Hit on the Middle Class: Lost Real Estate Assets

This continues our series on financial stresses affecting the middle class

Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances, (Federal Reserve Bulletin, June 2012) , highlighted “The share of total assets of all families attributable to unrealized capital gains from real estate, businesses, stocks, or mutual funds fell 11.6 percentage points, to 24.5 percent in 2010.” (p2)

Overview

“Housing was of greater importance than financial assets for the wealth position of most
families.

• National Home Price Index fell 22.4% between September 2007 and September 2010
• House prices were fully 27.5 percent below the peak achieved in April 2006
• Decline in house prices was most rapid in states where the boom had been greatest
• California, Nevada, Arizona, and Florida saw declines of 40 to 50 percent
• Iowa saw a decline of only about 1 percent

Homeowners Versus Renters

“The role of the decline in housing values in explaining median and mean wealth losses across various demographic groups, there are large differences in net worth changes by housing status.

• Median net worth for homeowners fell 29.1% 2007-2010…the mean fell 12.7%
• Decline in median net worth for renters was only 5.6%, though the decline in the mean was much larger at 23.4%.
• Renters have much lower median and mean net worth than homeowners
• Value of wealth losses for the renter group tended to be much smaller; for example,
• Median net worth of renters fell $300 over the three-year period
• In contrast with $71,500 for homeowners.”

Primary Residences

• Median and mean values of the primary residences of homeowners fell 18.9% & the mean fell 17.6%
• Losses in the median and mean translated into large dollar losses: $39,500 for the median and $55,700 for the mean.

Homeowners in virtually all demographic groups saw losses in the median, and most of those losses were substantial.”

Monday we will review the impact of debt on the middle class between 2007 and 2010

Hit on the Middle Class: Changes in Savings Practices

This continues our series examining the Federal Reserve Board’s report on consumer income

The Federal Reserve Board released Changes in U.S. Family Finances from 2007to 2010: Evidence from the Survey of  Consumer Finances in the June 2012 Federal Reserve Bulletin. Most of this post will consist of quotes directly from the report. “Because saving out of current income is an important determinant of family net worth, the SCF asks respondents whether, over the preceding year, the family’s spending was less than, more than, or about equal to its income. Though only qualitative, the answers are a useful indicator of whether families are saving.”

Changes in Saving Patterns

“The proportion of families that reported they had saved in the preceding year fell substantially from 56.4% to 52.0%. That decrease pushed the fraction of families reporting saving to the lowest level since the SCF began collecting such information in 1992. The general pattern of changes across demographic groups in the recent three-year period is also one of decline, as retirees were the only group reporting an increase in the fraction that saved.”

• “The study shows an annual saving rate of 5.3 percent between 2008 and 2010, up substantially from the 2.2 percent rate over the 2005–07 period
• In 2010, 6.0% of families reported that their spending usually exceeds their income
• 19.6% reported that income and expenditures usually equaled one another
• 34.8% reported that they typically save income left over at the end of the year
• 39% reported that they save regularly
• #1 reason people listed for saving was to have liquidity of money
• #2 reason people listed for savings was retirement“

Economic Downturn Had Modest Effect on Saving

“These estimates show a small decrease between 2007 and 2010 in the share of families who reported regular saving, but in general, the fact that these figures are not much changed over the past several surveys suggests that economic conditions over this period had only modest effects on the longer-run saving plans of families.”

Friday we will examine the changes reported by the Fed in real estate wealth

Hit on the Middle Class: Loss of Income 2007-2010

This begins a series on problems affecting the middle class in America

The Federal Reserve Board released the Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances in the June 2012 Federal Reserve Bulletin. “The Federal Reserve Board’s Survey of Consumer Finances (SCF) for 2010 provides
insights into changes in family income and net worth since the 2007 survey.” I quote the following information from the report. Today, we will focus on loss of income.

Changes in Income for the Middle Class

The report shares information gathered from 6,492 families interviewed in 2010. The Fed compared the 2010 responses with 4,421 families interviewed in 2007. The Fed found:

• '”Median value of real (inflation-adjusted) family income before taxes fell 7.7%
• Median income had also fallen slightly in the preceding three-year period
• The decline in median income was widespread across demographic groups
• Only a few groups experienced stable or rising incomes
• Median incomes moved higher for retirees and other nonworking families
• The decline was most pronounced among
• More highly educated families
• Families headed by persons aged less than 55
• Families living in the South and West regions
• Every age group less than 55 saw decreases in median income of 9.1-10.5%
• Mean incomes declined especially for the 65-74 age group, a decline of 21.7%
• Median income fell 5.7 % for families headed by a person headed by someone working for someone else
• Median income fell 18.7% for those who were self-employed

Occupational Demographics for Income

Across occupation groups,

• Median income fell most in proportional terms (9.3 percent) for families headed by a person working in a technical, sales, or service job. (Mean income fell 16.0)
• Percentage drop for families headed by a person in a managerial or professional position was 9.1%
• Dollar amount of their decline was much larger because their 2007 median income was much higher.
• Other-occupation group (predominantly workers in traditional blue-collar) median fell only 3.3%. (Mean income fell 16.3)
• Median income for families headed by retirees increased 10.0 percent.”

