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Financial Intelligence; more.
Financial IntelligenceBy Karen Berman and Joe Knight with John Case, Harvard Business School Press, 2006 List price: $24.95, 288 pages, ISBN: 1-59139-764-2
Hate math? Do you cringe at the thought that “financial intelligence” means suffering through Accounting 101 when all you want to do is get on with running your project or department?
Authors Karen Berman and Joe Knight don’t want to turn managers into accountants; they just want managers at all levels to become financially literate. This book is, in their words, “a manager’s guide to knowing what the numbers really mean.”
Berman and Knight, co-owners of the Business Literacy Institute, say that readers who finish
Financial Intelligence will understand that many of the figures they see from the finance department are estimates, and estimates can be questioned. Much of finance is art as well as craft, they say; estimates and analyses are applied to numbers and affect conclusions about them, and managers who understand this are already on the way to more-confident interactions with finance.
The book’s short chapters are peppered with pithy definitions of financial terms in easy-to-find boxes. Berman and Knight teach readers to interpret an income statement, a balance sheet and a cash flow statement—and how to spot critical differences between these documents.
Financial Intelligence explains costs of goods sold and costs of services, looks at operating expenses, and shows how depreciation and amortization are powerful (and often unrecognized) expenses that can affect businesses profoundly.
A chapter on profit’s many forms reveals how choices about when to claim revenue or what to include as costs affect profit. The book covers types of assets and liabilities, explains owner’s equity—what’s left after you subtract liabilities from assets—and shows “why the balance sheet balances.”
Berman and Knight give special attention to cash because managers tend to ignore it. But managers affect cash in many ways, from sales managers who get customers to pay bills on time, to plant managers who order extra equipment just to have it on hand “in case,” to credit managers who give credit too easily or who withhold it too readily.
The book demystifies ratios—the relationship of one number to another—and the power of ratios to uncover numbers’ real meanings. Knowing how to use ratios can reveal trends like whether profit relative to sales is up or down and whether your company can meet its payroll.
A section on return on investment (ROI) teaches readers to calculate ROI three ways and includes a brief guide for preparing a proposal—for a new piece of equipment, a new marketing campaign or any expenditure—that shows ROI in clear steps. The book also looks at the impact managers have on inventory and the role they play in collecting customers’ cash.
Leadership is an essential ingredient in the success of any organization or entity. With an estimated failure rate for American business leaders of close to 60 percent and top corporate executives being replaced at the rate of one per day, U.S. business faces a crisis in leadership. To improve anything you have to measure it, but how do you measure leadership? Do you look at bottom-line success? Charisma? Specific personality traits?
Measure of a Leader, authors Aubrey and James Daniels, of the management consulting firm of Aubrey Daniels International, hold that you measure leaders by measuring the effects of their actions on their followers. According to the authors, four criteria of followers’ behavior define leadership:
The authors provide common sense questions for leaders to ask themselves. For example, one key aspect of momentum is “discretionary effort”: doing more than is required by the job description or management. So a leader asks herself, “If I were to announce a requirement for action, how quickly would I get discretionary effort at all levels of the organization?”
Of course, establishing measurements and knowing what questions to ask is only the first step. You also have to get answers from followers and evaluate the responses. In discussing leadership measurement options, the authors note that in measurement you either count things or judge them. And they strongly recommend counting, using concrete, measurable criteria. Of the numerous ways to get feedback, the authors discuss surveys, checklists/sampling, behavior counts and matrices.
The first half of the book is devoted to measurement. The second half focuses on how to improve leadership. Consequences—the results of actions—motivate behavior. Describing the types of consequences as positive/negative, immediate/future and certain/uncertain, the authors note that the most effective consequences are positive, immediate and certain (PIC). To execute a new strategy, leaders must ensure that followers are receiving PICs on a daily basis.
In addition to motivation, there are chapters on adding meaning, creating and maintaining excitement, building commitment, and increasing initiative. On the topic of encouraging creativity, the authors say, “Never have a ‘best idea of the year’ award or anything resembling competition in this area. Also, don’t pay for ideas. Instead pay for the successful implementation of the ideas and pay all those who helped make them work.”
Measure of a Leader closes with a list of 50 things to do to increase your leadership impact, divided into the four leadership measures of momentum, commitment, initiative, and reciprocity, and leading off with “Get your followers to teach you something. Anything!”
Recruiting, Interviewing, Selecting & Orienting New EmployeesBy Diane Arthur
AMACOM, 2006List price: $49.95, 354 pages, ISBN: 0-8144-0861-3
This updated fourth edition of Diane Arthur’s 20-year-old, comprehensive volume on finding and hiring employees takes readers through each major aspect of the employment process with detailed advice, examples, and samples of employment forms and interviews.
Arthur’s target audience is HR practitioners as well as non-HR professionals who have employment responsibilities.
Arranging the book so that readers can find specific help quickly, Arthur, president of HR development firm Arthur Associates Management Consultants Ltd., devotes one section to each of the following four areas:
Recruiting. Economic issues, workforce illiteracy, a high number of retiring baby boomers and a low number of incoming, younger workers add up to potential trouble for recruiters, Arthur notes.
