Wednesday, January 30, 2013

Daymond John's lessons on the value of time

MONEYWATCH/ January 29, 2013, 8:56 AM

(MoneyWatch) Celebrated entrepreneur Daymond John knows how to use his money to make more money: He mortgaged the home he shared with his mother to seed his FUBU clothing brand, turning a street-corner business into a fashion powerhouse with annual sales of more than $350 million. But John also knows that no matter how much money he makes, he can't make more time.

English: This is a photo of Daymond John, FUBU...
English: This is a photo of Daymond John, FUBU CEO, speaking at an event. (Photo credit: Wikipedia)
John ... quickly turns down otherwise promising, attractive investments and projects when he feels they won't make the best use of his time or expertise. ...
Recently I had a conversation with John about his views on using and investing his time, along with about how he maintains that discipline now that he is involved in a variety of businesses and other pursuits. 
    The time return of self-employment can be hard to measure
    English: Photo of Red Lobster restaurant in Ba...
    English: Photo of Red Lobster restaurant in Baton Rouge, LA that demonstrates the new restaurant style of the chain. (Photo credit: Wikipedia)
    Before hitting it big in business, John owned a commuter van, which he drove 16 or more hours per day. "Every night I'd come home with around 300 bucks, thinking I was doing pretty well," John said. "But one day I did the math on what running the van was really costing me, and I realized I was working like a dog for about $50 a day." John later waited tables at Red Lobster, and ... found it to be a comparatively more satisfying use of his time. "Working at the restaurant, I made maybe a hundred dollars a day, but I knew exactly what I got paid for my time and went home stress-free," he said.
    The lesson: The return on time invested can be misleading; you must understand what your time is really producing, just as you look at a financial statement to see what your dollars are generating.
    It's easy to fall into the trap of being too busy for your own good
    After starting FUBU, ... John lived and breathed his business 24/7. But it took a toll on his personal life. "By my early thirties I'd already paid a heavy price in terms of my family situation," John said, "and I really had to take a hard look at all the ways I was spending my time." 
    ... John realized there were chunks of time that weren't productive. As an example, he pointed out that he was wasting an hour and a half every day sitting in Manhattan traffic, so he moved closer to his office and reclaimed the better part of a full working day every week.
    The lesson: Being "too busy" can often be a self-fulfilling prophecy, and most people can find or make the time they need to do the things that are important to them. Make sure you aren't making sacrifices you don't necessarily have to make.
    Having more control of your time doesn't mean you're making better use of it
    ... John learned that the fruits of his labor brought new time challenges. With wealth came the acquisition of stuff, and that stuff often made unexpected demands on his time. ...
    The lesson: Success buys many things, including more freedom to decide how you spend your time. But it's still your time, and it should still generate a return for you. The return might be financial, or it might be enjoying what you've earned; either way, make sure your time is giving you what you want and expect.
    Today, John segments the allocation of his time and money into three general categories. The easiest investments are completely hands-off: As John says, "The stock market doesn't require any of my time, so if I'm considering that kind of investing, it's only a financial decision."
    Next come equity investments like those pitched on Shark Tank. ... As he told me, "If my time is part of the deal, I will only consider it if my specific experience and expertise will very clearly add business value."  ...
    Finally, there are his own companies, where John remains every bit the entrepreneur. He makes it clear that his time commitments are inevitably and directly related to the level of financial investment, risk, and accountability: "Anything I own 100% of will always come first, and will always get whatever time is needed, no question."
    © 2013 CBS Interactive Inc.. All Rights Reserved.Michael Hess

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    Thursday, January 24, 2013

    Volkswagen Dog on

    Volkswagen Dog on

    It may not be business related, but this commercial was too clever not to share.

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    Wednesday, January 23, 2013

    When is the optimal time to book a flight?

    CBS News
    By KATHY KRISTOF / MONEYWATCH/ January 18, 2013, 12:41 PM

    (MoneyWatch) Bargain-conscious travelers have been trying to answer the question for years and are still stymied: How far in advance do you have to book to get the best airfare?

