Archive for January, 2010

7 Rules of Wealth Building:Practical Keys to Amassing Investment Capital

by Guest Blogger, Joshua Kennon of About.com

Statistics show that for the average person, the level of net worth they achieve in life comes down to a handful of key decisions they make about love, family, education, and occupation. Knowing what these are can help you make a conscience choice. Jan Stromme, Getty Images

Most parents want to teach their children responsibility – how to become self sufficient and succeed in life (after all, no one plans on raising a dead beat). However, very few actually accomplish this task. Why? Because, as parents, we are limited to the experiences our parents passed on to us; the antiquated notion that “responsibility” is simply getting a job, saving a little money, and maybe purchasing a car or some equally important item. Hopefully these seven rules will open your eyes and help you teach your children to avoid the traps that have stolen financial success from so many people.

Wealth Building Rule 1: Put Off Marriage

Your biggest obstacle to attaining wealth is YOU. Too often, people live their lives in a manner that is not conducive to creating riches and then get frustrated at “the system” when they only really have themselves to blame.

One of the most important financial decisions you will ever make is marriage (more specifically who you marry and when). By putting off the walk down the aisle for a few years, you can save a decade worth of frustration. Your first goal should be to become financially independent, with little or no debt, and have your investments in place. Once you have these three things, your odds of success are drastically improved by beginning your journey on a level playing field (after all, the number-one reason for divorce is financial trouble).

Wealth Building Rule 2: Debt is a Disease

With a few notable exceptions, debt is a form of bondage; a disease that enslaves the borrower. A few years ago, there was a young lady attending college who shot herself because she couldn’t pay back $2,300 in credit card debt. Although an extreme example, it is a testament to the power money has over peoples’ lives. Imagine your life without owing anyone anything; your car, your house, your education, all paid for in full. Like what you see? When you want it badly enough, you will make extinguishing your debt your number one priority.

Wealth Building Rule 3: If You Don’t Like Where your Parents Were at Your Age – Do Things Differently

The old cliché that “insanity is doing the same thing over and over expecting different results,” holds just as true today as it did when it was originally written. If you don’t like where your parents were at your age, stop what you are doing. During your childhood, they taught you all they knew about money. For many people, these early years established how they feel about their finances today. In order to become financially successful, you must do something different than they did. Otherwise, you will end up exactly as they are.

Wealth Building Rule 4: When you Begin a Job, Look at the Pay of the Highest Employee

Whether you are looking for employment now or are thinking about it sometime in the near future, one of the most important things for you to do is to look at what the top-dog gets at any company for which you are considering working. This will give you an idea of how high you can expect to climb in terms of earnings and promotion. If the CEO is making $30,000 a year, you have no chance to make six figures. Select a job accordingly.

Resources:
Transforming Debt Into Wealth Set By John M. Cummuta

This article was originally published as part of About.com’s Investing for Beginners Guide and was written by Joshua Kennon.  About.com is a part of The New York Times Company. All rights reserved.

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The Benefits of Buy to Let Investing

The housing market has recently been experiencing a bit of a slow down. Although this might have come with a sigh of relief from the first-time buyers, it has left some of those thinking of investing in the Buy to Let market in a bit of a quandary. Is it the right time to invest in a Buy to Let property? Well, Buy to Let is certainly a big commitment and not one to be taken lightly, however if it is well researched and undertaken as a long-term investment, it is unlikely that the average Buy to Let investor will lose money. So what benefits could you reap from taking that step towards investing in the Buy to Let property market?

Buy to Let – The Benefits.

With a bit of research and the right Buy to Let mortgage anybody can take advantage of this type of investment but what type of rewards from Buy to Let can you expect?

�Investment – Buy to Let allows you to maximise the longevity of your property investment.
�Low Interest Rates – The relatively low Buy to Let mortgage rates is convincing many to take the Buy to Let plunge.
�Professional Tenants – Over the last decade there has been an increase in the number of professionals being located to the bigger UK cities. This type of tenant is often viewed as preferable to students.
�Extra Money – A Buy to Let property guarantees you an extra monthly “salary”.
�Profit – Don’t forget that over time your property should appreciate in value. If correctly maintained and sold at the right time, a Buy to Let property can make you a significant profit.
�Rental Demands – Current surveys suggest that demand for rented accommodation in some of the UK’s larger cites with high population density, is outweighing supply.

�Hassle-free – If you use a reputable letting agent the letting process should be relatively hassle-free. This means you can sit back and relax while you watch the money roll in.
�Invest in you Investment – You can improve the value of your Buy to Let property through carefully planned renovations and therefore invest in your investment.
�Financial Security – Renting out the property can provide you with a degree of financial security which you otherwise may not have.
�Ex-pat Advantages – If you are going to work abroad you can rent out your property rather than having to sell it or leaving it empty.
�Stability – If you are looking to invest your money, Buy to Let property is a relatively stable investment.

If these sound like the kind of investment benefits that you have been looking for then maybe the Buy to Let property market is the one for you. If you decide to go ahead with your decision to invest in Buy to Let property then you would be well advised to speak to a professional mortgage adviser who will be able to assess your personal circumstances and advise if Buy to Let is the right investment for you.

About the Author
Elizabeth Grant writes exclusively for The Mortgage Broker specialist mortgage websites. To read more of Elizabeth ‘s articles on Buy to Let Mortgages please visit the Buy to Let Centre

Article source:
The Benefits of Buy to Let Investing

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Everything You Need to Know About Investing You Learned Playing Monopoly® Part 1

The following post is an excerpt from an article written by Anthony Sills entitled Everything You Need to Know About Investing You Learned Playing Monopoly® which was geared towards recent college graduates.

