2012 Economic Forecast, Birmingham Business Journal and Samford Brock School of Business

I phone?  Check.  Business Plan?  Check.  Clients? Check.  Crystal Ball?  I wish!  What are the drivers of business as we enter into 2012?  According to speakers for the recent Birmingham Business Journal event, they include the European Debt Crisis, China, Hiring and Labor Force Expectations, Growth issues, tax policy and the election.
An esteemed foursome of speakers addressed the potentials for business as we move in to 2012 at the Birmingham Business Journal’s 2012 Economic Forecast Panel held at Samford University  Brock School of Business this past week.  The discussion was similar to last years event, and according to the panel,  the slow pace of economic recovery last year will remain relatively unchanged in 2012 and could continue into 2013 or longer Samford University Latest from The Business Journals Top of the list: Education guideBBA may form PAC targeting political cloutUA is nation's 201st most selective school Follow this company .
The four panelists included Sara Helms,  an economics professor and research associate at the Lister Hill Center for Health Policy; Ahmad Ijaz, director of economic forecasting at the University of Alabama Center for Business and Economic Research, John Norris, a wealth management and investment services professional at Oakworth Capital Bank, and Rick Davis, senior vice president of economic development for the Birmingham Business Alliance.  
The panel summed their cautious outlook from the international down to the local picture in terms of where we are and where we may be heading in 2012. Uncertainty stemming from indecision and political infighting in Washington and Europe’s sovereign debt crisis were listed as primary factors causing the slow growth.  According to Norris, “Europe is a problem that is a long time coming.”  Ijaz interjected that, “An attempt with Europe to have one currency but 17 different monetary policies will continue to struggle, and perhaps cease to exist.”  With respect to Europe and debt problems, the question is will Europe hang together or splinter apart.   “The great unknown is China with its slow down and it will have a profound impact,” Norris continued.  Citing an anticipated slow down in China’s high-speed economic growth that is expected to further impact the global economy, they projected the slow economic recovery would continue in 2013 as the private sector continues de-leveraging.
On a state level, the economy is growing, but very slowly with a suggested 2.5-3.0% growth for this year and a modest 1-1.5% growth in employment.  Davis challenged the group to “Stop calling this a Recovery.  We have not gotten out of the woods yet, and we are still ringing distressed assets out.”  “If you want 4 percent growth, you may have to wait a few years,” said panelist John Norris.
One of the greatest challenges for 2012 will be how to manage the uncertainty.  Most shift in to neutral when the future is colored with unpredictable waves.  From hiring to predictions of growth, much is unknown.  “Most businesses are just not sure what capital investments they should make or whether they should hire,” Ijaz said. 
There are two halves to the issue of hiring and labor, and proper worker expectations play a big part in any true recovery.  Some discussion was made by the group to addressing not only high school completion, but also training in tech related jobs.  There was a stated observation of a general unwillingness of new college graduates to take more simple entry level work.  According to Norris, “Goal setting should be to find a way for the (new graduates) to set themselves apart.  Do what is beneath you to get experience.  Focus on work ethic, and start at the bottom with a goal to work up.” Helms added, “The Occupy movement has shown us that people have degrees of very little value.”  Birmingham Business Alliance Latest from The Business Journals JeffCo deal breaker will cost dearlyBBA campaign sets sights on national mediaBBA may form PAC targeting political clout Follow this company
The group agreed that recovering job sectors include science, technology, medicine and health services – areas the Birmingham region is well positioned to capitalize upon.  But, commercial real estate, development in any manner related to the bubble, and manufacturing will decline.  What does the future of manufacturing look like then?  The group discussed the public service announcement by Mike Roe of Dirty Jobs and the effort to encourage students to pursue advanced manufacturing jobs.  These high tech manufacturing jobs are high knowledge base, and it “ain’t your Daddy’s work shop” anymore.  White lab coats are taking the place of the fiery shop floor, and the highly trained, tech manufacturing worker is in certainly in demand.
With respect to unemployment, Helms cited 42-45% of the unemployed as having been unemployed for 6 months or longer.  Retraining is needed because your skills start to atrophy.  Davis also cited that 15% of the businesses create 50% of the jobs, and this must change to become sustainable. 
With regard to Banking, Davis describes the state we see now as the “new normal”.  “Actually the new normal is the old normal if you take a brief glance at the past.  Remember when you had to actually save some money for a down payment?” he reminded the group.  Now you must put some skin in the game, and banks are requiring up to 35% collateral for some loans.  Norris reminded the group that banks are “those places that you go to borrow money, when you don’t need any.”   
Turning it around?  This will certainly take some time to accomplish.  Ijaz cited that while the 2001 recession took 44-45 months to recover, the 2008 recession may take 3, 4 or even 5 years. 
These are defining times.  Pay attention, educate yourself, and do a quick roll up of your sleeves to get this one done.