    According to new research by based on the travel site's review of 560 million airfares, the optimal time to book a domestic flight is 49 days in advance. If you're flying overseas, you should book almost three months -- 81 days, to be precise -- before you travel.

    Too much planning for you? Don't worry. While the average domestic flight was the cheapest 49 days out, it didn't start to rise dramatically in price until about two weeks before the departure date. But if you wait until the day or two before you want to travel, get ready for some serious pocketbook pain. Domestic flights that would normally cost less than $400 jump to about $625.

    "TUESDAY" production sign (Photo credit: Vaguely Artistic)
    Notably, it's also bad for your pocketbook to book too far in advance, according to CheapAir. People who booked 210 days before the flight ended up paying an average of $475 for a domestic ticket. There are exceptions and caveats, however. If you're booking for a high-traffic time, like Thanksgiving, it can make sense to book well in advance. The optimal time to buy a flight for Thanksgiving weekend in 2012, for instance, was 96 days in advance.

    If you're taking an international flight, by contrast, you might score a real bargain by being spontaneous. For example, the best price CheapAir found for a Los Angeles-to-Tokyo flight was when the traveler booked one day before the flight.

    Other factoids of note: Booking a flight on a Tuesday or Wednesday is not likely to save any money. But
    Wednesday (Photo credit: teachernz)
     flying on a Tuesday or Wednesday will.

    And, of course, while this study focuses on average ticket prices, there are a lot of one-time deals that can make booking at any given time either a bargain or a bust. CheapAir tries to deal with the frustrations of variable airline pricing by offering a customer payback program. If you book a flight through the site and find that your specific itinerary has dropped in price, it offers you up to a $100 credit for another flight. And what if another airline offers a better deal in the meantime?  Unless you're traveling on one of the rare airlines, such as Southwest, that will allow you to change your ticket without penalty, you're out of luck.
    English: Southwest Boeing 737 at Los Angeles I...
    English: Southwest Boeing 737 at Los Angeles International Airport (LAX), Los Angeles, CA, USA (Photo credit: Wikipedia)

    © 2013 CBS Interactive Inc.. All Rights Reserved.
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    Tuesday, January 22, 2013

    Brilliant Idea: Make a Time Budget

    Your days are like your dollars -- if you don't have a plan for them, they have a way of disappearing. To take control and manage your time, audit your week to carve out space for your priorities while rooting out time-wasters. 
    Image representing Shine as depicted in CrunchBase
    Image via CrunchBase

    Work + Money - Yahoo! Shine:
    By Christina Breda Antoniades, REDBOOK. 

    Manage your time 
    Cover of
    Cover via Amazon
    ... "People focus on what's in front of them and forget everything else," says David Allen, the author of Getting Things Done. "All their energy goes toward patching cracks and catching up. They never get ahead." Break that cycle by treating your time like it's money. 

    Take stock 
    Spend a week tracking how you spend your time now. "Chances are, you'll be shocked," says Julie Morgenstern, the author of Time Management From the Inside Out

    Tally your "expenses" 
    Put your commitments into a few broad categories--think family, career, hobbies, housework, fitness, relationships, worship--and list three major goals for each. Don't be too project-oriented: Wanting more hours to enjoy your marriage or kids is perfectly valid. 

    Be selective 
    Mercilessly ditch any tasks that don't move you toward your goals. If book club has stopped being fun, bow out; instead, add in something with a tangible payoff. 

    Sketch out your new plan 
    On a blank weekly calendar, mark off sleep hours and then slot in your activities, starting with anything that's regularly scheduled: commuting, Zumba class, your Tuesday meeting. Then draw in blocks of time based on your categories ("Housework") or specific activities ("Movie night!"), using your goals to prioritize. And be sure to make room for planning the week ahead. "It's the most important thing to budget," says Allen, who recommends Sunday night for the task. From there, take the next several weeks to fine-tune your plan, and tweak it on the fly. "Think of it as pieces of a puzzle," says Morgenstern. "If your 30-minute run gets preempted by a work crisis, trade it out for another time in the day or week." 