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Rich Uncle Pennybags a.ka. Mr. Monopoly

Now that some of the euphoria surrounding graduation has worn off it may seem like ‘reality’ is starting to set in.  And the reality is no one taught you what to do with all that money you’ll be making out in the ‘real world’.  Well, fear not because everything you need to know to manage your money, and even become a successful investor, you learned a long time ago playing Monopoly!

So you’ve graduated and maybe you even have a job.  What now?  If you’re like most of us, you were always told to go to school, get a job, work hard, and save your money but no one ever told you what to do with the money.  That’s okay.  Everything you need to know about managing money you’ve know since you were a kid.  Avoid being cash poor, invest your money wisely, and be prepared for the unexpected.  It’s all about capitalism. Efficient use of one’s money makes for good capitalism and all that requires is some basic math.

WHY IT’S IMPORTANT TO START IN YOUR TWENTIES

Just like in Monopoly, you need to start the game focused and take control early.  After all, you don’t want to just pass the time, you’re trying to win!

First thing you need to do is figure out your goals.  What do you want out of life?  Whether you’re absolutely certain, or don’t have a clue what you want, the important thing is to start thinking about it.  That way you can develop a plan that will help you get there.  There’s no time like your twenties to start putting your money to work for you so that you can achieve your financial goals throughout your life. Developing good spending and saving habits, and learning to budget and invest during your twenties, can help you prevent needless debt, and allow you to put away money for the things that are important to you.  Not to mention you can take advantage of the power of compounding (beginning the game focused and taking control early) to start building a nice nest egg.

In fact, compounding of earnings is so powerful that those who start saving for retirement in their twenties can amass large nest eggs with relatively little effort, as long as they invest regularly.

For an example of the power of compounding, take a 25-year-old who invests $2,000 a year for eight years and never invests an additional dollar after the age of 33. He or she will earn more by the age of 65 than a 35-year-old who invests $2000 a year for 32 years, even though the 35-year-old invests four times as much.

Or consider this: Someone who puts $4,000 a year into retirement accounts starting at 22 can have $1 million by age 62, assuming 8% average annual returns.   Wait 10 years to start contributing, and you’d have to put in more than twice as much — $8,800 a year — to reach the same goal.

Think about it.

Another benefit to starting early is that you want to invest as much as you can.  Take advantage of employer contributions and matches to retirement accounts.  Start to study investments and how money works.  At least learn enough to know what’s going on with your money and the people that handle it (investment advisors, accountants, banks, mortgage companies, etc.).  If your employer offers a 401k or other retirement plan, sign up for it and contribute as much as you can. If not, start contributing to a traditional or Roth individual retirement account. Aim to put aside 10% to 15% of your gross pay. Contributing every dime you can now will give you flexibility when you’re older, either to retire early or to cut back your contributions so you can cover other expenses (like future children’s college educations) without derailing your retirement plans.

Expect the Unexpected

Just like in Monopoly, even a well-planned strategy is still subject to Murphy’s Law.  So be prepared.  There’s no such thing as a good time for a bad thing to happen. That’s why it’s important to set aside funds for unexpected expenses that may result from an accident, temporary unemployment or major health related expenses.

You should be saving as much as you can, and optimally have three to six months living expenses (rent, transportation, bills, etc) earning interest somewhere relatively accessible in case of emergency.  Start small. Add to your reserve when you get a raise—or when you receive a tax refund, a gift of cash or a rebate.

Get health insurance. You’re one accident or illness away from financial disaster if you don’t have coverage. If your employer doesn’t offer insurance, try to buy an individual policy. Opting for a high deductible can keep the monthly premium down but still offer you protection from catastrophic medical bills.

In future editions we will discuss Why No One Gets Rich Renting, Income Taxes, Investment Strategies, Real Estate Investing, Mortgages, Winning A Zero-Sum Game, and Bankruptcy.

Monopoly® and Rich Uncle Pennybags (a.ka. Mr. Monopoly and Milburn Pennybags) are registered trademarks of Hasbro, Inc. All rights reserved.

About the Author

Anthony Sills, M.B.A. is a veteran of the financial services industry having formerly traded FOREX from the Atlanta Financial Center and worked for stock advisory services, brokerages, Fortune 100 companies, and national banks including Bank of America and Washington Mutual.  Mr. Sills is currently a licensed loan officer and freelance writer. He is considered a FHA and FTHB expert as well as an authority on real estate investing.  You can reach him at anthony@bettercredit101.com.




Denied? Due to bad credit?

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Is There Really a Magic Formula for Investing

One question almost every investor asks at some point is whether it is possible to achieve above market returns by selecting a diversified group of stocks according to some formula, rather than having to evaluate each stock from every angle.

There are obvious advantages to such a formulaic approach. For the individual, the amount of time and effort spent caring for his investments would be reduced, leaving more time for him to spend on more enjoyable and fulfilling tasks. For the institution, large sums of money could be deployed without having to rely upon the investing acumen of a single talented stock picker. Many of the proposed systems also offer the advantage of matching the inflow of investable funds with investment opportunities. An investor who follows no formula, and evaluates each stock from every angle, may often find himself holding cash. Historically, this has been a problem for some excellent stock pickers. So, there are real advantages to favoring a formulaic approach to investing if such an approach would yield returns similar to the returns a complete stock by stock analysis would yield.