Public Relations vs. Publicity: What is the price of a reputation?

As you work to get ahead of the pack in your industry, and certainly as we move into an election year, I know the rhetoric and spin will begin to ramp up.  According to the Bloomberg Business (7/2007) businesses spent a hefty 4.2 Billion dollars on the Public Relations industry in an effort to craft a good image and reputation, or at least one that you will believe.  Let’s take a few minutes to sift through what that can mean for your customers, or the voting public. 

Publicity is to Limelight as Public Relations is to Spin.  Sounds like an excerpt from an ACT test, but if you think about it, it is all a matter of perspective.  The two words, and attached roles, of publicity and public relations are often used interchangeably by the novice, and it is important to appreciate the distinction between the two.  

            There are also two sides to every view, and one man’s bad publicity event is another man’s opportunity for being seen.  One man’s Public Relations frustration is another man’s chance for spin and opportunism. 

            Publicity is, put simply, public exposure or notoriety.  Public Relations is the business of inducing the public to have understanding for and good will toward a person, firm or institution.  Public Relations can be accomplished with publicity, but it is not the only way.  A good Public Relations strategy is more than just the simplistic calling in of media and putting up a few microphones.  A strong Public Relations strategy meets the public where they are and fosters a positive image and relationship via multiple avenues to include support of the arts, charitable causes, education, sporting events and civic engagement.  It creates true good will.

            More recently in public relations, professionals are using technology as their main tool to get their messages to target audiences. With the creation of social networks, blogs, and even Internet radio public relations professionals are able to send direct messages through these mediums that attract the target audiences. Methods used to find out what is appealing to target audiences include the use of surveys, conducting research or even focus groups. Tactics are the ways to attract target audiences by using the information gathered about that audience and directing a message to them using tools such as social mediums or other technology. Another emerging theme is the application of impression management.  The psychology behind impression management works to cultivate perception, and as you know, perception is reality.  Done well, impression management works to cultivate reputation capital, and build trustworthiness.  It is important to know that public image, be it to the soda you drink, car you drive, or leader that you select, gets a lot of thought committed to driving how you think and what you choose. 

            Seasoned Public Relations Professionals and Publicity Leads take a few years to learn their craft by completing degrees in communications, marketing, finance, engineering, healthcare and more and least at the Bachelors but often at the Masters Level.  Even with appropriate educational training and experience, there are rookie Public Relations and Publicity mistakes o’plenty to be made.  A public relations strategy for any business big or small is key for brand development, so why skimp and just dole the job out to the most junior of team member, or the one that is most easily lead or the most likely to “say what you want to hear” not the more useful item of “what you need” to hear?  It is important to recognize here that Public Relations is not Marketing.  Separate from Publicity and Public Relations is the entirely unique discipline of Marketing.  And Marketing is not Sales.  And so on and so on goes the list of disciplines of thought that are needed to keep the engine of your business, organization or government, big or small, humming away.   

            The world of information is changing so quickly that it is vital to stay on top by taking the time to educate and train yourself, and expect the same of your team.  

