The option to work from home has been shown to benefit employees and employers. This type of flexibility in working arrangements, when appropriate based on the employee’s responsibilities, increased productivity and retention for the employer and job satisfaction for the employee. The same benefits apply to working arrangements that include flexible hours.

As Margaret Heffernan explains in INC Magazine, “Treating employees like grown-ups made it more likely that they would behave the same way.” This treatment includes trust; if you hire the right people, you can trust them to accomplish their tasks and goals on time and under budget without worrying about the time they walk into their cubicle and the time they leave.

It’s difficult to treat employees like adults, however. At one of my corporate jobs, I joined a team some time after the management hired an efficiency consultant. The consultant sat with each employee and monitored and logged every minute of each employee’s work day in order to determine opportunities for improvement in productivity. After the study, productivity might have increased, but it most likely didn’t last long. Employees resented the requirement of tracking every minute of their days.

Around the same time, one of the supervisors made a habit of walking the floor at nine o’clock in the morning to see who was at their desk on time every day. This type of micro-management benefited the supervisor, and perhaps it gave her a feeling of control, but the employees resented the approach, even if they were at their desks on time each morning. Even when arriving on time, the employees would need to be at their desks at the moment the supervisor walked by rather than in the rest room or the kitchen area.

Thankfully, this supervisor was no longer with the team by the time I accepted my position.

A policy that includes flexible hours gives employees ownership of their roles and allows them to make decisions about the best time to do their jobs. The right people can handle these decisions without taking advantage of the employer or the flexible policies.

A flexible working hours arrangement can take a variety of forms:

• forty hours every week spread over four days instead of five
• eighty hours every two weeks spread over nine days instead of ten
• eight hours every day starting earlier or later than nine o’clock

This type of flexible working arrangement may increase productivity. Happy employees tend to be better employees, and they stick with the company longer. Long-term loyalty to a company has decreased over the years due to many changes in the relationship between employers and employees, but a policy involving flexible hours and other benefits can help reverse that trend.

Work/life balance isn’t always appropriate. I am always torn with this concept, because different goals require different treatment. When I worked for a small non-profit organization whose lofty goals were difficult to achieve on a tiny budget and a lack of resources, the expectation was to put our lives into our work. The only way to achieve greatness is to be completely dedicated to the mission, and that required making many personal sacrifices. Most jobs and careers do not work in this fashion, but in any career, this type of dedication can lead to success.

Work/life balance is a great approach for the cast majority of the American workforce that recognizes that life outside of work is important, but those whose personal mission is to become the best in the world at their job, life is just a distraction.

As a business owner without any employees, I took advantage of flexible hours. When I left my corporate job over a year ago, I experimented with creating a regular schedule for myself, but I determined — and this was something I had known since I was a teenager — that I just work better and more efficiently when I have the flexibility to work when I like.

Do you have flexible working hours at your job? Is it beneficial or detrimental to your group? If you work flexible hours, have you seen any personal benefits?

INC Magazine, American Psychological Association, Forbes

The original version of this article, Flexible Hours in Your Working Environment, is copyrighted by Consumerism Commentary.

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A group of fresh, unemployed lawyers have banded together to sue law schools. 73 alumni have filed at least fifteen class-action lawsuits, alleging the schools inflated employment figures and salary data to attract students and increase rankings. The real goal of the lawsuits seems to be to effect systemic change in the education industry and associations that accredit law schools, like the American Bar Association.

Schools are in the business of generating alumni, and to a great extent, use as many marketing tricks that any company uses in order to influence public opinion. It’s true that a 90% graduate employment rate looks better than a 75% rate on paper, and I’d be more inclined to choose a school with a higher employment rate, with all other factors being equal. But a 90% graduate employment rate doesn’t guarantee that I would receive the job I want after graduation, even if I were in the top 10% of the class.

Furthermore, I’ve come to the conclusion over the years that any statistic used for marketing purposes is subject to manipulation in an attempt to further the goals of marketing. Hard numbers give the impression of fact. From an early age, we’re trained to believe that one plus one equals two, in all circumstances, and numbers are truth. Statistics can be misleading in many ways, and are used more often to try to convince others of a point of view rather than quantify facts in reality.

The group of lawyers probably can’t prove that the blame for their unemployment situation rests with the law schools. There are many factors that contribute to unemployment, including the overall economy, local job markets, and the effort, skills, and self-marketability of each alumnus. It doesn’t appear as if the former students are suing to have the schools compensate them for the lack of expected income from working, but they are suing to enlighten the public to the issue of misleading statistics throughout the educational industry.

Mutual funds must advertise that “past performance does not guarantee future results.” Even if a graduate employment rate were perfectly measured and accurately reflected exactly what a potential student understood the number to be, a good rate today is no indication that the rate will continue to be high by the time the school awards a degree or certification. If my index mutual fund returned 12% last year and lost 8% this year, I can’t sue the fund manager or the stock market for not providing the dividends I was hoping for. If fraud was involved, it might be a different situation. Perhaps misleading statistics like graduate employment rates are somewhat fraudulent, but I don’t see a parallel as schools do not typically promise that students will be employed at the level they’d like after graduation — and in the case of lawyers, after passing the bar exam.

There might be better ways of raising the issue of misleading statistics in the marketing endeavors in which institutes of education engage. Using the courts to make a point is only one tool that’s available to increase awareness of an issue. When you’re a hammer, though, everything looks like a nail.

Several years ago, while I was completing my Masters in Business Administration degree, I considered attending law school. Ultimately, I decided not to pursue a law degree and to focus my energy on my business instead. I think I made the right decision.

Photo: CubanRefugee
WNYC

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There’s a chance you could become a multi-millionaire after repeatedly slamming your head into other people and suffering through the resulting mini-concussions and minor brain damage, but not everyone can be a professional football player in the NFL. There’s a safer and less harmful path toward financial independence.

Cognitive ability is an important part of your human capital, and your human capital measures, among other things, how likely you’ll be able to support yourself financially, particularly through difficult economic times. Cognitive ability is important because many jobs requiring intricate skills and the best careers that offer opportunities for advancement require the ability to learn and adapt, and that’s the core of cognition.

The ability for the brain to process information changes throughout one’s lifetime, and without stimulation, cognitive ability can decline. When companies like Google or SAS ask puzzling interview questions, they’re testing, among other things, cognitive ability. To be hired as a software engineer, you would need to show that you have a strong command of whatever primary programming language is popular at the time, but in an industry that changes so quickly, strong cognitive ability will show that you can learn and adapt to the changing environment.

The key is instilling cognitive ability in children at an early enough age. As we get older, we can continue to refine cognitive ability, but only to a small extent. These tactics may no longer work for me; the best adults can generally do to keep cognitive skills sharp is to get enough sleep and exercise, and eat nutritious food.

If you’re interested in helping your child prepare for a life full of challenges, there are some tactics you can employ.

Learning a new language

As a child, I enjoyed learning languages. I never became fluent in anything other than English, but I enjoyed the process of learning the rules. As a kid, I was fascinated by languages, and spent time learning a little bit of as many as possible. Like many kids, I learned a little Spanish from Sesame Street. I learned Hebrew and tried to teach myself Yiddish. I studied Latin in middle school, was taken out of usual classes to study Greek independently, and took five years of German. I learned programming languages like BASIC, Pascal, lisp, and C. And as a younger kid, I dabbled with creating my own languages and codes.

Music and mathematics have features in common with languages, as well. Music, particularly learning to play an instrument instead of just listening to Mozart, has been shown to improve cognitive ability.

As an adult, learning a new language or a musical instrument is a time-consuming task. There are programs that help frequent travelers learn languages quickly, but you could get a bigger cognitive benefit by learning a language through a more academic curriculum or through immersion. Rather than focusing on key phrases that help you get by in a foreign land, incorporating a new language into the way you think can help keep your brain active. On the other hand, young children, even those learning their first language or languages, can often learn multiple languages concurrently without being confused. Language skills not only improve cognitive ability, but they can make someone a more marketable employee around the world or increase the chance of international success in their own businesses.

Completing puzzles

Elementary school is a great time to focus on solving puzzles whose solutions require thinking “outside the box.” I seem to remember this being called “lateral thinking” when I was younger, but I don’t know if that term is widely used today. These are the types of puzzles that stymie job applicants at companies like Google. But puzzle solving as an adult won’t have the same impact as puzzle solving when the brain is at its most impressionable.

• Logic puzzles are kind of like the game Clue. You often have two or more dimensions to work with, and the goal is to pair each of the dimensions together based on a limited number of clues. A grid helps eliminate incorrect pairings to discover what’s correct. The more dimensions included in the puzzle, the more brain power necessary to solve the puzzle.
• For a child, a Rubik’s Cube can be an engaging puzzle. While the answer now comes packaged with the toy, and there are numerous Youtube videos describing how to solve the puzzle in about twenty moves, the cognitive challenge is in working to find patterns of movement that move closer to the result.
• Text adventure games open up a child’s mind to being able to control their environment. Video games have changed since I was a kid, but I enjoyed the early text adventure computer games like Scott Adams’ Adventureland. (Classic game lovers can play Adventureland here.)

Reading and writing

Reading and writing help develop important cognitive skills focused on processing information the same way they’ll need to make sense of problems as adults. Writing, particularly creative writing, improves the command of language and can help children find clarity when expressing their ideas. Writing is a skill that will easily set someone apart from the competition, as might be necessary in tough job markets. I’ve personally seen atrocious written communication among co-workers throughout the many jobs I’ve had. I will never say I’m a great writer, but these skills are lacking in my former non-profit and corporate environments.

When I compose a well-worded communication, the supervisors shouldn’t be surprised. Every employee with a college education should be able to express himself or herself somewhat eloquently.

These cognitive skills nurtured at an early age can help prepare children for financial success in life. The best careers need smart and flexible employees to take on unforeseen challenges. People often predict what the hottest careers may be one generation from now, but the specific opportunities are irrelevant if children are prepared today to handle any problem that presents itself.

What did you do as a child to improve your cognitive ability? If you have children, how are you helping them prepare for the future?

Photo: Don Wright

The original version of this article, Improve Your Child’s Cognitive Ability for Income Potential, is copyrighted by Consumerism Commentary.

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During the recession, my employer, a firm in the financial industry, eliminated raises for employees at the Vice President level and above for one year. The company, although continuing to perform well compared to its peers, cut back bonuses and other benefits. It’s easy for employers to demand higher productivity for less compensation when the job market is stagnant and the economy is threatened.

“You’re lucky to have a job” was the prevailing attitude. Many of my co-workers had family members or knew people who were out of work during the recession, and there was a lingering fear that, particularly after some internal consolidation, any of us could be out of our jobs at any time. Some were holding onto their jobs for dear life.

The power balance between employer and employee is always tilted in companies’ favor, but never more than during a period when the economy is falling apart. Unemployment may be at 8.5%, lower than during the height of the recession, but this is still high, and employees are still willing to put up with cutbacks just to keep their jobs.

What appears to be a short-term gain for an employer — reducing expenses in human resources, salaries, and benefits — can be a long-term loss. The recession ushered in a period of New Frugality. Consumers used credit cards less often and companies cut back spending and hoarded cash. The corporate balance sheet was important, and companies appeared stronger by reducing expenses to ensure profits for shareholders. Employees suffered as a result, and the stagnant — or in some cases, decreasing — compensation will not easily be forgotten.

Eventually, the job market will swing in the other direction. The top talent will feel no loyalty to the company that didn’t respect its workers during the recession, and they will leave for greener pastures.

The Wharton School highlights several recent surveys, showing that the short-term gains companies achieve by neglecting the benefits of their employees will likely result in long-term difficulties.

• 36% of workers want to leave their companies.
• 43% of human resources managers are concerned top employees will leave.
• 35% of companies in the United States have smaller staffs than before the recession.
• Companies have replaced full-time staff with temporary workers.

Companies cut compensation more for lower-level employees than higher-level, because executives view the average working middle class employee as easier to replace.

A company’s employees, literally its “human resources,” are the most important assets that a company can invest in. Proper handling and training will present a great return on investment. Spending money to support and enhance the lives of and benefits for employees keeps them engaged. If an employee believes he or she was treated well and respected during a time of economic upheaval, when employees at other companies are sharing their stories of frustration, the employee is more likely to appreciate the employer.

How has your employer treated you over the past few years? Have your compensation and benefits been scaled back? Will you stay when you know it will be easier to find a job?

Photo: dslrninja
Wharton School of the University of Pennsylvania

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A recent article in Fortune Magazine predicts that one of the hottest jobs ten years from now will be data scientist. If this prediction is true, parents of teenagers in their first year of high school and their parents might consider encouraging their kids to develop the skills necessary to be in high demand by the time they earn their bachelor’s and master’s degrees.

To excel at data science, which is currently a growing field, though I’ve more often seen it labeled information science, students should develop strong skills in mathematics and technology.

In the Bakken area of North Dakota, the hunt for oil has created lucrative jobs today. There is a need for just about every type of career at this location, from burger-flippers to geologists. Unemployed people have been relocating their families to North Dakota in search of well-paying new jobs.

From a financial perspective, it could be beneficial to be aware of what the market needs and fashion your career path in that direction. The flexibility to react to the economy is a human capital strength, and will help ensure you can generate income regardless of the strength of the broader job market. Today’s popular careers may be short-lived, however. While there’s an oil rush today in North Dakota, a longer career path may involve environmental science or alternative energy.

Attempting to predict hot careers in the future is riskier than chasing today’s in-demand careers because you could spend years of your life preparing for a specific job function. If that career doesn’t prove to be as necessary as previously thought, and you’re unable to find a job in that field, you might consider many years of your life wasted.

I lean more towards looking within when determining the career or jobs best suited for an individual. Skills and interest pay a large role. If you are able to make a career out of something about which you’re passionate, you’re more likely to succeed. Working will be enjoyable, and you’ll likely be more dedicated to your job. There’s a good chance, however, unless your passions coincide with a high-paying field, that following your passion is a luxury; it may not be a path that proves to be lucrative.

People in tougher financial situations need to be practical. Many parents have encouraged their children to develop skills in practical fields that have a chance of surviving any recession, perhaps due to experience living and struggling through recessions of the past.

Would you change your career to something popular now to try to improve your financial situation? Would you consider planning a career path based on what might be needed in a future decade?

Photo: lindsey gee
Fortune, CNN Money

The original version of this article, Choosing a Career Path By Chasing Hot Jobs, is copyrighted by Consumerism Commentary.

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In my old corporate job, upper-level management stressed the importance of work/life balance and flexible working arrangements. The idea of work/life balance stems from the idea that most corporate employees recognize that working in a cubicle is not all there is to life, and despite pressure from supervisors and bosses, family life is important, too. Ignoring unemployment, most households are two-income families, and in order for a family to survive, there must be some consideration for a family’s needs during the day. Often, the message of work/life balance doesn’t survive as it is passed down the ranks from the upper-level executives to the mid-level managers, whose job is to put business needs ahead of just about everything else.

That was the case in my old company when I was there. Upper management saw the benefit of allowing people to work from home occasionally. This flexibility increases productivity and morale, and there’s a new study that proves this assumption, as I’ll describe below. Nevertheless, some responsibilities in that environment could not be done from a location other than the office. That’s an understandable reason for limiting the availability of telecommuting options, but many managers do not trust either the studies or their employees.

I’ve had managers who believe that without a line of sight, employees would simply not work. They follow corporate guidelines and allow employees to occasionally work from home, but they’re grumpy about it, and those who do opt to take advantage of flexible working arrangements like telecommuting or alternate hours are viewed as less dedicated to the company and more likely to miss out on rewards like raises and bonuses regardless of performance.

Researchers at Stanford University developed a method of testing theories about working from home to determine, in a controlled environment rather than through anecdotal evidence or less-rigorous testing, whether telecommuting and other working arrangements such as flexible hours are beneficial to a company. The researchers, in a presentation labeled “very preliminary,” note that although work/life balance is used in recruiting, prior to the study there has been no evidence showing a cause and effect relationship between flexible policies and employees or employers. Most of what we “know” about work/life balance today relies on case studies (anecdotal evidence) and human resource surveys. This Stanford experiment set out to change that.

In this experiment, the researchers used a Chinese travel agency with 12,000 employees and a corporate culture modeled after American companies. The sample included call center workers, some who would be allowed to work four out of five shifts from home and others who were not. From a statistical perspective, those who worked from home were significantly more productive. Both quantitatively (number of calls) and qualitatively (judged by call quality assessments), working from home benefited the company. The quieter environment of the home increased concentration and the healthier environment resulted in fewer missed workdays.

From the employee’s perspective, they are more satisfied with their working experience at the company. The firm involved with the test has been so impressed with the results of the study that they are rolling out the plan to the rest of the company.

The next time you have the opportunity to discuss working from home with your manager, be sure to share the positive data.

Do you work from home? If so, are you more productive than you would be in an office?

Photo: C G-K
Stanford University [pdf]

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Every year around Mother’s Day, Salary.com looks at the role of a typical mother in a typical household and calculates an annual salary based on the market rates for the various jobs she does. Using the Mom Salary Wizard, I determined that the media salary for a mother of two school-age children living in my town is over $134,000.

This calculation doesn’t mean that she should only accept a full-time job that pays at least this amount, and it doesn’t mean that a family would need to pay this much to hire others to take care of mom’s responsibilities. Perhaps it encourages people not to underestimate the important roles covered by the typical mother in an average household.

The graphic included here takes a similar approach and applies it to Santa Claus. Looking at the work Santa does in order for Christmas to be successful, researchers have determined that Santa’s annual income should be almost $133,000. Using data from the Bureau of Labor Statistics, they used median salaries for jobs like farmworker (to represent Santa’s reindeer wrangling), correspondence clerk (to represent Santa’s letter reading), and retail sales (to represent Santa’s shopping on behalf of consumers).

Insure.com

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In most workplaces throughout the United States, employees receive vacation days to use every year as a benefit, and in some cases, unused vacation days expire at the end of the year. According to the latest survey by Expedia, on average, Americans earned 14 vacation days this year but used only 12. While the survey represents a larger percentage of taken vacation days than I’d assume would be the case, those 12 days are low compared to vacation days taken by employees in other countries.

In France, Spain, Denmark, and Brazil, workers receive 30 vacation days on average, and they take each of those vacation days. Is the lack of vacation in the United States a symptom of an economy under pressure to grow? Since this is a pattern that’s been consistent for many years, can we attribute the country’s growth as a major economic power in the twentieth century a result of the American workforce’s dedication to sitting in the office? It can’t be a result of the economic recession, where employees must work harder because companies are forced by their financial situation to produce more with fewer resources.

According to the survey, 58 percent of Americans say that both their work schedules and the economy do not affect their decisions about taking vacation days away from the office. Sometimes survey respondents lie, and sometimes they are unaware of their motivation and can’t accurately report it on a survey, but if the average American is leaving two vacation days on the table this year, there must be another reason.

