Mentoring programs help professionals grow, develop and learn new skills under the direction and advice of a seasoned expert. Organizations implement mentoring programs to align the goals of the company with the professional development of its employees. Coaching and mentoring provides benefits for the “mentee,” the mentor and the organization.
A coach or mentor can help a new employee adjust to the culture in an organization. Young professionals may not be accustomed to an organization’s practices and acceptable behaviors. The coach can provide the new worker with information on the corporate culture, organizational structure and procedures that will help the younger professional settle into his role in the business. Companies can assign a mentor or coach to new employees during the adjustment period to help them get up to speed on company procedures and policies. Mentoring also provides the worker with a leader he can turn to with questions.
Employee Growth and Development
Coaching and mentoring programs provide the mentee with real-world knowledge that bridges the gap between educational theory and actual business practices. Mentors also grow in a mentoring position by honing leadership skills and remaining in touch with other professionals. In an ideal coaching relationship, both parties learn from one another.
Mentoring programs help new employees adjust to the organizational structure and culture, which helps the business by bringing new hires up to speed. Those serving as coaches and mentors within an organization gain personal and professional satisfaction by sharing their expertise with other employees.
Mentoring generally helps boost employee morale and engagement, experts say. “From increased morale to increased organizational productivity and career development, the benefits of an organization that actively supports mentoring are numerous,” according to a report by U.S. Office of Personnel Management. A supportive atmosphere can improve employee morale and loyalty, thereby helping to reduce turnover and boost productivity. High employee turnover costs organizations money in the form of recruitment hiring and training of replacements. Companies should weigh the costs of implementing a mentoring program against the high cost of employee turnover to determine the benefits of coaching and mentoring.
Companies can align the goals of the business with a mentoring program to gain a competitive edge. For example, the mentoring program can target new employees in product development when the goal of the organization is to bring new products to the market. Developing employees in weak areas of the company can also benefit the business’s organizational goals.
More than simply an ambiguous term revered by HR managers, employee engagement is a crucial element of productivity in the workplace.
We know engagement is good for growth, and mounting evidence suggests it is directly tied to a business’s bottom line. Still, a survey by Gallup indicates today’s workforce is experiencing lukewarm engagement levels at best: Just 32% of respondents said they felt “actively engaged” at their jobs.
Research seeks to break down employee engagement to its fundamentals and propose ways for managers to encourage it. The literature detailing the impact of engagement is still in early stages, but so far it’s compelling enough to warrant a close look—particularly for businesses who want to bridge the perplexing gap between optimistic forecasts and mediocre performance.
Relationship between employee engagement and loyal customers
We can define engagement more concretely than a vague aura of “warm and fuzzies” in the workplace: An employee’s engagement level is gauged by the emotional commitment the employee has to the organization and its goals. Commitment we might add, just for a paycheck. Disengagement has been linked to detriments such as theft, employee turnover, and even safety incidents.
On an intuitive level, the correlation between employee engagement and customer satisfaction makes sense. When employees are passionate about their work, they’re more inclined to put in the effort that translates into buzzing productivity levels, a happier sales force, a more credible product pitch, and ultimately, increased revenue.
Gallup’s employee engagement assessment sheds light on the topic: Researchers found that employees scoring in the upper echelons of engagement levels had double, triple, and even quadruple odds of success compared with workers in the bottom half of the bucket. What’s more, work units displaying top-quartile engagement rates exceeded the bottom-quartile cohort’s performance by somewhat staggering figures: 10% on customer ratings, 21% on productivity, and 22% on profitability.
These numbers suggest employee engagement is perhaps an even more impactful piece of overall strategy than previously thought—and one worth learning how to effectively track.
Encouraging engagement via data-driven insights
Fostering employee engagement is often a task more fretted about in board meetings than actively instituted. There are a few management tactics, though, that show promise: Rewarding and recognizing high performers, ensuring employees have a clear understanding of how their role contributes to the overall business model, and clear communication from senior leadership rank high among them.
In order to effectively implement those measures, however, employers must first conduct due diligence to uncover pain points—and areas of promise—within their organization. Just as data can be crucial in helping to establish revenue streams, defining metrics and analytics are key for monitoring and tweaking engagement strategies.
