WHY WE'RE SUCH IRRATIONAL INVESTORS: ROSEMAN

I manage my own portfolio, buying conservative stocks that pay a decent dividend.


It’s a philosophy that works for me. I’d rather earn income on boring bank and pipeline stocks than speculate on fast-growth stocks.


Apple Inc. is up almost 80 per cent in the past year, but its high-flying shares (at $358 U.S. apiece, they’re priced at 20 times earnings) scare the heck out of me.


Do you know what you want as an investor? Meir Statman, an expert in behavioural finance, wants to help you define your personality.


In a new book, What Investors Really Want (McGraw-Hill, $34.95), he looks at the many things you might want — everything from excitement to status to staying true to your values.


A finance professor at Santa Clara University in California, he thinks that rational investors don’t exist.


You and I — and even wealthy and famous people, such as Martha Stewart — are all normal investors. We’re not stupid, but neither are we rational.


We’re reluctant to realize losses, so we hold onto stocks long after the point when we should have sold them.


Stewart, a caterer who built a large fortune, sold shares of ImClone Systems after being tipped off that company executives were dumping their shares. She went to jail for five months for insider trading.


Evidence presented at Stewart’s trial showed she was reluctant to sell stocks and realize losses that existed only on paper. It made her stomach turn.


“If Martha Stewart were rational, she would have felt her stomach turn when the prices of her stocks declined and she incurred her paper losses,” Statman writes.


“That is when her wealth decreased. But she would have rejoiced when she realized her losses, since the tax benefits of realized losses added to her wealth.”


Normal investors sell our winners too early and ride our losers too long because we’re not rational.


We make cognitive errors and we fall sway to our emotions, such as pride, regret and lack of self-control.


I first heard of Statman’s book when it popped up on a few blogs I follow, such as Canadian Capitalist and Canadian Dream: Free at 45.


The author had done a tour of the finance and investing blogosphere, offering exclusive content to those who wished to host him. What a great way to build a buzz.


Interviewed last week before flying to Tilburg University in the Netherlands, where he’s a visiting professor, the Israel-born Statman told me he’d studied investor behaviour since 1980.


“I want to help people look at themselves, as in a mirror, to figure out what they really want and how to go about getting what they really want,” he said.


Profit is the first thing most people say when asked why they invest. But if that were the case, they’d buy a diversified portfolio of index funds or exchange-traded funds that guarantee market returns.


But many of us think we can beat the market, so we buy actively managed mutual funds and individual stocks.


“It’s fun to play around,” Statman says, quoting U.S. investment dealer Charles Schwab, “People love doing that. They love to find winners.


“It’s human nature to try to select the right horse. It’s fun. There’s much more sport to it than just buying an index fund.”


Institutional investors are no less eager to play the game — and they aren’t much better at beating the market than individual investors, he notes.


Status is also an emotional benefit of investing. You might be lucky enough to get into an arrangement available only to a few, such as Goldman Sachs’ Facebook deal.


Hedge funds, sold only to sophisticated investors with a high net worth, make it easy to brag about your riches without appearing to brag.


Sometimes, the rich subvert the emblems of status, Statman says, pointing to Henry Paulson, a former U.S. treasury secretary and Goldman Sachs partner, who wore a cheap Casio watch.


Investors in low-cost index funds often wear their funds as the equivalent of Casio watches. They’re saying, “I’m too smart to pay extra for funds that are likely to deliver lower returns than index funds.”


As an index investor himself, Statman doesn’t condemn anyone who prefers picking stocks and actively managed funds.


He uses cars as an analogy. You buy a Honda Accord, but your neighbour buys an Acura – a more expensive luxury car from the same maker.


“You don’t say your neighbour is an idiot, but his tastes differ from yours. He likes action and pizzazz and he’s willing to pay more for that.”


Classic finance has rational people in it, but rational people don’t exist. Behavioural finance has normal people in it — sometimes smart and sometimes stupid.


“I thought I had something to say to regular investors and I wrote the book in a way that’s not condescending,” Statman says.


“I hope you can see my smile as you’re reading the chapters.”


I enjoyed this rich compilation of behavioural quirks, which can help you recognize yourself and make better investing decisions.

Ellen Roseman


Toronto Star


02/20.2011

WHAT CAN ADVISORS LEARN FROM STEVE JOBS?

Steve Jobs' business career is remarkable by any standard. His ability to go from boy wonder co-founder of Apple Computer, to Chairman and CEO of Pixar, to the largest individual shareholder of The Walt Disney Company, to ousted executive who returned to save Apple and turn it into a seemingly unbeatable brand, is simply amazing. While he made plenty of mistakes in his youth, he matured into a very successful businessman with some profound thoughts on business success. While Jobs’ ideas are applicable to broader business, upon close examination they seem tailor-made for the financial advisor in particular.