Vacation days are different for the slice of the American workforce that includes entrepreneurs and business owners. Running your own business, particularly if your business consists of only you or of a small number of people, is a type of employment that invades your personal life. The responsibilities of a business owner are different than the responsibilities of someone who works for a large corporation. Most employees can leave their work at the office at five o’clock and dedicate the rest of their time awake to themselves or their families.

Many business owners, on the other hand, live and breathe their businesses and can’t do a good job of putting their work to the side. I haven’t had a vacation in years where I completely set aside my work on Consumerism Commentary. In the past, I’ve planned for a trip by writing articles for the website in advance and scheduled them to be published at the right times, but I’d still be on call twenty-four hours a day to make sure the site continued to operate correctly, answer important emails, and ensure a constant stream of people would visit.

In some cases, I’ve even used traveling for vacation as an opportunity to meet colleagues and clients in the area I visit. My recent trip to California to visit family also gave me a chance to meet Neal from Wealth Pilgrim and other potential partners behind the scenes. Perhaps the lack of vacation days taken by Americans on average is affected by a higher concentration of workers, like business owners, who feel — or are — personally responsible for the success of their business.

Perhaps there is another explanation, as well. On a scale from socialism to capitalism, the United States economy falls somewhere right of center. Workplace benefits of any type are results of left-of-center policies, and with “socialism” being a dirty word in today’s economy, there might be a stigma against those who make taking vacation days an issue for discussion with their supervisors. Some corporate employees want to be competitive in their workplace in order to secure their jobs, and not taking vacation days or other voluntary benefits is one way to show your dedication to the corporate entity.

While the average American leaves only two days on the table, based on an average full-time salary, that’s $34.3 billion in benefits that will go unused this year in total.

Do you receive a benefit of vacation days from your employer? How many did you take this year?

Photo: mdanys
Expedia

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I’m an accidental entrepreneur.

I never quite fit in with big hierarchical systems, like public education (as a teacher) and corporations. Getting things done, particularly accomplishing various things the way I wanted to accomplish them, has always been a struggle for me in these structures. I knew from the day I started working at a corporation after leaving a small non-profit arts agency that I would never quite find my bliss or even thrive in that type of environment. I remember thinking that my first job, an administrative type of position, didn’t add any value to the world. The position only existed from a pure corporate need, not a societal need. If the corporation weren’t as big as it was, my job function would be unnecessary.

There were other options for me to consider such as owning an independent school of some type or creating an arts foundation, but those goals required two things I did not have at the time: money and experience. So I stuck it out in the corporation for more years than I would have liked, and I put energy into hobbies like writing and blogging.

My hobby became a business over time, and you can see this in its incarnation as Consumerism Commentary. While all I was doing initially was learning how to become the chief financial officer of my own life, I became the CEO of a company that was helping me attain that first goal. Being a CEO has been outside of my comfort zone, and I’ve made a number of mistakes over the last few years. The experience has been one of growth for me, and I believe I’ll eventually get the hang of running a business and accepting the fact that I am an entrepreneur.

In the past, the word “entrepreneur” has always been associated with a negative connotation for me. I viewed people who called themselves entrepreneurs as people who knew exactly what to say to manipulate others into relationships. They’re savvy, smooth, and disingenuous; they see all communication and relationship-building with a purpose in mind — building their own business and growing wealth for themselves.

Now that I’ve become what other people often call an entrepreneur, I’m dealing with this cognitive dissonance. What other choice did I have, though, to work for myself? I was out-of-place in formally-structured work environments, particularly where I wasn’t free to take whatever approach to my work I wanted, when I wanted. I may have misjudged entrepreneurship, but I still see this type of posturing in my daily experiences operating Consumerism Commentary.

To add another layer to the idea of entrepreneurship, with the employment market still very much in favor of employers, the trend in financial advisory media towards working for oneself has increased in volume — in both senses, quantity and amplitude. I do agree that by finding a way to work for yourself removes employers from the picture, giving you much more control over your financial destiny. (A portion of that control just moves from an employer to potential clients or customers, however.) A typical advice-based article attempts to convince all corporate drones to leave their unfulfilling job and start their own businesses.

Taken to the extreme, a nation of business owners wouldn’t work. This advice, however, might inspire a small portion of readers to crash through their psychological barriers and find a way to add value directly. Not everyone will be a successful entrepreneur.

I think there are certain personality traits that lend themselves to being a great business owner, first from a Myers-Briggs perspective, where the best business owners likely have a profile of “ENTJ.” (After some quick research, I’m right on the money with this assessment; the ENTJ type is often called The Executive type.) For contrast, I am an “INFP.”

• Extraversion. Dealing with business issues is much easier for someone on the Extraversion side of the first dimension. This would be someone who feels energized after dealing with people. I find certain aspects of dealing with people on a business level very draining, though I am comfortable being among large groups of people. I am slightly on the Introversion side of this dimension, but a Myers-Briggs Step II assessment reveals that this is slightly different from my core personality, which would call for a stronger Introversion score.
• Judging. While my personality traits register on the Feeling side of this dimension, a Judging tendency helps people lend themselves towards the same working structures I’ve never been comfortable with. The same trait that encourages the hierarchical approach to business, helpful when working in school systems and large corporations, is also beneficial to running a business. I’ve also been uncomfortable judging the sincerity of people I’ve worked with in the past. Many of my mistakes I alluded to above are related to my impressions of people.
• Self-motivation. Without a boss providing guidance and deadlines, the responsibility for performing rests only with the business owner. I find that motivation is much easier when you own the process. Like students who perform better in college when they pay their own tuition, an entrepreneur’s business is all about that one person. The ability to design a business based around something you’re passionate about or particularly skilled at will infuse motivation into many people who’ve struggled with this in other employment settings.
• Forward-looking and big picture. Anyone who is content with repetitive tasks or would prefer to perform a job by following a step-by-step guide may not be best suited for a life of entrepreneurialism. Running your own business requires looking beyond the next step. It involves always considering the big picture and the ability to define goals. Not everyone is suited for this level of thinking.
• Determination. From the outside, determination can look like stupidity. Being determined in the face of critics, refusing to give up regardless of what someone else might think of your abilities or your business’s potential is essential to becoming successful. Not only that, but considering businesses often fail, being serious about working for yourself requires the ability to brush off the failures and use them as an opportunity to learn about the business and about yourself.

• A careless attitude towards money. Many entrepreneurs have succeeded because they have had the financial means to go after their dreams. If you’re already wealthy, you can stand to take some risks with your business. Someone less established financially would find it much more difficult to justify the risks. For a business like mine, there was not much financial risk at the beginning. I did, however, spend almost all of my waking and some of my sleeping hours to finding a path to success, to the dismay of those who sought to spend more time with me.

  The concentration on my own business most likely affected, though probably in a small way, my ability to focus on and care about my day job. I may have missed out on promotions because I wasn’t going beyond my job scope, I was using my own time to build a business. In the end, it was the right decision for me, but it could have easily gone another way. I would have ended up with a continued low salary and no income on the side. From a truly financial perspective, starting a business can be a careless risk. Good entrepreneurs accept this or ignore this, or are just unaware of this.

• Obsessive-compulsive. With the biography of Steven Jobs due out soon, a lot of media attention has surrounded his attitude, particularly his obsessiveness. In the book, Jobs is described as not settling for anything less than perfection all the time, and perfection in his opinion could rarely be defined before him. He would know it when he were to see it.

  From a design perspective, this has shown to be immensely perspective. As Malcolm Gladwell said in his coverage of the biography, “The great accomplishment of Jobs’s life is how effectively he put his idiosyncrasies—his petulance, his narcissism, and his rudeness—in the service of perfection.”

• Generalist. Today’s economy seems to appreciate specialists over generalists, but I see the opposite as being the better approach to a fulfilling life — and generalism is an approach particularly suited for entrepreneurship. Large companies have the need for specialists, people who are very good, excellent, or best in the world at doing one particular thing. This can be a very narrow skill. An entrepreneur who starts a company from the ground up, particularly with limited resources at the beginning, needs to be able to handle many different types of tasks and goals, at the same time, while holding herself to a very high standard.

  As the business grows, there can be adjustments. When struggling and to build their business, the founders of Yahoo brought in a CEO from the outside because running the company at a certain level required skills the founders couldn’t quite meet on their own. During the start-up phase, however, the entrepreneurs needed to find a way to tackle all the hard tasks. In this respect, being a jack of all trades, master of none is the best approach for an entrepreneur, provided that this particular jack is a very skilled jack in all trades.

Leaving traditional employment structures behind is not for everyone, and the advice we often see telling everyone to quit their job and start a business can be largely ignored. If you aren’t predisposed towards at least a few of these personality traits, success will be very difficult. If, however, you don’t have these traits in your system, you can train yourself to be comfortable with the actions you would be taking if these traits were embedded in your personality. Acting against your personal profile can be very stressful, though, and might lead to an unsatisfying conclusion.

What do you think about being an entrepreneur? Is it something anybody can do with a little practice or are there certain personality traits necessary for success? Would you consider starting your own business if you felt it was a better path to greater financial well-being over time?

The original version of this article, The Entrepreneurial Trend: Personality Traits, is copyrighted by Consumerism Commentary.

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A new venture capital firm is looking for a few — one hundred in the first five years — entrepreneurs from the recent crop of former students and people their age. Gen Y Capital Partners is looking for investment opportunities — “For Gen Y, by Gen Y” — to help start-up businesses grow.

Any entrepreneur in the appropriate age group should consider this offer. The firm will pay your student loan debt for three years and eliminate your everyday expenses by providing a living space for you on a great university campus like Princeton University. Not having to worry about student loan bills and living expenses allows a young entrepreneur to focus solely on building a business from the ground up without financial distraction.

There has been a trend lately of encouraging the fostering of entrepreneurs from the corporate world. With few job opportunities and an economy where companies are under pressure to produce more with fewer resources, workers are frustrated with corporate life and some leave that world behind in favor of working for themselves. Recent college graduates are faced with a tough job market for someone with little experience and are turning to living at home and trying to determine their next steps. The time couldn’t be better to foster the independent approach that, when successful, can be financially and emotionally rewarding.

The entrepreneurial path isn’t for everyone, and I take issue with articles and gurus that suggest that every individual could solve their financial concerns by becoming making their own passion or interests a full-time job. Being a successful entrepreneur requires personality traits that not everyone is interested in fostering. But for those who are likely to succeed in building their own business and are within the target age group, Gen Y Capital Partners is worth a look.

In order to receive this funding, an entrepreneur and his or her business must meet several qualifications.

• A solid management team with business knowledge.
• A scalable business model.
• Existing paying clients.
• A likelihood that potential competitors are limited.
• A defined exit strategy.

Gen Y Capital Partners are also offering peer mentoring. Mentoring is one of the most beneficial methods of improving your human capital measurement, and can have real results when building a business.

Here is how the application process works, according to Scott Gerber, founder of the Young Entrepreneur Council and Gen Y Capital partner:

When people go to www.GenYCap.com and they go to the “Apply” section, they’ll be asked to supply their executive summary, and they’ll also be asked if they want to submit an up to one-minute YouTube video pitch so they can be seen and heard about their business along with some basic information. Starting in 2012, we’ll begin consideration on which businesses we’ll invest in… The average investments will be between $15,000 and $50,000 plus the loan reduction, and in select ventures we’ll invest up to $250,000… Our investment company will take an equity percentage based on the business and the investment that we make.

For a start-up business, $50,000 could be a sizable investment, and the elimination of student loan obligations and living expenses can make that investment go further.

US News & World Report

The original version of this article, New Capital Fund Pays Entrepreneurs’ Student Loans, is copyrighted by Consumerism Commentary.

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Focusing solely on your net worth is an approach too narrow if you want to become financially independent over time. To increase your chances of being secure, think about your personal human capital, a set of skills and experiences that will improve your finances in the future.

Establish yourself as an authority in your field and create a public image for yourself. When done well, this will help ensure that you and your skills will always be in demand as long as your field is relevant. With technology, establishing yourself is easier today than it has ever been. The internet allows people with similar interests to connect easier, establishing communities and subcommunities offering enough room for many experts and leaders.

It starts with a blog. If you develop or write for a popular blog in your field, you could spread your authority far beyond your circle of colleagues. Blogging can open even greater opportunities to enhance your renown, including writing published books, appearing on television, and being cited as an expert when news organizations seek sources. The best news is that it’s incredibly easy to start a blog. Like a college degree is, for the most part, an entry point for a good career, a blog is the entry point for establishing yourself as a sought-after expert in your field.

Before you start a blog

If you’re anxious to get started, there’s nothing wrong with starting a blog right away, particularly if your motivation comes in spurts. Not long after you begin, and before your blog can help you reach a level of authority, you’ll most likely need to think about these questions. Take some time and get it right from the start by planning your blog.

• What is your blog’s mission? The mission of Consumerism Commentary is “to develop financially literate, capable, and successful human beings by sharing educational, entertaining, and engaging writing.” Today, that mission guides almost everything I do related to this website. Consumerism Commentary has been around for eight and a half years, but I only created this mission recently. I formed the website for different reasons, but if I had focused on this mission from the beginning, the website may be more popular today.

  As the context of this article is increasing your human capital, your blog will also have a “secret mission:” to establish you as an expert in your field.

• What is your voice? The growth of a blog and its owner’s reputation within a broad community is related to the content on the website. If you’re focusing on writing articles, read often, write often, and learn how to infuse your personality into your published thoughts. Even if you’re already an established expert in your field, your skills may not immediately translate to engaging prose, so practice writing for the public.

  If you plan to focus your website on video, again, practice being coherent and engaging in front of the camera. Find the approach you want to take with your voice, mannerisms, and attitude. You might change your approach later when you have a chance to test what works best in front of the audience, but the more you can prepare even by testing among your friends the better you’ll be able to quickly establish yourself once you start releasing your thoughts on the public.

• What can visitors expect? Do you want to produce content on a daily basis? Do you feel you’d be better served by less frequent but more in-depth articles? Much of your decision might come after practice. Only then might you be able to determine what works best for you. At the outset, choose an approach and stick with it, only to provide some consistency.
• What is your blog’s name? Sometimes this step comes first — a name inspires how you approach your blog. Your blog’s name is your identity, and the choice might be affected by your ultimate plans for the website. If your goal truly is to establish yourself as an expert, tie the blog’s name to your real name. If, on the other hand, you’re interested in building your blog as a “business” and selling it some day, tying your identity to your blog can limit your options. There are many approaches, but to increase your human capital, keep branding simple and make your real name prominent — the opposite of my initial approach to Consumerism Commentary.
• Do you have a hook? Again from a marketing and branding perspective, you may want to consider a concept to identify with. Erica was a web developer who started her own web hosting company, sold her business for $1.1 million, and is now a successful web-based entrepreneur, thanks in part to how she markets herself. She focuses on the business-selling aspect of her experience. This is the hook that draws people in, turning visitors to readers and readers to fans (not without a healthy dose of critics, as well). The hook works. What’s yours?

How to start a blog

At the risk of sounding like an ad, I suggest visiting WordPress.com and starting a blog; it will take less than five minutes. There are other services out there, but WordPress is very popular and easy to learn. You will have an option to add extras to your blog, such as your own domain name. You may be reluctant to pay for some of the extra features like a domain name at first, but the fee is small and the benefit to your perceived expertise is worthwhile.

That mostly takes care of the technical aspect of getting started. Once you’ve established your framework, you can get started preparing your website for the initial launch. In a perfect world, you’d probably like to have these tasks completed before releasing your blog to the public and letting the world know about it. If you are anxious to get your name out there, you might not feel like waiting. My suggestion is to get your website to a point where it has engaging and deep content before you launch, because this will show even your first visitor that you are serious about what you are doing.

• Begin writing or posting regularly on your website, building an archive of content. Have enough to keep a visitor engaged. Consider having enough to keep someone engaged for an hour, reading, watching videos, or otherwise consuming your product, before promoting your new blog.
• Select and customize a pleasing and navigable design. WordPress offers many options for your website’s design and layout, and with a little practice, you should determine how you can customize both.
• Determine how to categorize your content and build out these sections of your site. Typical layout calls for a small number of high-level sections listed near the top of your website. You should also have an area of your website dedicated to your personal information. Include who you are, why you’re an expert, and a method of contacting you. Be sure to include any relevant information that could enhance your reputation.

Once your blog is established, you need to let people know of its existence. Find similar websites, participate in discussions, join communities, and determine how to use social media like Facebook and Twitter effectively. Use press release services like PRWeb to your advantage when there’s an opportunity to do so legitimately.

Move beyond your own blog

Publishing your thoughts to increase your human capital isn’t limited to blogs. A blog will help you promote your other writing and open doors for you, however. With an archive of great content, you will be able to point to your history of excellent writing when looking to advance your reputation beyond the confines of your own website.

• Offer to write articles for other respected bloggers within your community.
• Seek opportunities to contribute to major publications like newspapers or industry journals.
• Take a specific idea and publish your own book or e-book.
• Approach publishers with a concept for a book, pointing to your history — and importantly, the community of fans you’ve built — as a rationalization for a book deal.
• If you prefer developing video content over writing, look for opportunities to be on television, and perhaps, produce your own show.

The goal is to boost your human capital through establishing an expert identity for yourself. If you’re well-respected online and are able to establish yourself beyond others in your field, potential employers and clients will seek you out. You will have more opportunities to grow your wealth and use that wealth to achieve the real goals you have for your life.

There is much more that could be said about developing a blog to promote yourself as an expert. Each aspect of creating a successful online identity, including creating content, mastering the most effective layout, and marketing yourself, has generated enough interest among the public to warrant blogs and books devoted to these topics. This overview doesn’t even touch on directly generating revenue from your blog, but that is a separate goal from what is discussed here, establishing yourself as an expert. Focus on creating something that establishes you before worrying about income. The expense is minimal except for your time.

If you’re concerned about return on investment, keep in mind the goal is to increase your human capital, the benefit of which only reveals itself over a long period of time.

Keep in mind that the bar has been raised. It is easy to start a blog, so it takes much more than just starting and producing consistent content to establish yourself as an expert through your blog. Hold yourself to the highest standards and settle for nothing but the best you can do.

The original version of this article, Boost Your Human Capital: Publish Your Thoughts, is copyrighted by Consumerism Commentary.

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There have been times in my life, while working for other people or companies, that I’ve thought to myself, I should have more job responsibility than this, or, I should be getting paid more than I am. A disagreement with the boss over my skills, potential, and value to the organization created tension. For some people, this tension could be demotivating.

Dissatisfaction with career progress is often not something that could be blamed on the company on the boss. Sometimes it’s due to a bad fit between people, but more likely, employees can look at themselves to find the barrier to success in a career. Here are a few possibilities.

1. You haven’t defined what you really want. The first step to getting what you want out of a career is having a clear goal with a series of steps that will get you there. Knowing where you’d like to be in your career helps you carry a sense of purpose in your job. If career advancement isn’t important to you and you haven’t found a need to define any goals, chances are your boss will keep you right where you are. If you have a goal in mind and are willing to put in the effort to show why you can accept more responsibilities, you have a better chance of moving ahead.