Wednesday we discuss the Federal Reserve’s report on the middle class’ savings

Get a Promotion 15: Put It All Together to Get a Promotion

This concludes our series on how to get a promotion on your current job

We discussed, analyzed, and reviewed how to get a promotion. We outlined four key steps to impress management to give you the promotion. We defined additional actions that will help you accomplish the four key steps. Today, we will summarize and pull all the actions and steps into a workable career plan.

Create a Plan to Get a Promotion

You plan for a promotion by examining options that appeal to you within the company:

• Explore either upward or lateral promotions to positions with more respect, responsibility, or pay.
• Talk to people in the organization about positions that interest you.
• Discover what they think of them what they like about those teams, and any concerns they may have.
• Identify what skills, responsibilities, performance, or expectations exist for the jobs.
• Outline skills that you may need to get the promotion
• Identify training, mentoring, or apprenticeship methods to gain the skills
• Search for educational reimbursements or other ways to pay for training
• Use the principles we outlined in previous posts to plan how to
• Meet management’s expectations of your current job
• Exceed their expectations for your productivity, efficiency, effectiveness, and quality
• Prepare a graph to monitor your improvements

Implement and Monitor Your Plan

Implement your plan with the help of your mentors and internal network of contacts.

• Enroll in the training and let your mentor and network of contacts tutor you
• Do the things you planned that would improve your performance and productivity
• Mark your graph with management’s expectations, your target & actual performance
• Communicate them to management with home run statements
• First base=what division, company, or job you were working at
• Second base=what you did to create the improvement or increase
• Third base=the results of your actions using #s, %s, and  $s
• Home plate=the savings or revenues applied to the company

Plan to impress management by improving your performance. Increase your performance by implementing your plan. Communicate your successes to management with home run statements.

Monday we examine factors that decreased wealth of the middle class by 43%

Get a Promotion 14: Share Successes with Management

This continues our series on how to get a promotion on your current job

All of your progress and improvement will not get you a promotion unless you communicate your successes to management. Your communication cannot be too strong, or you come across as bragging and pompous. Weak communication leaves managers unimpressed. Either way they will not promote you. Accurate, factual, and timely communication increases your odds to get a promotion.

What to Communicate with Managers

I repeat what I wrote in many posts—you have to convince management of three things to get a promotion:

• You can do the (new) job they want done—and more than what they expect
• You will fit into the new organization or work team when promoted
• You will provide them an even better return on investment than you already do

Basically, you need to communicate that information to management. You need to communicate the facts that prove these assertions. Sharing general information—generalities—will not impress your managers. Generalities sound hollow at best, like bragging at worse. As I’ve posted before, use the home run format and include $s, #s, or %s.

Topics to communicate with managers may include how much you:

• Increased your personal or team productivity or efficiency
• Improved the effectiveness or quality of your work
• Processed or finished your work faster or more accurately
• Helped or mentored a co-worker to improve their work
• Made the company money, new clients, patents, products, or services
• Saved the company money on taxes, overhead, logistics, or more
• Hired someone who improved the productivity, efficiency, effectiveness or quality of your team
• Accomplished any direction, order, or action management wanted you to do

How to Communicate with Managers

You take advantage of many opportunities to communicate your success:

• Private conversations
• One-on-one supervisory or managerial interviews
• Quarterly or annual performance reviews
• Reporting structures, cycles, or periods
• End of week, month, quarter, or year

You communicate with managers using a variety of methods:

• Verbally
• Email
• Card
• Official report or form

Friday we end our series by combining the actions into a coherent plan to get a promotion

Get a Promotion 13: Give a Good Return on Investment

This continues our series on actions that could get a promotion on your current job. This post will refer back to several previous posts. I will link to them so that you can follow those ideas without me having to repeat them.

I will consistently repeat certain concepts through this blog. One constant message you will hear: “To get promotions you need to 1) do the job management wants done-and more, 2) fit into the organization, and 3) give a great return on investment. In addition, you need to effectively communicate all three to management.

