"We will get past this corporate governance issue. It is most unfortunate and, I think, very regrettable, and it has had negative effects, unquestionably. But beneath it all is still a very soundly functioning system, as best I can see it.
"We do have a set of profits data which, for all practical purposes, are free of spin. It's the numbers I was mentioning -- the National Income and Product Accounts numbers -- which essentially takes corporate reports and makes the types of adjustments that one is required to see what is going on.
"Those numbers are improving fairly dramatically, as indeed they must because the necessary implications of productivity growth at a 7 percent annual rate in the average of the fourth and first quarters is very difficult to engender without a very major increase in operating earnings. And indeed, that's exactly what is happening."
So, once we get by the negative effects of hedge funds hammering the market with short sales after every rally, we will start to see some recovery in the market. Unfortunately, most individual investors won't be there. [John Robb's Radio Weblog]
Five years ago, several executives at McKinsey & Company, America's largest and most prestigious management-consulting firm, launched what they called the War for Talent. Thousands of questionnaires were sent to managers across the country. Eighteen companies were singled out for special attention, and the consultants spent up to three days at each firm, interviewing everyone from the C.E.O. down to the human-resources staff. McKinsey wanted to document how the top-performing companies in America differed from other firms in the way they handle matters like hiring and promotion. But, as the consultants sifted through the piles of reports and questionnaires and interview transcripts, they grew convinced that the difference between winners and losers was more profound than they had realized. "We looked at one another and suddenly the light bulb blinked on," the three consultants who headed the project—Ed Michaels, Helen Handfield-Jones, and Beth Axelrod—write in their new book, also called "The War for Talent." The very best companies, they concluded, had leaders who were obsessed with the talent issue. They recruited ceaselessly, finding and hiring as many top performers as possible. They singled out and segregated their stars, rewarding them disproportionately, and pushing them into ever more senior positions. "Bet on the natural athletes, the ones with the strongest intrinsic skills," the authors approvingly quote one senior General Electric executive as saying. "Don't be afraid to promote stars without specifically relevant experience, seemingly over their heads." Success in the modern economy, according to Michaels, Handfield-Jones, and Axelrod, requires "the talent mind-set": the "deep-seated belief that having better talent at all levels is how you outperform your competitors."
This "talent mind-set" is the new orthodoxy of American management. It is the intellectual justification for why such a high premium is placed on degrees from first-tier business schools, and why the compensation packages for top executives have become so lavish. In the modern corporation, the system is considered only as strong as its stars, and, in the past few years, this message has been preached by consultants and management gurus all over the world. None, however, have spread the word quite so ardently as McKinsey, and, of all its clients, one firm took the talent mind-set closest to heart. It was a company where McKinsey conducted twenty separate projects, where McKinsey's billings topped ten million dollars a year, where a McKinsey director regularly attended board meetings, and where the C.E.O. himself was a former McKinsey partner. The company, of course, was Enron.