2. You haven’t discussed your career with your boss. While the best organizations are partners with employees in the career-building process, the initiative must come from the employees. After you have clear career goals and a personal job-related mission, you must share that with the people in your organization who can help make that happen. I’ve been too quiet about my desires in the past, and it has hurt me. After the fact, I’ve had bosses tell me that they didn’t know I wanted more responsibility. You may think you are showing the organization what you want through your actions, but in most cases, career desires need to be discussed explicitly.

3. You aren’t passionate about your work. Not everyone is lucky enough to be able to follow passions. The missions that people are more likely to be passionate about are in fields in which is may be difficult to make a living. If your passion is fine art and the only job you can see yourself doing is a painting artistic landscapes, the competition to become one of the few painters who can earn a solid living on their art is tough. If your passion is in a field that pays well, like engineering, you have a better shot. Most people settle, and particularly in job markets that favor employers, people often take the jobs they can get and don’t factor passion into the equation.

When you’re not passionate about your work, it’s more difficult to summon up the intrinsic motivation that’s required to not only do what’s asked of you, but to go beyond the call of duty and excel, impressing the decision-makers in your organization. Find something about your job to be passionate about, even if it’s not the job itself.

4. You haven’t clarified why you deserve more. Few people enjoy talking about themselves, particularly if it could be seen as bragging. Unfortunately, managers are busy and often don’t see everything you do. This information should come out in annual performance reviews if your organization participates in this ritual, but these reviews tend to be formalities after management has already decided whether you receive a promotion or a raise. Set up time to review your progress with your boss on a much more frequent basis. Even if discussed informally, let her know that you’re succeeding in ways that may not be immediately visible to a busy manager who focuses on many different people every day.

You may also need to make the connection for your manager. Explain not only what you’ve done but the effect these activities had or will have on the organization.

5. You’re not talking to the right decision-maker. You may have had all the right discussions with the wrong individual. At one company, I knew my direct supervisor had a good idea of where I wanted to be, but she wasn’t the person who could help move my career in the right direction. While she always claimed to be working on my behalf, for my to see career success, I needed to have more open communication with her supervisors — not her direct supervisor, but her boss’s boss, two layers in a corporate hierarchy up. When you need to jump ranks in order to move your career forward, it can tend to be intimidating. You don’t deal with your boss’s boss’s boss on a regular basis, but she might be the one who needs to know what your goals and desires are. She needs to know how you’ve succeeded, and she needs to she your passion.

Relying on long communication chain may be respectful of rank, but in the end, it’s not going to get you anywhere.

There might be other reasons you’re unhappy with your career progress. Perhaps the company just isn’t a good match for you. Perhaps your management plays favorites. Perhaps you’d succeed further working for yourself. Perhaps your management isn’t lying when they say the company has no money. Rather than focus on these external factors, look within. If you believe the career path you’re on is the right path for you and you’re undervalued, you can change your approach to increase your chances of being noticed positively.

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The original version of this article, 5 Reasons You’re Unhappy With Your Career Progress, is copyrighted by Consumerism Commentary.

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While saving money, reducing expenses, and earning income all help improve your net worth, these tactics often ignore the larger picture. Improving your personal human capital is like a form of insurance; you’re protecting your ability to increase your net worth over a long period of time. Boosting your human capital through gaining education, adding variety to your experiences, and cultivating your network can help to ensure you’re in a better financial position in the future.

I’m what Carl Jung would call an Introvert. To be more specific, in the variety of corporate psychological analyses I’ve participated in over the past fifteen years, my result is generally halfway between Introvert and Extravert, though I identify more with the Introvert qualities. This doesn’t mean I always prefer to work by myself or spend time alone; it means that I can draw energy from independent thinking. I am comfortable in social situations with large groups of people as well as working in teams, but rather than drawing energy from this type of socialization, it draws energy from me.

As a result of this energy drain, I haven’t put as much effort into networking as an independent business owner like myself should have. I’ve been building online communities of various types since at least 1990, but I haven’t done a great job with maintaining relationships over time. From a social perspective, I prefer to have a few close contacts than a large number of acquaintances. Not only does this make it difficult for people to get close to me, but it has perhaps damaged my personal human capital.

When to say yes

The overworked and overscheduled business owner receives standard advice: “Know when to say no.” One person cannot do everything, and those who have shown themselves to be experts are often faced with ceaseless requests for assistance. Focusing effort on the 20 percent of requests that have 80 percent of the most relevance to the expert’s own needs, an approach that borrows from the Pareto principle, might benefit from lighter schedules but might miss the opportunity to have a significant effect on someone’s life.

Keeping in mind that it could be damaging to over-promise and under-deliver, I take the approach of responding to as many requests as possible, looking at each as an opportunity to connect with someone I may not know about.

Both depth and breadth are important

I mentioned above that I’m more comfortable with fewer close relationships than more superficial connections. This limits my capacity for improving my overall human capital. The most beneficial network contains both deep relationships and a wide network.

An individual beginning a new business as a landlord or real estate investor is a good example of someone whose human capital increases significantly with a wide network. In order for an investment to be profitable, unless the investor intends to spend all of his time and effort handling every detail regarding the property, he or she needs to know a variety of people in positions to help. While one can find plumbers, contractors, painters, property managers, and real estate agents by searching online, the best help — and the better deals — would come from people the investor knows personally. Recommendations from friends or other investors could fill in some holes in the network, and every interaction through a recommendation can grow this network.

For someone building a photography business, initial help could come from the deeper relationships in the individual’s inner circle, those who would trust the photographer enough to help build an initial portfolio and be willing to recommend the photographer to friends in the early stages of the business.

The value of online networking tools

LinkedIn has become the one location for the best business-focused networking. Despite this, I am not convinced that online-only networking — or just having a massive contact list — is valuable. I receive connection requests every day from people I’ve never communicated with, whether in person or through email. I don’t see the benefit of growing the list just to have a high connection count, just like the purpose of earning more money or reducing expenses is not just to have a larger bank balance.

As LinkedIn has grown, more features seem to invite unwanted messages and self-aggrandizement. I see LinkedIn as an effective contact management system, where you can be sure your most important contacts also offer their latest information. This is much more efficient than maintaining a Little Black Book when contacts frequently change jobs, positions, email addresses, and phone numbers.

Professional organizations

Starting in college, you can join professional organizations that provide opportunities to expand your network and open opportunities that might not have been available otherwise. As a music education major, I re-established the university’s collegiate chapter of a major national organization related to the field. Had I remained in this field, I would have been able to draw upon the contacts I established at this organization for professional opportunities. (You never know what path your life might take, but it doesn’t hurt to prepare for the path you intend to take at any particular time.)

In my career as an independent financial blogger, it was rewarding to establish an informal association of like-minded writers. As a small, tightly-knit group, we could easily share ideas and best practices to help our budding businesses grow.

Mentoring relationships

Focusing on the depth rather than breadth of connections, the relationship between a mentor and protege can be a helpful for building personal human capital. Seeking a respected individual in your field to play the role of a mentor can help you have an avenue for asking direct questions where the answers will help you reach your goals. No matter where you are in life, there is always someone from whom you can learn. Even the most successful individuals in the world find time to speak to people they respect to come away from a discussion with more ideas or tools.

At the same time, being a mentor can be very rewarding. Often, a protege asks a question that forces you to solidify your thoughts and opinions. By talking through your approach to any particular issue helps you think about details that may seem self-explanatory. In the variety of relationships in which I’ve served as a mentor, I’ve found that I’ve learned more about myself and my life and business have both improved as a result.

One danger in this relationship is being defined by the role in nominal terms. Mentors can learn from proteges. Everyone has something to offer.

Five tips for building an effective human network

• Be authentic. Don’t present yourself as someone you’re not.
• Reciprocate. Don’t take more from a relationship than you’re prepared to give. Say yes often.
• Focus on depth and breadth. Don’t just be a contact collector. Add depth to the relationships that matter most.
• Facilitate connections. Rather than focusing solely on the relationships that will help you, note where your contacts will benefit from building a relationship with your other connections.
• Follow meetings with a message. Responding or connecting quickly after a meeting will help build relationships faster.

Do you have any additional tips for networking? What has worked well for you?

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The original version of this article, Boost Your Human Capital: Cultivate Your Network, is copyrighted by Consumerism Commentary.

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Your personal human capital is an essential part of evaluating your overall worth. Human capital has a number of definitions, but in this case, it refers to a measurement of who you are, particularly in relation to how you might be seen as valuable to an employer or a client. This isn’t the only way to define a person, but since it ties directly into your future earnings and your potential net worth, it is related to finance and shouldn’t be ignored. It’s as important, or even more important, than your net worth measurement.

Consider two job applicants with identical technical skills and education, both pertaining to the job description, and a similar personality that could result in either choice being a good fit for the company. One of the applicants has indicated that he has often been called upon to present information about hie field to the public. Having presentation skills can make a prospective employee more attractive to the employer. The ability to eloquently, entertainingly, and comfortably lead a discussion or present information in front of an audience can open opportunities.

Anyone can throw together a Powerpoint presentation together, but delivering that presentation isn’t as easy as reading the bullet points. Anyone can write a speech, but elocution is a skill that requires careful honing.

Most people in “business” head directly to Toastmasters. Toastmasters uses a standardized curriculum and a safe practice environment that allows people to receive the education and experience they need to take their presenting skills to the next level. My former company, at the satellite location where I worked, had an internal Toastmasters group. We met once every two weeks to critique each other’s speeches or presentations and gain experience speaking extemporaneously about random topics assigned in the moment.

Outside of Toastmasters, you can gain experience speaking and presenting by organizing an event in your community. Libraries offer these opportunities as do community centers and religious organizations. If your field of interest holds conferences, try to get on the schedule of speakers.

Public speaking is acting and performing

Stage fright is a common barrier to increasing public speaking experience. There are two keys to overcoming stage fright or performance anxiety: being overly prepared and breathing properly. Even though the solution is simple, it isn’t always easy. Even veteran actors deal with stage fright, so it isn’t something that is easily cured even it can be managed. Acting experience can be beneficial for public speaking, as many of the skills are similar. In addition to acting, any kind of performance experience — music, dance, etc. — can have positive effects on confidence and the ability to successfully deliver a speech.

Acting also helps develop a performer’s presence. If you’re speaking publicly, you’ll need to have a presence that’s informative and trusted. The best speakers are sometimes described as “larger than life.” You know when they walk into a room that whatever they have to say will be worth hearing.

Actors develop emotional communication skills. Without saying a word, an actor can convey an emotion. The audience will be able to understand what the actor is thinking or feeling. Skilled actors can transmit those emotions to the audience, so the spectators can sympathetically feel what the actor is feeling. This is an invaluable skill for speakers. It could mean the difference between a good presentation and a speech that has the audience on the edge of their seats.

How do you suggest gaining public speaking experience?

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Consider your personal human capital as an addendum to your net worth when evaluating your overall worth. While your net worth is a good financial measurement, your human capital is a good predictor of how you’ll handle opportunities to grow in the future. In an unsteady economy, those with better developed human capital have an advantage. One way to increase your human capital is to volunteer your time with organizations.

Recently, I wrote about gaining more experience as a way of boosting your human capital, making your skills more valuable to others, particularly potential employers or clients. Kyle from Amateur Asset Allocator promptly offered this feedback on growing human capital:

Volunteer work! Most charitable organizations are desperate for volunteers so it’s not incredibly difficult to get yourself in charge of something, even if it’s something small.

The organizations requiring volunteers benefit greatly from passionate individuals who are ready to get to work. Without volunteers, many non-profit organizations, including religious institutions, would never be able to provide services as broadly or as deeply as they’d like. These organizations are usually not businesses that create revenue by selling products to a consumer, and the opportunity to generate income is low. Relying on donations or government support for funding, volunteers play a vital role. The bigger an organization’s the mission, the more volunteers they’ll need to get the work done.

This demand for volunteers creates a great opportunity for those willing to dedicate time to the advancement of a cause. Volunteering is always the most beneficial when you can align yourself with an organization whose mission matches your values.

• If you are religious, your church, synagogue, or mosque could have opportunities for you.
• If you are driven to help find a cure for a disease, there is likely an organization that promotes awareness or raises funds with the intent of helping affected families and encouraging research.
• For those passionate about arts, there are likely several non-profits in your proximity that relate directly to your passion.
• Social issues like poverty are also served by non-profit organizations.

Gain leadership experience

If the boss at your day job undervalues you work and is reluctant to give you more responsibility, you’ll benefit from the opportunities that volunteering might present you. Since demand is high, any organization would value a motivated volunteer ready to help organize other volunteers, run events or manage campaigns. There are always openings for volunteers who are not seeking much responsibility, like those who help direct traffic at an event, but it won’t be difficult for a motivated volunteer to prove himself or herself as someone who can take responsibilities that require more skills.

I had a discussion yesterday with a friend whose husband has been having trouble moving to the next level in his career. The next level would be a management position, and he’s become a victim of the vicious experience cycle: He feels he won’t be hired as a manager without management experience, but he can’t gain management experience until he’s hired as a manager. This is always a tough barrier, but one solution is to volunteer for an organization. In many cases, you can accept leadership positions as a volunteer without having official experience, as long as you are capable and talented.

If you are a successful leader in your work as a volunteer, you can feel safe highlighting this work on your résumé, increasing your chances of receiving an offer for your first leadership position within your company or your career. This is even better if your volunteer work is somewhat related to your vocation.

Increase your confidence

Don’t be surprised if you find yourself more self-confident after volunteering for a cause about which you’re passionate, particularly if you do have a leadership position. A side effect of many organizations’ missions is making a difference in someone’s life, and when you are a part of an organization that makes a difference, regardless of whether you have a leadership role, you feel better about yourself. Self-confidence, like other aspects of your human capital, is difficult to measure. It’s not a skill you can put on your résumé. It is, however, an attitude that permeates what you do, and it’s something that other people, including a hiring manager or a client, can sense.

Expand your network

Cultivating your network of colleagues, acquaintances, and friends is a major contribution to your overall human capital, and I’ll be addressing this in more detail in a following article. Volunteer work often introduces you to people you wouldn’t otherwise meet. This is a great advantage from a business as well as social perspective. By associating with a wide variety of contacts, you’ll begin to see connections between the people you know. It’s easy to see this on social networks where you can chart your circle of friends. As your network expands, you’ll see that people you don’t expect to know each other do, proving the truth of the cliché: “it’s a small world, after all.”

While these connections help understand your friends and colleagues better, broad networks that cross industries and interests can result in your having someone to turn to in a wide variety of situations. If you need advice on starting a business, chances are you know someone who has been through the process of getting her own business off the ground. With a broad network, whether you need a photographer or a plumber, someone in your network can help, either directly or provide a recommendation. Likewise, the bigger your network, the more you’ll be seen as a helpful resource.

Find the right opportunity

The first thing you should consider when planing to volunteer is how much time you can commit. One of the biggest problems that organizations face is a lack of quality volunteers, and by over-promising or making a commitment you can’t keep can increase the difficulty of operations for an organization you’re trying to assist.

Consider your passions. This isn’t your job. Since you’re not being compensated in traditional monetary form for your work, ensure you’re going to enjoy and find meaning in the work that you’ll be doing. The wok itself might not be fun — stuffing envelopes with fundraising mailers comes to mind — but if the organization stands for something you support, the work will feel worthwhile.

Volunteering can be expensive. Look at the costs. If you need to travel 100 miles three days a week just to get to the location where your volunteering takes place, you’ll be spending time to commute and money to travel, neither of which can usually be reimbursed. (Time is never reimbursable; expenses are only reimbursable if your organization happens to be able to afford that luxury.)

Have you ever volunteered for an organization? What were your experiences?

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If there’s anything to take away from an extended period of unemployment, it’s that human capital can mean the difference between receiving a good job offer and remaining unemployed. There are many facets of human capital, and as your human capital increases, so does your marketability. There are many ways you can gain an edge, including seeking more education and gaining experience. One way to grow your human capital is to broaden your focus.

I came across a joke yesterday that described becoming an expert as learning more and more about less and less until one knows everything about nothing. There’s only room at the top in any field for very few, and in some fields, you have to be at the very top to take the most advantage of the effect on human capital. For most people, learning more and more about more and more is a safer approach to boost your human capital.

The specialism vs. generalism debate can be heated, and I often face opposition when I claim that I usually side with generalism. I believe broadening your horizons and being versatile is better in the long run than focusing intently on one skill. Even in the most recent article in this series about becoming an expert, I cited one of my favorite examples, Ron Howard. He broadened his scope beyond acting as soon as possible to gain more skills and allow himself to be open to more opportunities.

While I am sure this director and producer has other interests, he is not known for anything outside of the film industry.

Moving beyond a narrow focus

Nick Mason is best known as the drummer for Pink Floyd, but he is also a racing car enthusiast. He was able to use his success as a member of the band whose most popular record still has holds the record for most consecutive weeks on the Billboard chart to fund his classic car collection. After his responsibilities with the band slowed down, he had the opportunity to spend time racing. With his wealth, Nick will likely never need to worry about his human capital, but the ability to explore your interests, hobbies, or notable skills can lead to a more fulfilled existence, discovery of other talents, and possible changes in career paths.

My story is a little different. From my time in elementary school, I planned on being a teacher. In high school I decided I would teach music, and I attended college with that goal and the appropriate degree in mind. I earned my degree, but I followed other interests at the same time. I built online communities long before there was a World Wide Web. Even while I was learning to teach, I managed bulletin board systems accessed with modems and eventually taught myself how to program websites once Mosaic was available to the public. This eventually led to more experience writing and the beginning of this website. I’m pretty far away from where I would have been if I had focused solely on learning how to teach and practicing musical instruments as certain professors would have preferred.

And now that writing has been my main focus, I’m looking at other activities to fill any spare time I can grab, which isn’t much. I’ve mentioned that I’ve been learning more about photography. I’ve completed several classes presented by local experts and I try to spend time every month improving my art. It may never lead anywhere professionally — this is a field where anyone can buy a digital SLR, use a wide aperture, and declare themselves an expert and fool a lot of people — but it is something I enjoy. The enjoyment may add to my human capital indirectly; if professional opportunities open up it will have added to my human capital directly.

In my last full-time job, where I worked for a financial company, my job wasn’t technical in nature. However, my experience and skills with information technology, database management, Excel, as well as my capabilities as a good communicator and teacher, opened some opportunities for me in that position that went beyond what others in my position would have been expected to do.

• The programmer who also has experience running his own business is better suited for management opportunities.
• The lawyer who has a passion for the arts could be comfortable working for a variety of companies.
• A mortgage broker who writes professionally can earn income when banks stop offering loans to the public.
• The baseball player who learns about finance can manage investments when an injury destroys his career.

In high school, extra-curricular activities are generally assets on college applications; in college, experience in your field lead to well-rounded résumés. Being able to include a few sentences or bullet points on these résumés to inform readers of worthwhile but unrelated or tangentially related endeavors could give you an unexpected advantage over other applicants. Having some skills beyond your job description could increase the probability of receiving a promotion or a transfer. If your industry disappears, having alternative skills will make a transition easier.

