Tomato Newsletter Nr. 147 - March 2012
It’s been a long time since our last podcast. We tossed ideas around for a new one for months and a few days ago, Sven Olov Andersson and Martin Schneider used two NZZ articles, one related to the Hildebrand case and another one on the Swedish Riksbank’s guidelines, to discuss ethical guidelines as part of corporate governance. Normally, a podcast is based on a script and is polished. We’ve used a different format and produced what’s known as a “Vlog” (video blog) which is more conversational. Enjoy it as well as the variety of articles on finance, IT, working in teams, and the teaching of macroeconomics.
Enjoy!
Regula Spottl
In Today's Issue:
TOMATO UPDATES
FINANCE, BANKING AND IT
- Risiko, wenn mTan und E-Banking auf demselben Gerät bedient werden
- Creative Accounting Methods on the Rise
- Various News on SEPA
- GTNews Payment Survey 2011 Results
- Privacy: CIOs Competitive Weapon
- Who Is to Blame When IT Breaks?
CAREER AND MANAGEMENT
MISCELLANEOUS
Ethical Guidelines and Corporate Governance
Our newest podcast (or better “Vlog”) deals with Corporate Governance. Sven Olov Andersson, a Swede, and Martin Schneider examined various articles that dealt with this topic and found a reference to the Swedish Nationalbank’s ethical guidelines posted at the top of their Corporate Governance policy in an NZZ article. It impressed Martin by its simplicity and applicability for all kinds of ethical decision-making.
The Riksbank’s ethical guidelines advise that „When one is faced with an ethical problem, it may be useful to ask oneself the following questions:
- Would I consider it embarrassing or be concerned if my colleagues found out about this?
- Is this something that could be perceived as an unfair benefit that I am receiving because of my position?
- Could this in any way damage the Riksbank if it were published by the mass media?”
Listen
to the Podcast/Vlog (13 mins)
Request copies of the following two NZZ articles used for this Vlog from Andreas Carl:
Im Bericht „Kann es schaden?“ lobt Ingrid Meissl Årebo den Verhaltenskodex der schwedischen Reichsbank, weil er nicht „in verschlungenem Juristenjargon, sondern in verständlichem Schwedisch verfasst ist und sich als Wegweiser versteht.“ Der Kodex weist, dass man, wenn man mit einem ethischen Problem konfrontiert ist, sich diese drei Fragen stellen soll:
- Wäre es peinlich oder unangenehm für mich, wenn meine Arbeitskollegen von „dieser Sache“ erfahren würden?
- Könnte sie als unrechtmässiger Vorteil aufgefasst werden, den ich nur dank meiner Position erhalte?
- Könnte es der Notenbank schaden, wenn die Medien davon Wind bekämen?
Ausserdem, Reichsbank-Direktorium, Bankausschuss, Abteilungsleiter und ausgewählte Mitarbeiter müssen ihren Bestand an Aktien, Obligationen, Fondsanteilen und Derivaten jährlich angeben; auch Änderungen sind dem Chefjuristen zu melden.
„Geldpolitik braucht eine spezielle Corporate
Governance: Nationalbank im
Spannungsfeld zwischen betrieblicher Beaufsichtigung und Bewahrung der
Unabhängigkeit“
Bericht von Martin Lanz, NZZ 14. Januar 2012
Risiko, wenn mTan und E-Banking auf demselben Gerät bedient werden
Von Martin Schneider
Im letzten Newsletter berichteten wir ausgiebig über Corporate E-Banking und “Private E-Banking und mobile Freigaben.” Themen, die immer wieder Presse machen!
Der Bericht nimmt Bezug zum privaten E-Banking und zeigt Risiken auf, wenn mTan und E-Banking auf demselben Smartphone zusammenkommen.
