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The author of this book, Eugene J. Benge, has spent a lifetime working with people in industry and commerce. For the past 21 years he has been a management consultant, serving large and small companies. Hundreds of men and women have attended his executive seminars, held in the United States and Europe. Hundreds of thousands have read his magazine articles. He is the author of 14 books on management techniques and personality development. In the management field he is regarded by his confreres as a pioneer. He has been active in the American Management Association, the Society for Advancement of Management and other professional groups for three decades. Your publisher counts it a privilege to here present the condensed wisdom of one of the best known counselors in the international field of management. Every executive, young or old, can profit by the hardcore suggestions in this book. But every ambitious executive should read it, believe it,, follow itand benefit by it. FREDERICK FELL




Frederick Fell, Inc., Publishers, New York

Copyright 1960 by Eugene J. Benge

All rights reserved For information, address Frederick Fell, Inc., Publishers 386 Park Avenue South, New York 16, N. Y.

Manufactured in the United States of America by H. Wolff, New York

Published simultaneously in Canada by George J. McLeod, Limited, Toronto DESIGNED BY SIDNEY SOLOMON

Library of Congress Catalog Card Number 60-6220


1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23.

Acknowledgments xi Introduction 1 Welding An Employee Team 9 Five Roads To Cost Reduction 26 Bend The Knee To King Consumer 39 $ The Capital Letter 55 They May Hear, But Do They Listen ? 73 Social SkillGet It 88 How To Light Firecrackers 103 Think Like The Boss 116 You've Got To Be Tough 129 It's Stockholders Who Elect Directors 141 If You're Self Employed 154 Rainy Day Security 165 Investment Dollars and Sense 178 Autumn In Your Life 194 You Can Dig Your Grave With Your Teeth 206 Man Does Not DieHe Kills Himself 219 Psychosomatics Will Get You If You Don't Watch Out 233 Master The Basics Fast 253 Icing On The Cake 269 Your Personal Efficiency 282 Dream No Little Dreams 300 Think And Act Like A Leader 313 Break The Chains Which Bind You! 325 Bibliography 336


1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.

Some Characteristics of High Level Executives 16 Rating Scale on Executive Potential 22 STEM-analysis 35 New-Product Rating Form 48 Comparison of Actual Sales with Forecasted 53 Analysis of Principal Balance Sheet Items 59 Use of Capital Funds 61 Constant plus Straight Line Trend 66 Constant plus Curvilinear Trend 66 Rating Scale on Social Development 99 Procedure to Develop Long Range Planning 136 The Tax "Bite" on Executive Earnings 171 Income and Expenditures 174 Stock Prices as Multiples of Dividends 187 The Dow-Jones Industrial Average 189 The Dow-Jones Industrial Average and the Gross Na tional Product 192 Daily Food Requirements 208 Rating Scale on Health Factors 216 Dispersion of Happiness 246 Rating Scale on Emotional Maturity 249 How High Skill is Developed 265 Rating Scale on Intellectual Growth 266 Seven Personal Levels 272 Plan-Trol Chart and Instructions 292 Self Rating of Your Development 334


The author wishes to state his appreciation for permission to use the following material: The Alexander Hamilton Institute, New York, for the illustration shown as Figure 24. The American Soft Drink Journal, Atlanta, Ga., for numerous excerpts from my Management Tips column. Your Life Publications, New York for portions of two of my articles in Your Personality: How to Put Your Imagination to Work and Hitch Your Wagon to a Nearby Star. Rand McNally & Company, Conkey Division, Hammond, Indiana for excerpts from the poem The Winds of Fate, by Ella Wheeler Wilcox. The illustration shown as Figure 21 from the Right Career for You, by Eugene J. Benge, copyright by Dun and Bradstreet Publications Corporation. xi



An alternate title for this book might well have been: For Ambitious Executives Only. In a research-based article entitled "How to Identify Promotable Executives" (Harvard Business Review, MayJune, 1956), W. Wilson Randle writes: The most critical limitation on future business growth is the shortage of capable executives. . . . Locating promotable executives is . . . difficult, . . . for here indeed is a scarce resource, . . . the available supply . . . (of which is) probably highly critical. Business executives and economists polled by Elmo Roper Associates agreed that "America's basic deficiency in facing the future is the inadequate cultivation and education of its human resources. We must therefore place less emphasis on material production and more on developing the applied intelligence and creativeness of our people." Commenting on this Roper finding, Dause L. Bibby, 1


president of the Society for Advancement of Management, says:1 . . . tomorrow's successful manager . . . will need increased skill in scientific management, . . . will have to . . . understand a . . . complex scientific world, . . . deal increasingly with businessmen of other specialties and of other cultures, . . . grasp geographical and economic relationships. . . . Here is the management challenge of the 60's. This book is intended to help you meet an important segment of that challenge. Over four decades in industry, two of them as a management consultant, I have observed successive waves of eager young men enter the business scene. Their minds have been incandescent with ideas, hopes, confidence, ideals. Too often, after they have climbed a few rungs of the ladder, I have seen the heat diminish and the light flicker. Under the suffocation of layers of authority, the stultification of conformity and the insistence of the daily burden, the once brilliant flame has shriveled to the dull glow of a dying ember. This, the tragedy in youth's ambition to become an executive. A few minds continue to shine steadily. Some take on added luminescence. They shed light on all persons and all problems they approach. These minds are the guiding lights of business, the lights that men will follow. The seeming miracle which elevates the few to high places in industry is really a congeries of powers exercised, talents developed, courage asserted and aims followed, as a mariner his compass. These men drive ahead while their

Editorial in Advanced Management, July, 1959.


fellows drowse before their dusty desks. An ambitious man stands out against the others like a rugged mountain above a large plain. It is to a handful of determined, long-visioned, workoriented men that this book is addressed. The program it outlines results from years of intimate contact with executives at all levels; from counseling hundreds with their intimate problems; from conducting executive development seminars. Most young men say they prefer opportunity to security, but their deeds often belie their words. Any attempt to capture Security is like trying to vanquish a wraithbut Opportunity stands ever before you, like a wrestler waiting to be grappled. Too many executives have inherited or stumbled into their walnut-paneled offices. Some hold their jobs because they have developed one specialization, but their hold is precarious because of their unwillingness to broaden their horizons of understanding. Someone has well said that "experience is the great teacher, but education is the short cut to avoid the wasteful process of trial and error learning." You too could probably learn to become a senior executive by experience, but it is the author's hope that you may shorten your development time through some of the principles outlined in this book. Experience is excellentbut it is also the name everyone gives to his mistakes. Strange, isn't it, that if I tell you there are 214,696,000,001 stars in the universe you will probably believe me, but if you see a "Fresh Paint" sign you will be convinced only by personal investigation? If I assure you that in-


dustry and commerce are crying for ambitious young men, will you believe meor must you learn the hard way? Humorists aver that there are four major species of executive. These are: 1. Executivus mus 2. Executivus rabbitus 3. Executivus elephantus 4. Executivus leonis Executivus mus will rarely come out in the open with his opinions. He has a sharp bite, frequently poisonous; will scurry for his hole when faced with danger. Need I remind you that mus is the Latin word for mouse? Executivus rabbitus is a timid creature who has springs concealed beneath his hump so he can hop out of sight at the first sign of trouble. He is prone to hide behind bushes such as It-won't-work and The-boss-is-agin-it. Rabbitus is a newly coined word for this breed. Executivus elephantus is a clumsy, well meaning lout, frequently with a highly developed trumpet. He pulls his weight in the procession, especially when his tail is twisted, doesn't mind being ridden, likes to run with the herd. Executivus leonis is a lion-hearted individualist. He has courage and intelligence, puts them into action. His eyes are sharp, his aims clear, his tread certain. No doubt about it, he is king of the business jungle. Which kind of executive do you want to be: mouse, rabbit, elephant or lion? You can think your way to becoming any one of them. There is considerable scientific evidence that an individual tends to become what he thinks about. Don't be misled by the rejoinder of a young man in a class in psychology when the professor made


such a statement. The young man said, "I don't believe that is true, because I think about girls most of the time." If you have your heart set on a high executive position, if you keep concentrating upon various aspects of it, if you make moves toward it, your chances of getting there are very high indeed. Success lies not in making money but in making the man as he makes the money. A heap of stones is not an attractive sightbut a competent mason can make them so. You must be both architect and stonemason of your executive career; each stone that you lay should be capable of supporting all the burdens that later will come upon it. You must take risks. You'll never stub your toe standing stillbut you'll never go places, either. You must be ongoing in the interest of your company; if you are passive, you will be as ineffective as a fishing rod standing in a shop window. The growth of a company is largely dependent on the interaction which occurs among the factors of materials, money, employees and capital equipment. Each should augment the others to provide optimum utilization. Management needs to receive periodic data by means of which it can alter the relationships among these factors to meet changing conditions. The executive of the future must see his job as the coordination of these principal factors, as well as auxiliary items, which combine to determine the ultimate success of an enterprise. The last statement becomes increasingly true with the advent of automation in manufacturing processes. The executive of the future must seek to understand the impact


of automated production on employee skills and attitudes, on wage values of jobs, on methods of wage payment, on the employee's feeling of belonging to a group, on his desire to participate in solving manufacturing challenges, on the existing hierarchy of organization levels. These areas have not yet been explored. Problems which automated production and the consequent human reactions will bring about will be many and complex. They will demand resolution by executives of the future just as past problems have precipitated decisions by the present and former generations of managers. It seems likely that new organization patterns will emerge, patterns which we presently do not even visualize. There will be new horizontal relationships within the major functions of a business. The fast fading line of demarcation between line and staff functions will recede ever further as technology and the technical specialist become the controllers of production. Fortunately, two new tools for management decisionmaking are already available. One is operations research, whereby well known mathematical formulae are applied to the solution of difficult business problems. One of my friends likens operations research to modern drugs, some of which are so new we haven't diseases for them as yet! The second tool is the electronic computer, which is capable of digesting voluminous data from many variables, data which otherwise would remain undigested because of the time and cost necessary to evaluate them. High speed handling of basic data will make possible high speed decisions of great accuracy. Some wag has remarked that the one sure thing we


know about the future is that it will not be like the past. Nonetheless, even as the ultimate stature of a great oak lies latent in the buried acorn, so our economic future is incipient in present trends. As your own executive career unfolds you will want to keep a watchful eye on the national economy, looking for any signs which suggest that the present inflationary trend has either slowed up or is reversing itself. The decisions you make under a deflationary economy would be quite different from those you will make under slowly rising inflation. If present trends continue, the organization of the future may look more like an hourglass than a pyramid. In the top portion of the glass will be staff men, technicians, information gatherers, programmers, research specialists and the like. In the bottom portion of the hourglass will be operators of mechanical equipment, controllers of automated equipment and maintenance men. Information between the two portions of the hourglass will flow freely two ways and not, like the proverbial sand, from the top only. It will, however, be compressed into certain narrow channels, and much of the information flow itself will be automatic. Obviously, any such organization as here visualized will involve numerous changes in present organization practices and policies, including communication, opportunities for promotion, training, selection, compensation, expansion, etc. These changes present a big challenge to you. Ahead is a great vista of vast opportunity, in a period which will be markedly different from the present and the immediate past. Perhaps you won't recognize opportunity when it presents itself to youit may be wearing a blue


shirt and look like hard work. This opportunity can float away before your eyes, like milkweed down in a spanking breeze. Or it can be captured, provided you have the thirst of ambition craving to be sated. Everything has its price. The price tag for executive success, in a rounded sense of that word, is detailed in this book. As you read it, you must determine whether you are willing to pay for advancement with the currencies demanded, currencies which jingle in the stout hearts of ambitious executives only.



A Company Is Known by the Men It Keeps The success of many a business executive comes from his ability to develop an effective employee team. To produce goods and services by depleting natural physical resources and the spiritual reserves of people is to reassert slavery; to produce them by utilizing the bounties of nature and the voluntary talents of employees is an elevation of the spirit of man. Occasionally a single executive towers above his fellows like a giant redwood in a forest of pines. The dynamic spirit of such a man can infuse an entire organization. More often, however, it is a group of top executives who determine the company climate in which an employee has to work. Their success depends on exerting effective leadership, making prompt decisions, striving for growth, maintaining balance among various parts of the organization, careful planning as to objectives, selecting good working procedures and using ethical (as distinguished from manipulative) motivation. In the absence of these ongoing leader9



ship traits, an organization deteriorates from the rust of executive indifference and the friction of resistance to change. Decision making is fundamental for your development. Indecision will drive nails in the coffin which buries your ambition. Some decisions are bound to be wrong; in contrast with an unsuccessful executive, the successful man makes fewer bloomers. Or maybe he has learned the art of making his mistakes when nobody is looking!
Executive Dilemma
Every manager is impaled on the horns of a dilemma: whether to develop employee initiative or to tighten up supervision. He notes specific situations where either one fails or succeeds. One competitor goes in for the latest scientific management devices. Another pays no attention to management principles, gives employees considerable responsibility. Still a third treats employees like four-year-old children, directs every act. Which one should he emulate? The answer seems to lie in employee morale, according to studies made by the Institute for Social Research at the University of Michigan. Efficient techniques and close individual supervision may yield high production, but at the price of poorer attitudes and poorer quality, accompanied by increases in accidents, absenteeism, turnover, grievances and work stoppages.

Employees tend to resist direct pressure from superiors for increased production, but not pressure from fellow employees. Hence supervision of the group rather than of its individual members seems to provide the optimum combination of productivity, morale and individual choice as to method.



Employee-Oriented Supervision

The purely production-oriented supervisor drives men, materials and equipment to achieve high production at low cost. He is amazed to find his employees constantly snapping at his heels. The employee-oriented executive sees individual employees as the focus of his problem and works through them. Hence he is able to hold morale high and at the same time get high production with low cost. He thinks of his job in terms of selection, training, compensation and supervision, jointly working to yield production. Without attempting a comprehensive discussion of these four factors, let us hit some high spots about each one.


Rapid growth of some companies, coupled with long range planning, is causing most employers to pay more attention to the promotion potential of applicants for employment. Many executives are so sure of their magical intuitive powers in selecting applicants that they never bother to check whether this cocksureness is justified. Yet a rabbit's foot is a poor substitute for horse sense! In selecting employees, you should develop adequate sources of labor supply, use aptitude tests, give at least two interviews and by different persons, run down former employer references, require a thorough physical examination, induct each new employee carefully. These devices screen out the incompetent and the unworthy.



What traits should you look for when interviewing applicants?

In one comprehensive study, 70% of the companies queried said that the ability to get along with people was the most important attribute. This ability, they believed, consisted of six major traits: 1. Cooperation with others in the group, including accept ance of the surroundings in which the group had to work. 2. Persuading others, teaching them, keeping in two-way communication with them. 3. Enthusiasm, a contagious trait of great value in the group effort 4. Self respect, reflecting an understanding of an indi vidual's relation to other members of his group, and their relation to him. 5. Emotional maturity, revealed by freedom from impa tience, pettiness, fear, hatred and instability. 6. Leadership, the ability to plan work for others, to get them to follow the leader's plan.

In interviewing applicants, dig deep for indications of the first five at leastthe sixth you may have to develop on the job by challenging assignments and careful guidance. Interestingly enough, the findings from this research were indirectly corroborated by another study wherein the personnel records of 10,000 employees were analyzed. The conclusion was drawn that 15% of success results from technical training and 85% from personality development.



Training Is Needed

Employees well selected deserve adequate training in what they should know, do and be. Undoubtedly you are familiar with the pro's and con's of various training methods lectures, discussion conferences, case studies, demonstration, on-the-job training, etc. Here are three training devices which may not have come to your attention: 1. Compare the trainee against the mental, skill, physi cal and social requirements of his job. Write out a training "prescription" based on his revealed deficiencies. 2. By job analysis, discover the "hazard points" of the work to be done: those difficult duties which mess up smooth job performance. Give special training in the haz ard points, so that, through repetitive impact, he will ac quire facility. 3. Utilize role playing.

Role Playing As Training Role playing is too little used as a method of preparing for important moves, or of training associates.
The executive vice president of a well known company uses role playing for a variety of problems. Within a three-month period, he: 1. Acted as the international union adviser in a simulated labor negotiation meeting; had his industrial relations man ager play the part of the union president. 2. Brought in three long service salesmen to sell him the



company's products while his discomfited sales manager listened in over an open intercom system. 3. Brought together all executives and department heads, gave them two hours to physically transport all their important records to the company clubhouse, ten miles away. The situation was supposed to be an enemy air attack with atomic bombs. Each of these psychodramas had a certain touch of realism about it Weaknesses needing correction came to light. Participants learned what NOT to do as well as what to do, developed confidence.

You don't have to be the top dog to utilize role play ing. In fact, you can do it merely in your imagination: what would I do, if------? Of course, it's better when others take part. No rehearsals, no set lines to be parroted. Rather the problem is tossed out, and individuals are appointed to assume certain roles in attacking the problem. Try it with your associates and subordinates. It's interesting stimulatinginformative. You'll soon get the reputation of being "different," a "comer," a "man we should keep our eyes on." What's That Job Worth? Compensation is a complex problem. If you are assigned to work on it, study: 1. The literature on job evaluation, especially the factor comparison system. 2. Performance (merit) rating. 3. Incentive pay plans, individual and group.


4. Time and motion study; measured day work; work

simplification; establishment of work standards. 5. Profit sharing. Wage and salary inequalities can wreck employee morale. Once these inequalities are allowed to creep in, it requires much effort, great patience, a considerable period of time and unnecessary payroll cost to iron them out.
When Walt Sungood took over the plant managership of an unprofitable eastern foundry, he found some strange wage conditions. For example, foremen were not supposed to know the rates of men under them. (No wondersome employees were getting more than their bosses!) New employees frequently had demanded, and gotten, higher pay than older employees who broke them in. Walt brought in a management consultant to set up a job evaluation plan. Employees under the minima for their jobs were immediately given increases. Some, whose rates were over the maxima, were transferred to higher jobs where their rates could be justified. Performance rating was instituted. Wage administration policies were published to employees and supervisors. Within two years, most of the wage inequality problem had disappearedbut solving it had added about 4% to the labor cost of manufacturing. Even so, it must have been worth it, because the company made a profit for the first time in six years.


The functioning of an industrial organization normally involves:



Personnel, working with correct Tools, and adequate Equipment, using proper Methods, at the right Place, and at the right Time, on necessary Materials. This general formula, with slight modifications, is applicable to office, shop and sales, as well as service, organizations. The demands upon a high level executive to carry out these functions are both broad and exacting. Figure 1 lists some of these requirements, classified under what he should know, be and do.
FIGURE 1 Some Characteristics of the High Level Executive
What he should KNOW 1. How to raise capital for the business; refinancing with stocks, long-term or short-term bonds; borrowing from financial institutions; working capital require* ments. 2. How to manufacture the products or produce the services to be sold; ma terials, factory layout, equipment, tools, working methods; costs. 3. How to market the products or services; distribution agencies; retail outlets; market potentials; consumer demands as to style, quality and price; advertising and sales promotion. 4. How to manage personnel in plant, sales and office; deal with unions; selec tion, training, compensation; motivation of employees. 5. How to abide by numerous laws and governmental regulations. 6. How to get and maintain good public relations. 7. How to translate economic conditions and trends into business decisions; in terpretation of company accounting and statistical information. 8. How to forge an organization to help him carry out these varied demands upon him. 9. How to keep stockholders happy through profits for dividends and reserves.
What he should BE

1. Personal traits: Equable temperament, pleasing personality, dependability, creativity, initiative, energy, perseverance and self control.



2. Mental capacities: Intelligence, education, technical knowledge, comprehen sion, analytic powers, judgment, vocabulary, verbal facility and imagination. 3. Social skill: Ability to lead and motivate other people, friendliness, interest in people, earning the confidence and respect of others, sensitivity to social situations, empathy with the problems of others, consideration, development of subordinates and the leadership ability to weld people into loyal teams, the members of which will cooperate with each other. 4. Physical attributes: Principally the physical energy for the work to be done, but also freedom from physical handicaps which might necessitate repeated absence from the job. 5. Attitudes: Adaptability to changing conditions, a wholesome point of view about the job, ambition for the future, enthusiasm, optimism, loyalty, self confi dence, objectivity and good orientation to the people associated with the work.
What he should DO 1. Plan what is to be done. a. Get as many facts as possible on each problem, to reduce the area in which judgment alone must be exercised. b. Wherever possible, express the facts mathematically. c. Define objectives and sub-objectives clearly. d. Lay down tentative procedures. e. Establish a schedule. 2. Subdivide the work among the people available. a. According to their competence. b. Tell specifically who is to do what. c. Tell when each portion is to be done. 3. Coordinate the work as the plan unfolds. a. Arrange for progress reports. b. Redistribute work loads, if necessary. c. Change sub-objectives if necessary. d. Change schedules if necessary. 4. Set up a control system. a. To check progress against the master schedule. b. To avoid errors in future planning. c. To establish future standards as to cost, quality and quantity.

Supervision is a way of human relations in industry, not a series of devices. Nevertheless, it includes four distinct approaches: 1. Planning the work: aims and sub-aims; factors of time, place, equipment, etc. When employees have not been given clear objectives they are like a driver without a road map.



2. Direction: telling who is to do what, and when. Never forget the last two words! 3. Coordination: insuring that all parts of the plan are working together. 4. Control: checking up that the plan continues to be effective, or perhaps needs modification.

Descriptions of Executive Positions

Some day your company may want a manual of executive position descriptions. The person assigned to do such an important study as this is generally a "crown prince/' definitely in line for higher responsibility, perhaps for the throne itself sometime in the future. If you would prepare yourself for such a difficult assignment, study a book entitled Defining the Manager's Job (published by the American Management Association, Inc., New York). It tells how to make such a survey and presents numerous typical descriptions of high level positions.

Knows, Is, DoesWhich Is Most Important?

This same American Management Association surveyed 214 executives in an endeavor to get a profile or pattern of the typical executive. However, a by-product proved to be one of its most important results. The questionnaire used did not ask questions about human relations. Yet a report on the study states that:



"Spontaneously, separately, and without prompting of any kind, the survey respondents underscore the importance of people, . . . that human relations, . . . far more than technical specialties, are what they wish they'd learned more about at school."

The group as a whole mentioned 609 personal characteristics which they thought were most needed by an executive. Here are the top ten:
Characteristic Per cent mentioned

Ability to work with people Integrity, honesty, fairness Stamina, drive, ambition Leadership ability Willingness to listen to the ideas of others Judgment, common sense Intelligence Decisiveness Knowledge and skill Imagination, creative ability

21 11 9 7 4 4 4 3 3 3

Judging from this list, it would seem that what an executive is and does are much more important than what he knows.

Organization Principles A successful organization, like a great painting, demands knowledge, skill and patience. Some organizations seem more like thumbnail sketches than finished works of art. In contributing your share to build an organization, you will want to take cognizance of certain accepted principles. Some of the more usual are given below: 1. Authority should equal responsibility; both should be in writing.



2. An executive should understand what he is account able for and should be made accountable for it. 3. The span of executive contacts should be limited by his time and ability. 4. Work should be so subdivided that it can be handled by the competence of the persons available. 5. Standards of performance should be established for as many tasks and persons as possible. Mechanization and automation are bringing about changes of organization as well as changes of some accepted principles. For example, a trend in recent years has been to increase the relative proportion of total employees who are engaged in technical, scientific, clerical, control and administrative activities. Part of your problem in attempting to weld an employee team is to recognize that fundamental changes are occurring. You must cling to old ways as long as they are effective, but be ever open-minded to the new just as soon as it proves better.

Supervision's a Cinch!

No doubt about it, the supervisor has a soft job. Here's all he has to do: 1. He works extra hard in a lowly job eight hours a day so he can get to be a boss, so he can work ten hours a day. 2. He carefully picks his employees, only to have his boss likewise pick themto pieces. 3. He must repeatedly attend supervisory conferences, gradually learning more and more about less and less until finally he knows everything about nothing.



4. He must pursue production as zealously as a monkey on a flea hunt. 5. He must worry about his employees' earningsbut never about his own. 6. He tries to keep gremlins out of production, only to discover that gremlins are elf-made men. 7. He must have the drive of a devil and the temper of a saint. 8. He must read books like this one to prepare himself for those softer jobs above him!

"The Managerial Mind" This is the title of a thought-provoking article in the Harvard Business Review for January-February, 1959. In it the author, Charles E. Summer, Jr. suggests that the managerial mind characteristically reveals a blend of the four attributes listed below, attributes you would be wise to acquire: 1. Dig for facts before deciding; measure information and results; use theory and experience of others as aids to decision making; mistrust too much theory and "fads"; face the truth of facts gathered; utilize estimates or judgment where facts are not available; apply correct reasoning. 2. Accept responsibility and challenge. Do this routinely in your life; never back off from them. And don't stop just because you get your knuckles rapped occasionally! 3. Take social values into account. Don't buy profits at the cost of people, whether they're your employees or your customers.



4. Take timely action based on a whole-problem judgment of facts, of estimates and of forecasts available to you. An article in Collier's (February 5, 1954) entitled "Are You the New Executive Type?" points out the demand for generalists as distinguished from specialists. In developing executives, industry is emphasizing the broad gauge, well rounded, flexible man. The important underlying trait seems to be your attitude toward problem solving. How do you measure up?

Your Executive Potential So far in your life, have you developed attributes which give you high level executive potential? You can get a direct answer to this question from Figure 2, "Executive Potential Rating Scale."
Below are 50 traits important to your success as an executive. You can either rate yourself or get some higher executive in your company to do the rating. Rate each trait by encircling one of the three possible ratings: + : Satisfactory or better. ? : Average, usual, not known or not applicable to your job. : Unsatisfactory or deficient. //em No.

1 2 3 4

TRAIT Organizes his work Emotionally balanced Analyzes problems Motivates other people

+ + + +

Rating ? ? ? ?



: Total the points for items: :

? 1 0

Score to get a score for "work performance"------------------ " " " " " "personal traits" " " " " " "mental capacity" " " " " " "social skill" -------5,10,15,20,25,30,35,40,45,50 " " " " " "attitudes" -------Total----------------Since each of these five categories has a possible score of 20 points, you can readily note areas in which you are weak. You can interpret your total score by reference to the following table:
Score to 52 to to to to Significance for executive success

0 53 71 78


70 77 87 100

Very poor Poor Fair Good Excellent

Get some superior to rate you on the 50 traits listedor rate yourself, if you prefer. If your superior rates you as "excellent" or "good" (or you rate yourself "excellent") your chances of wearing a brass hat are likewise excellent. Whatever the final result, study the individual traits marked with a minus sign. These you need to work on. To be pitchforked into a high executive post before you are ready can do you grievous injurythe wound may heal but the scar will remain.

High Lights
1. Learn how to build a cooperating team. 2. See your problem as one of working through people.



3. Select employees who are potentially promotable. 4. Train employees, and check up that they are trained. 5. Iron out wage and salary inequalities among employees. 6. Understand what an executive should know, be and do. 7. Apply organization principles, but modify them to meet changing conditions. 8. Study your own executive potential, to improve your weaknesses.

A boxer who is not forced to fight usually takes on excess poundage. Successful organizations seem to suffer the same fate. How to reduce to fighting trim will be the challenge of the next chapter.



Constant Need to Reduce Costs The successful president of a large corporation told a group of business acquaintances how he had changed his company from red to black figures in two short years. He stated, "In all functions of our organization, I simply sought answers to these three questions: 1. Do we have to do it at all? 2. Do we have the right person doing it? 3. Could we do it better in some other way? F'rinstance No. 1. His company found that, by enclosing a bill with each shipment, about half its customers would pay immediately. So it had its money earlier, was saved rendering half its monthly statements. F'rinstance No. 2. Attending their information desk was a shy, introvert girl who was frequently affronted by brash salesmen. In the shop, a talkative, dominant girl was repeatedly neglecting her duties as a line inspector to "visit" with other employees. When the two girls were interchanged, two problems disappeared.



Frinstance No. 3. Branch stores hand-wrote sales slips of deliveries to regular customers. Because of clerical errors and illegibility, the accounting department had to check names and addresses against a master file. This clerical check became unnecessary when customer addressing plates were provided to the stores. Saved: 1200 clerical hours per year.

There's wisdom in the three questions. Try them in your own company. Interesting things will happen.

The Five Roads

Every management is faced with a continuing need to effect cost reduction. Somehow or other we think of these reductions as available principally in the manufacturing process, but this is not the sole area for expense reduction. There are at least five channels through which important savings can be effected. These are: 1. Raw materials. 2. The costs of capital equipment. 3. Manufacturing costs. 4. Sales expense. 5. General and administrative overhead expense (in cluding the office). Although there are some procedures in common which you can use in endeavoring to reduce expenses along these five avenues, for the most part the approaches must be different. You need therefore to be alert in your thinking about cost reductions in these five major areas.



Road 7: Raw Materials

Raw materials costs vary greatly with industries. Most companies have long since worked out the average percentage of the sales dollar paid for raw materials and supplies. If you can make a comparison of this percentage for your company against other companies in your industry, you may have an excellent starting point. And even where you can't do this, or where the comparison is favorable to your company, it nevertheless may pay you to study ways of lowering the cost of basic raw materials. Here are the principal devices which companies have used: 1. Development of carefully prepared purchasing specifications, which demand raw material that is good enough for your manufacturing process but not of such high quality that your costs go up without a compensating increase in the price of your ultimate product. 2. Inspection of incoming materials to make certain that they meet these specifications. 3. Tracing back difficulties in the manufacturing proc ess to raw material imperfections; alteration of specifications if indicated. 4. Modifications of manufacturing processes to eliminate the necessity for certain raw materials and supplies. 5. Substitution of other kinds of raw materials. 6. Control over the sources of raw materials either by purchase of the supply sources (vertical integration) or by long term contractual arrangements which may take ad vantage of low price situations. So many concerns take their raw materials for granted that you may make a startling contribution to your company by applying the basic viewpoints here spelled out.