Motivation and Compensation: It isn't all about money

     Everyone must put food on the table and find a way to squirrel out enough resources to keep Maslow happy with his famous five “hierarchy of needs” of physical (food), safety (get out of my cubicle), belongingness (include me in the information flow), esteem (I know what is going on around here) and lastly, self-actualization (I can lead the way.) We have discussed here previously Maslow and his description of these basic human requirements to get by, get along and get ahead, but what happens when you are just stuck trying to discern what is needed to motivate yourself or your team? Usually the answer is money. Show me the money, and I will show you the results. But, what happens when you don’t have the money for a pay raise or financial incentive, or worse, you have given that to your team, but they just can’t seem to get it done without your constantly micromanaging them?
     Enter the Law of Diminishing Returns, and the idea of a Break Even Point. The Law of Diminishing Returns tells us that there is a point where even with more effort or investment, results decline. The idea of a Break Even Point tells us that input (of money) equals output of effort up to a zero sum balance. That is to say, more money does not get you more effort past the psychological breakeven point. As I was asked in an interview once, “How much money do you need?” The hidden question is “How much money will make you lazy?” The point behind the question is “How do we motivate you when we can’t or won’t give you more money?” The correct answer is: It isn’t all about money.
     To that thought, here are some ideas to think about from an article I found in Inc. and offered up by entrepreneur Ilya Pozin. His company, Ciplex, made the Inc. 500/5000 list for 2011 of America’s fastest growing private businesses. Starting this company at age of 17, Ciplex is a digital marketing and creativity agency. Writing for Inc., Pozin’s article, 9 Things that motivate your employees more than Money, really caught my attention. When it comes to motivating yourself and your team, the answer may cost less than you think. Good stuff, so grab some coffee and think about this one for a minute. And there is no charge on this one either. 
According to Mr. Pozin:
     1. Be generous with praise. Everyone wants it and it’s one of the easiest things to give. Plus, praise from the Boss or leader goes a lot farther than you might think. Praise goes even further when you praise someone in front of others.
     2. Get rid of the managers. Love this one! Let people simply work as a team. There really are just some things that you cannot buy, and getting someone to come in early or stay late is an issue of motivation, not requirement. They may not do it for you, but they will do it for the group.
     3. Make your ideas theirs. It is all in the tone or turn of the phrase. “Do you think it’s a good idea if we do it this way?” is received much better than I need this done this way now. Remember, just because you say it harshly or loudly does not make it more accurate or necessary. (Unless of course the house is on fire.)
     4. Never criticize or correct. If you want adults, be adults. If you want children, treat people like children. Pozin suggests an indirect approach to get people to improve, learn from their mistakes, and fix them. Ask, “Was that the best way to approach the problem? Why not? Have any ideas on what you could have done differently?” Then you’re having a conversation and talking through solutions, not pointing a finger.
     5. Make everyone a leader. All you limelight huggers and glory hounds beware. You need to step away from the warmth of the spotlight and highlight your top performers’ strengths instead. Pozin suggests letting them know that because of their excellence, you want them to be the example for others.
     6. Take an employee to lunch once a week. Or just randomly do something nice for someone on your team. But, please don’t play favorites.
     7. Give recognition and small rewards. They don’t need to break the bank, but small tangible awards like dinner, trophies, spa services, and plaques are good places to start.
     8. Throw company parties. Remember when work use to be fun? Remind your staff that you’re all in it together.
     9. Share the rewards—and the pain. Be honest and transparent. Ask for opinions, and require a yes or no. You should not always agree for goodness sake. It is okay to have an original and intelligent thought that is different.

     If you never have any dissention, then you are not progressing as a team, and your entire effort is at peril if you lose the figurehead leader.

Thanks for taking a read this week, and I would look forward to your ideas as well.