    Your day could look like this... 
    8 a.m. - Your commute. Find yourself rushing every day? Give this more time. 
    9 a.m. - Settle in at work. Answer urgent messages--but at a set hour, move on. 
    10 a.m. - Write up report. No interruptions! Set this slot aside for focused thought. 
    12 p.m. - Lunch with friends. Your reward for staying on target all morning: getting some great gossip. 
    3 p.m. - Cushion time. Budget a few daily or weekly blank spots, to catch the unexpected. 
    5 p.m. - Work on blog. If you don't block out time for personal projects and dreams, they'll never happen. 
    8 p.m. - Family game night! The ultimate goal: to prioritize time for activities you love. 
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    Monday, January 21, 2013

    How to Stop Wasting Your Human Capital

    Leveraging the workforce is not an arcane, mysterious act. It is a matter of systematically and thoroughly applying some basic analytic practices.People | January 18, 2013 | | US (
    Jac Fitz-enz

    At most organizations, human capital is woefully underutilized. In the aggregate, that mismanagement leaves billions of dollars on the table in expenses that could have been saved and lost profits that could have been reinvested. In short, our return on people (ROP) is second rate.

    There are three options for reversing this defect. One is to restructure the standard human resources management model. The second is to introduce a systemic analytic process for managing human capital. The third is to do both.

    Human Resources
    Human Resources (Photo credit: zachstern)
    Thirty years ago the quality movement remade America’s manufacturing system. It had a profoundly positive effect on our global competitiveness. At about the same time, I introduced quantitative measurement to the human-resources function. ... Now I am seeing some companies applying analytics to staffing, training, performance management, and retention, thereby realizing competitive advantages along with significant financial gain.

    ... From an analytic viewpoint, human capital must be treated exactly like every other asset. Although people employed are different than things owned, the principles of assessment, planning, execution, and evaluation are the same. The main difference is the mobility and independence of human capital. That difference seems to deter management commitment. However, when you have a repeatable, systematic approach, the effort required is reasonable and the return exceptional.
    English: Human Capital Investment Model!!
    English: Human Capital Investment Model!! (Photo credit: Wikipedia)

    The Analytics Foundation
    There are four basic elements of human-capital analytics systems: assessment, planning, execution, and measurement. When carried out thoroughly and with insight, they generate a database for descriptive and predictive analysis.

    Assessment is, by far, the most important phase of the human-capital analytics model. It has two aspects: the external market and the internal environment. ... It begins with a pre-meeting survey of all executives who will be involved in the assessment phase. They are queried as to their views on market forces as well as the company’s operations and how these are affecting or will affect management of human capital in the near future. This is a necessary pre-planning drill that surfaces all elements that can be examined for future effects. It is the grist of the assessment mill whereby attendees at the meeting collectively produce an inventory of forces and factors. The example below shows the typical matters that are discussed.

                External Forces: State of the economy, labor availability, customer trends, competitor actions/plans, government regulations, technology trends, new markets
                Internal Factors: CEO’s vision, brand, culture, processes, leadership status, employee capabilities, financial state, technical ability, QIPS (quality-innovation-productivity-service) levels

    In practice, there are seldom more than 10 variables in either external or internal areas that are deemed to be important. ...[The] greatest value is putting the key variables on the table for thorough discussion and agreement. This consensus building is concluded usually within two days. From it, a workforce planning committee is formed, usually headed by the chief human resources officer. But the CEO maintains oversight, since he or she has ultimate responsibility for sustaining a capable workforce. That is especially true for the leadership cadre.

    Workforce planning is undergoing a makeover. ... In lieu of building competencies around invariably outdated and ignored job descriptions, the new planning program focuses on building workforce capabilities that can flex to serve the evolving needs.