Road 2: The Costs of Capital Equipment

Piled upon manufacturing labor and material costs must be costs of the capital equipment used. Typical of such costs would be depreciation, replacement, maintenance and interest on borrowed capital. Generally this field is thought to be so specialized that only financiers can study it, but this is not necessarily true. Some managements feel that the die has been cast when the company capitalization has been set up, and there is not much which can later be done about it. This is not necessarily true, either. A great many companies tie up a lot of money in semifinished or finished inventories. It is useful to make an occasional check as to the amount so tied up and to compare this with previous checks. In fact some companies make these comparisons weekly or monthly. Because of inventory pricing policies used by accountants at the close of the year, many a company goes through the year thinking that it has had a profitable operation, only to discover that the inventory pricing has sharply reduced the expected profit; by the same token many a company enjoys a fictitious profit through pricing of inventories and lulls itself into a false sense of security. In Chapter 4 we shall consider capital financing in more detail, so we will not make further comment here.
Road 3: Manufacturing Costs

Manufacturing costs normally consist of labor plus material plus manufacturing overhead. Labor cost opens up a large area for study. It includes proper original selection, adequate training of workers,



financial and non-financial incentives, quality of supervision, use of standards for control of labor costs. It may involve techniques of aptitude testing, skill training, time and motion study, work simplification, job evaluation, performance rating, delegation, recognition, participation, etc. Reduction of manufacturing overhead may involve studies of supervision, maintenance and other indirect labor; of inspection and quality control; of fuel, light and power; of fire, safety, police and insurance protection; of idle equipment charges; of proper utilization of the space available; of other charges directly allocated to the product. Design of new equipment for production involves consideration of manufacturing methods and the capital investment required. Proper lighting has been responsible for worthwhile increases in productivity and reduction of accidents. In some companies, improvements have resulted from painting of walls and machines, reduction of noise, better ventilation, introduction of music, etc. Materials handling is usually another fertile field for investigation. The movement and storage of raw materials, work in process and finished goods can add considerably to the final cost of manufactured goods. Studies of productive operations may readily include operations research, whereby mathematics is applied to determine the optimum or best manufacturing conditions. Typical would be job lot sizes to derive the greatest advantage from manufacturing operations; proper inventories of raw materials, partial assemblies, semi-finished products and finished products. Studies of this kind can sometimes lead to complete revisions of manufacturing



methods, changes of layout, mechanization, conveyor lines, use of production feedback, automation, different methods of inspection and control. In our present era of rapid change in manufacturing methods, no idea is too fantastic to be rejected without proper consideration.
Road 4: Sales Expense

Over the present century there has been a reversal of the relationship of manufacturing costs to marketing costs. At one time manufacturing costs represented more than half the sales price of an article, but these costs have relatively receded so that today, in most companies, the sales costs represent more than half the selling price. Contributing to this increase in sales cost have been such items as warehousing, transportation, advertising, packaging, direct sales costs and the constant price attrition of competition. Sales overhead, too, has increased through the addition of market research, sales promotion specialists, automatic vending equipment, more sales supervision, etc. Many sales managers have virtually become sales controllers. Their functions increasingly are those of analysis and control. They need both the accountant's figures as to sales expense and the statistician's figures as to sales analysis. The latter will normally show dollar and quantity sales by salesmen, by territory, by customer and product. Wherever the sales manager detects a falling off in some one of these areas, or an increase in sales expense, he applies effort to change the condition. If you are in a sales department, you will do well to become thoroughly acquainted with figures of this kind. Gross Profit. Deduct the manufacturing costs of an



article from its sales price and you get its gross profit. From this must come: 1. Sales expense. 2. General and administrative expense. 3. Net profit before taxes. a. Taxes b. Net profit after taxes. Usually it is easier to compute total gross profit than the gross profit on a single item. This is so because it is difficult to know how much manufacturing overhead, sales expense and general and administrative expense should be allocated against a given product. Differing assumptions in these allocations can lead to different conclusions. Hence if you are making product studies of gross profit, be sure to question the accounting assumptions that have been used.
Road 5: General and Administrative Expense

The fifth avenue of cost reduction consists of analysis of general and administrative expenses. In the normal company these cover such items as salaries of executives and office employees, office expense, interest, property depreciation, taxes, insurance, donations, legal fees, consultants, investigation of possible mergers, economic services and other general business expenses. Here is a delicate and difficult area to study, particularly for younger executives. It contains a lot of sacred cows. Hence it may well be that you will make observations in this area for a long time before presenting any suggestions. Moreover, you have to be certain of your ground before you make any recommendations. Quite often jealousies among top executives will be involved. Nepotism, re-



lationships with important stockholders, special arrangements with suppliers, relationships with banks, conditions of long standing, "empire building" by high officials and emphatically expressed viewpoints of top executives may well be the unseen opponents of any bright ideas you may have for reducing expense in this area. However, this may not be true of the entire area. Office costs, for example. Mechanization, including electronic computing equipment, is taking such a fast hold on the office that it may well provide a field in which you can become a specialist and make important recommendations. If your organization does not now have budgetary control, this may well be a management device in which you should interest yourself. There can be budgets for capital needs as well as expense budgets applicable to manufacturing, sales and administration. Budgeting is not merely a control device, nor a mathematical confirmation of management errors. It must be wanted by the operating heads, they must contribute to its formation, must believe in its soundness and must change their actions in accordance with its findings. Only then can budgetary control be of value. An interesting variant of budgeting is the profit budget. It sets a reasonable profit goal, then works backward to reveal what sales, production and administration must do in order to bring the profit about. Savings through determined effort can be large, indeed. Some years ago, a well known radio company was heading for bankruptcy. In desperation the Board of Directors brought in a new executive vice president, gave him a free



hand. After intensive analysis of the cost data, he set the following cost reduction goals:
Per cent

Raw materials Investment in buildings and equipment Manufacturing labor Manufacturing overhead Administrative overhead

2 1 10 15 15

He then initiated vigorous steps which increased sales expense somewhat The company broke even within six months, was extremely profitable within two years.

Work Simplification One of the most useful devices for effecting economy which I have worked with is the "STEM-analysis" plan. It derives its name from the fact that it seeks economies in: S-pace, T-ime, E-nergy, and M-aterials. Moreover, it is applicable to plant, office and sales, because all four factors involve expenditures in these three subdivisions of a business. Each factor may in turn be subdivided as shown in the first column of Figure 3. Also shown are some typical investigations conducted under this twelve-point attack. These factors are interrelated. Better storage may reduce



waiting time; a changed layout may make possible use of conveyors; studies of working methods may suggest use of new equipment. Here are some usual aims: 1. Flow of work should be in a forward direction, with a minimum of backtracking. 2. The flow of work should determine the layout, and not the reverse, as so often happens. 3. Use shelving to reduce floor space congestion. 4. Reduce waiting time of people and materials. 5. Reduce traveling time of people and materials. 6. Make repeated studies of production methods. 7. Select the best man for the work to be done; train,

motivate and supervise him. 8. Substitute mechanical for human energy. 9. Substitute electrical for mechanical energy. 10. Use raw materials consonant with the ultimate qual ity of your product. 11. Look for waste and carelessness in utilization of supplies. 12. Keep abreast of new developments in tools and equipment; design your own for special purposes.

Managing Improvements

A great opportunity lies ahead for young executives to learn how to manage improvements. At any given period of time most companies have a number of improvement programs in effect. Some of these die aborning; others just wear themselves out and never accomplish much. Some programs initiate important research which results in a



series of recommendations about which no action is taken. In some instances, carrying out improvements rests with executives who will merely make great sacrifusses. There is frequently need for a "lictor."
In the days of the vanquishing Roman armies, there existed a job known as "lictor." It was the duty of the man who held this job to follow the Roman general into battle. When the general hesitated, the lictor would lash said general as though he were an unwilling horse, to remind him that it was the job of a commander to win battles, not to retreat.

Every organization has an important potential for making improvements in products, production, distribution and administrative procedures. Provincial thinking and resistance to change are likely to interfere with getting these improvements. Conventional administration is concerned with the necessary planning, direction, coordination and control of the organization to carry out the avowed objectives. But too seldom are questions raised about the objectives or the methods of achieving the objectives. Change is the essence of progress. You can't push yourself ahead by patting yourself on the back. But if you will persistently and consistently work toward methods improvement and cost reduction, you will inevitably be selected for promotion, provided you have not made important enemies on the way. The future is necessarily filled with doubt and complexity. Executives who are able to project their organizations into the nebulous future, to sell their ideas to others, to do that kind of creative thinking which proves right against the actuali-



ties as they unfold, must inevitably be the executive leaders of that future.

High Lights
1. Ask: Need it be done? Is the right person doing it? Could it be done better? 2. Study the five roads to cost reduction: raw materials, capital equipment, manufacturing, sales and administration. 3. Studies of changes in gross profit can often point the way to cost reduction. 4. Learn to apply STEM-analysis in work simplification leading to cost reduction. 5. Once possible economies have been uncovered it is neces sary to prosecute them vigorously, lest they fail of accomplish ment through inertia and resistance to change.

Obviously, if your company can't sell certain products it won't continue to make them; piled up inventories will cause profits to become the "little man who wasn't there." So let's consider the problem of marketing.



Marketing Outdated?

Most businesses today are limping along with marketing plans geared to an era that has passed. Most sales managers are attempting to apply practices of the past to problems of the future. As a consequence they find themselves brain-obfuscated, job-frustrated and stomach-ulcerated. If your work has to do with marketing of a product, you can make yourself invaluable to your company by use of an inquiring mind. Instead of accepting the status quo, reverse your thinking. Assume that any practice which has long been in effect is ready for some kind of change, or that it may no longer be adaptable to present circumstance, or that it may have been wrong all the time. From this vantage point you may be able to get answers to the following ten important questions: 1. Are we trying to sell what we can make or are we willing to make what we can sell? 2. Considering population growth, how have we fared



as to our percentage of our markets and of our industry; what are the principal factors which influence our selling potential? 3. How adequate is our original selection of salesmen; are we adequately protected as to key sales positions so that capable men of the right age are available? 4. Do we train salesmen so that they do what we want or do we merely tell them what they should do; do we give adequate supervision to the field selling effort? 5. Is our method of compensating salesmen one which offers them real incentive to be out selling, or are competi tor salesmen outselling them? 6. Are advertising, sales promotion and packaging sup portive of selling effort? 7. Are our channels of distribution right, and are we using them properly; is the organization of the sales de partment effective considering our channels of distribu tion and other problems of marketing? 8. How could we improve transportation, re-handling, storage and warehousing? 9. Are present costing practices sound; can they tell us which products are profitable and which are not? 10. How do our selling practices compare with those of our competitors; what would be the likely result on our markets if we were to combine with one of our competi tors? Obviously there are other questions along these lines you can ask, but the above will be sufficient to indicate the nature of your inquiry.



Conceptual Skill

Writing in the Harvard Business Review for JanuaryFebruary, 1955, Robert L. Katz says the following about "skills of an effective administrator":
At lower levels of administrative responsibility, the principal need is for technical and human skills. At higher levels, technical skill becomes relatively less important while the need for conceptual skill increases rapidly. At the top level of an organization, conceptual skill becomes the most important skill of all for a successful administrator. A chief executive may lack technical or human skills and still be effective if he has subordinates who have strong abilities in these directions. But if his conceptual skill is weak, the success of a whole organization may be jeopardized.

Nowhere is this statement more true than in the field of marketing. It needs the kind of mind which sees nylon stockings in a felled log, an electronic computer in a vacuum tube. The top thinking in marketing should be conceptual thinking. Conceptual skill involves understanding the relationships of the parts to the whole. For example, a sales manager should be able to consider how a proposed change in marketing practice would affect production, finance, research, capitalization and all the people in various departments who would be involved. If he sees the change as of significance only to the sales department, he is operating merely a sales technical skill, or perhaps a sales human relationship skill. If you will consistently take the broad viewpoint about problems and proposed changes, considering their implications on the organization as a whole, you will become



known as one who makes important contributions to the company. One of your areas of interest should be market research. This includes studies of consumer preferences, market potential and buying motivations. It attempts to keep pace with the ever changing kaleidoscope of consumer demand. Market research and sales analysis are like twin guide ropes on a swaying footbridgehold on to them, stay within their confines, and you'll get there!

Motivation Research

In recent years the topic of motivation research has been picked up by many sales managers. It seeks to discover the subconscious desires which cause consumers to buy. Undoubtedly such research can contribute important knowledge, but there is a danger that it may be substituted for selling effort. There is a further danger that we may be catering to consumer desires of the past and failing to create new desires for the future. There is nothing wrong with developing little strategies for selling, provided you have a grand tactic for raising the sights of consumers as to what they should want and are willing to work to get. Subconscious and irrational forces are undoubtedly present in consumer preferences, but wise sales managers see these subconscious factors as adjuncts to, and not substitutes for, hard driving selling practices.



Sales Personnel Problems

The sales personnel problems of the marketing division are fairly clear: selection, training, compensation, motivation and supervision. The problem of selecting salesmen differs from that of employing production workers, engineers or clerks. In selling, the personal traits of the salesman himself are all-important.
Some years ago the Alexander Hamilton Institute authorized our consulting organization to study the traits of successful versus unsuccessful sales representatives. Based on an analysis of 317 excellent and 247 poor salesmen, we found that these were the outstanding differentiations: Self confidence: decisiveness; aggression. Planning; the presentation; time; getting information on prospects. Industriousness: persistence; asking for the order; optimism. Persuasiveness: convincing; fluent; talking prospect's needs.

Aptitude tests, and even the interview, are less likely to reveal these traits than a face-to-face discussion with a former employer. Training of salesmen should stress role playing for confidence and fluency; the proper use of questions to identify prospect needs; the value of testimonials; how to put on prospect-participating demonstrations. Sales compensation plans require special study. They fall into three major groups: 1. Salary, or drawing account.



2. Commissionsometimes a sliding scale.

3. Bonus plans of great variety; frequently they are ver

sions of a salary plus commission arrangement. Motivating salesmen differs little from other motivation problems. Accents on competition, rewards, recognitions and participation have generally proved successful.

Supervising Selling Effort

Supervision of salesmen has been a weak link in the marketing chain. Sales managers tend to hide supervisory deficiencies behind such statements as "our salesmen are in business for themselves; they're high level men who don't need policing; our compensation plan provides adequate supervision. If a salesman wants to go to a ball game or go fishing, that's his concern. All I care is that he produces business from his territory." Despite these lofty assurances, most sales territories are improperly covered, too many prospects are never contacted, many salesmen put in an inadequate work week, allimportant planning is poorly done, some customers cost the company money. Could be that competitor salesmen go to ball games at night or do their fishing over weekends. Modern sales executives believe in planning and closely controlling field selling effort. Marketing effectiveness, like sound, can be dissipated by sheer distance.



The Selling Process

Over a half century or more, writers have been endeavoring to analyze the selling process. One well known approach breaks it up into the four steps of attention, interest, presentation and close. Another one uses products, prospects, needs, presentation, conviction and close.
A salesman for a meat slicing machine was demonstrating it to a German-born delicatessen owner. First he cut a thin slice of boiled ham, held it up for inspection. "Iss gut," approved the shopkeeper. The salesman shaved a slice from a wedge of cheese. "Iss gut," nodded the other admiringly. "Give me a loaf of bread," requested the salesman. He adjusted the machine, cut two neat slices of bread. "With this sheer, you could make sandwiches, sell them to the workers in the factory across the street, double your income." "Dot sounds fine," beamed the man behind the counter. "Then why in hell don't you buy the machine?" asked the exasperated salesman. "Vy in hell don't you ask me to?" returned the store owner.

This whimsical story contains lesson number one in salesmanship: selling is asking people to buy. Sometimes we get so lazy just filling orders or become so imbued with the necessity for our product that we forget to sellto ask people to buy. Even clever ads and sales promotion pieces sometimes reveal the same defect. It's not too bad when your competitors, too, forget to sell. But when times get tough, some fellow digs into his memory and drags out Lesson Number One. When he does, watch outunless you're that fellow!



Selling is a complex process, not a single act. The prospect has needs, problems, pressures, knowledge, misconceptions, susceptibilities, viewpoints, hobbies, interests. The salesman has products or services to offer, but he also has personal traits which may help or hinder the offering. The timeliness of the selling contact, the climate of confidence between salesman and prospect and the physical circumstances surrounding the interview all enter into the selling process. The more you understand about these factors, the more likely you are to sell or to supervise salesmen successfully.
New Products

Five years from the time you are reading this book: One-third of sales in the aircraft industry will be new products. 20% of sales in machinery and related items will be products on drawing boards today. 16% of sales in the chemical industry will be products not produced five years earlier. 7% of food and beverages will be so different that they could be called new. These are educated guesses, of course. What's your guestimate for your industry? The development of new products for your market is one of the most creative contributions you can make to your company. Rarely can this be done as a single spark of thought. Rather it is a laborious process of selection and development, generally based on market data. This process is likely to follow these steps:



1. Exploration of possible products. 2. Screening of the most likely ones. 3. Specific proposals as a result of the screening. 4. Approval for development. 5. Estimates of volume and profit. 6. Development of manufacturing processes. 7. Development of marketing practices. 8. Launching upon the market. Most companies have so many suggestions for new products arising from the field, from the plant or from research and development employees that it becomes a problem which should be selected for development. In this situation you can make important contributions to your company by developing your own adaptation of the NewProduct Rating Form shown in Figure 4. (You probably could not use it as it stands.) After you have applied your rating form to a half dozen possible new products you will begin to get a standard for acceptance. If the rating is done by a knowledgeable committee, that committee will share responsibility for further development of a new idea. In the process it will develop a new product strategy, a set of policies to govern the selection of new products. Since many companies these days are working with long range planning, such strategy can become part of a long range plan.

A New Product "Team" Because it is eternally true that people believe to the extent that they participate, members of a rating group can



generate a considerable enthusiasm for the development of a proposed new product after they have had a chance to examine its merits. The team method of developing a new product is likely to build into that product significant sales features which will make it a success from the very start. Since profit potential has such a heavy weighting (30) in the rating plan proposed, the effect of such an analytic screening procedure on company profits is obvious. Conversely, little time is wasted on development of cats and dogs which would ultimately prove unprofitable. The span of time from idea to marketplace is likely to be reduced appreciably by this method of

handling. If you are part of an organization which has many divisions or plants specializing in certain groups of product, it is likely that each division needs someone to work on the development of new products. If your company is dominated by a marketing viewpoint, the new product function will probably be located in the sales department; if it is dominated by technological development, the new product section may be located in the research and development department. The basic thing for you to remember is that new product development requires creative minds and teamwork for the developmental process.

Importance of Sales Forecasting

Sales forecasting is potentially one of the most valuable, and actually one of the most neglected, tools of management. Many important decisions hinge on next year's



sales picture, yetshame on managementforecasts are too frequently "last year plus 10%" or some equally wishful method. You can make important contributions to your company by: 1. Preparing a statistically accurate sales forecast. 2. Setting up a monthly control system based on it. The procedures for carrying out both these important objectives are set forth below.
A Sales Forecasting Procedure

1. Plot the annual sales figures for the past twenty years on graph paper. Draw a trend line through the middle of your curve so that the areas above the trend line approximately equal the areas below it.
Annual Sales* Total 3 years* Smoothed Figure*


1940 1941 1942 1943

1944 (1945) * All figures in thousands.

($300) 300 317 308 339 324 (324)

$917 925 964 971 987 -

$305.7 308.3 321.3 323.7 329.0 -

If the curve shows jagged ups and downs you may have to smooth it first, as illustrated in the five-year example shown. The figures for three successive years are totaled, then averaged. The year prior to the first is assumed to be the same as the first year; likewise the year following the last. Graphically, the effect is to scrape off the peaks and



fill up the valleys. It becomes easier to draw a trend line through a curve plotted from such smoothed data. 2. Study your (smoothed) curve for evidences of a typi cal cycle (sometimes 4 years in length: 2 up, 1 down). 3. Estimate where you now are in this cycle. 4. Project your trend line forward one year. 5. Based on the third step, superimpose the cycle on your trend projection to read the sales forecast for the coming year. A Monthly Control System This plan uses monthly sales figures from the previous year to check up monthly whether your forecast is being met. In the example used, total annual sales last year were $228,000. Assume that your forecast for the coming year is $240,000.
Monthly Sales* I J $17 F 15 M 18 A 20 M 23 J 19 J 16 A 17 S 23 O 22 N 20 D 18 Total $228 Average $19 * All figures in thousands. Cumulative Monthly Sales* 2 $17 32 50 70 93 112 128 145 168 190 210 228 Cumulative Deviation Monthly between Average*Cols. 2 & 3* (Deviation)* 3 4 5 $19 38 57 76 95 114 133 152 171 190 209 228 $2 6 7 6 2 2 5 7 3 1 $4 36 49 36 4 4 25 49 9 1 $217



1. Compute the standard error from the following formula:



limits, above and below. If the sales curve goes beyond the allowable control limits, the forecast may need revision. In Figure 5, for example, this need became apparent in August.
Figure 5 Comparison of Actual Sales with Forecasted





High Lights
1. Question the validity of present marketing practices and assumptions. 2. To acquire conceptual skill, learn to use the "whole problem" viewpoint 3. Motivation research is an adjunct to, not a substitute for, the hard sell 4. Careful selection of salesmen is both difficult, and re warding. 5. If salesmen are to be trained they must be participants, not just listeners. 6. Field selling should be given active, plan-ful, control-ful supervision. 7. The selling process involves many factors. 8. Planning for new products requires teamwork. 9. Sales forecasting can become an important tool of man agement.

Reducing the cost of a product sometimes means new

equipment or even a new plant. In Chapter 4 we shall consider the pro- and con-fusion which often attends proposed new capital investment.



Equity or Debt

You know, of course, that a company can raise capital funds either by sale of stock or by borrowing. The borrowing may take the form of bonds, secured by company property (as specified equipment, finished goods or even accounts receivable), or of unsecured loans which are in the nature of promissory notes. If your company can earn 5% on money invested and has to pay only 4% to get capital, it may pay to have a large indebtedness and a relatively small amount of capital raised by means of common stock issue. If the reverse is true, and you have to pay 5% for money, yet can earn only 4%, the situation obviously presents a drain on the stockholders. However, interest on indebtedness is an item deductible before the income tax must be calculated. Hence there is an area of balance between the two methods (equity versus debt) which frequently needs exploration. This area may offer an opportunity for you to do some analysis in your own company, especially if your job makes it possible to recommend methods of raising capital.



Other considerations may enter in. For example, your company may have large sums of money in various banks, investment portfolios and short term government bonds. On the average these funds may not earn as much as if they were invested in the business itself. In this case management has decided to accept a lower rate of return on money to keep itself liquid (working capital), as protection against expected contingencies. Or it may be contemplating acquisition of some other concern.
The Costs of Capital

If your company wishes to raise additional capital, what sources should be sought? In the example given, Company X issues common stock; Company Y goes to four different sources for its capital funds. Company Y has to pay 10% more for use of its capital funds than Company
Comparison of Two Companies in the Same Line of Manufacturing (Capitalization of Each$100,000)
Sources and Cost of Capital; Credit Rating Company X Company Y

Sale of capital stock (common) Sale of 6% preferred stock, cumulative Bond issue Bank loan Total capital raised Dividends5% on common Dividends6% on preferred Interest on bonds5*% Interest on bank loans5%


$20,000 20,000 50,000 10,000 $100,000 $ 1,000 1,200 2,750 550

$100,000 $ 5,000

Cost of borrowed money Credit rating Credit rating


$ A





X. This comparison does not mean that it is always better to finance with common stock than otherwise. If you owned twenty thousand dollars worth of common stock, you would be a one-fifth owner of Company X but in control of Company Y. If both companies earned a $10,000 profit before tax, your $20,000 investment in either company would have yielded about as shown.
Company X Company Y

Profit before tax Tax (estimated) Net profit after tax Earnings as percentage of equity investment Dividends50% of earnings Plow back50% of earnings Percentage of increase in value of equity investment

$10,000 5,200 4,800 4.8% $ 2,400 2,400 2.4%

$10,000 5,200 4,800 24.0% $ 2,400 2,400 12.0%

If a creeping or galloping inflation lies ahead, a company which has successfully issued long term bonds at par enjoys a big advantage. It will be paying for use of its capital in fixed dollars while enjoying inflationary income. Conversely, if price-slipping deflation lies ahead, a company saddled with long term, non-callable bonds must pay fixed rates of interest while its own income is shrinking. A factor which enters into comparisons of bonds, loans and mortgages against common stock is the previously mentioned point that interest on debt is an expense which is deductible before arriving at the figure on which the income tax is based. Dividends are payable after computation of the income tax. You see then that there is no single, simple answer to the problem of raising capital funds. The availability of money, the interest which must be paid for it, the term



for which it can be borrowed, the kind of stock ownership existing or desired, the likelihood of inflation or deflation, the expected profitability of the investmentthese are the principal considerations which must be taken into account. If you have had training in finance and accounting, much of the material of this chapter will merely be review for you. If you have not had such training, it will present useful points of view but will not provide you with enough information to make wise decisions. If the subject is important to your success, you should study articles and books on those aspects which may apply to your situation.

Balance Sheet Items Figure 6 provides a graphic analysis of the principal balance sheet items. This gives you a clear idea of the composition of: 1. Working capital (often known as net current assets). 2. Net invested capital (also known as net tangible as sets). 3. Net worth (sometimes referred to as capital plus sur plus). Of these three concepts, the most important for this chapter is the term "net invested capital." As Figure 6 shows, it results from adding together the working capital and fixed tangible assets, then deducting reserves for depreciation on the assets and the value of the secured fixed indebtedness, such as loans and mortgages. Boards of directors are interested in what rate of return is being earned



on the net invested capital of the company. Of course they are also interested in the return on the net worth of the company. Figure 7 analyzes the principal uses of capital funds. Fixed capital can be put into land, buildings and equipment; depreciation for these production facilities must be included currently in the price at which products are sold. Working capital can be held in the form of bank deposits or of securities, both of which yield a return that is added to profits before computation of tax.

Uses of Working Capital

The major flow of working capital (Figure 7) represents expenditures

for manufacturing and sales operation. These funds are used for payroll, raw materials and other expenses incident to manufacturing and selling. The diagram shows how the processing of raw materials gathers both payroll and other expense to yield the cost of finished goods. To it are added sales and administrative salaries and other expense, interest on debt, depreciation and similar items which enter into the selling price. When products have been sold, their values are shown as accounts receivable. From accounts receivable is derived profit before tax. This in turn must be divided at least three waysincome tax; reserves for contingencies and plowback for purchase of new capital equipment, and dividends to preferred and common stockholders. This chart would be extremely complicated if it tried



to show all the conditions which can arise in the use of capital funds. We have mentioned that some funds are plowed back into the business for new capital investment. There are also times when a management considers raising additional capital either by issuance of more common stock or by borrowing, in order to make new investments in plant or equipment. Most junior executives have little opportunity to exercise judgment in such a problem. Yet it is one of the surest ways of understanding the problems of top management and of bringing yourself to the attention of top management. Hence we outline below an organized approach to this subject.

Appraising Equipment Investments

1. Make the pertinent estimates: a. Production rate, sales volume, competition, prices, costs, etc., of production items. b. Length of useful life, likelihood of obsolescence of equipment. 2. Summarize factors to estimate annual profits for esti mated life of the proposed investment. 3. Compute value of the proposed investment, using either "a." or "b." below: a. Years to "pay out": Divide investment by expected annual profit from it. For example, a $10,000 equipment investment is contemplated; it should yield a $2,000 annual profit, hence take five years to "pay out."

$ T H E C A P IT A L L E T T E R


Realize, however, that this method makes no allowance for income that the money tied up might otherwise be earning. If this sum were put into a 5% investment for five years, and interest "plowed back," i.e., compounded annually, we get a different picture: it would take more than six years to pay out.
Year Investment

1 2 3 4 5

$10,000.00 10,500.00 11,025.00 11,576.25 12,155.06

5% return $500.00 525.00 551.25 578.81 607.75

b. Return on investment: Many financial authorities consider this the better way to evaluate a proposed new investment. The "pay out" method above merely tells how long to recover the investment. What we really want to know is how profitable the proposed investment would be. The rate of return can be calculated on either: (1.) The original investment. (2.) The average investment, taking into account the rate of depreciation and the endpoint residual (salvage) value. In depreciation, it's not so much the original cost as the upcreep that hurts. This is true because federal depreciation allowances do not permit a company to set aside depreciation reserves sufficient to replace equipment at higher inflated prices. As long as inflation continues, federal regulations will work a hardship on business. 4. Contrast the return on the proposed investment with



net return if funds were used for some other purpose. 5. Decide whether to go ahead with the proposed investment. Is the time right for it? It is unusual for executives to give such careful thinking as this to proposed investments. If you are called upon to prepare a considered opinion on some proposed capital expenditure, utilize the outline above to guide your thinking.

Financial and Operating Ratios Virtually all managements use a number of financial and operating ratios, in order to measure internal trends of the business. All percentages and unit costs, for example, are ratios. Figures expressed per pound, per day, per hour, per man, per machine, etc., are ratios. Ratios are computed by dividing one quantity into another. For example, if we divide the average dollar value of inventory into the total sales, we get a turnover ratio; if we divide current liabilities into current assets, we get what is known as the "current" ratio. Here's a simple classification of business ratios: 1. Operating ratios: These may compare quantity against time (production per hour, for example) or time against quantity (minutes per unit produced); they may show per centages which the various items on a profit and loss state ment bear to net sales. 2. Turnover ratios: In general, these aim to indicate with what efficiency capital is being used for various pur poses in the business. If one product has sales which are



ten times the average inventory of that product and a second equally profitable product has sales which are only twice its average inventory, the contribution of the first product to the business is obviously greater than the second. 3. Financial ratios: These attempt to measure the earning power of capital employed in the business. They may relate cash to current liabilities, fixed liabilities to fixed tangible assets, inventory to working capital, total debt to net worth, net income to net worth, etc. In working with ratios it becomes important to define exactly what is meant by each term used in computing the ratio. Does the term "sales" mean gross sales, or net sales after returns and allowances? Is it to be expressed in units or dollars? Monthly or annually?

Some Ratio Weaknesses

Ratios do some strange things when one figure or the other becomes extremely high or extremely low. The principal reasons are analyzed in two charts on productivity per man hour, Figures 8 and 9. A department of ten employees, working 400 hours per week, turns out 100 units of production. The ratio is 4 hours per unit. In a dull period, two men are laid off; the remaining force produces 76 units, but the ratio then becomes 4.21 hours per unit. This looks as though the men are soldiering on the job, so management asks you to make an investigation. Here are your findings: The shop normally consists of one foreman, one inspector, and eight production workers (400 hours). By study-



ing old records, you learn that in the past, the following average productivities have been achieved:
Number of men Production hours Average Production units Hours per unit

6 7 8 9 10

240 280 320 360 400

51 63 74 87 100

4.71 4.44 4.32 4.14 4.00

If you plot the production hours and units figures, as in Figure 8, you can draw a straight line through them which shows no production at 80 hours per week (foreman and inspector). Each production worker accounts for 12 units. At 320 hours, the chart shows you should expect 75 units; since you are getting 76,

management fears are groundless. The example shows that it can be fallacious to apply usual ratios to conditions where one number or the other has become much larger or smaller. First investigate whether there is a constant (k) or fixed figure which exists regardless of other changes. If you are mathematically inclined, the formula for the line is: y = k + bx, and by substitution: Hours = 80 + 3.2 production where k is a constant, b is a fixed multiplier, x is the number of production units and y the total number of hours. We can also predict the expected units from a known number of hours by means of this formula:

If these formulae have no significance for you, don't worry about it. The formulae are not important, but the underlying reasoning is.

A Second Ratio Weakness

To illustrate another fallacy often encountered in the use of ratios, let's take a second example. The manufactured quantities of Product A fluctuate wildly from one week to another. Management asks you to study costs: (1) to determine a standard and (2) to endeavor to stabilize them. You find that 104 weekly costs are available. Quantities produced have varied from 2,000 to 180,000 units per week, depending on sales demand. As a standard, management is using an average of 52 weekly costs of the first year that cost records were kept. This standard is 74 cents, and the product sells for $2.00. The unit costs during the 2,000-unit week were $11.00; during the 180,000-unit week they were 500. When you plot the 104 weeks on a chart (each dot is a week) and draw in the "line of best fit" (trend line), you see that there is a fixed cost of $15,000 (similar to the 80 hours constant in the previous example), but there is a decelerat-



ing curve above that point. Unit costs fall off sharply as production volume increases. The 74 cents standard in use is meaningless, for it represents merely the average cost divided by the average production, a condition which did not occur in any single week. A table should be prepared from the curve, showing expected expenses for any given volume of production; figures from this table should be the standard for comparison purposes. You must ever be alert for ratios which decelerate or accelerate with increased production. Armed with the knowledge of ratios which these two charts give you, you may be in a position to understand and interpret to your superiors the significance of ratio changes in your own company. Virtually any avenue through which money flows into or from your company lends itself to analysis and improvement. As a rule, the more data you gather for the analysis the greater will be your chance of effecting economies.

