Monthly Archives: May 2014

Blog, crowd mentality, Millennials, Parenting for the Workplace, social comparison

Should You Spend Less on College?

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money stackBy Joanie Connell

Parents and students beware! Don’t get suckered into taking out unaffordable college loans because you think you have to. You don’t.

The problem with financial models is they assume people make rational decisions. There’s nothing rational about overspending. People overspend for emotional and psychological reasons, not rational ones.

We overspend because…anxiety

  • We feel anxious: we need to keep up with the Joneses, we feel insecure about our abilities, looks, or status. (Salespeople prey on people’s anxieties to sell them things. See techniques used and a sales example.)
  • We want something really badly: we see a beautiful house and we have an overwhelming desire to own it. (Salespeople also create customer desire to sell. See techniques used and a sales example.)
  • We think we deserve it: we feel entitled to go to a good college because we are a member of a certain group or because we have worked hard to get good grades.
  • We invoke psychological defense mechanisms to believe we can afford what we are buying: we deny that interest rates will go up, we rationalize the luxury car is necessary to impress clients.

There are many more irrational reasons for overspending, but the point is we need to stop doing it.

OVERSPENDING ON COLLEGEgraduates

“Too many degrees are a waste of money. The return on higher education would be much better if college were cheaper.”

One of the biggest problems in our nation right now is that young people are overstretched with costly student loans and it’s limiting their ability to live independently. Financial analysts have shown that, for many people, the investment in college has a negative return. (See The Economist and The Wall Street Journal for recent articles). Why are people spending so much on college then?

“Four in 10 college graduates, according to a recent Gallup study, wind up in jobs that don’t require a college degree.”

Frankly, I think the biggest reason why young graduates are in great debt is because they thought they had to go to the college they chose to get a good job. This is driven by anxiety—the fear of not being attractive in a highly competitive job market. Evidence shows that expensive college degrees are not necessary for most jobs. Check out the College Planner for more on this and for advice.

“A study by the Harvard Business Review found that almost half of the top executives at Fortune 100 companies did not go to prestigious schools.”

Prestige is another driver for choosing a college. I think that parents are the main contributors to the prestige factor because it makes them feel more successful as parents to have their children go to more prestigious colleges. The Boston Globe reports on how parents are using Face Book as a bragging platform to boast about their children’s college acceptances.  Here is a great blog from the Huffington Post for all you parents out there who are doing this.

The Huffington Post provides a “ranking of the public colleges with the highest return on investment.”

Entitlement is another major factor. A high school student told me she wouldn’t consider going to the local state college, as she literally turned up her nose. I was confused because it was a good school at an even better price and her family had only modest means. She chose to go to a state college in a neighboring state and pay out-of-state fees instead. She also moved back home after graduating, burdened with large student loans.

These are all psychological reasons for choosing colleges that may turn an otherwise practical decision to an impractical one.

OVERSPENDING ON LIFESTYLEmoney roll

Student loans aren’t the only factor contributing to young people’s financial problems. The new grads feel entitled to a high standard of living right out of college. I have been surprised at how many 20-somethings I know who have lived in their own apartments, walking distance from the beach here in costly San Diego. Some of them have moved back home because they say the cost of living is too high for them to afford. Well, of course it is if you expect to have an apartment next to the beach! Seriously, who can afford that?

What are reasonable expectations for a standard of living for a recent college graduate? A used car, an apartment with roommates and mismatched, self-assembled furniture in a rundown part of town would seem like a start. It takes time to earn money and save up to buy furnishings, piece by piece, and eventually make enough money to rent a nicer apartment or get a nicer car (emphasis on “or”). It’s not reasonable to expect to have all this right out of college, especially if you have loans to pay. It’s also part of the experience and the fun of being young.

All of the issues here are affected by the economy and demographics as well as psychological factors. Yes, it is more competitive to get into college these days and there is higher unemployment than at some times in our history. The standard of living has also increased so we should expect to have a higher standard of living than at previous times in history. Yet, young people are still financially overstretched and they don’t have to be. We don’t have control over all of these factors.  Yet we can take control of the psychological factors if we are aware and deliberately make practical choices.

Be wise. Make a practical decision on where to go to college. You will be thankful later.

Blog, Flexible Work, Leadership

Flexible Work Improves Employee Engagement

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By Joanie Connell

surprisedA scary trend is emerging for companies to ban flexible work. Don’t do it. As explained in last week’s post about following along the fads without thinking, this is a bad idea.

The workplace is changing whether we like it or not. That is a constant. The workplace isn’t like it was and it won’t be like it is. The workplace requires our flexibility to keep up.

Why is this important? Because flexible work is inherent in today’s workplace. Some companies are trying to fight it, like Yahoo and Oracle, who have both recently implemented policies that ban working from home during business hours. This is a huge mistake.

working at homeWorkplace flexibility increases employee engagement. According to a recent Gallup study, remote workers are more engaged than on-site employees, and they work more hours too. The study found that a blend of working remotely and working on-site produces the greatest amount of employee engagement.

Those who spend less than 20% of their time working remotely are the most engaged… These employees likely enjoy an ideal balance of both worlds — the opportunities for collaboration and camaraderie with coworkers at the office and the relative sense of freedom that comes from working remotely… [T]hose who spend more than half of their time or all of their time working remotely have similar engagement to employees who do not work remotely.

On a more intuitive level, think about how the flexibility to work remotely has helped you and your organization. For example, how many people call in sick anymore? More often, they work at home when they are sick instead of taking the day off. Keeping the germs out of the office saves the whole team from getting it. People also increasingly work while on vacation. I don’t advocate this practice in general because I firmly believe that people need to take breaks, but if they are managing to balance their lives in this way, I support them.