Many investment writers have proposed at least one such formulaic approach during their lifetime. The most promising formulaic approaches have been articulated by three men: Benjamin Graham, David Dreman, and Joel Greenblatt. As each of these approaches appeals to logic and common sense, they are not unique to these three men. But, these are the three names with which these approaches are usually most closely associated; so, there is little need to draw upon sources beyond theirs.

Benjamin Graham wrote three books of consequence: “Security Analysis”, “The Intelligent Investor”, and “The Interpretation of Financial Statements”. Within each book, he hints at various workable approaches both in stocks and bonds; however, he is most explicit in his best known work, “The Intelligent Investor”. There, Graham discusses the purchase of shares for less than two – thirds of their net current asset value. The belief that this method would yield above market returns is supported on both empirical and logical grounds.

In fact, it currently enjoys far too much support to be practicable. Public companies rarely trade below their net current asset values. This is unlikely to change in the future. Buyout firms, unconventional money managers, and vulture investors now check such excessive bouts of public pessimism by taking large or controlling stakes in troubled companies. As a result, the investing public is less likely to indulge its pessimism as feverishly as it once did; for, many cheap stocks now have the silver lining of being takeover targets. As Graham’s net current asset value method is neither workable at present, nor is likely to prove workable in the future, we must set it aside.

David Dreman is known as a contrarian investor. In his case, it is an appropriate label, because of his keen interest in behavioral finance. However, in most cases the line separating the value investor from the contrarian investor is fuzzy at best. Dreman’s contrarian investing strategies are derived from three measures: price to earnings, price to cash flow, and price to book value. Of these measures, the price to earnings ratio is by far the most conspicuous. It is quoted nearly everywhere the share price is quoted. When inverted, the price to earnings ratio becomes the earnings yield. To put this another way, a stock’s earnings yield is “e” over “p”. Dreman describes the strategy of buying stocks trading at low prices relative to their earnings as the low P/E approach; but, he could have just as easily called it the high earnings yield approach.

Whatever you call it, this approach has proved effective in the past. A diversified group of low P/E stocks has usually outperformed both a diversified group of high P/E stocks and the market as a whole.

This fact suggests that investors have a very hard time quantifying the future prospects of most public companies. While they may be able to make correct qualitative comparisons between businesses, they have trouble assigning a price to these qualitative differences. This does not come as a surprise to anyone with much knowledge of human judgment (and misjudgment). I am sure there is some technical term for this deficiency, but I know it only as “checklist syndrome”. Within any mental model, one must both describe the variables and assign weights to these variables. Humans tend to have little difficulty describing the variables – that is, creating the checklist. However, they rarely have any clue as to the weight that ought to be given to each variable.

This is why you will sometimes hear analysts say something like: the factor that tipped the balance in favor of online sales this holiday season was high gas prices (yes, this is an actual paraphrase; but, I won’t attribute it, because publicly attaching such an inane argument to anyone’s name is just cruel). It is true that avoiding paying high prices at the pump is a possible motivating factor in a shopper’s decision to make online Christmas purchases. However, it is an immaterial factor. It is a mere pebble on the scales. This is the same kind of thinking that places far too much value on a stock’s future earnings growth and far too little value on a stock’s current earnings.

The other two contrarian methods: the low price to cash flow approach and the low price to book value approach work for the same reasons. They exploit the natural human tendency to see a false equality in the factors, and to run down a checklist. For instance, a stock that has a triple digit price to cash flow ratio, but is in all other respects an extraordinary business, will be judged favorably by a checklist approach. However, if great weight is assigned to present cash flows relative to the stock price, the stock will be judged unfavorably. This also illustrates the second strength of the three contrarian methods.

They heavily weight the known factors. Of course, they do not heavily weight all known factors. They only consider three easily quantifiable known factors. An excellent brand, a growing industry, a superb management team, etc. may also be known factors. However, they are not precisely quantifiable. I would argue that while these factors may not be quantifiable they are calculable; that is to say, while no exact value may be assigned to them, they are useful data that ought to be considered when evaluating an investment.

There is the possibility of a middle ground here. These three contrarian methods may be used as a screen. Then, the investor may apply his own active judgment to winnow the qualifying stocks down to a final portfolio. Personally, I do not believe this is an acceptable compromise. These three methods do not adequately model the diversity of great investments. Therefore, they must either exclude some of the best stocks or include too many of the worst stocks. It is wise to place great weight upon each of these measures; however, it is foolish disqualify any stock because of a single criterion (which is exactly what such a screen does).

Finally, there is Joel Greenblatt’s “magic formula”. This is the most interesting formulaic approach to investing, both because it does not subject stocks to any true/false tests and because it is a composite of the two most important readily quantifiable measures a stock has: earnings yield and return on capital. As you will recall, earnings yield is simply the inverse of the P/E ratio; so, a stock with a high earnings yield is simply a low P/E stock. Return on capital may be thought of as the number of pennies earned for each dollar invested in the business. The exact formula that Greenblatt uses is described in “The Little Book That Beats the Market”. However, the formula used is rather unimportant. Over large groups of stocks (which is what Greenblatt suggests the magic formula be used on) any differences between the various return on capital formulae will not have much affect on the performance of the portfolios constructed.