The Vagaries of Economics

Finance decisions are necessarily tied in with economics. Yet economics is far from an exact science. Two economists of equal reputation advocate different or even opposite methods of meeting economic problems. One says "Spend," the other says "Save." One recommends raising interest rates, the other would lower them. One forecasts inflation, the other finds reasons to anticipate deflation. In this welter of antipodal opinion, decision-confronted



executives become perplexed and frustrated. And no wonder. Economists have developed a technical jargon which permits them to communicate with one another but prevents lay understanding of what they are trying to say to businessmen. If you have not studied economics in school, take a course in it. At least read one or two textbooks on the subject. In this way you may clarify otherwise fuzzy thinking on terms like capital, wealth, money, rents, balance of trade, time and place utilities, law of diminishing return, time discount, supply and demand, entrepreneur, price, gold standard, real wages, devaluation, marginal producers, innovation, competition, labor productivity, value added by manufacture, risk taking and profits. Economists endeavor to measure various factors and trends, using a statistical theory which has been well worked out. It includes such terms as average, median, mode, distribution curve, range, standard deviation, probable error, deciles, quartiles, percentiles, correlation, regression, time series, link relative, index number, secular trend, cyclical variation, seasonal fluctuations, time lag, moving average and semi-logarithmic scale. Master these terms by taking a course in elementary statistics. Many of the concepts you will learn may be directly useful in analyzing internal company data.

Accounting Not an Exact Science

Accounting is one of the most valuable tools available to management. It utilizes simple mathematics, but its con-



cepts and principles are so flexible that it can scarcely be termed an exact science. Depreciation provides an example. Suppose you have purchased a $100,000 piece of equipment to be depreciated over 10 years. One accountant wants to depreciate it on a straight line basis, i.e., $10,000 per year. Another accountant wants to use a diminishing balance, or sliding scale, method; it would depreciate $19,000 the first year, only $1,000 the tenth year. Which method should be used? Managersall kinds of managersshould understand accounting principles and practices. In fact, my friend and fellow consultant, Phil Carroll, avers that executives should know more about accounting than the accountants. He fears that many accountants are so lost in a forest of figures that they cannot see a single tree. Although accounting is useful basic knowledge for most executive jobs, it is indispensable for those who are working with problems of capital investment, flow of working capital, loans, taxes and related financial matters.

High Lights
1. To raise capital through sale of stock or by borrowing is an important, and sometimes complex, decision. 2. Interest on bonds or other indebtedness is an expense item deductible before calculation of income tax payable. 3. The rate of return on net invested capital of a company is fundamental. 4. Learn how to evaluate proposed new investments. 5. Ratios can help management in decision-making, but be



wary of any ratio when either computation factor changes very markedly. 6. Master the lingo and principles of economics and of accounting.

Capital investments are of little value until you get people to use them properly. So we are led to consider in Chapter 5 how you can get the best from subordinates and associates.



Five Factors in Communication

Unless you can communicate adequately with those around you, you will never be able to motivate them. Merely because you talk to or with people does not necessarily mean that you have put over to them what you have in mind. Words are messengers of ideas and feelings, but sometimes they deliver blank envelopes. Misunderstandings arise so frequently in human relations that it pays you to give some thought to the whole area of how to communicate properly. There are at least five important factors in the problem. These are: 1. You, the sender. 2. The other person, who is the receiver. 3. The situation under which the communication oc curs. 4. The words used. 5. The actions taken (with or without words).



One-Way Communication

Dr. Alex Bavelas of Bell Telephone Laboratories has made some revealing experiments:
For example, two persons (Sender and Receiver) were seated in separate rooms, but connected by telephone head sets. S had before him a sheet of paper on which 12 dominoes had been arranged in an irregular design. His assignment was to get R to make the same arrangement; S could explain to R but R could not ask questions nor "talk back." At the end of one hour S had been unable to get R to complete the task correctly, using only one-way communication. Then two-way communication was permitted; R got it right in about 16 minutes.

Management frequently has recourse to one-way communicationstandard practice instructions, rule books, bulletin board notices, typewritten or scribbled memos, telegrams, letters, verbal instructions handed down through a third party. Sometimes a one-way flow cannot be avoided. In your communication with subordinates, peers and superiors, strive for the following: 1. Put it, or get it, in writing. If you can't say it simply, the chances are you haven't thought it clearly. 2. If you receive verbally important, one-way informa tion or instructions, confirm them in your own words and preferably in writing to the sender, in order to state your understanding about the assignment. This practice be comes, partially, two-way communication. 3. If you give, verbally, important one-way information



or instructions, go into considerable detail with the receiver and use examples.
Some years ago, a foreman in a paint manufacturing plant told a new employee, "If there is ever a fire in this room, be sure that you don't open this door." No two-way communication here. Some weeks later, there was a fire. In the employee's mind lurked a phrase: "Open this door." He didand the entire plant was destroyed.

4. Always try to substitute two-way for one-way communication, to or from you.

An Experiment in Communication All evidence to date shows that one-way communication is very weak and open to a great many misinterpretations. An interesting experiment in verbal communication was worked out by one company. It included twelve foremen, five of whom were sent out of the meeting room.
The following written complaint was read to the seven foremen who remained: "I, Timothy G. Brazlofif, welder in the production department, being duly sworn, hereby state: 1. That the acetylene torch supplied me by the company on April 15th of this year was defective. 2. That I did not smash it with a claw hammer, as accused by my foreman, Martin Daugherty. 3. That my three-day layoff as discipline for this alleged act of sabotage was therefore unjustified. I request that my personnel record be purged of the



accusation and the disciplinary action taken; also that I be paid at my average piece rate earning for the three days' forced layoff." (Signed) Timothy G. Brazloff The seven foremen asked questions about the case, discussed it freely. One of them was then designated to explain the case to A, the first of the excused foremen to be brought back into the room. In succession A told it to B, B to C, C to D and D to E. No questions were permitted. At this point, E explained the complaint, as he understood it, to the group. The seven foremen had been given written copies of the complaint, with ten key words underlined. They scored E's explanation for the ten cardinal points. The result? An average score of four. Sixty per cent of the story had been lost in one-way verbal communication.

Communication in Decision Making

In the contrast to this experiment is one of an entirely different nature. There were 48 of us, and we were testing the value of one-way versus two-way communication in securing business decisions. First we were divided into Groups A and B, and assigned to separate meeting rooms.
Our project (I was in Group A) was to determine the rates which should be paid three unusual jobs, using a job evaluation measuring scale provided us. The jobs were fashion model for a department store, maintenance man for



an electronic computer and historical researcher for a motion picture producer. A loudspeaker gave us a detailed description of the three jobs and directed us how to value them by reference to the scale. This represented, of course, one-way communication. Group B received the same loudspeaker information but had the opportunity to ask further questions from a capable job analyst who was present. Rates for the three jobs had previously been carefully determined by an experienced job evaluation committee, using the same scale we had. The average variation of Group A from the committee was 11%; of Group B, 3%. We concluded that in making the three required decisions the two-way communication of Group B was far superior to the one-way communication permitted Group A. Yet managements issue one-way, "loud speaker" information every day. Status Individuals The presence of a status individual in a group meeting becomes important. For example, the president of a well known company felt that his vice president of manufacturing squelched original thinking of subordinates, but the vice president disagreed. "Let's find out, suggested the president, and outlined his plan, to be tried out at the regular weekly meeting of officers, superintendents and department heads. The principal subject under discussion was the advisability of spending $100,000 to rejuvenate an aging power plant



versus purchasing electric power from the local power company. Virtually everyone felt that purchased power was the right choice. But the vice president agreed, as a test, to advocate vociferously the capital expenditure for the company power plant. At the outset, the president tactfully felt the pulse of the group and showed that the sentiment was toward purchased power. Then the vice president expressed himself strongly in favor of producing their own power. To his dismay, he saw his subordinates' opinions wilting. One by one, they expressed support of a viewpoint which he and they knew was wrong!

The sociologists tell us that a "status" individual can readily swing to his viewpoint subordinates who respect his ability, fear his power or like the color of his eyes. In so doing, he may easily fail to get the benefit of honest thinking. It depends on whether you want thinkers or mirrors around you.


Committee meetings and conferences are supposed to provide wholesome two-way communication. Too frequently it is blocked by: 1. Inadequate preparation: Failing to inform partici pants as to purposes; calling meetings on short notice: im proper meeting room arrangements and properties. 2. Resentment of participants: The time of the confer ence; interference with matters they consider more impor-



tant; little knowledge of subject under discussion; animosities among members of the group; dislike for the leader. 3. One-way communication: The leader, or perhaps some specialist, dominates the discussion; the presence of some high status executive prevents questions or volunteered opinions. If you are responsible for the success of a group discussion, avoid these pitfalls. Participation of members can generally be achieved by addressing questions to them in their specific areas of competence.
The Receiver

Part of a communication problem lies in the intellectual grasp and emotional attitude of the receiver. Sometimes he is hostile to the sender, in which case there exists an emotional block of antagonism. Sometimes he is as frightened as a child suffering his first haircutagain there is an emotional block, of fear. Sometimes he is asked to do things which transgress his sense of right or wrong and the emotional block in this case is one of anticipated guilt. One reason for two-way communication is to make certain that the receiver has at least clearly understood the information or instruction. Mere understanding does not guarantee performance, but it is essential to it.
The Situation

The circumstances under which the communication occurs may make a vast difference. No salesman would take



a prospect to a baseball game and try to sell him anything with the score tied in the ninth inning, two out and the bases full. Yet many of us try to communicate with others when they are under equally tense pressures. What is desired is the climate of confidence; if sender and receiver are suspicious of each other, sparring rather than communication occurs. This relationship we have seen between the United States and Russia for many years. On the other hand, where the climate of confidence exists, cooperative effort can be undertaken. This status we have seen between the United States and Great Britain for many years. Words The principal, but not the only, medium of communication is words. Sometimes folks use words to hide rather than to convey; their words are masks for their true thoughts.
For example, a foreman asks you to outline his authorities and responsibilities. What he is trying to say is that he thinks some other foreman is stepping on his toes. Sometimes what is not said is more important than what is said. A tumbler of water half empty is also a tumbler half full Which way you think of it depends on whether you are considering the water which is there or the water which isn't there. You tell an employee that he made "a pretty good job" of an assignment you gave him. But he wonders whether you meant that the work was well done, or whether it left something to be desired.



You hire a new salesman, but the day before he is supposed to start work he telephones you that he has decided to move to another state. Months later you see him around* What was the real reason he didn't take your job?

In all human relations, and especially in business contacts, understanding the thoughts and actions of others may come from what they fail to say or do rather than from their words and deeds. So learn to listen for what is not said.

Use Words That Will Be Understood

Sometimes the words themselves are beyond the vocabulary of the receiver.
A foreign-born plumber in New York City wrote to the Bureau of Standards that he had found hydrochloric acid did a good job of cleaning out clogged drains. The Bureau wrote: "Efficiency of hydrochloric acid is indisputable, but the corrosive residue is incompatible with metallic permanence." The plumber replied he was glad the Bureau agreed. Again the Bureau wrote: "We cannot assume responsibility for the production of toxic and noxious residue with hydrochloric acid, and suggest you use an alternative procedure." The plumber was happy again at Bureau agreement with his idea. Then the Bureau wrote: "Don't use hydrochloric acid. It eats hell out of the pipes!"



Some years ago I encountered an interesting example of communication failure.

I was carrying a long metal case which contained rolled-up charts. As I handed it to a train porter, I said jokingly, "Be careful of this bazooka." He laughed and remarked, "I wonder whatever became of Bobby Burns!" A woman nearby looked puzzled. No wonderhere's what each of us was thinking: Person M y self Porter Woman passenger Bobby Burns means: A brand of cigar A musician A Scottish poet A bazooka is: A metal tube containing charts An instrument played by the musician A weapon used in warfare

If you think this true incident stretches the point, try sometime to get a group to agree on the exact meaning of liberty, democracy, seniority, planning, freedom of speech or similar terms used freely in everyday conversation.

Needs Overlapping Experience

The well known author, Stuart Chase, in his book, The Power of Words1, points out that a word of love may heal a wounded spirit, a word of challenge may be the unique spur to drive the faltering one to conquer, a word of hate may be as poisonous as the venom of a rattlesnake. Lan1

Harcourt, Brace and Co., N. Y., 1954.



guage, he reminds us, is not only a two-way means of communication, but is "a shaper of thought itself." "But," he adds, "meaning is relative to experience, and for a message to be understood, there must be an overlapping of experience between sender and receiver. Heat can easily be changed to hate and completely block further communication. A harsh word, once uttered, cannot be retrievedso think before you release it. Unspoken, you are still its master; spoken, its slave. Boys flying kites haul in their white-winged birds But you can't do that When you're flying words. Words are like the rays of the sun: the more you condense them, the deeper they burn. And burning words seem to have a longer life than friendly words.

Paint Word Pictures You will get more attention if you dramatize yourself and what you are saying.
A production superintendent showed his foremen the blueprints of a proposed new plant They spent perhaps five minutes, went away uninformed and unimpressed. A sales manager revealed to his salesmen a new product, displayed the advertising material which would be used, answered numerous interested, specific questions. Although it was a short meeting, it sparkled with enthusiasm. The treasurer of a church presented the trustees with a



financial budget for the coming year. His presentation was factual, statistical, boring. A leading industrialist outlined an imaginative plan for vocational training adapted to modern requirements of the companies in the area. He held his audience of businessmen spellbound for about two hours, after which they subscribed two hundred thousand dollars to get the plan started.

Contrast the two matter-of-fact sessions with the two animated meetings. They illustrate a useful principle of communication: paint pictures, don't just draw maps. The number of words, and the meaning-power of the words themselves, can help or hinder the communication effectiveness.
A foreman of my acquaintance has a tongue that wags like the proverbial tail of a puppy dog. He never tries to make a short story short. Once I secretly timed him with my wrist watch when three other persons were (supposed to be) in the conversation. In a five-minute span, he talked about four minutes, the other three persons totaled one minutea 12 to 1 ratio! Recently this man complained to me how unfriendly his associates are; he said that one foreman had poisoned the others against him. Apparently it has never crossed his mind that his own endless yakking has caused his fellows to shun him. He has not learned that those who think by the inch, yet talk by the yard, are often given a foot

Megaphones give one-way, telephones two-way transmission. My foreman acquaintance is a megaphone. He



does not realize that "the Good Lord gave us one mouth and two ears, meaning that we should talk less and listen more."


What an important problem in communication arises when you have to criticize some other individual! The first rule here is: Don't do it if you can avoid it. However, sometimes the situation is such that it cannot be avoided. If the reason for the criticism is merely to get it off your chest, then you will likely pay no attention to the situation under which the criticism is given nor to the words used. But if, on the other hand, the object is to get a change or improvement, then you should give considerable attention to the factors in the picture. One frequently used approach is the sandwich technique, whereby the real heart of the criticism is sandwiched between two slices of praise. For example, the sales manager says to his salesman: "I sure admired the way you handled that customer. He was spellbound. "Of course you shouldn't have promised him that delivery date without consulting the factory. I suggest that you make it a practice to phone themit always makes a customer feel important, may save you some headaches. "Try to remember that whole sales interviewI'd like to put it on with you (minus the delivery date promise) at the spring training session."




An old maxim says that actions speak louder than words, and this is true in all human relations. The officer who tells his men "Go into battle" is not as effective a leader as the one who says "Follow me." The foreman who is able to take work in the shop and show with his own hands how it should be done gains respect and communicates not only the know-how but also a wholesome relationship between himself and the individual worker. The vice president who will not permit the employment manager to hire the brother of a foreman must be consistent when he in turn has a problem of finding a job for his own brother-in-law. Facial expressions, body postures and gestures are forms of action. Actions are the ultimate in communication. If they are consonant with the words which have been used, confidence is built up; if they deny the words which have been used, we come to suspect hypocrisy.

Can You Listen?

Maybe you yourself hear the words but don't listen to the background music.
In the English language, the word "face" has 47 meanings. "Round" has 73. What a latitude for misunderstanding meanings in just two words!

When you listen, attend actively, not passively. Don't interrupt or contradict. Get the whole storydon't just



select what you want to hear. Try to evaluate the integrity of the "sender" and the circumstances which gave him the information he is trying to communicate to you. Give him a permissive climate so that he will not pull his punches. At the close, ask your questions, draw out his opinions. Finally, summarize in your words what you think he said to you, ask him either to approve your interpretation or to explain further. This, brother, is true listening!

High Lights
1. Try to convert one-way into two-way communication. 2. When you are a "sender," be very explicit and provide examples. 3. Reception can be impaired through lack of understand ing, the presence of status individuals, emotional blocks. 4. The situation under which the communication is at tempted can help or binder it. 5. Words are the principal means of communication. They should be specific, understandable, free from rancor and, preferably, dramatic. 6. If you have to criticize someone, use the "sandwich" technique. 7. Actions speak louder than words, in communication. 8. There's an art to listeningacquire it.

Of course, there is more to good human relations than just communication. In the following chapter we shall discuss social skill.



It Can Be Acquired

Have you ever noticed that some folks seem to get along so easily with their fellows whereas others are always at oddsor trying to get even! We say that the lucky ones come by it "naturally"but the fact is they know how they do it, and they keep working at it.
A friend of mine makes it a habit to scribble little notes of commendation to bis acquaintances when they do noteworthy things. For example, if they receive favorable mention in a newspaper he will clip and mail the item with bis card and the single word "Congratulations." He is practicing social skilL

Social skill has many facets, but the following deserve prominent mention: 1. Be supportive. 2. Invite participation. 3. Help satisfy wants, give recognition.



4. Join the right groups. 5. Strive to exert leadership. 6. Strive for emotional maturity.

Be Supportive

When you make others believe that you are supporting their efforts, they consider that you're "on their team." By the same magic, they're on your team. A climate of confidence exists between you.
Some months ago a business acquaintance phoned me. After some casual chitchat he asked me to be a patron ("for a mere $10") of a concert sponsored by a local group. I promised to let him know. When my wife and I discussed it, we both agreed that our acquaintance could be "mighty friendly" when he wanted something of us, but as distant as the moon when we met him at social gatherings. We rejected the request, never once discussing the merits of the proposed concert. That same day, an old friend wired us for a loan of one hundred dollars which we promptly sent without even asking the use to which it would be put.

The two instances illustrate the importance of a climate of confidence in human affairs. It takes a long while to build up such a climate; once established, it makes great progress possible in human relationships. If you would build such a climate, you must: 1. Avoid verbal attacks on the other fellowasperity, sarcasm, ridicule, criticism, digs, domineering. Don't be a missile base, launching devastating word projectiles!



2. Refrain from retaliating when he attacks you. How difficult this one is! 3. Do those actions which are right, regardless of what he does. 4. Keep doing them even in the face of unappreciativeness, suspicion or hostility. Don't think this one is easy! Soft speech is the zephyr and humility the warming sun of the climate of confidence. And bear in mind that a smile is worth nothing until it is given away. Supporting the efforts of others means much more than financial assistance. A word spoken at the right time, or to the right person; praise and encouragement; a helping hand; removal of possible obstacles; getting others to help; testimonial letters; lending your presence or namethese are typical supportive actions on your part. Someone has wisely said, "Loyalty does not well up from the bottom; rather, it trickles down from the top." Each supportive action you take tends to bind someone closer to you in loyalty and friendship.


Unless you keep open the windows of your mind, you will become intolerant of others. The same closed windows that shut them out also shut you in. You lose the enlarging and stimulating benefits of interesting experiences, widened contacts, new ideas and varied points of view. If you stay in your closed-up room long enough you will become convinced that your way is the only way, your religion is the only religion, your politics the only politics.



Your mental sets must not be disturbed by people who live and think differently. So you create psychological fetters which bind you to the stake of intolerance. You are, to no small degree, your * 'brother's keeper/' By your thoughts, words and deeds you generate some of his thoughts, words and deeds. Contrast your own emotional responses if these things were said to you.

1. I deplore what you have done; I'll never forgive you for it. 2. You are a public enemy; I consider your actions little short of treason. 3. I knew it would have to be wrong because you bungle ev erything you do. 4. I didn't ask for your advice; shut up and do what I told you.

5. Frankly, I distrust your motives. You haven't told me the whole truth.

1. Probably I would have done the same thing in similar cir cumstances. 2. Although I disagree with what you did, I admit your right to handle it that way. 3. Because I'm a fussy fellow who checks everything, I dis covered a minor error in your work. 4. You may prove to be right; let's try it my way first. If that fails, we can consider other solutions. 5. Because I have faith in you, I'll do it. But is there anything else I should know?

If the things in the first column were said to you often enough, you would likely become hostile, defensive, overaggressive, self deceptive, apprehensive, apologetic or otherwise emotionally immature. The words of the second column, on the other hand, would encourage you, save face for you, hold your self confidence, lead you to openness in



human relations. Number 3, for example, wraps a cloak of tactfulness around the naked criticism. Tolerance means more than what you say; thoughts and actions must be consonant, or the other fellow will soon see through the sham of words. Good deeds don't make headlinesbut they do make friends.
Invite Participation

When others are invited to participate in making important plans, decisions or activities, they more readily accept the group aims, develop greater interest and support the leader.
To dramatize a point, a shrewd manager played a practical joke on two of his salesmen. The occasion was the annual meeting of the fourteen salesmen. In advance, the salesmanager had primed twelve of the men to treat Salesman A as though he were a highly seasoned vice president, but to ignore suggestions coming from Salesman B as though he were completely inexperienced in selling and company practices. At the end of an hour, B had lost his temper completely, A was quite relaxed. Then the sales manager confessed to the hoax, asked A and B to describe their feelings to the group. From their candid expressions, the sales manager built a story around the negative results from belittling others, the positive results from making others feel important by allowing them to participate.

The sales manager who told me this story had picked his two subjects quite carefully. Salesman A, who had a bad



habit of "cutting people down to size," as he often put it, came to know how good it feels to be built up. Salesman B, a placid, easygoing person, came to realize that even a poised individual like himself could be disturbed if he failed to receive "psychic income." I asked this wise sales manager why he didn't give Salesman A a taste of his own medicine. "Because," he replied, "I wanted A to learn how to help people, not just to refrain from hurting them." Help Satisfy Their Wants The wants of people lurk behind their interests, words, vanities, aggressions, timiditiesand especially their actions. You can scarcely name a single action not motivated basically by a want. We shall discuss this important subject in the next chapter. People like to receive recognition, which is a generalized front for many of their wants. In other words, recognition is one of the large wants which permeates human desires. Here is a partial list of recognitions you can give to those around you: 1. Face-to-face praise. 2. Praise in the presence of others. 3. Name on desk placard, machine, office door, station ery, calling card, bulletin board, etc. 4. Job title; leadership title (such as chairman, chief, etc.). 5. Favorable mention in letter, report, printed booklet, employee paperwith photograph, if feasible.



6. Request for assistance, designation as counselor or technical expert. 7. Tangible awards: money, cup, plaque, certificate, etc.

Join the Right Groups Since you have but a certain amount of time to devote to various groups, it is important that you select these groups with some care. You just must not join every group you are invited to join. You just must not accept every outside responsibility which others would thrust upon you. Select or accept only those which will either advance you or bring you emotional satisfaction.
Some years ago I was persuaded to become a director of a chamber music group in our city. Since I cannot play a string instrument, the job consumed time without yielding satisfaction; ultimately I resigned. Later I joined a men's choral group, enjoyed it immensely, spent much more time on it than the chamber music obligation had exacted.

An organized group is not a thing of chance. It has a reason for being, cohesive interrelationships among its members, a group determination to progress and other characteristics.
Recently I took one week's training in how groups are formed and how the members interact Instead of merely listening to lectures on the subject, we formed a group and ultimately learned to exchange our honest reactions. It was a devastating, frustrating, interesting and rewarding experience. One thing we learned was to listen for FEEDBACK. The



first day a member said, "Fm quite sure we should elect a chairman." The group feedback seemed to be against the idea but really was against him as a stranger trying to dominate us, and against the way he said it. Another concept was that of the "PUNISHING" remark. One man said about a topic, "I have no opinion on it." Whereupon a member of the group wisecracked, "That's strange for a sales manager." A third concept was SUPPORT, both given and sought: "I agree with Jones." "I believe that Smith agrees with my point of view." All told, we learned awarenessof group aims and mores; of how words can damage self esteem or yield psychic income; of the formation of cliques; of the importance of listening with both ears; of communication by gestures, postures and inflections; of alignments and realignments in interpersonal relationships.

In a sense, the members of our group saw through a microscope how people act and react, talk and listen, send and receive messages, agree and disagree, like and dislike, feel expressive or frustrated, believe themselves included or excluded. You will want to bear these ideas in mind as you consider your part in the various groups you join. The influence of group membership is so important that you cannot clearly understand anyone without some knowledge of the social groups to which he is expected to adjust, whose standards become his standards. Expert Leadership Toward the end of this book we shall be talking a lot about leadership. It is possible to distinguish two kinds:



1. Natural leadership. 2. Status leadership. Natural leadership is conferred upon the leader by the consent of those led. The followers so respect his talent that they either elect him to leadership or turn to him without the formality of an election. Status leadership results from the title, or the position, of the leader. In the military, for example, the officer is obeyed because he is an officer regardless of his abilities or personality. Much the same can be said of the foreman or department head in industry. The status power of rank can be a dangerous thing, sometimes deluding the status leader into a false sense of importance, inhibiting the contributions of followers.
Seek Emotional Maturity

Emotional maturity is not a single, simple conceptit is rather the composite of your emotional reactions to the pressures which life puts upon you. In several chapters, and particularly in Chapter 17, we shall refer to its importance. Hence we shall not dwell upon it here other than to point out that emotional immaturity can prevent or destroy virtually all the important social relationships advocated in this chapter.

One gauge of your social development is your ability to make and hold friends.



Some portion of your business destiny lies in the hands of superiors, peers and other business contacts. If those persons are either friends or friendly, you are likely to receive sympathetic treatment. No one is emotionally so strong that he can get along without friendsespecially when calamity strikes. You need to develop a large capacity for friendship. Nor is anyone emotionally strong enough to live and work happily with people who are boiling with hates, fears, guilts and anxieties. Keep far away from the powerful suction of those who are whirlpooling downward to the vortex of destruction. Friendships grow, but they can also wane. Like your house and automobile, your friendships need to be kept in good repair. Commit the Golden Rule to memory, then commit yourself to the Golden Rule. If someone seems to be unfriendly to you, ask him why. This simple gesture on your part may clear up a misunderstanding, make him realize his negligence or show you that your impression was unfounded. If there's one thing in life about which you should be a miser, its your friends. Save every last one of them!

How to Become Persuasive

When you are truly persuasive, you get your way. It depends largely on: 1. The approach you use. 2. The words you use.



When you want someone to change his mind, try some such approach as this: 1. Know clearly what you want him to do or believe. 2. Pick your time and place carefullynot while he's emotionally upset or subject to distractions. 3. Ask him to explain how he feels. Listen. Don't argue. Ask questions. Restate his position in your own words. 4. Tell him about points of agreement. Praise. Show respect for his opinions. Present your point of view, admitting that you might be wrong. Get admissions of agreement from him. 5. Point out some benefit to him if he accepts your point of view. 6. Don't press for agreement. Say: "Let's both think it over and talk about it again sometime." In unfolding any such strategy as this, the words used are extremely important. Here are some tips: 1. Use plain words. Avoid technical words which may not be clear to him, may make him feel inferior. Be direct; don't hem and haw. 2. Use specific, not general, words. Don't talk about "objectives"name them. For example, you may seek approval for an appropriation, not for "the welfare of employees" but for "a much-needed drinking fountain." 3. Use positive, dynamic, power-laden, trigger words. Don't say "slow"; do say "time consuming/' Not "dangerous" but "death dealing." Avoid negative power words like "demand," "You're wrong," "You're obstinate." Re member that those who dish out dirt lose a lot of ground! 4. Use words which put the other fellow on a pedestal: "Your years of experience," "I need your advice," "Your amazingly accurate forecast."



5. Use humble words: "I could be wrong, "My experience is limited," "I need to know more. 6. Keep your voice low. Don't raise it above conversational level. Often the weaker your argument, the stronger your words. On the other hand, soft words are safe with sure points of view.

Rating Your Social Development Probably you'd like to estimate your own social development. Preferably, get some one to rate you, using the accompanying rating scalebut you can do it yourself if you prefer. Be particularly interested in those items where you have a minus () rating. The three extroversion scores (mental, social, emotional) are indications of your "outgoingness," or lack of self-centeredness. Dominance and attitude toward others are concerned more with your ability to get along with, and get your way with, groups.
Figure 10 Rating Scale on Social Development
Below are 50 traits important to your social development. You can either rat yourself or get some higher executive in your company to do the rating. Rate each trait by encircling one of the three possible ratings: + : Satisfactory or better. ? : Average, usual, not known or not applicable to your job. : Unsatisfactory or deficient. Item No.

1 2

TRAIT Fluent in conversation Makes friends easily Unselfish A good organizer of groups

++ + +-

Rating ? ? ? ?

SOCIAL SKILL-GET IT After the rating has been completed score it by allowing the following points:


? : 1 :0 Total the points for items: 1.6..1,16,21,26,31,36,41,46 " " Score to get a score for "mental extroversion" " "
" "social extroversion""
" " " "dominance" 5,10,15,20,25,30,35,40,45,50 " " " " " "emotional extroversion" " " " " " " "

attitude toward others" Total

Since each of these five categories has a possible score of 20 points you can readily note areas in which you are weak. You can interpret your total score by reference to the following table:
Significance for executive success


0 49 63 72 85

to to to to to

48 62 71 84 100

Very poor Poor Fair Good Excellent

High Lights
1. Social skill, like any other skill, can be acquired. 2. By supporting the efforts of others you build a climate of confidence between you. 3. Be tolerant of the actions and viewpoints of others. 4. Get participation. 5. Help satisfy people's wants. 6. Join worthwhile groups; understand the interplay of members. 7. Exert leadership. 8. Seek emotional maturity. 9. Strive to become both extroverted and dominant



Dominance is not necessarily assertiveness. Frequently it lies in motivating the other fellow to do what you want him to do. A number of motivation devices are available to you; these we shall consider in Chapter 7.



Motivation Is Executive Gunpowder

It is important that you learn how to motivate others, whether they are on a par with you in the organization, above you or serve as subordinates. A company, like an automobile, generates friction and heat when it runs in low gear. Both run quietly and efficiently in high gear. It is leadership and motivation which changes from low to high. Not infrequently companies painstakingly provide excellent tools and working methods for their employees; they select and train their employees with great care, but sadly neglect incentives to those employees to use their talents through the medium of the tools and methods sup plied. On the other hand there are some individuals of mediocre talents, utilizing poor equipment, who manage to turn out a lot of work because they are motivated to do so. Live-wire executives are in great demand because they know how to electrify employees. It will pay you in coin



of the realm to understand how to spur others on. Information and motivation go together like the light and heat of a candle flame. The secret of motivation is to provide satisfaction of human wants. This secret applies whether it is an individual or a group to be motivated. It operates in salesmanship and in supervision as well as in other avenues of human relationships. All actions are motivated; all emotions have been aroused by motivation. Sometimes these motivations are positive and stir up positive emotions; sometimes they are negative and stir up negative emotions. Unless you can communicate, you cannot motivate. Hence motivation involves the communication media discussed in Chapter 5. You can set up motivating devices in any of these three ways: 1. Setting up motivating situations. 2. Undertaking motivating actions. 3. Using motivating words.

