I’ve already whined about Merrill Lynch and the tone deafness that accompanies spending $1.2 million on an office. And progress, too — when publicized, John Thain agreed to give the money back.

Now Citigroup, that little bank that the American taxpayer has been investing billions of dollars to stay afloat, decides to buy a new corporate jet for $50 million. And, since you can’t tell the difference between a dollar of profits and a dollar contributed to the bank by the taxpayer, we’re paying for it. Or were. In another case of “we’ll do the right thing — if we get caught,” Citigroup took a pass on the plane with a little encouragement from the light of day:

The high-flying execs at Citigroup caved under pressure from President Obama and decided today to abandon plans for a luxurious new $50 million corporate jet from France.

The decision came 24 hours after the banking giant, which was rescued by a $45 billion taxpayer lifeline, defended buying the state-of-the-art Dassault Falcon 7X — one of nine to be flying in U.S. skies — as a smart business deal.

The jet, the epitome of corporate prestige and privilege, can carry 12 passengers in elegant comfort.

ABC News has learned that Monday officials of the Obama administration called Citigroup about the company’s new $50 million corporate jet and told execs to “fix it.”

The executive class with their assumption of entitlement — and it has to be an economic class all by itself now — just doesn’t get that when thousands of workers are losing their jobs because the company can’t sustain costs that spending money on worldly perks ticks people off.

But then another thought popped into my head:

If corporate executives can’t figure out that their worldly perks would cause an outrage in the time of the worst recession since the Great Depression, how can they think they can lead their companies into a profitable future? They can’t see anything coming at them.

Boards of Directors? You’ve got a culture to change. Time to get working on that.

No related posts.

Combine this with 52,000 job cuts at Citigroup and you can populate a city.

Glad I could help with the bailout of these companies.

Related posts:

1. Bank of America and Countrywide
2. Bank of America Buys Countrywide

Career Management Monday, November 24, 2008

Another week and yet another US bank gets a monster bailout from the taxpayers. This time, it is Citigroup, the worldwide conglomeration of financial services that has a management team that has yet to prove it knows how to make money. Even Saudi Princes have a tough time with their investments in the firm.

Details on the bailout are everywhere on the news; the cautionary tale comes from Paul Krugman, Nobel Prize winner:

A bailout was necessary — but this bailout is an outrage: a lousy deal for the taxpayers, no accountability for management, and just to make things perfect, quite possibly inadequate, so that Citi will be back for more.

The problem with these bailouts is that they are inconsistent – some invest in the bank with preferred stock, some just backstop losses, some do a combination of both and AIG just gets whatever it wants. The problem with this inconsistency is that everyone is now playing be different sets of rules and governance. That reduces transparency to something worse than the current blindness.

Plus, the program is now punishing those that did the right stuff during this crisis. It is now almost if you don’t have a bailout from the taxpayers, you can’t operate on a level playing field.

Impact on knowledge workers

The bailouts, easy to get for financial companies and tough to get for automakers, will prolong the pain in the economy. Sure, all sorts of financial institutions failing would be horrible and I’m not sure it would be right to let them fail. But the actions by the government have not eased credit. In fact, banks are continuing to stick it to businesses and consumers with higher rates, bigger fees, and unwillingness to lend – even among their own banks.

After paying for their bailouts, it makes one totally frustrated at the “stick it in your face” attitude of the banks with rates and willingness to loan.

Plus, these actions continue to challenge your employment no matter the industry you work for right now. Inability to get credit and having to pay higher rates means an unwillingness by your management team to be aggressive with growth. Instead, cost cutting reigns – and you are the one that is easiest to cut.

Life in the cubes is tough at the moment. Make sure you fight through the adversity.

Related posts:

1. Bailout Plan voted down by House

The layoff trap

For those that survive the layoff, the trap is to continue to do all of the work – with fewer people. That means YOU get to do all of the additional work that the people laid off were doing. So you work more hours. More days. And drive yourself crazy with all of the work instead of focusing on your family, professional and personal support networks.