Companies are finding ways to quantify the relationship between engagement and profitability, relying on theories like the service-profit chain. Technology, too, can give managers an upper hand when it comes to nurturing an engaged workforce. One system of technologies known as E4 Mathlosophy System has proven particularly successful for employers and employees.
Employee engagement is too crucial a piece of company culture for businesses to ignore. The first step to understanding how to boost engagement is learning how to measure it. The second is learning how to effectively implement strategies that work. Learn more about how the E4 Mathlosophy can help your business piece together the employee engagement puzzle.
What are the benefits of coaching employees? Harvard Business Review’s Answer Exchange offers some great reasons:
When organizations coach employees, benefits to the company include:
- Overcome costly and time-consuming performance problems
- Strengthen employees’ skills so you can delegate more tasks to them and focus on more important managerial responsibilities—such as planning
- Boost productivity by helping your employees work smarter
- Develop a deep bench of talent who can step into your shoes as you advance in the company
- Improve retention; employees are more loyal and motivated when their bosses take time to help them improve their skills
- Make more effective use of company resources; coaching costs less than formal training
When employees are coached, they:
- Build valuable skills and knowledge they can use to advance in their careers
- Feel supported and encouraged by their manager and the company
- Experience the pride and satisfaction that come with surmounting new challenges
Sixty-six percent of small business owners plan to grow their business in the next five years, according to the 2015 Bank of America Small Business Owner Report. Major growth can be a time of great excitement at a company of any size, but it can also usher in a period of tumult for business leaders and employees. Protocols that once fit the organization might no longer work or need to be wholly re-envisioned, the talent pool may be over-stretched or expanding rapidly and feeling disjointed, and strategies that were first created when the company was smaller could prove themselves to be anything but one size fits it.
During these intense transitions, business coaching can help a growing company weather the storm – and come out stronger. “What I have learned is that systems have different levels and each level has their own rules of what works and does not work,” Dr. Ichak Kalderon Adizes, president of the Adizes Institute, wrote on the Huffington Post.
Just as the tools employed during individual therapy sessions may fall flat during couples counseling, business leaders should be prepared to rethink their toolkit as the business grows.
“Business leaders should be prepared to rethink their toolkits as the business grows.”
The Power of perspective
A business coach can help you develop the skills and prioritization you’ll need to run the business at the size it’s going to become. But coaches can also play another crucial role as you navigate these unchartered waters: being a possible voice of dissent.
“Too many business owners build their businesses in isolation, lacking the outside perspective and feedback from an experienced mentor,” writes David Finkel, co-author of Scale: Seven Proven Principles to Grow Your Business and Get Your Life Back on Inc. magazine.
It is unrealistic – and sometimes unfair – to rely on your employees to play devil’s advocate or cheerleader for every idea that you have to expand and reshape the business. Yet what you’ll need during this time of uncertainty and growth is exactly that: someone to question your assumptions, point out any holes in your vision or strategies, and objectively assess which skills you need to strengthen in order to succeed. And, unlike your best employees who might have never worked with a rapidly growing organization, a business coach can speak from experience about what you’ll need to make it through this anxiety-pocked transition and what you’ll need after.
“What I get out of having a business coach is that my coach has run and worked with so many companies that they’ve seen every situation,” Jeff Hoffman, cofounder of Priceline.com and Finkel’s coauthor told him. “So when I don’t even know how to handle a new situation, my coach says, ‘Don’t worry about it. I’ve seen this pattern a dozen times. Here’s how to best handle it.’” To a business leader with big ambitions in the midst of growing pains, those can be welcome words indeed.
There are managers who coach and managers who don’t. Leaders in the latter category are not necessarily bad managers, but they are neglecting an effective tool to develop talent. We’ve been researching managers who coach and what distinguishes them. What has stood out in our interviews with hundreds of managers who do coach their direct reports is their mindset: They believe in the value of coaching, and they think about their role as a manager in a way that makes coaching a natural part of their managerial toolkit. These are not professional coaches. They are line and staff leaders who manage a group of individuals, and they are busy, hard-working people. So why do they so readily give coaching an important place in their schedule? Here are reasons:
They see coaching as an essential tool for achieving business goals. They are not coaching their people because they are nice — they see personal involvement in the development of talent as an essential activity for business success. Most managers will tell you that they don’t have the time to coach. However, time isn’t a problem if you think coaching is a “must have” rather than a “nice to have.” Whether it’s because they are competing for talent, operating in a highly turbulent market place, trying to retain their budding leaders, or aiming to grow their solid players, they believe that they simply have to take the time to coach.