Greenblatt claims his magic formula may be used in two different ways: as an automated portfolio generation tool or as a screen. For an investor like you (that is, one with sufficient curiosity and commitment to frequent a site such as this) the latter use is the more appropriate one. The magic formula will serve you well as a screen. I would argue, however, that you needn’t limit yourself to stocks screened by the magic formula, if you have full confidence in your judgment regarding some other stock.

These four formulaic approaches (the three from Dreman and the one from Greenblatt) will likely yield returns greater than or equal to the returns you would obtain from an index fund. Therefore, you would do better to invest in your own basket of qualifying stocks than in the prefabricated market basket. If you want to be a passive investor, or believe yourself incapable of being an active investor, these formulaic approaches are your best bet.

In fact, if I were approached by an institution making long – term investments and using only a very small percentage of the fund for operating expenses, I would recommend an automated process derived from these four approaches. I would also recommend that 100% of the fund’s investable assets be put into equities, but that is a discussion for another day (in fact, it’s a discussion for Tuesday; my next podcast is devoted to the dangers of diversification). If, however, you believe you have what it takes to be an active investor, and that is truly what you wish to be, then, I would suggest you do not use these approaches for anything more than helping you generate some useful ideas.

If you choose this path, you need to be clear about what being an active investor entails. Read this next part very carefully (it is correct even though it may not appear to be): I have never found a screen that generates more than one buy order per hundred stocks returned. Even after I have narrowed the list of possible stocks down by a cursory review of the industry and the business itself, I have never found a method that can consistently generate more than one buy order per twenty – five annual reports read.

Here, I am citing my best past experiences. In my experience, most screens result in less than one buy order per three hundred stocks returned, and I usually read more like fifty to a hundred annual reports per buy order at a minimum. You may choose to invest in far more stocks than I do. Perhaps instead of limiting yourself to your five to twelve best ideas as I do, you might want to put money into your best twenty – five to thirty ideas. Do the math, and you’ll see that is still quite a bit of homework.

That’s why remaining a passive investor is the best bet for most people. The time and effort demanded of the active investor is simply too taxing. They have more important, more enjoyable things to do. If that’s true for you, the four formulaic approaches outlined above should guide you to above market returns.

About the Author
Geoff Gannon writes a daily value investing blog and produces a twice weekly (half hour) value investing podcast at Gannon On Investing

Article source:
Is There Really a Magic Formula for Investing

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Wealth Building Tips and Tools to Attain More Money Than You’ll Ever Need

Everyone wants to acquire riches, but many don’t know how. If you’re clueless on where to start or what to do, that ends now. This article reveals wealth building tips and tools for anyone who’s interested to improve their lifestyle.

I believe you’re not likely to run away from such an opportunity for growth. Don’t worry; all these tips are legal and ethical. So without further ado, I give you these wealth building tips and tools.

Wealth Building Tip # 1: Learn Restraint.

It’s a lot more difficult to discipline yourself when you’re equipped with a credit card. However, that is part of the challenge.

If you really want to be wealthy, you must first avoid unnecessary purchases. Not only will this save you money, this will also teach you to discern wise buys from unwise buys. You’ll become a better decision maker and will ultimately have more control of your money.

Don’t be one of those people who allow themselves to be victimized by materialism. It’s not a bad thing to splurge once in a while; but when the compulsion gets out of control, you might as well say goodbye to your wealth and say hello to mountainous debts.

Wealth Building Tip # 2: Learn To Invest.

Money will not grow on its own. You have to invest it if you want your wealth to expand. Of course, you can’t just put all your money into one pot. Nor should you scatter it around without a second thought.

From the first tip, you should have already developed patience and wisdom. Before investing your money into anything, make sure you have researched well. Consult others who are more knowledgeable and more experienced in that area.

Investments can also be risky. But that is part of learning how to build wealth. Be prepared to have a plan B in case things go awry. Plan Bs are very crucial. Ask the most successful entrepreneurs and leaders, and majority of them would have a plan B (or even Plan C and D) waiting in the wings.

Wealth Building Tip # 3: Learn To Manifest Wealth.

Manifesting wealth with your mind is critical in attaining abundance. If you think like a poor person, you will become or remain that way. If you think like someone who knows wealth and who has experienced wealth, then your chances of acquiring riches are magnified ten times over.

It’s all about mind over matter. What you think about most of the time will be reflected in what actually happens to you. So if you want to manifest wealth, think in those terms and see the magic happen.

These wealth building tips and tools are available at your disposal. Use them wisely.

Author: Michael Lee
Article Source: EzineArticles.com
Provided by: Cellphone news

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Team Building Maneuvers and the Team’s Leadership

Conquering the Challenge of “Change” through Team Building Maneuvers

Nothing is as upsetting to your people as change. Nothing has greater potential to cause failures, loss of production or failing quality. Yet nothing is as important to the survival of your organization as your people and their response to change.

Research tells us that 70 percent of all change initiatives fail (Source: Author Peter Senge, “The Dance of Change,” Doubleday Press, Toronto, Ont. 1999, p. 3-4). Beyond a doubt, the likelihood of your change initiative failing is overwhelming. Since 2004, I’ve studied, facilitated and taught change processes and experience tells me that change efforts fail for one, two, or all of the following three reasons:

1. Failure to properly define the Future Picture and the impact of the change.
All too often, the “change” initiative addresses the symptoms of current challenges and problems rather than the future the organization wants or needs to create. Change is about creating a desired future, not just correcting current problem/symptoms.

2. Failure to properly assess the current situation, in order to determine the scope within the requirements for change.
Organizations perpetually assess the current situation against current measures of performance. However, change is not the same as problem-solving or project management. Rather, managing change is about moving an organization strategically forward to achieve its vision of the future.