How to Use Situations

Motivating situations represent combinations of time, place and people. They include the establishment of standards or the use of symbols and awards. Sometimes you must have them provide specific challenges, aims or objectives; sometimes changes of environment. In considering the motivating value of surrounding conditions, you need to project their probable influence upon the individual or group to be motivated.



A young man born on the wrong side of the tracks plugged away in his company until he became a general foreman. Then he realized that, to go higher, he would have to improve his grammar, learn to play golf, take part in civic activities, join new groups. His situation provided the motivation to grow. Today he is executive vice president of his company. The president of a large company assigned an administrative assistant as manager of a large plant. Old-timers shook their heads, predicted failure. But the challenge brought out latent traits which the president had detected; the man made good. The president had properly estimated the motivation which the new situation would provide.

How to Use Actions The actions you take, or fail to take, may be powerful motivations for those around you. If people believe that your actions are designed to help them in some way they will subscribe to them enthusiastically. If they expect you to make a decision and you fail to do so, they will feel frustrated and want to pull away from younegative motivation. By personal example you may cause mediocre people to perform heroic deeds, as many a military officer has proven.
Years ago I had working under my supervision a man who had direct access to the general manager. Every time my subordinate offered suggestions or requested favors of his high level friend, the wise general manager would tell him, "Take it up with Benge." It was an example I was to



remember years later when one of my protgs began to bypass his superior and come to me direct. The highly paid treasurer of a well known corporation, a C.P.A., each year enrolled in some night course at the local university. His precept stimulated several dozen juniors under him to take additional studies.

How to Use Words Much motivation in human relationships, whether positive or negative, comes as a result of the use of words. Any executive spends a considerable portion of his time in contact with other individuals, using words. If he is to be a skilled craftsman in his line he should learn to use these tools skillfully. In the previous chapter, in discussing persuasiveness, we mentioned the use of pedestal words, that is, words which elevate the other fellow. Typical of such words would be: "Squeeze it into your busy schedule" or "I need your opinion" or "Based on your wide experience." We have also previously mentioned trigger words, which carry emotion power along with them. They are like ordinary words with dynamite caps attached. We are all familiar with negative trigger words such as cursing, sharp criticism, ridicule, threats, odious comparisons, etc., but there are positive trigger words also: expressions of love, friendship, respect, praise, beauty, security, empathy, belonging, inclusion. Pedestal and trigger words are valuable in all kinds of motivation, not alone in persuading someone to your point



of view. They stir enthusiasm, which has been defined as "belief, with a tin can tied to its tail."


Some persons respond better to suggestion than to command.

The comptroller for a large oil company believed that paper work had become cumbersome, needed simplification. He wanted to bring in a consulting firm, but suspected that the office manager might sabotage their efforts. Here's what he said to the office manager: "I'd like you to head up a work simplification team for our office procedures. If you want to bring in a consultant to assist you, get their estimate and I'll try to get budget approval for it. I'd like the study completed within six months, so plan and schedule the whole job, and let's discuss it next Monday."

Questioning is generally an effective form of suggestion. It's better to ask "Do you think " than to assert "You should think " Directed inquiry is still another form of suggestion: "Find out how the X Company does it," or "Read this article and tell me if it contains anything of use to us." Sometimes you can drop a hint to someone, knowing full well that it will be retold to the person you want to reach. "Some of these days, I'd like to see a systems and procedures study made; we haven't had one since I was office manager, twelve years ago."



Emotion Power

We have said that situations, actions and words are capable of bringing about either positive or negative motivation. This motivation is characterized by the release of emotion power. The nature of this emotional power is largely physiological, chemical, and its release occurs within the human body. If you stir up emotions in someone, his reactions will be characterized by a feeling of happiness or of unhappiness, never one of neutrality or passivity. Actually his emotions are feelings of dilation or constriction of tiny blood vessels; increase of heart action, of lung action; release of potent chemicals known as hormones which further stir up bodily processes; changes in digestion; discharge of blood sugar into the blood stream; increase of blood supply to the large muscles of the body. These internal stirrings are mobilizing his body for a higher level of activity. Whether that activity shall be helpful or hurtful to you depends on what kind of motivation you have provided. If you have given negative motivation, then you have generated negative power which will not only be used against you but will cause physiological harm to the individual motivated. If you have used positive motivation you will have stirred up positive emotions. Their power can frequently be used to advance your objectives and will furthermore cause benign benefits in the body of the motivated person. Thus in a single paragraph the whole problem of motivation has been stated simply. Its application to meet



the varying situations of life is, however, far from simple. The power of negative emotions can be dissipated through physical activity; can turn inward to cause ulcers, spastic colon and high blood pressure, or can become pent up and finally explode in overt acts. The power of positive emotions (which I like to call happy chemistry) can bring forth extra effort with high satisfaction accompanying; can maintain a state of physical equilibrium; can build peaceful human relationships.

Satisfy Wants If motivation is to help people satisfy their wants it becomes important to know what those wants are. One simple classification is the following: 1. Dominance. 2. Submission. 3. Creativeness. 4. Possessiveness. 5. Belonging. 6. Homing. Typical of dominance would be desire for social position, adulation, power, physical health, prowess, energy, recognition and fame. Folks like to feel important, to be asked for opinions, to be mentioned in print, to be singled out for praise, to win in a contest. Typical of submissiveness would be following a strong leader, acceptance of laws and customs, joining in common cause with others or conformity with religious tenets. Typical of creativeness would be handicraft, artistic



creation, organizing ideas into a plan or working toward improved social relationships. Typical of possessiveness would be the acquisition of physical possessions, an organized plan of saving or development of collecting hobbies such as stamps, clocks, bottles, etc. Typical of belonging would be the joining of various groups or associations, participation in their activities, acceptance by members of social groups, comfort when with the group. Typical of the homing desires would be marriage, protection of children, purchase of home and programs for economic security. The demanding-power, the insistency, of these urges varies greatly: 1. Among different individuals. 2. At different times in the life of one person. Hence you may have to probe, like a searchlight fingering the sky, to determine which wants demand satiation in a given person.
A friend of mine, a petroleum salesman, had been trying to sell to a dealer. He had presented the usual profit and prestige appeals but to no avail. On one of his calls my friend said, "The profit would put your 17-year-old daughter through college." That did it; he had found the proper motivation.

You need to determine the effects of your attempted motivations. In doing this, look for actions of other people rather than for their words. Interests which endure over a long period of time are rather sure indicators of people's



wants, and much the same can be said of the use of spare time. Another cue is to determine a man's pretensions or ambitions. A sure test of this is to note what steps he has taken and continues to take toward his goalsnot the words he expresses. You can note negative indications, too, which may show up as over-aggression, as withdrawal or as apple polishing. These signs may reveal emotional twists which destroy reason; unsatisfied wants; stressful hatreds, guilts and fears.

Motivating Groups

Group motivation is more difficult than inciting some individual to higher effort.
A successful life insurance salesman was invited to give a talk on salesmanship to an association of young businessmen. He decided to use the opportunity to try to sell a $5,000 policy to each and every member of his audience. After his scheduled talk he adroitly swung over to his regular pitch. But his audience thought it a demonstration of his talk to the group, not a genuine appeal to buy. No one bought. In fact, no one even thought of buying.

This man had failed to differentiate between individual and group motivation. For contrast, consider the problem of Harter Benson, foreman of a fuse department, who wanted his men to work on Friday, July 4th, during World War II. He knew



that the men were earning so much money that the doubletime pay would have little appeal against a three-day holiday. Here's what he said to his workers:
"Men, the assembly department needs two thousand fuses to meet the deadline for those 50 millimeter shells. Dick JudWaltand some of you other fellows have sons or brothers over in Europe just as I do. Some of you had planned to go away over the Fourth, just as I had. But I'm going to be here tomorrow turning out shell fuses like sausage from a sausage machine, because I can't let my son down. If any of you want to show your Fourth of July patriotism by working instead of fishing, just show up at seven tomorrow." The whole department showed up.

Research on Group Participation

The Institute for Social Research of the University of Michigan conducted a five-year human relations study in cooperation with the Detroit Edison Company. Here are some of their findings on groups which had shared in decision making1: 1. Production and quality standards were high. 2. Judgments were good. 3. There was group satisfaction from solving problems and progressing toward group-determined goals. 4. Members felt free to voice opinions. 5. Each member felt some responsibility for success; did not feel bossed; did unpleasant tasks more willingly.
1 See Motivation: The Core of Management, Personnel Series No. 155, American Management Association, N. Y., 1953.



Here are some typical work problems which were successfully handled by group participation: 1. Distribution of work loads and disagreeable tasks. 2. Lunch schedules; wash-up time; vacation periods. 3. Office arrangement; simplification of paperwork; re duction of clerical errors. 4. Care of equipment and tools. 5. Selection of men to be transferred. A group is more than an agglomeration of individuals; it has structure, leadership, aims, standards and mores. Members will frequently surrender some of their individual goals (as in the fuse department) to maintain good standing with the group. If your problem is to motivate a group, bear these points in mind: 1. Identify the true leaders. 2. Get the group, or at least the leaders, to participate in decisions affecting the group. 3. Give the group a challenge and a time limit. 4. Define the goal, don't demand it. 5. Facilitate and coordinate individual effort for attainment of the group goal, but not by individual supervision. 6. Respect the groupit has an integrity all its own.

Use Varying Motivations Each person, and each group, represents a unique combination of wants. You are like a musician who must play varied tunes to reach all his listeners. It will pay you to study people and groups to determine the strengths of various wants. Next you need to decide what avenues of



motivation you will usethe situations, the actions, the

words, the standards, the symbols, the aims or the personal examples. You need to consider the value of recognition and participation in what you plan to do. Make certain that your communication will be clear and will be twoway. Finally, bring together the planned factors, the specific time, place, actions, words and persons who will be involved. You will not be successful with everyone. Spur on a race horse and he responds with a burst of speed; a jackass, and he reacts with a kick. Most individuals will not take the time to think through these approaches. Leaders will do so. They learn to free the emotion power of those who work with them and to channel this emotion power for constructive aims. In so doing, they not only make others happy but they also advance their own lot in life.

High Lights
1. Motivation is one of the tools of an executive. 2. The secret of motivation is to provide satisfaction for human wants. 3. All action is motivated. 4. Situations, actions and words can motivate, pro or con. 5. Emotion power is physiological, and very real, whether pro or con. 6. There are six basic wants, of varying strengths among different individuals and at different times in their lives. 7. To motivate a group you must understand the group aims and use group motivations.



Your boss probably has a task which not only requires social skill but makes other demands as well. In the next chapter we shall discuss why you should try thinking like your boss.



Analyze His Problems

In recent years a new word, empathy, has crept into management literature. It means a feeling with the other fellow. Emotionally, you put yourself in his shoes. One of the surest ways you can get ahead is to become empathetic with your boss. It is easy consciously or subconsciously to become antagonistic to your boss; it is difficult to become empathetic. Yet he is likely to influence your future more than any other one person. In seeking empathy you endeavor to analyze the problems which he faces. Consider them from the standpoints of organization, personnel, methods and equipment. If he is not responsible for all four of these functions, select those for which he is accountable. His problems of organization may pertain to planning for growth, to proper separation of functions, to delegation of authority or to the proper subdivision of work. His personnel headaches may encompass selection, training,



incentives, supervision, communication, participation and relationship with groups. His responsibility for cost reduction and methods improvement may involve studies of space, time, energy or material elements. If his province includes equipment, his difficulties will likely revolve around proper selection, a comparison of machine features and justification for the investment. In addition, like every other person in a supervisory position, he has problems of administration. These deal with planning the work of his department; directing subordinates; coordinating their efforts internally and with other departments; and setting up control devices to see that the original plan is carried out. Your task is to consider where you can make important contributions, lightening his load and making him feel that you are on his team. You don't want merely to make a hit with him; you want a home run.

What's He Like?

If you would be of maximum assistance to your boss, you will need to take into account the following attributes: 1. His aims. 2. His social life. 3. His strengths and weaknesses. 4. His attitudes. 5. His health. If you observe what he does consistently (not necessarily what he says), you will get an idea as to his true aims in life, where he wants to go in your company, what



place he wants to take in your industry and whether he desires to have any part in community activities. His social life can be equally revealing. Is he primarily interested in his family, does he join groups, is he (or perhaps his wife) a social climber, is he very conscious of status, is he an extroverted or an introverted person? His weaknesses are likely to thrust themselves upon you, so that you are less likely to give proper credit to the strengths which he brings to his job. It may pay you to consider dispassionately his education, his intelligence, his special knowledge and experience, the skills he possesses and whether these are manipulative, ideational, human relations or imaginative. Similarly, his attitudes should be of interest. Is he generally positive in his thinking, radiating cheerfulness and hope, or is he more likely to be negativistic? Is he consumed with fears and resentments? Does he like to analyze problems or decide them with a flip of his mind? When you do jobs for him does he want to consider the minutiae or merely the conclusions? Given adequate information, will he decide or defer? The answers to these questions may give you further insight into your boss. His health too may enter into the relationship between you. If he has good health habits he's more likely to be a wholesome person than otherwise. Per contra, if he suffers some physical impairment he's more likely to be crabbed and tactless. Analyze your boss to understand him, not to try to improve him. Avoid passing any final or moral judgments about the goodness or badness of the attributes which you see; each of us possesses some assets and some liabilities.



Inasmuch as you have to work with your boss it is desirable that you have an understanding of him without any more negative reactions to some of his weaknesses than you can help. Always remember you help yourself by helping him.

Some Common Weaknesses

Here are some commonly found executive weaknesses: 1. He has a strong will, but a stronger won't. 2. He comes in frequently with a hangover, and you have to endure the moaning after the night before. 3. He's like a ferryboatblows his horn the loudest when he's in a fog. 4. Facts confuse himhe prefers to rest on his hunches. 5. He's a self made man who loves his maker. 6. No matter how flat the discussion, he likes to have it flatter. 7. He monotonizes the conversation. 8. He should be held up as a warning, not an example. 9. He's highly flimflammable. 10. He's a believer in Confusionism. Maybe you recognize some of these traits in your boss. Would your subordinates identify any of them in you?

Cost Reductions

One sure way to get on the boss's team and to bring yourself to the attention of top management is to seek cost reductions in many directions. Below are the principal



areas of possible economies. It is not likely that you will have either the breadth of experience or the opportunity to work in all these areas, but it certainly will pay you to become a specialist in one or more of them. Obviously the largest possibilities for savings are likely to be in those areas where the greatest amount of money is now being spent.
Areas of Possible Economies
Manufacturing Production methods Production equipment Layout and flow of work Materials handling Quality control Production control Raw materials Personnel Selection Training Motivation Communication Labor turnover Productivity per hour Contract negotiation Selling Sales personnel problems Distribution channels; traffic Inventory Product development Pricing Field selling control Market research Administrative Analysis of overhead items Purchasing practices Office and accounting procedures Credit Finance

Chapter 2 covered five roads to cost reduction. Many of these roads lead to economies in the four major areas listed above. Are you cost conscious?
Management Talent in Demand

Underlying the competition among companies and industries is the unseen force of management skill. The techniques of marketing, manufacturing, finance and research are available to all companies. But the paucity



of management talent to use these techniques is even more critical than the much publicized scarcity of engineers and scientists. Any kind of skill results from bringing together specific knowledge, sensory observations and physical activityrepeating them so often that both speed of performance and accuracy of results are achieved. Your management skill, like other skills, improves with practice. But first you must learn what to practice: 1. What knowledge you need. 2. What sensory observations to train. 3. What kind of actions to take. It is better that you practice your growing management skill on minor problems where mistakes will not have grave consequences. In this way your skill can "grow up" to the major problems. By so doing, you acquire self confidence.

Your Self Confidence

Self confidence is largely a matter of overcoming your doubts and fears. Here are some guideposts which others before you have found helpful: 1. Make up your mind whether you want merely to work harderor smarter. 2. Do a "slum clearance" job on yourself. Identify the thoughts, attitudes, deficiencies, personality traits and daily actions which keep you from being an assured person. Looking these enemies in the face wins half the battle for you.



3. Some of your fears are groundless; they should be rooted out like weeds. Others are justifiable in part; what steps should you take to overcome them? 4. Take those steps. 5. Have faith that they will give you the confidence you need. William James said: "Believe that life is worth living and your belief will help create the fact." There is a place in the future for you, if you will but assume it. In so believing, you are thinking like a boss, perhaps like the boss.

Confidence Can Be Recaptured Bert was a chemical engineer with a local company near my home in Asheville, N. C. When he learned that his company was going to fold up, Bert somehow or other saw this as just another evidence of personal failure. He came to me for career counsela dejected man in his late thirties, ready to retreat from life. My vocational guidance showed that he was intellectually brilliant, highly imaginative, strongly creative. When I made Bert realize that his big problem was Bert, he began a new way of life. Instead of the little self employment he was contemplating, he took a job with a chemical giant In competition with other chemical engineers he forged ahead to become a division chief. I hear from Bert and his understanding wife each Christmastime. On their last card she wrote, "Bert now walks with head erect Recently the company instituted a large retrenchment programbut Bert was promoted. You would be amazed at his new found self confidence."



To me this was just another instance of an old Biblical truth: "As a man thinketh, so is he."

The Gentle Art of Nay-Saying

The boss doesn't remain boss-man very long if he doesn't learn to say "No." Subordinates come up with hairbrained schemes, idealistic hopes, poorly planned projects and self-seeking proposals which could ruin the business faster than the nimble feet of your competitors. You too must learn not only to say "No" but how to say it. There are five principal techniques:
No. 1 is the scissors method. The two letters snap together incisively in an endeavor to cut off all further discussion. Unfortunately the scissors are often so sharp that they snip the thread of communication between two people. No. 2 is the tactic of delay. You tell the asker, "I'll look into it and let you know." It can prove a useful method, giving you an opportunity to get all the facts needed for a right decision. If the final answer is to be "No," you can then choose your approach. No. 3 is the "Yesbut" technique. It was the method employed by a prominent lawyer who was pressured to write a letter recommending a worthless character for political office. He wrote, "The bearer of this letter is John Doe, a citizen of this city who has gained much notoriety. Anything you can do for him will be greatly appreciated by him." No. 4 is the "disguised yes" approach. It says, "Nobut I won't try to stop you." A cynical bachelor friend of mine calls this one the reluctant-virgin technique.



No. 5 is the papa knows best" plan. It says, Nofor your own goodand here's why.

Businessmen who can't say no are soon hornswoggled into useless bills or boondoggled into foolish frills. But if you won't decide, and revel too long in the paralysis of analysis, you will make your subordinates into yes-sir, nosir, ulcer men.

Pride in Your Job Do you take as much pride in your work as you did the first month you had it? Job pride is like frosting on the cakewhen the cake grows stale, the icing crumbles and falls off, bit by bit. Examples all around you: The service station attendant any resemblance between his one-time laundered uniform and his present greasy ragbag is surely coincidental; the powerhouse engineer whose equipment once gleamed like the polished-up handles of the big front door; the salesman whose suit and products were always pressed, shoes and eyes always shining; the foreman who used to shave daily but now looks like a stubble-bum; the clerk who once wore clean shirts and cleaned his fingernails. Ah, the opposite! Here's a taxi driver who uses his spare moments not to read the comics, but to furbish his car. A stenographer, to clean her type. A machinist, to wipe up his lathe. A sales clerk, to arrange his stock. An executive, to reduce the piles on his desk. The lack of these evidences of job pride leaves a definite negative impression on the boss. He's more likely to be



critical of your work or to wonder whether you're a "comer" after all. If the icing has grown stale on your cake, there's a simple way to restore it. Ask a baker to make some special icing; and he'll probably bake a good cake to go with it. So with you: start to manifest all those little signs of pride in your work and you'll likely enjoy your job more. I'm one of those fellows who likes plenty of icing on the cake. How about you? Careless Work
I had a good example recently of how careless work leaves its mark. I had asked Alex, who runs a radio and electric shop, to install an electric wall socket in our bedroom. For this stupendous task, an electrician first class and his helper arrived in a two-ton truck. But they had no chisel to cut the wooden baseboard, so the helper had to drive back to the shop for one. They blew two fuses, used my fuses for replacement. Later I discovered they had disconnected another circuit and failed to reconnect it. So next day the electrician (first class) with his helper (no class) arrived to complete the job. When they departed, both times, they left shavings, pieces of frayed wire covering, tape and other miscellany on the floor. Now Alex wants to sell me a color television set, tries to paint a picture of our family comfortably ensconced in our living room, splitting our sides over those hilarious New York colorcasts. But all I can picture in our living room is a melee of wires and pliers, tubes and boobs, scratches and patches. No thanks, Alex. When I do buy, some other outfit's going to get the business.



I know a dentist who keeps griping about his chosen work. "My son's not going to be a dentist, you bet/' he'd tell you. Recently he remarked to an engineer patient, * 'You're lucky to be in engineeringhere I am stuck for the rest of my life in dentistry." When my engineering friend told me of this incident he added, "I'm not going back to that dentist; any fellow who talks like that couldn't have any pride in his workmanship."

You Are Judged by Your Clothes

The extent to which you need be careful about dress will necessarily vary with the kind of work you do and the groups you mix with. In recent decades clothes have become less formal and hence their importance minimized, but sometimes in the informality itself lies opportunity for adjustment to a group. If you work in a plant you will normally want to dress as your co-workers do. However, since you are endeavoring to bring yourself to the attention of superiors, neat clothes, a regular change of shirt, or clean laundering of work clothes, may be the very thing which will bring you to the attention of those above you. If you work in the office, again you will want to follow the prevailing practice. Here it may pay you to spend a little extra for particularly neat shirts or shirts with french cuffs that use cufflinks, etc. Again your objective is to stand out ever so slightly in the direction of neatness and cleanliness. People are bound to note shabby heels, holes in socks,



frayed shirt and trouser cuffs, dirty linen, soiled hatbands and worn clothing of any type. Subconsciously they make certain judgments about you when they observe these things. The opposite is true: if you stand out from your fellows because of excellence in these matters, positive judgments are likely to be made about you. There is an inherent implication that you are more successful than the average or that you know better how to manage your affairs or that you have better taste. In any event you cannot lose by being careful about your dress. Color and style combinations are important. The right combinations can proclaim you as a person of refinement and discrimination. The wrong combinations can annoy people sometimes without their even realizing the cause. If you doubt that you have good taste in these matters, talk with the salesmen who sell you your clothes and accessories. Generally they will, by the very nature of their job, have good taste. Sales managers have a phrase to the effect that ''every day is election day in the marketplace." We could paraphrase this to say that every day is the day of judgment for each of us in human contact. How you are dressed is one of the bases of judgment used by your boss and others above and around you.

High Lights
1. Become "empathetic" with the problems of your boss. 2. Study him, to understand what makes him tick. 3. Realizeand toleratehis weaknesses.



4. 5. 6. 7. 8.

Help him reduce costs. Develop your own self confidence. Learn to say "No"and how. Take pride in your job. Be careful about the clothes you wear.

In small companies, many management problems are compressed into heavy burdens which weigh upon the shoulders of a few top executives. Although the next chapter has the small-business slant, nevertheless many of its points are useful to executives in large companies and to the selfemployed.



The "Small7' Company

The government defines a small business as one which employs fewer than 500 persons. Most of us, however, think of companies having fewer than 100 employees. Size confers many benefitsin finance and borrowing; in justifying large equipment investments; in research and development; in advertising and marketing. However, large organizations suffer some disadvantages, tooless interest on the part of employees, poorer communication among the various organization levels, slower adaptation to changing demands, frequently less opportunity for the exercise of employee initiative. If all advantages were on the side of giant corporations, the small companies couldn't even exist. The big ones would simply trample through competition like a farmer across a ploughed field. Yet the fact is that there are numerous small but highly profitable companies in all communities. Their success is not accidentalit results rather from intelligent planning, cooperation, persistent



effort, imagination, knowledge, skill and other worthwhile attributes. The principals of small companies who exercise such traits are hardy souls who work long hours, often against great odds.

Executive Versatility
In a large company an executive is usually some kind of specialist; in a small company, a generalist. During the depression of the 30's, a friend of my father lost his job as district sales manager for a paint company. After a few months of futile job seeking, he began making and bottling in his basement a household cleanser. Each day he would solicit from door to door until he had sold his supplythen back to the basement. Evenings he kept his accounts, ordered new supplies, designed advertising circulars, pasted labels on bottles, etc. As a one-man business he was completely versatile. Ten years, and two million dollars of sales later, he sold his flourishing business (employing forty persons) for $200,000.

All of us have heard of similar cases. Per contra, all of us know of men who started one-man concerns which soon perished in mute anguish through lack of experience or

unwillingness to stick at it. To run a small business, you've got to be tough. It's not a simple task, that's for sure. Its executives have to be as versatile as a mother with ten children on a rainy day.



Some Problems

Fundamentally, a small business encounters the same problems as its big brother. As it grows to four, forty or four hundred employees, these problems are likely to increase in complexity. Here are some typical problems: 1. The profit squeezecosts rising faster than sales. 2. The need for added capital to buy more efficient equipment. 3. The need for working capital to employ consultant specialists or to undertake market studies and other re search. 4. Changing the organization structure to meet growth or changing conditions: recognizing the need for change; overcoming resistance to change; establishing new functions; altering responsibility with commensurate authority. 5. Personnel: selection, training, compensation, super vision. Building the morale of employees at all levels through communication, participation, development and motivation. Union relationships. 6. Products: adding new products and services; eliminating unprofitable lines; holding down inventories with out impairing sales. 7. Improving working methods in office and shop. 8. Marketing: distribution channels; warehousing; planning and controlling field selling effort; consumer research; advertising. 9. Administration: public relations; legal entanglements; top management controls; procurement; executive decisions; relations with board of directors, banks, competitors and lawmakers.



The ever-changing interrelationships among these executive problems provide a complex maze which challenges the human resources of top level executives. Solutions are seldom lasting, but must be re-evaluated as conditions change.

Small Business Investment Act

In 1958 Congress passed the Small Business Investment Act. It is designed to make available to small business more and better financing. It permits the formation of small business investment companies which can help small businesses raise long term capital through term loans or can purchase convertible debentures of these businesses. The Act further outlines the conditions under which the investment companies can operate. Managers of small companies have long been aware that their expansion needs for long term loan funds or equity (stock) capital were frequently not being met by existing financial institutions. Reception of the act has been enthusiastic. You can get additional information from the Small Business Administration.

Selling to Uncle Sam

The United States Government is the largest customer in the world. It buys billions of dollars worth of goods and services annually from American industry. Although your



Uncle's specifications are sometimes unnecessarily tough, and the inspection unnecessarily strict, nevertheless his business can be a useful and profitable volume. Competition for it is keen. If you would sell to the government you need specialized information. You must pay close attention to the standards and specifications provided you, know who the proper buyers are and how to present your products to them. Sometimes selling to the government involves you with special legislation, safety standards or labor problems. Federal agencies purchase their materials either on competitive bidding or on negotiated contracts. The latter are of four general types: 1. Fixed price contracts. Sometimes these permit revising prices upward or downward by later negotiation. 2. Negotiated final price. Under this plan a reasonable initial price is set and also a maximum price. At the close of the contract a final price is set based on cost and a sliding scale of profit. This scale is usually set to provide an incentive to the contractor to keep costs low. 3. Cost plus contracts. These provide for payment of costs and a fixed fee, but not a percentage fee. There are several possible variations of the cost plus contract. 4. Letter contracts. Quite often these are letters of in tent which authorize the contractor to proceed; at the same time they obligate the government either to make a final contract or to reimburse the contractor for expenses incurred. There is an official U. S. Government Purchasing and Specifications Directory put out by the Small Business Administration. It can be secured from the Superintendent



of Documents or perhaps from the Department of Commerce office in your locality. This directory tells the names of purchasing officers for several thousand items. Also, the Department of Commerce puts out a daily sheet which summarizes proposed purchases. You can have your name placed on the bidders' lists by writing the proper agencies and specifying the products on which you would like to bid. The Small Business Act of 1953 provides that a certain portion of the total purchases for the government must be placed with small businesses (fewer than 500 employees). The Small Business Administration Agency can offer a great deal of help to you in trying to get government business. Part of its function is to issue certificates of competency, and you should get information about this. Write to Washington, D. C, for the name of the regional or field office closest you.

Decision Making

Large companies normally progress faster than small organizations because they tend to base fundamental decisions on hard-gathered facts, rather than on hunch. This practice reduces the area in which the intuition of experience alone must be exercised.
Market research for a small company provides an obvious example. The sales manager (responsible also for advertising, product development, et al.) decides to sell in the state of Pennsylvania, so sets up sales offices in Philadelphia and



Pittsburgh. The sales manager of a large company feeds considerable market research data to an electronic computer, makes a wiser decision to establish offices in Reading and Altoona.

This seeming advantage is not insurmountable if the small business manager bears in mind that a computer is not the essential ingredient in decision makingit's facts. And this is true for all nine problem areas listed above and others as they arise.

Long Range Planning Another distinguishing feature of large versus small companies is likely to be long range planning. Here, again, smallness is not an insurmountable obstacle if the attitude of the top executives is broad gauge and long term. Small companies tend to be family owned, or family dominated; large organizations, to be professionally managed. Pater familias generally thinks that his sons, nephews and sons-in-law provide continuity of management and insure him later-year income while he's fishing in Florida. But too often the sons want to be band leaders or college professors rather than business executives; sometimes they want to remain adolescent playboys. Then woe betide the planless businessand the founder's widow! Figure 11 sets forth a procedure to establish a long range plan. How many of these topics, and how many persons, shall be involved depends on the size of the company and its problems.



Figure 11

Procedure to Develop Long Range Planning



Long range planning has well been termed "profit insurance." Companies which have done it have outdistanced their competitors, have found banks more willing to lend funds, have learned that it encouraged executive teamwork.


Several years ago an executive in the auto industry assured me, "Mechanically, the automobile is close to perfection; from here on out, our problem is one of selling." Perfection, eh? I didn't think so when one by one the locks on four doors went bad. Nor when I had to replace a muffler after driving only 6,000 miles. Nor that snowy day last winter when I tried to put on chains, but the car jack wouldn't jackand then I borrowed one from my neighbor, and it broke. And in over thirty years of driving, I have yet to own a decent electric clock on my dashboard. Of course, my smug executive acquaintance does not reflect the thinking of top-flight auto men. They know that perfection is like the horizon: it recedes as you approach it.
Reminds me of an experience years ago when our organization was making a survey for a trade association. I was in the office of a soft drink bottler when a dealer phoned the owner, said that customers were complaining about the flat taste of a recent shipment. "Nothing to it," the owner assured the dealer loftily, "just some crank." Ten minutes later his chemist dashed in to tell him the syrup line was



partially clogged, that everything going out, to use the chemist's own words, "had a flat taste!"