There are two assumptions behind this belief. First, that extremely talented people are hard to find and recruit. If you are known as a manager who will help those people thrive, they will gravitate to you. Second, that an organization cannot be successful on the backs of the extremely talented alone. You need solid players just as you need stars, and they will need a manager’s help to build skills and deal with the changing realities of their marketplace.
They enjoy helping people develop. These managers are not unlike artists who look at material and imagine that something better, more interesting, and more valuable could emerge. They assume that the people who work for them don’t necessarily show up ready to do the job, but that they will need to learn and grow to fulfill their role and adapt to changing circumstances. Coaching managers see this as an essential part of their job. They believe that those with the highest potential, who can often contribute the most to a business, will need their help to realize their often-lofty ambitions. As one manager told us recently, “Isn’t helping others to be more successful one of the key roles of a manager?”
The manager must adapt his or her style to the needs and style of each particular individual. This of course takes a good deal of work on the part of the manager, but again, this is perceived as being part of the job, not a special favor.
They are curious. Coaching managers ask a lot of questions. They are genuinely interested in finding out more about how things are going, what kinds of problems people are running into, where the gaps and opportunities are, and what needs to be done better. Typically, they don’t need to be taught how to ask questions because it’s a natural strength. This curiosity facilitates the coaching dialogue, the give-and-take between coach and learner in which the learner freely shares his or her perceptions, doubts, mistakes, and successes so that they together reflect on what’s happening.
They are interested in establishing connections. As one coaching manager stated, “That is why someone would listen to me, because they believe that for that time, I really am trying to put myself in their shoes.” This empathy allows the coaching manager to build an understanding of what each employee needs and appropriately adjust his or her style. Some employees might come to coaching with a “Give it to me straight, I can take it” attitude. Others need time to think and come to their own conclusions. A trusting, connected relationship helps managers better gauge which approach to take. And coaching managers don’t put too much stock in the hierarchy. As a coaching manager recently told us, “We all have a job to do, we’re all important, and we can all be replaced. Ultimately, no one is above anyone else. We just need to work together to see what we can accomplish.”
Achieving this mindset is doable. It comes down to whether the business case is sufficiently compelling to motivate a manager to develop a coaching mindset. Managers need to ask themselves a few questions: Does your organization (or group or team) have the talent it needs to compete? If not, why not? Have you done a poor job hiring, or are people not performing up to their potential? It’s really either one or the other. If the latter is true, it’s your job to help get them to where they need to be.
For managers who want to start coaching, one of the first steps is to find someone who is a good coach in your organization and ask her or him to tell you about it. What do they do? Ask why they coach. Listen and learn.
Second, understand that before you start coaching, you need to develop a culture of trust and a solid relationship with the people you will be coaching. In spite of your good intentions, all the techniques in the world will make little difference if those you are trying to coach don’t feel connected to you in some way. The relationship you develop is more important than the all of the best coaching methods that are available.
Third, learn some of the basic principles of managerial coaching that will help you develop your own expertise as a coach. One of the core lessons for managers is that coaching isn’t always about telling people the answer. Rather, it is more about having a conversation and asking good, open-ended questions that allow the people you are coaching to reflect on what they are doing and how they can do things differently in the future to improve performance.
Finally, the mindset should be focused on the people you are coaching. Always remember the main principle: coaching is about them, not about you.
Most of us are aware of the sacrificial slaughter of Bear Sterns. Some people call it a bailout, but I call it a handout — a government handout to some of the richest people on Earth, paid for by American taxpayers.
It’s the survival of the richest, and the poorest be damned. There’s something dismal about a society that operates by those values.
The Economy on Life Support
I understand why the Federal Reserve did what it did with Bear Stearns. The Fed was doing its job — acting as the lender of last resort, pumping money into a dying system. It wanted to prevent a run on the bank and economic chaos. It was a very creative financing move, using the Fed’s magic checkbook to pump more liquidity into a thirsty market — sort of like a physician administering life-saving measures to a critically wounded patient.