“Connect the dots.”


Over time, all of us have incredible life experiences, sometimes positive, and sometimes not. Regardless of the outcome, they ultimately shaped the person you are today. Everything that has happened to you in your past has the ability to positively affect you in the present—if you connect the dots. Jobs relates a story about how on a whim, he dropped in on a calligraphy class while he was attending Reed College back in the early 1970s. At the time, he found the class utterly fascinating, but totally useless. It wasn’t until 10 years later, when he was designing the Macintosh computer, that he was able to connect the dots. The result…the Macintosh became the first computer with beautiful typography and it became a huge hit in the desktop publishing industry.


Think for a moment about some of your life experiences. What lessons have you learned? What stories can you create from these lessons that you can share with your clients to deepen your relationship with them? Stories are the best way to turn a complicated idea into an understandable teaching point, so don’t be afraid to leverage your life experiences, even those you think have no bearing on your current reality – connecting the dots can be a powerful method of uncovering your inner innovator.


What dots can you connect to make your business better?


“Say no.”


There is no shortage of opportunities in this business. However, there is a shortage of conviction. The easy thing to do is to go to a meeting, hear a few good ideas, then go out and try them. When that does not work, you go to another meeting or hear another speaker and repeat the process with similar unacceptable results. Soon, you find yourself literally trying everything, and successfully completing nothing. Jobs does the opposite. He’s an obsessive focuser on a small number of things that are truly important to him.


How many major products does Apple sell? Essentially four: the Macintosh computer, the iPod, the iPhone, and the iPad. With just four main product lines, Apple has a market capitalization of more than $200 billion. Despite pleas from analysts and other pundits, Jobs has resisted the call to offer lower-end products and milk the company’s great brand. He said, “It’s only by saying no that you can concentrate on the things that are really important.” Having a well thought-out and focused mission statement is a great place to start. A quality mission statement can act as a “not to do” list. If you’re considering new opportunities, check your mission statement. If the new opportunity doesn’t fit your mission, move on.


What can you say “no” to so you have room to say “yes” with complete conviction to something else that’s more important?


“Quality, not quantity.”


Many of the advisors that I’ve worked with over the years had more than 500 clients. By financial measures, these advisors had successful businesses that generated substantial revenue and comfortable profits. Yet who got shortchanged in that deal? The clients! None of those advisors would ever go on the record as saying they did a great job of taking care of all of their clients. Typically, 20 percent received great care and the other 80 percent were mainly an entry in a database. This is not due to a lack of good intentions; it is simple math and human capacity. These advisors did not have the time to meet once or twice a year with 500 clients let alone have a meaningful advisor to client human connection.


At Pixar, where Jobs built the firm from peanuts into a company that he sold to The Walt Disney Company for $7.4 billion, there is no 80/20 rule. It’s simply what I call the Rule of 100™—every effort gets 100% support. Accordingly, Pixar delivered an average of only one movie every 18 months; a weak pace by major movie studio standards. However, the result was anything but weak. Pixar has generated more than $6.5 in worldwide box office receipts since 1995—and they’ve had no bombs.


How can you restructure your business to deliver 100 percent quality to 100 percent of your clients 100 percent of the time?


“Hire the best.”


Quality work starts with quality employees. For many advisors, finding and retaining quality staff members is a perennial issue. Advisors are tempted to hire the first person that marginally fits the bill. Unfortunately, that’s a recipe for long-term pain. It’s better to bite the bullet now and continue pursuing the right person, rather than settle for an average candidate who is destined to deliver mediocre results. Like other notable business leaders, Jobs devotes a material amount of his time to “working the phones” and talking to prospective employees that he thinks can be A-list players on his team. At the end of the day, there are no weak links in his executive suite.


If you currently have no support staff, then go out and hire your first person. Without staff, you’ll have a job, but you’ll never have a business. In fact you and your clients will find yourselves perennial victims of the afore-mentioned 80/20 rule. If you have existing staff, continue to support and nurture your “A” players. For your weaker links, work with them to try to get them to “A” status. If they can’t make the jump after you’ve given them every opportunity to do so, it’s time to let them go. While letting someone go is never easy, I’ve found that if their employment is not working for you, it’s not working for them either. By giving them a compassionate push out the door, you’ll enable them to find another job that’s a better fit for their interests and skill set.


How can you upgrade your staff and which A-list players should you be calling to add to your team?


“Don’t settle.”


It’s a pattern that I've seen repeated over and over again. An advisor rises to a level of production that makes them comfortable and then they coast. They have the house, the cars, the vacations, the club membership, and the kids’ college education pre-funded. It’s the American dream. No need to push yourself any further by asking for a referral or making more calls, right?