Our last post outlined all the costs employers invest in their employees. Today, we continue exploring how to give a good return on investment.

Estimating How Much You Make or Save the Company

In some of the previous posts in this series we discussed the need to

• Understand what job they want you to do—and do more than that\
• Identify how they measure results in metrics and benchmarks
• Use a formula to establish the value of your contribution
• Decide what you want to improve about your performance and how to do it
• Chart your actual performance to management’s expectations and your goals
• Use the formula from above to estimate how much money you made or saved

Factoring the Return on Investment

Once you know how much money you made or saved the company, you subtract how much you cost the company from the amount of money you contribute to estimate your return on investment. For example:

• $67,000 (contribution) – $32,200 (costs) =$35,000 ROI = 2 times
• $440,000 (contribution) – $98,000 (costs) = $342,000 ROI = 4.8 times
• $2,000,000 (sales contribution) –$190,000 (costs) = 1,810,000 ROI = 10.6 times

Expected Returns on Investment

Each type of job generates a different expected return on investment based on the capacity of that job to generate revenues or savings. For example,

• Secretaries generate limited revenues or savings, thus a ROI of only 1-2 times
• Sales people generate most revenues, thus an expected ROI of 10-20 times

Wednesday we  how communicating effectively with management helps get a promotion

Get a Promotion 12: Show Your Return on Investment

This continues our series on actions that will help you get a promotion in your current job

Doing the job the company wants done and fitting into the organization constitute two thirds of the actions to help you get a promotion. You show a return on their investment as the third action to get a promotion  Organizations cannot afford to hire people who do not generate either more revenues or savings than they earn in salary, benefits, or other compensation. This post begins several posts outlining how to show a return on investment.

Hidden Costs Companies Spend on You

Companies invest in their employees more than most employees recognize. You begin to show your return by acknowledging the investment. You can see most of the investments on your pay statement. Their investment includes:

• Salary: what is the gross dollar amount they pay you
• Employer taxes: employers must pay taxes on each employee
• Federal withholding
• federal MED/EE
• Federal OASDI/EE
• State withholding
• Wages paid for no work produced
• Holiday pay
• Vacation leave
• Sick leave
• Disability pay (if used)
• Employer paid benefits
• Federal Medical/ER
• Fed OASDI/ER
• 401K employer matching contributions
• Medical insurance premiums (if applicable)
• Master retirement (if offered)
• Life insurance (if provided)
• Dues and subscriptions for professional development (if offered)
• Training costs
• Salary, materials, and facilities used to orient you to the organization
• Salary, materials, and facilities used to help you learn how to do the job
• Conferences, seminars, workshops, and courses the company pays for
• Certifications, licenses, and other credentials the company pays for
• Educational reimbursement (if offered)

Acknowledge Their Investment in You

You can see that you cost your company a lot of money. Typically, you cost more money than you generate for the first several months—or even years—that you work for a company.

Hence, companies dislike employees who leave them quickly. They do not get a return on their investment. The employee leaves before earning more than they cost. Employees generate a return based the revenues or savings you generate.

Monday we continue our series on how showing your return on investment gets promotions

Get a Promotion 11: Dress, Attend, & Behave to Fit In

This continues our series on how to get a promotion

Dress, attendance, and behavior can impress management that you fit into the organization or prove to management that you do not fit into the organization and need to go. Even companies known for creative innovations do not tolerate those who do not fit in.

Dress for Success Still Applies

While some companies use official uniforms (fast food, retail, football, HVAC). Others use informal uniforms (law, accounting, medical). Official or unofficial dress codes allow companies to establish a look. Not following the dress code makes you stand out—it shows you don’t fit in.

Sometimes the written guidelines may conflict with the unwritten rules. I once worked at the headquarters of a global organization. The dress code allowed men to wear “white or lite colored dress shirts”. One day I wore a conservative burgundy and white striped, oxford, button-downed shirt, a classic conservative men’s dress shirt.

An executive told that while the policy allowed light colored shirts, white shirts were expected. I noticed, thereafter, that all of the respected, upwardly bound employees wore white shirts. His mentoring me on something as simple as the color of shirt (plus my performance) allowed me to get two promotions.

Attendance Standards May be Written or Unwritten

Most companies list written policies on attendance. Usually, however, unwritten rules govern attendance for promotions.

