Embracing a Life Without the Roller Bag

Via The New York Times

By JOE SHARKEY

WILLIAM A. ALLEN III has deplaned, returned the rental car and unpacked the suitcase he always kept ready to roll at home in Raleigh, N.C.

Mr. Allen, business traveler extraordinaire, is off the road. “I don’t want to do it anymore. I’m going to be 61 in April, and I’ve had it,” he said.

Mr. Allen is a consultant who often flew 200,000 miles in a year. He enjoys top-level elite status at airlines, hotels and rental car companies. I first met him four years ago at a Hilton Garden Inn across the road from Los Angeles International Airport.

Back then, I noticed that the hotel manager treated him like visiting royalty. Would you like a drink, Mr. Allen? How is your room? Is there anything we can do for you?

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What Managers Need Now: CONFIDENCE

Via The Wall Street Journal

By JOHN BALDONI

In a December appearance on "Meet The Press," Michigan Governor Jennifer Granholm identified a critical trait our leaders need now: Confidence. Leaders, she said, "need to be evoking this: 'We're going to be all right. In fact, we're going to be magnificent.'"

She hit the nail on the head. Never is this truer than now, when economic uncertainty has caused a massive loss of confidence among consumers and managers alike. A recent study by Booz & Company revealed that nearly half of senior managers lack confidence in their own CEO to lead their organizations through the current hardship.

Confidence is a vital leadership attribute. Yet so often executives get bogged down in operational issues that they overlook what their people need in terms of uplift. Management focuses on operations; leadership focuses on inspiration. It's essential to encourage followers. If the leader cannot project a sense of accomplishment, then who wants to fall in behind? No one.

We can look to past crises to find leaders who projected confidence. One who stands out is Franklin Roosevelt. In the wake of the shock of Pearl Harbor, as Doris Kearns Goodwin writes in "No Ordinary Time," Roosevelt projected the deepest sense of inner calm. Just after Pearl Harbor, Roosevelt's unruffled demeanor reassured those around him and allowed them to focus on doing their jobs.

Can you exert too much confidence? Of course. We call it bravado. Or worse, buffoonery. Former Illinois Governor Rod Blagojevich's determination to fight corruption charges are a prime example.

So what exactly is the right kind of confidence, and how can leaders project it? From what I observe with executives who I coach or speak to in corporate gatherings, I define confidence in terms of three key attributes:

Realism. Confident leaders are those who can look reality square in the face and deal with the consequences it may have on their organizations. A leader needs to assess whether everyone on the team can perform the task at hand. If not, the leader must find ways to develop or train them, or find other positions for them. At the same time, a leader must make tough assessments of his products or services, to make sure they're really delivering what customers want.

Reassurance. Leaders need to share their sense of confidence with their people. That does not mean telling employees everything is rosy. It means offering them ways they can improve the situation. Managers can reassure staffers at meetings by talking about what the company and its people are doing well. At the same time, managers should talk about things they'd like to improve, and invite suggestions for improvement and other feedback.

Resolve. The strength to persevere is a form of confidence. In tough times, managers may need to resolve simply not to lose ground, such as limiting a slide in sales. Experienced executives realize that pushing people to achieve unrealistic goals will de-motivate good people; leaders should focus on getting their people to persevere towards realistic targets.

Realism, reassurance and resolve all inspire confidence. And that is something leaders should try to project every day, especially when times are so tough.

Worst Isn't Over for Japan

Via The Wall Street Journal

By YUKA HAYASHI

TOKYO -- The worst isn't over for Japan.

The world's second largest economy contracted at its sharpest pace in nearly 35 years during the last quarter of 2008. Now, it's likely to continue to underperform other major nations early this year as demand for its manufactured goods collapses all over the world amid a deepening global economic crisis.

Japan's gross domestic product shrank by an annualized pace of 12.7% during the quarter, the government said Monday, a steeper decline than a contraction of 3.8% reported earlier for the U.S. and 5.9% in the euro-zone for the same period. A big reason was an unprecedented 14% decline in exports on quarter and sharply lower capital spending by companies.

Exporters including Toyota Motor Corp., Nissan Motor Co., Sony Corp. and NEC Corp. have all warned of hefty losses for the current fiscal year ending March, and unveiled restructuring plans that would together eliminate tends of thousands of manufacturing jobs over the coming months. This could further dampen consumer spending.

Already, data point to further deterioration in the economy. Industrial output is expected to drop by around 20% during the first quarter, a government survey says. After tumbling by a record 35% in December, exports sank 46% from a year earlier during the first 20 days of January. In this environment, the jobless rate could climb to an all-time high of 6% or so later this year, from 4.4% in December, economists say.

