The one question every boss should ask

When Nancy Hickey was promoted to chief administrative officer at Steelcase, she began to oversee areas of the office furniture corporation that she knew little about; among them, IT, real estate and facilities. So she started asking questions, plenty of them, to the department heads who reported to her.
Now that Hickey, a former human resources executive, knows more about the departments she oversees, her questions have changed, and she can push her team more effectively, and better understand how they're faring. She's among a growing cadre of senior managers who use smart questions to engage, innovate and solve problems.
A consummate inquirer, Hickey believes that asking questions instills an intellectual curiosity and encourages her staff to share their expertise. "They know the right things, maybe better than I do," says Hickey, whether they are working to design new Steelcase chairs or upgrading its website.
Senior managers who employ smart questions have found it "a wonderful discipline for executives," says Robert Simons, a professor of business administration at Harvard Business School and author of the recently published Seven Strategy Questions.
"Some leaders are, by nature, questioning and empowering and pulling in the ideas of [other] people," he says. The rest -- the majority of executives -- struggle to advance their business objectives by asking questions consistently.
Many of the executives who come to Harvard for advanced management programs "really wrestle with this stuff," Simons says. "They make assumptions that everyone in their organization is on the same page" he says, or may not be willing to ignore people's titles to dig for the best insights.
He believes that all leaders can become more valuable by asking the right questions -- sometimes multiple times -- which in turn helps to strip away confusion and provides focus on unique business situations. "The job of a leader is to simplify and focus," he says.
Marshall Goldsmith, an executive coach who works with some high powered CEOs, says that asking for information and feedback is a discipline. "I don't think it comes naturally to any of us," he says. Yet when you hire and manage smart people who know more about their area than you, "you have to ask, you have to listen and you have to learn."
James (Jamie) Hutchinson, who is the partner in charge of Alston & Bird's New York office, uses questions to evoke what he describes as, "an openness and a curiosity rather than … a pre-determined answer that I wanted to go to."
"It's not as though I sit around and think up especially clever questions," says Hutchinson, who focuses on employee benefits and executive compensation law at Alston & Bird. "It's [about] asking questions more, with more interest in learning something rather than judging."
During the annual reviews of all the firm's partners, Hutchinson might mention that he has read a partner's self-evaluation memo and ask, "What would you like to emphasize on what you've done in the last year?"
The one question to ask your staff 20 times a day
When looking at a partner's successes with clients, he may ask, "How do we build on that?" Another question he likes to use during reviews: Who has helped you? And who have you helped?
That's a question that Manny Fernandez, managing partner of KPMG's Dallas office, can appreciate. Fernandez asks a variety of questions on feasibility and ethics when he's meeting with his staff, but he asks one question in particular all the time: "How can I help you to be successful? I ask it 20 times a day."
He hears a wide array of answers to that question, from resources that people need to connections that a colleague hasn't seen or made. Fernandez sees the question as a good motivator.
Questions like "how can I help you?" fall squarely into one of Simons' seven strategy questions, question no. 6, in fact: How committed are your employees to helping each other? This kind of question can help build commitment, motivation and trust.
Simons' questions, which grew out of 25 years of research on organizations and their development, focus on seven areas critical to business success: customers, values, creative tension, setting boundaries, and uncertainty and change -- which leaders get to by asking "What strategic uncertainties keep you awake at night?
Questions can help executives "stay on top of a changing world," Simons says, though he's never seen any research that shows the Socratic method to be a more effective management approach, though he does see that that approach engages business school students.
Steelcase's Nancy Hickey, who started out as a teacher, sometimes takes notes as she asks questions, and then refers back to the notes before the next meeting with her direct reports. She likes to use questions to visualize the future and inspire people to develop new ways of thinking about their departments and the company. She might ask Steelcase's (SCS) chief information officer what the next generation of IT will look like. Or she'll ask the real estate sustainability team how other companies manage a particular issue.
"The questions I use are to push their thinking to the next level," Hickey says.
Hickey asks -- and answers -- questions at a monthly birthday breakfast for employees at Steelcase's headquarters in Grand Rapids, Michigan. She uses the event to answer employees' questions and receive feedback.
"I will respond to a question with a question too," she says. And, like Hutchinson, most of Hickey's favorite questions are open ended. When someone comes to her with a problem, she often asks: "If I had a magic wand to solve this problem, what would you want me to do with it?"
Her next question: "What's the question I didn't ask you that you wish I had? What's the question that I missed?"

