Learn a new word: Goodwill Impairment

If you follow the tech and finance news at all, you will no doubt be familiar with the recent and ongoing troubles and challenges being experienced at Yahoo.  

Yesterday the 'old school' internet company announced some strategic shifts, including the plans to reduce its workforce by 15% in the coming months, resulting in an employment count of about 9,000 -  42% below the level in 2010.

Part of the earnings announcements included this statement, about on-paper losses totaling about $4.4B due to an accounting exercise known as 'Goodwill Impairment'. Here is the language from Yahoo, then we'll break it down a little, because well, that's what we do here on the blog:

We concluded that the carrying value of our U.S. & Canada, Europe, Latin America and Tumblr reporting units exceeded their respective estimated fair values. The goodwill impairment resulted from a combination of factors, including decreases in our market capitalization, projected operating results and estimated future cash flows.

Seems kind of boring, almost normal accounting-speak right? Let's look at the definition of a 'Goodwill Impairment', courtesy of our pals at Investopedia:

Goodwill that has become or is considered to be of lower value than at the time or purchase. From an accounting perspective, when the carrying value of the goodwill exceeds the fair value, then it is considered to be impaired. Negative publicity about a firm can create goodwill impairment, as can the reduction of brand-name recognition.

And in the notes about the accounting requirements related to Goodwill Impairment for companies, Investopedia says this:

Generally accepted accounting principles, (GAAP), require businesses that have the type of assets that might be impaired to make periodic tests to see if those assets are, in fact, impaired.

So the accounting rules require if your business has a potentially 'impaired' asset like Yahoo's $1.1B Tumblr division, that you must from time to time evaluate (and likely have audited), the 'true' value of the asset. And in the case of Tumblr, it turns out that it really isn't worth $1.1B and the true value is something like $300M, then you have to take a charge for the difference, ($800M), in the financial statements. And that stings investors a little bit. Ok, maybe a lot.

Why the mini-accounting lesson?

Because the periodic review, valuation, and write-down of financial assets in the accounting sense is probably an exercise we can and should apply to all kinds of projects, technologies, programs, even personal relationships. 

Does that 'progressive' and high-tech performance management system and process you implemented in 2012 still have value today? Or does it need some kind of 'impairment' write-down as well?

Does the new employee orientation guide that you spent big bucks developing and printing up in 2010 still have relevance today, in light of all the changes in business, technology, employee expectations, and more?

Does your 'best work friend' that you have had since 2008 remain the 'right' person for you to pal around with, or are they kind of holding you back at the office?

As Yahoo's experience with it's Tumblr acquisition remind us, things can change really, really fast. And an asset that was worth $1.1B just a couple of years ago suddenly is worth less than half that amount today. But the 'Goodwill Impairment' while painful, at least provides financial types a mechanism to recognize these changes, attempt to make them right on the financial statements, and give leaders a chance to move forward from a new starting place. And when times are bad, that at least offers a little bit of hope moving forward.

If you could take a 'Goodwill Impairment' charge in your business or life today, what would it be?

We value hard work, but we reward natural talent

Of all the phrases used to describe a candidate or an employee, 'He/she is a hard worker' is probably one of the most valued by employers, colleagues, and the people in general. We like people that work hard. We value the effort, the grind, the grit of folks who show up, dig in, plow through - day in and day out. Some even think that 'working hard' is actually a skill akin to other technical or practical kinds of aptitudes that are often harder to find.

After all, 'hard work', even if it is a skill, is probably one that can be 'learned' by just about everyone. In many ways you just have to decide to work hard and there it is, you are a hard worker. Doesn't exactly work that way for other skills like coding, painting, or hitting 3-point baskets.

But as much as we value hard work,  a skill that is readily observable, some recent research suggests that we value (and reward) something more intangible much, much more - the ore opaque notion of 'natural talent.'