When I was a professor and I had a baby, I made a point to spend time with my baby during the day when I could and work in the evenings and on weekends preparing my classes. Instead of 9-5, 5 days a week, I worked 7 days a week at various times. It was a great solution for me at the time and I was very effective at work. For example, my students loved it that I responded to their emails at night and on Saturday.

Now that my daughter is older, I still work flexibly but do other things, like exercise or meet a friend for coffee during the day. I still spread my work around at night and over the weekend because that suits me well. I mention this to make the point that flexibility is not only about family. People take advantage of flexible work to do many things, like go to the doctor’s and participate in hobbies. In San Diego, surfing is a way of life and there are numerous professionals who structure their work hours around the waves. I don’t know how good these folks are at surfing, but the ones I know are very effective at work.

Even if companies fight it, workplace flexibility is not going to go away. Technology has made it possible, global companies require it, and younger generations of workers expect it. Companies typically have two concerns about flexible work: (1) lack of control and (2) difficulty establishing a company culture. Both of these obstacles can be overcome with modern methods of managing and leading people. What these companies need to learn is that the workplace requires flexibility to keep up.  It’s better to embrace it than to fight it.

Blog, Flexible Work, Leadership, Millennials

Stop and Think

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by Joanie Connell

stop and thinkThe downside of operating at lightning speed is that we don’t have time to reflect on what we’re doing. We respond to challenges with knee-jerk reactions and leap onto the bandwagon without ever stopping to question whether this is the right way to go. We think it is right because everybody else is doing it and we don’t want to get left behind.

In today’s world, we are all under an enormous amount of pressure to do things quickly. We need to keep up with minute-by-minute stock prices, what is “trending now” on social media, whose kid is participating in the most extra-curriculars, which traffic lane is going the fastest, and what emails are already stacked up in our inboxes. It’s exhausting! Yet, we don’t stop. We keep running faster and faster, managing more and more information.overwhelmed

Ironically, the need for speed is slowing us down. Really. It. Is.

How could that possibly be? It is because we aren’t taking time to stop and think. When we run at full speed, we make careless mistakes. When we do too many things at once, we make haphazard decisions. When we feel pressure to keep up, we mindlessly follow the pack. If we don’t take time to stop and think, we may end up losing the race—remember the tortoise and the hare—and trampling others along the way.

CARELESS MISTAKES

Typos, bugs, and safety recalls are often caused by careless mistakes. We are racing to meet deadlines, under pressure to get torace car print or to market quickly, and we work fast without checking it over. Careless mistakes cost us time and money. For example, the most common reason for the IRS to reject an income tax return is because of a careless mistake, like the person forgot to sign the form. A rejection is usually accompanied by a fine. Thus, slowing down to proofread your tax form could speed things up and save you money.

As much as we like to think that we are good at multitasking, the evidence is to the contrary, especially when it comes to complex tasks. Of course, doing a load of laundry while you are washing the dishes is fairly benign (unless you forget about the laundry). Texting while driving is not. At work, we read email during meetings and wonder why our meetings are so ineffective. At home, we do our homework while instant messaging. It’s hard to concentrate on more than one thing at a time. You can shift back and forth, but even then you may lose time reintegrating yourself into each task. Often, completing a task before you move to another can save you time.

CROWD MENTALITY

Much of our world is online and crowd driven. Add time pressures to the mix and we end up with impulsive, irrational decisions that are made carelessly, without contemplation. Stock market crashes, fads, and riots are caused by a crowd mentality. We lose ourselves in the presence of a crowd. It’s called “deindividuation” in social crowdpsychological terms. When we get caught up in the excitement and momentum of a crowd, we lose our judgment and do things we wouldn’t normally do on our own. Riots after sporting events are a good example. Most sports fans would not smash car windows and set fire to things on their own, but when they get caught up in the post-game fury of a stadium full of fans, they can find themselves doing extreme things. The same is true in business.

Online interactions have a similar effect. People deindividuate when they are online. For example we’ve all seen people post comments on blogs or send emails that they would never say in person. We feel less personally accountable online, similar to when we are in a crowd. And what are we doing online? Creating crowds! People these days define their value by their numbers of followers, friends, likes and retweets. The news reports on what is “trending now” on social media to acknowledge what the largest numbers of people are doing and saying. It may be “trending” but it doesn’t mean it is a good idea.

SOCIAL COMPARISON

People feel better about themselves when they are better than someone else. When you get a B on a test, you feel better when you find out someone else got a C. Social comparison is a way to feel better about yourself by thinking or saying negative things about other people. Gossiping is the quintessential example.

The flip side of putting others down to make ourselves feel good is to compete with others to do better. To feel good, we want to outdo our neighbors, coworkers, classmates, FB friends, and Tcompetitionwitter followers. For example, if my friend is taking 4 AP classes, I should take 5. If the competitor is decreasing costs by 5%, we should decrease by 10%. If my coworker works 10 hours a day, I should work 12. If my teammate runs 12 miles a day, I should run 15. This also manifests with opinions and positions. If others in my political party are moderately liberal/conservative, I will be more liberal/conservative to show I am better or more committed to the group. After enough people do that, the party is broadcasting extremist statements. This is called “group polarization.” We all know what calamities that can lead to.

It’s tpauseime to stop and think.

It’s time to slow down and check our work to avoid careless mistakes. It’s time to pause and make well thought-out decisions to make sure we are doing what we want to do. It’s time to question the crowd to see if it is going in a direction we think is valuable for us to follow. The cost of not thinking is far greater.