Any executiveautomobile, soft drink or what have you who considers his business progress "close to perfection" has already turned his back on the horizon. He's heading for trouble, as sure as thunder follows lightning. One sure way to find some imperfections is to run down complaints: of product, promises, billing, service, selling. That's where you'll find the flat taste or the bad jacks, locks and clocks of your business. But the mere absence of complaints is not enough; you need to forestall trouble. Attention to trifles makes for perfectionbut perfection is no trifle, as every successful small businessman knows.

Attention to Details It has been facetiously remarked that a first grade teacher is one who can make the little things count. The profitable conduct of a business, especially a small business, is the sum total of a lot of little things. For every major act there are thousands of minor actions, no one of which seems particularly important. Ignore them at your peril, for they soon grow to Frankenstein proportions. Monthly billingcollectionsvendors' discountsplant housekeepingquality controlrepairs to the production equipmenttruck maintenance: these are practical examples. Let any one of them get ahead of you, and it's hard to catch up. It's fine to dream about building a new plant, taking on



a new product, opening a new territorybut don't dream at the expense of the present plant, products, territories. Reminds me of a story I heard recently.
A huge, powerful mountaineer was sitting on his front porch, whittling himself a fancy whistle. Along came a pint-sized neighbor who remarked, "If n I was as big and strong as you'n, I'd go up yonder mountain and catch me a big b'ar, so's my kids'd have some meat." The big man said nothing, kept whittling. The little guy persisted: "Why, a strong fellow like you ought to be able to tear a big b'ar apart, if n you really wanted to." The huge mountaineer stopped whittling, remarked slowly: "They is litte b'ars up thar, too," resumed his whittling.

If youve been dreaming about capturing some big bears for your business, how about practicing on some of the little bears that are under foot every day.

High Lights
1. Running a small business requires versatility and a large capacity for work. 2. As a company grows, management problems multiply. 3. The Small Business Investment Act is designed to help small companies get long term capital. 4. Selling to the U. S. Government requires specialized knowledge which, however, you can easily acquire. 5. Get as many facts as you can before you make important decisions. 6. Do long range planning.



7. Avoid complacency about your product or service 8. Pay attention to detailsno business runs itself.

Membership on the Board of Directors of your company could bring you a number of benefits. How to get there is the subject of the next chapter.



How to Analyze Stockholder Interests

If you work for a corporation, and particularly a small or medium-sized company, the competence and wisdom of the board of directors may play an important part in your future.
Two brothers, boyhood chums of mine, provide illustrations. One went to work in their uncle's haberdashery. The business never expanded, gave him a fair living on a dead level, even when he ultimately inherited it. The other brother started as salesman for a well managed and expanding company; rose through four or five promotions to become assistant general sales manager at a high salary; within a few years will retire on a generous pension. Both brothers worked hard, but the second one sought out a potentially more rewarding situation.

It may not have occurred to you to make three analyses: stockholder interests, the competence of the directors and the degree to which the abilities of directors are being used.



Probably you will have to make these sacrosanct studies entirely on your own and use the information purely for your own guidance. Why sell socks and ties when you could be selling ships or turbines? Generally it is not too difficult to determine who the large stockholders of a company are. Normally these are matters of record. Even if this is not the case you probably can learn the facts without seeming to be putting your nose into affairs that others may think should not concern you. If, as is usually the case, large stockholders are also directors, that fact in itself is no guarantee of their effectiveness, because they may be motivated to do things which are in the long run not in the interest of the company and hence of your future. For example, they may vote for the declaration of a dividend at a time when it would be wiser not to pay a dividend. A board of directors should interpret company trends in terms of the current economy. It should not merely accept the interpretations prepared for it by company executives. This statement is particularly true if the company is in any kind of difficulty as to finance, sales, manufacturing or manpower. Once a company has lost position in its industry, it takes considerable time, energy and competence to restore it to its former position.

What Your Analysis May Show

Your study of stockholder interests may turn up such facts as the following:



1. A widow owns a large block of stock and lives on the income. 2. A large stockholder is living beyond his means. 3. The ownership of the company is such that nepotism is inevitable; you can only look forward to sons, sons-inlaw and nephews of doubtful competence. The old phrase "about three generations from shirtsleeves to shirtsleeves" may be applicable to your company. 4. Some large corporation is gradually acquiring stock of your company, presumably looking to ultimate control. You should also be interested in whether in your state cumulative voting for directors is possible. Under cumulative voting, if a company has eleven directors, any stockholder who owns 1/1lth of all the common shares can put one director on the board. This statement is an oversimplification of the way it works, but it expresses the general idea. Your interest in analyzing stockholders' ownership is primarily to determine what the principal stockholders are trying to accomplish. It is stockholders who elect directors and it is directors who vote on the many issues which come up during a year.

Become a Director?

A second reason for your concern about ownership is that you yourself may want to become a director. In order for this important event to happen, a vacancy on the board must occur or the number of directors must be increased by board action, and your name must be proposed



by a common stockholder, and accepted by stockholder vote. Again you see here the importance of genuine accomplishment on your part, combined with dignified contacts with present directors and large stockholders. One of these alone is usually not sufficient; you need both. Stockholders who lend capital to a company usually do not wish to attempt to run the affairs of that company, but they do want to be sure that their funds are being protected and used well. Board members should plan for the good of the corporation, not merely vote on issues which are brought before them by the company executives or approve actions which have already been taken.

Rubber Stamp Boards

A rubber stamp board of directors permits an executive autocracy which can preclude advice, criticism and progress. This is particularly true where company executives constitute a majority of the board. Too often the tail wags the dogcompany officers who have been elected by the board think of themselves as not only running the company but also running the board. You should look for such signs in your own organization. The situation may operate satisfactorily as long as the officers are highly competent persons of integrity, but changes occurring through resignations and deaths may affect not only the profit destinies of the company but also your own opportunities.



Growth Industries Most industries follow an S-shaped curve of growth: slow development in the first phase, rapid rise in the second, slow growth (or decline) in the third. Here are economists' judgments on a number of well known industries:
In first phase Atomic energy Automatic vending machines Automation Electronics Guided missiles Silicone plastics Solar energy Swimming pools Television, color Ultrasonics In second phase Aircraft mfrs. Chemicals, basic Drugs, ethical Electrical appliances Natural gas Office equipment Paper and pulp Plastic packaging School supplies Travel In third phase Autos and parts Department stores (in cities) Glass containers Movie theatres Railroads & equipment Shipbuilding Steel and iron Television, black and white Textiles Woodworking

Of course, there are opportunities for capable, ambitious people in all these industries. Corporations endeavor to provide for a succession of management by developing younger executivessometimes by acquisition of other companies. But fast growing industries mean fast growing companies, so creating executive positions which have not previously existed. New industries, such as electronics and atomic energy, may require mastery of new technologies for which older executives are not equipped. Hence capable younger men are necessarily selected for the executive posts. Generally it is true that your greatest opportunity is right on your own front doorstep. But if you contemplate changing companies or industries, it may pay you to investigate possibilities in fast growing situations.



Putting Directors to Work If your analysis of the abilities of the members of your board suggests that they are men having specialized knowledge which could well be put to the use of the company, you may find yourself from time to time in a position to draw upon that experience and knowledge. That, of course, has value to you in that it gives you contact with directors under favorable circumstances. It also gives you the benefit of outside viewpoints on some of the problems of your company. Typical of these problems would be the necessity to change the organization structure, markets, legal involvements, competitive conditions, new technology, research and development, social trends, economic influences, political developments, etc. The business acumen of successful businessmen on your board may well be utilized in some of your company decisions. Some companies utilize professional directors who serve as auditors of management policies and practices and normally have had a wealth of experience in the operation of corporations. Sometimes these men represent the special interests of large stockholders. If a company fails to utilize the talents of directors and merely makes rubber stamps of them, some of the more competent may resign, leaving the less competent on the board. One way of bringing corporation directors into the operation of the company is to set up standing committees of which they and the executives are a part. Another way of arousing the interest of board members is to introduce graphic controls, exhibits, sample products and other types of dignified showmanship into the board meeting itself.



As to the constituency of the board, it is desirable that the members supplement one another in their specialized areas of competence.

Cultivating Director Contacts We have already intimated that it is desirable for you to have contacts with directors. Similarly, it is desirable for a director to have contacts with you and with all other executives of the organization, whether those executives are on the board or not. From time to time directors are called upon to elect new officers, and they should have intimate familiarity with the capabilities of present junior and senior executives of the company. Some of these changes of top organization may present you an opportunity to suggest alterations of the organization's structure, policies, aims, practices and other changes which can improve the company and at the same time bring you more closely into the center of the top management problem. Try to develop special reports or projects of value to your company which will likely be brought to the attention of the directors.

Improving Investor Relationships Most companies have only a vague idea as to their shareholders, if ownership is widely dispersed. Such knowledge opens up opportunities for creating a strong investor rela-



tions program. A well planned program along these lines can confer many benefits upon a company. One of these is to create an increasing number of stockholders; dispersion of ownership is generally considered desirable. Also, it may facilitate future financing: current shareholders may well become an untapped future investment market. Sometimes vigorous efforts are necessary to attract new share ownership. In fact, economists believe that the present number of share owners in America must be greatly increased to provide the proper financing of the future. Your stockholders can become sympathetic allies when problems of public relations arise or when support is needed for policy programs or even for sale of products. These days more and more stock is being purchased through brokers, banks and trust funds and by investment companies. Since these organizations are likely to own large blocks of stock, they have corresponding voting power. Hence it is important that they feel favorably disposed toward the company and its management. Many companies believe that if they prove profitable this will be sufficient, but experience shows that it is desirable to have more than a profit relationship. Security analysts go through the figures of a company with a fine tooth comb and are definitely interested in more than a net profit picture. In addition, the executives who run these financial institutions are human beings, possessed of prejudices for or against people or companies. Hence contacts of a personal nature are usually desirable. Since stockholder relationships is an area which is frequently neglected, it may offer you opportunity in which you have little competition. Give it some thought.



Mergers In 1950, Congress amended Section 7 of the Clayton Act to limit mergers where "the effect of such acquisition may be substantially to lessen competition." Opinions which have since been issued by the Federal Trade Commission and the lower courts suggest that mergers may become increasingly difficult to effect. This situation bears watching, for it may: 1. Prevent mergers designed largely to increase the competitive effectiveness of a company. 2. Encourage companies with proven management ability to merge with companies in other lines. 3. Limit vertical integration (merging with raw material suppliers and distribution outlets). 4. Work to the advantage of companies which have considerable room for expanding production within the frame work of existing facilities. 5. Make price competition more fierce. 6. Intensify the need for managerial competence. The strictness of the amended law may prove a potent, though unseen, force. At the same time it may cause a greater demand for highly trained, dedicated, professional business managers. Herein lies opportunity for ambitious men. If a larger organization were to take over your company, one of its first moves would be to study the executive timber it had "acquired" in the merger. If you had the reputation of being a "comer," the new arrangement would likely offer you larger opportunityprovided you adjusted quickly to new bosses and methods. But if you



resisted change, whether vocally or silently, you would probably be passed up or kicked out. Situations of this kind are usually difficult, because of conflicting loyalties, schisms, opposing "camps," struggle for power and the numerous rapid adaptations involved.
A friend of mine is a manufacturer's representative in the chemical field. At one time he was sales manager for a small chemical plant. When it was taken over by a larger company, he bucked its sales manager so violently that my friend was ultimately asked to resign. In the intervening years, the two men have become close friends; the one-time sales manager has been promoted to the presidency. Had my friend adjusted to the new status, he now would undoubtedly be sales manager of the combined companies at a salary three times his present earning power.

Some wag has remarked that often we don't recognize opportunity because it wears overalls and looks like work. It can be equally true that it can wear new methods and look like a new boss. What of the reverse picture, where your company takes over some other? If the merger is to offer opportunity for you, you must already have been recognized as worthy of promotion. If you are assigned to aid the assimilation ot the new concern, be tolerant of the reluctance of their executives to accept you and the changes you are empowered to make. Your patience (but not timidity!) may win you ultimate loyalty and save some competent men for the merged organization.



Your Company Earnings

If the data are available to you, it will pay you to review the company earnings over a decade or more. You may want to study these as a percentage of the total sales figure or as a percentage of the net worth of the company. Normally the net worth of a company is determined by adding to the current assets the fixed tangible assets less reserves, write-offs and secured fixed liabilities. The formula frequently used for computing total net assets or net worth is as follows: net tangible assets plus intangible assets minus unsecured fixed liabilities. Refer to an accounting textbook for clarification or discuss this with your own accountant. After you have noted the earnings record of your company in relation either to sales or net worth, you may want to study the policy of the board of directors in giving dividends and setting aside reserves (plowback). A strong policy of plowback is likely to enhance the book value per common share and to strengthen the company. If a large percentage of earnings is given out as dividends, it may reflect unwise cupidity of certain dominant stockholders on the board of directors. It is not your province to criticize what has been done so much as to understand it. This understanding will in turn help you to understand the board of directors, or some of its members at least. The understanding you get may also assist you in determining whether you want to buy stock in your own company, either through the company itself or on the open market.



Some companies, in an endeavor to hold capable executives, make available to them stock options. Normally these represent options to purchase stock in the company at a fixed price. If the value of the stock goes up it can become a very valuable and important thing to exercise the options. Normally, however, the options themselves cannot be sold on the open market as can stock rights or warrants.

High Lights
1. The competence of your board of directors may affect your future, pro or con. 2. Who are large stockholders of your company? 3. Are stockholder directors developing, or milking, the company? 4. If company officers dominate the board, are they developing or milking the company? 5. Should you cultivate certain directors to benefit from their experience or get them acquainted with your ability? 6. Can you help improve investor relationships? 7. What would be your status if your company were bought by a larger competitor; if it took over a smaller competitor? 8. What is your company's profit history, compared with other concerns in your industry? 9. What executive "fringe benefits" can you expect?

The material of this chapter has pretty much assumed that you are employed by a small or medium sized organization. Many of your problems are not much different than if you were self employed or were one of a partner-



ship. Obviously, if you are self employed, you must be all things to all men. Some special problems incident to self employment will be taken up in the chapter which follows.



Business for Yourself

It is difficult to draw a sharp distinction between small business as we have considered it in the previous chapter and a business for yourself. Theoretically, as soon as you hire another person to work for you have become a small businessman and are no longer in business for yourself. Practically, if you make all the decisions and you hire only minor assistants, you are still in business for yourself. Generally such a business is not incorporated, operates as a sole proprietorship. Most men would rather be employees of strong companies. Only a few want genuinely to be the boss, with all the risks and responsibilities that go with it. Most people want a regular paycheck and the security of working in a large concern. A few want the challenge and adventure of owning their own business. This chapter is for these venturesome souls. In the United States there are well over three million in154



dividuals offering professional services and perhaps an equal number in occupations which might be classed as being in business for themselves. In some instances they are suppliers to large companies of parts which enter into the total manufacturing operation. It has been computed that for each manufacturing establishment there will be needed at least one wholesaler, 7 retail stores, 7 service concerns, 5 outside salesmen and 45 employees engaged in distribution activities.

Typical Self Employment Aside from the professions, not discussed in this book, here are some usual kinds of self employment.
Auto service station Baking Building contracting Cleansers Dressmaking Farming Handicraft Metal working 1. Manufacturing, fabrication, products Millinery Needlework Nurseryman Polishes Restauranteur Tailoring Upholstering Woodworking 2. Services Mailing Maintenance (of many types) Market research Motel manager Moving and hauling Photographer Publisher Repairs (of many types) Small loans Stenographic Taxicab driver Writing

Accounting Adjuster Advertising Architect Barber Beauty shop Counseling Duplicating Gardening Interior decorator Laboratory analysis Laundry; cleaning & dyeing


IF YOU'RE SELF EMPLOYED 3. Selling Manufacturer's representative Own products Own retail store Real estate Travel agency Wholesaler

Antiques Coins and stamps Commission basis Dealership Investments Jobber; broker Life insurance

Interesting but Risky

Being in business for yourself involves a considerable amount of risk. If you are willing to take these risks, you stand a chance to be independent, to develop more financial resources than you might if you worked for a large company, to achieve the respect of your family and community, to provide security for yourself and to derive a reasonable income, perhaps a large income. Your business is likely to have the virtue of simplicity. This may mean that you will be keenly aware of your individual customers and their needs. You will be service minded. Businesses of this kind are generally adaptable quickly to changing demands of customers, and in this attribute they contrast with the inflexibility of many large corporations. There is a distinct advantage in being the owner and being able to make on-the-spot decisions without the necessity of consulting superiors. Likewise, the costs of your business are likely to be very obvious to you. If there is a lack of profit, the source of this condition can be spotted rather readily. This feature, too, contrasts with the difficulty of running down waste and losses in large companies.



The Success Attributes

When you are in business for yourself you are likely to work long hours; this demand may require both perseverance and physical energy. You have to be willing to accept responsibility and to make decisions. You will need initiative and imagination. In relationships with people you will need friendliness and an ability to gain their confidence.
Some years ago my wife and I drove to a seashore resort The attendant in the parking lot adjoining the hotel was a blues whiner: "Nobody could make a livingpeople are pikersthis town's dead." Last year we were there again. There was a new attendant who would wash your car, rent you a bicycle, sell you novelties, sunglasses or soda pop. He was friendly, obliging, hard working. We saw him again this summer. He now supervises his original parking lot, plus a laundromat store, a large service station and a merchants parcel delivery service. He also owns three corner lots which he acquired by paying up delinquent taxes. Evidently he doesn't believe that "this town's dead."

Self employment involves bringing together a number of mutually supporting skills and information. These requirements are likely to pertain to the knowhow of producing your product or service; selling it; finding the necessary capital for equipment and for working capital; probably hiring and supervising assistants. Ultimately you will also want to have considerable information about bookkeeping and accounting, income and other taxation, as well as legislation which may provide opportunity or limitation upon your activities. Other men may have more brains, brawn,



or boodle than youbut if you utilize a common-sense combination of these traits, you will win out over them.

Reasons for Failure

A number of studies have been made as to why the self employed and other tiny businesses fold up. Incompetence and inexperience account for about four out of ten failures. Men start a business simply because it "looks good/' without adequate preparation in the skills listed above or the specifics of the business undertaken. Like a fly in molasses, they struggle for a while but ultimately give up. Lack of sufficient capital accounts for three casualties out of ten. Sometimes this means insufficient funds to buy the proper equipment. Sometimes it means inadequate working capital for supplies, advertising and transportation. Unwise extension of credit can deplete working capital, as can foolish withdrawals on the part of the owner. Other causes of failure are insufficient demand, fraud, failure of others, speculation and throat-cutting competition; they pretty much account for the remaining three failures.

Watching Business Conditions

Avalanches ruthlessly destroy small twigs as well as sturdy oaks. Youve got to watch out for economic cycles which might hurt your business.



The price of your raw materials may skyrocket; an economic recession may leave your inventories loaded; a competitor may start bloodletting discounts; a new company may get you into a tough rat race because they have found a way to make better "mouse traps" than yours; a different industry may offer a product which displaces yours. Guard against these catastrophes by doing these things: 1. Join the local trade association in your industryor help organize one. Take an active part in it. 2. Regularly read one or more trade magazines pertaining to your field. 3. Read at least one general business magazine, prefer ably one that publishes charts of various indices of business conditions. 4. If some large company supplies you basic materials, or if you sell to a large company, become friendly with their economist, purchasing agent or sales forecaster. 5. Set up a connection with a large, strong bank in your community. Call upon it for economic advice from time to time.

Government Patents Available It may be worthwhile to make an investigation of government patents available. You can secure this information by writing to the Superintendent of Documents in Washington, D. C. A few hours of study may either give you ideas which would help you launch a career of your own or, if you are already in business for yourself, offer suggestions which would supplement what you're now doing.



While you're probably free of legal entanglements if you utilize government patents which are available, nevertheless that does not insure that you will either have the knowhow to produce the article or that there is a market for it. Hence it would be worth your while to seek informed counsel in both these directions.

Helping People Buy from You If you are in business for youself, the chances are that you will have to do your own selling. Here are some pointers which may be of interest. 1. Prospects will exhibit certain personality habits. For example, some will listen to you but rarely volunteer; others will want to do most of the talking. Hence you must learn to size up your prospects. 2. Do your selling from the customer's point of view. He is interested in what you have to offer only as it helps him. Learn therefore to help him succeed in his business. Help him buy advantageously; do not sell him things which will not be of use to him. 3. Use demonstrations to save time in selling. It is preferable that the prospect's muscles enter into the demonstration act, whatever it is. An ounce of proof is worth a pound of talk. 4. Stick with your price. If your product and service are right, the customer will pay a reasonable price. On the other hand, if you shave the price in order to get business then your competitor shaves his price. Both of you will soon be out of business. If you have quality, sell it.



5. Learn to use the kind of advertising which will pave the way for your selling contacts. 6. Be careful in extending credit. If you don't do this you may find yourself without working capital. Moreover, never apologize when you are asking for money which is due you. 7. Study your competition, particularly if it has been extremely successful. Perhaps you may have to imitate it at first. Avoid knocking your competitors. When you are up against price competition quote your price even though it is higher and immediately pour on the benefits which you alone can confer. 8. Use showmanship. This includes educating the prospect as well as stimulating him with the use of trigger words, visual presentations and other dramatic devices. 9. Keep in touch with prospects and customers. A coin tarnishes when it is not in circulation. Remember that good salesmanship is selling, to customers who will come back, goods which won't. A sale to a new customer does not complete a relationshipit starts it. Chapter 3 of this book may also give you ideas of value in selling your own products or services.

Publicity Publicizing your business is one of your basic problems. Of course you can do this through various kinds of advertisingcirculars, letters, radio, newspaper and trade paper advertisements, etc. All these cost money, and you should



try to find ways of publicizing your activities which will not cut into your working capital. Here are some suggestions: 1. Talking to groups. If the kind of thing you do is likely to be interesting to various groups, try to get yourself on programs where you can explain your activity. Use colored charts, slides or demonstrations if you can. Sometimes you promote a cause into which your activity fits; in this case you do not even mention your own work in it but leave it to others to do that for you. 2. Writing articles. If you have sufficient knowhow to prepare several articles in your area of competence and can get them published in trade journals, you will find that it is excellent publicity. Most editors will permit you to have the articles reproduced, and this can be done rather inex pensively by photo offset process. Then you can distribute or mail the reprints to those who are likely to help you or to be your customers. In this way, too, you may gain the reputation of being an authority in your field. 3. Word of mouth is, of course, one of the best means of advertising. Not only should you satisfy your customers, but do not hesitate to ask them to suggest your name to people of their acquaintance. 4. Telephoning to prospects is usually an excellent de vice. If your local telephone company allows unlimited service, telephoning can be an inexpensive way of bringing your business to the attention of potential customers. It has been said repeatedly that selling is asking people to buy. Do not hesitate to ask a large number of people to buy your products or service. Do this in face to face situations, by mail, by radio, by telephone or in any other



means that you can utilize. In the long run, selling is likely to be the secret of your success.


There are advantages and disadvantages to partnerships. The principal advantage is that you may be able to bring into the activity with you someone whose knowledge and skill supplement yours. The disadvantages are that the two of you may not always see eye to eye as to what should be done, how much time each one should put in, what expenditures to make, who should be employed, what changes of product are necessary, etc. The one grave risk of partnership is that the other partner has the right to commit the partnership to expenditures and, if he is a spendthrift, may readily use up working capital. Hence you should be extremely cautious before taking the partnership step.

Your Security Program

There is an important tie-up between self employment and some of the things we shall discuss in Chapters 13 and 14 dealing with the financial management of your life. If you are working for a large corporation, the chances are high that some kind of pension fund will be built up for you to take care of your old age. You may have an opportunity to buy stock in the company. If you are in business for yourself, you must make such provisions on your own.



This necessity may mean that you pay premiums on some kind of retirement income policy. It also means that you set up some kind of savings and investment policy and stick to it with consistent regularity.

High Lights
1. There are numerous self employment opportunities for ambitious men of courage. 2. Sole proprietorships possess certain inherent advantages over larger companies. 3. Success attributes are varied, but anyone with normal intelligence and abnormal determination can acquire them. 4. Failures result largely from incompetence, inexperience and lack of capital 5. You need to watch trends in your industry and in general business conditions. 6. It may pay you to investigate government patents avail able. 7. Selling and publicity are likely to be final determinants of your permanence. 8. Be wary of a partnership.

Whether you are self employed or an employee of some company, you have an obligation to your family to set up a program of insurance, old age security and savings for a rainy day. The next chapter may help you reach some important decisions about these problems.



You Need Security

It is indeed difficult to revitalize your life against a background of insecurity. You can, however, utilize the power of new-found determination to develop various kinds of security. In the absence of such security, hope is likely to become dissipated. The granite rock of determination cannot indefinitely withstand the beating waves of apprehension. Several million years ago many large and fierce animals roamed the earth. Prehistoric man was insecure in their presence. They had more power, more speed or more ferocity than he. Yet today their fossil remains are found only in museums. The decendants of prehistoric man are found all over the globe, living in various degrees of security. The difference lay in thinking power. Prehistoric man found security against wild animals and against the threatening forces of nature by giving thought to his problem.



Then he applied emotion power to carry out the results of his thoughts. You and I have much the same situation. The factors which contribute to insecurity are different, true enough, but there are such factors all around us. We too must think out proper solutions and apply emotion power to execute our decisions. Failing to do this, we may find ourselves limited, or defeated, or even snuffed out entirely by forces which besiege us. Imagine that several million yean ago some small animal took refuge in a cave in the rocks. It felt secure. But a larger animal came along, discovered it and entered the recess. Then the security of the cave became a trap for the small animal which resulted in its destruction. We have a parallel in modern times. Many individuals feel that security is maintenance of the status quo of their lives. If people and events will only let them alone, they believe they will be secure. This can be as fallacious as was the feeling of security of the small animal two million years ago. Maintenance of status quo can be a trap, far removed from security, as many an individual has discovered too late. This chapter examines various types of security, so that you may select for yourself specific security goals and lay out a program to achieve them. These goals and the resulting program may take you far afield from a status quo in your life. They may demand great expenditures of emotion power as well as severe changes in your modes of living and thinking.



Meeting Security Problems

Over the ages man has endeavored to find security by: 1. Attacking the threat. 2. Defending himself against the threat. 3. Fleeing from the threat. All three are legitimate; failure of one device may merely indicate the necessity of utilizing some one of the other two. When you are pursuing new goals, you are attacking. It is usually the method of the strong and should normally be considered as the first approach to a problem. It is better to conquer it than merely to avoid it or to run away from it.

What Is Security?

Security is not a simple concept. For example, security to the Eskimo may be food, shelter and an igloo. Security desires of the Samoan may be much the same, but weather conditions make a shelter easy and food abundant. Hence we get a different personality in the Eskimo than in the Samoan. Security to the Iowa farmer may rest in his fields and in his farmhouse; security to a mediocre portrait painter in a large city may consist of his single room in a boarding house plus the disability allowance he receives from past military service. Security for the day laborer may rest principally on his ability to find work; security for the corporation executive may be an involved matter taking into



account a large house and social status as well as a plan for future retirement. For most of us, security is some mid-point of these various things. We too want food, clothing, shelter, protection from natural forces, insects and wild animals. We too want assurance of daily work and regular income. We too want some degree of social status and assurance for old age. If security is absent, neurotic traits are likely to develop. These will appear if attack, defense or flight fails to yield the desired security. In fact, a great many aggressive, ambitious individuals all around us are actually persons seeking security by attack methods. Some, though not all, individuals on Government payrolls are there because they have failed to find security by attack methods and have resorted to the method of flight into a Government position. A great many individuals find themselves repeatedly defending their security status from economic factors which would disturb that status. Rather few individuals are willing to disturb it themselves to the extent that they will consciously and radically change their lives or their mode of thinking in order to improve themselves.

Life Insurance

You can build an estate immediately, to protect your family, through life insurance.
A man of 25 took out $50,000 of ten-year, term insurance; the premiums cost about the same as $25,000 ordinary life. Each year, as his income increased, he converted $5,000 to ordinary life, so beginning to build cash (or loan) value into



his policies. By the time he was 35, the conversion process was completed. He then began to buy retirement income policies, with life insurance coverage in event of his death before the age of 65. At age 65, he exercised annuity options in the first five $5,000 policies he had bought, making these annuities joint survivorship to protect his wife. This plan left $25,000 in death benefit policies. He and his wife are today living in comfortable Florida retirement, largely because of his wisdom in handling his life insurance program.

Tax laws are fairly lenient on the accumulations of cash value in a life insurance policy, especially if installment payment options are elected; also on income received by a widow as a death benefit; even on the savings inherent in an endowment policy.

In 1935, Pierre Lavette sold his suburban Paris home for 200,000 francs, invested the money to yield 12,000 francs income annually (at that time about $2,400). He and his wife lived modestly in a rented house near Nice, overlooking the blue Mediterranean. Seemingly, he "had it made." Twenty years later inflation had reduced the purchasing power of his 12,000-franc income to $20.00 per year; they lived in one room, and were dependent on government aid for their subsistence.

To a lesser degree than in France, inflation in our country has been eroding the purchasing power of the dollar. As this book is being written, public awareness of the dangers of inflationary forces is braking thembut not



stopping or reversing them. No doubt about itinflation is the bugaboo in trying to build an estate or establish retirement security through life insurance. Hence you should not rely on this protection alone, lest it slip through your fingers like quicksand.

Savings Through Capital Gains If you make a profit on sale of stock or other asset, it is known as capital gain. If you owned the asset six months (plus one day) or longer, your profit is a long term capital gain; if for a less period, it is a short term capital gain. In making out your income tax return, long term gain is taxed either: 1. Half of it at your ordinary tax rate, or 2. All of it at 25%, whichever is less. You can see that the capital gains tax will benefit you to the extent that your income results from buying and selling stocks or other assets, and particularly as your total income gets into higher brackets.
Two men have $100,000 to invest. A puts his money in 5% bonds, pays income tax on $5,000. B buys stocks; after six months sells for $110,000. He pays tax on $5,000 but in addition has $5,000 tax free to spend.

Figure 12 shows how the "tax bite" cuts into your earnings as they become higher. For example, if your income is $10,000 per year, the tax take is 13%if $25,000, the tax is 23%. And should you ever reach the $100,000,000 level, Uncle Sam will let you keep only $49,000.



Figure 12 The Tax "Bite" on Executive Earnings



Earn InterestDon't Pay It

Installment buying can be a boon to some families, a burden to many others. Too many have been led by it to live beyond their means. The wisecrack, "A dollar down, and a dollar per week for the rest of your life," comes uncomfortably close to being true. The only reason some folks don't own an elephant is that they've never been offered one on the weekly payment plan! The Internal Revenue Service tells us that for the average family, interest payments on mortgages, installment purchases, etc. constitute an appreciable item. For example:
If family income is between $5,000-9,999 10,000-14,999 The average amount paid as interest is $323 505 Which represents 5% interest on an investment of $6,460 10,100

Another way to look at this interest outgo: suppose you avoided it, invested it annually in common stocks yielding 5%. At the end of 25 years, the results would be:
Amount invested each year at 5% $323. 505. Value of stocks at end of 25 years $15,000 25,000

These figurations do not take into account the possibility of stock splits or enhancement in the value of the stocks purchased. Going into debt is not, in itself, a vicious thingbut going into unnecessary debt is. A mortgage on your house may be justifiablebut wait until you can pay cash for



some of the household luxuries. It takes considerable strength of character to draw a sharp line between necessity and luxury.