    Basic questions for planning include:

    • Which are our mission-critical capabilities?
    • How strong is our current bench in each of these?
    • What are the incumbents’ growth potentials?
    • How vulnerable are they to being hired away?
    • What would be the impact if these capabilities are not refilled quickly?     

      Note that we talk about human capabilities rather than changeable jobs. To answer workforce questions, we focus on the skills, knowledge, and behaviors that are essential requirements for performing any given job. Some are inherent and some can be developed. They include skill, commitment, motivation, flexibility, knowledge, engagement, creativity, and growth potential.

      The critical planning point is two-fold. First, how will these evolve as business and therefore workforce requirements change? Second, how will the source of change affect workforce requirements? Experience shows that if change comes from technological advances, workforce needs will be different than if change comes from government regulations, competitor actions, customer swings, or new market opportunities.

      Execution is the efficient and effective development of human capital. It is guided by the assessment and strategic workforce plan and is carried out through improving processes for staffing, deploying, developing, compensating, engaging, and retaining human capital. ... Services are designed by the HR department and executed in partnership with line and staff managers. Employee capability development is the responsibility of each manager. HR provides the technical guidance and services to support that.

      Performance Reference Model of the Federal Ent...
      Performance Reference Model of the Federal Enterprise Architecture, 2005. FEA Consolidated Reference Model Document. May 2005. (Photo credit: Wikipedia)
      Measurement (and its sibling, valuation) is the last phase in leveraging human capital. ...  Metrics have three levels: strategic, which are the concern of C-level executives; operational, which are the province of mid-management; and leading indicators, which help monitor predictive and prescriptive actions. The following are a few of the many metrics and leading indicators that companies are using.

      Strategic-level human capital “return on people” metrics:
      • Revenue per FTE
      • Profit per FTE
      • Total cost of workforce (TCOW)
      • TCOW as a percentage of operating expense

      Operating-level human capital metrics:
      • Cost to hire, cost per trainee, cost of turnover
      • Time to fill jobs, time to deliver services
      • New hire fit
      • Voluntary turnover rate
      • Training effectiveness
      • Manager and employee satisfaction levels

      Leading indicators:
      • Leadership rating by employees
      • Readiness level of backups for key positions
      • Learning-and-development spend per employee
      • Engagement level and performance effects
      • Mission-critical turnover rate
      • “Great place to work” rating

      Leveraging human capital is not an arcane, mysterious act. It is a matter of systematically and thoroughly applying the analytic management practices described above: assess, plan, execute and measure. Effective ROP reduces operating expense, generates revenue, and enhances competitive advantage.

      Dr. Jac Fitz-enz is widely known as the father of human capital strategic analysis and measurement. He is the founder of the Predictive Institute, a group of organizations and thought leaders formed to develop a new model for human capital management. (
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      Monday, January 7, 2013

      Do the Wellness Math Yourselves, CFOs

      11/52 6 million people
      11/52 6 million people (Photo credit: bcymet)
      Counterpoint: Much of the common wisdom about the economic value of wellness programs is mere fantasy.

      Al Lewis

      Healthy workers are more productive than unhealthy workers, just like workers in some countries are demonstrably more productive than those in others. Yet while no one would propose solving a struggling country’s economic problems by paying its workers to act more German (for example), the average Fortune 500 company pays unhealthy workers $460 per year to act like healthy workers.

      That is the value of incentives employees at such companies got for participating in wellness programs in 2011, according to a study by the National Business Group on Health. Oh, and the already-healthy workers got the incentives, too. And the $460 figure didn’t even include the programs’ costs.

      The kicker is that, unfortunately, the investment does not reduce health-care spending at all, let alone by the 25% claimed by my opposing party in this point-counterpoint package in his meta-evaluation of wellness programs, published last spring in The American Journal of Health Promotion.

