I want to be a garbage collector

The story that two garbage cleaners in New York were fined and forced to retire after being caught accepting a tip of $ 5 caught my eye.  Not for the reason you might think. This story would provoke hoots of laughter in my country where nothing happens in the public service without a gratuity.  Even in NY, this must be an incredulous story - every man and a dog demands tips shamelessly for just existing in the same space as you. But the real reason this story has prompted this post was buried somewhere in the middle.

 

The two garbage men apparently netted $100,000 each, including overtime. Granted that they had put in long years of service. Granted that they probably earned lots of overtime. But still a wage of $ 100,000 for a garbage collector shows everything that is wrong about the United States. No wonder they lose jobs by the droves to India and China. No wonder unemployment is a stubborn problem.

 

But this post is not to highlight the completely unrealistic pricing for labour in the US, as compared to the world. This post is instead about a global problem - automatic salary increases every year.

 

If you spend enough years on any job, even that of a garbage collector, you will reach levels of $ 100,000. If you start at $ 20,000 a year and get a 5% rise every year , you'll land up with a $100,000 salary in 33 years. That is presumably what happened to these two guys. Imagine the situation in India where anything less than a 10% raise a year leads to a strike. If you start at an annual salary of Rs 5 lakhs, an entry level salary for a qualified graduate,  and keep demanding 10% salary rises, by the time you retire after 35 years, your salary even staying in the same job, will be Rs 1.4 crores.

 

Now you see why there is age discrimination in employment and the older you are, the quicker you are fired. Now you see why there are large scale job losses.

 

Salary levels have to follow some form of a normal distribution over the years, if you stay on the same job.  You start low and as you gain more experience and you become more efficient, your salary should increase. It should probably reach a peak when you are say 40, and then begin a slow decline so that you can remain competitive with the younger folks who are trying to displace you. I know this sounds heretic, but I would rather take cuts in my salary than lose my job altogether. The trick is to price yourself, just a shade below the market rate (not go for the highest salary possible). If that involves annual salary decreases, then so be it.

 

Of course, you can, and should, upskill and move on to a higher value job. But if you stay in the same job, automatic salary increases every year is a one way ticket to losing the job.

 

So, how about negotiating a salary reduction, instead of a raise. At first read this might seem like an insane idea. But think about it .....

 

Its an altogether different matter as to why somebody who was earning $100,000 a year, asked and took a $5 gratuity !

BlogLovin' & Blog Huntin'

There's always something new to keep up with in social media, isn't there?  My latest adventure:  Bloglovin!    I'm still working through the details, but so far...I like what I see!  I was fortunate enough to get to transfer the blogs I follow from Google reader over to Bloglovin with a few clicks of the mouse.  If you weren't so lucky before Google Reader disappeared, it's NOT TOO LATE to search for some of your old favorites, and maybe even find some new ones to follow.   Let's go on a BLOG hunt together!  :-)  I've joined the Goin' on a Blog hunt linky with Laura Candler to help teachers find some terrific blogs to follow on Bloglovin' if you're up for it!   Getting started is easy! If you'd like to follow my blog, No Monkey Business, simply click on the black button to follow my blog on BlogLovin, which was a button created by the talented and super sweet Melissa over at Common Core and So Much More!   If you're ready to hunt for some additional teacher and student friendly blogs, click on the Blog Hunt button where you can peruse through some outstanding educational blogs. Happy Hunting!  
 Bananas for hunts that don't require camouflage and getting up early!

Why Firms Hire Their Employees' Friends

It is well-documented in the literature on labour markets that personal connections, friendships, and other types of networks matter a lot for finding a job. For example, applicants with friends in the recruiting organisation are more likely to get a job offer.

This may be perfectly rational for the recruiting firm; the friends of the candidate in the organization can be a great source of information about the applicant. As a result, the firm can be more assured of the job qualities of the person. Put differently, the candidate will pose less of a risk – in terms of potentially turning out to be a hiring mistake – if he or she has friends in the firm who have provided inside information. Therefore, employers may be more eager to hire new people who already have friends in the firm.

But professor Adina Sterling from Washington University suspected there might be another reason why job applicants with friends in the firm might be more attractive to an employer than those without. For quite a few jobs – especially if it concerns newly recruited MBA students – applicants will simultaneously apply for multiple jobs and then pick the most attractive offer they receive. And this can be very costly for a firm: the recruitment procedure can be very expensive, with multiple rounds of interviews and tests, but the time the candidate “sits on an offer” before eventually rejecting it may also precisely be the time that the numbers 2 and 3 on the list also secure and accept offers elsewhere. Therefore, understandably, firms are eager to limit the number of rejections they receive from candidates to whom they offered the job, and if they get rejected they want it to happen asap.

And Adina, who did a lot of interviews among employers, theorized that prospective employers would figure that candidates who already have friends in the firm might be more likely to accept an offer or, if they do reject it, do so soon. That is because the internal friendships might make them more attractive as an employee but also because the candidate has a reputation to protect with his or her friends, and feel an obligation towards them and the firm.