Talkin' Bout an Evolution

Forgive me John Lennon and the Beatles, but just a little play on the title wording. Brian Brim is the coauthor of Strengths Based Selling, and I found a few of his thoughts in the Gallup Management Journal this week that you may find helpful too. His ideas, and those of David Liebnau, Executive Coach with Gallup, offer some insight as we evaluate change opportunities and growth here in the North Jefferson area. I was encouraged and reminded that real change takes time and persistence. In their words, we should be more patient. More will be accomplished through slight shifts than massive immediate changes.
According to Brim and Liebnau, everyone has their special way of doing things that is comfortable, your own special groove. Stepping out of your way of doing things and into another can feel a bit like putting on someone else’s shoes. Not too comfortable and certainly not that efficient. The challenge it seems is to appreciate the difference between actions and practices. Now stay with me here.
According to the writers, actions are the behaviors that you do with little thought. The actions a leader usually takes are determined by the "groove" he or she has developed over time. But how can you grow as a leader if you're forever contained in this same groove? You can't, and that is where practices come in. Practices are interventions that enable you to establish new ways of thinking, feeling, and behaving. They are essential to expand and develop your identity. To grow as a leader, you must slowly and steadily expand the groove. Adopting new practices which are slight shifts from what you already do enables you to access a different level of possible actions and create new opportunities. It is evolution, not revolution.
You don’t get out of your rhythm of what works, you just expand it.
This type of change is called slight-shift practice. It may be fairly easy too. But that's the point: When leaders are asked to do something they have the confidence to do and they see immediate success, they gain confidence from the positive feedback. Confidence and success drive them to repeat it. That's how sustainable development and wider grooves are created, and that's how great results happen. It is like a slow lazy stream that with time and persistence can become the Grand Canyon.
What small changes can you make this week that will lead you to a sea change of possibility? How about pushing back from your desk and talking with your team more about their ideas for improvement? How about dealing with problems immediately, instead of putting them off? How about delegating more to allow someone else to grow in a skill? Can you accept the challenge to just get things done without regard to whom gets the credit?
Now think about this idea in the context of our communities and growth. Think about it in the context of economic and professional development for yourself and the company that you support. Each entity be a company or a community has its own opportunity for development, and each has its own groove for certain. But what would happen if the groove or rhythm started to widen, just a little?
Will our opportunities expand if we take a few actions to partner more, to trust more, and to be more transparent? Once these first easier steps are taken, then and only then will you be able to really talk about creative change, innovation, and thoughtful risk taking.