To Budgetor Not to Budget Just as a budget is a useful control in operating a business, so can it be in your own life. Perhaps you can safely drop it when your income greatly exceeds your outgo, but until this desirable status is reached-BUDGET! Not just a mathematical proof of your suspicions, but a plan for financial living. If you pass all receipts and disbursements through a single checking account, it will facilitate both budgeting and income tax reporting. You see where you stand all the time; too often a checkbook is a book with an unhappy ending. Figure 13 presents a simple form of budget which you can modify to meet your needs. You fill out the budgeted figures prior to each year, enter the actual at the close of each month. The "cumulative to date" lines tell you whether you are living within your means or falling behind, whether you have too much month at the end of your money.

The Habit of Saving If our forefathers had consumed all they produced, there would be no automobiles, no refrigerators, no supermar-



kets. We would be living as primitively as tribes in Africa. For it is savings which have created factories, railroads, utilities and other facilities which make possible our modern standard of living. These savings have been made by individuals like you and me. They were willing to sacrifice immediate satisfactions in contemplation of continuing future satisfactions. Your problem of saving is no different from theirs.
At one time I worked beside a man who was earning $200 per month and living beyond his means. He used to tell me, "I could go ahead on $300 per month." Today he holds an executive position with a large company, earns $2,000 per month, is still up to his ears in debt. He has never developed the habit of saving.

In your life, genuine financial opportunities will open up from time to time. Most of them will require you to invest some of your savings, at slight risk, for possibilities of large gain. If you have no savings these opportunities pass you by, to be snapped up by others who were more prudent in handling outgo versus income. Moreover, "into each life some rain must fall." The chances are high that some catastrophe will occur in your life, something that will demand a large sum of money. At such time, if you must borrow on your house, car, life insurance policies, the interest will put you even further behind the fate-ball. If you have the money available in a comforting savings account, you can avoid the interest hindrance.



"A Merry Heart"

You must not, however, go to the other extreme. Life is meant to be enjoyed, not merely to be existed.
I know an executive who lives only for his old age. He and his wife deny themselves the normal pursuits of his social group; they keep talking about retirement, security, the house they will build some day. Poor fellowhe has worried himself into such a state that I doubt he'll ever live to reap the harvest of his frugalityor, if he survives, that he will be capable of enjoying anything.

This kind of planning, saving, security, rainy day thinking is wrong, because it is extreme. By denying the joy of present living, it precludes the joy of future living. The

brownish moods it induces depress all body functions, invite illness. Better to live modestly than to exist miserly within your income. This is not new knowledge. In the Book of Proverbs, you will find psychosomatics stated very succinctly: "A merry heart doeth good like a medicine."

High Lights
1. Economic security can be helpful in your program of development. 2. When you face a problem you can attack it, defend yourself against it or flee from it. 3. Life insurance can build an estate for you at minimum cost. 4. Continuing inflation, however, can minimize your se-



curity from life insurance or other fixed income investments. 5. Income through capital gain is an important way to enhance your wealth. 6. Installment buying of luxuries can keep you poor even though you seem to have a lot of possessions. 7. Use a budget for your personal finances. 8. Build the habit of saving. 9. Avoid such penny pinching that you can't enjoy life.

After your security program has been established, you need to consider how to invest wisely. Stock market and other investment factors are considered in Chapter 13.



Your Surplus Cash

If you make progress in the business world, you will reach a point where you will have some extra dollars to invest. The wisdom of what you do at this time may pay off handsomely in the years ahead.
In 1955 Buzz Bater was retired on half his former salary as credit manager for a medium sized oil company. Now he had time to maintain the stock market data and charts he had worked on for many years, while accumulating stocks which had cost him about $50,000. Early in '56 his charts began to show "sell" signals; he sold everything for $70,000. Over the next year he traveled extensively, using some of his $20,000 capital gain. In early '58, after an 18-month decline in stock prices, his charts began to give "buy" signals, so Buzz bought the same portfolio for $50,000, saw its value rise to $75,000 within another 18-month period. You might think Buzz was just luckybut you would change your thinking if you knew how Buzz had been analyzing stock market data over a twenty-year period. His economic safety was no accident.



One of your fundamental decisions deals with the likelihood of inflation. Compared with 1939, the U.S. dollar has lost about half of its purchasing power. This same process has affected virtually all civilized nations, most of them more than the United States.

Inflation Ahead? You must decide for yourself which one of the following four is likely to happen: 1. A runaway inflation. This occurred in Germany after the first world war, and reached such dizzy heights that it cost a hundred thousand marks to send a small parcel by mail. A situation like this might conceivably arise in our country if an atomic war with its destructive power were to start. In such a situation the dollar would buy less and less of more and more, oftener and oftener. 2. Creeping inflation. This would mean that prices would continue to rise faster than productivity. As a con sequence the dollar would gradually purchase less and less. Such a creeping inflation has been compounding at a rate of about 2.2% per year, causing people to say, "Buy, buy stocks or bye, bye dollars." If the current rate of inflation continues, the purchasing power of the present dollar will be cut in half in about 35 years. Thus, if you bought an annuity which was to pay you $200 per month effective 35 years from now, you would then discover that its purchasing power was equivalent only to what $100 per month would buy you now. Suppose that in 1948 you had had $1,000 loose cash.



Here's what it would be worth in 1959, under two different conditions:

Interest Dividends Value of Capital Total

1. You had put it into a

savings fund at 3%; also saved the interest 2. You had bought blue chip stocks; rein vested the dividends $383 $1,000 $1,383




Dr. J. Sterling Livingston of the Harvard Business School, writing in the Harvard Business Review for March-April, 1958, says:
The hour is late and the need is great. American capitalism can be priced out of the market by high costs, but, more than that, capitalism, unless it conquers inflation, can become non-competitive in the global struggle for men's minds and hearts. 3. Stabilization of prices. Under this kind of economy, improvements of productivity resulting from mechanizetion and mass production would just about offset increases resulting from wage demands of labor, price rises by man agers, and political manipulation of money and credit. 4. Deflation. Each major war in the United States has in the past resulted initially in a sharp upswing of prices, followed by a postwar long and steady drop in prices. How ever, we have not seen such a price recession after World War II. Some economists believe that this is the result of the Korean war and the cold war with Russia and China, but that eventually stability in world affairs will be achieved, and when it is reached the expected deflationary forces will assert themselves.



However, most economists currently believe that the near future will yield a succession of stabilized prices followed by creeping inflation; that neither sharp deflation nor runaway inflation seems to be on the horizon. If you subscribe to such a belief, you will want to put your extra cash into some kind of hedge against the future. A hedge is something you buy which will go up in price along with any rise in the general level of prices. The principal hedges available to you are commodities, real estate and securities.

Hedges The usual hedges in commodities are gold, other basic metals, diamonds and objects of art. All of these demand considerable specialized knowledge and are scarcely recommended for your consideration if you lack that knowledge. If you contemplate purchase of real estate as a hedge against the future you should think first of resort and waterfront property, next of commercial and industrial property. Residential, farmland and timber land are normally subject to hazards that you may wish to avoid. Remember that a real estate broker will always say a lot when you ask him what to invest in! If you believe that sharp deflation lies ahead for our country, you might want to consider preferred stocks, mortgages or non-callable bonds. On the other hand, if you are endeavoring to hedge against a probable creeping inflation you may wish to consider common stocks or convertible debentures (which can be converted into common stocks).



The best security hedges would seem to be stocks of companies selling necessities (such as food), which companies can readily raise prices to keep up with the cost of living; banks and finance companies; corporations that seem to have sure expansion ahead of them (so-called growth companies). Other possibilities are concerns producing essential raw materials and those having low labor costs.

How Much Risk Can You Afford? If your aim is to put extra cash into the stock market, you must determine the degree of risk you can afford to take. Realize that money can be lost in more ways than won. Investments are normally classified as: 1. Speculative. 2. Enterprising. 3. Conservative. If you have large funds to invest you can, of course, apportion them among the three and treat each portion separately. If you wish to speculate you will be willing to take long risks, will buy and sell frequently, will make large gains and suffer large losses. You will seek capital growth and/or generous income. You may not believe in Santa Claus but you will be convinced that you can beat the stock market. The enterprising investor watches the market for trends, is more interested in capital gains than high yields.



If you are a conservative investor you will seek safety of your principal, will be willing to accept a moderate rate of return for that safety and normally will hold securities for a long time. A given stock may be subject to short up and down movements, to intermediate swings which may last for some weeks and to long-time trends which may last for quite a few years. It is roughly true that the speculator is interested in the day-to-day fluctuations, the enterprising investor in the intermediate swings and the conservative investor in the long-time trends. If you are typical of most executives you fall in the second group, that is, you are interested in the intermediate swings, are willing to buy and sell stocks as they change with those swings. The suggestions which follow are based on the assumption that you are this kind of investor. They would have little applicability if you want to be a speculator or if your concern is for long-time trends and safety. One of your prime considerations should be industry selection. You want to do your investing in sound growth industries and companies which will participate in the growth of the country, earn increasing dividends with that growth, provide relative security in periods of deflation. Additionally you want to derive some tax advantage through capital gains rather than income from large dividends. The stocks of some industries are cyclical and volatile; they move up and down with considerable rapidity. These prince-or-pauper industries normally have heavy capital investment, as in rails or steels. Others are relatively noncyclical, like food, drugs, shoes, petroleum products and



utilities. Moreover, when the stock market average is rising, the stocks of certain industries may lag behind that rise and the reverse can be true when the market is falling.

Yield or Capital Gain? In selecting individual stocks you must decide whether you are buying principally for dividend yield or for possible capital gains. Books, and stock market services, list the names of stocks that have paid dividends for a long period of years (so-called aristocrats of the stock market). Other lists are available to give you information like the following: 1. Relative stability in price fluctuation. 2. High quality. 3. Depression resistance. 4. High yield. 5. Dividend boosters. 6. Stock dividend distributors. 7. Probable growth companies of the future.

Stock Market Services

Inasmuch as various services have different methods of computing these characteristics, you would do well to make comparisons before accepting the recommendations of any one. Admit frankly to yourself that you are trying to outguess the future. You will want to take into account



companies that may benefit from age changes, regional population shifts, public works improvements, military developments, new inventions and adequate top organization. Obviously you have to put them together as a jigsaw puzzle and make up your mind as to some of the companies in which you are interested for investment purposes. I commend to you a $3.00 paper-bound book entitled Your Investments, by Leo Barnes, American Research Council, Inc., Larchmont, N.Y. Once you are on the investment counselors 7 mailing list, you will be besieged with a bewildering array of statistical services, each one implying that it has developed a highly accurate method of outguessing the future performance of the stock market. Their statistical departments will uncover stocks of companies that are selling below net asset value, reveal low price /earnings ratios, have low labor costs, are closely held by officers or own sizable chunks of other well known companies. These services will inform you of stocks that are selling well below previous prices, are long on cash, have diversified lines, have major foreign investments or interests, etc.

Two Significant Ratios

Ultimately you will be barraged by such a mass of literature on this subject that you will become confused, will not know which way to turn. Here are two suggestions which may help: 1. The price of a stock tends in the long run to be adjusted to its earnings and dividends. People are interested



in what return they can get on their money and hence are interested in the price/dividend ratio, that is, the price of the stock divided by the annual dividend. Experience shows for the market as a whole, using the Dow Jones industrial average as the index, that when an investor has to put up $30 to get $1 of dividend (yielding a 3.3% return on his money) the price of that stock is not likely to go much higher; conversely, when he can get a dollar of dividend for a $12 investment (8.3% return) the price of that stock is not likely to go much lower. Figure 14 shows how the price/dividend ratio has fluctuated between the (approximate) limits of $30 and $12 over recent decades. Because of the fear of inflation, some stock market analysts predict that this curve will remain high for many years to come. In essence they believe that the value of a stock lies in its hedge importance as much as in its yield (which is the inverse of the price/dividend ratio). 2. Of similar interest is the price/earnings ratio. Perhaps the company represented by the stock selling for $30 earned $2 per share and plowed $1 back into the business. Hence the price/earnings ratio was 15 to 1 and the price/ dividend ratio 30 to 1. The investor in this stock must take into account that he has had one dollar of earnings put back into the business for him and that the business has been increased in value by that much. Obviously a large plowback increases the capital value of the company and should enable it in the future to produce more and so to make more earnings and dividends. At the top of a bull market, the price/earnings ratio is likely to be around 20 (based on the Dow Jones industrial



average reported in most newspapers). At the bottom of a bear market the ratio will normally run around 9. To summarize these guideposts:
Ratios of stock data: At extreme of: Bear market (prices depressed) Bull market (prices sky-high) Price Earnings 9 20 Price Dividends 12 30

The time-honored comparison of average stock yields (dividends) to average bond yields (interest) seems to have lost some of its significance as an indicator of reverses in the stock market.

Other Indices

There are numerous statistical analysis approaches to stock market trends which are based on the internal behavior of the stock market itself. The most famous of these is the Dow theory, which is primarily a method for determining when a bull or a bear market has started or has ended. Its disadvantages are principally: 1. Its buy and sell signals occur months after the actual low or high point of the market. 2. Its accuracy in the last 20 years has not been as great as in the earlier years of this century. There are three Dow Jones indices: industrials, rails and utilities. Figure 15 traces the Dow Jones industrial average (of 30 blue chip stocks) for three decades following the



1929 crash. It shows the trend since 1940; other lines at 15% have been added. The index stays within these limits most of the time. If the trend continues, the Dow Jones industrial average might reach 700 in 1962; it might be as low as 600 or as high as 800. The scale of this chart is semi-logarithmic, so that a straight line like the trend shown represents a compounding percentage of growth. Three other well known techniques for judging changes in the stock market are mentioned briefly below: 1. Ratio of stock advances, daily, to total of advances plus declines. On a stable day this figure would be 50%; more on an advancing market, less on a declining market. When the average for ten successive days is 60% or more, it is a "sell signal"; when 40% or less a "buy signal." Most stock market forecasters like to get several confirming buy or sell signals from other indices before expressing an opin

2. Volume of shares traded. The theory is that prices rise when the demand for stocks at a given price level is greater than the supply. Hence, market strength is shown by: a. Volume increasing from day to day as prices rise. b. Volume decreasing as prices fall. Market weakness is indicated by the reverse: a. Volume increasing from day to day as prices fall. b. Volume decreasing as prices rise. If you use this index, maintain a curve showing the moving average of ten successive days to iron out the daily gyrations.



3. Odd lot sales. Small investors frequently buy less than 100 shares at a time; this purchase is an "odd lot." The theory is that the general public climbs aboard a rising market when that market has almost reached its peak, when professionals are quietly disposing of their holdings. Conversely, the odd lot holder becomes frightened when his holdings drop severely in price, sells at a time when the low market is about to reverse itself. In essence, an index of odd lot sales (as a percentage of total stock sales) is supposed to indicate to wiseacres what not to do. Barrons Weekly provides much basic data if you wish to maintain data or charts on stock market behavior.

Gross National Product The gross national product represents the total value of goods and services produced in our country. As Figure 16 reveals, there has been a good correlation between gross national product and the stock market since 1929. It has been estimated that, based on present trends, gross national product will be: By 1965$575 billions By 1970- 604 billions By 1975- 634 billions If you believe that these estimates are likely to come true, then it seems probable that the stock market average will likewise continue to grow (with an occasional set back!).



High Lights
1. Start early upon a sound investment program. 2. As you foresee inflation, deflation or price stability ahead, plan your investments accordingly. 3. Most economists believe that creeping inflation will continue. 4. You should compare possible "hedge" investments. 5. Decide how much risk you can afford. 6. Decide whether primarily you want yield or capital gain. 7. Learn to use various indices of stock market perform ance. 8. Ride the future with America's growth.

The time to think about your retirement is long before you have to, while your earning power is high. How to make retirement a natural evolution instead of a dreaded shock is outlined next.



Look Ahead Now is not too soon to consider what kind of a person you will be in your later years, when you'll have time on your handsand face. What kind of a life will you be able to lead, physically, socially, economically? Look around you at people in their sixties or seventies. You will find a wide gamut of health, success and happiness. The living habits you build now may well determine whether your ripe years will be restless and listless or restful and zestful. These habits may decide whether your later life will witness the satisfaction of well rounded accomplishmentor the broken fragments of youthful dreams at your feet, like shattered Christmas tree ornaments. The Institute for Human Adjustment of the University of Michigan made a survey of the problems of older people. As a result it listed seven basic needs: 1. Financial security. 2. Health, comfort, illness insurance. 3. Satisfactory living arrangements, preferably not with children.



4. Being useful. 5. Companionship. 6. Activity. 7. Religion. In looking ahead in your life to autumn (winter, too!) you need to plan the following: 1. A long term health program. 2. A retirement income program. 3. An activity program. Your Health Program Ever hear your doctor speak of "muscle tone?" It means a firmness of muscles, brought about by repeated use. But the physician knows that as by-products of muscular activity you have enjoyed increased blood circulation, more oxygen, more blood sugar, better digestion, happy emotions. You have warded off tensions, fat tissue, artery-clogging cholesterol and painful calcium deposits. Medical researchers are firmly of the opinion that daily muscular activity is necessary for the maintenance of health. And the more muscles used, the better. Dr. Frederick C. Swartz, a specialist along these lines, puts it this way:
"Physical exercise, begun early in life and continued into the advanced years, is capable of delaying the physical stigma of aging, and of prolonging life expectancy as much as eight to ten years."

In fact, if you want to avoid shaky hands, a tottering gait, bursitis, fibrositis and a lot of other "itises" in later life, you'll do more than your daily dozen.



The lesson is plain: Keep muscles active. Even that statement is not fully correctlet's write it right: Keep all muscles active. In essence, if you keep your muscles alive, they'll keep you alive. Fail to use them and they'll tend to atrophy. So will you. Of course your health program involves more than muscle activity. The next three chapters of this book discuss various contributors to health. Many Americans find success easy to come by. But, for muscles, success is hard work.

Start Early

You cannot hope to lead a sedentary life to the age of 65, then suddenly change your mode of physical living and become spry as a clockspring on the loose. You can hope to be highly active in your twenties and gradually lessen the vigorousness of your regular exercise with each succeeding decade. Then when you're 65 you will have a trim figure, tough musculature, an erect posture and other evidences of virility. Physical activity needs to be part of your plan. Walking, swimming, recreational exercise, formal exercisethese helpful habits must be built up now, if they're to be of value to you later on. Otherwise you may find that middle age is the time when you'll do anything to feel better except give up the habits that are hurting you.



Your Retirement Income

How much income will you need when you retire, or in your later years? This is an individual problem which you will have to decide for yourself. Here are some factors you should take into account: 1. Social security benefits. Since the Social Security Law was passed, in 1935, important and liberalizing changes have been made in it. Here are highlights of the Law, (as of January 1, 1959) but you should keep alert to added modifications as they are made: a. Tax is 3% of employee earnings, for both em ployee and employer (4% by 1969). b. Tax is paid on the first $4,800 of annual earnings. c. Typical benefits are:
Average Monthly Wage while Working 100 150 200 250 300 350 400 Monthly Benefits 59 73 84 95 105 116 127

d. When the wife of a retired worker reaches 65, she receives a sum equal to 50% of her husband's benefit (40% if she retires at age 62). e. Additionally, the law provides benefits for widows, dependent children and parents of deceased workers; for disabled workers themselves; for burial expenses. f. Between the ages of 65 and 72, your monthly bene-



fit is payable in any month in which you earn less than $100. Note that income from investments (dividends, interest, rents, insurance policies) or from company pensions does not count as "earnings" here. Thus you might earn in employment $1200 a year, derive income of any amount from investments or company pension, and still receive your social security benefit. Of course you may be able to foresee some kind of occupation which, after 65, will bring you in considerably more than $1200 plus your social security benefits. (After you are 72, you will receive your social security benefit regardless of how much you can earn in employment.) But it is good planning to assume that you may have to, or want to, take that social security check every month. 2. Purchased annuities. You can build up a retirement income for yourself by taking out annuity policies with a life insurance company. This approach may be indicated if you are in business for yourself, if you work for a company which does not have a pension plan or if you have changed jobs so that you will not qualify for a pension. 3. Conversion of life insurance policies. Perhaps you will carry a large amount of life insurance while your children are growing up. Once they are established, you may wish to convert some of your policies to retirement income, pay able at age 65 or even 60. Make sure that any life insurance policies you buy give you this option. 4. Company retirement benefits. If you work for a company which has a retirement plan, you can probably figure out approximately how much income you will receive from this source by the time you reach retirement age.



5. Investments. We touched upon this subject in Chap

ter 13. How much will you be likely to have invested by the time you are ready to retire? Better figure no more than 5% return, and allow nothing for capital gain, stock dividends or stock splits. If these last happen in your in vestment future, goodbut don't depend on them. 6. Continuing income from your present business. If you have a family owned business, a partnership or even a sole proprietorship, you may be able to work out some ar rangement which will continue income for you even when you are no longer active in the organization. If you are in a partnership, study the feasibility of partnership insurance to protect each partner in the event of death of another partner.
Suppose you develop a profitable business. At age 65 you turn over its operation to a son, or a son-in-law, but remain the owner of record. The courts have held that you would be entitled to receive profits from the business but would also be entitled to social security benefits. If this situation fits your case, discuss it with your lawyer.

7. A retirement activity. Sometimes retired men can locate a job, or set up a new type of business adapted to their physical ability or retirement location. Many a man has prepared himself for this eventuality while active in his normal occupation, either by training or by setting up a part time business. Others have converted hobbies into sources of income.



Your Program

All these suggestions are designed to cause you to take a hard look at your own probable situation. After that look, lay some long term plans. You might plan your retirement budget as follows:
Company pension Investment income Employment income Social security benefit (self) Social security benefit (wife) Total ? per year ? " " 1200 " " ? " " ? " "

Here's what has happened to 100 men, aged 25, by the time they are 65: 31 have passed on 2 are really wealthy 3 are well-to-do 3 have some savings 4 are same economic status as when 25 6 are living hand-to-mouth 51 are being supported by relatives In which group will you be?

Your Older Age Activities

If you're fortunate, old age is something that may happen to you. The things you are able to do in your later years may necessarily be limited by your income. But what you would like to do then will largely depend on four kinds of aging:



1. Physiological, which we have discussed. 2. Intellectual. 3. Social. 4. Emotional. Some men start to age intellectually as soon as they leave school. They solve no more problems, master no new subjects, accept no mental challenges. Their reading is limited to newspapers, popular magazines, an occasional novel. Other men, their minds more zealous, will tackle new areas of science, master a foreign language, enroll in formal study. The latter will probably still be intellectually curious at sixty or seventy. Social relationships, too, reflect the habits of early years. If you avoid people when you're thirty, you may be a recluse when you're sixty. People, like coins, tarnish when not in circulation. On the other hand, if you learn early to seek people out you will not want for real friends late in your life. You cannot be a worry-wart, a milquetoast or a hate breeder for two-thirds of your life, then suddenly find peace of mind. Instead, you will be like the child who chases a butterfly into a forest, becomes frantic when he realizes that he is lost in the maze of trees. Emotional deterioration is the surest, and saddest, sign of oncoming senility. Harping on your aches and pains, retelling thrice-told tales of past glories and grudges, overtalkativeness, new-found timidities, vain regrets, futile anxietiesyou see the signs all around you. Yes, you see the signs in thembut can you recognize any incipient signs in you?



Your Attitude Toward Aging

Gerontologists who study the problems of older people tell us that a person's attitude toward the four aging factors in itself can speed up or slow down the old age processes. Since attitudes, like plaster of paris, are hard to change once they're set, it is highly desirable that you mold the right attitudes toward aging while you are young. Believe that you are going to keep your muscles active, and take steps accordingly. Keep learning all your years. Keep in contact with people, especially in situations where you are helping them, needed by them. Make new friends, join new groups, to avoid hardening of the social arteries. Cultivate faith and serenity to drive out hate, fear and guilt. Look forward, not backward. Believe Andre Maurois when he says: 'The first rule for happiness: avoid too lengthy meditations on the past." If you do these things consistently they will become living habitsit will be easier to do them than not to do them. And you will be setting a wonderful stage for zestful living in your later years.
Should You Retire?

Some men dread the thought of retirement. They see themselves as aimless, drooling, unwanted putterers, waiting around to shake hands with Death. Others welcome the idea, look forward to long-desired reading, to travel, to hobbies, to restoration of companionship with their wives. Generally, these men will lay retirement plans long in advance of the actuality.



Still others give the matter little thought. Financially, they see little likelihood of planned retirement. If it comes by virtue of age or physical impairment, they are likely to be mentally and emotionally unprepared for it. Experience shows that most men who are forced to retire from their normal pursuits, whether by circumstance or employer action, undergo a period of emotional travail. Some never emerge from this period, go downhill to senility. Others make the necessary adjustment to relative inactivity or find other business and civic activities which prove satisfying. A few men find themselves busier in retirement than ever before. Of course, Society is inconsistent when it retires businessmen at 65 but retains judges and legislators as long as they can totter. It seems that one or the other is wrong. Psychologists believe that it is best that men and women engage in some kind of useful work as long as they are physically able. This may mean reducing the kind and amount of labor as powers wane, but all of us want to feel needed and useful. Plans for your own later years must be highly individualizedbut you should make them. And remember that your attitude toward this, your problem, is extremely important.

The Problem in Your Company

In 1850 the average life span was 40 years; today it is 70. In the United States we have more than 16 million people who are 60 and over.



Most companies have an older worker problem, but few have faced up to it squarely. Herein may lie an opportunity for you to make some sound recommendations to your management. Here are some thoughts you may want to explore: 1. Age is physiological, not chronological. Hence, older workers should be given a thorough physical examination and their cases reviewed by a retirement committee. 2. Lighten the physical or working conditions and haz ards on older men, either by job content changes or by transferring employees to lighter jobs. 3. Lighten the responsibility and decision making de mands on men no longer able to assume them. 4. Lighten the output demands on those whose work is largely muscular skill or dexterity. 5. Analyze company jobs to determine which could be performed by employees who are in process of "stepping downward." 6. Workers who should be retiredshould be retired; but they need something to live for. 7. Several years before you expect to retire an employee, have him counseled by an informed and emotionally ma ture executive. 8. Retire a man to something, not just from something. Help him to prepare for some retirement occupation. Some companies have been able to train retirees as converters, sub-contractors, retail outlets or service men for products. Old dogs can learn new tricks; it just needs a competent trainer.



High Lights 1. In preparation for your later years, embark on a long term health program. 2. Plan for adequate retirement income, even if it involves sacrifices during your high income years. 3. Keep your mind active through study, reading and problem solving. 4. Build social habits which will endure into your later years. 5. Establish positive thinking (emotional maturity) in your present years; it will serve you well later on. 6. Believe that the things you do to keep you young, will 7. If you don't want to retire, try to keep going. 8. If you do want to retire, prepare yourself for it. 9. Help your company solve its problem of older workers.

Retirement or middle-year living without abounding health can be frustrating. The three chapters which follow suggest ways to hold a high level of physical energy.



Food Elements

Despite an outpouring of articles on proper diets, one person in four eats improperly. Fifty million Americans can be wrong! Without trying to become academic on the subject, let's take a quick rundown on the elements your body needs from the food you eat, and the foods best designed to supply them. Your body needs the following elements: 1. Water: for tissue building; digestion; removal of waste products; replacement of evaporation losses. 2. Proteins: for building muscle tissue; folic acid and iron to form red blood cells. 3. Vitamins: A: for healthy skin, eyesight, teeth. B1: for appetite, nerve health, physical courage. B12: for red corpuscles. Other B vitamins aid digestion and complex body chemistry. C: for firm gums, skin, red corpuscles; helps resist colds.



D: helps body absorb calcium and phosphorus for strong bones and teeth. G: for growth, vigor and youthfulness. 4. Calories: for energy, supplied by fats, sugars and starches as well as by proteins. 5. Minerals: such as iron, calcium, phosphorus and sulphur. These are needed for bones, teeth, hair, fingernails, muscles, nerves and red blood, and for much body chemistry.
Balanced Diet

The Council on Foods and Nutrition of the American Medical Association recommends that the normal adult should consume every day the quantities given of the seven kinds of food listed in Figure 17.
Breakfast Is Served

Breakfastmost important meal of your day. Do you skimp it, get a snack lunch, then stoke up at the evening meal? Experiments at the University of Chicago proved that if you follow this regimen, your body, while you sleep, converts much of that big dinner into fat instead of energy. University of Iowa scientists found further that skimpy breakfasts caused lowered productivity, decreased mental alertness, increased fatigue and susceptibility to accidents. They concluded that breakfast: 1. Should provide at least one quarter of the daily food requirement.



2. Should include fruit, cereal or eggs, milk, bread and butter. Some Eating Notions Want to try a little test on eating habits? Check this list, then read the answers supplied by authorities.
1. To reduce your weight, exercise is more effective than dieting. 2. Four or five small meals per day would

be the better same than quant

ity of food in three meals. 3. Your most important meal is breakfast. 4. Eating a snack before going to bed makes you sleep better. 5. When you're very tired, you need a large meal. 6. It's better to nap before meals than afterward. 7. Persistent over-eating makes you crave large meals. 8. You are more likely to be irritable after, than before, a meal. 9. Fat people actually eat less than thin people. 10. In hot weather you should consume less than normal. Here are the authoritative answers:





1. 2. 3. 4. 5.

False True True True False

6. True 7. True 8. False 9. False 10. False

Did you have seven or more correct answers?

Girth Control Flat feet, eh? Pain in the back? Pot belly? Do you excuse them as occupational diseases of a sedentary executive? Could also be that you haven't been practicing girth control. It's legaland is done by the best of executives. It's violated, too. It even seems that some executives go out of their weigh to put on flesh. They sit too long at the table in pursuit of happiness, confirm the definition of an adult as a person who has stopped growing except in the middle. Overweight, especially if you're past forty, is likely to accentuate many diseases like arthritis, heart ailments and high blood pressure. In trying to avoid the exertion required to lug around a few spare tires, stout folks get the reputation of being lazya tough reputation for any executive to surmount. No fun in attempting the survival of the fattest, after you've made your stomach into a waist basket. Americans usually get too much food, too little balanced nourishment. They take their daily exercise with a knife, fork and spoon. They are pepless, jittery, under parfre-



quently suffer backaches, headaches, nerveaches, tummy aches, muscle shakes and illness breaks. They pop vitamin pellets into their hapless stomachs on top of bicarbonate of soda, on top of aspirin; often stuff themselves with food in the vain hope of satisfying basic deficiency hankerings which they mistake for normal hunger. Improper diethungerovereatingoverweight: there's the vicious circle. Overeating can also be a "compensation" for emotional pressures. Some folks drown their troubles in alcohol but others try to bury them in creampuffs. They eat like birds: a peck at a time! If you want an illuminating lesson in overweight, stuff a briefcase with books and carry it around with you for one hour. See how you feel. That may be the rough equivalent of putting on twelve pounds in weight. How would you like to tote that briefcase around sixteen hours every day?