Hidden workforce challenges domestic economic recovery

These workers are not counted in the Labor Department’s monthly unemployment rate, yet they say they are willing to work. Since the recession began, their numbers have grown by 30 percent, to more than 6.4 million, amounting to a hidden labor force that could stymie the turnaround.
Adding these workers to February’s jobless rate pushes it up to 10.5 percent, well above the more commonly cited 8.9 percent rate. An even broader measure of unemployment, which includes people forced to work part time, stands at nearly 16 percent.
Economists say the longer these workers stay out of the job market, the harder it will be for them to find employment, creating a vicious circle that can spiral for months or longer. Meanwhile, their delayed entry into the job market means smaller paychecks in the future. And if these ranks remain high, economists worry that it will signal a much deeper and more troubling problem for the country: Workers’ skills don’t match the jobs available.
“It can be a self-reinforcing problem, where it just gets worse over time,” said Burt Barnow, an economist and professor at George Washington University.

Part of the reason these workers are not factored into the unemployment rate is a technical quirk: Workers are counted as unemployed only if they are actively job-hunting. Otherwise, they are considered outside of the labor force altogether.
That means Silver Spring resident Dirk Bos, 42, isn’t technically unemployed, according to the government’s definitions, even though he hasn’t worked since he was laid off from his position as a construction administrator at an architecture firm in 2008.
Bos said he knew he didn’t stand a chance of finding a new job in his field. The housing market has been in turmoil, and his firm went through two more rounds of layoffs that included some of its top principals.
“Rather than turning around and getting straight back out to the workforce, both of us [Bos and his wife] said, ‘Let’s take it easy. Take it one day at a time,’ ” he said.
For now, Bos is relying on his wife’s income and on savings to make ends meet. He plans to begin look for a job eventually and is applying for school in hopes of launching a new career as a librarian.
“You hope in two or three years that things might change,” he said.
People like Bos have historically made up just a sliver of the 86 million Americans who aren’t part of the workforce, most of whom are are students, retired or stay-at-home spouses. But since 2007, the number of people who want a job but aren’t looking for one — the hidden labor force — rose from 4.7 million to more than 6 million. Making ends meet can be a struggle, as they do not qualify for unemployment benefits.
Over a million members of this group have given up looking for work even though they are able to hold a job — people officially designated as “discouraged.” That’s more than double the number at the start of the recession.
Bringing these workers back into the labor force could prove to be a tricky problem, both politically and economically. If they begin to seek work in an improving job market, they could increase the unemployment rate. That’s a scenario that will be tough for politicians headed into campaign season to explain, particularly since the rate is being used to excoriate Obama’s administration. Republican presidential hopeful Mitt Romney, for example, has made the unemployment rate the centerpiece of what he is now calling the Obama Misery Index.
It may not be possible to bring the hidden workers back into the job market without equipping them with new skills. Roughly half of employers say they are providing readiness or remedial training for their associates to prepare them for their jobs, according to recent surveys of businesses by Corporate Voices for Working Families, a nonprofit that focuses on workforce readiness.
“Employers have jobs, but they can’t find the workers that are necessary,” said Steve Wing, president of the group. “I think people are losing hope. That’s what we don’t want to have happen.”
Compounding the problem is the length of time many people have been out of work. A study last year by three economists at the Federal Reserve Bank of Chicago found that workers unemployed for less than a month have a 34 percent chance of finding a job the next month. But those who had been out of work for more than six months had a 19 percent chance.
That’s partly because the longer that workers are out of the job market, the more their skills and knowledge are likely to fade.
Fifty-year-old Ramona Abbott, who lives in northwest Washington state, was laid off from an engineering firm a decade ago and decided to start a consulting business. But as contracts began to dry up during the economic downturn, she moved into what she jokingly calls “forced retirement.”
Abbott said she has applied for a few jobs while working to keep her skills sharp, but she gave up after a prospective employer questioned her time away from the field.
“It’s basically code for: ‘You’re too old now and your experience is old,’ ” Abbott said. “If someone’s been out of their field for five to 10 years, you just automatically begin to question whether or not they remember how to do all of this.”
The cloud of unemployment can also linger long after returning to the workforce. Columbia University economist Till von Wachter compared the wages of workers laid off during the 1982 recession with those of people who kept their jobs and found a 20 percent difference after two decades.
Terry Miale, 50, hasn’t been able to match the $75,000-a-year salary she earned as an engineer at a telecom firm since she was laid off for the first time a decade ago. She worked as an administrative assistant before landing at another communications firm — only to lose her job in 2008.
Now, Miale is working at a Macy’s making $8.10 an hour, but her position is strictly “on call” — and often the store doesn’t. She said she has stopped looking for other work, because she already knows what the outcome will be.
“I effectively have lost my power as a human being,” she said. “I feel like no matter what I do, it’s not going to make any difference. If I open my mouth, it’s just white noise coming out because no one hears.”

