Posts

Jeffrey Gitomer

Want to Start Making an Attitude Change? Take Attitude Actions.

I define attitude as, “The way you dedicate yourself to the way you think.” Think negative or think positive is a choice and a process. Negative is (unfortunately) an instinctive process. Positive is a learned self-discipline that must be studied and practiced every day.

To achieve a POSITIVE attitude, or as I have named it, a “YES! Attitude,” you must take physical, verbal, and mental ACTIONS. Here are a few short chunks of attitude “awareness and actions” that will help put you (or keep you) on the positive path.

1. Admit that attitude is no one’s fault but yours. The more you blame others, the less chance you have to think positive thoughts, see a positive solution, or take positive action towards solution. The opposite of blame is responsibility. Your first responsibility is to control your inner thoughts and thought directions.

2. Understand you always have (had) a choice. Attitude is a choice, and most people select from the negative column. Reason? Negative is more pervasive in society and media. It’s more natural to blame and defend than it is to admit and take responsibility. Ask any politician.

3. If you think it’s ok, it is…if you think it’s not ok, it’s not. Your thoughts direct your attitude to a path. If you think “this is crappy, why does this always happen to me?” You have chosen a negative path. If you think “WOW, this may not be the greatest, but look what I’m learning. And learning what NOT to do again.” You have chosen a positive path.

4. Invest time, don’t spend it. Ignore the media you cannot control – find a project, or make a plan to sell something, or meet with someone who buys (or teaches) instead. You will become a world-class expert in five years – the only question is: at what? Spend (invest) an hour a day working at or studying anything, and in five years you will be a world-class expert. Most people will become world-class experts at some kind of local TV news program and some kind of TV rerun. Me? I read and write while you watch TV. Business news is IMPORTANT. Who got killed or what burned down, unimportant.

5. Study the thoughts and writings of positive people. Read Napoleon Hill classic Think and Grow Rich, TWICE. Read The Power of Positive Thinking. They are priceless, timeless gems of wisdom that you can convert to your own success thoughts. The secret is to read a little each morning.

6. Attend seminars and take courses. The hardest part of taking an attitude course is FINDING one. Look at any school or university in the world and try to find ONE course in ANY of them. I’ll save you the time. The answer is (and has always been) ZERO. Find a Gitomer Certified Advisor in your city (call my friendly office for recommendations – (704) 333-1112) and take YOUR attitude course TODAY.

7. Check your language. It’s just words, but they are a reflection of how your mind sees things, and an indication of how you process thoughts.

8. Avoid confrontational and negative words. The worst ones are ‘why,’ ‘can’t,’ and ‘won’t.’

9. Say why you LIKE things and people, not why you don’t. I like my job because… I love my family because… Say things from the positive side enough and it becomes a habit you will revel in for life.

10. Help others without expectation or measuring. If you think someone ‘owes you one,’ you are counting or measuring. If you give it away freely, you don’t ever have to worry about the measurement. The world will reward you ten times over.

11. Think about your winning and losing words. Be aware of ‘loser’ phrases and expressions. Lose with: “They don’t pay me enough to…” or “That’s not my job.” If you say, “I’m not ’cause he’s not,” who loses? If you say, “Why should I…” who loses? Think ‘learn,’ ‘lessons,’ ‘experience,’ ‘help,’ and ‘solutions’ before you make a statement.

12. Think about your mood, and your mood swings. How long do you stay in a bad mood? If it’s more than 5 minutes, something’s wrong. And your attitude (and your relationships, and your results, and your success) will suffer.

13. Are you the head of the complaint department, AND the chief complainer? Many people slip into cynicism day-by-day. They become bitter because of their jealousy or envy of other people or their own misfortune. BIG MISTAKE. List the lessons you can learn from those you have bitterness for and the results will turn your thinking towards your own success and away from theirs.

14. Celebrate victory AND defeat. In my early days of selling I would go to a department store and buy myself something every time I made a sale. It made me feel GREAT! When someone told me to celebrate victory AND defeat, I started to buy myself something after I lost a sale, too. It felt GREAT. After a while I was feeling GREAT all the time. Winning and losing are part of life and apart from attitude.