My problem with the move is that the Fed saved this patient because it’s a wealthy one. Saving the biggest investment banks in America is welfare for the rich. Would the Fed do that for you or me if we screwed up our investment portfolio? Is the Fed going to bail out the millions of people facing foreclosure because the value of their homes is less than their mortgages? If I’m a small-business owner and fall behind on my taxes, is the Fed going to pay my taxes for me? If I can’t pay off my college loan, will the fed pay it for me?
Aren’t these investment bankers supposed to be the smartest guys in the world? Aren’t they the people we entrust with our investment and retirement money? Aren’t they supposed to be financially fit? Some blame subprime borrowers as the culprits in this mess, but the supposedly brilliant investment bankers bought their mortgages. Was that smart?
A Handout for the Rich
This bailout was a signal to Wall Street that the Fed stands behind them — that they’re on the same team. It was a thumbs-up to the super-rich: “Do what you want. If you screw up, we’ll cover your blunders.”
Ralph Nader’s father purportedly once said that “Capitalism will never fail because Socialism will always bail it out.” My concern, especially in this election year, is that socialists will seek revenge. Already I can hear the war cry “tax the rich!” The problem with taxing the truly rich is that the rich simply move their money to countries that treat them and their money with undue respect. And when the rich move their money, the poor and middle class end up paying more taxes.
Not only will taxes go up, but the prices of food and fuel will increase, because the purchasing power of the dollar will continue to decline. This rise in cost of living, plus higher taxes and stagnant wages, could lead to unrest — protests, riots, and possibly chaos. In other words, what the Federal Reserve was attempting to prevent may happen anyway.
When Capitalism Stumbles
Bailing out the rich means over $800 billion from the Fed’s magic checkbook entered the market. Immediately, the stock market rebounded and the price of gold and silver declined. The U.S. dollar strengthened against the euro. While this looks like a good sign, I’m afraid the problem isn’t solved. The inevitable may only have been delayed.
Our problem is a toxic U.S. dollar. Printing funny money steals from the poor and middle class, savers, and the elderly. It may be legal, but it isn’t moral or ethical. As long as the Fed is allowed to wield its power at will, the prices for food and fuel will only go up.
So will the price of gold and silver. Some are calling for gold and silver to go over $2,500 and $200 an ounce, respectively. Some even believe gold will go as high as $5,000 an ounce. I hope not. While I get excited about seeing the gold I purchased for less than $300 an ounce flirt with $1,000 an ounce, I also begin to worry.
The rise in the price of gold is a sign that capitalism has stumbled. And when capitalism stumbles, workers’ wages buy less and savings are wiped out. Even gains from the stock market are diminished because our dollar gains are worth less.
Troubles Past and Present
Throughout history, when capitalism stumbles chaos erupts and sometimes despots take over. For example:
- In 1897, the Russian ruble was pegged to gold and a period of relative economic growth followed. Russia went off the gold standard to finance World War I. The government fell to the Bolsheviks in 1917, and the Russian mafia took control of the economy.
- After World War I, the German middle class was wiped out and Adolf Hitler was voted into power in 1933.
- In the 1930s, China was the only country on the silver standard. In 1935, the nationalist Chinese government started issuing paper money. In 1937, in order to fight the Japanese, the government began printing funny money. The value of their currency went from four yuan per dollar in 1936 to a trillion yuan per dollar in 1949. In May of 1949, the Chinese government fell to Mao Tse-Tung and the Communists.
- In 1984, Yugoslavia hosted the Winter Olympics just as their currency, the dinar, began to devalue. In 1989, the IMF recommended more devaluation and the freezing of workers’ wages. Rioting broke out, and in 1989 Communist party leader Slobodan Milsoevic was elected into power. Yugoslavia broke apart as war and ethnic cleansing began.
As capitalism falters, the rich move their money out of the country, violence increases, and politicians promising prosperity are elected. It’s happened before, and I fear it’s happening again. Trouble brews when we steal from the poor and give to the rich.