Looking beyond your field is about more than “having something to fall back on;” it’s increasing your worth to others by having a varied set of skills and interests that make you compelling as an individual.

How have you spent time to focus on skills or activities other than what your job calls for or what your main education track provided?

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Education and experience are necessities for increasing your human capital, with human capital as an approach to looking at your potential overall worth, a grand analysis of which your financial net worth is only a part. With education and experience, you have the ability to become a versatile subject matter expert. As a recognized expert, you would add another layer to your measurement of human capital.

There are two kinds of experts. The first kind of expert you can identify easily because individuals who fall into this category typical market or advertise themselves as experts. Self-declared experts tend to be people who are more interested in selling something than any other professional goal. Selling something, however, is key to financial independence, so we can’t put off that particular skill.

True experts, however, are recognized within their fields, and that recognition sometimes requires a little marketing in a crowded field. But you can’t just say you’re an expert without something to support the claim, as when your expertise is called upon, you will be required to live up to your name. If you choose to “fake it before you make it,” you should hope that your claim goes unquestioned until your education and experience catches up with your marketing.

Malcolm Gladwell, author of Outliers: The Story of Success, came to the conclusion that the key to success in any field is the “10,000 hour rule.” You need to practice any activity, whether that be writing, performing a musical instrument, or policing the streets a minimum of 10,000 hours in order to excel. That’s the baseline. After 10,000 hours of education and experience, you will likely see success and perhaps recognition within your field.

Being an expert requires more: admiration within your field. Other successful individuals should be looking to you as an example. Expertise comes in a variety of different levels. You may consider any of the following an expert, using physics as an example because I’m currently reading a biography of Albert Einstein.

• Everyday expert: Your college physics professor, who holds a PhD and has published research in a peer-reviewed journal.
• Respected expert: Your graduate-level physics professor, who has published innovative research and several books about physics or a specific topic within physics.
• Renowned expert: An adjunct physics professor at a major university, who is called upon by companies and government organizations for advisement.
• Revolutionary expert: A physicist who changes the way we understand the world, such as Albert Einstein.

While the above examples are centered around academia, there are equivalents in the private sector as well.

Specialism vs. generalism

There are two approaches to becoming an expert. The first is to focus your expertise on a fine point and drill down deep into a slim area and the other is to widen your angle to add to your versatility across many aspects of the same field. The specialism vs. generalism is a lively debate, and each approach has its benefits. While I favor the generalism approach and the concept of a Renaissance man (or woman), either path can gain human capital.

With the specialist approach, the increase in human capital comes from the notoriety you will gain from people in your field; as long as your particular focus continues to be relevant to the world and to your industry, your recognition as an expert will keep your talents in demand.

I often use Ron Howard as an example of the generalist approach. From his time as Richie Cunningham on the sitcom Happy Days, he worked hard to expand his skills beyond acting, seeking a mentor in the form of Garry Marshall and experience behind the camera. Ron isn’t remembered today for being one of the world’s greatest sitcom actors, but for being a highly-respected producer and director within the industry. Ron’s talents will always be in demand.

Both categories are experts, and both benefit from an increase human capital. I tend to think that the boost is greater for a successful generalist, but it may be more difficult to gain the advantage as expert generalists are not as easily recognized as expert specialists.

Teach others

Seeking out a mentor who success you respect is a great way to acquire valuable insight, but little is more effective than becoming a mentor. As a mentor, you are required to thoughtfully consider the choices that you’ve made to accomplish your success thus far. The process of teaching and leading others often elucidates your own philosophies and paths, connecting the dots from your adventurous onset to the present day. If you’re asked to give advice, you might, on the spot, come up with a tactic that would help yourself.

This has happened to me many times. I talk to many financial bloggers, for example — split relatively evenly between those who I’d like to learn from and those who intend to learn from me (although I believe I have much to learn from everyone). Almost every time, I gain some insight that proves to be invaluable or potentially helpful whether from myself when discussing my thoughts on a topic or from the other party.

Perhaps this also comes from my background in education. As a teacher, you are on the spot, forced prepare for your lessons by knowing the issues inside and out. This preparation is necessary because many of the most involved students ask questions and offer challenges.

Getting the word out about your expertise

It doesn’t help if you’re an expert who nobody knows about. It does help, but being known as an expert — if you are in fact an expert, not a charlatan — is better than being an expert locked in your basement without any publicity. I am not a fan of the approach that calls for calling oneself an expert. If everyone who called him or herself an “expert” truly was exceptional, there would be no value in being an expert.

Here are some tips for sharing your expertise with the public.

• You should have your own website. This is a minimum. The website should be personal in nature, should preferably include updated content like a blog, and should include evidence of your expertise without explicitly calling yourself an expert.
• You should be published. Writing a book is usually not a good money-making venture in the short term. Even best-selling authors calculate they earned roughly minimum wage for their time writing and promoting. On the other hand, being a published author increases the value of your “brand,” solidifying your place as an expert.
• If publishers aren’t interested, self-publish. Working with a publisher lends credibility to yourself, but not everyone can reach that level due to the subject matter being too risky for a major publisher to invest in and market. Anyone can publish a book on his or her own, so this in itself doesn’t add to credibility. If you’re able to market it well, a self-published book may attract some attention, but it’s only a good choice for those who can’t find a publisher.
• Use radio and television. Target media that have audiences similar to your potential audience, and find ways to get noticed by the producers. Agents and public relations firms help with this, though some charge you by appearance.

What are your suggestions for becoming an expert? If you are an expert, how did you get to that point?

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Increasing your human capital is an excellent way to put yourself in a position where you’re better prepared for life’s surprises, particularly when it comes to money. I’ve written about human capital in the past, but I’m taking a deeper look into ten ways you can boost this important aspect of self-worth — beyond the concrete net worth that garners much more attention.

Although I’ve been in a wide variety of leadership roles since I was a teenager, I’m not always at ease in those roles. I prefer not to step on other people’s toes and to let those assigned leadership roles to enjoy those positions without my interference. This isn’t an approach that I recommend. Organizations don’t pick leaders, the best leaders make themselves known outside of any selection process.

More experience in the workplace

In the workplace, I understand the position that one might only want to do what is in their official job description; after all, if more responsibilities are requested, those responsibilities should demand compensation. Going above and beyond the call of duty is an important piece of getting more experience — the right kind of experience that will increase your human capital. In my last organization, many of the rank-and-file workers were interested in nothing other than putting in their time at their desk, and clocking in and out at the expected time every day. Whenever an initiative arose that required work beyond their typical scope, whether in the nature of tasks or requiring a different schedule, there was friction between management and employees.

Those least willing to put in extra effort are the first to encounter difficulty justifying their job or their salary when the company decides to cut back on salary-related expenses. Those who have shown initiative though involvement with the industry outside the company, the company at large, and the business unit, beyond the scope of their job description, are the employees who are given the first opportunities to share in the company’s successes.

You job should not be the only thing that defines you. It bothers me that in social settings, one of the first questions a stranger might ask when meeting is, “What do you do?” When a stranger asks this question, the assumption is that they want to understand what your job is, as if this were the most important thing about you after your name.

While you’re learning

In college, my classmates who took the extra initiative outside of class to gain experience in their fields had a much easier time finding jobs after graduation. They made connections in the industry, and in some communities, already had those making hiring decisions familiar with their names. As a hobbyist photographer considering the possibility of creating an alternative stream of income for myself and my future, I’ve been spending some time doing some pro-bono work for friends as I learn the ropes of the business.

There’s no need to wait until the learning process is over to start gaining experience in a field, even if this is a second or third activity outside of your primary job, and even if this is a field for which you don’t plan to end your learning process with a degree. I subscribe to the belief that a degree does not signal the end of education. Learning is a life-long process, and more education increases your human capital, as well. You can boost your human capital further by allowing yourself to gain experience at the same time you’re learning about the activity or skill.

Build bridges

Looking beyond your job, searching for ways to gain more experience can help increase your value from an employer’s perspective or a client’s perspective. The people I’ve known whom I’ve found the most interesting have found a way to bridge two different areas. For example, those in my college’s Department of Music who found a way to combine their study of music with something else, such as technology, business, or culture, seemed better prepared to stand out in the community. Standing out among a crowd is a big indication of a higher level of human capital.

The ability to be known within the community from bridging doesn’t come from just being interested in intersecting fields of study, it comes from bringing two communities together through action and direct involvement.

Getting more experience often requires stepping outside of your comfort zone. This is not easy for a lot of people, particularly those who draw strength from internal thoughts and feelings rather than external stimuli. (Jungian psychologists often call these people Introverts.) Some who are pressured to seek experience before they believe are ready are often concerned with the world discovering they are “frauds.”

There is little risk, though, so given the potential benefit of increasing your human capital, it makes sense to gain as much experience as possible.

• Go the extra mile at your job or for your client, not only to gain more experience but to show that you are committed to being the best you can be.
• Be a leader in your field by taking leadership roles before they are assigned to you.
• Acquire experience in your field before you’d consider yourself “ready” by professional standards.
• Find connections between your interests and build experience bridging the two.
• Make your name known in your field by getting involved in public.

How do you suggest gaining more experience in your field?

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A new analysis of household income reveals some statistics that might be counter-intuitive. The study, authored by former Census Bureau economists Gordon W. Green Jr. and John F. Coder and published by Sentier Research, shows that median income for Americans has decreased more sharply during the economic recovery than during the recession.

The survey that presented these results focuses on monthly income data, which the study’s authors believe are more accurate than the popular annual data. The monthly data is more recent, helping to contribute to more potentially accurate results. Also, the annual data is subject to a “telescoping” effect, wherein respondents are more likely unable to correctly identify the timing of financial changes.

When the recession began in December 2007, the median salary was $55,309. This figure was down to $49,909 by June 2011, the most recent period with monthly data available.

It’s always interesting to look at data reflecting the economy as a whole, but most of the time, the only data points that matter are the specific conditions that affect your household. While the economy is slowing down, if a family has been able to increase income through negotiation, a strategic carer move, excellent performance, or picking up extra work on the side, the overall economy’s failure doesn’t matter.

It’s probably because I’m paying more attention now, but it seems like the economy is a significantly bigger piece of the news cycle than it ever has been. The economy has been the primary issue for politicians as well, replacing war and social issues. As someone who writes about personal finances, I can’t complain about this trend, but I often need to remind myself that macroeconomic issues aren’t that connected to people’s day-to-day experiences. It does trickle down. For example, the economy suffers and the financial industry suffers with it. With a sluggish industry, financial companies are less likely to hire or offer competitive salaries and benefits, protecting profits as much as possible for shareholders. Financial firms increase fees, fire customers, and make life difficult for employees.

At the individual level, these changes might not matter. I can move my money to an account that doesn’t charge fees. I can find a new job or find ways to supplement my income.

You can either be a victim of the economy or you can take control of your finances and increase your human capital so you can thrive regardless of the state of the economy.

Reuters, New York Times

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For anyone interested in starting a business, particularly in creative arts, is building up a reputation in the field. I mentioned that my goals for this year include doing two photography shoots each month. Over the past few years, my interest in photography has grown from a hobby to a serious interest to a potential income-generating endeavor, and over the last few years I’ve taken a number of classes to learn from professional artists.

I haven’t had much time to dedicate to photography due to my other responsibilities, but if there comes a time when I have more free time, I will most likely be pursuing professional photography with greater force.

There was a time when there was a delineation between amateur and professional photographers; from a technical standpoint, amateurs used inexpensive 35mm rangefinder cameras and occasionally SLRs, while professionals used high-level SLRs, medium format cameras, and large format cameras (although some did use rangefinders, particularly artists who focused on street photography). Professionals had training from other professionals, while amateurs concentrated on family snapshots.

The advancement of technology introduced more sophisticated cameras and lenses for amateurs, and a new category of photographer emerged: the “prosumer.” The prosumer exists somewhere between professional and general consumer. The quality of image, from a technical standpoint and not necessarily artistic, has given these consumers the confidence that their images are as good as professional work. Also, except to the most discerning clients, it has resulted in the impression that all it takes is a good camera for anyone to become a professional photographer.

With many amateurs acquiring quality equipment and deciding to start business, many are looking to build their portfolios and get practice shooting for clients. A business looking for event photography or a family looking for portraits need only to ask around within their network of connections, and most likely, he or she will find a budding photographer willing to accept the task for free.

As a result, clients expect they can find professional photographers willing to work for free at any time, which devalues the entire photography industry. Some pointed this Craigslist ad to me, a reaction from a photographer who may have been starting out but who’s frustrated that he or she is expected to work for free to build the portfolio.

This doesn’t apply to just photography, but it’s a great example because technology has put high-quality equipment in reach to more people. Should new business owners offering creative services be willing to work for free? Does offering service for free devalue their businesses? If they do offer services for free, how do they transition to earning revenue?

The original version of this article, Offering Your Services for Free, is copyrighted by Consumerism Commentary.

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My experience with the first Financial Blogger Conference

This past weekend has been a whirlwind. On Friday, for the first time I took advantage of using accrued frequent flyer miles to upgrade to first class on Continental. I will write more on that experience later. For now, I want to concentrate on what happened after I arrived in Schaumburg, Illinois, a suburb of Chicago, for the first-ever Financial Blogger Conference.

I’ve never been a big fan of industry conferences. I’ve been to several in a variety of roles, but most often the role is a distant cousin to press: blogger. Bloggers at conferences, even in industries where blogger participation is reputable, there’s a tinge of being a lower-class citizen when compared to members of mainstream media. In that role, I have no editorial assignments, and am just there to stay abreast of the latest financial trends and look for material for the blog and Podcast. This conference, however, focused on information that would be valuable for bloggers specifically — in fact, all bloggers, not just financial bloggers. J.D. Roth from Get Rich Slowly started the conference on the perfect note by discussing why we write, looking past the business and monetary aspects of writing. A panel of experts assembled to discuss building relationships with mainstream media. Other sessions focused on creative ways of earning a living from writing.

The real value of events like these, particularly in an industry where most communication takes place online rather than in person or even on the phone, is getting to meet like-minded individuals and associate faces with names. For me, the highlights have been talking to and sharing ideas with people in the industry I admire, like J.D. Roth (whom I have previously met in person), Farnoosh Torabi (one of the best personal finance writers of my generation), and Tess Vigeland (one of my all-time favorite financial radio voices). The social networking aspect of a conference is often just as important as the informational aspect, and I spent a lot of time talking to other bloggers, meeting many for the first time.

I can’t possibly name the hundreds of people I talked to, but I was excited to meet FMF from Free Money Finance and the anonymous author of Mighty Bargain Hunter, two blogs that Consumerism Commentary has partnered with since the earlier days of the website. Prior to the official start of the conference, the charity event organized by J. Money and Nate St. Pierre Love Drop allowed a large contingent of bloggers to socialize while doing good for Phil’s Friends, an organization helping families of individuals affected by cancer.

The community of financial bloggers is very diverse in topic, personality, age, and just about every other dimension. Some of my favorite conversations were with Mike Piper of Oblivious Investor, Paula Pant of Afford Anything, Paul Puckett (who authored Investiphobia and appeared on an episode of the podcast), and Donna Freedman of MSN and Surviving and Thriving, Kylie Ofiu who came all the way from Australia, and all the folks from Wise Bread.

It as also a great opportunity to learn more about commercial industry products, having had great discussions with Soam Lall from Savings.com and Irene Shubladze of Credit Sesame. The conference also allowed me to discuss a little business with representatives from companies that allow Consumerism Commentary to support itself.

I was luck enough to be invited to a number of interviews, including one for Marketplace Money, the American Public Media radio show hosted by Tess Vigeland. The show should air next weekend. Even if none of my spoken thoughts and comments make the cut, and I almost hope they don’t so I would avoid any embarrassment, it should be an interesting piece about the business and the trust of blogging about personal finance.

I’m happy to say that I was able to recover from the lack of sleep over the weekend. Ramit Sethi from I Will Teach You To Be Rich was the social king, arranging meetings between like-minded individuals and arranging a floor-shaking, eardrum-busting dance party at a local Schaumburg club. After the weekend, I have enormous respect for Philip from PT Money who organized this event from scratch (and from Texas). The organization, flow, and attitude among attendees and exhibitors was more professional than any other conference I’ve attended — and this was just the first year. You’d expect there to be kinks and problems, but if there were any, they were not apparent to me or any of the other participants I’ve spoken with.

What other attendees and presenters have to say about the conference

I don’t normally write about blogging or focus on the blogosphere on Consumerism Commentary, but my participation in this conference warrants an exception. If you liked my thoughts on the conference and are wondering what other people have to say, here are a few articles from other bloggers about the conference for you to read.

• A Gathering of Financial Minds – FinCon11 a Smashing Success! from Cash Money Life
• A Meeting of Minds: Financial Blogger Conference 2011 from Get Rich Slowly
• Moving Beyond Blogging at The Financial Bloggers’ Conference from The Centsible Life
• Financial Blogger Conference 2011: Meeting Up With The Personal Finance Blogosphere from Bible Money Matters
• How Can One Personal Finance Blogger Make So Many Bad Money Decisions? by Miranda Marquit
• Share Your Favorite FinCon Moments and Win $100! by Will Chen from Wise Bread
• The Financial Bloggers Conference Saved This Blog from The Jenny Pincher
• Financial Blogger Conference 2011 – Meeting the PF Blogger World and More from Free From Broke
• Scenes from the Financial Blogger Conference. (Now with more Klingons!) by Donna Freedman

What’s next?

From an emotional perspective, spending time with other creative people has motivated my own creative juices. I have a jolt of motivational energy today. I hope I can make it last long, but I’ve come away from the weekend with a lot of drive to push my business to the next level.

One key, of course, to being successful at networking at a conference like this is maintaining communication as the event fades from short-term memory. This is one of my largest hurdles, and one of the reasons Consumerism Commentary isn’t as successful as it could be. I generally keep to myself, and prefer to work in a solitary environment. I would love to maintain more relationships but I find often myself distracted, particularly when I understand that my primary focus is writing. This is an area I need to improve. I’ve already sent out a few follow-up emails, particularly to people who seemed interested in appearing on the Consumerism Commentary Podcast.

How do you organize and maintain relationships with your colleagues?

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There have been two major financial crossroads in my life until this point. Although it took a while to get to each one, by the time the dust settled, I knew I had made the right choice. In both instances, the decisions surround leaving my job, whether by my pure choice without external pressure or a “mutual agreement.”

Ten years ago, I knew my days at the non-profit organization were coming to an end. I was already in a tough financial situation and I had recently moved to be closer to the organization’s headquarters, which seemed like a bad move since the organization’s CEO was constantly talking about relocating, to save money and time. Three months later, I left the organization. Around the same time, my girlfriend and I parted ways. I spent my time looking for teaching jobs, and because of some kind of communication breakdown, my landlord found a new tenant for my apartment while I was still living there. If that weren’t enough, my ignored speeding tickets caught up with me and I found myself without a car.