• They outline hours of operation, sick days, annual leave, and punctuality, but expect you to use:
• Less than 6 days sick leave a year.
• Less than half your vacation leave.
• At least half of vacation leave a year
• At least a one week vacation a year (Improves employee performance)

Violate Expected Behavior Standards at Your Own Risk

Law suits and resulting regulations govern organizational behavior more than ever:

• Lewd jokes or comments, not only offend, but can negate promotions
• Zero tolerance on anger, violence, sexual harassment, discriminatory, or any malicious behavior
• Drinking.or drugs in the workplace
• Violation may result in immediate termination and definitely stall promotions

Friday we will begin our study of how establishing your return on investment get promotions

Get a Promotion 10: Fit In By Knowing Policy & Procedure

This continues our series on actions that will help you get a promotion in your current job

Understanding the written and unwritten rules help you fit into the organization . Your mentor and network can help you comprehend the unwritten rules. Large organizations write their rules in policy and procedure. You study and follow policies and procedures of the organization to fit in.

Purpose of Policy and Procedure

Merriam-Webster defines policy as:

• “Prudence or wisdom in the management of affaires”
• “Management or procedure based primarily on material interest”
• “A definite course or method of action selected from among alternatives and in light of given conditions to guide and determine present and future decision”
• “A high-level overall plan embracing the general goals and acceptable procedures especially of a government body”

Small organizations seldom write policies or procedures. They rely on unwritten guidelines.

Larger organizations require them to help lots of employees behave in similar or branded patterns. Policies also help organizations abide by legal rulings and regulations.

You can usually obtain policies and procedure from the human resource and legal divisions of large companies.

Consequences of Not Fitting into Policy or Procedure

Policy allows organizations 10 or 5,000 to act, as one, toward the same goal and in the same manner. Persistently not understanding or complying with policy sends certain messages to the organization. 

• Executives seldom share the “high-level plan” with underlings. They write procedures for you to do your small piece of the plan
• Not performing as expected can affects others work and cause delays or flaws
• Not following policy indicates a lack of respect for the “prudence or wisdom” of management and the “material interest” of the organization
• Rejecting the “material interest” of the organization puts you out-of-step
• Noncompliance indicate you know better than them
• Continued violation indicates non-conformity—you do not want to fit in
• Management usually ends the employment relationship if you consistently violate policy or procedure.

Get promoted by showing respect for management. Study and comply with policy and procedure.

Wednesday we will review the importance of fitting in with attendance, dress, and behavior

Get a Promotion 9: Build an Internal Network of Contacts

This continues our series on actions to help you get a promotion in your current company

We discussed the need to develop a network of contacts in a previous post. The focus, in that post, dealt with how a network helps you improve your productivity, efficiency, effectiveness, and quality. This post explores how internal networks of contacts teach you the written and unwritten rules, and about the organizational structure.

How to Build Your Internal Network

You build your network by making friends in the company. Do not select your friends based on what you think they can do for you. Select people that you want to know more about.

Sarah and Jared Stewart teach 9 keys building relationships. I’d like to share just of few of their keys in this post:

• Get out of the coliseum: avoid developing relationships for hoped for transaction
• Learn, serve, grow: Learn about people so that you can find a way to serve them, so the relationship will grow
• Just because: build relationships just because knowing people is good: not for some selfish purpose

The CIO Survival Guide authored by Karl D. Schubert offers this good advice:

• Cultivate a broad network to exchange ideas and rally collaborative support
• Stay in touch with people at all levels of your organization—vertically & horizontally
• Continuously investigate what managers and others need from you and your team
• Respect and openly acknowledge the individuals on your team
• Adapt your interpersonal style to align with the strengths & shortcomings of others
• Act to preserve relationships, even under difficult stress or heated emotions
• Promote collaboration and remove obstacles to teamwork across the organization

What Your Network Can Teach You

EFinancialCareers posted “Building a network within your company can be as important to your success as developing contacts outside. But watch out: The wrong moves can sink you. Here’s how to avoid some of the most common pitfalls.

• Assess Your Workplace Culture
• Follow Company Guidelines
• Keep Your Boss in the Loop
• Stay Positive
• Reciprocate
• Don’t Be Pushy”

Monday we examine how studying the policies & procedures for the company helps you fit in

Get a Promotion 8: Fit In the Organization—Find a Mentor

This continue our series on actions that can help you get a promotion within the company

The first step to getting a promotion is doing the job management wants done—and more. The second step involves fitting into the work team or organization. Fitting in includes abiding by the written and unwritten rules, the organizational culture, and getting along with co-workers. A good mentor will help you learn what you need to fit in.

Traits of a Mentor

Mentor Scout defines “A mentor is a coach, guide, tutor, facilitator, councilor and trusted advisor. A mentor is someone willing to spend his or her time and expertise to guide the development of another person.” Mentors help you fit in.