If you’re serious about getting rich, now is the time. We’ve entered a period of mass-produced pessimism, when bad news is everywhere, and the best time to invest is when optimists become pessimists.
The Weird Turn Pro
Journalist Hunter S. Thompson used to say, “When the going gets weird, the weird turn pro.” That’s true in investing, too: At the height of every market boom, the weird turn into professional investors. In 2000, millions of people became professional day traders or investors in dotcom companies. Mutual funds had a record net inflow of $309 billion that year, too.
In an earlier column, I stated that it was time to sell all nonperforming real estate. My market indicator? A checkout girl at the local supermarket, who handed me her real estate agent card. She was quitting her job to become a real estate professional.
As a bull market turns into a bear market, the new pros turn into optimists, hoping and praying the bear market will become a bull and save them. But as the market remains bearish, the optimists become pessimists, quit the profession, and return to their day jobs. This is when the real professional investors re-enter the market. That’s what’s happening now.
Pessimism vs. Realism
In 1987, the United States experienced one of the biggest stock market crashes in history. The savings and loan industry was wiped out. Real estate crashed and a federal bailout entity known as the Resolution Trust Corporation, or the RTC, was formed. The RTC took from the financially foolish and gave to the financially smart.
Right on schedule 20 years later, Dow Industrials and Transports struck their last highs together in July 2007. Since then, nothing but bad news has emerged. In August 2007 a new word surfaced in the world’s vocabulary: subprime. That October, I appeared on a number of television shows and was asked when the market would turn and head back up. My reply was, “This is a bad one. The worst is yet to come.”
Many of the optimistic TV hosts got angry with me, asking me why I was so pessimistic. I told them, “The difference between an optimist and a pessimist is that a pessimist is a realist. I’m just being realistic.”
As we all know, things only got worse in early 2008, with the demise of Bear Stearns and the Federal Reserve stepping in to save investment bankers. In February, many of those optimistic TV (and print) reporters became pessimists — and when journalists become pessimists, the public follows. By March, mutual funds had a net outflow of $45 billion as investors fled the market.
Four generations are active in the workplace-presenting interesting challenges and opportunities to leaders, managers, and their teams. It is important to understand the nature of these challenges as we present a brief overview of traits specific to each generation. What’s even more important is to have some insight (and apply it) to each generation’s interactions, issues, styles, experiences and preferences.
Who are the four generations?
You might see some variation in the labels and dates used by other writers, with the following commonly understood:
- The Silent Generation (a.k.a Traditionalists)were born before 1946
- Baby Boomers were born between 1946 and 1964
- Gen Xers were born between 1965 and 1980
- Millennials (sometimes called Gen Y or Generation Next) were born after 1981
Why is it important for leaders to pay attention to the four generations?
First of all, in many cases, they are not getting along in the workplace (and elsewhere). They don’t communicate well with each other. It’s important to observe the distinction between Age vs. Generation. Different generations care about different approaches to the same problems-at different times. Generational context is not about age, but common experiences. Do you remember“don’t trust anyone over 30“? We heard that back in the 70s, and it was said by the Baby Boomers. Well, the Boomers retain many consistent generational traits, but now the youngest of them are over 50 and the oldest over 70. What a shock!
And here comes Gen Z
They are the kids that will soon be entering the workforce. They were born after 2000 (or slightly earlier, by some definitions) and they are entering a world and a workplace very different from that of their mostly-GenX parents. We’ll have more to say about them in a futureCoachNet Strategy Letter.
Leaders, managers and coaches do well to understand the dynamics and the potential outcomes of generational interaction and sometimes misunderstanding. When generations fail to communicate effectively in the workplace we may see a negative impact on the bottom line—through retention rates, grievances and complaints, tangible and intangible costs, morale, etc. We need to ask powerful questions around issues related to the generations, such as:
- What is the impact of differing communication styles?
- What are some pitfalls in inter-generational communications–professionally and personally?
- How can we enhance cross-generational communication?
- How do we recognize each generation, if not by age or hierarchy?
- How do common experiences shape the personality of a generation?
- What are the challenges of leadership, management and team development that pertain to each generation?
- What can we learn and apply from the formative years of each generation?
- What are their favorite forms of entertainment and recreation?
What are some of the traits of each generation?