"It's very likely we'll see another double-digit decline for the current quarter," says Yoshiki Shinke, an economist for Dai-Ichi Life Research Institute.

The latest GDP data highlighted the vulnerability of a nation that for years relied on global trade to fuel its growth. Even though Japan has escaped a housing bubble and crippling credit losses that now weigh on the U.S. and Europe, its overall economy is shrinking much faster because it's exposed so much to consumer demand from elsewhere. Until the economy started shrinking in the second quarter of 2008, Japan had enjoyed six years of steady growth thanks to sharp increases in exports bound for the U.S. and fast-growing economies like China. Domestic demand, meanwhile remained static as workers' pay was kept low.

Exacerbating the economy's performance in the latest quarter was a rapid cool-down in exports bound for China and other Asian nations that had previously propped up Japan's economy long after demand for Japanese autos and high-end electronic products began to falter in the U.S. and Europe.

After growing 12% during the first half of 2008, Japan's exports to China began to erode in October, and fell a steep 36% in December. Japan was among the few developed nations that had previously boasted a trade surplus with China. That was because of shipments of high-tech materials and production machinery used by local manufacturing facilities owned by Japanese companies. Many of the finished goods were then shipped back to Japan or sold to other markets like the U.S. and Europe. Now that demand is shrinking both within China and for exports, such trade is suffering.

"Our sales in China began to falter around July, collapsed in October and are still dropping," said a spokesman for Union Tool Co., a Tokyo company that makes drills used to make holes in printed circuit boards, a critical component in electronic equipment from cellphones to personal computers. After reporting a 19% drop in its net profit for the year ended November, Union Tool, which derives nearly a half of its revenues from Asia including China, foresees a net loss for the six months through May, the first half-year loss in its history. To cope, the company recently said it would cut executive pay and reduced operations at its production facilities. Its factory in Shanghai operated only 15 days in January, compared with 28 to 29 days previously.

The economy is facing "without a doubt, the worst crisis since World War II," said economic minister Kaoru Yosano. He signaled the government's intention to compile a new economic stimulus package, which, according to Japanese media reports, could total 20 trillion to 30 trillion yen. His comment came in the wake of a weekend meeting of the Group of Seven nations in Rome where finance ministers and central bankers affirmed their commitments to "act together using the full range of policy tools" to support the economy.

Euro-Zone Economy Contracts Sharply

Via The Wall Street Journal

By NICHOLAS WINNING

The euro zone plunged deeper into recession in the fourth quarter of last year with its sharpest contraction in gross domestic product since records began in 1995, data from the European Union's Eurostat statistics agency showed Friday.

The decline was led by the biggest quarterly fall in German GDP in more than two decades. France and Italy also reported severe downturns as the global financial crisis throttled demand and output at home and in the region's main trading partners.

Eurostat said euro-zone GDP contracted 1.5% on a quarter-to-quarter basis and fell 1.2% on an annualized basis, the biggest falls by both measures on record. In the third quarter, GDP shrank 0.2% on a quarterly basis, but grew 0.6% on a year-to-year basis.

The fourth-quarter figures were even weaker than the market consensus estimate of a 1.3% quarterly drop and 1.2% decline on an annualized basis from a Dow Jones Newswires survey of economists last week.

The data are likely to support expectations that the European Central Bank will cut its benchmark interest rate again in March. The ECB has lowered rates to 2.0% from 4.25% in October as weaker energy prices fueled a sharp slowdown in inflation in the region.

In the third quarter, the euro zone entered recession for the first time since it was formed in 1999. Since then, business and consumer confidence has dropped to all-time lows, industrial output has fallen at a record pace, unemployment has risen to a two-year high, and demand in many of the euro zone's main trading partners has weakened.

Figures released earlier by Germany, France and Italy, the euro zone's three biggest economies, suggested the euro-zone figure would be very weak.

German economic growth posted its sharpest quarterly fall since 1987, as machinery investment and exports nose-dived, data from its Federal Statistics Office showed Friday. Real GDP declined 2.1% from the third quarter, when adjusted for seasonal and calendar effects, well below economists' forecasts of a 1.8% quarterly fall.

This was the third quarter in a row that German GDP declined, after falling by 0.5% in the second and third quarters of 2008 respectively from the quarter-earlier periods. The loss also marked the sharpest quarterly drop in GDP since the first quarter of 1987, when GDP declined by 2.5%.

Germany, the euro zone's largest economy, is widely expected to contract 2%-3% this year, which would mark the steepest decline since World War II.