The University of Washington published What is a Mentor?,

• “A mentor may share with a mentee (or protégé) information about his or her own career path, as well as provide guidance, motivation, emotional support, and role modeling.
• A mentor may help with exploring careers, setting goals, developing contacts, and identifying resources.
• The mentor role may change as the needs of the mentee change.
• Some mentoring relationships are part of structured programs that have specific expectations and guidelines: others are more informal.”

How to Find and Cultivate a Mentor

The American Psychological Association lists characteristics of effective mentoring to include "the ability and willingness to

• value the mentee as a person;
• develop mutual trust and respect;
• maintain confidentiality;
• listen both to what is being said and how it is being said;
• help the mentee solve his or her own problem, rather than give direction;
• focus on the mentee's development and resist the urge to produce a clone."

Lindsey Pollack authored Seek a Mentor on Wet Feet.com: She advises:

• Seek a mentor in your existing network
• Ask a focused and informed question about something you need to learn about the organization
• Be specific about the kind of help you want
• Meet any way you can
• Ask your mentor to make you accountable

Friday we will discuss how to build an internal network and use it to get a promotion

Get a Promotion 7: Chart Your Performance & Goals

This continues our series exploring actions that help you get a promotion on your job

Improving performance and reporting it to management helps you get the promotions you desire. You monitor your progress more effectively if you make a chart graphing your expected, targeted, and actual performance. A chart or graph visually communicates your improvements to you, your supervisors, and others.

What Should You Chart

Each job will measure something different. We discussed metrics in a previous post. Hopefully, you identified the important metrics for your job if you followed our suggestions.

You probably need to maintain multiple charts. First, you chart the metrics for each of the following measurement criteria:

• Productivity metrics: how much you produce
• Efficiency metrics: how much time, money, or materials do you use for production
• Effectiveness metrics: how well does what you accomplish its intended purpose
• Quality metrics: the degree of excellence or shoddiness of the performance

Second, you chart:

• What management expects you to perform in each of the areas listed above
• Your target to exceed what management expects
• Your actual performance for each of the metrics identified

How to Make Your Charts

Several methods of making charts exist:

• Manual graphs: you can use graph paper to manually make a chart
• Google Spreadsheets: you can graph your metrics for free using Google documents
• Microsoft Excel spreadsheet: you must buy MS Excel to graph performance this way

A line graph will display your metrics better than a bar or other type of chart. You create a separate graph for each metric because each graph will chart three measurements.

The details of your graph will include:

•  Time (days, weeks, or months) along the bottom line of the graph
• Performance metrics along the vertical or left side of the graph
• One row (line) of the table will contain expected performance data
• Another row (line) of the table will contain data of your goals
• Final row (line) of the table will contain your actual data performance
• Data labels if you wish

Wednesday we begin to explore the next step in getting a promotion—fit into the organization

Get a Promotion 6: How to Improve Your Performance

This continues our series about actions that may help you get a promotion at work

When you begin to exceed the company’s expectations, you move toward a promotion. You must decide what you wish to improve: your productivity, efficiency, effectiveness, or quality of your work. You must also decide how you will improve your performance. Fortunately, you do not have to decide on your own. Your mentor and network of contacts within and outside the company may help you brainstorm ideas and develop your plan of action.

Incorporate Others in Developing Your Plan

Several people can help you improve your performance. They each assist you in different ways:

• Your supervisor can help you understand why the company does things the way they do it. He or she can explain any restrictions, guidelines, or ideas for improvement
• Your mentor can nurture you, guide you, and brainstorm ideas on how to improve within the corporate culture. Your mentor can also introduce you to others that can help you improve.
• Your internal network of contacts can help you get your work done more efficiently and effectively. For example your contacts in,
• Purchasing may teach you how to order your material more efficiently
• Clerical staff can make your written materials clearer & more accurate
• Operations can show you the better products to promote
• Shipping can help you understand how to prepare your orders better
• The Internet shares best practices, benchmarks, articles, and ideas for improving performance. You move forward when you spend 30 minutes 2-3 times a week studying
• Your Vendors can help you reduce costs, find discounts, and improve work
• Your professional or trade associations can share best practices from others doing the same work

Deciding What to Do

Your research and discussion will probably generate a multitude of ideas for improving your performance on the job. Eventually, you must select 1-3 specific actions. I suggest you use the Proact model to guide your decisions:

• PRoblem: describe it
• Objectives: what are they
• Alternative actions: to consider
• Tradeoffs: weighted to prioritize

Monday we will explore how charting expectations, goals & actual performance will help