Im Bericht im Finance Forum Germany von cio.de “Zu großes Risiko. Keine Bankgeschäfte mit dem Smartphone” wird hervorgehoben, dass es fahrlässig ist, “wenn das Gerät mit dem die SMS-TAN empfangen wird, auch für das Online-Banking eingesetzt wird.” Kontoinhaber riskieren, den entstandenen Schaden in vollem Umfang tragen zu müssen.
Zahlungsfreigaben sollen auf zwei Kanälen getätigt werden: E-Banking via PC / Laptop als Kanal 1 und der Freigabe Code ist eine Streichliste oder eine mTAN auf dem zweiten Kanal.
(Details... )
Creative Accounting Methods on the Rise
According to the rating agency Fitch, the less than optimal results of 2011 have produced a “tempting environment for CFOs to use creative accounting methods for smoothing over results or meeting target ratios and covenants.”
The most frequently used techniques include minimizing expenses, aggressive revenue recognition, cash-flow enhancements, and general manipulation like the reorganization of segments etc.
Investors notice if a company’s accounting is significantly more aggressive than it was in the past or than that of their competitors, and the risk of losing some must be taken seriously, according to the article “Aggressive Accounting on the Rise” in the March issue of Euro Treasurer.
(Full story: Euro Treasurer, Issue 03|2012, page 3... )
The European Council and Commission have agreed on the end dates for migration to single euro payments area (SEPA) instruments. This has moved SEPA into the spotlight. GTNews responded by publishing a series of articles on the topic. (all articles require registration; it’s free)
Wire
Payments Maintain the Lead, as SEPA Gains Ground
by Joy
Macknight, gtnews Editor
Industry experts comment on what the new regulation will mean for corporates and how to prepare for this eventuality.
SEPA: A New Beginning?
By Ruth Wandhöfer, Citi
Highlights different requirements, timeline and the current state of play on taking on the challenges.
The
End Date is Coming and with it Comes Progress
Karsten
Becker, Deutsche Bank
SEPA:
Beyond the End Date
Steve Dixie, Lloyds Bank Wholesale Banking
& Markets
How to prepare for the switchover to SEPA
GTNews Payment Survey 2011 Results
The GTNews’ Payment Survey 2011 revealed that wire transfers top the list due to their “their significant risk mitigation effect”, and that ACH credits and SEPA instruments will become more important in the near future.
GTNews conducted the survey in Oct/Nov 2011. 312 corporate-level finance professionals from twenty countries responded.
The article, compiled by Joy Macknight, editor at gtnews, summarizes the results and includes sections dedicated to SEPA, SWIFT and “Treasury Control over Payments” as well as a graph detailing the organization’s reason for not investing in SEPA.
The article also provides a link for purchasing the 47-page report which includes 55 charts and tables and expert commentary.
(Full story... registration required)
Privacy: CIOs Competitive Weapon
Protecting customer data can be a competitive advantage. Instead of considering privacy a time-consuming regulatory issue, CIOs should look at it as a valuable service. It may well result in a positive change in customer relationships and present new ways to generate revenue.
The Blog “Privacy: A CIO's Next Competitive Weapon” was tweeted well over 30 times, indicating its relevance and timeliness.
The blog points to a PricewaterhouseCoopers webcast about data privacy and protection. Their panel provided practical insights and experiential perspectives into the current and future privacy landscape.
(Description of panel discussion and link to the recorded podcast... )
Who Is to Blame When IT Breaks?
Someone invariably must take the blame for data center problems. The Uptime Institute, an organization that provides education, publications, certifications, etc. for the enterprise data center industry, has compiled data on reasons for “abnormal incidents” and who gets blamed. Findings include:
- 34% of the abnormal incidents were attributed to operations staff
- 50% to 60% were attributed to external forces who work on the customer's data center or supply equipment to it
- 5% to 8% of the incidents were tied to things like sabotage, outside fires, other tenants in a shared facility and various odd anomalies.
- About 10% of all the reported abnormal incidents resulted in an outage ranging from a system losing power to a data center going out.