Those few months following my departure from that organization were the lowest points of my life, but thanks to some support from family, I found a way to move forward. It began with the loss of the job, and although leaving that job led to short-term stress, from a financial perspective it motivated me to assume control of my life. Rather than let things happen to me without much engagement in the decision-making process, I became the CFO (and really, the CEO, too) of my own life.

The job I found just a few months after leaving the non-profit organization, in my new situation without a car and unable to take most teaching jobs, was for the company I ended up sticking with until December last year. At that point, I was fully in control of my financial direction. My day job had become a relatively insignificant contributor to my overall financial well-being. While I did enjoy inexpensive health benefits, access to a discounted stock purchase plan, and the camaraderie of spending most of my day with co-workers, this day job was only a barrier to pursuing my fuller potential with my own business, primarily Consumerism Commentary.

By this time last year, my business had consistently overtaken my day job income for three to four years. Some people would have used that benchmark to decide to quit their day job, but I took a more conservative approach. I was familiar with the risks, and wanted some security before I would say goodbye to corporate life. About a year ago, I put the wheels in motion to leave my day job, and I finally pulled the trigger after Thanksgiving.

Again, leaving my job has proven, at least so far, to be a fantastic decision for me. I’ve been able to dedicate more time to operating Consumerism Commentary. Although much of that gained time is not dedicated to writing, and my editorial approach hasn’t changed much in the last year, I can now use my time in such a way I’m not constrained. Trying to balance a day job, my own business, a relationship, and my own health needs like sleep resulted in low effectiveness in every area. By gaining nine hours back in each day, I do not need to spread my attention out as much.

This has resulted in improvement at least from the perspective of the business; the last nine months have been quite positive.

The unemployment rate is still high in this post-recessionary economy, and many people would not take a risky move like quitting a good job right now. Furthermore, many people have financial responsibilities like family, and these responsibilities make quitting a job without a solid back-up plan irresponsible. Put if you plant the seeds by saving enough money to feel secure in the decision over and above an emergency fund, you can reduce some of the risk. Then again, the riskiest moves can have the best payoffs, like my departure from the non-profit organization ten years ago.

Think about your immediate plans if you want to leave your job:

• How will I afford my expenses? Quitting a job by choice is not an emergency, so you shouldn’t rely on an emergency fund. You can create a safety net in addition to your emergency fund, and some people call this extra savings an F.U. fund (as in “fuck you” fund — what you would might to your boss when you leave if you aren’t interested in leaving a good impression).
• Who else will this affect at the job? Quitting your job out of the blue, again, could make things difficult for your organization. In most cases, be the better person and ensure there is a transition or succession plan in place. Offer to be available for questions after your last day in the office.
• Who else will this affect outside of the job? If you are financially interdependent with other adults, this is the kind of decision you should discuss ahead of time. There’s a risk that your plan won’t be fruitful, at least not immediately, and if that loss of income affects your family, they have a right to plan with you. If your job loss means you’ll need to rely on extended family, discuss expectations and limitations so there are no surprises.
• What’s my next move? For the most part, if leaving a job by choice, you should have a plan in place. In fact, you should always have a plan in place for the situation that would arise if you are forced out of a job, laid off, or fired. With a plan, you’ll always be a few moves ahead, like a good chess player.

The above helps, but sometimes people can achieve the best results by just quitting. Some people would be more motivated to succeed on their own when the stakes are higher. This can create a sense of urgency. While not positive for everyone, certain personality types respond well to this type of pressure and use it an advantage.

Conformity, and in this case, conformity with the typical middle class career-based existence, is comfortable. I always knew I didn’t fit well in that mold, and if I wanted to find a way of living that was more satisfying, it would be outside of the corporate box. I may return to the corporate mold in the future, but only if it can be under my terms. I highly recommend leaving an unsatisfying day job in exchange for finding your own way. This could be to follow a passion or it could be to provide the motivation to take control of your situation. Even if it results in some short-term hardship, quitting a job can be financially and emotionally satisfying over the long term.

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The concept of turning your passion into a vocation, making a living doing something you love, easily generates two opposing viewpoints. I wouldn’t say I’ve had a privileged upbringing, but it depends on the perspective. I had the freedom to explore a variety to activities to help nurture my mind, soul and body. As a kid, I explored computer programming, music performance, acting, summer camp, karate, Little League baseball, and even tennis lessons. This alone is enough to make people less fortunate scoff at the futility of my time while growing up. I could have lived in a developing country where kids have no choice but work so their families could survive day-to-day.

In an effort to develop artists, one recurring theme always present in my activities was the idea that life provided endless opportunities. There was no need to be resigned to an unsatisfying job, working for money rather than soul satisfaction. With enough education and practice, everyone would have a chance to find a way to earn money doing something with passion, an activity that was more than just “work.”

To characterize the two perspective, one would say that everyone, at least those with sufficient resources, can find a way to sustain a family while pursuing a passion completely. The other perspective takes the position that following a passion is a luxury and most people would be better off finding a job that pays the bills right away and looking for passion elsewhere, like with hobbies or family.

I wrote about pursuing my passion six years ago. I mentioned that I was stuck in a rut and was still trying to determine what my “dream job” would be. I went on to spend five more years working for a corporation in a job I had little interest. At the time, I didn’t really consider Consumerism Commentary a business. I didn’t consider it my passion, either. I never desired to be a writer or a publisher, but an interesting theme running through the last twenty years of my life has been building communities, particularly online, and that is a bigger passion for me than writing.

With a less personal approach, I suggested starting the decade off right by doing something you love.

I wouldn’t have been able to pursue Consumerism Commentary if I wasn’t already meeting my baser needs. I started this website after I had already started moving in the right financial direction, with a new income at a corporate job ready to help me pay off my debt and save for the future. If I had been struggling to find affordable shelter and scrounging for food, I’d have greater concerns than finding a web server.

When considering the idea of following a passion, particularly if that passion doesn’t naturally coincide with a potentially high-paying career like mathematics or engineering, I find that Abraham Maslow’s Hierarchy of Needs is an appropriate metaphor. Following your passion is related most to the top of the pyramid, self-actualization. All the issues pertaining to the levels below self-actualization must be met before a quest to reach one’s full potential can be moderately successful. Because of these pre-requisites, paving one’s own way to create a successful life that doesn’t rely on typical social structures (like corporations) is rare.

Once physiological needs like food, water, and shelter are met, the next needs pertain to safety: having sufficient finances, job security, and health security. A good portion of the middle class doesn’t really get past this stage of needs. Living paycheck-to-paycheck keeps the lower middle class unfulfilled. The upper middle class may not have money that could be used in an emergency other than the wealth locked in the value of their primary residence, or those who do have emergency funds would not be able to live off savings for a year to pursue a financially risky endeavor. The working class relies on employers and rarely sets out to build their own business, again due to risk.

To get past this second stage, you need to be in a position where worrying about finances is unnecessary. When there is little concern about whether you can afford to fail, you have the opportunity to try different approaches to life-sustaining pursuits of your passion.

In my work with non-profit organizations, I noticed that many people involved with activities were not in a financial situation where they needed to worry about finance. If the organization failed to provide a paycheck one week due to the company’s negative cash flow, they didn’t start a riot. If you’re “independently wealthy” the paycheck from one week to another is not the main concern, and you have the ability to take some risk in order to spend the bulk of your waking life working with your passion. If you’ve retired from your former career and just looking for a good way to spend the last few decades of your life doing something meaningful, and if you’re done raising a family and paying for a house, you have the flexibility to work for little or volunteer without concern about moving up the corporate ladder. If your spouse brings in the money and you’re only working to keep yourself from going insane alone in the house, your options are wide open.

When I was working for the non-profit, I was in a significantly different financial position, and this was a message I had some difficulty getting through to the executives. Then again, why should I receive preferential treatment of any sort when the rest of the employees were happy with the poor financial situation within the company. In the end, I made some sacrifices in my living situation and other expenses to make things work a little better, but I was also sacrificing my future financial stability. My following a passion early on in my career, I was skipping over the more basic needs like a safe living environment and financial security while seeking higher-order fulfillment. It didn’t work out so well for me.

While it’s good to persuade young students to follow their passion — and this is a great topic for motivational speakers for adults as well — it’s more important to look at any particular individual before condoning leaving reason behind to search out a living following a passion. For some, the risk of financial failure could be a good motivational tool for bringing about success while following a passion, but for others, it’s nothing more than false hope and results in a delay in building a solid financial foundation.

Abraham Maslow

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Bank of America can’t catch a break. A whistleblower, Eileen Foster, brought fraud at Countrywide Financial Corp. to the attention of Countrywide’s Employee Relations Department shortly after Bank of America acquired the company. Bank of America then allegedly fired the whistleblower in retaliation, although the bank claims the termination was due to the employee’s management style, not the fact she led an investigation that uncovered fraud.

The U.S. Department of Labor says Bank of America must reinstate the employee and pay her $930,000 for lost income, interest, damages, and attorney fees.

Countrywide specialized in subprime loans, and the employee’s investigation uncovered wire, mail and bank fraud at the company, as a matter in the course of doing business. Countrywide used predatory lending tactics and falsified loan documents.

As a result of the investigation, six branches of Countrywide in Boston closed. After the closings, Countrywide agreed to pay $3.1 million to Massachusetts and $3 billion in loan modifications. According to the Department of Labor, also as a result of the investigation, Bank of America retaliated by firing Foster.

From the Wall Street Journal:

Countrywide then initiated an investigation into allegations of harassment and misconduct by Foster, the report says. The report says Foster wasn’t initially informed of the investigation but several employees were interviewed for it. One employee who was interviewed went to the general counsel and the chief operating officer of Bank of America to express concern Foster was unfairly targeted, the report says.

An employee told the Department of Labor the investigators asked “leading questions and had a profoundly biased view” of Foster.

Foster was fired in September 2008. An executive said she engaged in “inappropriate and unprofessional conduct with your staff and displaying poor judgment as a leader,” according to an email cited in the government’s report.

Bank of America will repeal the Department of Labor’s decision.

Despite protections for whistleblowers, many who believe they witness unethical activities in an organization may not raise the issue to the appropriate authorities. The culture of an organization plays a larger role in decisions to go against co-workers and superiors than documented protections. Even though retaliation is not permitted, the fear is great enough to keep most people silent. Particularly when the unemployment rate is high, employees are willing to stay silent and keep their jobs. The Department of Labor is charged with ensuring that employees are not afraid to speak out when there is evidence of wrongdoing.

In addition to this issue for employees, consumers should also pay attention. While Countrywide Financial (Bank of America Home Loans) is not the same entity that provides savings accounts and credit cards within Bank of America, it is part of the larger organization. Interest rates and customer service tend to be the biggest drivers for the choice of banks, but the attitude of the larger corporation can legitimately play a role in these decisions, as well.

While Bank of America may not be continuing any possible retaliation, they are appealing the decisions. Of course, this is the only possible course of action because in the end, the company must answer to its shareholders who expect the company to avoid any unnecessary expenses if possible. When shareholders’ priorities are different than customers’ priorities, it may be time to consider alternatives, like credit unions and mutual insurance companies.

Wall Street Journal

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There’s some evidence that the first number mentioned in salary negotiations serves as an anchor. As an employee, you can influence the employer’s final salary by asking for a high number up front. That high number, you may know, is out of the employer’s range, but by asking for a somewhat reasonable high number, you’re making an impression that continues to influence the following discussion. If you allow the employer to make the first offer, and it’s low, they may have successfully anchored the number in your mind. As a result, you may accept a salary lower than you would have otherwise.

In a controlled study published in the Journal of Applied Psychology, researchers have reason to believe that offering a ridiculously high salary proposal — even as a joke — is just as effective as an anchor. Although both parties may laugh off a $100,000 starting salary for an administrative assistant, for example, the same anchoring effect is at play during the subsequent negotiation. In the study’s simulations, candidates who started off the negotiation with a ridiculous request received 9% higher offers on average.

Here were the parameters of the study.

• Participants were asked to role play in a simulation. The employer had offered the job of an administrative assistant to the applicant.
• The applicant had a previous salary of $29,000.
• When asked for salary requirements, the control group asked for a reasonable salary while the test group kiddingly asked for $100,000.

There’s another interpretation that it doesn’t appear the researchers have considered: starting what is usually a tense and stressful conversation with levity could put all parties at ease, and that might encourage everyone to work together to find an agreeable compromise. Also missing is a true real-world experiment. Simulations are valuable from a theoretical perspective, but until this technique is tested in a real-world environment, it will be hard to say whether a joke salary request will have a real positive effect on negotiations from the candidate’s point of view.

Would you be willing to start your salary negotiation with a joke?

Journal of Applied Psychology, TIME

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After Bank of America investors have endured a year of suffering, Bank of America employees will start to feel the company’s troubles. Although the bank already announced significant layoffs this year, hot on the heels of a $5 billion boost from Warren Buffett, an overdraft fee lawsuit settlement, and a settlement for a lawsuit pertaining to mortgage-backed securities, the CEO of BofA, Brian Moynihan, announced the company will shed 30,000 jobs between October 2011 and December 2012.

For now, Bank of America is the largest bank in the United States. This move is a reflection of the financial industry, which, in turn, is a reflection of the stock market, with financial companies being a strong component of indexes. The stock market is a partial reflection of the broader economy.

While not currently in a technical recession, this is just another piece of bad news in addition to the economic woes currently affecting us. Some have a more direct effect than others; high unemployment rates hurt the wallet for many families, while the European debt crisis seems to be somewhat removed from Americans’ daily financial experiences. Layoffs at Bank of America will obviously affect families who rely on BofA salaries and benefits, but it is a signal that economic turmoil may be around for longer than we had hoped.

We may be entering a period where companies want to avoid being “too big to fail.” After deregulation and a regulatory culture that permitted financial institutions to grow without restriction, companies wary of the consequences of being so large in an industry that still bears high levels of systemic risk may find it better in the long run to fly low — the “Careful, Icarus” approach to business growth.

So far this year, here’s the timeline for Bank of America job cuts:

• August 19, 2011: Bank of America announces a total of 6,000 job cuts for the year.
• September 12, 2011: Bank of America announces 30,000 job cuts between October 2011 and December 2012.

I expect more announcements will come as the financial industry continues to struggle to find footing in the post-recession economic environment.

CNN Money

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For some people, finding the right career is easy. During formative years, perhaps one skill outshines all others, directing someone to develop that skill over time. Perhaps there is one particular area that develops into a passion, and the only choice is to follow that passion regardless of the income potential. In my formative years, I found myself interested in a wide variety of things, any of which could have developed into careers, some of which could have been very lucrative.

I can no longer recall the order of my earliest jobs. One of the first, while I was in high school, was as a computer programmer for a small consulting firm that developed custom applications for clients. I fumbled my way through the VisualBASIC programming language, which was fairly new at the time, after several years of hobbyist programming in BASIC. My assignments were relatively easy, but they gave me a chance to learn a skill that could prove to be useful — if I were to keep up with programming and turned it into a career. I studied C and C++. I spent hours of my own time writing and rewriting software for my bulletin board system that hundreds of people accessed by dialing with their computers’ modems. If I had wanted to, I could have taken my computer programming knowledge further by studying in college, but I had other plans.

Another early job during my high school years was working at Radio Shack. I didn’t know much about electronics other than computers, and I didn’t know anything about sales. I left the job knowing that I had no interest in working in retail again. Customers were generally unhappy. Although the company’s catchphrase at the time was, “You’ve got questions; we’ve got answers,” a phrase I was required to utter every time I picked up the store’s phone, occasionally people asked questions for which I didn’t have an answer. Compensation was partly commission-based, and the main goal seemed to be to push the TSP (Tandy Service Plan), which even as a teenager I could see that was almost always a bad deal for the customer. I didn’t want to push extended warranties, and I didn’t want to bother every customer by asking them for their phone number. Eventually, whatever break from school I was on that allowed me to spend time at this job was over, and I left retail never to return.

In college during the year, I occasionally allowed myself a job, but my schedule was usually overloaded with courses that prevented me from taking too much time to do anything other than academic. Additionally, I preferred to take leadership positions in several campus organizations rather than use that potentially free time to earn money. Of course, it helped that loans, scholarships, and my patient parents helped me afford my education. I also had a few office jobs during breaks to help pay, but during the semesters, my attentions were elsewhere. I spent one break working for the university’s music department library, an easy job hat gave me some quiet time to myself as the library was rarely visited.

Also, at the time I was in college, the World Wide Web was new. I developed a few departmental websites, including taking photographs of the staff, scanning various photographs in one of the university’s computer labs, and programming in HTML. I was paid for this work from the departments’ budgets. I also consulted for professors who wanted to develop their own “home pages,” teaching them how to use Netscape to design their own websites without having to teach them much, if any, HTML.

All this time, I was studying music education with the intent to teach. Despite my heavy involvement with computers, my desire had always been to teach music, preferably at the high school level. Somewhere along the way, I changed my mind, but I was the last to know.

In addition to the above, I spent breaks from school in cubicle environments. I usually worked with a temp agency, and impressed with my skills, they lined me up with jobs in corporate environments. With my computer skills, I tended to qualify for some of the more advanced entry-level jobs, sometimes working with computer databases or designing presentations.

After college I worked as a long-term substitute in a middle school while looking for a full-time teaching job that I liked. The middle school teaching experience was one of the worst experiences of my life. My next stop was a non-profit arts organization, managing projects. I had previously worked for the organization as an intern, a requirement of my music management minor. It was a nice organization to work for, except that the organization was practically bankrupt and I was losing money just by working there.

Part of the year, the job required an intense work schedule, which was fine when I was younger. But more and more, executives used cult-like techniques for rationalization of the work. Towards the end of my career there, they invited me to attend the “bring-a-guest” portion of a cult-like re-education seminar, complete with obvious plants talking about how their lives were changed after going through the program. The executives strongly encouraged to sign up for the full program. I wasn’t buying it.

My varied interests led me all over the map in terms of jobs, and made it somewhat difficult for me to focus on one particular career. I suppose one positive thing I’ve taken away from my experiences is that I can do things my way and succeed rather than following a path that’s laid out for me by tradition or common practice. After my first horrible experience teaching, I didn’t want to accept another job unless it was exactly what I wanted — and that eventually led me away from teaching. People chided me for claiming I never wanted to work in retail after a mediocre experience as a Radio Shack employee. The truth was that it wasn’t horrible, and I could have gone back to retail if necessary, but I’ve made that decision work for me so far.

If I’ve drawn any conclusions from my experiences, it would be that I’d much prefer to drive my own career, as long as I can find a profitable way to do it, than rely on employers to be concerned about my financial needs.

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In the midst of the recession, more than a few corporate executives made the difficult choice to cut their employees’ salaries. Companies whose profits depended on the health of the economy might have been at risk for bankruptcy if unable to cut costs. Reluctant to lay off employees, many troubled companies convinced the employees that the cuts were the best way to share responsibility for allowing the companies to survive the economic downturn as unscathed as possible. Company loyalty and faith was the new cult, the new nationalism. Stick by your company in difficult times.