Considering the limitations of space, we can only present a small sampling of the many observable traits and patterns we see in the generations. Many resources exist for those who would like to delve deeper and/or find more examples.
The Silent Generation (Traditionalists)
- Employees recognize the role of authority in a hierarchical organization.
- Experienced smooth career passage-until recently.
- Adopted a “just stick it out” attitude in their jobs (as well as in their marriages).
- Expected traditional retirement at 65-but now may never want to retire.
- Tom Brokaw called them The Greatest Generation.
- Boomers were beat up by downsizings and rightsizings and have always competed fiercely among themselves.
- May have had several careers, employers or types of jobs
- Tend to be workaholics and define themselves through work. May have guilt over putting career before family.
- Tend to be self-centered and self-absorbed. They personify the “me generation.”
- The whole concept of retirement is in question.
- Saw the layoffs of the ’70s, ’80s and ’90s and distrust big institutions.
- Assume that every job is temporary.
- Parents suffered fatigue, illness and divorce—want a better balance.
- Avoid long hours and keep their work and personal lives separate.
- Viewed as being less driven in their work habits and less loyal than Boomers
- Skeptical, self-focused and self-protective at work.
- Xers seek excitement and want to have fun at work.
- Want relaxed rules and a casual dress codes. Prefer e-mail to long meetings.
- Will confront or publicly disagree with an authoritative manager.
- Watched Gen Xers rise and fall before and after 2000 (dot-com bubble-burst)
- Want job security
- Large in numbers; may need to compete for jobs..
- Grew up with protective parents and might fear workplace conflict.
- Great at multitasking; can work effectively on numerous activities at once.
- Get along with their parents; may live at home for longer.
- Thrive in a fast-paced technological world. Live on social media.
What approaches can we use in managing people?
Leaders have long-considered the influences of behavioral styles, company culture and urgency as they made decisions about their approach to communication in the workplace. Now we add to the mix–factors relating to generational differences.
The Silent Generation
Approach to feedback: “No news is good news.”
Respond well to a traditional classroom environment and to lectures and presentations given by experts.
Respond best to language that is logical and non-emotional
Like information that is organized, well researched and supported by facts, figures, details and examples.
To motivate Traditionalists: let them know their experience is valued and provide stability and security where possible.
Want feedback once a year and lots of documentation.
Enjoy a more casual training atmosphere and prefer a more participative, interactive formatWant to be rewarded personally and publicly for the many long hours that they give to their work.
- See information and education as rewards.
Buy books, videos, self-help guides and audiotapes they can listen to on their commutes.
Boomers like in-person meetings and like to be in control of the message.
- To motivate a Boomer: promote and support lifelong learning, give them public recognition, and provide visible perks
Need a lot of positive feedback—frequently—to let them know they’re on the right track.
Are far more comfortable learning from a computer than the older generations.
Like role-playing and appreciate the opportunity to practice their skills and get feedback and coaching on the spot.
Don’t expect to control messages. Expect moderated discussion.
Messages need to be meaningful, personal and up-to-date.
Don’t want one-way communication from authorities. Want to interact, add their own insights and be a participant, not a passive listener.
- To Motivate Gen Xers: Support them in staying on the forefront of technology, adopt a management style that promotes honesty and integrity, and provide continuous training, and opportunities to work with a diverse group in a team setting.
Want instantaneous and constant feedback.
Used to praise and may mistake silence for disapproval.
Wants to let everyone have a voice–the Wikipedia generation: Everyone has something to add.
Won’t accept “my way or the highway” approach—they’ll take the highway.
Hate to be talked down to or told what to think.
Will use technology to “tune out.”
- Notice who they are and how they respond
- Experiment with your approaches and responses to each generation
- eXtrapolate to future behaviors and choices
- Transition to new ways of relating to the generations
What Does the Future Hold?
- What will a Gen Y world look like?
- Will Gen Z tolerate it?
- Who is going to retire and when?
- What about the “brain drain”?
- How important are new models of leadership?
- Where will technology take us?
- Look to the past to predict the future.
What are your business goals for the year? If you’re like most owners, you have a profit goal you want to hit. You may also have a top line revenue number that’s important to you. While those goals are important, there is another objective that may have an even bigger payoff: building a sellable business.
