Unemployment Ideas

You just never know.  I happened to be at a family gathering recently and was seated next to a woman who I did not know.  She mentioned that she worked for her state’s Department of Labor and was an unemployment counselor.  We got to talking and I found out a bunch of neat things that I didn’t know about unemployment.

(Disclaimer: I am not an attorney or unemployment counselor, so you should check out what I say with your state’s Department of Labor or a real labor attorney.)

  • Depending on your situation, you may be able to shop your unemployment claim to a different state.  If you have worked for employers in different states or even, sometimes, if your corporation has its headquarters in a state, you may be able to file there.  Why is this important?  Unemployment is handled as a state matter.  Therefore, each state has its own limit on weekly benefits. A list of 2008 maximums by state can be found here. The differences can be staggering.  Florida was at $275, but if there is some chance that you can collect from Massachusetts, your weekly maximum could be $900.
  • You can file for non-contiguous time frames.  Say that your boss lays you off, but then offers to pay you half your salary for half time.  You are better off working one week on and one week off.  In this case, you can file for unemployment on your off weeks until you get a job.  Do not work half days because any day that you show up for work cannot be counted towards unemployment.
  • If you do get laid off, look for opportunities to go back to school. Unemployment compensation can sometimes extend throughout your academic program, even if it exceeds the normal time frames.  In addition, there are often state grants for retraining that can be applied for to pay for tuition.
  • There have been many changes to unemployment law and practice in the past year due to the economic conditions.  Make sure to do your homework or talk to an employment counselor at your  Department of Labor to see about the $25 Federal increase and the extension of unemployment benefits.

Certainly, no one wants to be on unemployment, but if you or someone you know has been affected by this economy, it pays to know the rules at the Department of Labor.

Economy, Politics and Fun

Economy: Here is a really neat idea to help small, local, independent businesses.  It is one way to Pay It Forward.

Economy: I have written a lot about the employee bonuses at AIG, but a professor at Columbia University looks at the bonus situation as a “missed opportunity“.

Politics: I am sure glad that the US Congress has all of the other problems of the country solved, so that they can devote their time and effort on this one.  Especially since they did such a good job on the last sports related one.

Fun: I love to watch MythBusters on the Discovery network.  One of the co-hosts, Adam Savage, sat down with Lifehacker to talk about the show.

Technology and Economy Cubed

Technology: I have been a big fan of Google Docs for users for a while now.  It makes sense to me to have the documents that you need whereever you are, not to mention the ability to easily share documents and collaborate on editing. Google today announced two changes to Google Docs.  The first is a full find and replace function that replaces a totally anemic one.  The second is the addition of a drawing module.  The drawing module will work in Docs, Spreadsheets and Presentations.

Economy: Speaking of Google, they seem to be the only firm that has a solid PR plan regarding the economy.  Read this article on the salary structure of the Google leadership.

Economy: Ever wonder about the huge contracts that sports stars get and how that works for them?  Sports Illustrated has a great story on the answer — not so well.

Economy: Heard this week from a small business banker at Chase that they are not lending to companies without three years of solid financial statements, up from 2 years.  I am not sure how they are making money if they are not lending it out, but the pendulum is definitely swinging back to the cautious side of things.

A Rebuttal to Jake DeSantis

Yesterday, I published a link to a resignation letter by Jake DeSantis, an executive vice president from AIG Financial Products that was sent to the New York Times as an Op-Ed piece.  After rereading the letter and thinking about it way too much, I believe that his letter deserves a rebuttal.

Dear Mr. DeSantis,

Thank you for writing your clear description of your feelings.  As an owner of AIG (now that the US government owns 80% of the firm), I wish to respond to you regarding the issues brought up in your letter.

As an executive vice president of the AIG Financial Products group, I fail to see how you can be totally without blame for the economic mess that your teammates left us with. As a senior manager with responsibility for business development for commodities, you had to be aware of the shenanigans that were taking place in your own groups.