3. Failure to effectively manage the transition of moving from the present to the future.
Experience demonstrates that failure to effectively manage the transition/transformation need is the leading cause of failure for strategic change initiatives. The change itself is not the problem. Change is an event; it is situational: deciding to implement a new system, target a new market, acquire or merge two organizational cultures (Source: Author William Bridges, “Managing Transitions: Making the Most of Change,” Addison Wesley, Don Mills Ont., p.3). The problem occurs with what happens within the gap between the present and future, after the “change” and before you get to “there.” The reality of change is that change is about people not structures – people are the reasons for stop gaps in change initiatives!

Failure to successfully execute often comes from seeing the change as solely structural, so once the new system is designed and ready for implementation, the new organization is agreed upon and the doctrine papers are signed to legalize the “deal,” everyone, including the CEO, walks away from what is considered (prematurely) a “done deal.” This is a mistake that goes on all too often like a broken record. History is full of examples of organizations and teams that failed when experiencing changing environments (most of them are now extinct). The secret to successfully managing change, from the perspective of the people within the organization and their teams, is “definition” and “understanding.” To make it clear, I’ll explain them in subsets.

Definition and Understanding for the “WHAT” in Teams

It is important to understand that not everyone who works together or in close proximity is a member of a team. This concept is a misnomer for a lot of people. A clear explanation of a team is a group of individuals who are interdependent with respect to intelligence, information, transferable skill sets, resources, and tools and who seek to combine their efforts to achieve a shared-vision towards a common goal. A team, for instance, is either building or falling apart. An essential aptitude for true team building and the maneuvers they require is leading the team into building on a continuous basis. Team building maneuvers lead a group into higher levels of team spirit, cooperation and interpersonal communication. Building teams is the process of developing on the team-dynamics and interpersonal relationship of the people that come together to make-up the unit. Team spirit either grows or it dies based on the dynamics of the unit.

Teams have specific characteristics that should be addressed:

- Teams must be constructed to achieve a shared-vision for a shared goal.
- Team associates are interdependent regarding some common interests; teams are the instrument of sustained and enduring success in leadership and management.
- Teams use strategic thinking, acting, and influence – associates each possess the authority to manage their own stimulus for change.
- A team is a type of group, but not all groups are teams – team leaders know this to be true.
- Teams are formed to best facilitate learning and peak performance while operating in a socialist environment.
- Team associates are not responsible to “self,” but to their team and its mission; their obligation is to guide the unit to find its voice, while strategically and flawlessly executing.
- Teams learn to navigate positive transition to disseminate authority and power for change – and, they understand when it is a “must” to move into greater levels of performance (the difference between ordinary and extraordinary high performance teams).

The difference between ordinary teams and high performance teams are its people and their abilities to overcome the fear of change. High performance teams place a focus on the people who drive the overall performance within the system: “how do you define a high-performance team?” A high performance team is a group of people who are led by an exception leader, ALL having complementary skills, who understand roles and goals, and who are committed to achieving those goals through a shared-voice, as one unit or body, to demonstrate strategic and flawless execution measures for overcoming changing environments.

This team format learns quickly how-to work together toward mutual goals using their individual skills to support one another regardless of the situation they are engaging or any amount of resistance to change from a fear of the unknown or an expectation of loss or failure.

The “alpha” of the high performance team’s resistance to change is how they perceive the change. The “omega” is how well they are equipped to deal with the change they expect. The team member’s degree of resistance is determined by whether they perceive the change as good or bad, and how they expect the impact of the change to be on the entire unit. Their ultimate acceptance of the change is a function of how much resistance the team member has and the quality of their coping skills and their support system. The job role of the team leader is to address their resistance from both perspectives by helping each member reduce it to a minimal, manageable process level. The success of the response depends on the leader’s ability to lead by example, their level of trust from the members on the team and their ability to persuade the members to overcome their resistance so the unit can move ahead. When the leader is able to communicate a low threat level and/or limited risk, the member’s perception will be one of trust for engaging the objective. Simply, it will all come down to the leader’s relationship with the team; hence, the success of the team not only depends on its members, but also on the leadership they follow.

Definition and Understanding for Accepting “CHANGE” on Teams and Organizations

Now, we’ll look at how teams can manage change and fear, and overcome them both to perform at its peak as a unit, and pronounce its leadership style to permeate peak performance across an entire organization. The “alpha” here begins by looking at change as an emotions state that is synonymous with fear. Fear stipulates an uncomfortable emotional response to potential threats and a way of life. It is a basic survival mechanism that occurs in response to specific stimulus of future events, such as worsening of a situation or continuation of a situation that is unacceptable. It needs to be addressed by the leadership personnel in as much detail and as early as possible. Leadership must be able to provide updates as things develop and become clearer if any chance is possible for overcoming the fears that are the precursor for change.

“Definition” is a two-way street. In addition to defining a problem that causes fear, team leaders need to get their members to a point that they feel comfortable defining the reasons behind their resistance. “Understanding,” the “omega” here is also a two-way street. Team leaders must be prepared to clearly explain to their members what is changing and why. They must also be clear about the member’s reluctance. Here are a few things that the team leaders must be aware of:

- Team leaders must not try to rationalize the issues, but focus on opening and maintaining clear channels of communication with their team members so they understand what is coming and what it means to them and the unit.
- Team leaders must be able to help their member gain a comprehensive understanding of the situation at hand, both the positives and negatives.
- Team leaders must inform their members what the change will be, when it will happen and why – what is not changing and how the anchors on the team (the characteristics, such as “trust” that holds the team together) will be affected as they face the winds of uncertainty and change.
- Team leaders must be able to understand the specific fears of each member. What their concerns are and how strongly they feel about the potential outcomes, both the positives and negatives (do they perceive it as a good or a bad thing?).