Recently, our company, Peak Advisor Alliance, delivered a three-day True Wealth Institute for approximately 65 advisors. The attendees were highly successful financial advisors who wanted to add life planning to their practice. Interestingly, by material standards, these advisors had it all—they were an embodiment of the American Dream. Yet here they were, spending three full days in Omaha, Nebraska learning how to keep growing. What they were seeking was not just business growth; it was personal growth, too.


When you get to a point in your life where you are comfortable, coasting is the worst thing you can do. You’ll get stale, disenchanted, and start feeling that indefinable ache. The key is this—if growing your business is no longer satisfying, it’s time to start growing your self.


When I talk about growing your “self,” I don’t mean this in a self-absorbed egoistic way. I’m talking about using your life’s wisdom to reach out to the world in new ways; stretching yourself in terms of how you can impact others. Perhaps you do this by adding life planning to your practice. Perhaps you start giving back to the industry by teaching or mentoring industry newcomers. Perhaps you start volunteering more.


Jobs says, “We’re just trying to make great products. We do things where we feel we can make a significant contribution.” To him, it’s about staying focused. It’s about creating products that are, “insanely great.” It’s about loving what you do and doing it with all your energy. Don’t settle for anything less.


Instead of settling, where could you start growing?


In a 2004 BusinessWeek interview, Jobs reflected on his personal growth that resulted from him successfully bouncing back from cancer. He said,


“I realized that I loved my life. I really do. I’ve got the greatest family in the world, and I’ve got my work. I love my family, and I love running Apple, and I love Pixar. And I get to do that. I’m very lucky.”


By following this simple plan—connecting the dots, saying no to the unimportant and yes to the most important, focusing on quality, not quantity, hiring the best, and not settling—you too can end up with a life you love. Do that and you’ll be one of the lucky few in this life who can look back at the end of their days and say with great conviction, “It was a life well lived.”


Steve Sanduski
OnWallStreet
February 9, 2011

Steve Sanduski, CFP, is the Managing Partner of Peak Advisor Alliance, a financial advisor coaching and practice management resources organization. He is also the co-author of the New York Times Bestselling book, Avalanche: The 9 Principles for Uncovering True Wealth, and Tested in the Trenches: A 9 Step Plan for Building and Sustaining a Million-Dollar Financial Services Practice.

BEST IN CLASS [ GREEN BAY ] COACHING: UNASSUMING MCCARTHY PUSHES RIGHT BUTTONS

ARLINGTON, Texas – He sat in a private office adjacent to a nearly emptied locker room, surrounded by his past, present and future. Two hours after he had hoisted the Lombardi Trophy amid red, white, blue and silver confetti swirling above him at Cowboys Stadium on Sunday night, Green Bay Packers coach Mike McCarthy reflected on a life’s journey that took him from humble beginnings in Steeltown to an enduring immortality in Titletown.


Soaking up the aftermath of the Pack’s 31-25 victory over the Pittsburgh Steelers in Super Bowl XLV, McCarthy looked at his parents, Joe and Ellen, his wife, Jessica, and his daughter, Alex, and shook his head back and forth like a man humbled by the magnitude of his accomplishment.


Mike McCarthy, who grew up in Pittsburgh and is married to a Green Bay native, coached the Packers to their first Super Bowl title since the 1996 season.


“It’s a numbing sensation,” McCarthy said. “It feels great to share it with family, and to share it with the players. You’re so focused on the game, and it’s fourth-and-5 and the ball hits the turf, and it’s total chaos – they’re pulling you here and pushing you there and you can’t get any air.


“It’s definitely personal that it was against Pittsburgh, because that’s where I’m from. I was very blessed to grow up in a great football town, and now I’m fortunate enough to coach in the mecca of football. I’m married to a Green Bay native. It’s our home. And now, to be a permanent part of the tradition? Oh, man, it’s unreal.”


If the reality of his team’s unlikely achievement hadn’t yet sunk in – winning a championship as a No. 6 seed after overcoming an unrelenting run of key injuries from start to finish – McCarthy couldn’t completely dodge the stamp Sunday’s game would leave upon his legacy. Chances are he will have a street named after him in the quaint Wisconsin city he plans to call home forever. That’s what happens to coaches who bring Super Bowl championships back to Green Bay, whether they’re living legends like Vince Lombardi, franchise revivers like Mike Holmgren or, as seems inevitable given Sunday’s outcome, deceptively brash catalysts like Michael John McCarthy.


You want bold? In a move that would have made Rex Ryan proud, McCarthy dismissed his players from their final team meeting on the night before the game and had them fitted for Super Bowl rings. As their fingers were measured in a hallway at the Dallas-area hotel where they’d spent the week, the Packers couldn’t help but feel their coach’s swagger.