I know a little about this.  In the late ’90s and 2000, I worked for Computer Associates.  There were times that many of us in management talked about deals that came in on March 34th.  We chuckled and thought that somehow the powers that be had figured out a way to get more sales revenue.  I guess it is not as funny today with 5 former executives (including the CEO and CFO) behind bars for fraud.  I left the company in 2000, in part because there were too many corners cut, too many ethical dilemmas.  I wish today that I had had the fortitude to confront those with ethical lapses directly.  It might have made a difference to the people that I worked with.  But enough about me.

You are a smart guy, MIT, years on the street. You had to be aware in years past — the good years — that some of the rewards that came to you, both financial and career-wise were due to corporate (and divisional) behaviors that were wrong and possibly even were company threatening. But you assuaged your conscience by the thought that “at least my hands aren’t dirty”.

Now, you worked hard for 11 months to close down AIG Financial Products.  During this time, you accepted a $1 salary.  But you were promised a bonus for staying on.  The problem is that AIG Financial Products is bankrupt in all but the court of law.  If the Federal Government had not stepped up and invested billions to prop AIG up, AIG would be under the leadership of a bankruptcy trustee and all contracts would be open to cancellation or renegotiation by a bankruptcy judge.  This would most likely include your contract for retention.

Clearly, for the past 11 months, you have been doing better than a majority of Americans.  You have had a job and benefits. Compare this to the many people who have lost their jobs because of the havoc wrought by AIGFP.  Think about the folks who have lost their homes because of your company and others on Wall Street that created magic to hide the financial risks that they were taking.  There are many people in America today, who like your parents are working multiple jobs, who have it tougher today and have a cloudy retirement future because of this magic that your group peddled.

Think for a moment about the auto workers.  I am not a big fan of either auto manufacturer management or unions, but there haven’t been retention bonuses like yours for people in Lansing or Flint.  There are a whole lot of people who have it much worse and are being asked to take it just a little longer.  If the auto examples don’t work, check out Circuit City, Linens ‘n Things or Lehman Brothers. Think about others who contracts have been changed on a one-sided basis — forced furloughs, auto worker’s contracts, pay cuts. It is bigger than an AIG thing.

It amazes me that the folks within AIG are so tone deaf with regard to the PR aspect of this.  They are surprised that there are a lot of people in this country (aka the owners of AIG) who have a problem with $165 M being paid to the people that had a hand in the crisis that they are living.  Even Mr. Liddy, who should know better, seemed caught off-guard by the vehemence of the public response.

I guess my main message to you, Mr. De Santis, is to Grow Up.  You have been richly rewarded by a company that failed on so many levels.  If the company had succumbed to bankruptcy, most likely you would not have received your bonus.  The message that the financial industry has always put out was that the pay was so high due to the risks involved. Now, Mr. DeSantis you get to see up close what risk reciprocity means in the bad times. So welcome to the growing team of folks that has been screwed by AIG.

I wish you luck in your upcoming job search and hope that you can put this episode behind you where it belongs.


Al Herbach

Economy, Entrepreneurship, Fun and Behavior

Economy: Although the language is a bit salty, Mike Taibbi’s article in The Rolling Stone on how we got into this economic mess is a must read. And from the other side of the fence, read Jake DeSantis’ resignation letter from AIG.

Entrepreneurship: Here’s something you don’t hear about every day — an article from Harvard Business extolling the work of small business.  And for those of you running  small businesses, pay attention to what is the biggest benefit to your customers — communication.

Fun: Even those of you who do not like math are sure to enjoy this site, MoreNewMath.com.

Behavior: Have you heard about the woman who had the incredible memory?  A cognitive psychologist tries to figure out what makes her tick.

The Young Entrepreneur – Winning

My friend, Jeff Leitner, is fond of asking the question “What does winning look like?”.  This simple question neatly frames the problem that many entrepreneurs struggle with. Sometimes it is a lack of focus.  Sometimes it is a plethora of options.  Sometimes it is just getting overwhelmed by the speed of business. In sports, it’s easy — more points.  In politics — it’s 50% + 1 of the cast votes. In business, not so easy.

