Indebting Your Future: Are Student Loans Good?

A student loan is the first pleasurable experience of young people introducing them the perilous idea that debt is good. Debt allows you to buy things. Debt makes it possible to live beyond your means. But debts must be paid back sooner or later. I see students loans more as an investment rather than an expense. If I learn anything from the Finance classes during my MBA, should the future discounted cash inflows be greater than the costs, it is a good investment. With student loans it used to be the case, and that´s why we have seen the rampant growth of all kinds of academic institutions giving away degrees left and right, but the picture is changing. As The Economist reports,

All over the world student indebtedness is causing problems—witness this month’s violent protests in Chile (see article). In Britain, according to a recent parliamentary report, rising university fees mean that student debt is likely to treble to £70 billion by 2015. But, partly because higher education there is so expensive, the scale of the problem is far greater in America. When the next official estimates of outstanding student debt there are published, it is expected to be close to $1 trillion, higher than credit-card borrowing (see article). Credit quality in other classes of consumer debt has been improving; delinquency rates on student loans are rising.

Should delinquency rates continue growing, very soon the financial institutions will (1) pump up the interest rates and (2) severely curb the eligible pool of loan applicants. The history will make a loop, education will become once again the privilege of the few and its prestige will go up. The debate whether education should be for all or just for a smaller fraction of the society has been going on for ever. There are those who believe that for the well-being of the society education should be given to all those who ask for it. The Soviet Union was a good example of this: the country was boasting some 98% literacy rates but it was a challenge to find a good plumber while the economists and teachers abounded. There is a second group who opine that education should be elitist and be granted to people solely on the basis of their merit. This point of view is based on the premise that a good technician is better than a mediocre philosopher and I tend to agree with this approach more. Admitting mediocre students academic institutions impede the learning process for the bright and gifted: it is a vicious circle, and at the end of the process all will emerge with the same piece of paper certifying their academic status.

I started speaking of this to prove a point that once we limit the ability of just anyone to enter higher academic institutions, the student loans will once again play the role they are supposed to: assisting those who will use their diplomas to multiply wealth, and not merely drift through the college years and emerge in the labor market with a skill set fit for a telephone operator.

We can also talk about the role of the business in all this. Spotting talent and helping it develop should be today's companies priority. Clawback clauses or not, but big organizations should help the gifted and deserving to augment their knowledge as they will be entering the labor market in four to five years. When companies talk about CSR, they often talk about hugging the pandas and planting trees. Helping promising youngsters get to where they want to be in terms of their academic and career aspirations is a CSR missions as important: it is doing the right thing and the smart thing at the same time. Very soon they will lead your companies.

So yes, debt is good. You can do more with other people's money. I don't blame those who have indebted themselves to the point of no return; I blame the banks and other financial institutions who made it possible. You cannot reproach people grown up in a society encouraging borrowing, it's part of your culture - what can you do about it? But giving credits and loans left and right for those who know something more about economics and finance than 17-18 year olds is at least irresponsible and morally questionable.

Perfect Job Feeling

I guess this is what having the perfect job and doing what you love to do feels like:

Making Recruitment Fun

Just like most children want to know if something is an animal, vegetable or mineral, most employers want to know what type of people come into their organizations. For those purposes they invent a wide variety of instruments ranging from online assessment tools to elaborate assessment center techniques. The recruiters and assessors will carefully observe everything you have said and done, classify it accordingly in immaculately looking recording forms and will pass their judgment according to the company's assessment methodology whether you are a suitable candidate for them or not. Nowadays that nearly everyone is following the same route of such evaluations and assessments, it has become somewhat trite and hackneyed.

So it was a gush of fresh air when a few weeks ago a friend of mine shared an informal (but none the less comprehensive) candidate assessment scale used by one of her senior managers. I cannot look at it without tears and at the same time admiration for the boundless creativity that is inane in the Russian culture.

According to that fine high-ranked specimen of a huge monopoly, all candidates fall into the following categories (I am trying to convey the manager's attitude as close as possible here):

• GHOUL. These have no place in the company and should be escorted (ideally with security) out of the interview venue. Serious self-esteem issues. Can be entertaining but only in retrospect and solely because of masochistically morbid curiosity.