“It gave us a subtle confidence,” said middle linebacker Desmond Bishop(notes), whose fumble recovery on the first play of the fourth quarter was one of the game’s pivotal moments. “It let us know that we’re right there on the cusp of going down in history, and it made us want it so badly.”


McCarthy might have been crucified for his motivational ploy had the Steelers won the game, but the fifth-year coach wasn’t sweating it. “See, I don’t really think about those things,” he insisted. “I just care about what’s best for the team, and I really believed what I’d told them: That Super Bowl XLV was our time, that given the path we’d taken to get here we could handle anything Pittsburgh would throw at us. They’re a great, championship football team. But this is our time.”


For the Packers, Super Sunday was the culmination of a three-year process that began after the team’s painful 2007 NFC championship game overtime defeat to the New York Giants at frigid Lambeau Field. That triggered the chain of events that led to the messy departure of quarterback Brett Favre(notes) as McCarthy and general manager Ted Thompson put their faith and career fortunes in the right arm of Aaron Rodgers(notes), the young backup who’d spent three tense years waiting to succeed a beloved Titletown icon.


Had that gamble failed, McCarthy likely would have been forced to relocate by now. Instead, Rodgers burgeoned into a star and led the Packers on a three-game postseason tear through the NFC – and, on Sunday, past a Steelers team that boasted the NFL’s top defense in 2010.


If Rodgers’ golden right arm was the reason for his Super Bowl MVP performance – a 24-of-39, 304-yard, three-touchdown, mistake-free effort that was even more brilliant than the numbers suggested – McCarthy’s mindset was surely the catalyst. With a game plan that featured only 11 James Starks(notes) runs (along with a pair of Rodgers kneel-downs), McCarthy didn’t bother with balance. When he sent out a five-receiver alignment on Green Bay’s first play from scrimmage, it was clear the coach was in full attack mode.


“Totally,” McCarthy said. “Aaron and I talked about it all week. I told him, ‘You’re going to have to throw the ball away two or three times, check it down a few times and make some plays with your feet, ‘cause I’m gonna put my foot on the gas all day long.’ He threw bullets all day.”


Said veteran wideout Donald Driver(notes), who missed a good portion of Sunday’s game after suffering an ankle injury: “[McCarthy] knows exactly what we’ve got – a great group of receivers who can make plays at any time. If our backs are ever against the wall, he’ll put the dogs out there and let ‘em go to work. He let the dogs loose [Sunday night].”


Hines Ward's eight-yard touchdown reception just before halftime cut the Packers' lead to 21-10.


With Rodgers throwing ridiculously crisp and well-placed touchdown passes to Jordy Nelson(notes) and Greg Jennings(notes) in the first half and safety Nick Collins(notes) racing 37 yards for a first-quarter score after intercepting a Ben Roethlisberger(notes) floater, the Packers took a 21-3 lead and looked to be headed for an old-fashioned, ’80s-style Super Bowl blowout. Roethlisberger, however, led a scoring drive late in the half that culminated with an eight-yard touchdown pass to Hines Ward(notes), and intermission grew significantly more tense for Green Bay.


McCarthy, likening the game to a heavyweight fight, exhorted his players to “keep working the cut,” a reminder to try to exploit Pittsburgh’s vulnerability. The Packers, however, had issues of their own. Driver, rookie cornerback Sam Shields(notes) and veteran corner Charles Woodson(notes), a team captain and emotional leader, had all suffered first-half injuries, though Shields would fight through a shoulder injury to play much of the second half.


After McCarthy’s halftime speech, Woodson tried to say a few words but apparently degenerated into a screaming, crying mess. Woodson, who also addressed the team before the game, had suffered a broken collarbone while diving to defend a deep Roethlisberger pass to wideout Mike Wallace(notes) late in the first half and essentially told his teammates, I can’t be out there, and it’s killing me, so you’re all going to have to step up and lead.


“We’ve got you!” numerous Packers screamed at the wailing Woodson. “We’ll pick you up!”


The Packers did, as they have all season. Having endured season-ending injuries to key starters such as halfback Ryan Grant(notes), tight end Jermichael Finley(notes) and middle linebacker Nick Barnett(notes) (among the 16 players who ended up on IR), Green Bay possessed a resilience that McCarthy had clearly helped instill.


“He’s tremendously positive for our team,” Packers president Mark Murphy said of McCarthy, who is in line for a lucrative contract extension. “The way our season played out, he never let the players let injuries be an excuse. He never let the players or coaches get down about it. He made sure we just kept plugging away.”