15. Visit a children’s hospital. Get comfortable with the plight of others, and feel good about the minuteness of your problems compared to theirs.

15.5 Count your blessings every day. Make the list as long as you can. Start with health if you are fortunate enough to have it. Add the love of children and family. From there it’s easy to build the list.

Oh, and then there are the ‘Attitude Aha’s.’ Many (many) years ago I was riding down the road listening to a tape by Earl Nightingale (one of the founding fathers of personal development). On tape four of his legendary, but unavailable, series “Direct Line,” the topic was enthusiasm. “Enthusiasm” Earl said, “Comes from the Greek “entheos” meaning the God within.” AHA! All of a sudden all the other quotes and advice made sense. The strength of self-belief is within your own spirit, if you hunger for the feeling.

And these words are food for yours. In the words of the Jefferson Airplane rock anthem White Rabbit, “Feed your head.”

Want an instant lesson? Go out and buy a copy of “The Little Engine That Could.” Or go to your kid’s room and get the copy full of crayon marks. Read it regularly. It’s not a book for kids, it’s a philosophy for a lifetime.

Positive attitude is a self-imposed blessing. And it is my greatest hope that you discover that truth and bless yourself forever.


About the Author

Jeffrey GitomerJeffrey Gitomer is the author of The Sales Bible, Customer Satisfaction is Worthless Customer Loyalty is Priceless, The Little Red Book of Selling, The Little Red Book of Sales Answers, The Little Black Book of Connections, The Little Gold Book of YES! Attitude, The Little Green Book of Getting Your Way, The Little Platinum Book of Cha-Ching, The Little Teal Book of Trust, The Little Book of Leadership, and Social BOOM! His website, www.gitomer.com, will lead you to more information about training and seminars, or email him personally at [email protected].

StrategyDriven Podcast Series

StrategyDriven Editorial Perspective – Good Intentions, Bad Results: Learning from the Panic of 1826

Good Intentions, Bad Results: Learning from the Panic of 1826They say the road to hell is paved with good intentions. In 1825, to deal with the “Indian Problem,” the US Congress formed a region known as “Indian Country,” lands West of the Mississippi (today Oklahoma). Their intentions were good.

“The removal of the tribes from the territory which they now inhabit would not only shield them from impending ruin, but promote their welfare and happiness,” President James Monroe told Congress on January 27. He went so far as to say that without a defined Indian country “their degradation and extermination will be inevitable.”

It’s heartening to know that at least some of the President’s contemporaries could see through his good intentions. New York County District Attorney Hugh Maxwell and twelve other prominent New Yorkers wrote in a pamphlet published in1825 that “the American Indians, now living upon lands derived from their ancestors and never alienated or surrendered, have a perfect right to the continued and undisturbed possession of these lands,” and the “removal of any nation of Indians from their country by force would be an instance of gross and cruel oppression.”

History was not on Mr. Maxwell’s side, nor with his attempts to reform the financial industry a few years later. His prosecution of the Life & Fire Insurance Company, whose owners Jacob Barker, et al perpetuated a fraud that led to the Panic of 1826, resulted in a hung jury. (Eventually, Mr. Maxwell’s efforts did lead to comprehensive reform, including: financial reporting requirements, accounting standards, and defined roles & responsibilities for directors, according to Professor Eric Hilt in a paper about the Panic of 1826.)

Mr. Maxwell’s rationality was no match for his era’s good intentions. For what lead Life & Fire’s directors to commit fraud in the first place was in part driven by a desire (so they claimed) to extend credit to high-risk borrowers being ignored by traditional banks. When those borrowers started to default en masse, fraud appeared to be the only way to repay their investors, but unfortunately, even that didn’t work.

Why was an insurance company doing a bank’s work? In the 19th century, banking was the most profitably industry in America, and incumbent banks fought hard to protect their profits. To open a new one involved special-act charters and bitter legislative battles. Would-be owners required both political and financial capital, which few had in equal measure.