• VEGETABLE. These fall into two subcategories: sad vegetables and happy vegetables. Sad vegetables make you yawn and ponder over Karen Walker's categories of why people choose to be poor or tax evasion being a victimless crime. Happy vegetables do become amusing with their eagerness or rosy idealistic categories of democracy and human rights. Both types are OK for hiring and will form the "solid citizen" pool of the company. Dispensable at will.

• STAR. Enough said. Should hire if the salary ambitions are adequate. Top score for females.

• ALPHA-MALE. Does not apply to women. The highest grade one can get. Issues like moral turpitude or harassment are foreign concepts for them, Machiavelli is a kin, and Joseph Stalin School of Management is the preferred academic institution. Hire by all means and costs: an invaluable asset but will eat you alive at the first opportunity. 

It makes me sad to think that this manager is up there at the senior level, that his approach and comments are tolerated and even made into urban myths, perpetuating the stereotypes of Russian management. Suppose I were to disclose the name of the company or even the name of the manager - nothing would change, as that is what others expect. It might only make that company more desirable for new entrants: to see how charismatic its leaders are, just like Boris Yeltsin's ratings went up after he got drunk and fell from the bridge.

At moments like this I can only quote a famous Russian poet Fyodor Tyutchev:

You can't perceive the Russian land,

 You'll fail to measure it with measures,

From common way apart it stands,

You can but trust in Russian treasures. 

The Job Description Poem

Today is my second day of Job Evaluation training. It's nice to be dealing with the Hay charts again, at least I  don't need to learn anything new, like Paterson - apparently, it's quite a nuisance. In the training pack I've discovered a poem about Job Description, and I just cannot help myself sharing it with you!

Bertie Ramsbottom

The Job Description

I trod, where fools alone may tread,

To speak what’s better left unsaid,

The day I asked my boss his view

On what I was supposed to do;

For, after two years in the task,

I thought it only right to ask,

In case I’d got it badly wrong,

Ad-hoc’ing as I went along.

He raised his desultory eyes,

And made no effort to disguise

That, what had caused my sudden whim,

Had equally occurred to him;

And thus did we embark upon

Our classic corporate contretemps,

To separate the fact from fiction,

Bedevilling my job description.

For first he asked me to construe

A list of things I really do;

While he – he promised – would prepare

A note of what he thought they were;

And, with the two, we’d take as well

The expert view from personnel,

And thus eliminate the doubt

On what my job was all about.

But when the boss and I conflated

The tasks we’d separately stated,

The evidence became abundant

That one of us must be redundant;

For what I stated I was doing

He claimed, himself, to be pursuing,

While my role, on his definition,

Was way outside my recognition.

He called in personnel to give

A somewhat more definitive

Reply, – but they, by way of answer,

Produced some vague extravaganza,

Depicting, in a web of charts,

Descriptive and prescriptive parts

Of tasks, the boss and I agree,

Can’t possibly refer to me.

So, hanging limply as I am,

In limbo on the diagram,

Suspended by a dotted line

From functions that I thought were mine,

I feel its maybe for the best

I made my innocent request;

And hopefully await their view

On which job of the three I do!

HR by Chance

I know that I entered the HR career by chance. After I had successfully passed the Shell Assessment Center, I was asked what I wanted to do (since I really could not do anything, for the Company it was a matter of indifference in which area to develop my potential) and my affection for Psychology and Education pointed me in the HR direction. I thought that I was more of an exception. This bit of information threw me into realization that I was the rule:

  

Almost half (45%) of HR practitioners entered the profession "by chance", according to early findings from XpertHR's 2011 research into HR careers.

Apparently,

• more than four HR practitioners in five (81.6%) did not start out working in HR.

On a positive note,

• more than two-thirds (68%) are "quite confident" that there will be good job prospects for HR professionals in the future.

What (not) To Do With Your HR Department

NB: Before you read! All examples are fictional, any coincidences are by chance. Satire attempted, sarcasm intended.