The Packers stayed energized on Sunday, even when things got tense. When the Steelers cut the Green Bay lead to 21-17 on Rashard Mendenhall’s(notes) eight-yard run with 10:19 left in the third quarter, it looked like Pittsburgh was poised to take control of the game.


In going 10-6 during the regular season, Green Bay had suffered each of its defeats by four points or fewer. However, if there was a lingering criticism of McCarthy, it was his team’s shoddy record in close games – and this looked like another opportunity for a heartbreaking defeat.


McCarthy’s players, however, wouldn’t let it happen. After a dismal third quarter, the Packers forced their third turnover on the opening play of the final period. After Roethlisberger handed off to Mendenhall on second-and-2 from the Green Bay 33-yard line, defensive end Ryan Pickett(notes) burst into the backfield and smacked the running back from behind as All-Pro outside linebacker Clay Matthews(notes) popped him in the midsection and dislodged the football. Bishop, who played a terrific game (eight tackles, three for loss), scooped up the ball and returned it to the Packers’ 45.


Charles Woodson gave an emotional halftime speech after suffering a broken collarbone while defending a pass.


“I wanted to score,” said Bishop, who added that Woodson’s passionate halftime speech had inspired him and his fellow defenders. “Everybody took a little piece of Wood out there with him, and we knew we needed to get it done.”


Rodgers did much of the rest, marching the Pack 55 yards and extending their lead to 28-17 on another glorious scoring pass, an eight-yarder to Jennings in the right corner of the end zone. He answered a subsequent Steelers score by getting Green Bay into range for Mason Crosby’s(notes) 23-yard field goal, but when the Steelers took over at their own 13 trailing by six with 1:59 remaining, the Packers still had reason to be nervous: It was Roethlisberger who possessed the chance to summon his second Super Bowl-winning drive in three seasons.


Roethlisberger hit tight end Heath Miller(notes) on a 15-yard completion, then found Ward underneath for five before throwing a pair of incompletions. Then, as McCarthy later noted, it was fourth-and-5 and life was about to get very, very surreal: Suddenly, cornerback Tramon Williams(notes) was breaking up a high pass for Wallace, and an orange Gatorade bath and sweet satisfaction awaited the 14th coach in the franchise’s storied history.


General manager Ted Thompson, whose hiring of McCarthy (who’d struggled as the San Francisco 49ers’ offensive coordinator the previous season) in January 2006 was somewhat of a surprise, had been vindicated once more.


“I liked him as a person,” Thompson said Sunday night. “I thought he had a lot of grit to him. I wasn’t hiring an X’s and O’s guy. I think there are a lot of people that can do that. I was hiring a man. I think he’s a good man who knows what buttons to push to motivate players and knows how to understand people.”


McCarthy is a reasonably simple man who is grateful for his many blessings, and the notion that he might someday cruise to work past street signs bearing his surname sounded a bit overwhelming as he sat with his parents, wife and daughter long after Sunday’s game.


“Shoot,” he said, “I don’t worry about those things. Those are for the big people.”


Earlier, I’d asked Murphy which Green Bay street seemed ripe for renaming, and he’d answered, “I don’t know. Ashland, maybe? We’ll see.”


Jessica McCarthy, who has spent her entire life in the NFL’s smallest municipality, didn’t have any thoughts on that subject, but she did have a suggestion for what to call a prospective street named after her husband: “I think McCarthy Mile has a nice ring to it.”


In the meantime, her husband will have a nice ring, as will his players, and the prospect of more to come as the 27-year-old Rodgers continues to blossom. And whatever happens down the road, McCarthy is pretty sure where he’ll end up living when all is said and done.


“I’ll be [in Green Bay],” he said, looking at Jessica. “I’m not leaving.”


That means his post-football future is a dead-end street located in Titletown. In the meantime, he has a parade route that may well include Lombardi Avenue and Holmgren Way in his very near future.


Michael Silver
Yahoo! Sports
February 7, 2011

GROWTH CONTINUES YEAR AFTER YEAR: A DISCIPLINED ORGANIC PROCESS

In 1954, a young man named David Shiller left his job at a local houseware store in Montreal to pursue a entrepreneurial dream. He began by selling housegoods door to door. Today, the company he founded, Blinds To Go, is a vertically integrated business with 120 retail stores and two manufacturing facilities in Lakewood, N.J., and Montreal -- and plans to keep growing at a rate of some 15% to 20% annually.


"That's a combination of growth in some of the markets we're in such as Toronto, where we're very successful, but also opening up another half a dozen showrooms in the GTA, as well as in the New York market, and to continue to expand into some of our newer markets such as Florida, where we have a toehold and the opportunity to keep growing," says Nkere Udofia, vice-chairman of the company, which has become the leading retailer and manufacturer of window blinds and shades in North America.