The Bottom Line: Definition and Understanding

Conquering the challenge of “change” through team building maneuvers requires innovation, creativity and some good old fashion “leadership.” People yearn for ideas (big and small ones) and think that if they just had that one “right” idea for the team or organization, success would surely come. Certainly, we can all do things to be more creative, but having ideas isn’t the biggest, or even first, source of our challenges.

Think about it this way. You’ve experienced what is believed by you to be the greatest workshop ever attended, so you go back to the workplace to integrate what you’ve learned – only, you never do. You’ve thought about trying a new approach to your meetings, but never did. You’ve had a great idea that never went anywhere. You’ve had an idea for a new process, but failed to introduce it to other the leaders. The list can go on and on and you’ll see that there’s no shortage of ideas or creativity that is stopping you. What is stopping you is fear, the fear of change or the fear of failure. Either way you look at it, fear is the stimulus that stops great people from doing great things – the action that is required for successful progress in life and in the workplace.

Change and Failure (Breakdown)

Failure and success are the outcomes of change. No matter how you look at them both, they each have a constant that cannot go unnoticed, “leadership.” We cannot succeed at higher levels of performance if we maintain status quo, but inherent in change is the possibility that we might fail or experience a breakdown in process. So any discussion of the “fear of change” or the “fear of failure” needs to start with a discussion on transition and transformation. While there are downsides and risks involved in change (including the risk of failure) think of all of the positives that can come from change:

- Process Improvement to Leadership and Management,
- Overall Employee Performance Increases,
- Team Development, Transition and Transformation,
- Greater Satisfaction (Individual) – Personal Proficiency,
- Organizational Renewal – Professional Mastery, and
- Marketplace Expansion, and much more.

And these are just a few. The next time you feel the fear of failure, think about how you feel about change and how it impacts your level of fear. All change involves a certain amount of uncertainty and ambiguity and those two conditions provoke anxiety. This is a reason to hold onto the past for lessons learned; it’s familiar, and as the adage goes, “better what you know versus whet you don’t know.” So, although change has the ability to promote new systems, structures, organizations and teams, people will always conform to the “same old~same old,” unwilling to let go of the past. That is why looking at the positives and keeping an open mind is so critical to the success of experiencing change.

Structuring Failure and Success (Breakthrough)

One individual’s failure is another individual’s success; it’s all based on a decision that “must” be made at some point. Sun Tzu, arguably the greatest military strategist that many still follow, had his say on success and failure: “Consideration and analysis of The Five Elements, “Dao” – Moral Unity, “Tian” – Weather Condition, “Di” – Geographical Condition, “Jiang” – Leadership Quality, “Fa” – Discipline and Organization Structure, a must know for all commanders. Victory to those who understand and no victory to those who does not. The Five Elements will determine success or failure of conducting war.”

Here’s an explanation of Sun Tzu’s statement through comparison and an analytical lens. The Five Elements will reveal the factors of success and failure of all battle, namely: Moral Unity, Weather Condition, Geographical Condition, Leadership Quality, Discipline and Organization Structure.

Moral Unity determines the cohesiveness between the ruler and his subjects, the leader and his followers, the general and his soldiers. Ultimately, to achieve full support by fellowman, putting aside life and death matters and share the view of the ruler’s is the goal of Moral Unity. Only when a view or decision is fully supported, can orders be carried out smoothly by the team.

Weather Condition such as summer/winter and drought/flood will have significant affects on how plans are executed. When weather is an element that no one has any control, the best strategy will be take full advantage of the conditions when able. Going against the force of nature may prove rewarding when one overcomes, but it usually spells destruction.

Geographical Condition here refers to distance of near/far, terrain/mountainous/flat regarding the battle space, wide/narrow the battle field and whether the location chosen to engage the battle favors attack/defense.

This will limit the size, type and performance of the troop. The same for business – this will also determine the team’s reaction to the mission and the amount of resources – people, process and management of initiative that will be required to win.

Leadership Quality (my favorite) concerns the general/commander’s leading capability. There are five qualities of a good leader: “wisdom, trustworthiness, benevolence and deportment, courage (both physical and emotional) and sternness (temperament).” These five qualities will affect the leading capability of a commander, his culture and climate for organizational behavior effectiveness within the environment and the efficacy and value of his command being carried out by the people under his leadership.

Discipline and Organization Structure is the system of open communication and the vehicles used to do so – how each level within the organization manages and leads the people and process, including logistics. It requires a fair, consistent and clear communication to everyone. Communication is the greatest resource in all of life, not only in organizations, but in all we set out to accomplish. Effective communications is leadership’s greatest tool to win its people, systems, processes and management of functions.

As The Five Elements are inter-related, no leader can either ignore or fail to understand the constructive/destructive nature of each element. Victory will overcome “failure” and “success” will fall upon those who analyze and clearly understand The Five Elements. Therefore, by asking who offers fairest reward and punishment, whose troop, team or organization is best trained and led, whose equipment and resources are more efficient and plentiful, who can deliver and communicate order/leadership smoothly, effectively and thoroughly, who has better geographical/weather advantages (culture and organizational climate), who has more resourceful leaders and followers – teams, whether the appointed leader/leadership is wiser, more strategic in their thinking, tactical in their approach to engage and has virtue… the winner is clear, defined and understood.

