Managerial Entrenchment In the Corporate World

Managerial Entrenchment In the Corporate World One of the biggest threats to long-term success is managerial entrenchment, which occurs when corporate leaders put their own self-interests ahead of the companys goals. This is of concern to people working in finance and corporate governance such as compliance officers and investors because managerial entrenchment can affect shareholder value, employee morale, and even lead to legal action in some instances. Definition Managerial entrenchment can be defined as an action, such as investing corporate funds, that is made by a manager in order to boost his or her perceived value as an employee, rather than to benefit the company financially or otherwise. Or, in the phrasing of Michael Weisbach, a noted finance professor and author: Managerial entrenchment occurs when managers gain so much power that they are able to use the firm to further their own interests rather than the interests of shareholders. Corporations depend on investors to raise capital, and these relationships can take years to build and maintain. Companies rely on managers and other employees to cultivate investors, and its expected that employees will leverage these connections to benefit corporate interests. Some workers also use the perceived value of these transactional relations to ensconce themselves within the organization, making them difficult to dislodge. Experts in the field of finance call this a  dynamic capital structure. For example, a mutual-fund manager with a track record of producing consistent returns and retaining large corporate investors may use those relationships (and the implied threat of losing them) as a means of earning more compensation from management. Noted finance professors  Andrei Shleifer  of Harvard University and  Robert Vishny  of University of Chicago describe the problem this way:   By making manager-specific investments, managers can reduce the probability of being replaced, extract higher wages and larger prerequisites from shareholders, and obtain more latitude in determining corporate strategy. Risks Over time, this can affect  capital structure decisions, which in turn affects the way in which shareholders and the managers opinions affect the way a company is run. Managerial entrenchment can reach all the way to the C-suite. Plenty of companies with sliding stock prices and shrinking market shares have been unable to dislodge powerful CEOs whose best days are well behind them. Investors may abandon the company, making it vulnerable to a hostile takeover. Workplace morale can also suffer, prompting talent to leave or for toxic relationships to fester.  A manager who makes purchasing or investment decisions based on personal bias, rather in a companys interests, can also  cause  statistical discrimination. In extreme circumstances, experts say, management may even turn a blind eye to unethical or illegal business behavior, such as insider trading or collusion, in order to retain an employee who is entrenched. Sources Martin, Gregory, and Lail, Bradley. The Downside to Limiting Manager Entrenchment. Columbia.edu, 3 April 2017.Schleifer, Andrei, and Vishny, Robert W. Managerial Entrenchment: The Case of Manager-Specific Investments. Journal of Financial Economics. 1989.Weisbach, Michael. Outside Directors and CEO Turnover. Journal of Financial Economics. 1988.Wharton School of University of Pennsylvania staff. The Cost of Entrenchment: Why CEOs Are Rarely Fired. UPenn.edu, 19 January 2011.

How to beat writers block - Emphasis

How to beat writers block How to beat writers block Someone once said that writing is easy. You just sit at your keyboard and wait till the beads of blood form on your forehead. For anyone who has ever suffered from writers block (and thats all of us), this will be a familiar scenario. It doesnt have to be that way though: you can beat writers block. But first you need to realise what causes it. Fight the fear Usually its down to two things: fear and lack of information. You dont have to dislike a subject to fear writing about it. In fact, your document could be about something that you find fascinating and it might still cause you problems. The trouble is that we worry that as soon as we put fingers to keyboard, reality will set in. Were afraid that it wont be perfect, that people may disagree with us or that well mess it up. Well, heres the first truth: all those fears might come true. And heres the second: it doesnt matter. Yes, it doesnt matter if its not perfect. In fact, nothing is ever perfect. The key is to realise that success is not perfection. To misquote General George Patton, better to have an imperfect report today than a perfect one in six weeks time. Because if you dont write it at all, it doesnt matter how much potential your document has. And what could be more galling than avoiding writing a perfect document and losing out to someone who wrote an imperfect one? Get what you need If fear isnt the issue, then probably its that you dont know what to write. In other words, you lack information. So get it. Perhaps you dont know what your reader expects. If so, then filling out a reader-profile questionnaire should help. (You can download one here.) And if youre still not sure, why not ask your reader or someone who knows them better than you do some well-targeted questions? Be sure to think the topic through first though, to show that youre not just being lazy. Brainstorm all that you know already with a mind map or some similar tool then put question marks against all topics that need a little more research. Whatever it is you need to know, acknowledge that, then go and find out. A few words of warning though: make sure you really do need to know it, and that youre not just being a perfectionist. Remember, success is not perfection. Kick-start your writing Finally, here are a few practical tips to get you going: Plan first. Planning can be a great way to ease yourself into the writing itself. Besides, its critical to separate the thinking from the writing, otherwise your document could end up a jumbled mess that makes sense only to you. Planning first does exactly that. Pick a leading task. Sitting and stewing will only increase your stress and muddle your thinking. So pick something that you need to do before you can write such as launching your word-processing program or opening the folder that contains the information you need. Then do that first. This will begin to put you in action mode, and make the writing itself easier. Planning is a good leading task, incidentally (see above). Set a time. Pick a time to start writing, and do your leading task just beforehand. As the time to write approaches, you should start to feel energised and able to get going. Pick an introduction. There are four types of introduction, and picking one of these types gives you (and your reader) an instant in. For instance, the Historical intro type contrasts what used to happen last year/decade or whenever with whats happening now, and creates a real sense of movement in your readers mind. Give yourself a time limit. If after all this, youre still paralysed with fear, then simply set yourself a time limit. Resolve to write for five minutes and only five minutes. This usually works where all other methods fail. After all, how bad can five minutes be? What usually happens with the last technique is that you start writing more quickly as the time limit approaches which sets you up nicely for writing the rest of the document. You need to be honest for this method to work though. So do allow yourself to stop after five minutes if youre really not happy. Then set a time to do another five minutes. You almost certainly wont need many five minutes sessions before youre in full flow.