Greece, Debt and the Road to Your House

So, 10 doctors walk into a bar….Okay not the beginning of the best joke ever, but I did have a dinner meeting with several of my customers this week and the conversation quickly turned to politics. I would like to continue our thinking from last week’s discussion of how to best engage government and explore just how deeply our Grassroots should run. From banking, to schools, to medicine, to the local restaurant around the corner, it is important to understand how we came to be in well…so much debt.
It begins here at home. I call it trickle up debt. It becomes a pervasive mindset that in order to have something you have to pay for it later. The conversation with my customers over dinner began with a bit of finger pointing. “Look at Greece! Geez what a mess!” said one. Like many countries, the Greek government, like the U. S., relies on borrowed money to balance its books. The recession has made this harder to achieve, because tax revenues are falling with people spending less, just as entitlement and welfare payments start to rise. To be fair, using public spending to even out the bumps in an economy is what most large developed economies do right now. This is all well and good as long as the investor money keeps coming in to the system. We aren’t even close to a balanced budget here in our own country. In fact, Economist warn that to get there we would pretty much need to eliminate all spending on defense and social security. Yikes. The lesson here is that debit is not all bad. Debt that you cannot repay is very, very bad.
Unfortunately, investors have lost confidence in the Greek government's ability to walk this tightrope – so they have been demanding ever higher rates of interest to compensate for the risk that they might not get their money back. The higher it’s borrowing costs, the harder it is for the Greek economy to grow itself out of trouble. Money really doesn’t grow on trees, and while countries like the US can print more, it just works to devalue the currency.
When Greek debt downgraded to "junk" status, the cost of borrowing money became too high. Fearing bankruptcy, Greece had to turn instead to the European Union and the International Monetary Fund for money to float there debt. But, just as money doesn’t grow on trees, it ain’t cheap either. Germany and other European Union members took issue with just giving more money without constraints to a struggling Greek economy as did Washington. This time there had to be some strings attached and a tough series of public sector cuts known as austerity measures were designed to reassure international investors that the government can become credit worthy again.
Dial back a few years to the mid 2000’s when Greece was strong and solvent. During this time and prior, the Greek government took advantage of this by running in a deficit. With an economy dependent on shipping and tourism, it headed south quickly when the economy worldwide started to cool. Austerity measures have been the source of massive protests as the Greek government seeks to shake the couch cushions of its economy for loose change. Public sector pay cuts, pension reductions, new taxes on corporate profits, luxury and sin taxes, and value added tax (which is for an entirely different article) are the tools of a Government seeking to sustain itself and it has the people crying Uncle.
But, let’s get back to my doctors and our dinner conversation. Greece is a long way away, so what does that mean here in little old Jefferson County? Well, the story for Greece sounds pretty similar to Jefferson County if you get right down to it. Weak leadership, poor accountability, and simply spending and promising to spend money that you don’t have can be found across the world or even around the corner.
And what about some of the towns right here in North Jefferson County? Time will tell how the balance sheet fares out, but spending just because you have it, especially when it is on salaries and not infrastructure or improvements is just not a good idea. A recent Birmingham News article reviewed the balance sheets of two of our big towns here in North Jefferson. Both passed budget increases for 2012 with bigger coffer requirements needed to support employee raises and debt obligations. And don’t forget the add-on of “just a penny more” to your tax burden at the store.
Suddenly Greece doesn’t sound so far away.

Occupy North Jefferson County

Occupy North Jefferson. Is it that different than Occupy Wall Street? We think that our town is different in the notion of challenges and problems, but from Wall Street to Main Street, we are really quite similar. Job creation, economic concerns, debt, local government, and a desire for accountable leadership all hit a resonant cord for both communities.


Just as “All Politics is local” so I have found that “All Job creation is local.” You can’t open the paper or turn on the news and not find a discussion of the topic, so perhaps now is the time to put down the remote, fold up the paper, and stop with the finger pointing. How about a good dose of “roll up your own sleeves and get busy” instead?

In Jim Clifton’s article for the Gallup Management Journal this week, he writes that “fixing America’s problems with job creation can only be accomplished one city at a time.” Well, it that is the case, and then let us begin with our own town or towns.

Here in the North Jefferson area, we already have strong leadership in place. We may not see eye to eye, and we certainly may disagree on many topics and decisions, but that does not make our leadership weak. Clifton continues to state that “A natural order is already present, in governments and local business and philanthropic entities. Every city has strong, caring leaders working on numerous committees and initiatives to fuel their local economic growth -- let's call it the city GDP -- and to create good jobs. The feat these leaders have to pull off is doubling their entrepreneurial energy by aligning all their local forces.” That means we must stop looking at our neighboring cities as competitors, and start viewing them as allies.

In his words, “They succeed by declaring all-out war.” A war on job loss, a war on low workplace energy, on healthcare costs, on low graduation rates, on brain drain, and on community disengagement.” Those things destroy cities, destroy job growth, and destroy city GDP. Every city requires its own master plan that is as serious as planning for war.

I would add that this master plan, or community development plan, will only be affective if the leaders communicate the plan to the people of the city. It is equally important as well to embrace the success of your neighbors and help them to participate in the growth war. For certain, the last thing that you need is for an excelling city to be surrounded by declining cities.

Clifton goes on to point out that we should remember what Washington, and Government is about really. “In defense of Washington, it wasn't originally set up to be the nation's economic engine. The U.S. government has seeded whole industries through land grant universities, defense contractors, and scientific and medical researchers to name just a few. But the government has never, will never, nor should it be expected to ignite badly needed sustainable economic booms. These economic booms originate in the souls of individuals,” he writes.