Constructing it all to Enhance Leadership for Teamwork as an Essential Goal

What am I referring to in the term “Leadership for Teamwork?” Organizations can try to influence leaders to work as a team, but only leaders themselves can make it work. Why should you want to be a team-oriented leader, and how can you take steps to make it happen, even when the status quo is not favorable? A strong motivator to becoming a better cohort with your leaders-colleagues-peers is to take stock of what “not” collaborating is costing you during the tough times (and, even the not so tough times).

As you attempt to lead others and yourself, it is important to keep in mind your quintessential intention to enhance, deepen and strengthen the spirit of “we are absolutely on the same team, sounding with one unified voice, and committed to achieving the same outcome/ Future Picture for one another.” Integrate the improvement of the quality of leadership for effective teamwork into your objective, strategy and tactics. Include it in the vision and mission and ensure that all members across each level of the organization understand and can communicate it without fail. It must not “only” be written on a fancy picture and placed on the wall (the all too common inspirational). It must run like blood through veins and become as important as the air we breathe.

Express your value of Leadership for Teamwork and team fortitude by ensuring that the cost factor is not as important in the decision to remain on a continuum to train organizational behavior, transformational leadership, strategic execution and team building maneuvers as the decision to make all allocations to do so. The cost of not doing it, even when things are tough, offers a far more potential for failure.

If you overlook Leadership for Teamwork and effective team building maneuvers by focused exclusively or excessively on the outcome you want teamwork to accomplish, you’ll place your team and organization in a position to neglect the means to your end and eliminate the solution-centric outcomes in your future. This would be like a U.S. Marine purposely neglecting to adequately care for his weapons while on the battlefield.

How you think about each individual and team in the organization is the most critical aspect in Leadership for Teamwork. By leading your own thoughts, you begin leading in the most significant way. So discipline yourself to think about those you are responsible for leading as members of your team, and not as your problems, adversaries or competitors. You have to “mentally embrace” them as for you, and not against you, particularly when they demonstrate difficult conduct. This is the truest form of selflessness that, in most cases, is forgotten.

An effective and easy tool to form the greatest disciplines in Leadership for Teamwork is for everyone to do his best to interpret the behaviors of others, however dissonant, as a sign of a core challenge or initiative that needs immediate attention. It’s important to realize that behaviors are a form of communications to address Leadership for Teamwork and this action can transform bad feelings of resentment into positive organizational behaviors and gratitude. Our President Barack Obama, the 44TH of the United States, used similar techniques to successfully win the elections to lead the American people; “CHANGE and Leadership for Teamwork!” His message rings true around the world and is also being used to bring communities and Governments (also forms of teams) together in ways that at one time, would never have been thought of. Marcus Aurelius said, “Accept the things to which fate binds you, and love the people with whom fate brings you together, but do so with all your heart.”

This statement can be applied to teams and defines the true meaning of Leadership for Teamwork. The team that is not overwhelmed with being productive and full of life is far too busy dying. Life is born from every member and led by every member. Regard Leadership for Teamwork as an essential means for overcoming fear, winning change and leading through cooperation to experience peak performance that takes the organization to the next level.

How to Lead your Team to the Next Level

What is the worst thing that could happen? Actually, people will ask a more rhetorical question: “what could happen?” But, they never really get the answer they are hoping for because of fear. Most of the time, just asking the question seems like progress is being made or, a significant amount of time (meetings to schedule more meetings that promotes nothing but time and talk) planning and not executing. This is a question that simply hangs in the spam folders, lost in internet space or on a memo at the water cooler. Don’t let it become a technical “error message” that requires someone else to get it done. Take the initiative to go against the status quo and get the question answered yourself. Consider the very worst thing that could happen; answering the question for yourself can and will stimulate movement in a positive direction. Often, the absolute worst case isn’t as bad as might think.

What is the best possible outcome? Seriously, what is the best thing that could happen? Think about the scenario where everything goes perfectly. Will this be your outcome? Maybe not, but your worst case scenario likely won’t happen either. It takes both of these questions to really understand your situation. Chances are, your results will be somewhere between the two. Once you have considered the range of possibilities, you are in a better position to decide whether to proceed or not, and you will have definitely reduced your fear of failure if you do take that step forward.

Next, you can explore the development of a “Memorandum of Understanding” (MOU) for the team. This is designed for people to learn broadly, to inspire the service out of generosity for others, and to prepare them to lead courageously into the future. A Memorandum of Understanding encourages a perspective to become firmly grounded in the potential for successful growth using a series of constructs – a portfolio management approach – that everyone buys into for effective deportment and forward movement. A Memorandum of Understanding acts as the blueprint for strategic leadership on the teams and across the organization.

Are you wondering how to build an organization in which executive leaders, team leaders, middle managers and front line staff will flourish? To build an environment where people, teams and organizations will flourish and achieve peak performance, you must get the best leaders to pay close attention to the design of the elements around them (situational awareness).

The Memorandum of Understanding articulate a lucid purpose, helps to create effective leadership teams, prioritize their initiatives carefully, redesign organizational structures, employ strategic intent meets strategic agility to result flawless and strategic execution and, most importantly, integrate all these tactics into one coherent strategy.