      In fairness and respect, Mr. Chapman’s advocacy of wellness programs inspired me, when I was the CEO of a Nasdaq-listed company, to offer a wellness program to increase employee morale. But I found zero health-care cost savings. Incentives to make healthy food choices and participate in fitness programs were appreciated by the (easily predicted) subset of my employees who valued their health, but failed to convert the others.

      I never bothered with health-risk assessments. It seemed to me that smokers already knew they should quit, respondents might lie, and of course such assessments are anonymous and voluntary, making them impossible to tie to claims costs, which in any case wouldn’t budge for years after people changed their behavior.

      Despite all those impediments, somehow one major vendor claims a massive (and massively precise) 14.3-to-1 return on investment on its health-risk assessments. That provides an excellent segue into the many fallacies regarding the measurement and efficacy of wellness programs. The following examples are all documented in my book, Why Nobody Believes the Numbers (Wiley, 2012).

      First, most studies and vendors “find” that participants outperform nonparticipants in terms of trends in annual per-worker claims costs. But that is caused not by the program itself. It is caused by separating the population into motivated and non motivated people. In one case, a company’s claims costs for participants in a wellness program declined 9% from the Year Zero baseline year to Year One — but the actual program didn’t start until Year Two!

      Second, most studies and vendors focus programs on high-risk people and then “demonstrate” that their risks declined. ... University of Michigan professor Dee Edington, a leading authority on health-risk factors, has demonstrated a “natural flow of risk” in which a high-risk group’s risk factors tend to decline on their own over time, and vice versa. Yet most vendors count only the former when making claims of savings.

      Third, in their efforts to show unsophisticated buyers massive ROI, vendors and consultants claim mathematically impossible savings, as was the case in a recent, well-publicized analysis of Medicaid in North Carolina. At least two vendors claimed savings even in the absence of risk reduction. Another vendor has coined an oxymoronic term,“undetected claims costs,” once finding $21 million of such costs for a customer, even though the customer spent only $6 million on health care.

      Fourth, wellness has no basic outcomes standards. Despite the need to show massive reductions in events such as heart attacks that one would expect wellness programs to reduce in order to justify claims of massive ROI, I am not aware of any study or vendor that has ever measured employer-wide reductions in wellness-sensitive medical events. Moreover, I am not aware that anyone has even published a list of wellness-sensitive medical events. (By contrast, there are long-established lists of medical events that are potentially preventable by both disease management and primary care.)

      Fifth, even the iconic Safeway story of achieving a zero medical-cost-inflation trend through wellness — the inspiration for the wellness provisions in the Affordable Care Act ­— is made up. The Washington Post observed that the trend predated Safeway’s wellness initiative by several years.

      Sixth, consider marketplace behavior. If indeed wellness programs reduced costs by 25% for self-insured employers, wouldn’t health-insurance companies pay fully insured customers to implement such programs, too, and capture the benefit for themselves in lower loss ratios? Yet none does.

      Finally, the 25% reduction-in-cost math is fanciful. Excluding unavoidable hospitalizations, companies don’t even spend 25% of their costs for in-patient care, according to the Agency for Health Research and Quality. And other costs, such as for primary care, tend to rise after a wellness program takes effect, as employees are often encouraged or even paid to go see their doctors.

      Employers have been fooled by get-well-quick schemes because the process-oriented human-resources department is being burdened with analytic responsibilities. The idea of the CFO carving out those responsibilities is one whose time has come.

      Al Lewis, widely credited with inventing the discipline of disease management (as currently defined), is president of the Disease Management Purchasing Consortium. He thanks health-and-wellness consultant Vik Khanna for his collaboration on this article. (

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      Nine Reasons Why Wellness Works

      Point: Done well, worksite wellness efforts can generate enormous health-care savings.

      Health (Photo credit: 401(K) 2013)

      Larry S. Chapman

      ...Vocal proponents of wellness programs for working populations frequently make claims that seem ridiculous. How can a proposed program produce 300% return on investment in the first year?