Disaster in Japan threatens recession recovery

The earthquake and tsunami in Japan on Friday struck an area that accounts for only a small fraction of the country’s economic activity, but damage could still run into the tens of billions of dollars, according to analysts trying to assess the impact of the disaster.
Hard-hit Miyagi Prefecture is the source of only 1.7 percent of Japan’s gross domestic product, and damage to industrial and commercial facilities in the area appeared to be limited.
Still, the earthquake and subsequent flood struck at a time when Japan is struggling to pull itself out of recession and facing pressure to curb the heaviest public debt load in the world. Any downturn in economic activity resulting from the disaster, at least in the short term, could undercut Japan’s tentative recovery, analysts said, and could force the country to delay efforts to reduce its debt and annual deficits while it rebuilds.
“The timing of the disaster could not have been much worse,” according to an analysis written by Japanese and other international economists at London-based Capital Economics. The Japanese government is already divided over how to tame Japan’s debt. So, the economists warned, “the greater the social and economic damage, the larger the threat to the government’s ability and willingness to ward off a fiscal crisis.”
The Bank of Japan announced Friday that it would accelerate a meeting scheduled for next week and ensure that banks and the financial system have the funds needed to conduct business.
The human toll and the amount of property destruction are so far unknown, and damage at a nuclear power plant remained a concern. Millions of homes were without power, and public transportation systems in major cities including Tokyo were shut down.
A host of global companies — Honda, Toyota, Canon, Panasonic and others — suspended at least some operations while they assessed damage to plants in the northeastern parts of the country. An extended shutdown could be devastating for Japan’s export-oriented economy.
But unlike with the earthquake that struck heavily industrialized Kobe, Japan, in 1995, analysts said they did not expect Friday’s events to dramatically undercut Japan’s industrial output or cause damage approaching the $100 billion in destruction Kobe suffered.
Damage to manufacturing facilities and offices “appears limited” at this point, wrote Dan Ryan, an analyst with the consulting firm IHS Global Insight.
European-based analysts with Japan’s Nomura bank noted in a conference call that the extensive damage caused by the Kobe earthquake, which knocked out an equivalent of 2.5 percent of Japan’s gross domestic product, closed major ports and undercut manufacturing.
“This has not been concentrated in urban areas,” said Nomura economist Peter Westaway.
Chris Scicluna, deputy head of economics for Japan’s Daiwa Capital Markets, wrote: “The key ports for Japanese trade are all further south from the most affected area. The overall disruption to Japan’s external trade should be smaller” than the Kobe disaster.
The hardest-hit urban area was Sendai, home to about 1 million people. The region hosts an extensive agriculture and fishing industry, and television images of homes being inundated and commercial boats being washed ashore suggest that major reconstruction will be needed.
But agricultural markets took the event in stride. Prices of many major commodities, including rice, actually fell, indicating that investors did not think Japanese agricultural production would be significantly disrupted.
Tokyo’s main Nikkei index lost 1.7 percent Friday, but the earthquake struck with only a half-hour left in the trading day and analysts said steeper losses are likely when trading resumes at the start of the week.
As with most natural disasters, analysts noted that any immediate downturn is likely to be more than offset by new investment and construction as people rebuild.
Nomura economist Takuma Ikeda said earthquake-related government investment in the Kobe region was ultimately more than the estimated damage, helping provide a long-run economic boost.
Global insurance companies will also contribute to the rebuilding. While the amount of their exposure is not known, Nomura analysts pointed to the sharp drop in major insurance company stocks Friday and an estimated $5 billion loss in their market capital.

 http://www.washingtonpost.com/business/economy/japan-tsunami-spares-major-economic-zones/2011/03/11/AB4ZwLR_story.html

U.S. markets plunge on fears of nuclear catastrophe in Japan

U.S. stocks dropped sharply into the red early Tuesday following a global sell-off on fears that what appeared to be a serious but contained nuclear accident in Japan is turning into a full-blown catastrophe.