In a posting last week, I talked about negotiation.  The key to a negotiation is to understand the very essence of what winning looks like. In order to get what you need out of a negotiation, you need to take a deep breath and invest the time to really understand what winning looks like, both for you and what you imagine it looks like for the other party.  If you can clearly lay out what winning looks like, the negotiation becomes much easier since you know the winning strategy for each side.

But you do not need to be in a formal negotiation to see the benefits of thinking seriously about winning.  Think about meeting a new sales prospect.  As much as possible, you need to control the agenda for a meeting.  The agenda should be built with winning in mind. If you control and publish an agenda, you have the ability to help ensure winning.

In contracting, if you are asked to write a first draft of a proposed agreement, jump at the chance.  Yes, it will be more work for you, but it will allow you to shape the document towards your vision for winning.  You can certainly take this too far and write the agreement one sided, but if you can use the opportunity to shade things toward your winning strategy, you have a more positive negotiating position and the likelihood of getting a favorable deal is increased.

So, how do you know what winning looks like for the other side?  Many times you can guess as to the components of a winning deal, but why guess?  I have disarmed many people by just asking simple questions: “How are you compensated?”  or “What is your incentive for making this deal happen?”.  I don’t want to know their W2 or base salary.  What I really want to understand are those things that could be beneficial to my negotiating partner that are not valuable to me.  These become good bargaining chips.  Winning to the other guy could be something as simple as booking this deal by the end of the month.  Perhaps I can trade booking the deal this month with longer payment terms.

Sure, understanding what winning looks like before each meeting, negotiation or sales presentation is more work.  Documenting these strategies will take a bit more time.  But in business, as in sports, winning usually means working harder than the other side.

Behavior, Economy and Entrepreneur

Behavior: Can you name one question that Amazon uses to garner more than $2B in sales? Jared Spool can and he explains the whole process.

Economy: Hugh MacLeod, creator of the gapingvoid art and blogger, writes about how the economy of today is being purged of “Middle Seat Sellers” and how this is a good thing.

Entrepreneur: I just finished the book, The Monk and the Riddle: The Art of Creating a Life While Making a Living and I loved it. It is a very fast read and talks about the things one needs to think about before visiting your local VC or angel for funding.

Negotiation 101

The process of achieving agreement through discussion (en.wiktionary.org/wiki/negotiation)

Negotiation is one of those things that scares people.  Our moms have taught us that we need to be polite, thankful and subservient to power.  While your mom may have been right in teaching you social skills, negotiation is a business process.You need to be strong, knowledgeable and flexible as you try to come to agreement, whether it is for a salary increase, buying a car or selling a company.

First off, you need to do your homework.  What is that car really worth?  What do people with my level of experience actually get paid?  You may be surprised at the results of your research.  Next, you need to think about what you offer to the deal.  Is it a trade in, is it more responsibility, is it a contact list and potential sales leads?  What is the total value of these to the deal?  Are there intangibles? List them.  Are you willing to give something else to get the deal?  What is your BATNA (Best Alternative To a Negotiated Agreement)? What could you throw into the deal that has little value to you, but higher value to the other party? What do you know about the company across the table?  Find out about budget, financial status, reputation of dealing with vendors, corporate news, where this project fits into corporate strategic planning etc. How does the other side’s negotiator personally win – is  it saving money, is it ensuring that the project gets done correctly, is it building a vendor network? The more you know about both sides, the better you will be able to develop a strategy. Plan out your negotiating strategy in writing, so you have a guide.

A common mistake is to make the deal personal.  You think “If I don’t get this deal, then how will I face my spouse?” or you think ” I will demand the best price and won’t back down”. Wrong move. Don’t get angry or throw out “Take it or leave it” offers.  Now is the time for some of mom’s social skills to come into play.  Be calm.  Be strong. Take a deep breath before replying. The voice of reason usually will prevail in a negotiation.