Enterprising merchants like Mr. Barker started circumventing these laws by forming insurance companies whose charter empowered them to lend their capital. In so doing, they created a new financial product called a post note. A typical post note transaction went as follows: a borrower approached an insurance company and requested a six-month IOU of $1000, minus a discount of say 3%. The borrower would then sell the discounted $970 post note on the money market, also paying a discount to the post note purchaser of say $30, receiving $940 in cash.

After six months, the borrower would repay the insurance company’s IOU of $1000. The insurance company would repay the money market investor’s post note of $970, yielding a $30 profit for both the insurance company and the investor.

While rates and terms varied, it was not unusual for post notes to trade at yields of 2 percent per month or more, compared to banks that were lending at yields of five percent per year, Professor Hilt’s research found. Needless to say, these products were very profitable as long as default rates were low.

But higher yield meant higher risk, since borrowers who sought out post notes did so because they did not qualify for the less expensive credit from traditional banks. Despite their dubious quality, the corporate guaranty by the insurance company created a sense that the investments were safe. This combination of high yield and seemingly low risk sparked a credit boom.

“The judge the lawyer the doctor the clergy the widow the trustee of orphans all fell into the common vortex of investing in these bonds,” Life and Fire Insurance Company director Jacob Barker wrote in a letter in 1827.

Like post notes, what made sub-prime mortgage-backed securities (MBS) so attractive to investors during the boom years was their high yield and perceived low risk. Unlike 1826, where the secondary market was created by the private sector, our government in many ways created the secondary market that gave sub-prime loans both the cash and perceived safety they needed to expand.

This was all done with good intentions. Looking to increase the homeownership rate and “foster affordable housing,” the Housing and Urban Development (HUD) department issued regulations that required 55% of all government sponsored entities (GSEs) to purchase “affordable” loans from banks, either directly or through packaged MBS.

Most of these “affordable” loans were in fact sub-prime, “for persons with blemished or limited credit histories,” and “carry a higher rate of interest than prime loans to compensate for increased credit risk,” according to HUD.gov. In 2009, forty percent of mortgages were sub-prime according to Forbes.com.

By 2007, Fannie Mae and Freddie Max held $227 billion (one in six loans) in nonprime (aka subprime) pools, and approximately $1.6 trillion in low-quality loans altogether, according to Forbes.com and the Congressional Budget Office (CBO).

“That was a huge, huge mistake,” said Patricia McCoy, who teaches securities law at the University of Connecticut. “That just pumped more capital into a very unregulated market that has turned out to be a disaster.”

Nonetheless, when the crisis hit in the Fall 2008, the financial world seemed to be blind-sided. “It’s a new financial world on the verge of a complete reorganization,” said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

But was it a new financial world? In many ways, looking back to the Panic of 1826, we see ourselves looking back at us. Both were defined by financial innovations that seemed to defy the natural law of risk and reward, by promising a high yield and low risk. Both crises fooled investors into believing that transferring risk is the same thing as removing it. Both crises were made worse by the good intention that lending money to people who can’t pay it back is good for society. Both crises proved it’s not.

In our time, the implosion of the subprime lending market “has left a scar on the finances of black Americans,” the Washington Post reported in 2012, “that not only wiped out a generation of economic progress but could leave them at a financial disadvantage for decades.” (HUD.gov studies reveal that African-Americans are one-and-a-half times more likely to have a subprime loan than persons in white neighborhoods.)

Like the comprehensive financial reforms made after the 1826 panic, we can be reasonably sure that the numerous reforms issued after our own will fail to avert another crisis. This is because financial regulation cannot address the cause of financial crises that lives in our mirror. As long as there are borrowers who can’t see through good intentions, and take on more debt then they can repay, there will be financial crises.

Real financial reform means living within our means, and abiding by the natural law of risk and reward. With the rising default rate on student loans, the increasing popularity of sub-prime auto loans, I fear that we have not yet learned our lesson. I’m confident we will eventually, but like our predecessors, it may have to be the hard way.