A true story

When I had to lay off a group of people that worked for me, we were eliminating a function that we no longer wanted to be doing. While that caused people to be gone from the business, it was clear that my management no longer thought the function was important to be doing. Agree or disagree, at least it was clear and there was comfort to me in that approach.

One month after the layoff, a different department approached me and asked if they could learn about the function that my department was no longer doing. I agreed and we had a two-hour meeting on the work that was done. At the end of the meeting, this department said that they could really help me and could support what I was doing in my department with the function.

When I told them that I would gladly hand over all of the documentation and they could take over the function because we were no longer doing the work, they were surprised.

“Why aren’t you doing this anymore,” they asked?

“Because my management team determined the function was no longer important, so I am no longer working on it,” was my reply. “If you want to work on something management has already determined is no longer important, be my guest.” (If they want to be set up to be laid off later, that’s not my problem…).

In the end, they took all of the documentation. I never offered them any additional help.

What needs to be done

If you accept the premise that the people who were laid off were productive and doing real work, then the management team needs to determine what work will no longer be done. Which reports? Which processes? Which meetings? Management must determine what the most important work is and assign people to do it. Not just keep doing what has always done. Do you think the 50,000+ people being laid off at Citigroup weren’t doing any work?

After the layoff, it is important for the people still working to specifically ask what will no longer be done. It is a critical, defining question for your management team. It will probably not be known the day of the layoff what will no longer be done – but don’t get a non-answer and then forget about it. Bring it up at the next team meeting. And then one more. If your management team can’t tell you after two team meetings, you have your answer.

If your management team can’t tell you what work will no longer be done, it is time to find a new job.

If you don’t, you’ll get stuck doing all the work that was done by additional staff. Work that doesn’t pertain to your goals. And if you don’t work the extra hours and get the extra work done, you’ll be rated poorly all because management wasn’t good enough to define what no longer would be done with less staff.

Related posts:

1. Work longer to make up losses

I’m not going to guess a stock market number, but since this is a career management site, I think it is important to give you my predictions on what happens from here.

Quick summary of today’s events

1. The “bailout” plan fails a vote in Congress with both Republicans and Democrats not presenting a united front for the plan.
2. Wall Street fell about 777 points (DOW) and there were equally big losses on the NASDAQ and S&P 500 stocks. This was the largest single day drop in the DOW. Like one point for each billion in the bailout plan…
3. Wachovia’s bank assets were bought by Citibank. WaMu failed last week.
4. The mess has spread worldwide with Europe taking over three banks today. The Ireland (Dublin) stock market was down 13% in a day. A record.
5. The Fed is adding billions more dollars to the money markets (where are they getting them and how long before they have to print them?).
6. And we haven’t gotten to Asian markets as I write this.
7. Plus many, many more that would, on a normal day, be huge news, but today is merely more of the same.

What do these events mean for the Cubicle Warrior?

Here come the predictions:

1. Renegotiate the bailout in Congress by the Bush Administration. That will take more time. It may not happen at all. There is a large part of Congress that does not want to bail out anyone for the excesses of the past. That includes a large slice of the US population. The result of that stance is significant destruction of businesses – and jobs.
2. The liquidity issue is one where banks don’t want to lend to each other and, in turn, don’t want to lend to anyone else. This means that your checking, saving, and financial accounts backed by what your bank already has for capital. Sure, the FDIC is there, but they are doing these takeovers (like WaMu and Wachovia) based on someone else buying assets for pennies on the dollar and not using the FDIC insurance dollars. JPMorgan Chase got WaMu’s $300 billion in assets for $1.9 billion. Wachovia’s bank assets sold for $1 per share to Citigroup. Even I can do the math.
3. Business liquidity will drop. Because banks want to hold cash, there is the strong possibility that revolving business lines of credit won’t renew. If your companies credit line isn’t renewed, that significantly impacts their capacity to stay in business (think of financing 30-days of receivables or two months of inventory through credit but now you can’t).
4. Psychologically, people will pull in their spending even more than they have already. Since most the economy rests on consumer spending, the economy will tank into a recession. When you go into your local mall, look and see how many spaces are available. For the stores that are there, look how few clothes they have on the racks going into the critical holiday season and how soon the sales are already starting. They know.