And with unemployment levels so high, many employees couldn’t leave, even if they wanted to. A salary cut may be bad, but it’s better than being unemployed.

I’ve heard stories of a non-profit organization where, even in times of overall economic exuberance, the company’s cash flow was in such a sorry state that employees didn’t get paid. There was no cash for the payroll, and no bank would extend credit. The problems came back with the recession, and salary cuts were necessary. The CEO looked towards the example of Howard W. Lutnick, the much maligned CEO of Cantor Fitzgerald.

After the September 11, 2001 disaster, the financial firm Cantor Fitzgerald was left with only a small fraction of its employees. Rather than allowing the company to disappear, Lutnick aggressively worked to rebuild his organization. Part of his plan was to immediately stop salaries for the families of those who perished in the terrorist attacks. Lutnick became one of the most hated men on Wall Street, according to the New York Times.

The difference between Lutnick and the non-profit CEO who wants to cut salaries is that on Wall Street, the salaries were replaced with a promise of a 25% profit distribution to families each year for the following five years. The families didn’t have faith that the company would survive, but in hindsight it was a good bet to take. In total, the families received more than they would have received if they continued to receive salaries. The key here is that Lutnick offered something in replace of the salaries, even if it was a risky bet.

While Lutnick is viewed as a genius by CEOs who want to lower salaries in hard times, these CEOs aren’t offering much in the way of a replacement other than the continuation of employment — and even that is not guaranteed. This is even worse with smaller organizations, particularly non-profits, that have nothing to promise.

Non-profit organizations often count on employees believing in the mission rather than being motivated by money. Salaries are generally lower than they are for equivalent jobs in the private sector, so working in non-profit requires some acceptance that income opportunities are somewhat limited. From my experience in non-profit work, I could see I was in the minority. Many co-workers came from families where money was not a consideration; there was enough of it such that a salary at a non-profit job wasn’t even worth negotiating. Some married a rich spouse, some had family money, and others just lived with their parents. When the bulk of an organization’s employees are not concerned about salaries, the executives are not concerned, either.

If no one in the organization is motivated by financial compensation, it creates a culture where executives can get away with anything. For those in the minority who need to earn money to pay rent, buy food, and transport themselves without use of a company-owned vehicle, the question is whether the company’s mission is worth the possibility of being financially destitute.

This is much different than Cantor Fitzgerald’s Lutnick asking his community to make a financial sacrifice in return for a potential financial reward.

Have you every taken a salary cut for the same job — or for an increase in responsibilities? How did it work out?

Photo: Yutaka Tsutano
New York Times

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Financial giant Bank of America is eliminating 3,500 more employees. With this addition to the 2,500 already lost this year, the score is up to 6,000. The bank is trimming the workforce to sell of businesses, like global credit cards and life insurance portfolios. The company’s profits overall aren’t growing fast enough, particularly due to not enough demand for loans, and the lack of excessive revenues is leading the bank to cut expenses.

Bank of America is selling its Canadian credit card business to TD Bank, and will unload its credit card businesses in the United Kingdom and Ireland, as well. Selling these businesses as well as the life insurance portfolios will help raise capital to deal with a lawsuit. Earlier this year, AIG sued Bank of America for mortgage securities fraud. With the cash gained from the sale of these businesses, Bank of America should be able to afford the judgment, assuming the banks settle. Bank of America is also involved in its own class action lawsuit about overdraft fees.

The latest 3,500 terminations may not be the end of the bad news. The Wall Street Journal reports that the final number of jobs lost this year might be closer to 10,000 rather than today’s total of 6,000. Many employees have already been informed of their personal impact, but others will not be asked to pack their desks until later this year.

Photo: MoneyBlogNewz
CNN, Wall Street Journal, FOX Business

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A new academic study to be presented next week focuses on workplace data gathered over the past twenty years. Questioning the reasons for the patters they found, the researchers from Cornell University and the University of Notre Dame conducted business simulations to get to the roots of the issue. As a result of the data analysis and the simulations, the researchers have discovered that people described as having agreeable personalities earn significantly less than non-agreeable jerks.

Nice women (“most agreeable”) earn 5% less than highly disagreeable women. The difference is even more significant for men. Nice guys earn even 18% less — almost $10,000 less — than highly disagreeable men. This tends to follow what I think most people expect. The study doesn’t show that a negative attitude causes a higher income, so don’t head off to work and begin acting like a jerk. The study shows a correlation.

The same personality aspects that might make someone disagreeable may help someone be a better negotiator. For men, the study does show that people rated more aggressive are more likely to be designated in a management track in their career. In fact, in simulations, men described as “highly agreeable” often were not awarded jobs despite having the same qualifications as men described as “disagreeable.”

If anything, the study is a reminder that if you want to earn more in a corporate setting, you need to speak up for yourself once in a while. Being assertive might lead people to characterize you as highly disagreeable, but if it’s money you’re after, the trade-off could be worthwhile.

Whether you work in a corporate environment or you work for yourself and deal with clients, are you assertive enough to make the most of your opportunity to earn income?

For people who aren’t assertive by nature, being more aggressive can be emotionally draining.

Wall Street Journal

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Most theatrical performers become professional actors because they have a talent or a love for what they do. They have a drive to entertain, and they can’t imagine spending their limited time on this planet doing something other than what they love. By the time they’re adults, unless they have seen outstanding success as a child, they have given up any dreams of making a fortune doing what they love, or being a movie superstar. Most just love their jobs, look forward to the hard work, and aspire to meet their next dramatic challenge.

Most successful actors aren’t rich, but the actors who are rich tend to be very wealthy. Have a few Academy Award nominations, a win or two, and you can command salaries a bit higher than union scale.

Forbes analyzed box office success and the contracts of the major movie actors from a recent rolling year (May 2010 through May 2011) and determined which five movie actors likely earned the most. The numbers are a bit staggering. They may not be Warren Buffett’s net worth numbers, but these figures are still sums the vast any typical American will never see in his lifetime.

• Leonardo DiCaprio, star of Shutter Island, Inception, and Growing Pains, probably walked away with $77 million.
• Johnny Depp, star of the latest Pirates of the Caribbean as well as 21 Jump Street, added $50 million to his balance sheet.
• Adam Sandler, who starred in Grown Ups and Saturday Night Live, somehow pocketed $40 million.
• Will Smith, who will be appearing soon in Men in Black III but is better known to me as The Fresh Prince of Bel-Air, represents Philadelphia with $36 million.
• Tom Hanks, who flopped in Larry Crown but is everyone’s bosom buddy, is splashing around in a big (pause) money pit full of 35 million dollar bills.

The top five movie actors earned $238 million in total. It’s no wonder the movie industry is moving away from big names towards ensemble casts and relatively unknown actors. Most films can’t earn enough revenue to justify the large guaranteed payouts that the top movie stars require. To be fair, actors have quite a bit of expenses to pay. Agents and managers take their cuts, tax bills are high, and someone needs to pay to maintain those California mansions. Regardless, after taxes and expenses, there’s a lot of money that could be put to good use rather than just sitting in a bank account or invested in a stock market index fund.

Successful movie stars often put their money, their mouths, and even their hands behind issues that are important to them. Being a star commands the public ear, and with that responsibility, many — not only actors — feel they have an obligation to endorse causes they find important and those they believe are important to the world.

Searching some listings for background actors or extras in New York City, I see there’s a going rate of about $300 a day (for eight hours). As a full-time job, this is not a bad living, though it’s probably not enough to live comfortably in this city. Most actors won’t find this work full-time, however. It’s a long road from being an extra to becoming a top movie star taking home an eight-digit income.

Photo: ctrl z a.k.a rahma
Forbes

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As we may be currently living in a buyer’s market in real estate, it’s also a buyer’s market in employment. With employers cutting back due to the economy over the past few years, companies are surviving with fewer employees. For any open positions, employers have the luxury of being very picky about who they hire. Any employer is within its right to select the best candidate for the job, and as a result, people who have been out of work for some time are finding it hard to get a job. Because employers see a candidate’s unemployment as a sign of risk, many employers aren’t even considering candidates who have a period of unemployment on their résumé for interviews.

Overall, this puts the unemployed class in a tough position, because their period of unemployment will just grow, making it even less likely they’ll qualify for a job in their field. Even going back to school or switching careers, two typical suggestions for dealing with extended unemployment in the past, may not be able to help workers today as companies have a wide array of potential employees who haven’t had any type of break or switch.

In New Jersey, the state passed a law forbidding employers from posting job wanted ads that turn away unemployed workers, moving towards considering this group a protected class, like a minority. The law as it stands likely won’t help. Even if companies do not include the message in their ads, hiring managers and recruiters can still easily turn away the unemployed at a later stage in the process.

The best solution I can suggest for someone who is stuck without the ability to get hired for an extended period of time is no longer to take the extra time to increase skills or education level, but to find away to become an employer rather than rely on an employer. Start a consulting business in your field. There is always the danger of failure, but at least you’ll be continuing to work in your field, networking with people in your industry, and staying abreast of the latest trends. In most cases, you won’t need to lay out a major investment in order to become a consultant, but you will likely need to work hard to compete for clients.

It may not be immediately clear how to turn your job into your own company. You may not be doing exactly the same type of work you were doing before you were laid off, but with some thought, there will always be an answer. I understand that being your own boss requires a certain type of personality and a strong sense of self-motivation, qualities that not everyone possesses. Some people consider “entrepreneur” to be a word with negative connotations. These are obstacles that can be overcome, though.

Your own company, in place of unemployment, will look much better on your résumé, and if your business is successful, you may never need a résumé again. Turn the tables on unemployment. In this market, the employer has all the power. Rather than waiting for the market to change, become an employer — or at least a one-person company including yourself.

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This is part of an on-going series about my life after salary — my thoughts and concerns pertaining to my resignation from my day job to focus full-time (and more) mainly to the website I created in 2003 and has grown into a business with a life of its own. I’ve previously looked at structure and motivation, to which this article can be seen as a sequel, as well as financial considerations like health insurance, retirement savings, and my expenses. Here’s an overview of the entire “Life After Salary” series.

It struck me the other day that I have been gone from my former day job for slightly over five months now. Six months ago I was trying to negotiate a leave of absence, and as it wasn’t working out, I was getting ready to give my boss my two weeks’ notice. That time frame hardly seems correct, but it’s true according to the calendar. I was asked recently if I’ve regretted leaving the job yet. I haven’t regretted it, even for a moment. The only regret I have is not doing it sooner.

There were circumstances that made the jump risky — and it still was risky when I did tender my resignation — and I don’t fault myself for waiting. The longer I were to wait, the less perfect the timing would continue to be; as it was in December 2010, I was still young, not married, and the only mouth I had to feed other than my own was my cat’s. That’s the perfect time to take a risk and say goodbye to the guaranteed paycheck.

Don’t get me wrong — I really liked my co-workers, and the company was a good company to work for. Although my bosses throughout my nearly nine years there seemed to like me, I wasn’t heading anywhere with it. It’s a huge corporation, and the corporate world was never for me. I don’t work well with conformity. In addition, my time was better spent working on my own projects than climbing a corporate ladder that didn’t really lead anywhere.

I can’t believe it’s been five months because I’ve perceived the passage of time at a rate that seems too fast. When I embarked on this journey, I assumed my days would feel longer because I’d be working almost completely alone, spending my days and nights in the same location without much variation in scenery. I thought I’d have free time to spend on other projects in addition to increased focus on Consumerism Commentary. I figured I may travel more and work from remote locations when the lack of variation bugged me.

None of this has been true. I’ve found that I’ve spent about the same amount of time writing for Consumerism Commentary as I did while I was still working at my “primary” job, but more of my time has been devoted to behind-the-scenes aspects of running the website, including dealing with technical issues (the growth of the site has forced me to move to a new web hosting solution that should be flexible as the site grows further), answering more emails, communicating more with media and press, faking my way through marketing and public relations, and brainstorming ways to build the community. I’m relieved that while I’ve been doing all of this, I’ve had invaluable help dealing with advertisers. It’s time to bring some more help in; I’m looking for a community manager to assist with many of the tasks I work on now when my time could be better spent writing.

From a business perspective, I haven’t had a chance to diversify sources of income as much as I’d like, mostly because of the way my time has been spent over the past few months. While I expected to have more “free” time to fulfill other creative outlets, I’ve fallen far short of participating in two photography shoots each month as I hoped for in my goals for 2011. My exercise routine, also a goal for the year, broke down after one month when the weather was bad, and I’ve yet to return to the habit.

I had hoped by now I would have fallen into more of a routine that involves everything I need to do each day, but it hasn’t worked out as perfectly as I would like. There are some constants. I wake up and I check my email. I see if there are any issues I have to deal with from the overnight hours. I write an article or two. I research the news for more topics to cover. I might have some breakfast in there in the form of a cereal or granola bar, or I might not. I respond to emails to line up podcast guests, answer inquiries from the media, collaborate with other bloggers, answer readers’ questions. I ensure the Consumerism Commentary Facebook and Twitter accounts are up-to-date. Somewhere in there, I make myself lunch. I write more, usually something for the future, and do more research and administrative tasks. Somewhere in there, there’s dinner.

At night, usually stretching into the later hours, I catch up on things that I’ve missed and often write an article for the following day, like this one. This is my routine, but it isn’t as organized as it sounds. Emails go unanswered because I can’t keep up with the volume. Posts don’t get completed because halfway through I decide I don’t like the idea. Something occurs that requires immediate attention, pulling me away from whatever I’m working on. While the plan sounds good, it doesn’t usually work out smoothly in real life.

I’m not an organized person, which makes the idea of running my own business that much more difficult. I used to try to improve my organizational skills, but at some point, after not making much headway, I decided I should focus on my strengths and accept certain weaknesses that were not going to be fixed anytime soon. While some people thrive in a self-motivated environment, it is something I struggle with, though I prefer it immensely to working for someone else.

The original version of this article, Life After Salary: Structure and Motivation, Five Months Later, is copyrighted by Consumerism Commentary.

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This is a guest article by Michael, chief editor of DoughRoller.net. DoughRoller.net helps consumers figure out the best Netflix plans for their home movie experiences. There is a lot of bad information online about working from home, with scammy and spammy websites offering ideas about quick ways to make money without doing much work — and all require an up-front purchase of some sort. As someone who went from working full-time two jobs to working full-time for myself on a very legitimate endeavor, this article is particularly appropriate.

Working from home comes with a long list of benefits and drawbacks. One benefit is that you make your own schedule, so working from home can give you a great degree of flexibility. On the other hand, that flexibility can mean that friends and family will ask you for favors all of the time. Thinking that you don’t have an office to go to, they’ll assume you’re around to pick up their dry cleaning. And, if you’re not good at time management, you might find that your productivity slips.

Regardless of the pros and cons, working from home provides a flexible, part-time way to augment your current income. If you’ve been wondering whether working from home is right for you, we’ll shoot you five legitimate ways to make your new, at-home career work.

Running an online store. Have you ever thought about selling goods on eBay, Half.com, or other online sales sites? This just might be the job for you. Many owners of online stores keep inventory in their home or basement. When a sale comes in, they pack and ship the purchase to the customer. Other companies simply drop ship stock. (“Drop ship” is an industry term for when a retailer places an order with a manufacturer or distributor and has the manufacturer or distributor ship the product straight to the consumer.) You may have read in the news recently that a ten-year-old Michigan girl managed to turn one such website into a half million dollar company. So if you find the right product, there’s no telling how successful you’ll be.

Turn your hobby into a sale-producing venture. If you’re a hobbyist of any sort, you might be able to turn your craft of passion into a paying business. This could be anything from building furniture to knitting or building birdhouses. If you’ve ever gotten sincere compliments from someone on your work — or, better yet, if someone has asked where you bought something you made yourself — you may be on the right track. You’d be surprised what sort of market you can find with local word of mouth and the internet on your side.

Freelance your writing skills. Should you have that right background and skills, you may be able to find great freelance writing work. While a lot of freelance work centers on local stories or copy writing, you can also find work writing newsletters, fliers, or other promotional literature for local organizations, including websites. Check local job listings, ask around and don’t be afraid to cold call. Although most organizations may not be looking for help, they may know others who are. Making money as freelance writer won’t bring in millions, but it can help stabilize a budget.

Telecommuting call center worker. Believe it or not, many call center workers don’t work in business settings. With the help of the internet and call routing services, some companies pay call-center workers to work customer service jobs at home. If you think this is the sort of job you might be interested in, check out Live Ops, Accolade Support, Alpine Success, Arise, and Extended Presence. Specifics vary across the industry on everything from pay to hour requirements and flexibility. Investigate what opportunities different companies have available, and hopefully you’ll find something advantageous to your wallet and schedule. Some companies also offer similar work from home opportunities involving cold-call sales positions, so poke around and see what you find.

Become a blogger. This last suggestion can be a bit of a lift, but consider turning your passion into a blog. The financial rewards of blogging can be anything from a few bucks a week, to a few hundred thousand a year. To make money, a blog must attract enough readers to generate advertising revenue. That can take a long time, if it happens at all. Blogging can also be your extra-curricular activity of choice, particularly if you consider writing its own reward. Consider whether or not people who read about your topic also make internet purchases, and see if any of the big name sellers in the industry have affiliate programs. If they do, reviewing products honestly and openly might give you a chance to earn kickbacks from retailers. Before jumping into this potential money-maker, educate yourself on writing for the web, search engine optimization, and — of course — your topic of interest.

The sort of work you can do from home is largely dictated by your time constraints and your creativity. If you have a great idea, let nothing stand in your way! Always be wary of anything that sounds too good to be true, and never give sensitive information to anyone before you’re convinced that their business is legitimate.

The original version of this article, 5 Legitimate Work-From-Home Options, is copyrighted by Consumerism Commentary.

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If you love baseball, you might also love statistics. I suppose analyzing players’ performance numbers gives spectators something to do during long at-bats. Very few other sports engage fans by providing scorecards, and learning how to score a game is like learning a language or a code.

I enjoy baseball, as much as a Mets fan can be said to “enjoy” the sport, but I’m not fanatic when it comes to sports statistics. Possibly more appropriate for Consumerism Commentary readers are the baseball statistics that pertain to salary rather than performance. Major League Baseball players, particularly the better ones, are able negotiate what seem like stratospheric salaries, with the assistance of agents. It’s easy to look at multi-million dollar salaries for what seems like an easy job and think that the players don’t deserve it. That’s even more the case when players don’t perform as expected. (Oliver Perez, are you reading this?)

A new website takes a look at the available salary data for Major League Baseball players and presents an analysis. On Thanks, Curt, you can review, based on the latest information publicly available, several different views of the data. The name of the website refers to Curt Flood, the player who in 1969 was on the forefront of free agency in baseball.