About the Author

Cara WickCara Wick writes about American financial and political history at www.bankersnotes.com. She holds a BA from Williams College and an MBA from the University of Iowa. Cara can be reached at [email protected].

StrategyDriven Podcast Series

StrategyDriven Editorial Perspective – Panic of 1907 vs Great Recession of 2008

Panic of 1907 vs Great Recession of 2008This year, 2013, marks the 100th anniversary of the Federal Reserve System, and central bankers are taking a historical perspective. That is “good advice in general,” Fed Chairman Ben Bernanke told attendees at the Fourteenth Jacques Polak Annual Research Conference, in Washington, D.C earlier this month.

“An appreciation of the parallels between recent and historical events greatly influenced how I and many of my colleagues around the world responded to the crisis,” Mr. Bernanke said.

He went on to describe the similarities between the banking crisis of 1907 – the one that inspired the formation of the Federal Reserve – and the more recent 2008 financial crisis.

Both fit the archetype of a classic financial panic, Bernanke said. Both crises started in an economy in recession and both suffered from a sudden lack of liquidity.

In 1907, money was tight in part due to the rebuilding of San Francisco. After the Bank of England raised its discount rate, causing more gold to flow out of the US, New York was left with unusually low monetary reserves just as it entered the cash-intensive harvest season, explained Ellis Tallman and Jon Moen in a 1990 article about the Panic in the Atlanta Fed’s Economic Review.

In the more recent crises, Bernanke explained, liquidity started to dry up when housing prices declined, and subprime mortgage defaults rose in 2007. As the underwriting weaknesses of subprime portfolios became known, banks stopped lending to each other, paralyzing credit markets. By 2008, losses from these portfolios were causing banks to fail.

In both crises, a tinder-dry credit environment made them vulnerable to sparks. In 1907, the fire started when F. Augustus Heinze and C.F. Morse tried and failed to corner the stock of the United Copper Company. The investigation into the scam revealed an intricate web of corrupt bankers and brokers. (Heinze was president of Mercantile National Bank, and Morse served on seven New York City bank boards.) When the president of the second largest trust in the country was implicated in the copper cornering con, depositors started a run on Knickerbocker Trust.

Without a central bank, the availability of liquidity depended on the discretion of firms and private individuals, Bernanke explained. The Lehman Brothers moment of 1907 came when New York’s financiers, led by J.P. Morgan, were unable to value the trusts, and refused to ‘bail out’ Knickerbocker. (Unregulated and a relatively new innovation, trusts were the ‘toxic assets‘ of the 1907 crises. Trusts, however, were financed by consumer deposits, while the toxic asset of 2008 were securities contracts held by investment banks.)

Their refusal prevented other institutions from offering aid, and depositors started a massive run on banks and trusts, exacerbating the liquidity crises. (In 2008 a loss of confidence in the banking system did not turn into a consumer run on banks primarily because of FDIC deposit insurance.)

Morgan et al realized that a failure of the trusts could spread to the entire financial system, and they ultimately convinced John D. Rockefeller and others to pony up enough cash to stabilize the markets.

Similarly, American lawmakers eventually agreed that failure of the nation’s largest financial institutions was not an option, and passed the $700 billion Trouble Asset Relief Program in October 2008 (reduced to $475 billion by the Dodd-Frank Act). This program was designed “to strengthen market stability, improve the strength of financial institutions, and enhance market liquidity,” according to the Federal Reserve.

A major difference between the two crises, that I can see, is the popular perception of these liquidity liberators. In 1907, Senator Nelson Aldrich called the actions of JP Morgan and crew heroic. In his arguments for centralized banking reprinted in the New York Tribune, he warned that without it “men may not be found in another emergency with the patriotism, courage and capacity of those who in this crisis rendered such inconspicuous and invaluable service to the financial interests of this country.”

But in the 2008 crisis, when taxpayers rendered this very same “invaluable service,” people stormed the streets in protest. From the tea party conservative to the Wall Street occupier, hatred of the bailouts was met with bipartisan vehemence.