But what about my job?

Here’s the advice:

1. You need to analyze the strength of your company. That means reading about your publicly held company on sites other than your own company “drink the kool-aid” internal web site. Not the discussion boards, but the financial news sites (for example, Yahoo finance – just plug-in your company’s stock symbol to get all the news).
2. You need to interpret what your management team is telling you. And I don’t mean follow them, but listen to them. If your management team is giving you corporate spin, you need to ask the hard questions: what is the company’s cash position compared with a year ago? What about revolving credit lines? What about receivables compared with a year ago? What about sales and inventory compared with a year ago? If your management team simply tells you they are in a strong position but can’t compare that with a year ago, you’re in trouble. WaMu consistently talked about how strong they were capitalized, but casually forgot to mention that since September 15^th through the day they were taken over their bank deposits dropped by over $16 billion.
3. You need to do your work. Performance counts, even in the face of a bankruptcy or other difficult times. Managers will want to keep – and other managers will want to hire – those people that continuously perform.
4. Decide your accomplishments. Your manager and other hiring managers want you know what you did – including numbers – in your last position. If you can’t state your accomplishments with the results, you need to write them down and get the numbers.
5. Continue networking. Networking with others keeps you engaged and informed on what is happening in other departments and companies. And if your only networking is in your own company, however large, start getting contacts in other companies now.
6. Manage your finances. Sure, the worst event for the economy is to have consumer spending stop. But you having a year’s take-home pay in the bank and then supporting the economy is priceless – to you.

You can only control what you can control. But that doesn’t mean you shouldn’t be watching out for yourself, family and friends. When the world is falling apart, doing what you can control — having prepared for the worst already — and watching for opportunities is black belt career management.

Scot

Related posts:

1. Bad career advice is worse than no advice at all
2. Career Advice for the Older Worker
3. Burning bridges and career advice
4. Time management and conflicting career advice

The infamous bailout continues to be worked in the United States Congress – while the financial markets take a hit. Whether they are taking a hit because they are finally realizing that $700 billion is a lot of money – or not enough – or they realize that the problem is even bigger, I don’t know. But the US market is down, European markets dropped from four to five percent (and the Ireland Dublin market a record 13% in one day!), and now a couple of failing banks and mortgage companies in Europe are starting to be taken over by their governments. National City, a regional bank looking to be the next on the list, has its stock price drop 50% today.

In short, whether you believe in a bailout or not, whether this is the right bailout or not, it is obvious that something needs to be done. This, in spite of both liberal and conservative chatter on the Internet and talking heads locations. You just don’t have this magnitude of failure in the financial markets this quickly unless there is something bad going on.

What is a Cubicle Warrior to do?

On Friday in my world, it was very hard to stay focused during the day (contrary to all the blog posts I wrote) because everything was imploding – the financial markets, the government bailout, the Presidential debates…everything was changing every 30-minutes. It was tough to keep up with the news, much less have any perspective on what it all means.

But, there are some conclusions we can draw for all knowledge workers:

The worse is not yet over. Until the bailout package is passed, we won’t see the implementation to see if it works. If it does work, events will calm down. If it doesn’t, this credit crisis will hit all sorts of industries outside of finance (as in we already this weekend gave a huge loan to the auto industry…).

Even if the bailout works, nothing will truly be solved until housing prices start to line up with incomes again and the backlog of homes is knocked back to around three months sales. Starting in 2001, housing prices started to go higher than incomes. If incomes hold steady at a value of 100, for example, then home prices peaked in 2006 at about 175. They are currently back to about 130 with incomes still flat-lined. When 2 of 5 homes in California are sold as foreclosure and many others sold with losses, it isn’t like we can just pick up and move any more.

Even after housing gets back in line, people will need to rebuild their own personal balance sheets to get rid of the debt and build up savings. Just as banks and other companies need to preserve capital, so do we.