You can see the top salaries among all players, but more interestingly, the site calculates the players who are the best values. Each player receives a cost vs. performance score, which is the MLB player average salary divided by the player’s salary, multiplied by the player’s WAR (wins above replacement), a measure of overall performance.

Oliver Perez, mentioned above, is currently fourth on the list of worst value players.

Other statistics included are cheapest home runs and most expensive home runs, a simpler calculation that takes the player’s salary and total HR into account.

If you like baseball, personal finance, and statistics, you should find the data on Thanks, Curt interesting. Permutations of baseball statistics are limitless, and I expect that as the site matures, even more financial information and analysis will be available.

The original version of this article, Baseball Statistics for Player Salaries, is copyrighted by Consumerism Commentary.

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The Health Insurance Reform Bill was signed into law a year ago. It’s already having an effect on the state of the medical profession. Thanks to some incentives, general practitioners or family doctors, typically the best choices when one is selecting a primary care physician, are becoming attractive jobs. It’s easy to see why, for a long time, early doctors choosing their residencies haven’t been attracted to these jobs.

Graduating from medical school, a student is likely to be in a significant amount of debt. With that in mind, consider the options. The student could choose to focus on family medicine and earn $150,000 to $180,000 or choose a specialization and earn twice that amount. The choice from a financial perspective is obvious. While many young people decide to become doctors not because of the salary, the financial reality is hard to ignore.

Choosing a high-paying first job can set the pattern for earning a higher income throughout your life. Many people believe that they will take a high-paying job first, until they pay off debt and become financially comfortable, and then shift gears to a lower-paying job about which they’re passionate, fulfills a deeper need, or provides meaning to their lives. That shift, if it ever happens, will often come later than they expected. Meanwhile, on average, those who choose the lower paying job out of school are often doomed to earn less than they could have throughout their entire lives.

For those who are taking the government’s incentives as the factor that tipped the scales in favor of general practice, and the number of those swayed must be significant considering the increase of family practice residencies this past year, there could be danger. Lawmakers are considering parts of the health insurance reform law.

How should money influence your career choice or initial job choice within a career?

Photo: gwire

The original version of this article, Potential Doctors Attracted to Primary Care Physician Jobs, is copyrighted by Consumerism Commentary.

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About the author: This is a guest article written by Leigh Mutert, CPA. Leigh is the manager of the H&R Block Get it Right Community, a blog that focuses on breaking down complex topics for taxpayers, and the manager of social media, corporate relations for H&R Block. Leigh was a recent guest on the Consumerism Commentary Podcast.

Searching for and starting a new job can cause workers to spend money when they may be short on funds. A bright spot is that some of those expenses may be tax-deductible.

Unemployed and searching for a new job

Taxpayers — particularly the unemployed and underemployed — should file tax returns to claim all tax credits and deductions they are entitled on their tax returns, to ensure they get the largest tax refund they are due.

Remember, all income must be reported to the IRS, regardless of the source. It does not matter if it is from unemployment compensation (all of which is subject to federal income tax this year), tips, a lawn mowing business or working as a nanny.

While looking for a new job, keep good financial records because items used exclusively for the job search are tax-deductible as long as the job is in the same field. Among these expenses are résumé development, professional placement services, and unreimbursed mileage, airfare and hotel expenses for interview travel.

Save 25% on H&R Block At Home Online Premium

Moving for a new job

If relocating for a new job, unreimbursed moving expenses may be eligible deductions that do not have to be itemized. These are the eligibility requirements:

• Any moving expenses incurred within one year from the first day of work
• The new job would have increased the taxpayer’s commute by more than 50 miles, and if the taxpayer was previously unemployed, the new job must be at least 50 miles from the taxpayer’s old home
• Taxpayers must be employed at least 39 weeks during the first 12 months after the move.

Starting a new job

Expenses for unreimbursed items necessary for working, such as computers, mobile phones, training that allows workers to keep their current positions, union dues and required uniforms may be eligible tax deductions. To be eligible, these items must be required by your employer and used exclusively for work purposes. This job deduction calculator on H&R Block’s Tax Calculators page can help you quickly see what expenses are typically claimed based on your occupation.

Eligible job expenses must be claimed as itemized tax deductions and they must total more than 2% of adjusted gross income; only the portion of job deductions and other miscellaneous itemized deductions that exceed 2% of adjusted gross income may be claimed.

Getting help filing taxes correctly

H&R Block has online tax preparation software for filing your taxes yourself that can help you accurately claim your job-hunting expenses automatically. If you have questions about what qualified as a job-hunting expense, or any other tax question, you can always get a free 30-minute consultation with an H&R Block tax pro at an office near you.

The original version of this article, Tax Tips When Looking for Work is Your Job, is copyrighted by Consumerism Commentary.

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Bad bosses come in many flavors, and they’re usually easy to identify. There was the workaholic who worked in the office until 3:00 AM every night, falling asleep as his desk, and expects everyone else to stay, as well. There was the micro-manager who didn’t communicate with his employees. There was the director who delegated responsibility without delegating authority. There was the manager who always had inappropriate comments ready to go.

Joe Goltz, an owner of five small businesses in Chicago, offers ten suggestions for assessing whether a boss is good:

1. Are you a screamer? Some good bosses are “passionate,” but screaming does not automatically make someone a good boss. Leadership through fear may work for a short time, but listening is a much better trait for effective communication.

2. Do you provide a respectful environment? Mutual respect is important for a good working environment. There have been times I felt like I was not respected, and at times, it was difficult for me to respect in return the superiors who didn’t respect me.

3. Do you provide adequate training and tools? I understand, especially in large companies, that any individual’s particular boss may have her hands tied by the corporation. I’ve worked in divisions where there was no money for training and tools. I don’t think that’s an excuse though. Training doesn’t have to come from an expensive seminar.

4. Do you provide positive reinforcement? Some bosses don’t want to give positive reinforcement because it provides their opportunities with proof that they deserve a higher salary or a larger bonus.

5. Do you have pay scales and raise reviews? More often, an employee’s pay is dictated by none other than their negotiating ability. It pays to practice and become an expert at negotiation. Without some kind of pay scale, employees might feel there is more inequity in salaries. That’s possible even with a pay scale if it isn’t specific enough. Raise reviews should be separate from performance reviews, but most bosses combine these feedback meetings.

6. Are you good at motivation? Motivation is tricky because, according to business psychologists, every individual has different motivating factors. This leads to compensation in forms other than money, like the employee recognition program at a former employer that allowed a monthly winner, chosen at random from a list of recognized employees that month, choose a gift from a catalog. This perceived choice might have come recommended by business psychologists, but every individual would have rather received money or a day off. Motivation comes in forms other than rewards, and motivation through communication is a key to being a good leader.

7. Do you offer support during a difficult time? Do be a good boss, you should care about your employees on a personal level. It may be impossible to know every detail about a person’s life, but since people spend almost all their waking life in the office, employees are much more willing to perform their best if they believe someone in the office cares about them.

8. Do you provide opportunity for people who have accepted responsibility, have done an excellent job and have shown the desire to move up? There’s nothing more frustrating than doing great work expected of someone in a position or two higher, and watching all recognition go to the individual who is a better buddy with the boss.

9. Do you offer leadership? This is a bit vague; all of the suggestions above exemplify leadership to an extent. Be a good example of the type of employee you would like others to be.

10. Are you effective? Your effectiveness as a boss is measured by how your employees perform for and with you. It may be hard to measure; some employees will be successful regardless of who is in charge. If you’re the boss in a small company, the company’s performance is partly a result of your effectiveness, but that might not be as true for bosses within larger corporations.

CNN highlights more differences between good bosses and bad bosses. A good boss accepts that he might not be right all the time and expects the job to be difficult, while a bad boss exudes confidence in his performance at all times, expecting the job to be easy and for his decisions to be right at all times. A bad boss gives orders, while a good boss brings order to what the employees do.

Are you a good boss? What makes you good? Have you ever had a bad boss, and what were his or her worst traits?

New York Times, CNN

The original version of this article, How to Be a Good Boss, is copyrighted by Consumerism Commentary.

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It’s clear that if you can work for a company that provides a valuable service to major corporations, you have the ability to earn millions of dollars of income for that company. That’s the only reason I can determine that a Senior Account Executive at SalesForce.com would earn an average annual total compensation of $318,233, according to a new list published by Forbes of the 25 top-paying companies. SalesForce.com tops this list. I had heard of SalesForce.com, but I was never quite sure what they do, and after looking around their website, I’m still not completely sure.

According to the article, SalesForce.com gave their employees who generated the most revenue a benefit called “Breakfast at Tiffany’s,” where the company built a branch of Tiffany’s in Hawaii and flew in millions of dollars of merchandise for a $5,000 shopping spree. This is the most ridiculous thing I’ve ever heard of a company doing. The money must be flowing like water. Who do they think they are, AIG?

If you’re a good person, you might like the second company on the list. Bingham McCutchen is a law firm in Boston where employees are paid for “office citizenship” or “positive thinking and teamwork.” This sounds more like something that might occur on Boston Legal than a real firm. Who wouldn’t want to work at a company with James T. Kirk, Murphy Brown, and the guy from Secretary running the show? At Bingham McCutchen, law associates are paid $219,888 on average.

Goldman Sachs, despite its reputation for lavish pay, is only seventh on the list, where a mix of the most common positions earn only $160,000 on average. The Boston Consulting Group, Forbes’ second-ranked “best company” in the United States, is tenth on the list thanks to consultants at the company who earn an average $154,051.

Does your company rank in this list? Here’s the full breakdown of the rankings.

1. Salesforce.com
2. Bingham McCutchen
3. Alston & Bird
4. Perkins Coie
5. Devon Energy
6. Millennium: The Takeda Oncology Company
7. Goldman Sachs
8. EOG Resources
9. Brocade Communications Systems
10. Boston Consulting Group
11. NetApp
12. Scripps Health
13. Qualcomm
14. Cisco
15. Kimpton Hotels & Restaurants
16. CH2M Hill
17. MITRE
18. Johnson Financial Group
19. Adobe Systems
20. Microsoft
21. Baker Donelson
22. The Everett Clinic
23. Atlantic Health
24. Chesapeake Energy
25. Novo Nordisk

Forbes

The original version of this article, 25 Top-Paying Companies, is copyrighted by Consumerism Commentary.

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When unemployment remains high, companies are making the most of their staff without hiring or promoting. They don’t have to in today’s job market. When they are dissatisfied with the added responsibilities, employees are unable to find new jobs or believe that it’s not worthwhile to spend the effort looking right now. Employers have the advantage today, and to save the company money, will squeeze productivity out as much as possible.

I’ve left many jobs in the past, and I’ve seen an interesting pattern: the company I leave behind often hired two people to replace me, regardless of my position and my former responsibilities. With my latest move in December, my department was unable to hire anyone due to a directive from executive-level management. My responsibilities were doled out among those who already had full workloads. I’ve stayed in contact with a few of my co-workers, and the past month, a period of year-end financial reporting, was more stressful than it could have been had I stayed at the company.

If there’s any consolation for them, it might be that I left before the company gave out bonuses, so my share of the bonus pool has most likely been distributed among those who are shouldering my former responsibilities. The amount of that bonus is most likely so low that it doesn’t provide much of an incentive, however.

Fortune Magazine offers several tips for dealing with added responsibilities without the promotion or pay increase to match.

1. Prioritize your work. Consult with your management to ensure you focus on the most important tasks and projects. You may find that some of the least important elements can be eliminated. When I was working at the company, when I took on more responsibilities, I eliminated unnecessary tasks as much as possible, and functions that once locked an employee’s time for four weeks every quarter were reduced to two weeks or less.

2. Ask for more training. In an employment environment where fewer people are asked to take on more responsibilities, finding the time for training can be difficult. When I left in December, my department was planning to institute a requirement of a certain amount of training hours each year. This is going to lead to training for the sake of meeting the requirement, and possibly some wasted time. Certain types of training can help you justify a promotion in the future, so consider the type of training that will be most beneficial to you.

3. Enhance your resume. Forbes provides an example pertaining to a degree. If your peers all have MBAs and you don’t, consider completing the degree to keep your resume up to date. I don’t know if MBA degrees are as valuable as they once were, but if you intend on staying with th same group of people, you don’t want to be left behind or overlooked because your resume does not have the same features as those you may compete with for positions and raises.

4. Give your boss a deadline. Make it clear that after three or six months with your new responsibilities without additional compensation or consideration for a promotion, you will want to meet with your boss to discuss performance again. From the boss’s point of view, raises and promotions don’t come automatically with added responsibilities, they come after employees show that they can handle their increased workload. Let your boss know that you’re willing to accept it, but you want to review your performance every three months, more often than your official performance review.

5. Make your pitch for a promotion. Some of the people I worked with at my former company were not interested in moving up in the ranks, not interested in promotions. They may have worked in the same department for decades and are satisfied with the small annual pay increases, and they shied away from or even refused more responsibility when they could. One co-worker even took a demotion in order to avoid additional responsibilities. Those who are unsatisfied with their level or pay need to make the case for why they deserve to move up, and success with added responsibilities may not be enough. For example, quantify how much money you’ve brought into the company or how much you’ve saved the company.

Have you experienced more responsibilities at work recently without the corresponding promotion or pay increase? How are you handling the situation?

Fortune Magazine

The original version of this article, More Responsibilities With Less Pay, is copyrighted by Consumerism Commentary.

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In December 2010, I left the day job where I had worked since 2002. My intent was to focus on Consumerism Commentary, the blog I started in 2003, and other related projects, without distraction from a nine-to-five day job. By that time, the revenue generated by my projects significantly exceeded my day job salary — including the value of my corporate benefits — and I had put my other fears to rest. I made the jump from employed individual with a side business to full-time business owner.

I’ve been chronicling my thoughts and experiences with my newfound control over my life and time in the “Life After Salary” series here at Consumerism Commentary. Here are the articles included in the series so far.

Structure and Motivation. “Time management has never been my strength. I like working at my own pace, and the certain working structures, like deadlines, tend to annoy me rather than motivate me. It’s no wonder I’m excited about leaving a job with a typical standardized nine-to-five schedule. I allow myself distractions and breaks and often procrastinate.” Read more.

Individual Health Insurance. “Now that I’ll be leaving my corporate job and leaving behind the benefits a salaried position afforded me, I need to begin looking at alternative options for those benefits. One of the first concerns on my list is health insurance. Inside the company, our annual benefits enrollment period was completed only a few weeks ago, so the cost of insurance is fresh in my mind.” Read more.

Saving for Retirement. “One of the benefits of earning income outside of a day job while not significantly increasing my expenses has been the ability to fully invest in a 401(k) plan. Assuming one can trust the chances of the stock market (and the financial industry) to produce impressive results over the long term, the 401(k) is the vehicle most people will use to provide some stability in retirement. With a 401(k), employees can defer a good portion of their taxes until the future…” Read more.

The Human Connection. “Working in an office on a team with other employees is a social activity. Although there is work to be done and goals to accomplish, and although most of us stare at computer screens all day and spend most of the time in a cubicle or an office, many tasks require communicating with the people around us.” Read more.

COBRA vs. Individual Health Insurance. “Last month, I didn’t know what to expect regarding COBRA coverage. My notice arrived last week, and with the cost in hand, I’m ready to decide whether to continue the same coverage I had from my former employer through COBRA or to seek opening a plan from New Jersey’s list of providers…” Read more.

One Month Without a Paycheck. “I’d love to say that working fully for myself has been perfect, I’m fully acclimated to my new working environment, and I’ve improved my time management skills. Alas, none of that is true…” Read more.

Rolling Over My Pension. “In a country where large employers are offering fewer defined benefit plans, like pensions, and more defined contribution plans, like 401(k)s, it’s surprising I have a pension…” Read more. Added February 10, 2011.

Changes in My Expenses. “Leaving behind a salary and benefits was a tough decision to make, and I wasn’t under the illusion that I’d be able to make up for the lost income solely by saving money. Predicting my future expenses wasn’t difficult. Some expenses would automatically decrease, like travel expenses, while some would likely increase, like heating bills. There was at least one surprise, however.” Read more. Added February 14, 2011.

401(k) Rollover. “It often makes sense to roll over a 401(k) when you leave a job. I’m considering a 401(k) rollover to a discount brokerage to alleviate some of the problems I have with my former employer’s retirement plan. These problems are common among employer plans, even those managed by the same discount brokerages you’d likely consider to receive a rollover.” Read more. Added April 28, 2011.

Structure and Motivation, Five Months Later. “When I embarked on this journey, I assumed my days would feel longer because I’d be working almost completely alone, spending my days and nights in the same location without much variation in scenery. I thought I’d have free time to spend on other projects in addition to increased focus on Consumerism Commentary. I figured I may travel more and work from remote locations when the lack of variation bugged me.” Read more. Added May 27, 2011.

401(k) Rollover Complete. “With one call on June 1 to Vanguard and one conference call with Vanguard to my former employer’s 401(k) department, everything was set into motion.” Read more. Added June 7, 2011.

Selling Company Stock. “Rather than continue waiting for the stock price to rise back to its lifetime maximum, which could take years and is not guaranteed, I put in an order to sell the company stock I purchased between December 2007 and June 2009.” Read more. Added July 1, 2011.

As more articles are added to this series, this page will be updated to include links and excerpts.

The original version of this article, Series: Life After Salary, is copyrighted by Consumerism Commentary.

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About a month ago, I celebrated my imminent departure from my former employer with a lunch with my co-workers. They’ve been spending the past few weeks trying to get through the year-end reporting period, and from what I hear, I should be glad I left when I did. I know, however, that I should have left much earlier.

I’d love to say that working fully for myself has been perfect, I’m fully acclimated to my new working environment, and I’ve improved my time management skills. Alas, none of that is true. I spend some of my time working in my loft, which I’ve rearranged to ensure it functions well enough as an office, and some time in the living room. I haven’t given myself a set working schedule, but I’m keeping mostly to the publication schedule I’ve established over the past few years.

So far, January has been the biggest month Consumerism Commentary has seen, so the combination of the time of year and the work I’ve been putting in could be paying off. At this rate, leaving behind an annual salary and benefits behind will pay off in a few months.

I’m attributing a few personal benefits to the fact that I no longer need to focus on my former day job.

• I no longer get headaches. Perhaps this is because I spend most of my time working at my desk in a comfortable chair that seems to be positioned correctly. This may also be due to getting more and better sleep.
• I am also taking time out of my day several times a week to get exercise. I am working towards losing weight and completing a 5K, and am following a training class offered by RunKeeper. I’ve already lost five pounds.
• Possibly also contributing to the weight loss, I’m eating smaller meals. Rather than eating an over-priced lunch with large portions in a corporate cafeteria, I generally make my own lunch. It’s not necessarily healthy food all the time, but the portions are smaller.

If you have the opportunity to make a living for yourself, don’t wait as long as I did. On Yakezie, I wrote about why I waited so long before quitting while I had been earning enough income to live from my projects without my salaried job for several years, and there are legitimate reasons for being cautious. The type of income I’m generating now may not be viable three decades from now, but with more time to focus, I will be able to adapt to changes.