So why is it that when a handful of wealthy individuals restore liquidity to a broken system they are courageous patriots, but when it’s taxpayer’s, lawmakers are voted out of office? Perhaps the vehemence comes from how the money was used. In 1907, it was to save consumer’s retail deposits, in 2008 corporate wholesale funds.

As Bernanke explains in his speech, seeking to stem the panic in wholesale funding markets, in 2008 the Fed “extended its lender-of-last-resort facilities to support nonbank institutions such as investment banks.” This had little direct impact on consumers. As Fed governor Daniel Tarullo recently said “the savings of most U.S. households are generally not directly at risk in short-term wholesale funding arrangements.”

In 1907, on the other hand, ending bank runs meant “widows on the corner” could cash their checks, shop-owners could feed their families.

Another problem with the 2008 solution, from the popular perspective, was the moral hazard it created.

Senator Aldrich worried that courageous individuals might be hard to find in a financial emergency, and it appears he was right to worry. Senior executives in 2008 were not interested in rendering an inconspicuous service to the financial interests of the country. They didn’t even want to forego their bonuses. But in trying to account for the rarity of courage, lawmakers in 1913 may have created a system that prevents it from emerging.

A July 2013 Congressional research report articulates a challenge for today’s central bankers. “Although ‘too big to fail’ (TBTF) has been a perennial policy issue, it was highlighted by the near-collapse of several large financial firms in 2008… If a TBTF firm believes that the government will protect them from losses, they have less incentive to monitor the firm’s riskiness because they are shielded from the negative consequences of those risks.”

In 1907, the wealthy elite pooled their resources to prevent the failure of banks and trusts, saving millions in consumer deposits. In so doing they bore the brunt of the consequences of their risks, and Americans considered them heroes for it.


About the Author

Cara WickCara Wick writes about American financial and political history at www.bankersnotes.com. She holds a BA from Williams College and an MBA from the University of Iowa. Cara can be reached at [email protected].

StrategyDriven Podcast Series

StrategyDriven Editorial Perspective – The Ugly Truth About Partisan Public Project Labor Agreements

While we voice concerns about debt and spending, we also need to be mindful of the state of employers, particularly small business and their struggles to remain competitive and viable. Statistically small business, employers of at least 50 percent of our workforce, are struggling, and eager to get your business. They are begging to serve you while balancing unclear taxes, health insurance obligations, and uncertain ability to make payroll. Public project labor agreements (PLAs) provide another hurdle, unless their employees choose to pay union dues.

Here is the ugly truth for small business employers without union workers…

As the result of $50 Million in Hurricane Sandy damage, the New Jersey Senate passed Bill S24251 that approves PLAs. That means that non-union employers will not be included in the bidding process for public work or state funded contracts unless there is a collective bargaining (union) contract representing employees. This is not only bidding preference, this is a freeze small businesses out of competitive bidding unless their employees pay union dues.

In other words, non-union contractors have no place in this public work, period. The NJ Senate Bill S2425 enhanced their existing law in New Jersey for PLAs to include roads, bridges, and water treatment. The bill was introduced and sponsored by Senate President Steve Sweeney, former vicinity president of Iron Workers District Council of Philadelphia. This is a stark contradiction to Sweeney’s inaugural goals including “encourage shared public services among local governments as a way to reduce spending… and make the state business friendly.”2 This Senate Bill is hardly a cost saving, business friendly measure.

Further, in support of unions, on February 6, 2009, President Obama signed an executive order reversing George H. W. Bush’s prohibition on the requirement for project labor agreements on federal projects.3 Obama claimed “it was the government’s policy to encourage the use of labor agreements to avoid misunderstandings about the cost of labor and to ensure that one contractor’s workforce problems during a project not delay other teams involved in the contract.” What it does not address is the freezing out of non-union bidders and the increases in taxpayer costs.

Statistically speaking, only 13.2 percent of the 2012 U.S. private construction workforce belongs to unions.4 This information represents that 87 percent of this employment sector are non-union employees, a solid supposition that they are from the small business sector.