Ok, so now you are calm and reasonable.  The other party asks you to make an offer.  You never want to make the first offer.  Now I realize that someone needs to make the first offer, but look for a way where you come to the first offer in a cooperative way. For example, when negotiating a contract for consulting services, I might ask the company what is the budget for the project.  That might give me an opportunity to look at whether I want to do an hourly type of contract or provide a fixed bid, which gives the client some additional comfort from fear of going overbudget. If you knew the budget for the project and also asked questions about the company’s level of risk tolerance, you could provide a more compelling case for winning the project.

Understanding that this is a negotiation, you need to ask for more than you reasonably expect to receive.  While I don’t like the term compromise because it makes it seem like you are already giving up something, your offer will most likely be reduced (in value to you) throughout the negotiation process.  Be prepared for this by understanding your limits and thinking creatively about what other items can be included in an agreement.

In a negotiation, you need to understand that you own your position.  You can make this deal happen or you can walk away.  The other party owns his position.  He also holds the right to walk.  If he walks, your deal is dead.  The goal is to find the place where both parties are a little uncomfortable, but both get rewarded in some way.

Having said that you own your position, my next statement is a bit incongruous. The final decision should never rest with you.  This is the reason that the CEO or chairman of companies do not normally negotiate deals.  You always want to have an out to say that your partners need to review the deal or the chairman has the ability to approve any deal that you come up with.  This will allow you to take a deal home and think through the options without being pressed for an answer in front of the other party. While you don’t want to make minor changes at this stage, you do want to reserve the ability to pull out completely if with a clear mind, you find a deal unacceptable.

Now, both parties have agreed to the deal.  The negotiation is still not done.  There is the writing of a contract to codify the terms and conditions of the deal.  In most cases, there will be a standard document that will be presented to be signed by both parties.  If you have not done this before, please, please get a lawyer to review any legal documents.  Make sure that you understand that you can make changes to any document and if the other party agrees, you have a valid contract.  Even if you are signing a pre-printed contract (like, say for a new car), if you don’t like a term, you can cross it out or make changes.  If the other party wants to complete the deal, they can choose to accept your change.  Otherwise, you may need to negotiate terms and conditions.

The final point is that a successful negotiation will leave both parties feeling better off than if the deal had not been done.  People like doing business with people that they like.  If you have squeezed every drop of blood out of the deal and “won”, you may have created a monster.  Be prepared for the client from hell.

Behavior, Entrepreneurship, Economy and Technology

Behavior: Last year, I read and thoroughly enjoyed Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely, a behavioral economist from Duke.  He gave a presentation at TED this year on cheating that discussed, among other things, a fake MIT Honor Code, sweatshirts, the Personal Fudge Factor, atheists swearing on Bibles and The Ten Commandments.

Entrepreneurship: Seth Godin wrote today about how to apportion equity in a start-up. His ideas are well thought out and I especially like the idea of appointing an arbitrator right at the start.  This advice is all the more important if your partner is also your spouse, best friend or both.

Economy: I posted recently on some ideas regarding the AIG bonus issue. Adam Davidson, writes on the NPR Blog today to tell us to look at the bigger picture and as mad as I was when I wrote about the bonuses, I think he makes some sense.

Technology: I have been a big online mapping fan from the early days of MapQuest.  Now, I normally choose Google Maps, for the richness of the experience as well as the ease of use.  Today, I found out about www.openstreetmap.org. This is an open source world street mapping program.  It is designed to be crowdsourced, meaning that like Wikipedia, everyone can be an editor.  It looks a lot like Google Maps but includes user generated features like detailed bike paths near my home that were included by a user with a GPS unit.

Marketing, Quotable and Big Picture

Marketing: The folks in the UK have found solace in a bit of WWII history.  They have resurrected a poster created in time of war that is eerily appropriate for our current economic conditions.  However, the entrepreneur in me, likes this version even better.

Quotable: Justin Wolfers in talking about economics partnerships: “The best way to keep learning economics is to find opportunities to be the dumbest guy in a very smart room.”. I think this is true for all endeavors.

Big Picture: Clay Shirky writes a nice long blog post about the history of the newspaper business and what comes next, by looking at history.