Within minutes of the opening of the markets, the Dow Jones Industrial Average fell 2.27 percent as all 30 stocks that comprise the index dropped; the S&P was down 2.2 percent; and the Nasdaq dropped 2.66 percent. Stocks in several sectors, such as makers of parts for nuclear energy plants, were at their 2011 lows.
Gold tumbled over $40 on Tuesday and oil prices were plunging. Uranium and other nuclear power stocks were weaker. Among the only stocks rising were from companies that compete with nuclear energy businesses: solar stocks.
The New York Stock Exchange said it would invoke the so-called rule 48 to smooth volatility. This rule, which was approved by the Securities and Exchange Commission in 2007 but is rarely used, means that market makers will not have to disseminate prices ahead of opening.
Overnight in Japan, the benchmark Nikkei 225 stock average plummeted 10.6 percent to 8,605.15, after declining as much as 14 percent during the day. Tuesday’s rout followed a 6 percent drop Monday. Those declines occurred despite an infusion of yen Monday and Tuesday by the Bank of Japan to try to prop up the nation’s financial system.
Western financial markets had largely brushed off the impact of the disaster on Monday, with the Standard & Poor’s 500 down a modest 0.6 percent. But on Tuesday, stocks were trading sharply lower in Europe and on Wall Street.
The devastation wrought by the earthquake in Japan has disrupted production of automobiles, computer chips and other goods and threatens the world’s third-largest economy at a time when it was already vulnerable.
While the global economy is under threat from turmoil in the Middle East and financial troubles in Europe, the calamity in Japan creates another risk. The immediate response has been to temporarily shut down much of Japan’s industrial production. Japanese power supplies could be strained for some time because of trouble at several nuclear plants. And the heavily indebted country will need to borrow more money to rebuild, potentially straining its finances.
“The timing couldn’t be any worse,” said Nicholas Szechenyi, a senior fellow at the Center for Strategic and International Studies. “Japan was just starting to have some positive economic numbers, and the international community is still adjusting to the impact of the financial crisis.”

The area of Japan that suffered the most direct hit from the earthquake and tsunami accounts for a relatively small part of the nation’s industrial output. But damage to infrastructure — roads, rail lines, electricity — is more widespread.
That disruption has compromised the ability of Japanese manufacturers to obtain supplies and electricity to continue producing and the ability of their employees to get to work. It is too soon to know how much world supply chains for key goods will be affected. Global businesses have worked around national disasters in the past, such as the Indian Ocean tsunami in 2004 and Hurricane Katrina in 2005.
Many auto plants across Japan have shut down, at least temporarily, wrote auto analyst Paul Newton of IHS Global Insight, who described the situation as fluid. Some of the shutdowns are due to rolling blackouts and disruptions to “the country’s transport infrastructure, affecting everything from parts delivery, personnel mobility, and shipping activity at the country’s ports.”
Toyota idled all of its Japanese factories through Wednesday, halting production at 45 percent of the company’s global production. Nissan, Honda, Suzuki, Mazda and Mitsubishi reported varying amounts of damage and temporary shutdowns at their Japanese plants.
Japan’s top corporations include major global brands that have moved production overseas. Honda has projected that its operations in the critical North American market will not be greatly affected.
There are also potential disruptions in the supply and shipping of electronics, particularly of semiconductors and key materials used in making LCD panels, according to a report from IHS iSuppli, which researches electronics supply chains.
Like their auto industry counterparts, many Japan-based electronics companies announced the temporary closure of manufacturing facilities this week, including Sony and Panasonic. Analysts said there could be price swings for certain chips produced in Japan until the facilities resume normal operations.
The nation’s central bank announced cash infusions Monday and Tuesday totaling more than $280 billion to keep the country’s financial system stable and its trading system functioning. On Tuesday, it pumped 8 trillion yen into the financial system, a day after a record 15 trillion yen infusion. The bank said it would expand a program of buying bonds and other assets to 40 trillion yen, up from 35 trillion, to support the economy in the longer term.
Insured-property losses from the quake could amount to $14 billion to $35 billion, according to Air Worldwide, a risk consulting company.
Japan is groaning under government debt equal to twice its yearly economic output, proportionally the world’s largest load. But analysts said the country should have the financial muscle to deal with the reconstruction and be able to borrow what it will need to bounce back without using nontraditional methods, such as spending down its trillion-dollar stockpile of international currency reserves.
Although Japan’s gross domestic product will probably suffer in the short run as economic activity grinds to a halt, economists said, it will bounce back in the coming months as reconstruction begins. But it is too soon to determine the lasting impact the disaster will have on the Japanese or global economies.
“The full extent of the devastation caused by the earthquake and tsunami that struck northeastern Japan on Friday only began to become clear at the weekend, and the economic impact remains highly uncertain,” John Higgins, an analyst at Capital Economics, said in a report [www.washingtonpost.com]