"We have a tremendous amount of diversity in our company -- but in metropolitan areas like New York and Toronto, we also have diverse customers. And we are constantly getting offers from people telling us that Blinds To Go would do well in any number of different countries as well as business proposals from people who want to franchise it."


But the company, which has a strong and confident vision and mission and focuses on growing by sticking to its knitting and its culture and values, turns the offers down.


"All our showrooms are company owned and we work hard to maintain our culture, which we couldn't do without complete control, so we're not rushing to go anywhere until we have the human capital to do it right," Mr. Udofia says.


"When we go into a new market, we literally move existing managers -- whom we've trained and who share our vision and have the skill sets to lead and motivate -- into that market to open it up. We'd love to be elsewhere in the world as well but for the next four or five years, we have plenty of opportunity to grow here. And North America is a big continent."


National Post
February 7, 2011

HELPING EMPLOYEES HELPS THE COMPANY: THE ROLE OF COACHING AND MENTORING IN ACHIEVING COMPETITIVE GROWTH ADVANTAGE

When Meetu Mehra graduated from the University of Toronto in 2003 with a degree in psychology and linguistics, she knew she loved working with people and wanted a career in which she could make a difference -- but like many new grads starting out, she had no idea of where and how she'd find that career.



And then she thought of Blinds To Go (BTG), where she had interned during school. In her experience with the company, she had learned about its commitment to developing its people and its strong focus on management training programs. More importantly, she knew the company has a policy of only promoting from within and offered young grads such as herself the possibility to rise quickly through the organization. She applied and got the job.


Today, Ms. Mehra is a fast-rising young leader at BTG, serving as the key development manager and market leader for the Toronto market. Her responsibilities range from coaching and mentoring new managers to training management trainees and going to university campuses to recruit other graduates.


"I think what has impacted me most about BTG is the opportunity I have to make my own decisions and make my own mistakes. Rather than learning what is right and wrong, I feel I have learned to think through situations on my own and reflect on problems when they occur, all the while feeling supported and not being punished for my mistakes. I don't think I would have been able to make as many mistakes, and thus grow, as much anywhere else," Ms. Mehra says. "This company is a perfect place if you see learning as lifelong. You have an opportunity to become part of huge family and build many strong relationships. You are coached by people who truly want you to succeed; people who want you to acquire skills to enrich not only your professional career but your personal life as well. Truly, your growth potential is limited only by you."


Rather than the exception, Ms. Mehra's successful career path is typical at BTG. In fact, stories such as hers are at the very core of the company's philosophy and growth strategy. "Our ability to grow our people drives our growth. It's easy to build new stores and new manufacturing facilities. The hard part is continuing to find and develop people who are true to the company's vision and values. For that reason we're really committed to growing internally," says Nkere Udofia, vice-chairman, Blinds To Go, whose company only expands into a new location when it has the internally trained leaders to take the helm. "Why did we choose this path? When we first started trying to grow the company quickly, we hired a lot of functionally sound managers only to find that some of them were very challenged in managing and leading other people. For example, they could be great at the technical aspects of finance but not know how to develop, motivate and retain a team.


"We saw that over and over again in hiring people from the outside, so we made a commitment to develop the management and leadership skills in our people."


BTG's culture of growing the company by growing its people also gives it a competitive advantage. "We have a business that's extremely people-oriented. We're selling a product that comes with a high level of service and requires a high touch," Mr. Udofia says. "In our showrooms, how well-trained and skilled our consultants are, how effective they are at understanding customers' needs, and how motivated and knowledgeable they are has a huge impact on whether or not the customer makes a purchase with us. A lot of that is what drove our thinking and our commitment to trying to hire the best people we can find, and then focusing on training and developing to them into leadership positions. As a result we've grown the company but, even more importantly, we enjoy customer satisfaction of 95%, which is just unheard of in our business. We're very proud of that and we work very hard to maintain it."


Practically every BTG employee in a leadership position knows the company, its vision, its nuts and bolts and its on-the-ground reality inside out. That's because the company's training programs start each employee off in an entry level position, allowing every future leader to learn the business from the ground floor. The company's management training program selects business and liberal arts graduates interested in working with people and developing general management skills early in their careers. All trainees start their career as design consultants in a showroom, where they learn to interact with and service customers. The company's manufacturing leadership development program recruits engineering graduates who have an interest in business operations and general management, and starts them in showrooms to acquire basic people interaction and management skills before giving them significant training as supervisors at its manufacturing facilities.