But what if you don’t want to sell? That’s irrelevant. Here are five reasons why building a sellable business should be your most important goal, regardless of when you plan to push the eject button:
- Sellability means freedom
One of the fundamental tenants of sellability is how well your company would perform if you were unable to work for a while. As long as your business is dependent on you personally, there’s not much to sell. Making your company less dependent on you by building a management team and creating just-add-water systems for employees to follow means you have the ability to spend time away from your business. Think of the world of possibilities that would open up if you could choose not to go into the office tomorrow….
- Sellable businesses are more fun
Running a business would be fun if you were able to spend your days on strategic thinking and big picture ideas. Instead, most business owners spend the majority of their day on the minutia: the government forms, the employee performance reviews, bank reconciliations, customer issues, auditing expenses. The boring details of company ownership suck the enjoyment out of owning a business—and it is exactly these tasks you need to get into someone else’s job description if you’re ever going to sell.
- Sellability is financial freedom
Each month you open your brokerage statement to see how your portfolio is doing. Not because you want to sell your portfolio, but because you want to know where you stand on the journey to financial freedom. Creating a sellable business also allows you peace of mind, knowing that you’re building something that—just like your stock portfolio—has value you could choose to make liquid one day.
- Sellability is a gift
Imagine that your first-born graduates from college and as a gift you give him your prized 1967 Shelby Ford Mustang. Your heavily indebted child takes it on the road, but after a few miles, the engine starts smoking. The mechanic takes one look under the hood and declares that the engine needs a rebuild.
You thought you were giving your child an incredible asset, but instead it’s an expensive liability he can’t afford to keep, and nor can he sell it without feeling guilty.
You may be planning to pass your business on to your kids or let your young managers buy into your company over time. These are both admirable exit options, but if your business is too dependent on you, and it hasn’t been tuned up to run without you, you may be passing along a jalopy.
- Nine women can’t make a baby in one month
There are some things in life that take time, no matter how much you want to rush them. Making your business sellable often requires significant changes; and a prospective buyer is going to want to see how your business has performed for the three years after you have made the changes required to make your business sellable. Therefore, if you want to sell in five years, you need to start making your business sellable now so the changes have time to gestate.
How did we get into the current financial mess? Great question.
Turmoil in the Making
In 1910, seven men held a secret meeting on Jekyll Island off the coast of Georgia. It’s estimated that those seven men represented one-sixth of the world’s wealth. Six were Americans representing J.P. Morgan, John D. Rockefeller, and the U.S. government. One was a European representing the Rothschilds and Warburgs.
In 1913, the U.S. Federal Reserve Bank was created as a direct result of that secret meeting. Interestingly, the U.S. Federal Reserve Bank isn’t federal, there are no reserves, and it’s not a bank. Those seven men, some American and some European, created this new entity, commonly referred to as the Fed, to take control of the banking system and the money supply of the United States.
In 1944, a meeting in Bretton Woods, N.H., led to the creation of the International Monetary Fund and the World Bank. While the stated purposes for the two new organizations initially sounded admirable, the IMF and the World Bank were created to do to the world what the Federal Reserve Bank does to the United States.
In 1971, President Richard Nixon signed an executive order declaring that the United States no longer had to redeem its paper dollars for gold. With that, the first phase of the takeover of the world banking system and money supply was complete.
In 2008, the world is in economic turmoil. The rich are getting richer, but most people are becoming poorer. Much of this turmoil is directly related to those meetings that took place decades ago. In other words, much of this turmoil is by design.
Power and Domination
Some people say these events are part of a grand conspiracy, and that might well be. Some people say they represent the struggle between capitalists, communists and socialists, and that might be, too.
I personally don’t participate in the debate over a possible global conspiracy; it’s a waste of time. To me, the wider struggle is for power and domination. And while this struggle has done a lot of good — and a lot of bad — I just want to know how to avoid becoming its victim. I see no reason to be a mouse trying to stop a herd of elephants from fighting.
Currently, many people are suffering due to high oil price, the slowdown in the economy, loss of jobs, declines in home values, increased bankruptcies and businesses closings, savings being wiped out, the plummeting stock market, and rising inflation. These realities are all direct results of this financial power struggle, and millions of people are its victims today.