The Memorandum of Understanding must include the following constructs:

- The Cardinal Rules,
- The Guiding Precepts,
- The Forms of Disposition,
- The General Orders,
- The Strategy Forward – Establishing Professional Mastery, and
- The Centers of Gravity.

The Cardinal Rules are a set of guidelines that are invaluable for people and organizations to follow while planning and executing at the strategic or tactical level. These rules, once established by the individual(s) or teams are the rules that govern forward movement and must not change (i.e. To manage by mind, lead by heart).

The Guiding Precepts are designed to inform people what they should and should not be doing in accordance with executing a well designed strategy to win. They also inform of the reasons “why” an action must occur and the repercussions should the individual and/or organization fail at meeting such a task (i.e. Unselfishness; this trait is the avoidance of providing for one’s personal comfort and advancement at the expense of others. The comfort, pleasure, and recreation levels should be placed above everything. Looking out for the needs of others is the essence of self-leadership).

The Forms of Disposition offer a substantive transformation in “thought” about how people achieve a perspective on things in life. It refers to an orchestrated, systemic and revolutionary new world-view resulting in a “change” of societies, cultures, and marketplaces due to behavioral perspective. This is today often called “systems theory,” which sees a web of relationships coalescing to become something greater than the parts. Individuals must be able to look at things from a perspective that they are always changing and evolving into new forms – thinking “out-of-the-box!” We are doomed to a slow death unless radical change occurs in the way we think. Change your way of thinking or die a slow death (i.e. Mistakes are a fact of life that requires an eraser; it is the ability to respond to error that counts. You can’t live without an eraser).

The General Orders are broad, community-wide “need statements,” designed to encompass a variety of related issues in a person’s life or within the life cycle of an organization. These related issues are referred to as “Guiding Objectives,” which are specific items that need to be addressed. The Guiding Strategies (developed to fit current and future circumstance) are the methods identified for addressing the Guiding Objectives, and the Guiding Policies are the specific action steps that are recommended to implement the Guiding Strategies. The General Orders, all eleven of them, offer the ability to explore implications in an open and reflective manner and reinforce each other in providing a coherency and wholeness often lacking in life cycles (i.e. Know yourself as a “Leader” and seek continuous improvement).

The Strategy Forward – Establishing Professional Mastery. The traditional values are the foundation of the modern day; that was yesterday. Tomorrow, you have an opportunity to create commitment and the needed momentum to establish, publish, share, and teach a different set of life’s code, values, and ethics to journey into the future. After much hard work, you are prepared to develop a strategy to move forward and plan the next steps to target critical successes for winning the Future Picture. What a legacy you will leave when executed with personal and professional bearing for others to follow. This is the way of the future. This is a new chapter (i.e. Remove the Jars’ Lid: Allow for profound growth by employing Transformational Thinking to navigate the maze of organizational politics – and the schedule to do so – to accept change).

The Centers of Gravity. Just as time changes, so does the internal and external influence in your life and in the life cycle of an organization. The Centers of Gravity are the dynamics within a process that offer the greatest impact on the overall system when change happens. They offer a high level of “value” and return on your energy “investment.” When combined with the concept of parallel deposits (creating energy from various perspectives in a short period of time), the Centers of Gravity make possible the seemingly impossible task of realizing success in changing paradigms. The Centers of Gravity places significant influence on the five established epicenters of any changing system to receive desired effects: Leadership, Processes, Infrastructure, Population, and Action Units.

In summary, a Memorandum of Understanding, your blueprint for strategic leadership, offers an opportunity to free up our actions as public servants. It is empowering, it is enabling and it grounds us in a public way on the fundamentals that we all must share. There is no ethical malaise. It is important to realize that the new is not a finding from what has been lost. Rather, we are like the journey of the Scarecrow in the Wizard of Oz story in search of a brain (brain power in this context); the Tin Woodsman in search of a heart, and the Cowardly Lion in search of courage. Your value system is intact and has been with you the entire way thus far. The Memorandum of Understanding simply articulates and reaffirms the core value and behavioral perspective that already underlie your personal and professional appearance and conduct to achieve significant growth.

Develop, learn and instruct the Memorandum of Understanding well. It will make the difference between winning and losing in every aspect of your life – personally and professionally – and maintain a positive team building attitude.

Finally, Maintain a Positive Team Building Attitude

To lead most effectively, the leader’s attitude needs to be strongly and deeply rooted in the dynamics of the team and its fortitude, particularly when relating with individuals who are also seeking to grow themselves and the organization they are a part. The Memorandum of Understanding has been used to lead successful transformation efforts for organization and teams to achieve their goals in and away from the organization and the battlefields of life. A paradigm-changing approach, the Memorandum of Understanding concurrently addresses multiple disciplines across the entire transformation life cycle; enabling leaders and teams help people build a stronger, more responsive and resilient organizations.

Rather than relating to a series of ongoing problematic behaviors as a hindrance or as a threat to your objective, relate to the development of your Memorandum of Understanding as a guide for how you need to build teamwork and team spirit and fortitude to meet the inevitable challenge of change and effective leadership.

If you would like to receive a copy of our Memorandum of Understanding to guide you with developing your own, simply send me an email at Dpitts@thebisongroup.com. God Speed as you continue on your path to experience your own unique state of Leadership for Teamwork, using team building maneuvers to take your people and team to new levels and conquer the challenge of overcoming the “fears of change” across the organizations and teams you are leading.

Author: Damian D. Pitts
Article Source: EzineArticles.com
Provided by: Digital Camera Times

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