explain why apparently ordinary people can commit atrocities. >
Yale University professor Stanley Milgram's work, published in 1963, recruited volunteers to help carry out a medical experiment, with none aware that they were actually the subject of the test. >
A "scientist" instructed them to deliver a shock every time the actor answered a question wrongly. >
When the pretend 150-volt shock was delivered, the actor could be heard screaming in pain, and yet, when asked to, more than eight out of ten volunteers were prepared to give further shocks, even when the "voltage" was gradually increased threefold. >
Some volunteers even carried on giving 450-volt shocks even when there was no further response from the actor, suggesting he was either unconscious or dead. >
Similar format >
Dr Jerry Burger, of Santa Clara University, used a similar format, although he did not allow the volunteers to carry on beyond 150 volts after they had shown their willingness to do so, suggesting that the distress caused to the original volunteers had been too great. >
Again, however, the vast majority of the 29 men and 41 women taking part were willing to push the button knowing it would cause pain to another human. >
Even when another actor entered the room and questioned what was happening, most were still prepared to continue. >
He told Reuters: "What we found is validation of the same argument - if you put people in certain situations, they will act in surprising and maybe often even disturbing ways." >
He said that it was not that there was "something wrong" with the volunteers, but that when placed under pressure, people will often do "unsettling" things. >
Even though it was difficult to translate laboratory work to the real world, he said, it might partly explain why, in times of conflict, people could take part in genocide. >
Complex task >
Dr Abigail San, a chartered clinical psychologist, has recently replicated the experiment for a soon-to-be-aired BBC documentary - all the way up to the 450-volt mark, again finding a similar outcome to Professor Milgram. >
"It's not that these people are simply not good people any more - there is a massive social influence going on." >
She said that the volunteers were being asked to carry out a complex task in aid of scientific research, and became entirely focused on it, with "little room" left for considering the plight of the person receiving the shock. >
"They tend to identify massively with the 'experimenter', and become very engaged and distracted by the research. >
"There's no opportunity for them to say 'What's my moral stand on this?'" >
Story from BBC NEWS:http://news.bbc.co.uk/go/pr/fr/-/1/hi/health/7791278.stmPublished: 2008/12/19 10:41:36 GMT© BBC MMVIII
***********************************************************************
This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
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