An Extreme Example
I was in South Africa in July of this year. During my television and radio interviews there, I was often asked my opinion on the world economy. Speaking bluntly, I said that South Africans had a better opportunity of comprehending the global turmoil because they’re neighbors to Zimbabwe, a country run by Robert Mugabe.
In my interviews, I said, “What Mugabe has done to Zimbabwe, the Federal Reserve Bank and the IMF are doing to the world.” Obviously, my statements disturbed many of the journalists. I did my best to comfort them and assure them I was not an anarchist. I explained, as best I could, that Zimbabwe was an extreme example of an out of control power struggle.
After they were assured I was only using Zimbabwe to illustrate my point, I said, “If you want to understand the world economy, take a refugee from Zimbabwe to lunch.” I advised them to ask the refugee these questions:
- How fast did the economy turn?
- When did you know that you were in financial trouble?
- When did you finally decide to leave Zimbabwe?
- If you could do things differently, what would you have done?
Three Approaches to a Crumbling Economy
I spoke to three young couples from Zimbabwe while I was in South Africa. Two couples were recent refugees now living in South Africa, and one couple still lives in Zimbabwe. All three couples had interesting stories to tell.
One couple said that they would have quit their jobs earlier. Instead, they hung on, hoping the economy would change. Then, virtually overnight, the value of the Zimbabwean dollar dropped and inflation went through the roof. Even though they received pay raises, the couple couldn’t survive and soon depleted their savings. They left Zimbabwe by car with almost nothing. If they could’ve done something differently, they told me, they would have started a business in Zimbabwe and began exporting products to South Africa, so that they would have had South African currency and a bank account there before they fled.
The second couple that fled the country said they saved money and paid off their house and other debts even as the Zimbabwean dollar fell in value. Looking back, they say they would’ve saved nothing and gotten deeply in debt in Zimbabwe, allowing them to pay off their debt with the cheaper dollars. Instead, they fled after they lost their jobs, leaving behind their house and owning $200,000 in nearly worthless Zimbabwean dollars.
The third couple still lives in Zimbabwe. When they saw the writing on the wall, they set up a business in South Africa and, with the profits, began acquiring tangible assets in Zimbabwe. Often, they’ll buy an asset in Zimbabwe and pay the seller in South African currency. They believe that once Mugabe is gone and order is restored, they’ll be in a strong financial position.
Many Problems, Few Solutions
There are three major problems with the events of 1913, 1944, and 1971. The first is that the Fed, the World Bank, and the IMF are allowed to create money out of nothing. This is the primary cause of global inflation. Global inflation devalues our work and our savings by raising the prices of necessities.
For example, when gas prices soared, many people said that the price of oil was going up. In reality, the main cause of the high price of oil is the decreasing value of the dollar. The Fed, the World Bank, and the IMF, like Zimbabwe, are mass-producing funny money, thereby increasing prices and devaluing our quality of life.
The second problem is that our economic crises are getting bigger. In the 1970s, the Fed faced and solved million-dollar crises. In the 1980s, it was billion-dollar crises. Today, we have trillion-dollar crises. Unfortunately, these bigger crises mean more funny money entering the system.
The third problem is that in 1913, the Fed only protected the large commercial banks such as Bank of America. After 1944, the Fed, the World Bank, and the IMF began bailing out Third World nations such as Tanzania and Mexico. Then, in 2008, the Fed began bailing out investment banks such as Bear Sterns, and its role in the Fannie Mae and Freddie Mac debacle is well known. By 2020, the biggest of bailout of all will probably occur: Social Security and Medicare, which will cost at least a $100 trillion.
Even if we find more oil and produce more food, prices will continue to rise because the value of the dollar will continue to decline. The dollar has lost over 90 percent of its value since the Fed was created. The U.S. dollar will continue to decline because of those seven men on Jekyll Island in 1910.
Granted, the funny-money system has done a lot of good — it has improved the world and made a lot of people rich. But it’s also done a lot of bad. I believe somewhere between today and 2020, the system will break. We’re on the eve of financial destruction, and that’s why it’s in gold I trust. I’d rather be a victor than a victim.