But that’s a nice theory and thought, but how on earth can you examine that? Because how could you statistically separate the two effects of 1) employers gain information about a candidate from his or her friends, and 2) the friends might make the candidate more likely to accept an offer?

To solve this problem, Adina chose a clever research setting. She looked at a 158 MBA and law students who had just completed an internship with a company, and then examined whether having friends in that company made them more likely to receive an offer from that firm. This was a clever setting because reason number 1 (gaining information about the candidate through his friends) no longer plays a role here; the employer already knows the candidate very well due to his recently completed internship! Hence, whatever effect is left could be attributed to reason number 2.

Adina indeed found that having friends in the company made it more likely that the applicant received an offer. Overall, her findings indicate that reason number 2 (friends make it more likely that the candidate will accept) is also an important consideration for prospective employers.

 

Paper to be presented at the “Sumantra Ghoshal Conference for Managerially Relevant Research” at the London Business School
Friendships and Strategic Behavior in Labor Markets, Adina Sterling (Washington University)
Paper summary published with the author’s permission.

Inquilab Zindabad ? No ! _____ (fill in the blanks) Murdabad .

What is common between a park demolition and a raise in bus fares. Well, something profound , I believe. Because in the last one month, I dare suggest that these were the two most important events in the world (NSA be damned ; as if that was a surprise)

The park issue was the first and it happened in Istanbul, Turkey.  The government had planned to demolish the Taksim Gezi Park and use the space to reconstruct the historic Taksim military barracks. About 50 environmentalists occupied the Park in protest. The police , predictably evicted them. That snowballed into massive nationwide protests and a huge Occupy Taksim Square movement started.  The issue of demolition of the Park has now given way to a protest against all sorts of unrelated issues and drawing crowds numbering in the tens of thousands. It is now an anti government protest without a coherent theme or leaders. A big section of the population is just protesting without a clear understanding of what they are protesting against and what the solution is. This mind you, in a country where the President Erdogan has won repeated elections with a strong mandate.

In Brazil, the government decided to raise some bus , train and metro fares. A few protested, notably the  Movimento Passe Livre (Free Fare Movement). The police broke up the protests. Again this has snowballed into a nationwide protest movement, involving millions of people. The government quickly withdrew the bus fare hike, but the protests have snowballed into something bigger - a whole range of issues, including protests against the Football World Cup and the Olympics all scheduled to be held in Brazil in the near future.  If Brazilians are protesting against football, something serious is happening. Again this is in a country where Dilma Rousseff won a resounding mandate in the elections and is the chosen successor of the extremely popular Lula.

As of today, both these protests are going on. You can see parallels with the Occupy Wall Street movement in the US and a few other places. In all these protests, there is no coherent theme, there is no leadership organising the protests. But these protests have been massive, cover a whole range of grievances and are significantly aided by social media.  They largely cover the middle class, not the poor. They tend to die down because they are not coherent and not "organised". But they are symptoms of a deep underlying problem.

This is a profound sociological change and one that should be researched deeply.  I believe the underlying issue is economic. Despite a big economic improvement globally across the last two decades, there is deep resentment. Large swathes of the population do not believe that there is a bright economic future ahead of them. This, despite the fact that the future is significantly brighter than what our parents, grandparents and forefathers ever had. And that is the problem governments and societies cannot ignore. There is no easy solution, and aspects of the solution will be different for different societies. But the root of the solution is economic. We have to have economic growth.

PS - In the title of the post - Inquilab Zindabad means Long live the revolution, in Urdu, a favourite phrase of protests of the past in the Indian subcontinent. Murdabad means "Down with".

Business Jazz – 24th June 2013 – Liz Strauss: We Won't Let You Fail

TOPICS THIS WEEK: Surrounding yourself with people who won't let you fail

Liz Strauss is a remarkable lady. She has touched the lives of many and helped them to improve their businesses and their quality of life. She's maybe best known on this podcast as one of the people behind SOBCon, a series of deep-dive online business conferences.

Liz has been ill. Those four words barely capture the hardship she's endured over the last year. In addition to ravaging her body, her illness has left her unable to work in the face of mounting medical bills.

What happened next is quite remarkable. Listen to find out.

The video

Here is the video of the Google+ hangout recorded during the recording of this week's podcast episode:

Links to people and things we mention

Liz Strauss Fundraiser
Liz's website

New rallying point

You are a big part of the story of this podcast. We'd like you to be an even bigger part of it. To help with that, and to help us have discussions about being genuinely attractive in business, we've established a LinkedIn group. Please knock on the door and we'll let you in.

Country tally

We're hoping to get a listener in every country in the world. The amazing, super, fantastic, wonderful Phil Sorrell has produced an interactive map for us. If you have a Twitter account, you'll be able to add yourself to the map. Hurry – maybe you can be the first in your country.

You can find the map here: Business Jazz Global Listener Map.

Listening to the podcast

You can listen to this week's podcast using the player at the top of the post or download it directly here: Business Jazz – 24th June, 2013.

We're also in iTunes. We'd love it if you subscribed or left some feedback.

Business Jazz Players

This podcast is a collaboration of people dotted around the world. Most of us have never met each other. It's quite a story and it's still evolving. 
If you'd like to read what's happened so far, you'll find it here: Our Story.