Is this precipitating and/or worsening the status quo with small business? The success of small business is largely measured on their ability to hire and maintain employees. Their success for work is neither viable nor likely considering PLAs. According to the 2012 Year End Economic Report of the National Small Business Association,

  • Just over one-third (38 percent) anticipate their firms will grow in the coming year—the lowest this indicator has been since we began asking this question in December 2009;
  • Hiring remains stagnant with the number of small-business owners who project decreases to their employment size in the coming year rising from 12 percent to 16 percent;5

The reality is that there is a major difference between supporting unions and taking away legitimate bidding power from small contractors and family owned, non-union businesses. And, the competitive bidding process is in place to assure the best look at products, quality of services, at the best price. Competitive bidding is most often used by government agencies that are required by law to open contracts for bid and must award business to the lowest bidder. This is intended to ensure impartiality in buying decisions and assure the best price.

Further included in a PLA is the stipulation that may require even non-union contractors to make contributions to the union benefit and pension funds for each employee. That would result in additional contributions (possibly double the cost) to employers for benefits and pensions that have already been provided.

All eyes are on New Jersey Governor Chris Christie to see what he will do with the NJ approved State Bill 2425. According to Chris Christie’s Office, he will consider the bill including a possible veto when it reaches his desk. Republican Governor Christie is a union supporter, who is up for re-election in November, 2013.

We must not forget, the costs to taxpayers on project labor agreements is between 12 and 18 percent higher when union contractors are only part of the bidding process.6

House Bill HR 436 has been introduced by Congressman Andy Harris (R) from Maryland which would prohibit preference to labor unions or other discriminatory provisions in government projects.7 The Bill has been referred to the House Committee on Oversight and Government Reform.

We know our priorities, at least according to public opinion; Jump start the economy, provide avenues for small business to thrive, patronize local business – not exactly the focus of legislators. The survival of small business is being largely ignored by the elected officials of New Jersey and Washington who must remember that they also represent small businesses, and workers who choose not to be represented by labor unions.

Keep in mind that the National Labor Relations Act clearly protects the rights of employees to form and join unions but it also provides the right to refrain from association with unions. These actions could result in a process of “pay to play” – or in this case, pay to work.

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About the Author

Wendy Powell is the author of Management Experience Acquired. With more than twenty-five years of human resource and management consulting experience, Wendy has spent most of her career at the University of Michigan. She is currently on the business faculty at both Palm Beach State College and the University of Phoenix. A member of the Society of Human Resource Management, she received a leadership award in 2002 from the Midwest College and University Professional Association for Human Resources. She is routinely featured on The Huffington Post and has appeared on Fox Business’s The Strategy Room. Wendy holds a Bachelor of Science degree in business management and a Master of Arts degree in organizational management.


References

  1. http://www.njleg.state.nj.us/2012/Bills/S2500/2425_I1.HTM
  2. http://www.impact-net.org/news/iron-workers-district-council-president-steve-sweeney-sworn-in-as-nj-senate/
  3. http://www.whitehouse.gov/the_press_office/EXECUTIVEORDERUSEOFPROJECTLABORAGREEMENTSFORFEDERALCONSTRUCTIONPROJECTS/
  4. http://www.bls.gov/news.release/union2.t03.htm
  5. http://www.nsba.biz/?p=5242
  6. http://thetruthaboutplas.com/get-the-truth/
  7. http://thomas.loc.gov/cgi-bin/bdquery/z?d113:HR00436:@@@D&summ2=m&
StrategyDriven Podcast Series

StrategyDriven Editorial Perspective – The National Debt and Federal Budget Deficit Deconstructed

How big is the U.S. national debt? Could large corporations and the rich ‘bailout’ the Federal government?

In this video, Tony Robbins masterfully illustrates just how large the $15 trillion U.S. national debt really is and the degree of ‘commitment’ necessary to satisfy our government’s insatiable spending. This eye-opening commentary is neither political nor directive, it simply seeks to raise awareness to the plague overshadowing our markets, our government, and our society.