How do you know if your city is on the right track for improving debt reduction and increasing jobs creation? If your city leadership is looking for more legislation, more stimulus and more (tax) money to solve your cities problem, and then you probably need to look for new city leadership first. Stop what you are doing if it does not create real, meaningful jobs. Clifton writes, “Everybody in charge of anything needs to focus on job creation. If they divert their attention, vote them out. Be ruthless. If the bike path doesn't have anything to do with job creation, there is no bike path. If rezoning improves the jobs outlook, rezone. This is what leadership should work on everyday, and it “should get city leaders up in the morning, what they should work on all day, and what should keep them from getting to sleep at night.”

As you move in to your week, think about how you work with your company, philanthropy or local government and if it is affectively working in tandem with surrounding communities. Every city needs a team of leaders that work well of course, but not in isolation. Your town I am certain is just like mine with multiple boards, committees and leadership appointments. Take a close look. Are they a reshuffle of the same stagnant minds without change for too many years? Or are you bringing in new thought leaders that learn from the old, but embrace the change of the new? Are you marching to the beat of the same old drum, or are you encouraged to at least on occasion ask for someone to change the station and say no to the same old song?

Management vs. Leadership

Management vs. Leadership. Is there a difference? Managers focus on processes, leaders however take the special role of, well, leading. Leading people. Having a vision. Making the hard calls, and sticking through tough times.


In that vein, I came upon information this week on the Kaufmann Foundation. The Ewing Marion Kauffman Foundation is often referred to as one of the largest foundations in the United States—or as the world's largest foundation devoted to entrepreneurship. What strikes me as particularly relevant to our area is the idea of the Tug Boat leverage philosophy that comparatively small organizations like the Kaufmann have accomplished. According to the mission of this organization, which keeps the noted company of the Bill and Melinda Gates Foundation, is the idea of the small leading the many. Some of us work at massive organizations striding forth to remake the world, but many pull from a talented few people engaging with many, many others to make a difference together. You get the image of this giant ocean liner being pushed along by the seemingly tiny tugboat.

So where is your fit for this leadership mind set? I did a bit of searching to take a deeper look at this idea of Tug Boat Leadership and I came upon the writings of Geoffery Webb and his site called Leading on Purpose.

Webb has a few suggestions for us to consider on leading intentionally.

1. Small moves have big impacts. Unless absolutely needed, tugs don’t over-steer their vessels with dramatic movements. A little here and a little there is all it takes. Likewise leaders should be looking ahead, anticipating changes, and responding with strong, small moves to set their organizations on their best course. We see this in organizations with low attrition rates where they take the loss of an employee personally. Companies stay competitive when they take the time to retrain employees and keep that “Corporate Memory” in house and not lose it to another organization. Retraining and reinvesting in employees can go a long way to rebuilding the loss of loyalty that is so pandemic today.

2. There’s no autopilot. Many leaders seek to find a comfortable status quo, a place of rest where they can sit back and relax. There is no autopilot for a tugboat—or for a leader. Guiding an organization through ever-changing environments takes constant vigilance. The moment you think you’ve “figured it out” is the when you—and your organization—are most at risk. Your company or team needs constant tending, and keeping a strong focus on your mission is critical. Plunge head first into change and make it happen. Or as Winston Churchill said, “To improve is to change; to be perfect is to change often.”

3. It’s not about you. Tugs know that they exist to serve a purpose. Their job is to safely move vessels weighing thousands of tons through challenging waterways. Ultimately, as a leader, it’s not about you either. It’s about moving your organization, your employees, your customers, your clients safely through the hazards around them. Now that is a “Gee Whiz” concept for many leaders who forget that the job is to help the team. The job is to grow the city, build the company, and never once take the credit. Think it is all about you do ya’? Well how affective will you be when you are the only one standing on the field in the uniform?

Take some time to think about how you are doing as a leader, or a manager, as these two roles are really hard to separate. And remember, take care of your customers or someone else will.