Business Jazz – 20th June 2013 – How Authentic is too Authentic?

TOPICS THIS WEEK: Being authentic as a marketing tool

Authenticity is a big buzzword in content marketing at the moment. The question is, how authentic should you be?

A second issue concerns how much you push your successes over your failures. Some of us are only really comfortable presenting a facade of wild success to the outside world. Yet in doing so we run the risk of not connecting properly with our audience. Nobody only experiences good things in their lives. Often revealing some setbacks or missteps make us seem more human and accessible. On the flipside, revealing business struggles can put off clients.

Plenty of connundrums there.

The video

Here is the video of the Google+ hangout recorded during the recording of this week's podcast episode:

Links to people and things we mention

We didn't mention anyone this week. But do go here: Liz Strauss Fundraiser

New rallying point

You are a big part of the story of this podcast. We'd like you to be an even bigger part of it. To help with that, and to help us have discussions about being genuinely attractive in business, we've established a LinkedIn group. Please knock on the door and we'll let you in.

Country tally

We're hoping to get a listener in every country in the world. The amazing, super, fantastic, wonderful Phil Sorrell has produced an interactive map for us. If you have a Twitter account, you'll be able to add yourself to the map. Hurry – maybe you can be the first in your country.

You can find the map here: Business Jazz Global Listener Map.

Listening to the podcast

You can listen to this week's podcast using the player at the top of the post or download it directly here: Business Jazz – 20th June, 2013.

We're also in iTunes. We'd love it if you subscribed or left some feedback.

Business Jazz Players

This podcast is a collaboration of people dotted around the world. Most of us have never met each other. It's quite a story and it's still evolving. 
If you'd like to read what's happened so far, you'll find it here: Our Story.

Caste and Ethnicity still matter for Business in India

Ample research has shown that informal connections between people have a substantial influence on economic life, in terms who deals with whom and how well they perform. We call this “social embeddedness”, meaning that we are all embedded to different degrees in various networks of people, which influences our behaviour and success. One dimension which in a business context has received a lot of research is whether people have a joint educational background, particularly whether they are alumni from the same academic institution.

Guoli Chen, Ravee Chittoor and Bala Vissa thought that this embeddedness research that is focused on educational background could perhaps be especially valid in a Western context (where most of the research has taken place) but that in a different context, such as India, different types of affiliations might also play an important role. Specifically, they wanted to focus on the role of caste (i.e. people being of the same or different castes) and language (in terms of people sharing the same regional dialect).

Research setting: Equity analysts in India
To examine these different dimensions of inter-personal networks, they focused on a particular set of people and relationships, namely equity analysts. Firms listed on the stock exchange will often be followed and evaluated by analysts, as employed by banks, who make buy and sell recommendations to the public regarding the company’s stock.

Perhaps the most important task of such an equity analyst is to forecast – as accurately as possible – the future earnings of the firm. However, to make an accurate forecast, an analyst often has to at least partly rely on information received directly from the company; not seldom in the form of personal conversations with the Chief Executive. And Guoli, Ravee and Bala suspected that when the analyst happened to share the same background with the company’s CEO it would be much easier for him or her to get access to the CEO and his company information; making his earnings forecasts more accurate.

Findings
They tested this suspicion on a sample of 141 Indian firms, followed by a total of 296 equity analysts, between 2001-2010. First of all, they found clear evidence that equity analysts that are alumni of the same academic institution as the company’s CEO were indeed able to make much more accurate forecasts. But, in addition, the same was true for analysts who shared the same background in terms of caste, and in terms of regional language.  In fact, the effects were roughly the same size, meaning that these old historical patterns (around caste and language) were just as important in India as the more contemporary ones (i.e. university affiliation).

They then examined the conditions under which these different types of informal ties mattered more or less or whether such ties were indeed always beneficial. They found that older CEOs – who could be expected to be influenced more heavily by traditional patterns – were more susceptible to issues of caste and language than younger CEOs. They were less influenced by joint academic affiliation. Hence, although these old historical patterns matter a lot in India; they matter less for younger people, who are relatively more susceptible to joint academic affiliation.

In addition, they found evidence that these informal relationships were particularly beneficial if it concerned a truly Indian firm (part of a traditional business group). In contrast, such informal ties hurted more than they helped, when the firm in question was an Indian subsidiary of a Western multinational corporation.

Overall, what Guoli, Ravee and Bala’s research shows is that, in a country like India, old historical social structures still matter a lot in the world of business, especially when it concerns firms that are part of a traditional business group. The effect of language (which is analogous to ethnicity) was particularly potent. These effects may begin to matter a bit less for younger people (i.e. since they were especially strong for older CEOs) but they still wield considerable influence on economic life.


Paper presented at the “Sumantra Ghoshal Conference for Managerially Relevant Research” at the London Business School.
Which old boy network matters? Basis of social affiliation and the accuracy of equity analysts’ earnings forecast of Indian firms. Guoli Chen (INSEAD), Ravee Chittoor (Indian School of Business), Bala Vissa (INSEAD)
This paper summary is published with permission from the authors.