There are many myths about HR. Most of them are true. But many are not. For example, there is a firm belief that HR people do not have feelings. I wish to disagree: I personally saw an HR director cry. Once. He was getting out of a taxi and the driver slammed the door before my poor boss removed the palm of his hand from the vehicle. You see - they are human too!

These days there are guides for everything. The How-To specialists are most sought-for employees at glossy magazines (ask Kate Hudson if you don't believe me). I have decided to write… no, surely not a guide, but a short list of do's and don’t's for dealing with HR. Mind you: it is a delicate subject, so please take my advice seriously and please pay absolutely no attention to it whatsoever.

When to distract HR from actually doing something by all available means:

• Never ask HR to organize an event. At first they'll try to do some psychological tumba-yumba with you and later in the night will take pictures, which they'll attach to the report to your boss the following morning.
• Keep HR away from any important numbers. Once an accounting assistant fell ill and an HR Director was asked to do the headcount budget for the following  year. Public embarrassment was avoided by sheer luck and involvement of the sick accounting assistant.
• Try to do all interviews by yourself. HR questions like "What psychosomatic reactions do you experience when you see your own shadow?" do not add value to the interview process and confuse everyone, including the HR themselves.
• Avoid asking HR for advice. You well know how it's gonna end: the lazy bastards will start by asking "and how would you…" type of stuff and end up with updating your personal record with "doesn't know how to do his job".
• Do you best at keeping HR away from the employees. Preferably in a separate building. A separate country is yet better. Distance will ensure that HR will remain blissfully ignorant about the business issues and it will help them continue thinking that they are doing their job well. 

When HR folks are absolutely essential:

• Firing someone: they revel in causing pain and suffering. Make sure that the candidates for layoffs have lots of underage kids and no opportunities for alternative employment.
• Writing something: whether it is about a gum-chewing policy or back-scratching memorandum, you can rely on HR to document it correctly and file accordingly.
•  If you are a columnist for Humor Illustrated, ask an HR person a business question. I guarantee: your readers will be delighted.
• Chaos creation and people confusion. Just like an octopus squirts out ink to escape the predators, let your HR out to create havoc and communication paralysis inside the organization as well as among your competitors, suppliers and the stray dogs in the vicinity.
• Paper-shifting, nose-wiping, belly-gazing. Unsurpassed champions!

Love your HR. Otherwise, they are gonna love you…

MEN are finished

Salary discrimination

The controversy whether it's a man's world still or not deserves to be on the agenda but the facts point in the opposite direction:

• women earn 10-30% less than men
• men utterly dominate such beefy industries as transport and mining. A hefty 11% of men work in construction; only 1% of women do. Women cluster in communications, retail and public administration, including education and health. See here a larger list of female dominated industries.

Pat Heim assures that until very recently the only truly female professions were (1) queen and (2) witch. The things have changed...

- Women 3.0

-  Women, Know Your Limits

 ...but females are still not scoring even with men in the workplace. Why?

World Bank suggests the following reasons:

1. Discrimination
1. Some men think women are less capable, and some laws treat the sexes differently
2. Women also have fewer assets that can be turned into capital. Land is a prime example. In 16 poor countries, 55% of female-headed households own land, but 64% of male-headed ones do.
2. Women are sometimes less qualified than men
3. Women do not control their own time. In rich Austria and Italy, women do at least three times as much housework and child care as men. In poorer Cambodia, they do 50% more.

With a large degree of generalization, I think there are three constituencies that have highest stakes in this issue:

• The society bears part of the blame: gender stereotyping begins from the moment parents and relatives start buying pink or blue clothes on finding our the sex of the baby. Not many know the difference between the concepts of "sex" and "gender" and many do not think that the baby itself does not really care what color pamper it is going to wear.

• The business should also assume partial responsibility. Managers do not want to deal with pregnancies and child care leaves, so females in the workforce have been traditionally shunned (emphasis on "traditionally"), particularly in the senior echelons ("boys' clubs), and the board of directors have this affinity for the alpha-male style of leaders, and that's exactly whom they appoint CEO, and alpha-males like those alike, and the vicious circle makes another loop.

• Finally, it is the individual (man or woman - does not, actually, matter): the stance you take, the force of your conviction and the passion, with which you are going to defend your beliefs --- they do make a difference.