Steve Fairfax, president of MTechnology, applies Probabilistic Risk Assessment (PRA), which is used in the nuclear industry, on IT equipment. His study concluded that too much maintenance is a major source of problems and responsible for a lot of downtime. “Messing with perfectly functioning equipment is highly profitable," and more is not always better, he argues.
(Article "Who Do You Blame When IT Breaks?” by Patrick Thibodeau...)
Generally, larger teams are more productive than smaller ones. However, individual members in larger teams are less productive than those in smaller teams. So clearly collaboration has its cost.
A study published in the journal “Organizational Behavior and Human Decision Processes” found that individuals in small teams knew what resources were available and they felt they could ask questions when things went wrong. Overall, they found the situation more controllable. In larger teams, individuals felt more stressed because they didn’t know who to ask for help because they didn’t know the team members well. And they couldn’t ask the team leader because it would look like they had failed.
Wharton management professor Jennifer Mueller reported these findings in the recent paper “The Unexpected Costs of Collaboration.” It was published in the Wharton School’s newsletter and tweeted 150 times.
Brainstorming in Teams Needs Reconsideration
Brainstorming is based on the belief that groups produce better ideas than individuals. True, they produce lots of results quantitatively. However, decades of research shows that individuals almost always perform better than groups in quantity and quality. So, “if you have talented and motivated people, they should be encouraged to work alone when creativity or efficiency is the highest priority,” suggests organizational psychologist Adrian Furnham.
In the opinion article “The Rise of Groupthink” in the NYTimes, Susan Cain explains why working in teams and in offices without walls and for managers who value people skills above all, may be misguided. She cites research which strongly suggests that people are more creative when they can work without interruption. “The most spectacularly creative people in many fields are often introverted. They’re extroverted enough to exchange and advance ideas, but see themselves as independent and individualistic,” she argues.
Cain illustrates her point with examples such as the collaboration between Apple’s Jobs and Wozniak. She is the author of the book “Quiet: The Power of Introverts in a World That Can’t Stop Talking,” which I have just read and can highly recommend.
Kritik am Lehren der klassischen Ökonomie
Das NZZ Campus Magazin vom 29. Februar war dem Thema „Geld“ gewidmet. Der Leitartikel „Ökonomische Auslauf-Modelle“ kritisiert die Volkswirtschaftslehre und die Finanzmarktökonomie in ihrer Lehre von klassischen, veralteten Wirtschaftsmodellen. Die „Anwendung von stark vereinfachenden Modellen habe die Finanzkrise mitverursacht, sagen Kritiker und sprechen von „autistischer Ökonomie“. Theorie und Realität seien weit auseinander, fand eine Diagnose.
Der Artikel weist auch auf das Basler Manifest zur ökonimischen Aufklärung, eine gemeinsame Initiative der Universitäten Basel, Lausanne, Luzern und Zürich sowie des Collegium Helveticum, hin.
From the Desk of Regula Spottl, Greensboro, North Carolina
In a podcast in June 2011, Martin and Sven discussed Malcolm Gladwell’s book Outliers: The Story of Success. It described what special circumstances helped individuals such as Bill Gates, Steve Jobs, Canadian hockey players and many others to become successful. The book is still on bestseller lists.
In the new book Great by Choice, Jim Collins and Morten Hansen offer a new slant on success stories. Take Bill Gates, for example. He was lucky to be born at the right time, go to the right school, live in the right area, etc. Had he been born 10 years later, he would have missed the moment.
However, there were many others who were in similar situations. How many changed their life plans, cut their sleep to near zero, dropped out of college etc?
Collins and Hanson argue that luck happens to everybody. The key to extreme success is that these individuals “zoom out to recognize when a luck event has happened and to consider whether they should let it disrupt their plans.” Just think of Facebook’s Mark Zuckerman’s story; it’s a prime example.
The NYTimes article “What’s Luck Got to Do With It?” explains why some thrive despite uncertainty, chaos, and luck.
Your Tomato
Regula Spottl