France's finance ministry, meanwhile, said late Thursday that GDP in the euro zone's second-biggest economy contracted 1.2% in the fourth quarter -- also more than the 1.0% decline expected by market participants. It said GDP should contract by at least 1.0% this year on average. In a radio interview earlier Friday, French Finance Minister Christine Lagarde said the country was, "clearly in a recession."

In Italy, GDP shrank 1.8% on a quarter-to-quarter basis between October and the end of December, the sharpest decline since 1980, after contracting 0.6% in the third quarter.

Eurostat said the EU economy as a whole slipped into recession in the final quarter of last year. EU GDP shrank 1.5% on a quarter-to-quarter basis after declining 0.2% in the previous three-month period.

—Nina Koeppen contributed to this article.

Eastern Europe Reels as Exports Fall

Via The Wall Street Journal

By MARCUS WALKER

BERLIN -- Eastern Europe, which narrowly survived the global financial crisis with help from the International Monetary Fund, now faces a second shock wave: Industry is slumping along with exports to Europe's wealthier West.

Economic data for 2008's fourth quarter, due Friday, are expected to show growth collapsing in countries such as Poland, the Czech Republic and Slovakia, which had coped relatively well with the crisis to date.

Thus far, the downturn's toll has been worst in countries that have large trade deficits and relied on foreign borrowing to pay for their consumption, such as Baltic nations Estonia and Latvia.

Many analysts expect other countries that rely on foreign credit, such as Bulgaria and Romania, will follow the Baltics into recession now that cheap credit has dried up and investors are fleeing emerging markets.

Even the region's strongest economies are caught in the downward spiral, because of trade links with Germany and other euro-zone nations.

Data out Thursday confirm the economic pain isn't limited to Eastern Europe. Spain -- the first major euro-zone member to post national gross domestic product numbers for the fourth quarter -- entered its first recession in 15 years in the fourth quarter, reporting a 1% contraction from the third quarter Thursday. Spanish GDP contracted 0.3% in the third quarter. Two consecutive quarters of contraction is a common definition of recession.

France's GDP also contracted, shrinking 1.2% in the fourth quarter compared with the third quarter, the French finance ministry said Thursday. France, which scratched out 0.1% third-quarter growth, thus far has escaped an official recession.

"Almost every country in central and eastern Europe will have a recession in 2009," says Neil Shearing, an economist at London consultancy Capital Economics. "The collapse in industrial production that we're seeing will spread and engulf these entire economies."

Growth in Poland and Slovakia could fall to around zero this year, while Hungary and the Czech Republic will have sharp economic contractions, Mr. Shearing predicts.

Friday's data are expected to confirm that Hungary's economy is shrinking. The country is suffering from falling exports and financial strains because of its citizens' excessive borrowing in foreign currencies in recent years.

Analysts expect data for Slovakia -- which joined the euro zone in January -- and the Czech Republic to show that a slowdown began in the fourth quarter, driven by collapsing Western European demand for cars.

The two countries fashioned themselves as the Detroit of Europe in recent years. Sales in Western Europe of cars made in the Czech Republic, Slovakia and Hungary are currently down about 30% from a year ago, says Gyula Toth, Central Europe economist at Unicredit in Vienna.

Economists say prospects for a recovery depend heavily on Germany, which buys roughly a third of its eastern neighbors' exports. Germany's economy is set to shrink by about 2.5% this year, the IMF predicts.

Some business surveys suggest Germany might stabilize in the second half, however.

—Geraldine Amiel, Jonathan House and Jason Sinclair contributed to this article.

Coping With Aftermath of Layoffs at Your Firm

By TODDI GUTNER
The Wall Street Journal

Relief, guilt, grief and fear are all typical feelings of employees are left behind in an office after a wave of layoffs. It's easy to get mired in the emotions; it takes deliberate thought and action to manage in the workplace after colleagues have been laid off. "To be a survivor you have to act like one," says Janet Banks, an executive coach in Boston. "People who survive difficult experiences and economic times are able to do so because they can imagine a time when things will change for the better," she says. Here's how to cope and position yourself in the office after a round of layoffs.

Confirm new business priorities. Not only do the number of employees change after a layoff, but often the direction of the business and the importance of various projects also change. Check in with managers at least one or two levels above you to find out what the highest priority work is now, says Mark Phelps, a senior consultant at Development Dimensions International, a Pittsburgh human-resources firm. Ask for detailed descriptions of your new responsibilities, especially if you've taken on the work of a former colleague.

Take initiative. Now is the time to get out of your comfort zone at work and stretch yourself. At a time when there are fewer people to do work, "look for projects and raise your hand for new assignments that need to be done," says Mr. Phelps. Managers will see you as someone who is willing to go the extra mile. You might also open yourself up to other opportunities by taking on new projects or picking up new skills.

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