Of course, we all take hits on retirement accounts. I don’t have any good answers on that one. But one of the trends happening in the market is that everyone is predicting the end of the world. That means we’re close to a bottom in the market. While I don’t time any market moves, as one who got out of the market in May, there are plenty of opportunities to the financially strong. Another reason for getting your personal finances right.

For our jobs

Regardless of where you work, you need to get your work completed. If you focus on the crisis, you won’t get your work done and that is a poor prescription for success.

If you work in these distressed industries, especially financials, you not only need to keep doing the work, but also insure that you have everything you need to have in case of a layoff.

For everyone else, you also need a clear understanding of your accomplishments and what they meant to your department and company ready to state to the next hiring manager. Those without accomplishments won’t get hired.

The worst advice is to “look busy when there is nothing to do.” If there is nothing to do in your workplace because of the chaos going on, now is the time to work hard on your stuff: your resume, your accomplishments, your networking, your personal brand details, and your financial situation to maximize cash and minimize debt. If your company doesn’t have work for you to do, what do you think the next step is?

Despite the mess out there, have a great week.

Scot

Related posts:

1. Career Management Monday, September 8, 2008
2. Career Management Monday, September 15, 2008
3. Career Management Monday, October 13, 2008
4. Career Management Monday, November 3, 2008
5. Career Management Monday, December 1, 2008

And there is significant financial news affecting Cubicle Warriors this week.

Government takes over Freddie and Fannie

Over the weekend, the Treasury announced that it would be taking over Fannie and Freddie and providing cash – as much as needed – to maintain and preserve their debt ratings. The shareholders will lose virtually everything, of course.

The reason for the takeover?

Stock markets jumped after the U.S. government’s decision to launch what could be its biggest federal bailout ever, in a bid to support the housing market and ward off more global financial market turbulence.

But Rogers said in the long term the move spelled trouble.

“This is madness, this is insanity, they have more than doubled the American national debt in one weekend for a bunch of crooks and incompetents. I’m not quite sure why I or anybody else should be paying for this,” Rogers told “Squawk Box Europe.”

When the government bails out company, it means YOU are having your tax dollars bail out companies. Foreign governments – who have supplied the dollars to support the deficit – are starting to call those dollars home. And, the bailout may not even work.

The stock market opened some 300 points higher, but have lost half the gains as I write this. And the gains, even at the 300-point level, are not even enough to make up for the losses last week.

For Cubicle Warriors, it means the financial crisis is far from over and that spills over into all sorts of industries. You can expect 6.1% unemployment to go up.

Another bank CEO replaced

At Washington Mutual, Kerry Killinger is out as CEO.

As Cube Rules Members noted in their exclusive reports, the bank replaced its executive in charge of banking several weeks ago. Today they announced this change in leadership.

Given the fact that they received a $7-billion capitol infusion several months ago that is now under water, have filed a “memorandum of understanding with the Office of Thrift Supervision concerning aspects of its operations,” and the stock continues to tank, you can expect wholesale changes in the management of the bank. And more layoffs. Last I checked today, the stock was down almost 15% more after the announcement.

Laying off 10,000 people at a time

With the unemployment rate over 6%, who should be laying more people off? In a provocative article – with good reasons provided – here are the 12 companies that should be laying off 10,000 people this year:

Ford, Sears, Citigroup, WaMu, Rite Aid, AT&T, Circuit City, Gap, Merck, AIG, Blockbuster, and IBM

A thoughtful, but scary, read.

Cube Rules News

It’s good to be back in the swing of things. I’ve had issues with my site not being up and running as much as I would like. Last week, this site moved over to a different server after two or three weeks of not having 99% uptime.

This weekend, I also changed the way I upgrade the software on the site and though it was thoroughly tested after the upgrade, I was greeted this morning with a 500 internal server error. That has now been fixed.

The first rule of technology is to have it be reliable. Not reliably unreliable. I’m optimistic that these infrastructure issues are now behind us.