Researchers Chia-Jung Tsay and Mahzarin Banaji examined what has been called the 'naturalness bias', the tendency to choose and reward so-called 'naturally talented' people over the classic 'hard-worker' in a series of experiments that were recently described in FastCo Design. Here is an excerpt from the piece: 

"We are likely influenced by concepts such as the Protestant work ethic, and the American dream, and ideals such as a truer meritocracy, opportunity, and social mobility that can be achieved with enough hard work and motivation," says management scholar Chia-Jung Tsay of University College London, via email. "We may subscribe to these ideas, but our preference for and fascination with naturalness still seem to emerge through our actual choices."

Tsay’s research has documented this tendency—which Malcolm Gladwell coined as the "naturalness bias"—across creative fields. A few years back, Tsay and Harvard psychologist Mahzarin Banaji asked 103 professional musicians to rate two performers based on a written profile and clips of them playing Stravinsky's Trois Mouvements de Petrouchka. The two performers were actually the same person, with one profile tweaked to emphasize work ethic and the other made to highlight natural talent.

In questionnaires, study participants claimed to value effort and practice over innate ability. But when it came time to rate the "two" performers, they gave the natural higher marks on talent, likelihood of future success, and value as a musical company hire, Tsay and Banaji reported in the Journal of Experimental Social Psychology. In a follow-up, the researchers found that seasoned experts favored naturals even more than novice musicians did—a finding with troubling workplace implications, given that veterans tend to make hiring decisions.

Did you catch that? Two performers, who were actually the same performer, and the one that was pitched as having some higher level of natural talent was rated more positively and favorably than the performer who was portrayed as someone whose achievements were a product of hard work. Additionally, the more experienced and 'senior' the evaluator, the more likely they were to reward the 'natural talent' over the hard worker.

Really interesting implications for this data, particularly in the world of talent evaluation and hiring. If the 'naturalness' bias does exist in organizations, then they could be overlooking or discounting individuals that are totally qualified and capable of performing at a high level, if their history of 'hard work' is somehow diminished in value in the eyes of the talent evaluators.

More interesting still is that while this research appears to suggest the existence of a bias towards 'natural talent', it seems like 'hard work' is much more reliable in the long run. 

Let's toss it back to my favorite metaphor for talent and workplace comparisons - basketball.

'Natural talent' may account for a high degree of accuracy shooting 3-point baskets. But this 'skill' also can come and go in the course of a game, season, and career - sometimes inexplicably. 

Playing tough, solid, and aggressive defense however, is usually chalked up at least primarily to 'hard work', which tends to be much more reliable, repeatable, and predictable. 

It can be kind of hard to 'see' natural talent in all kinds of fields. Hard work is a little easier to spot.

PODCAST - #HRHappyHour 232 - Culture and Technology at Ultimate Software

HR Happy Hour 232 - Culture and Technology at Ultimate Software

Recorded Monday January 25, 2016 at Ultimate Software HQ, Weston, Fl

Hosts: Steve Boese, Trish McFarlane

Guest: Adam Rogers, CTO, Ultimate Software

This week on the HR Happy Hour Show, while Trish McFarlane was on assignment, Steve Boese welcomed Adam Rogers, CTO from Ultimate Software to the show. Ultimate is a leading provider of HCM technology that has grown over the years from a few people sharing office space in a law office, to an almost 3,000 person-strong organization supporting thousands of customers in the US and around the world.

But perhaps more important than Ultimate's technology innovation is their unique culture, which reinforces their commitment to their employees, their families, the Ultimate customers, and finally, their shareholders. Ultimate has a slogan, 'People First', and once you spend some time with Ultimate people, and hear them talk about what Ultimate represents, reinforces, and values, you will walk away understanding why and how they have won so many 'Best Places to Work' awards - with the signifying banners adorning the rafters of the basketball court that is in the lobby of the Ultimate HQ.

On the show, Ultimate's CTO Adam Rogers shares his perspective and insights on the unique and refreshing Ultimate culture, how that culture informs hiring decisions, customer service and support, and even the way they approach building new and innovative HR technology solutions. Additionally, Adam shared some thoughts about the next evolution of predictive analytics technology for HR as well as some opportunities to innovate in 'commodity' solutions like payroll and employee self-service.