At thirty-four years old, with no dependents other than a cat, I’m still young enough to take some risks, with no one else relying on me to earn a steady income, but older than many of the most successful bloggers and other industry leaders in this space. I wish I could have done this ten years ago.

If there’s a moral to this story, it’s not to wait before becoming the architect of your own life.

The original version of this article, Life After Salary: One Month Without a Paycheck, is copyrighted by Consumerism Commentary.

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Save for the last few years, the extreme early retirement movement was gaining momentum. If the American Dream was homeownership, saying, “See you!” to your boss with a more colorful word choice was the American Daydream. Who wouldn’t want financial freedom at age thirty, spending the best years of one’s life doing only what they want rather than trading time and effort for a paycheck, through age sixty-five or later?

For most people, the idea of ending the rat race, leaving the safe corporate world behind in favor of financial freedom for five to six decades of one’s life, is going to remain a cubicle daydream. Without extremely diligent saving and a lucrative short career or some luck with business, extreme early retirement is out of the question. There are a few ways to get around this conundrum, though, without the excessive frugality or selling your latest start-up to Google.

I was fortunate to be able to say, “See you!” to my corporate boss recently, and while it may look to some people who don’t know my life here at Consumerism Commentary that I was able to retire, nothing could be farther from the truth. This is just the next level of working, like when you move from strawberries to bananas in Ms. Pac Man. I’m working harder, but so are the ghosts that are chasing me. I’m not as paranoid as that sounds.

Here are some suggestions for making that early retirement happen. So there is a common understanding, I’m taking “retirement” to mean “living off savings without the need to trade time and effort for income.”

1. Marry someone who is willing to work while you sit on your backside. I love this suggestion because out of the many writers who claim they retired early, more than a few have someone in the family still generating income for the household. If they have published a book about retiring early, they haven’t really retired, either. You could write a book while sitting on the beach but it’s still work. It may be enjoyable work, but nonetheless, if that is your situation, you haven’t really retired because you’re working for an income. You may not be doing the high-stress work you once did, but it is not retirement.

We’re in a two-income-family world right now, and I know very few people who would be happy to work for a living while their spouse sits back and spends the money that is coming in. That isn’t to say there aren’t people out there for whom this plan works, but I expect in those cases, the person who is choosing not to work does not have the capability to earn as much as the individual who is working or is satisfied managing the household.

2. Marry someone who is independently wealthy. Retirement is generally seen as the reward of hard work over a long period of time, but if you have the ability to attract a partner who doesn’t need to work for a living to afford a family, it’s a legitimate choice. “The Millionaire Matchmaker” is a popular television show wherein a successful matchmaker works with clients, usually multi-millionaires and multi-millionairesses, to find partners for life. Patti Stanger is the matchmaking star of the show, and the show is based on her service for wealthy bachelors. The company’s fees are quite high, although women can join for free. Single men are looking for love, and they’re willing to pay for help finding it.

Wealthy single women are in a similar position; the desire for a rich partner doesn’t discriminate by sex. With wealth comes the opportunity to choose from among many. If you want to be chosen and therefore have the ability to live without working, find out how to be in the right places at the right times.

3. Find a job doing what you love. In theory, if you spend your time earning money by doing something you love, you’d never want to retire. You would continue working until the day you could no longer physically or mentally carry out your job function. If you reach this point, then you may also be at the point where enjoying your retirement is impossible as well. The solution is to think about what you would like to do when you’re retired and find some way to earn a living doing that. For example, if you like traveling, work for a travel agency or produce series like Michael Palin’s travel documentaries. Perhaps more in line with twenty-first century trends, create an insanely popular and profitable travel blog.

In this case you are still working, but in this cheat, you’re doing what you’d imagine you’d be spending your time with in retirement.

4. Live your retirement now. While the stoic are saving diligently for retirement, putting away every penny they can to max out 401(k)s, IRAs, and any other saving vehicle available, a good portion of us will never make it to retirement. Not everyone lives well into their eighties or nineties. If you have reason to believe you wouldn’t have the opportunity to make much of your retirement, either due to your medical issues, hereditary concerns, or risky lifestyle choices, and if you’re not concerned about the financial independence of those you leave behind, stop wasting your precious time and start living.

Even for those who live to be 100 years old, life is short. If you want to live a life without any regrets, don’t put all of your eggs in a basket that may never come. It’s risky not to save for retirement at all, but you’re also taking the chance that you will live long enough to achieve all that you want to do.

If you’re willing to stretch the truth or take a different approach to living and earning money, you don’t have to wait until your sixties to retire.

Photo: Telstar

The original version of this article, 4 Ways to Retire Early by Cheating, is copyrighted by Consumerism Commentary.

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A big criticism of Wall Street bonuses throughout and after the collapse of the financial industry has been the idea that executives were awarded over-sized bonuses while their companies fell apart. Wall Street fought back against this criticism, usually with the explanation that bonuses were paid in accordance to contracts that were signed before the economic collapse.

A guaranteed bonus seems to defy the concept of itself; it’s really just another form of compensation that an employee can rely on. On the other hand, a true bonus should be tied to some sort of measurement of success, and the tighter the bonus is tied to an individual’s effect on the success of the company, the better. For a sales representative or broker who brings in $5 billion in new business, it’s hard to deny a $1 million bonus would be appropriate (0.02%), and feel free to go higher. Rationalization gets murkier when the broker brings in $5 billion in new business but the company loses a net $50 billion over the previous year.

Goldman Sachs, a company that took bailout money from taxpayers and then proceeded to pay its executives massive bonuses with its cash, recently announced that it will tie some executives’ bonuses to long-term financial performance.

One of the keys to a good system of rewards is to provide an incentive timed closely to the action that merits the reward; otherwise, the cause and effect are muddied. One year in the company which until recently was my employer, a publicly-traded company on the New York Stock Exchange, executives announced a company-wide bonus immediately following our annual financial performance was released to the public.

A year’s results may not be long-term enough, however. Companies were making billions of dollars year after year on credit default swaps and mortgage-backed securities until these derivatives were shown to be of little value and expedited financial collapse. Even with a reward system that looks at the annual “long-term” results for its definition would have allowed those who created short-term profits for these companies to lock in billions in bonuses.

If companies want to tie bonuses to long-term results, they should be waiting ten to twenty years to determine what has truly been good for the company. Of course, no executive wants to wait more than a decade to find out what their compensation will be. As it is, many companies offer these bonuses in deferred compensation, so although executives know what they’ll be receiving, it may be some time before money changes hands.

As the best executives for the most part gravitate towards the most favorable compensation packages, bonuses based on real long-term results would be a hard policy to adopt throughout an industry. There are no good solutions to this problem. I have no problem with companies making massive profits compensating those who helped create those profits, but when those profits are found to be based on shady operations, misleading deals, or outright lies that don’t come to the surface for years, there should be a way for those who profited to be held financially responsible.

The original version of this article, Goldman Sachs Will Tie Bonuses to Long-Term Performance, is copyrighted by Consumerism Commentary.

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The recession has been tough on everyone, particularly when it comes to the employment situation. The unemployment rate is still high, so we know there are many people who would like to be working but have not been able to find something. Many who are working have settled for jobs that pay less and offer less growth than they would like.

The common theme for graduating college seniors for the past few years is that they should be lucky to have a job at all, and the shouldn’t expect high salaries right out of college, much less a position where they can learn anything valuable about their industry other than how to to grunt work.

The recession is technically over, but employment is usually the last piece of the economy to improve. If the business climate improves in the following year, and companies begin to be willing to spend money on growth rather than shoring up balance sheets, the scales may start to tip more in favor of the employee rather than the employer. I know many people who have been keeping their eyes open for better jobs, networking with the right connections, and laying the groundwork.

While some companies, like Facebook, have been competing for the best employees throughout the recession, those who have not attracted talent will have to put some effort into recruitment as the economy continues to improve. We’ll start to see signing bonuses, higher compensation (even for entry-level jobs), and more profit sharing. From the employee’s point of view, the key is to be in demand, and that can only happen with hard work, focus, and something special to help stand out from the crowd.

CNN Money

The original version of this article, Quit Your Job in 2011, is copyrighted by Consumerism Commentary.

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Glassdoor is a good tool for researching a potential employer. The site compiles anonymous reviews, ratings, and salary information from employees and allows individuals to access that information. The more you share about your current or past employer, the more access to information is granted.

In addition to the search and browse functionality, Glassdoor has assembled the latest reviews and ratings by employees, those submitted to the website between December 1, 2009 and December 1, 2010, and announced the 50 best places to work. Topping the list is Facebook, and that’s not a surprise. This company has been leading the charge by offering health compensation packages including ownership in the company which is currently valued ridiculously high, stealing the best employees from other companies in the sector like Microsoft and Google, and fostering a non-corporate atmosphere.

The next two companies on the list are Southwest Airlines and Bain & Company.

I find it interesting that these three companies, out of the thousands listed at Glassdoor, are the only companies to score higher than 4.0 out of 5 on the ratings scale. Add the companies that scored exactly 4.0, and the total is only nine. What this says to me is that although these companies may be the best places to work for, there are still more than enough dissatisfied employees. Possible offsetting this is what may be human nature for dissatisfied people to be more likely to write about their experiences than satisfied people.

Here is the list of the top ten.

1. Facebook
2. Southwest Airlines
3. Bain & Company
4. General Mills
5. Edelman
6. The Boston Consulting Group
7. SAS
8. Slalom Consulting
9. Overstock.com
10. Susquehanna International Group

If you want to work for a company and you don’t mind relocating for your work if you don’t live near one of these employers now, this list is a good place to start.

Glassdoor

The original version of this article, 50 Best Places to Work, is copyrighted by Consumerism Commentary.

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Working in an office on a team with other employees is a social activity. Although there is work to be done and goals to accomplish, and although most of us stare at computer screens all day and spend most of the time in a cubicle or an office, many tasks require communicating with the people around us.

Many people cite their co-workers as the primary reason for staying in their current job. When all else is frustrating and disappointing on the job, you can always count on your officemates for a sounding boards and commiseration.

As I shift from working in a corporate department consisting of offices, cubicles, and people to occupy them to my home with no human company, I’ll need to grow accustomed to not having anyone to chat with during the day other than my cat. He listens and occasionally responds, but I’m not convinced he understands.

I’m a single guy, so I’m used to spending time by myself. I’d prefer to have some social interaction throughout the day, however. I have a few options to consider.

Meet friends for lunch.

I’m not the only self-employed individual making his own hours in my social circle. I have the opportunity to meet my friends for lunch as frequently as we can arrange. This isn’t difficult when we all have the ability to make our own hours to an extent and can take a break in the middle of the day for an hour or two if necessary.

My soon-to-be-former co-workers are interested in getting together for lunch occasionally, as well. They’ll be limited to their typical lunch hour. Although they have some flexibility with scheduling and can take a longer lunch occasionally, I’ll have to respect their time constraints. During busy periods of the year, this plan may not work at all. There were many times we were too busy to leave the office for lunch. Dinner is another option, but my concern is the ability to break up the “work hours” with interaction with people.

Move my work out of my home.

A friend of mine intends to rent office and warehouse space for his audio production and installation company. He offered to set me up with an office in the new space. It would be a perfect arrangement were it not for the fact that the office will be forty minutes from my house. On the other hand, I could travel to and from the location outside of the busy rush hour. Perhaps I will take him up on the offer.

Another idea is to join a co-working space. There are a few such locations in New Jersey, such as Converge. I’m not sure this arrangement is worth the expense, and I’m not convinced that it would provide enough social interaction. It would allow me to have a work space where I’m not distracted, like I could easily be at home or even in my friend’s new office space.

There are cafés and fast food locations (like Panera) that offer free WiFi access to the internet, which many freelancers or aspiring writers use for their daily activities. The benefit here could be meeting new, friendly, like-minded people, but it’s more likely that other individuals would prefer not to be bothered. Still, being around people in public could be a good way to keep myself sane.

Attend more conferences.

I’ve attended blogging-related conferences occasionally, but I generally find the seminars a complete waste of time. The way information is presented often reminds me of those awful motivational speakers a former boss of mine loved. The presentations are full of general information, none of which was particularly unique or insightful, designed primarily to make attendees feel happy or to sell a product without much long-term benefit.

The best aspect about these conferences takes place behind the scenes. There are opportunities to meet people from around the world with similar interests and goals, but networking doesn’t make the conference tickets worth the price. If you are invited to speak, however, you have the opportunity to reach people — and if you offer a presentation that does go beyond making people feel happy or selling a product, you could stand out amongst mediocrity.

Attending conferences doesn’t change the day-to-day likelihood of increased lonesomeness induced by working in a solitary environment, but without set hours or schedules, there is the flexibility to travel more often and meet interesting people.

Do you work out of your home? How do you keep a connection with other humans? Is the idea of interaction throughout the day overrated?

The original version of this article, Life After Salary: The Human Connection, is copyrighted by Consumerism Commentary.

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Time management has never been my strength. I like working at my own pace, and the certain working structures, like deadlines, tend to annoy me rather than motivate me. It’s no wonder I’m excited about leaving a job with a typical standardized nine-to-five schedule. I allow myself distractions and breaks and often procrastinate.

Despite this, I am motivated to succeed, and that’s probably one of the only aspects of my personality that has helped me thus far. Given the above, I am a bit concerned about how I will work once my only boss is me. When J.D. Roth began working on Get Rich Slowly without the distraction and time-suck of his day job, he found that working outside of the home in a separate office was helpful in keeping him focused — I remember reading this at one point but I don’t know whether it is still the case.

A friend of mine, another business owner, plans to begin renting office and warehouse space in the new year. He offered to set up a place for me to work there, and I might have taken him up on the offer if his office were closer.

My biggest concern at the moment is that I am used to writing at night. I usually begin around 10:00 PM and don’t finish until 2:00 AM, and that’s after answering emails and doing other management activities from 5:30 PM to 10:00 PM, with some breaks for dinner and sanity. Once my schedule changes in the middle of next week, I will see for the first time whether I am capable of writing during more convenient hours. I hope I am, because I plan to increase my writing volume for Consumerism Commentary as well as for a number of other websites.

In a perfect world, I would have time every day for eating three healthy meals, exercising, and practicing hobbies — in addition to working — with classes once a week. Of course, all of this will need to be balanced with time spent with my girlfriend, and if I can manage it, more of my other friends. I’m not going to be able to manage a schedule like this without a well-defined structure, even if it is a flexible structure.

One thing I find I have to remind my friends, many of whom are envious of my ability to leave the corporate world behind, is that this is not going to be a vacation. I work hard now, and I’m going to be working even harder soon. The motivation isn’t going to be the problem, but it will be a test for me to see how well I can do on my own.

I’m thirty-four years old, young to some, but old enough that I’ve come to accept some of my weaknesses rather than stressing myself over making improvements to my life that would only have incremental value, if I’m even successful at changing my personality. Time management is one of these weaknesses. It’s a trait that corporations love, so much that they’re willing to pay for training. Skills like these help their assets (employees) produce efficiently (more work for less pay), so I understand the bottom-line implications for encouraging good time management skills.

Another concern is my work environment. As I mentioned above, working outside of my house might be a good idea to save me from distraction, but I don’t like the idea of traveling to an office and back every day. I’d like to reduce my driving for the near future, and there’s nothing in walking distance. I don’t have a proper desk. I’ve been waiting to own a house before upgrading my furniture, so most of my writing is done in my living room, with a notebook computer placed on my coffee table. I shouldn’t even mention that this is in front of a television which, when I’m sitting in the living room, is more on than off.

Working from home every day is going to require some isolation from this distraction, and my health and the long-term stability of my body would benefit from a better sitting position.

These changes to my structure and environment will not be instant next Thursday, the first day I’ll be working solely for myself. Changing my process will be a process unto itself, and I’ll need to set some ground rules to ensure that I’m making the most of my time and producing the best work I can manage as frequently as possible.

The original version of this article, Life After Salary: Structure and Motivation, is copyrighted by Consumerism Commentary.

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As I mentioned a few days ago, Consumerism Commentary is matching your charitable contributions. Please take this opportunity to give to your favorite charity. Here’s how to make your charity count twice.

What does your office, cubicle, or desk look like?

In my day job, most of my time is spent in a cubicle in front of a computer monitor and a small portion of my time is spent at home in front of a notebook computer sitting at my coffee table. In the office, I have only a few personal items displayed on my desk. I’m not interested in making my cubicle feel like home or comfortable; it’s a place of work and I don’t particularly want to stay there longer than necessary.

A study shows that having any more than one out of five objects on your desk of a personal nature rather than professional could affect your reputation. American managers in the study show a differentiation between professional and “unprofessional” employees, and expect significantly more personal objects to be on display for those they deem “unprofessional.”

On the other hand, having more personal items on a desk could increase an employee’s level of happiness, which could then result in higher productivity and good performance. In a boring cubicle farm, where everyone’s workspaces are identical by default, increasing the sense of individuality is important to creating a more human environment.

How many personal items on your desk are too many?

Fortune Magazine

The original version of this article, How Many Personal Items on Your Desk Are Too Many?, is copyrighted by Consumerism Commentary.

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As the end of the year approaches, managers and supervisors throughout the corporate world will begin having conversations with the employees who report to them. These conversations usually involve tools like a self-evaluation form completed by the employee, feedback forms completed by the supervisor, and possibly peer evaluations completed by co-workers.

There isn’t one part of the employee-employer relationship that isn’t as stacked against the employee as this process.

In a perfect world, these performance reviews could be valuable, with the manager offering specific tips for helping the employee reach his or her professional goals. Rather than this, most of the time these discussions are partisan, with each party selling its side without listening to the other. The employee’s function is clear: to present himself or herself in the best light. Employees have the opportunity to make sure their management is aware of the positive work that has been completed and any achievements made. Managers, on the other hand, use performance reviews to make sure their direct reports understand the areas where development is needed.

In companies where compensation is based on these performance reviews, this situation is more prevalent. In a discussion where performance leads to compensation, the manager represents the company and is always looking for ways to save money, particularly in salary-related expenses. On the other hand, the employee wants to justify a bonus and a raise.

As a result, the discussions are mostly useless because everyone has an ulterior motive.

On a rare occasion, it is possible for some insight to come from annual performance reviews, but anything worthwhile shouldn’t wait until a meeting that occurs once a year. The last thing an employee wants during an annual review is a surprise, as a boss criticizes a behavior that could have been changed or resolved months prior with effective communication and feedback.

Author Samuel A Culbert suggests eliminating this process in his book, Get Rid of the Performance Review and replacing it with more effective conversations.

Is the performance review an effective tool in your organization? Or do you avoid performance reviews by owning your own business and answering to no one other than your customers? If that is the case, your business’s success is largely a review of your performance, anyway. But not every job function produces results that are as tangible as the company’s bottom line. (If my performance was based on the financial success of the large company I work for, they’d crown me CEO.)

The original version of this article, Performance Reviews: Useless or Worthwhile?, is copyrighted by Consumerism Commentary.

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