Overweight Kills There's a killer loose in the land. His name is overweight. He wields the Scythe of Complacency, mows 'em down with various degenerative diseases. So far, no one has developed any better method of slimming than the simple expedient of reducing the intake of food, especially of fats, sugars and starches. Exercise may convert flabby fat to mighty musclesbut it may also make you mighty hungry. And reducing drugs have their dangers as well as their inadequacies. As an example of exercise versus dieting, here are two. ways to reduce:

212 Amount reduced

YOU CAN DIG YOUR GRAVE WITH YOUR TEETH By exercise Climb 320 steps Do 2800 push-ups Walk 36 miles By dieting Omit 8 highballs Omit 6 candy bars Omit 8 portions of pie a la mode

pound pound
1 pound

Your Proper Weight

Are you overweight? Check this table of normal weights for men:
Height in inches Small 118 lbs. 121 1 24 1 27 131 1 34 1 38 142 1 46 1 50 1 54 1 58 1 64 1 70 178 IF YOU HAVE A FRAME WHICH IS Medium Large 126 lbs. 12 9 132 135 13 9 142 14 6 15 0 15 4 158 162 16 6 172 17 8 18 4 134 lbs. 137 140 143 147 150 154 158 162 166 170 176 1 82 188 194

60 61 62 63 64 65 66 67 68 69 70 71 72 73 74

The smaller your waistline, the longer your lifeline. Studies made by the Metropolitan Life Insurance Company show that overweight yields higher death rates:
Approximate Percentage of percentage of death rate overweight ___________________________above normal ______

20 30 50

33 50 100



Overeating puts a recurring burden on the digestive tract, heart, liver, kidneys and circulatory system. If your calories of energy expenditure fall short of your calorie intake, you will start to put on weightone pound for each 3500 calories excess. Here are some typical calorie values:

Canny old Ben Franklin had a daily exercise which he recommended for reducing: "After a single helping/' he advised, "and before the dessert is served, place the hands firmly on the edge of the table, and push hard."

Overweight and Heart Disease Heart disease is the No. 1 killer in our country. One kind of heart disease (atherosclerosis) involves a narrowing of artery walls. It leads to high blood pressure, coronary thrombosis and strokes. Doctors believe that the narrowing results from accumulation, on the inside of the walls of the arteries, of a fatty substance known as cholesterol. It's getting fat, not just eating fat, that builds up cholesterol deposits. You can eat your way into heart



trouble with any kind of diet input that contains too many calories.

Unrecognized Hunger

If you never eat eggs, or butter, or never drink milk, or despise vegetables, you may be creating vitamin or mineral deficiencies which can upset the chemistry of your body very seriously. Should such a condition arise, you may suffer a long period of dragged out existence until some doctor comes to realize what is basically wrong with you. The time-honored slogan, "Tell me what you eat and I'll tell you what you are/' contains a lot of wisdom. Eating a variety of foods is not necessarily a guarantee that your body will get the proper amounts of the right kind of needed vitamins, minerals, proteins, etc. It depends largely on the richness of the soil which grows the fruits and vegetables you consume; or the greens eaten by the animals and fowl that yield milk, meat and eggs for your diet. Additionally it may depend on the freshness and cooking of the foods you eat. If you suspect that you are the victim of poor-soil foods, try one of these solutions for a three-month period: 1. First choice: Grow your own vegetables and fruits in soil you have enriched with fertilizers and composts. 2. Second choice: Get these foods from a local farmer who regularly enriches his soil. 3. Third choice: If neither of these is feasible, take multiple vitamin tablets for the three-month period. At the end of three months determine whether you



are healthier than before. If not, your original food sources were probably adequate for your body's needs. In this event your varied diet should supply you with all the elements you need and you should not have to continue vitamin pills.

The Guards at the Portals

Your teeth can help dig your grave, not because of the food they masticate, but through neglect and infection of the teeth themselves. Harmful conditions may result from failure to brush properly and frequently, absence of bridgework where a tooth has been extracted, crooked teeth, bleeding gums and indifference to cavities. Neither dental bills nor drills are pleasant. But if you will "see your dentist twice a year," you may avoid vitality-draining infections, painful nerve aches and digestive problemsnot to mention lost time from your job and loss of drive for advancement.

Your Health, Sir

No, it's not a toast to quaffit's a question to be solved. To get the greatest benefit from this and the two succeeding chapters, fill out and score the Health Factors Rating Scale (Figure 18). Are you satisfied with your scores on relaxation, exercise and freedom from handicaps, on health habits and foods?



Figure 18 Rating Scale on Health Factors

Below are 50 traits important to your health Perhaps you can get someone who knows you well to make these ratings, or at least to check your self-rating. Rate each trait by encircling one of the three possible ratings.

Item No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

: Satisfactory or better. ? : Average, usual, not known or not applicable to your job. : Unsatisfactory or deficient. TRAIT Gets sufficient sleep Likes fresh air Has no arthritic trouble Careful as to personal cleanliness Eats plenty of greens and vegetables Has a relaxing hobby Gets regular exercise No lung trouble Careful about adequate lighting Avoids starchy foods in excess Plays games for relaxation Is energetic Free from neuritis and neuralgia Has on erect posture At least one glass of milk daily Laughs readily Engages in physical sports No speech impediment Seldom uses alcohol to excess Likes meat, fowl, fish Rarely gets excited Requires very few drugs No liver or gall bladder trouble Gets annual physical examination Avoids excess sweets and sugars Takes time out far occasional rests Likes to walk No allergy or asthma Enjoys bowel regularity Eats leisurely Avoids muscle tension Has physical endurance No stomach ulcers Drinks plenty of water Does not overeat Rating

+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +

? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?


Item No.


36 37 38 39 40 41 42 43 44
45 47



Attends church regularly

46 48 49 50

Gets plenty of sunshine Free from back weakness Sensible clothing in varied seasons Likes to eat various fruits Likes to sing aloud Does not fatigue easily No physical impairment Is a light (or non) smoker No problem of indigestion Tells jokes and anecdotes Rarely has headaches No kidney disease Takes good care of teeth Not overweight for height

+ + + + + + + + + + + + + +

? ? ? ? ? ? ? ? ? ? ? ? ? ? ?

After the rating has been completed score it by allowing the following points: +:2 ?:1 :0 Total the points for items: 1.6..1,16,21,26,31,36,41,46 " " " "exercise" " Score to get a score for "relaxation" " "
" ""
" "freedom from handicaps" " " " "food" Total " " " " "health habits" 5,10,15,20,25,30,35,40,45,50 " " "

Since each of these five categories has a possibility of 20 points you can readily note areas in which you are weak. You can interpret your total score by reference to the following table:
Score Significance for executive success

0 to 44 45 to 64 65 to 73 74 to 85 86 to 100

Very poor Poor Fair Good Excellent

High Lights
1. One person in four eats improperly. 2. You should eat a balanced diet daily.



3. Breakfast is probably your most important meal. 4. Overweight aggravates numerous diseases. 5. The only sure way to reduce weight is to reduce your food intake. 6. Impoverished soil can yield inadequate fruits, vegetables, milk and meats. 7. Take proper care of your teeth.

A varied and adequate diet alone will not guarantee vibrant health. Good living habits, discussed in the next chapter, get the "mostess" from your calories.



Health and Energy Both health and energy are important. They generally go together, since true health exists when your normal physical life is carried on at maximum vigor. However, some seemingly healthy persons are not energetic. Vice versa, too. An old English maxim states that "a hale cobbler is better than a sick king." If you have ever been seriously ill, or have had members of your family who were afflicted, you understand how important health is to progress and happiness. Most successful people seem to be tireless. We envy them their energy without trying to understand its source. You can enjoy both better health and greater energy if you will seek them intelligently. Medical science has added appreciably to man's span of years, but this alone would be a dubious gain; it is a longer life of energetic living, of useful activity, which most of us want. Fortunately, medical research has, within the last ten years, contributed



important knowledge on emotion power as a source of energy. Accordingly, this chapter will consider how you can: 1. Improve your health. 2. Increase your energy.

Health Factors

In the previous chapter, we discussed the part which food plays in maintaining health. Additionally, we shall here consider: 1. Fresh air and sunlight. 2. Clothing. 3. Posture. 4. Good health habits. 5. Physical handicaps.
Fresh Air and Sunlight

Sit in a closed, crowded room for several hours and you will soon come to realize the importance of a proper supply of oxygen (fresh air) to bodily functioning and clear thinking. Most of your mental and muscular activities are dependent on a continuous exchange of waste products for oxygen and blood sugar. Overheated air reduces the relative moisture content and dries up the mucous membranes of your body, so invites head colds and other ailments. Extremely cold air forces body adaptations which can be harmful if prolonged, or if you are not accustomed to them. Hence, if you want to maintain an above average living rate, try to breathe fresh air of proper temperature.



Exposure of the skin to sunlight is another health-giving device. It prevents vitamin "D" deficiency, aids in calcium absorption and promotes skin resistance to infections. However, overexposure, resulting in extreme tan, tends to reduce the ability of the body to absorb the beneficial ultra-violet rays.

At 98, your body is almost always warmer than the surrounding air. Clothing controls the loss of heat from the
body. In summer you want light weight, loose fitting garments to speed up the heat loss and to permit evaporation of perspiration. In winter you should have warm clothes and bed blankets, but preferably light weight and porous. Sleeping room air temperature should be cool, but not cold. Men who wear too much clothing in hot summer and women who wear too little clothing in winter put different kinds of tax on their bodies, tend to force difficult body adaptations.

Many foot, leg and back pains result from faulty sitting and standing posture. When combined with insufficient exercise and overweight, faulty posture adds to formation of a pot belly, This in turn is usually accompanied by a displacement of stomach, liver, intestines and other abdominal organs. If you need postural correction, get advice from a competent orthopedic specialist. He will show you how to assume a correct posture, what exercises will strengthen the



weakened muscles. Restoration of posture is a slow process, so don't expect miracles. But stay with it!
Health Habits

These deal with day-to-day living and include exercise, rest, play and internal and external cleanliness as well as fresh air and sunlight, clothing and posture, which we have been considering. A few years ago, a Gallup Poll showed that 58% of Americans take no systematic exercise and that 43% of Americans do not even engage in walking outside of that demanded by their regular jobs. Soft living is not conducive to health. Man is a working machine. Failure to utilize numerous muscles, and particularly the large muscles of your body, brings about a deterioration of your whole system. Recent studies by medical researchers have yielded chemical and physiological reasons for rules of living which mankind has known (but disobeyed) for centuries. Under muscular activity, the circulation rate in your body may increase from two to eight times with resulting benefits to the entire system. Likewise, perspiration rate increases, deep breathing is promoted and various organs are stimulated. The kind of physical activity you indulge in must be related to your age and physical condition. It would be foolish for you immediately to plunge into strenuous activity. Walking, golfing, swimming and bowling are safe for most people; you can decide later on whether to go in for more active sports. Since the heart is a muscle, it too benefits from physical activity. A loafer's heart is a dangerous heart. The average employed American loses eight days per



year through illness, but suffers colds, indigestion or other maladies an additional 21 days. These figures mean that almost 15% of his working life he's under par. If this is true for you, think of the loss of effectivenessand of opportunityit can mean. The Health Research Center of Chicago, after giving physical examinations to 500 executives, reported that: 1. Only 8% had no ailments; they were all under 40 years of age. 2. More than half the group had previously undiscovered diseases including 10% heart trouble; 11% hardening of the arteries; 2% cancer. 3. All told, 92% of these financially successful men were battling some kind of physical problem. Get a thorough physical examination annually. Discuss the whole problem of health and vigor with your physician. He can tell you whether your posture is good, whether your diet is right, whether you show the results of adequate rest, relaxation, exercise and other contributory factors. He can give you wise counsel on handicaps or potential handicaps, so that you can take offsetting measures. He can tell you the status of your eyesight, hearing, metabolism, blood pressure and muscle tone. He can advise you whether you are overweight or underweight for your height and age. This one step may add years to your life, and vigor to all the years which lie ahead.
Overcoming Your Physical Handicaps

It is likely that you already have one or two handicaps which limit your physical activities or which are causing you mental anxiety. Typical would be stomach ulcers,



high blood pressure, fallen arches, skin diseases, neuritis, bursitis, sinus infection, allergies, headaches, arthritis, etc. Any one of them, if prolonged, can reduce your physical vigor, may ultimately become so chronic that in your later years you will become a burden to your family or community. Get after these conditions. Seek the best medical advice you can get; determine that you will persistently follow it to the letter. If, at the same time, you carry out some of the suggestions in the next chapter of this book, you will increase your chances of winning against whatever physical handicaps beset you. If your physical impairment cannot be cured, it must be endured; this adjustment needs strong character. Fatigue may be an insidious handicap. If you find yourself worn out at the end of the day or at the end of the week, you should endeavor to discover its cause. There is a genuine fatigue which results from too much expenditure of muscular energy. It is the kind of fatigue experienced by a man who runs a mile race and drops exhausted. Few men work at such a pace of muscular activity that they experience this kind of fatigue. The second kind of fatigue actually is a feeling of fatigue resulting from disinterest, frustration, or boredom. We'll have more to say on this subject in the next chapter.

Energy Factors

Some folks mistake energy for efficiency; others know that energy and genius are often indistinguishable.



Health and energy factors are so closely related that it is difficult to separate them. Our only justification for doing so here is that we may examine them individually. If you enjoy good health but display little energy in performing your job, you will likely not progress in your company. But when energy pulsates within you, no task is impossible. If your body is healthy you are like a powerhouse with many dynamos, waiting for the switch to be flicked on. In operating a business, accountants designate a "break even point" above which added sales yield profits. In running your life you, too, have a break even point above which added energy yields increasing success. Most people are content to exist at their break even points. The energetic honeybee creates a beehive as a monument to his industry; the resplendent butterfly leaves behind him no such testimony. We shall here consider: 1. Relaxation. 2. Sleep. 3. Environment. 4. Alcohol and tobacco. 5. Your attitudes (Chapter 17).
Learn to Relax

When muscles are contracted by nerve impulses from the brain, chemical waste products result as a by-product. Stored within the muscle tissue is a substance which immediately combines with the waste products to create a muscle activating chemical. Thus, energy is regenerated. The cycle goes about like this:



Nerve impulses plus muscle yield contraction. Contraction does work, yields waste products. Stored substances combine with waste products to form an activating chemical. Nerve impulses plus muscle (with activating chemical present) yield contraction. If you use the muscle too rapidly or too long, the regeneration cycle fails, because the stored substances are depleted. Muscle rest becomes necessary to give the body a chance to replenish the stores. Here's an experiment. Raise your right arm and bend it several times at the elbow. If you did this slowly enough you could probably do it for ten minutes or more before you would tire. Now flex it one time per second; the arm may tire in four minutes. Finally, hold it tightly flexed, so that your biceps are hard; the arm may tire in two minutes. Here's what your arm muscles did: Situation 1. Used with sufficient rest: 10 minutes of work or more. Situation 2. Used with insufficient rest: 4 minutes of work. Situation 3. Used with no rest: 2 minutes of work. When you suffer anxiety, you most likely will tense various musclesand keep them that way, as in Situation 3. Hence, you could be in bed and worry yourself into more fatigue than if you were up and about. Health comes in through your muscles, flies out through your nerves. If you consciously relax muscles, you can start up the muscle energy regeneration cycle once more. Heat and slow massage can help remove the piled-up waste products (muscle fatigue). Circulation will bring vital substances



for storage; the muscle will be rested, ready for action once more. The chances are that some of your muscles are tense right now. Can you think them down a bit? Try it. Especially when you are under emotional stress, consciously relax your tensed musclesarms, neck, shoulders, back, abdomen, legs. Get yourself as limp as an old towel. And stay that way until you feel muscle power returning. Play, watching sports, entertainment, singing, radio, television, movies, some kinds of reading, banter, uncontroversial conversation, lectures and some sermons are other muscle relaxing media.

Sleep So you can't sleep, eh? Instead of counting sheep, you find yourself counting the customers you've lost, the dollars you need for your wife's operation or the number of employees you're supposed to boss. Modern science has discovered three interesting facts which can help you get more rest from sleep, may even make it possible for you to get along with less sleep, yet wake like a giant refreshed. Worries, fears, resentments, guilts and a whole host of anxieties can keep you awake, as you well realize. But maybe you don't know that you emote with your muscles as well as with your mind. So here's: Discovery No. 1: You can't worry if you're completely relaxed.



So, if you can't will your brain to stop worrying, try willing your muscles to stop working. Do this each night you may not succeed entirely at first, but keep at it and you'll soon learn to sleep like a tired kitten. Discovery No. 2: Frequent rests slow up the accumulation of fatigue. Rests don't have to be inactivitythey can simply be something different. So take an occasional nap, visit with a friend, switch from work to play or play to work. It's the change of pace that does the trick. And the more energy you have for work, the less you'll have for worry. And now for Discovery No. 3: Most of sleep's benefit comes in the first few hours, something which Thomas Edison learned almost a century ago. Percentage-wise, the first half hour of deep sleep gives you about as much restoration as the last two hours. In practical terms, this discovery means that if you will learn to relax your fretting muscles and take frequent rests, you can find another hour each day for reading, pleasure or productivity. Who knowsyou might even out-Edison Edison himself! Here are some sleep hints: 1. Sleep in a quiet room; monotonous sounds like a clock are o.k. No sudden sounds like bus horns or elevated trains. 2. Your mattress and springs should tend to be hard rather than soft. Sleep alone, in a bed at least 39 inches wide. 3. Avoid an extremely cold, or extremely hot, bedroom. 4. Adopt regular hours for sleep. 5. Avoid dependence on sleeping pills. 6. Use the three discoveries listed above.



Control Your Environment

If you don't control your environment, it is likely to control you. Principally it consists of the physical surroundings and the people you contact. The physical surroundings may embrace lighting, glare, heating, humidity, chairs, cluttered conditions, dust, noise, distractions and other factors which can facilitate or handicap daily living. You should be interested in: 1. Your home environment. 2. Your work place. 3. Your social environment. By far the most important aspect of your home environment is the degree of love and friendliness which is present. If there is hostility or indifference, you are being handicapped by negative influences. Here are some suggestions: 1. Maybe you are contributing to the condition. Perhaps the eloquence of your arguing exceeds the energy of your cooperation. If so, refrain from criticism, demonstrating superiority, punishing remarks, sarcasm, temper outbursts, impatience, sullenness, or aloofness. On stormy days, particularly, watch out: that's when children become unruly, prisoners tend to riot, more dogs go madand you get into a quarrel. 2. Discuss with other members of the household the importance of a loving and peaceful atmosphere. They'll probably agree there is no joy living in a household which sounds like the squabbling cacophony of catbirds and blue jays. 3. Failing to achieve these after a reasonable period of time, you may be able to take yourself out of the situation, for a while at least. It is an important decision which you



should make only after all other attempts have failed, and when you are absolutely certain that you, yourself, are not to blame. Obviously, if you are the guilty one, putting yourself into some new living quarters will not help, because soon it will be much the same as before. If many of your fellow workers are unfriendly, it is more likely to be your fault than theirsso analyze your work situation carefully to determine what you can do about it. Be willing to make friendly gestures, and keep on making them. If your boss is cruel or unreasonable, and all your fellow workers feel the same way about him, you may want to seek a transfer or a job in another company. But if some workers like him, and some don't, try to get on the "liking team" as outlined in Chapter 8, "Think Like the Boss." In your social contacts seek out congenial, happy people, preferably with high standardsintellectually, socially and morally. Some adaptations to environment are essential; so are attempts to improve it. Scientists have disputed fiercely as to whether heredity or environment is more important to your success. No one disputes about which is easier to improve.

Alcohol and Tobacco

No sermons here. Let's look at these two subjects from the standpoints of your health and energy. Alcohol is a depressant, not a stimulant. It impairs memory, judgment and other thought processes, causes



loss of muscular coordination. On the positive side, it lubricates social relationships, relaxes muscles and arteries, increases blood supply to various organs and extremities. About 75 million Americans drink "socially." Five million are, or will become, alcoholics (including 700,000 women). All think, or thought, they could control their drinking. More mathematics: a fifth will go into three with none left overbut there may be one to carry. To drink or not to drink is a question for you alone to decide. If you do drink, here are two simple rules which will keep you from becoming a chronic alcoholic: Rule 1Never drink alone. Rule 2Stop with two drinks in an evening or within any six-hour period. It's excess that causes the real trouble, and this statement seems to be true for tobacco. The immediate effects of smoking are to stimulate adrenal glands, making you contentious; to increase sugar content in your blood; to give you an acid stomach or a headache; to irritate the linings of nose, throat and lungs. If you smoke more than 10 cigarettes per day, you are inviting heart or other disease; risking lung cancer; shortening your life. Again, you alone must decide whether the benefits you feel you get from smoking justify the risks to your health and energy. This chapter has mentioned many ways to acquire health and energy; also some ways to lose these essentials to happiness. Sometimes job pressures creep up on you so insidiously that you fail to recognize them for the robbers they are. Here are ten job danger signals to look for: 1. Adding weight.



2. Craving for "a drink or two." 3. Excessive smoking. 4. Muscle tension. 5. Irritability; apprehension. 6. Faster heartbeat under job pressure. 7. Insomnia over job problems. 8. Indecisiveness. 9. Avoidance of more responsibility. 10. Never caught up with work. High Lights
1. Health and energy, the static and dynamic aspects of physical living, are interdependent. 2. Get plenty of fresh air and sunlight. 3. Wear clothes suitable to the weather. 4. Sit, stand and walk with a proper posture. 5. Regularly exercise the muscles of your body. 6. Get a physical examination annually. 7. Overcome, or adjust to, physical handicaps. 8. Learn to relax your muscles. 9. Get restful sleep. 10. Select, or improve, your environment 11. Abstain from, or be moderate with, alcohol and tobacco. 12. Watch for the ten job danger signals.

'Taint workit's worry that kills. Your emotional attitudes are more likely to releaseor to depleteenergy than any other single influence. The how and why of this important subject will be considered in the chapter which follows. It will show you how to bury the hobgoblins in your life.



What Psychosomatics Means Ancient philosophers believed that the mind was a kind of thinking machine, stored in the skull. Mind and body were different, went their separate ways. Now we know that they are completely interdependent. What one does affects the other, and vice versa. The problem is not just two-sided, like opposite sides of a coin. It is more like a triangle, with physical, mental and emotional interacting in a thousand ways each day. If you are eating improperly, you cannot think clearly nor be pleasant to people. If you indulge in negative thoughts, you will generate bad emotional states which will induce indigestion and physical tension. If you suffer constant emotional frustration, it can color your thinking and lower your desire for physical activity. Our everyday experiences tell us that these three are constantly acting upon and reacting to one another. Your attitudes are the windows through which you view the world. They can play an important part in your entire



living level. If you think that your boss is unfair, that you are misunderstood by your family, that your associates are inferior people or that you should attack folks before they attack you, then you are exhibiting bad attitudes and in turn will likely suffer some resultant physical malady. A whole branch of medicine known as psychosomatics has sprung up to study the effects of the mind on the body.
Emotion Power (E.P.)

An important concept is that emotions have powerpower for good, power for evilbut power which, like the River Nile, comes from hidden sources.
During the deep depression of the 30's, an accountant friend of mine, Charlton by name, unexpectedly lost his good job. Always an energetic fellow, he immediately became a dejected, tired man. Physically, he was bankrupt. Charlton felt worthless, wondered if he shouldn't make available to his wife and three children the $30,000 life insurance he carried.

This little story is in two parts. Before going on to the second part, let's note that it wasn't Charlton's E.P. factory that had suddenly stopped production. He was producing lots of emotionall of it bad. It was his management of that factory that had walked out.
It was when his brother was paralyzed in an automobile accident that Charlton realized how lucky he was: he had his health, a fine family, a house, good friends. From that moment he started up positive production once more in his E.P. factory. He began advising neighborhood merchants on their problemsaccounting, credit, bank loans, leases, insur-



ance. Before many months he had built a consulting business which thrives to this very day. If you were to meet this active, prosperous man you would scarcely believe that he had ever passed through a slough of despond. All of us can learn from Charlton's experience because it has its counterpart from time to time in our own lives. The secret of perpetual emotion is to control it. If you narrow the focus of your attention to the frustrations which beset you, you can readily lose sight of the wonderful things which you have, of the great E.P. you are failing to use properly. Worse, you are turning that E.P. negatively inward where it savagely attacks the stomach, intestines, liver, kidneys or heart. This is the ominous warning of psychosomatic medicine.

Hormones Hormones are chemicals produced by your ductless glands. Various hormones have various jobs to do. Some are fighters resisting stress, stirring organs, muscles and circulation to high activities. Others are quieters, offsetting the exciters. Normal stressors are bacteria, viruses, blows, cuts, fatique and malfunctioning of any part of the body. In conditions caused by these stressors, Nature rushes reinforcements to the scene of battle to repel the invader or repair the damage. Fighter hormones are mobilizing emotion power. When the enemy has been overcome, Nature sends in other hormones to restore the battlefield to normalcy.



These are the quieters which allay pain, reduce swelling, heal. Negative thoughts, also, can set off alarm reactions, readying the body for fight or flight. Anger and fear have been necessary to enable man to survive against fire, flood, animals and other men. Had our forebears known no fear or been unwilling to fight, you and I would not be alive today. But apprehensions, hostilities and other anxieties which persist month in and month out can deplete the fighter hormone resources. In a sense, your whole body feels the tug of war between the fighters and the quieters; you feel "churned up." Let's take a look at some of these negative thoughts.

The Unholy Trinity When the president of a large paper company died of a heart attack, the board of directors solemnly approved an appropriation for a large tombstone. It read, "He gave a great leadership." Privately, one of the directors told me that it should have read, "He blew his top once too often."
Alf Walters was the personable, intelligent treasurer of a well known corporation. Everybody said he was the obvious one to inherit the president's mantle some day. Alf drove himself furiously day and night, year after year, to keep ahead of his rivals. One morning he didn't awaken. His easygoing, low pressure assistant became treasurer, five years later was made president.

I'll bet you can tell a few stories like this yourself. Stories of friends, acquaintances, relatives, who drowned



themselves in tidal waves of anger, hate, worry, envy, fear, guilt. Death is not the onlyindeed, not even the worstpenalty, for at least it brings surcease. More difficult to endure is the half death of arthritic ache, suffocating asthma, burning eczema, gnawing ulcers, spastic colon, throbbing migraine, high pressure dizziness, stabbing heart pain, faulty spleen. No doctor claims that all diseases result only from negative mental and emotional statesbut virtually all agree that emotions and tensions can bring on some diseases, can worsen most of them. They know that more than half the hospital beds in our country are occupied by patients suffering emotionally induced diseases.
When Art was assistant production manager he faked some cost figures which caused his boss to be fired. Art was promoted to the top job but he's spending some sleepless nights wrestling with his conscience. Worry is etching his soul as well as his face. He is learning that time wounds all heels. Bill lied about his age to get his present job, is afraid he'll be fired if it's found out. He'll be fired all right, because his fear is cutting into his work effectiveness. A state senator almost boils over when he even thinks about his fellow senator, who returns the hatred with interest. Both are candidates for the Grim Reaper within the next few years.

These threeguilt, fear and hatredare the unholy trinity. Each one has many guises. Guilt may show itself as depressiveness, vain regrets, martyrdom to duty, oversensitiveness, secretiveness. Fear masquerades as timidity, inse-



curity, indecisiveness, various phobias, superstitions, anxiety, avoidance, inferiority, over-assertiveness, unnecessary aggression. Doubts flit into consciousness like a swarm of agitated bees. Hatred, too, assumes many forms: envy, jealousy, revenge, intolerance, criticism, sarcasm, ridicule, gossip, innuendo, cruelty. The moths of resentment can soon consume the cloaks of friendship. When any of these are present within you, peace of mind is impossible, for negative thoughts can propagate faster than rabbits. You've got to keep them out, like thievesas indeed they are, for they steal your greatest treasure, contentment. Reactions to Hate, Fear and Guilt In my consulting practice I am called upon, occasionally, to counsel men who are slipping. Here's one of my prize cases:
Tom G., 52, one-time star salesman, was on the point of being fired, despite his sixteen years of service. He had become so critical of his associates and customers that they no longer tolerated him. His grown children had tired of his bullying, had told him so in plain English. Even his longsuffering wife was about to pull up stakes. Tom was made to realize that failure to receive a coveted promotion to district manager two years earlier had caused him to hate everybody, that his verbal attacks on associates and loved ones were merely worsening his situation. He cooperated in developing new attitudes and personality habits, made the adjustment to a selling career rather than a sales management career. In the words of one dealer, "Tom is sure a changed man these days."



Many folks in business lose resiliency to life's blows in their forties and fifties. They become so brittle that they snap under strain. Or it may be a gradual bending rather than a sudden break, only obvious in retrospect. As I have studied executives with neurotic tendencies, they seem to fall into three groups: 1. The hermits. 2. The doormats. 3. The bruisers. The hermits have retreated, want to be alone. They bury themselves in books, daydreaming, plans without action, brooding. They lose interest in their daily jobs, become sensitive to supervision, resistant to change. The doormats are broken in spirit, or never had any to start with. They go out of their way to polish apples, are overly conscientious, easily imposed upon, timid, indecisive and fearful. The bruisers (like Tom G.) are pseudo-tough. They suspect they're slipping, try to cover up (and at the same time reassure themselves) by over-aggression with other executives. Where their attack technique fails, they flounder, have nothing to fall back on. Hermit-ism, doormat-ism and bruiser-ism are symptoms of deep emotional conflicts caused by fear, hatred or guilt. This unholy trinity accounts for most of life's unhappiness. The sequence now becomes clear. If you say, do or think things which build up fear, hate or guilt within you, your ultimate reaction is likely to be withdrawal (hermit-ism), submissiveness (doormat-ism) or fight (bruiser-ism). All three reactions are far removed from normalcy; all three are neurotic; all three lead to personality deterioration,



nervous breakdowns, possibly to insanity. The fall-out from Hate-bombs is especially deadly.
Recently I sat in the Union Station in Cincinnati waiting for a morning train. Nearby was a drunken bum, muttering to himself, swearing profusely. A man of fifty, probably, still wearing a beautifully tailored Army officer's overcoat which contrasted sharply with his shabby civilian clothing. From time to time he'd mumble, "I gotta do something about it." The station policeman came along, ushered the drunk out of the station, and the incident came to an end. Except for the man himself. What events had contributed to the degeneration of a man good enough to be an officer in the Army? What problem so beset him that he "had to do something about it"? Where did he go when he was given the bum's rush from that station?

There, but for the grace of God, went you and Ia man of apparent ability, dragged down to the gutter by his own emotions. Twenty years ago, if you had told him that he would degenerate like this, he would have laughed the idea off, even as you and I may do now. Yet an impersonal self analysis might have revealed to him his tortuous path of negative emotionalism, might have enabled him to turn back before it was too late.

Executive Stress

Executive stressis it something different from the garden variety of emotional pressure which pounces upon all of us from time to time? Psychiatrists tell us that the nature



of stress is much the same for all mankind, but that the executive gets more exposure to it than the average. Executives must make decisions, frequently without sufficient information. They are lonelyand the higher the executive's position, the greater his loneliness becomes. People make time and energy consuming demands upon an executive, largely because of the position he holds. In addition he has obligations to his own subordinates. He may have to relinquish the creative joy of individual craftsmanship, or the togetherness of a group carrying out a plan. Yet he is held responsible if the product or the plan fails or is imperfect. In one way or another he is constantly in competition with other executives: ambitious young men under him pressing for acceptance of their ideas; peers in his own organization striving to advance their interests; executives of other companies girding their products for the sales battle. Most executives suffer relentless stress. Some men react with ulcers, spastic colons, high blood pressure and heart attacks. Others accept the fact that stress is part of the job, consider it a challenge to grow. They meet problems with equanimity; learn to do things for other humans; remember to play occasionally; develop a hobby; devote time to their families; cling to religious faith; substitute courage for fear; refuse to wallow in resentments. Work can wear an executive down to fighting trimworry, to his grave. The survival of the fittest doesn't mean the strongestit means the adaptingest.