You can listen to the show on the show page HERE, or using the widget player below (email and RSS subscribers will need to click through).

This was an enormously fun show to do, and many thanks to Adam and the team at Ultimate for hosting the HR Happy Hour show this week.

Reminder: you can subscribe to the HR Happy Hour Show on iTunes or using your favorite podcast app for Android or iOS. Just search for 'HR Happy Hour' to add the show to your subscriptions and you'll never miss a show.

PODCAST: #HRHappyHour 231 - Employee Financial Wellness

HR Happy Hour 231 - Employee Financial Wellness

Recorded Friday January 22, 2016

Hosts: Steve Boese, Trish McFarlane

Guest: Steve Wilbourne, CEO, Questis 

Listen HERE

This week on the show join Steve Boese and Trish McFarlane as they discuss the increasingly important topic of employee financial wellness and well-being with guest Steve Wilbourne, CEO of Questis, a software and services provider of employee financial wellness technology and resources.

On the show, we discuss the issues that many employees are facing with financial planning, financial readiness in case of unforeseen expenses or challenges, and the benefits to organizations and to employees in providing more modern, personalized, and affordable tools for employees to help manage their finances.

In addition, Steve (the host Steve), made a semi-serious pitch for the return of employee pensions, Trish shared a bit of a preview for the widely anticipated HR Happy Hour Oscars show coming soon, and Steve shamelessly appealed for some big-time corporate sponsors to come on board, (are you listening Delta and Dr. Pepper?).

You can listen to the show on the show page HERE, or by using the widget player below (Emaill and RSS subscribers will need to click through)

This was an interesting and informative show about employee financial wellness, many thanks to Steve Wilbourne from Questis for joining us. To learn more about Questis, please go towww.myquestis.com.

Thanks for listening and remember to add the HR Happy Hour Show to your podcast subscriptions in iTunes, Stitcher Radio, or any of the major podcast apps. Just search for 'HR Happy Hour' to subscribe.

Announcement: The Health & Benefits Leadership Conference

Quick break from the regularly scheduled nonsense compelling content on the blog to share some information and a special discount offer for the upcoming 4th Annual Health & Benefits Leadership Conference that will take place March 30 - April 1, 2016 at the fabulous Aria resort in Las Vegas.

This event has grown into what I think is the premier conference for corporate leaders that oversee benefits, wellness, and the overall well being (health, financial, physical, emotional), of their employees. 

Don't believe me? 

Take a guick look at the agenda for the conference here. You will see dozens of sessions covering the most important, relevant, and cutting-edge topics in health, benefits, and wellness today. From current issues with health care and employer-sponsored benefits to financial wellness to important issues around work/life balance, and more - the Health & Benefits Leadership Conference offers HR and benefits leaders a tremendous opportunity to learn, network, and raise their understanding of the most important issues and potential solutions for their benefits challenges.

Just some of the health and benefits thought leaders that will be speaking at the conference include Alexandra Drane, Ron Leopold, Jennifer Benz, Carol Harnett, Fran Melmed and many more.

And your humble correspondent, (me), will once again serve as host of the wildly popular 'Ideas and Innovators' session where health and benefits innovators and provocateurs will share their most challenging and cutting-edge ideas in a fast-paced and fun format.

And more that 70 providers of services and technology, including some of the most innovative companies in the world, will be on hand in the Expo hall, where benefits pros can see, touch, and learn more about the latest technology solutions that can enhance and support their organizational benefits and wellness programs.

If you are a benefits or wellness pro, this is one event that you don't want to miss, and to make it a little easier for you to attend, blog readers can use the registration discount code BOESE16  to get an additional $75 off the current rate. Just go to www.benefitsconf.com and click on 'Register'.

Hope to see lots of readers out at the event, if you see me, make sure to day hi!