"If you come into the organization and we tell you we only promote from within and you look around and you see people in leadership positions who've come up through the training program, it's consistent. The guy who runs IT spent a year in the stores," Mr. Udofia says. "Not only did he develop some vital management skills that you don't find in your typical IT manager but he also understands at heart what the business is and what drives it. He is, therefore, very service-oriented in servicing our stores. He doesn't just give them technological fixes, he gives them solutions that fit their needs. He understands the business in a way your typical IT manager just wouldn't."


Because of the tremendous importance of its people to the company's growth and success -- as well as the considerable investment the company makes in each employee's development and career path -- BTG doesn't just set out to hire people, it sets out to hire the right people. "Our recruiting practices are significant and consistent with our business and what we try to do. First and foremost, it's focused on finding people who we think have an interest in this value proposition from a career perspective. Before we actually start the formal interview process with an applicant we have an initial call, a very quick screen focused on what the candidate's interests are, what direction they want to go. If we think there's a reasonable overlap with what we have to offer, before we even move to a first interview we send the candidate to one of our stores for an informal visit. We have them spend an hour or two watching what we do and informally talking to the managers and management trainees. After that we have a conversation with them to see if there really is interest and whether what we're doing makes sense to them before we bring them in for the interview."


From BTG's perspective, applicants aren't simply applying for a job in the organization, they are applying to be mentored, trained and groomed for the leadership positions in the BTG team needed to grow the company across North America. "If you want to maintain consistent values in an organization, it's so important to have only people in leadership positions who share those values. We think that's how you build something that will be around 100 years from now," Mr. Udofia says.


Alexandra Lopez-Pacheco,



National Post


Monday, Feb. 7, 2011

THE VALUE OF CO-OPERATION - DESJARDINS GROUP

A corporate template in collaborative management for the uncompromising long term interests of its members.



Desjardins Group, Canada's largest financial services cooperative, recently completed a survey of its more than 42,200 employees to see how they felt about the organization's initiatives around corporate social responsibility. The grade: A+.


"Our employees believe in our values and agree with the way we act and how we focus our efforts when it comes to helping the community," says Suzanne Gendron, vice-president, executive services to the CEO and management committee of the Desjardins Group. "Our employees really have a strong feeling of attachment toward Desjardins because of our distinctive model and values."


In fact, while the turnover rate for the financial sector sits at 7.9%, Desjardins Group's turnover rate is just 4.2%. "We share a bond that is very strong, and it is all based on those values and our culture. I have never seen that anywhere else in my career."


That culture starts with the business model and the tenets that have guided that model, established by founder Alphonse Desjardins 110 years ago. Desjardins Group is a pure democracy. Its retail branches are legal entities with their own boards. And its members of which there are now six million -- pay $5 for membership into the co-operative. Each member has one vote at the annual meeting of their branch.


"Members elect the board members of their local branches who are also members--not employees of Desjardins," Ms. Gendron says. "The local boards also elect a president who goes to the regional assembly to decide on regional issues and priorities. These branch presidents elect a president of the regional assembly, who then has a seat on the Desjardins Group board of directors with our CEO. In this way all the decisions we make are always aligned with the values and needs of our members. We belong to our six million members. And this changes the dynamic completely.

It is an inverse pyramid.

In my personal experience, when you work in a publicly traded company, the accountability is to the shareholders. Consequently, the pressures on achieving short-term results is extremely strong. Here we don't have that pressure because we don't have stocks or shareholders. This gives us the ability to develop a long-term vision and realize it. Everyone is working in the best long-term interest of the collective."


This democratic model is supported by the tenets of financial responsibility and education. Throughout its history, Desjardins focus has been the financial health and stability of its clients/members and the communities they call home. "We have existed for 110 years and the goal is that Desjardins will always exist. And that means that we remain financiallystrong," Ms. Gendron says. This past year alone, while other financial institutions required government financial support, Desjardins grew at a sustained pace thanks to its policy of administrative discipline and self-auditing.


"Being owned by our members, it's our responsibility to manage their assets as a parent would. We are here to create sustainable prosperity, and it starts by being financially sound and solid and making sure we move forward in that way," Ms. Gendron says. "We will not take risks just for the sake of having a higher return. This would not be in the long-term interest of our members. It's one of the reasons we came through the financial crisis largely without consequence."


Bottom line: Desjardins Group wants to make sure its members are not just clients to whom it sells products but people it educates to make sure they can manage their own personal finances well. That focus on education started from the beginning, when its founder created the school caisse, a program now running in many elementary schools in Quebec and Ontario. Today more than 1,000 schools have a "branch" that effectively belongs to the students.


"Each week they can make deposits and earn interest and we teach them how to manage their money, so that they are saving and spending within their means," Ms. Gendron says. Desjardins Group also runs a more sophisticated program for high school students and works with universities to promote finance education.