      I am a strong supporter of the “underpromise and overdeliver” school of management thought, especially when it comes to claims about economic return. ... But in taking this position, I also want to stress that the ROI of a wellness program is profoundly influenced by how you do it. ... Having worked on more than 1,000 such programs in the past 35 years, I know that all too well.

      Worksite wellness programs do produce a positive ROI — if you design them well and implement them appropriately. Why do I take this position?

      English: Health care costs as a percent of GDP...
      English: Health care costs as a percent of GDP for OECD countries vs year (along with US presidencies). Health care costs increase dramatically during republican administrations at least since Nixon. (Photo credit: Wikipedia)
      Reason #1: Even with Obamacare, there continue to be key market imperfections in our health-care system. One of them is the role of insurance in insulating individual patients and consumers from the financial consequences of their lifestyle and health-care choices. Another important market imperfection is the sparse availability of information about the quality, cost, and value of health-care services; and even if such information were widely available, there wouldn’t be a compelling reason to use it because most health plans cover the vast majority of cost.

      Those market imperfections, combined with health-care providers’ incentive to generate more revenue from patients, will continue to produce high annual increases in health-care costs. These higher costs will create more pressure to engage in more serious wellness efforts, increasing the probability of higher economic returns. Costs will continue to increase.

      Reason #2: There is an enormous amount of scientific evidence that unhealthy behavior and modifiable health risks significantly increase health-care costs in all working populations. ... The more unhealthy behaviors and risk factors people have, the exponentially higher their health-care costs will be. Costs are modifiable.

      Reason #3: Unhealthy behavior and modifiable health risks are very common in all working populations and are generating more costs as the population ages. Costs will go up at an even greater rate than they have, if we don’t do something.
      Reason #4: There are more than 500 well-designed scientific studies that document the ability of wellness programs to change unhealthy behaviors and modify health-risk factors. Behavior and risks can be modified.
      Reason #5: There are more than 70 peer-reviewed studies of the economic return of worksite wellness programs that show average annual ROI from 150% to almost 2,000%. The average for more than a dozen “traditional” worksite wellness programs in the literature is 300%. Cost reduction has been documented.

      [Editor’s note: The figures in the above paragraph are cited in this article by Larry S. Chapman, though his own analysis of 62 wellness plans in another recent article put the average cost savings at 24.5%. But Chapman says the higher figures are relevant, because “first, they are in the peer-review literature and need to be recognized as someone’s actual experience, and second, they get the reader’s attention about the potential economic return, which you don’t get without doing more than most employers are currently doing.”]

      Reason #6: There is an independent meta-analysis of 44 peer-reviewed studies that found a 327% savings on medical claims and a 273% reduction in the cost of sick-leave absenteeism savings, and there also is an independent actuarial study that identifies wellness programs as potentially affecting approximately 25% of health-care costs for working populations. Cost-reduction potential is large.

      Reason #7: Besides health-benefit costs, worksite wellness programs also reduce costs related to sick leave, workers’ compensation, disability insurance, and presenteeism. ... Multiple types of cost reduction are possible.
      Reason #8: There are also a large number of additional programming strategies (like medical self-care and injury prevention) that can significantly increase the ROI of current worksite wellness programs. ... Multiple ways exist to further enhance economic return and cost reduction.
      Reason #9: Few employers spend more than $500 per year per employee, while the average health-benefit plan cost per employee per year is more than $12,000. Some have estimated that for an average company, the combined cost of health plan, sick leave, workers’ compensation, disability insurance, and presenteeism amounts to more than $35,000 per employee per year. Five hundred dollars is about 1.4% of $35,000. Wellness is cheap.
      Like all things human, there are lots of caveats, but the basics allow a guardedly bullish opinion on the potential of worksite wellness programs to deliver economic goods for American employers.

      Larry S. Chapman is president and CEO of Chapman Institute, which provides a certification program for worksite wellness practitioners. (

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