Scot

Related posts:

1. Career Management Monday, September 29, 2008
2. Career Management Monday, September 15, 2008
3. Career Management Monday, October 06, 2008
4. Career Management Monday, October 13, 2008
5. Career Management Monday, November 3, 2008

Citigroup lays off 9,000

The “We know how to manage risk” financial companies have Citigroup laying off 9,000 additional workers after posting a $5.11 billion first-quarter loss. Also $16 billion in write-downs associated with the credit crisis.

Citigroup has a new CEO and it looks like some of the poor management of the past is now finding its way to the cubicle in a big way. The layoff announcement is in addition to the 4,500 people laid off at Citigroup in the last quarter.

We know how to manage risk indeed…

AT&T announces management layoffs

Meanwhile, AT&T announced the layoffs of 4,600 people through a regulatory filing. Most of these layoffs, 1.5% of the workforce, will be management level employees. This, while in the process of hiring “more workers to support growth areas.”

This is lazy work. Instead of seeing what is happening in the business and working to move people to right positions within the company, the company instead chooses to lay people off. These workers that are hired in growth areas won’t need managers? There won’t be any attrition among the managers?

There are a lot of creative ways of keeping effective employees with the company and still meet the needs of business. The financial companies really blew the risk associated with their products and they and their employees are paying a dear price for their miscalculations. At company survival time, huge layoffs need to happen for survival.

But AT&T is simply taking the easy way by not figuring out how to use their workforce in the right places to match their business needs.

Both stocks are up as I write this, of course. Wall Street rewards ineffective management when layoffs are announced — it is a sign the company is doing something to help earnings…

Sobering thoughts for the weekend.

Scot

No related posts.

This week, I’ll be interviewing Eric with a question a day — kicking off yesterday with Part 1. It’s all about career management and personal growth, something near and dear to my heart. We’ll have the question, the answer, and some commentary as it relates to our work in cubes.

Question: In your book, Waking Up in Corporate America, you provide readers seven secret principles that helped you navigate and survive in corporate America. How do you think your readers will find hope in these seven secrets?

Eric Pennington: I think many people who are of the non-executive management variety are hungry for hope. Somehow many of those people became statistics (Citigroup reduces workforce by 15,000 or Nationwide reorganizes to better position itself for the future), or worse, forgotten by the organization. The forgotten folks are most at risk, because they are left in a vacuum that most senior and mid-level managers cannot fill. The forgotten tend to spend significant periods of time just carrying on. Like it or not, leaders are responsible for setting the tone of hope.

The book offers hope to people at all levels of the organization because the book says: “I know how you feel and think, and you’re not crazy.” Some of the loneliest times I experienced in corporate America were when I was made to feel that either a) there’s nothing you can do about the madness, or, b) Eric — you’re the one with the problem, not the organization. Often we need validation and affirmation to remind us that we’re not crazy. The book speaks to that need. The book also says that Eric Pennington woke up, and the reader gets to connect with me along the way.

Commentary

I’m particularly pleased that Eric addresses that people are hungry for hope in corporations. There is the job to be done, of course. But corporations have long lost the promise of working to a goal that actually inspires the people that work for them.

Indeed, “employee engagement” is a hot topic in HR circles simply because there is little employee engagement in the workplace today (I’m currently reading that some 40% of employees are not engaged in their work at all, a frightening statistic). Without the engagement, over time, people will lose hope — and engage in their work even less.

With 75% corporate churn and where you have a new manager every 18 months with new “mission” statements every year, it’s really tough to maintain perspective.

Eric’s right: we all need hope.

Scot

Eric Pennington is a passionate thought leader who has helped organizations capitalize on the power within their people through sales growth, leadership training/development and Epic conversations. Eric is the author of “Waking Up In Corporate America” and a member of National Speakers Association and Leader to Leader Institute. Read more of Eric’s bio here.

Related posts:

1. Waking Up in Corporate America: Interview, part 5
2. Waking Up in Corporate America: Interview, part 4
3. Waking Up In Corporate America: Interview, Part 3
4. Waking Up in Corporate America: Interview, Part 1
5. “Betrayal at the Hands of Corporate America”