"We try to find as many ways as possible to educate our members. We were one of the last banks to issue credit cards because we were afraid members might take on too much debt. We wanted to educate them so that credit could be a positive tool."


Desjardins Group also leads all other Canadian financial institutions when it comes to giving back and ensuring the wellbeing of communities. Since 2000, the caisses returned over $3.7 billion in member dividends--45.5% of surplus earnings after income taxes. In 2009, Desjardins gave $72.3 million in sponsorships, donations, and scholarships, i.e., 6.7% of surplus earnings after income taxes, versus a 1.34% median ratio for large Canadian companies. ," Ms. Gendron says.


The non-profit Developpement international Desjardins (DID) was recognized as Canada's largest source of specialized expertise in all sectors of international aid by the Canadian International Development Agency (CIDA); members and employees both raised $1-million each in support of Haiti earthquake relief. And its proactive approach to mental health awareness, in particular the work done by its subsidiary, Desjardins Financial Security, in partnership with the Canadian Mental Health Association, was also recognized.


Desjardins Group has also taken a leadership role in helping small towns and First Nations meet their financial needs. In Quebec, 34% of its branches are in municipalities with 2,000 or fewer inhabitants. This compares to just 2.6% for its competitors. "The reason is simple," Ms. Gendron says. "We take a different approach-- there are people who need services, so we will be there to serve them. Go to the most remote parts of Quebec and you will find a Desjardins branch. We don't want to let anybody down."


When it comes to First Nations communities, Desjardins Group has founded five caisses and 36 points of service in aboriginal markets. "We are very close to these remote communities because it is hard for them to have access to services and we serve everybody even if it's going to cost us money," Ms. Gendron says.


The environment also goes hand in hand with Desjardins Group's sustainable prosperity philosophy. For this reason it has developed a sustainable development policy and has launched several initiatives, including: offering energy-efficiency loans to help businesses reduce their greenhouse gas emissions; reducing paper use by 31% and carbon emissions by 490 metric tons enterprise wide; developing an alternative transportation plan by encouraging mass transit use; partnering with Project Climate Canada to raise climate change awareness; joining forces with the David Suzuki Foundation; and signing the Boreal Forest Conservation Framework.


"When you talk to employees and members about Desjardins they have a light in their eyes. They are proud to be part of this organization," Ms. Gendron says. "It's rare when you have an organization where people will gladly contribute their personal time, but that's what our nearly 7,000 elected corporate officers do. They do it for the best interest of the community and their branch. How many organizations have that kind of support from people who are not being paid to be there? These are not employees. There is nothing like Desjardins Group, a company that cares about its people, its members, its communities and the environment. This is not a communications or an image strategy. It is part of our DNA, and it's been here for 110 years. These are our shared values we live on a day-to-day basis and that you can feel in every decision we make."


Mary Teresa Bitti


National Post •


Monday, Feb. 7, 2011

THE DESJARDINS DIFFERENCE - CORPORATE PROFESSIONALISM THROUGH AN UNCOMPROMISING CLIENT CENTRIC FOCUS

A 'professional practice' template for Canada's corporate financial services institutions

The history of Desjardins Group, the largest financial co-operative group in Canada and sixth largest in the world with overall assets of more than $175-billion, is intertwined with that of modern Quebec.


For more than 100 years, the development and growth of the Desjardins network and the diversification of its activities paralleled the social and economic boom of the province.


Today, that network is comprised of financial service cooperatives and some 20 subsidiary companies in life and general insurance, securities brokerage, venture capital and asset management across Canada.


Its 42,200 employees offer complete banking services to nearly six million members and clients.


As it has grown and expanded, Desjardins has always remained true to its founding philosophy: to contribute to the well-being of individuals and communities.


The values of Desjardins Group are clearly stated in its code of ethics and professional conduct: money at the service at human development; personal commitment; democratic action; integrity and vigour; solidarity with the community.


These values are at the core of what sets Desjardins Group apart in its industry and they are the reason the company was recently honoured by U.K. magazine The Banker with the coveted title, Bank of the Year 2010 -- Canada.


"We are not just a company that exists to make profits for our shareholders," says Suzanne Gendron, vice-president, executive services to the CEO and management committee of the Desjardins Group.


"We don't have shareholders. We have members who own Desjardins. We exist for them, for their communities and to make our world better.


"Being awarded Canada's Bank of the Year and being named one of Canada's Top 10 Corporate Cultures shows that people are recognizing the fact that we are different. We do things differently. We treat our people differently. We have a democratic structure.


"We invest tremendously in our communities and in our people and make financial education a priority.


"We are really quite proud that people can see the difference of our model and our values."


National Post
Monday, Feb. 7, 2011