In a chapter on recruiting challenges, she offers 26 guidelines for successful recruitment, outlines applicants’ turn-ons (like perks) and turnoffs (like recruiters and interviewers who keep them waiting), looks at what today’s workers expect from employers, and explores the pros and cons of outsourcing jobs. A chapter on recruitment sources covers differences between proactive and reactive recruitment, possibilities for targeting specific groups, and uses of traditional and innovative recruitment methods.
Electronic recruiting gets its own chapter, with Arthur helping readers define when a person who applies for a job over the Internet is formally considered an applicant—a definition that can matter legally. Guidelines list tips for creating a successful online recruiting site.
Interviewing. Interview preparation starts with analysis of the job being offered, and Arthur urges HR specialists to spend time in the departments where jobs are open. Readers get key questions for analyzing a job’s requirements, discussion of intangible requirements such as creativity, advice on how to assess a job’s physical working conditions, and tips on writing good job descriptions.
Arthur gives steps for reviewing applications and resumes, planning the interview setting and preparing questions for applicants. Interviewers get lists of questions they should be able to answer themselves—questions about the organization, the job, growth opportunities and other areas about which applicants may ask.
A chapter on legal considerations covers major employment laws, federal recordkeeping requirements, discrimination issues and more.
Arthur outlines how to identify job-specific competencies and create questions based on them. She shows how other types of questions can set up hypothetical situations, probe for more detailed answers or put nervous applicants at ease. Readers learn how to tailor questions to the particular stage of the interview or to the needs of a problem candidate who may be aggressive, confrontational or shy.
Selecting. The chapter on documenting interviews gives texts of job interviews, then shows effective and ineffective versions of notes that interviewers might make from those interviews. There are extensive examples of how to record substantial observations about applicants.
There are reviews of pre-employment testing as well as descriptions of types of tests and methods for verifying test results. A chapter on background and reference checks covers legal guidelines, advice on creating background check policies and selecting vendors to perform checks, and using Internet and telephone reference checks.
After offering a job, HR needs to prepare for a final meeting at which the HR representative or hiring manager lays out details like the working hours, vacation and other particulars—details that Arthur says often are not addressed. Sample letters show how to address both accepted and rejected candidates.
Orienting. If orientation means sending new employees to a brief meeting about company rules and benefits, the company doesn’t truly do orientation, Arthur says. She details how to orient a new employee to both the organization and a specific department. She describes “partner programs” to set new workers up with buddies, online orientation and orientation for executives.
Arthur updates this edition with a new chapter on “why recruitment efforts often fail.” She adds discussion of outsourcing, expands sections on recruiting sources, and ponders risks and benefits of electronic recruiting. A new chapter on types of recruiting covers how to use peer interviews, departmental recruiting and videos.
An analysis of an oil refinery accident. A review of the education system in a former Soviet republic. A project to promote a common culture after a business merger. All these are examples of organization development, says University of Minnesota professor Gary McLean, and they show that the discipline covers many contexts.
Organization Development is an undergraduate and graduate textbook but could be used by anyone wanting an overview of the field.
Organization development (OD) is any process or activity that helps develop “enhanced knowledge, expertise, productivity, satisfaction, income, interpersonal relations” or other desired outcomes in an organization, McLean writes.
He weighs the use of both internal and external OD consultants; compares OD consulting with other types of consulting; outlines models for OD; and helps readers determine when an organization needs OD, such as when it needs to manage conflicts, support senior employees, create performance feedback and more.
The book opens with marketing the OD professional’s skills and writing contracts. Readers learn how OD professionals obtain work and identify potential clients. McLean includes a sample contract.
OD project management includes an overview of how to set up systems to track what is done by whom and when, plus ideas on setting up an OD team and getting access to top management.
Review of organizational assessment and feedback covers risks and benefits of surveys, interviews, and other ways of gathering information and designing and using surveys. Readers learn to analyze the information they gather and write and distribute feedback documents.
McLean gives steps toward creating action plans. Individual clients may need coaching, mentoring, training, conflict management or job redesign. For groups or teams, team-building exercises or meeting facilitation are possible interventions. At the organizational level, OD interventions include redesigning the organization, effecting cultural change, helping HR create performance management systems, and revamping mission or vision statements.
McLean covers the challenges of global OD such as corruption, language issues, differences in work ethics and gender roles. He looks at global actions such as setting up virtual dialogues and provides tips for effective web chats and e-mails.
OD professionals often neglect to evaluate how well their interventions worked, McLean notes. Assessing OD helps determine future invest- ments in OD and helps keep OD aligned with the organization’s business needs, he writes, offering methods for evaluating an OD project.
Organization Development considers how OD changes get adopted and reasons why organizations might resist change. The book advises OD professionals about when to separate from clients and lists signs that an organization is too dependent on the consultant—or vice versa.
McLean reviews ethical issues such as confidentiality, conflict of interest and insider information. A section on competencies for OD professionals is a tool for people contemplating OD careers, OD professionals assessing their own development and organizations considering hiring an OD consultant.
Inclusion of a book does not imply endorsement by SHRM or
Compiled by Leigh Rivenbark, a freelance writer and editor in Vienna, Va.
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