The May, 1958, issue of The Management Review (published by The American Management Association) reports findings on executive tension among six thousand executives. The study was made by the Life Extension Foundation and covered a wide range of ages in 18 occupations among 179 companies in 25 different industries located in the U.S. and 13 other countries. In answer to the question "What Causes Tension?" the article concludes:
It seems clear that stress is not caused by age, occupation or job demands. . . . Tension is clearly identified with the personality of the individual executive. Stress stems from within the man himself, not from the outer forces of his living or working environment. In other words, their jobs aren't killing themthey are killing themselves.

Get Rid of Negative Emotions

When you are enmeshed in a web of hate, guilt or fear, you must first want very much to escape your emotional prison before you can do so. Reasoning alone won't help much in overpowering these giant assassins of your mental peace. Your second step is to indulge in activity which uses large muscles, activities which tire you.
My friend, psychologist Henry C. Link (now deceased), told of a dejected counselee, a man of 50, who wanted to commit suicide. Instead of trying to dissuade the man, Link advised him to invite a heart attack by running several miles each evening. In a few weeks the once dispirited man was



back, full of bounce, his self-destructive desires almost forgotten. When you're "dog tired" you sleep; and when you sleep your tensions are eased, waste products are removed, energy is regenerated. Your third step is to conquer the source of your negative emotions. Here's how:

When cumulus clouds of apprehension shut out the sun from your reasoning, you suffer from fear, the most widespread poison of the three. Generally, fear starts as a sluggish trickle in your consciousness. Soon it races, cutting a deep channel which can sluice all your courage away. There are four principal types: 1. Fear of self: Timidity, inferiority, inconsistency; also pain. 2. Fear of other persons: Physical combat; criticism from them; their influence exerted against you; the power of their wealth, authority, position or antagonism. 3. Fear of natural forces: Water, fire, wind, electricity, also animals, insects and bacteria. 4. Fear of supernatural forces: God, death, hell, supersti tions. Courage conquers fear. Remember how the young soldier, about to enter his first battle, defined courage? "Courage," he said, "is being afraid but going ahead anyhow." You go ahead anyhow. That's the secret. Afraid to talk on your feet? Join a debating group or force yourself to speak in public. Scared that you'll lose your job? Go in for a course of study to improve your job effectiveness. Fear of water? Learn to swim.



Remember that there is some affirmative, confidence building action for each one of your fearsnot just thoughts, hopes, intentions. You are not alone in fearing: all mankind suffers with you. But some conquer it.

It's quite a job to get rid of hate. You can't snip out a hate feeling like an appendix, nor just forget it as your friends admonish. Hates are like termites: they work in the darkness of your subconsciousness. There they multiply, eat away the foundations of your personality. Like termites, however, they can't stand searching light. So if you really want to get rid of a hate (most folks don't), you should: 1. Examine it carefully. Where did it originate? Of what possible value is it to you? What situations aggravate it? 2. Substitute some positive action each time it asserts it self. At the outset this action need not be concerned with the person you dislike, but can be directed toward someone who is sick, or discouraged, or in need of help. When you can capture a fragment of greatness and forgive the one who has wronged you, hatred is dead. Expressing hatred is like using poison gassome of it is bound to blow back upon you. Love is a much safer weapon.

Guilt is specific. You did something which you feel was wrong, the memory of which burdens your soul. What should you do? 1. Face it, quit trying to deny it or make excuses for your self. You did it. What's past is past. If you blundered, you are not the first. 2. Confess it to the injured person, if it will not make



the situation worse, or to the spiritual leader of your church, or to God in prayer. So unburden your soul. 3. Look forward, not backward. Waste no worry and shed no tears over what happened yesteryear. So order your life that you will not repeat the mistake. Build new personality habits to this end. Thus you transmute the dross of guilt to the gold of good. Why They Live Long Dr. Raymond Pearl, of Johns Hopkins University, undertook research to determine the causes of longevity. After years of study he concluded that peace of mind seemed to be the one characteristic possessed by most of the oldsters. Their hard-hitting, go-getting friendstheir timid and worrisome relativestheir ambitious, driving bosses were moldering in their graves, while these serene old folks lived on. Happiness is a state of mind resulting from satisfaction of wants. But human wants can be met by giving as well as by getting. True extroverts, who give freely of their time, energy, possessions and sympathies are happier than strong introverts who demand that others do for them, give to them. Figure 19 attempts to diagram the relationship between giving and getting, to show the kind of person resulting from various combinations of the two traits. It suggests that it is the givers, not the getters, who get happiness. That Peace of Mind "I do so want to find contentment. How," you ask, "can I acquire it?"



Figure 19 Dispersion of Happiness

(NOTE: The percentages shown are the author's estimates; they oversimplify this complex problem.)



If you are over forty, you are a likely target for some form of neurotic retreat from the realities of life. Physical ailments combined with life's burdens and disappointments eat into your resistance. You long for serenity, but it seems to elude you. Yet serenity is attainable by a conscious affirmative application of the same principle which can bring about emotional chaos. This principle can be stated quite simply: the personality habits you develop will determine whether life yields you confusion or peace of mind. Note that the prescription to get rid of all three of the unholy trinity contains a common ingredient: do something. Confess, for guilt. Contra-action for fear. Forgiveness, for hate. When such actions are habits of your personality you will react in the new ways, not as before. Then the trinity will be gone from your life, you will be a greater person, contentment will be yours. You will be emotionally mature. Figure 20 presents a scale for rating your own emotional maturity. If the results hurt, study your admitted weaknesses. Remember the slogan: "Even your best friend may not tell you."

What You Do

It is not the events of life, but your reactions to them, which make or break you. Life is one quarter how you make it, three quarters how you take it. The same blow which sends one person to a mental institution will but cause another to say, as Henley does in his great poem,



Invictus, "My head is bloody but unbowed." The selvage of self confidence keeps your life from unraveling.
Figure 20 Rating Scale on Emotional Maturity
Below are 50 traits important to your emotional maturity. You can either rate yourself or get some higher executive in your company to do the rating. Rate each trait by encircling one of the three possible ratings: + : ? : : Item No. Satisfactory or better Average, usual, not known or not applicable to your job Unsatisfactory or deficient Rating ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?

TRAIT Avoids holding grudges Pursues worthwhile goals Generally meets obligations 4 Well poised 5 Meets people confidently 6 Has learned to "build people up" 7 Persistent in pursuit of goals 8 Makes his own decisions 9 Knows how to compromise 10 Feels economically secure 11 Shows regard for rights of others 12 Plans ahead 13 Not afraid of responsibility 14 Exhibits peace of mind 15 Admits his mistakes 16 Rarely seems jealous or envious 17 Generally cheerful 18 Reveals no inferiority complex 19 Considerate 20 Holds faith that problems will work out 21 Forgives readily 22 Relaxed most of the time 23 Does not procrastinate 24 Helps others voluntarily 25 Forthright in defense of beliefs 26 Rarely indulges in sarcasm 17 Has considerable patience 28 Weighs alternatives, then decides 29 Understands people's motives 30 Has plenty of physical courage 31 Seldom loses his temper

1 2 3

+ + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +



Item No. 32 33 34 35 37 39 40

TRAIT Good powers of concentration Follows through on his decisions Gentle in human relations Faces up to his problems His criticisms are usually constructive Optimistic Respected by his fellows Cooperates in group effort Does not feel persecuted Tolerant in politics and religion Adjusts easily to change Will study a problem carefully Exhibits dignity and self respect Avoids boasting or bluffing Refrains from scandal mongering Recognizes his own limitations Will exercise authority given him Is humble about his accomplishments Refrains from making alibis + + + + + + + + + + + + + + + + + + + ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?


36 38 41 42
43 44 45

46 47 48 49 50

After the rating has been completed score it by allowing the following point*: +:2 ?:1 -:0 Total the points for items: 1,6,11,16,21,26,31,36,41,46 " " " " Score to get a score for "rights of others" " " " " "courage" Total " " " "
" "decision power" " " " "human relations" 5,10,15,20,25,30,35,40,45,50 " " "pursuit of goals"

" " "

Since each of these five categories has a possibility of 20 points you can readily note areas in which you are weak. You can interpret your total score by reference to the following table: Score 0 to 48 49 to 70 71 to 76 77 to 87 88 to 100 Significance for executive success Very poor Poor Fair Good Excellent



Psychologists have an almost surefire formula for building good personality habits and hence for meeting life's blows. Here it is: Assume a virtue, if you have it not. If you would be brave, act as a brave person would under similar circumstances. Stop running away from danger. If you would be poised, assume itcheerful, put it onfriendly, act itloved, give it. And keep on doing it. For habits are built by repetition, the good as well as the bad. So, if you keep responding to life with an outward show of bravery, faith and friendliness, the time will surely come when those responses are the real You. And when that time comes, there will be no more retreats for you, no more hermit-ism, doormat-ism or bruiser-ism. Your troubles will vanish like morning vapors before the rising sun. A new sequence will unfold: If you say, do or think things the opposite of hate, fear and guilt, your ultimate personality will radiate love, courage and assurance.

High Lights
1. The mind, by stirring emotions, can powerfully influ ence health and energy, for better or for worse. 2. Emotion power demands some kind of action. 3. Hormones are potent chemical agents in arousing emo tion power. 4. The unholy trinityhate, fear and guiltcauses most of your unhappiness. 5. Neurotic reactions to life's frustrations are to withdraw, to curry favor or to attack.



6. So-called "executive stress" is not caused by job demands, but by the personal traits of an executive. 7. A three-step program will help you get rid of negative emotions. 8. Peace of mind comes from building positive personality habits.

Achievement of emotional maturity and peace of mind sets the stage for the fullest possible use of your mental powers. The next four chapters tell how successful executives "use their heads."



The Basics You Need

Your success, like a well made birthday cake, may consist of several layers plus icing on top. Some men don't have enough leaven in 'em to rise above the first layera thin layer at that. With no icing. If you would get above that first layer, master the basics thoroughly. And fast. These will likely be specific applications of powers you already possess, or rapid development of some new capacities. Principally the needed abilities are: 1. Observation of what is needed. 2. Acquisition of specific work knowledge. 3. Mastery of any indicated work skills. 4. Conscious development of social skills. Great leaders and outstanding executives develop themselves as producing organisms, so that their total output can be high, usually in some specialized field. Just as special purpose machine tools can outproduce general purpose



machinery, so a special purpose man can outproduce a general purpose man. The principle is important and applies, for example, in such diverse fields as medicine, law, teaching, toolmaking, woodworking, accounting, office practice and selling. If you want to be outstanding, imitate the magnifying glass. It is so integrated that it can gather light and focus it to a pinpoint of energy. You too should be integrated, i.e., so developed that each part of you helps the other: physical, mental, mechanical, social. You, too, should be able to concentrate your forces upon a pinpoint problem (getting a job, a promotion, a bank account, elected to some high office, etc.). Any man can raise himself to a higher level by integrating his abilities and energies. The steps are yearning, burning, learning, earning.

Observation, to be of use, must be more than mere noting. It should involve understanding, lead to conclusions and actions.
British Dr. Withering provides an example. In the 1700's he learned of an old Shropshire woman who brewed a tea of many herbs that had repeatedly cured dropsy. By experimentation he concluded that it was one herbfoxglovewhich so strengthened the heartbeat that the increased flow of blood removed the fluid of dropsy from the tissues. So was born the important drug digitalisand a doctor's name became immortal in medical history.

You can focus your observation on some of the problems

of your business or your jobthat employee whose work



has suddenly slumped; the need for working capital; the rival in the company who thwarts you at every turn; the fickleness of consumer acceptance. If you merely resign yourself to these situations, you are no more inquiring than the Old Woman of Shropshire. But if you use concentrated observation on each problem learn what, how, when, where, who, whyyou'll discover some important solutions. Here's the way one writer (Talmadge) has expressed it: I care not what your education is, elaborate or nothing; what your mental calibre is, great or smallthat man who concentrates all his energies of body, mind and soul in one direction is a tremendous man.
Work Knowledge

Just as a house is more than bricks, plaster, joists and roofing, so technical knowledge is more than mere words, ideas, principles, relationships and reasoning. However, when they are organized as a body of knowledge they can help you exercise sound thinking. Lacking any one of them your conclusions may be false or inadequate. You can get such knowledge in formal classroom training but you can get it also from reading books and magazines, from correspondence courses, from on-the-job instruction, from observation. It is important that you get it, but where you get it from is unimportant. So select your field of endeavor and pitch into an intensive and prolonged mastery of the necessary technical information. By taking advantage of the knowledge already developed by others, you avoid the heartbreaks of trial and error; you save time in acquiring high



proficiency; ultimately you may contribute to knowledge in the field of your choice. There is technical information available for every specialization: accounting, credit, tax, traffic, purchasing, personnel, production, advertising, marketing, engineering, etc. Your problem, clearly, is to master the technical knowledge needed for present job performance, plus that for your next higher job. The latter may readily open up correlative fields.
The accountant aiming at a comptrollership may need to know budgetary control plus organization principles. The advertising man aiming at market research may additionally need statistical theory and social psychology. The salesman aiming at a sales manager's job may require knowledge of commercial law, product costing and personnel.

The principle is obvious: the higher the position, the more diversified the knowledge required. Sheer specialization leads to blind alleys.


Some of history's outstanding persons have been men of ordinary intelligence, according to Dr. Catherine Cox Miles, noted Yale psychologist. She cites Cromwell, Lincoln, Drake, Napoleon, Nelson, Goldsmith, Thackeray and Emerson. Although they failed to tower over their fellows in sheer gray matter, they made up for this lack in character, perseverance and the marshaling of abilities at their command. So don't be discouraged because some fellow is smarter than you; success is more than an I.Q.



Here are three props you can use to improve your mental powers: 1. Learn to read faster, comprehend more. 2. Enlarge and enrich your vocabulary. 3. Improve your memory.

In recent years, Harvard and other universities have shown that it is possible for almost everyone to learn to read faster and at the same time to comprehend more. Courses of instruction are being offered to adults in many large cities; correspondence courses are available for those who cannot get personalized instruction. If you know that you are a "slow reader" take one of these courses. It will accelerate your whole rate of idea absorption.

All studies of successful people suggest favorable results from widening your vocabulary. Highly intelligent people tend to possess large vocabularies; those who can understand and use many words receive high scores on intelligence tests. On the average, skilled workers know more words than the unskilled; supervisors more than the skilled; executives more than supervisors. As businesses and communities increase in complexity, the importance of communication becomes greater. And this means putting a thought into specific spoken or written words which will convey the exact meaning intended. If you would increase your vocabulary, purchase an A to Z book which you can carry in your pocket. Each time you encounter a new word, write it into your book. Later, enter



its dictionary definition. In idle moments, browse through your notebook, refreshing your memory. Use these words in conversation from time to timesoon they will be permanent additions to your vocabulary.

It would be of little value to learn to read faster and to enrich your vocabulary if you could not remember what you had acquired. Hence it may pay you to learn how you can improve your memory. Your author considers it important enough to devote several pages to the subject. Do you agree? Think of the five most successful executives you know; likely, they'll all have better than average memories. If you, too, would like to improve this ability, then the four laws of memory are of vital importance. Law 1SELECTION: Seek to remember those things which promise betterment for you. This law requires that you exercise your power of selection. You can (if you but will) choose many of the significant memories which shall enter your life. Selection requires decision as to what you want to remember. Even failing to choose anything is a decision to accept what comes. Law 1 seems obvious, doesn't it? But you'll probably violate it a dozen times in the next twenty-four hours. Thus, you may choose to: 1. Read the comics, instead of a technical magazine. 2. Listen to silly banter on the radio, instead of a serious economic discussion. 3. Indulge in a hate mood, instead of calm planning.



Begining to get the point? What you select determines what memories shall rest in your storehouse for future use. Note that Law 1 doesn't merely require you to select helpful material from possibilities presented to youit commands you to seek out the best. You have to go after it. Not likely that a technical magazine, an economic discussion or an hour of planning will seek you out. But they're available to you if you seek them out. Law 2CONCENTRATION: Concentrate on what is to be remembered. Selection, of itself, is an initial concentration, but you need more than that. You need to exclude distractions and to attend to that which is to be remembered with as many senses as possible. Try to: See it Hear it Touch it Taste it Smell it Each sense reinforces the others, fills out the memory, keeps it longer in your storehouse available for recall. If you can do so, create mental "pictures" of how it looked, sounded, felt, tasted or smelled. Nowhere is the value of this law more evident than in remembering the name of a new acquaintance. At first meeting, narrow the focus of your attention to him only. Get the correct spellinghe will be flattered if you ask how to spell his name. Pronounce his name distinctly, so he'll have the opportunity to correct you if you're wrong. All this in ten seconds concentration when you first meet.



You can concentrate in your reading, by reading for meaning. When you grasp the meaning of a passage, move on to the next one. Law 3ASSOCIATION: Associate new ideas with one another and with present memories. Let's see concentration and association in action. You meet Mr. Harry Pierce. You hear his name and say, "Pierce. Which way do you spell it?" So you hear (and "feel") yourself saying his name. You feel the firm grasp of his hand, hear him spell out P~i-e-r-c~e. You see that he is tall, well built, dressed in a gray suit, has blond hair, a mole on his chin. You smell the strong odor of a pipe. These are concentrations on sensory impressions, the basic stuff of which many of your memories are made: bricks, but not mortar. Association is the mortar which cements these bricks together, as:
Ideas with present memories Met him at the Athletic Club Spells it differently from Dr. Pearce His head would pierce the ceiling of our attic H looks like Uncle Harryand his name is Harry, too Ideas Achap named " " " " " " " " " " " " " " " with one another Piercetall " well built " blond " gray suit " mole on chin " has a piercing voice

Some of these are associations of circumstance (met him at the club), some are of contrast (Dr. Pearce), some of similarity (piercing voice, pierce the ceiling, looks like Uncle Harry). Still others are original impressions associated with a man named Pierce. We tend to remember longer those things which fit in with present memories or with present interests (needs, desires, motivations). Hence:



1. With material you have selected, and 2. Concentrated on, 3. You can improve retention by noting its benefits to you (interest associations) and its relationships to present knowledge (similarities, differences, circumstances). Law 4REPETITION: Repeat memories, to retain them. For example: Sight: You remember what Abraham Lincoln looked like, because you have seen his picture repeatedly. Sound: You can identify the voice of (i.e., you remember the sound of) your favorite radio commentator, because you have heard him so often. Taste: Can you imagine (recall) the taste of orange juice? Drinking these juices repeatedly built up those memories. An Eskimo might not possess them. Touch: Can you reach into a pocketful of change and draw out a dime? The feel of that coin again and again has kept its memory sharp. Smell: Burning leaves in the fallwhat a memory! Yet you did not have it when you were one year old. Again, repetition year after year has kept the smell memory alive. Muscular: Can you recall the "feel" of roller skating, paddling a canoe, batting a baseball, climbing a tree? You did those things so many times that you can still remember them. As a lesson in applied repetition, let us here repeat the four basic laws of memory: Law I: Seek to remember those things which promise betterment for you. Law II: Concentrate on what is to be remembered. Law III: Associate new ideas with one another, and with present memories.



Law IV: Repeat memories to retain them. Let's repeat it another way: Law I Selection Law II Concentration Law IIIAssociation Law IVRepetition Or perhaps we could so engrave these ideas upon your mind that they would leave a permanent S C A R on your memory. So, now, in one mnemonic wordS C A Ryou have a way of remembering the four laws of memory!

Here are eight devices you can use to bolster your memory: 1. A name book. Purchase an A to Z pocket notebook. Enter in it the names of people you meet. Review it from time to time, recalling faces, circumstances, incidents. 2. A calendar pad or engagement book. Enter time and place of dates ahead of you. 3. A tickler file. File material by future dates, so that it will come to your attention when you'll want to review it. 4. Underline significant passages in magazines and books (that belong to you), especially in texts and techni cal works. Review your marked passages from time to time. 5. Outline (headings, subheadings, etc.) or diagram masses of knowledge you want to master and remember.



6. Talk it over, teach, explain, debate, write about a subject you want to retain. 7. Set up a filing folder for each subject of interest. Select and file pertinent material. 8. Associate with people who have a similar interest, especially with those who know more about it than you do.

One sure way to qualify for higher responsibility is to

distinguish cause from effect.
A missionary in Dutch New Guinea built a small windmill to pump water, but the natives asked him to dismantle it. They said his machine made the wind blow, causing them to be cold.

We smile at the gullibility of uncivilized natives, yet may be guilty of equally bad reasoning. For examples:
A plant manager says that all dissension in his plant stems from one trouble-making employee. It has never occurred to him that some supervisory practices could produce both labor agitation and a labor agitator. A sales manager decries price cutting by a competing company. He sees it as a cause for discounts on his part, not as the result of some of his own past practices. An employee suffers a dizzy spell; shortly afterward his automatic machine burns out a bearing. The foreman accuses the employee of "carelessness." Manufacturing costs of product A are so high that not much is sold. This situation would seem to be simple cause



and effect Analysis shows a large fixed cost in manufacture; if price were reduced so that twice as many units were demanded, the effect would be to decrease manufacturing cost per unit

In considering complex events, ask whether you are witnessing: 1. Completely unrelated events which you are trying to force into some cause-effect relationship (as in the case of the burned out bearing). 2. A cause; if so, what are the probable effects? (For in stance, what effect will the foreman's unjust accusation of carelessness have on the employee?) 3. An effect; if so what are the probable causes? (As the price cutting competitior; or the manufacturing cost of product A which seems at first blush to be a cause.) 4. Two or more effects from the same probable cause (as the rotating windmill and the cold weather; or labor agitation and agitator). Learn to question important events which on the surface seem very obvious, and you'll soon acquire the reputation of possessing a penetrating mind.
Work Skills

The mastery of work skills is too often neglected. Perhaps your job can be facilitated by learning to operate a desk calculating machine, a slide rule, a dictating machine, a tickler file, a graphic control system, drafting instruments, laboratory apparatus. By speeding up certain tasks, or by yielding you more accurate information, work skills may improve your daily productivity. Figure 21 shows how high skill is developed.



Figure 21 How High Skill is Developed







In any manual or dexterity skill it is repetition which makes for perfection. Sometimes there is one hazard point only which needs repeated practice to give smoothness to the whole skill.
Social Skills

Social skills develop slowly. Some people don't grow at all in this arearemain social adolescents. You have to work at the problems quite consciously if you want to re-





16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

TRAIT Analyzes problems well Good memory for dates Effective public speaker Interested in marketing Won honors in high school Uses logic instead of hunch Clips and files items of interest Is tactful in conversation Interested in production methods Usually in top quarter of class Is a keen observer Meets commitments Uses words with precise meanings Interested in science College graduate Knows how to prepare charts Good memory for faces Is a good conversationalist Interested in stock market Associates with educated people Likes to plan work Prepares notes on new subjects Is an adroit questioner Interested in human relations Won honors in college Gets facts before deciding Good memory for mathematics Writes convincingly Interested in business finance Post graduate college study Has an analytic mind Observes details, people and places Expresses his convictions Interested in office methods Studies new subject each year

Rating + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +

? ? ? ? ? ? ? ? ? ? ? ? ? ? 1 ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?

After the rating has been completed score it by allowing the following points: +:2 ?: 1 :0 Total the points for items: 1.6..1,16,21,26,31,36,41,46 to get a score for "reasoning" 2,7,12,17,22,27,32,37,42,47" " " " " "memory" 3,8,13,18,23,28,33,38,43,48" " " " " "verbal facility" 4,9,14,19,24,29,34,39,44,49" " " " " "wide interests" 5,10,15,20,25,30,35,40,45,50 " " " " " " education" Total Score

26 8


Figure 22 (cont.)
Since each of these five categories has a possibility of 20 points you can readily note areas in which you are weak. You can interpret your total score by reference to the following table:

Score 0 to 49 50 to 66 67 to 75 76 to 86 87 to 100

Significance for executive success Very poor Poor Fair Good Excellent

High Lights
1. Master the basics of your job, fast. 2. Concentrate your energies upon job performance. 3. Make full observations of each important problem. 4. Get the needed technical knowledge for your present job. 5. Learn to read faster. 6. Enrich your vocabulary. 7. Improve your memory by applying the four funda mental laws. 8. Learn to separate cause from effect 9. Acquire work skills which will facilitate your job per formance. 10. Develop social skills of use in your present job. 11. Keep learning.

The difference between mediocrity and so-called brilliance may be more what you do about problems than what you know about them. The next chapter covers both.



One Man's Problem

"Twice in the last two years I've been headin' for a better job, 'n sumpin' always busts it up. I'm the best cabinet maker in the outfit, yet I never git to be foreman." Ken was 31, forceful, confident and quite personable, despite his frayed cuffs and tobacco-stained teeth. Living in a one-industry town, he had worked himself up from apprentice to first class cabinetmaker. Yet, somehow, opportunity for a supervisory job always seemed to pass him by. "Some highbrow," Ken told me, "always gits the promotion." Not difficult to understand his problem. In that small town, as a foreman he would travel in the same circles as the other supervisors, technical men and junior executives of his company. Because of his crudities, Ken was socially unacceptable, didn't get promoted. Together we worked out some icing for his cake: a new scheme of living for himself, his shy young wife and their two children. We attacked bad grammar, clothes, cleanliness, cheap interests, poor living habits, social errors and crudities of various sorts. Three years later, when he was assistant



superintendent of his company, I had the satisfaction of seeing him installed as president of the local Rotary Club.

Ken's problem is, to a certain degree, every man's problem. Each of us, each day, is being judged by others on the basis of what we say or do, how we appear, where we are seen, whom we associate with, what attitudes and interests we express. Many of us make Ken's mistake: we think that perfecting one skill or trait should necessarily open the door to higher levels. Frequently it does bring in higher income, but that is a hollow victory if it is not accompanied by personality development, by acceptance from others and by greater opportunities.

Seven Levels

In most industrialized communities it is possible to distinguish seven distinct levels of business and professional people, with higher earning power (on the average) for each higher level. They are:
The Seven Occupational Levels
Level Typical Jobs

Laborer, helper, mail boy, elevator operator Machine operator, truck driver, junior clerk, retail salesclerk Machinist, truck mechanic, senior clerical, outside selling Foreman, junior technical, small business for self Superintendent, senior technical, office manager, district sales manager Senior Executive General manager, chief engineer, sales manager, comptroller, business owner; profesisonal man Top Leadership President of business, university or national association. Recognized authority or leader in business, politics, social service/ education, arts, profession, etc.

Unskilled Semi-skilled Skilled Supervisory Junior Executive



Each level utilizes personal developments of the lower levels, but stresses some added attribute:
Level Stresses Strength or energy Physical coordination Technical skill; persistence Social relations; planning for others Technical knowledge; coordinating work of others Executive ability; control Leadership; conceptual skill

1. Unskilled 2. Semi-skilled 3. Skilled 4. Supervisory 5. Junior Executive 6. Senior Executive 7. Top Leadership

Above Level 3, mental and social developments are accented. These are the qualities which lift many men above the rank and file. In fact, these seven levels seem to apply to a great many characteristics of people, as suggested below. It is not necessarily true that persons on any given occupational level will therefore exhibit the mental and social characteristics of that level. Frequently, the mental and social levels will be higher than the occupational level, particularly with young people. Less frequently, they will be lower.

Ingredients of the 'Icing"

Chapters 18 to 20 of this book are devoted to the general problem of "how to think creatively." But what can be more creative for you than to consider ways to attain a higher living and earning level? You can't just pull yourself up by your bootstraps. In your particular situation, there may be a number of special actions you need to take. Discover them. Take them.



But there are various general actions which can be helpful to most young men in business. These are: 1. Pipelines to learning. 2. Widened interests. 3. Civic activities. 4. Public speaking. 5. Group meetings. 6. "Plus" work.

Let's take a further look at each one of these strands in weaving a strong cable by means of which you can climb higher.
Pipelines to Learning

You need not become a walking encyclopedia in order to use vast stores of knowledge available to you. But you do have to know how to tap them when you need specialized information. So spend an hour or two in a public library. Learn how to use its card files, the Industrial Arts Index, Reader's Guide to Periodical Literature and other indices. Get a librarian to tell you what's available and how to use it. If there is published a handbook in your field, buy one for your personal use. Refer to it more than frequently. Get acquainted with a 736-page volume entitled How and Where to Look it Up. (See Bibliography at end of this book.) Its index alone lists more than 10,000 topics. Keep a file of people in your community who are in various fields of concern to you. These may be teachers, professional men, retired persons, consultants, successful businessmen, civic leaders, etc. Many such men are willing to offer advice to young men. If it stems from a wealth of experience, it is likely to be sound.



Widened Interests

When you cease to invest in life, you lose interest; but if you make a lot of investments, they'll pay you dividends. Range of interest tests given to hundreds of thousands of persons reveal an important finding: the higher the occupational level, the wider the range of interest. Every job pays two ways: money and satisfaction. Interest yields satisfaction. Many interests yield many satisfactions. Makes sense, doesn't it?
A friend of mine makes an unusual New Year's resolution: to take up something new. One year he studied the Mayan civilization. In the three following years it was atomic energy, silver working and applied psychology. This year, he's learning to play a chord organ. An interesting fellowone who fits in with any group.

If you want to reach a higher occupational level, if you want more satisfactions, seek out more interests: things to study, activities to pursue, groups to join, hobbies to follow. Study the characteristics of higher levels suggested in the "Seven Personal Levels" (Figure 23). If your life is uninteresting, soon you too will be. So keep your interests alive; fires can't be lighted from dead embers.
CIVIC Activities

Participation in civic affairs is a doubly beneficent activity; you get joy from helping your fellow man and you come to the attention of higher-ups who are looking for men who can get things done. It is one of the surest ways



of contacting, under favorable circumstances, important people whom otherwise you might never meet. And that means they'd never get to know you: It is foolish to deny that part of a man's success comes through the people he knows. What person in high position selects a total stranger over someone whose mettle has been proven? It is equally foolish to believe that a man's success will come only through the people he knows. What person in high position selects for promotion those he considers incompetentor without character?
Public Speaking

If you learn to talk well before groups, it will become a key to open many doors of progress and happiness to you. Hence you should be willing to accept any public speaking opportunity which comes your way, especially in the early years. If you are at all doubtful about your subject, prepare a detailed outline. Keep this outline in front of you when you talk but refer to it as little as possible. Some polished speakers prepare an outline, memorize it, then throw it away. In this way the whole speech seems extemporaneous. Posture on the platform is important, but this does not mean stiffness. Many accomplished speakers change position from time to time, first standing erect, then leaning with both hands on a lectern and perhaps again walking out to the very edge of the platform to make an effective point. Look at one individual after another in the audience, not past them. These days many platforms have amplifiers and if this,



is the case you do not need to raise your voice in order to reach the audience. However, you do have to keep within a reasonable radius of the microphone. Platform talks or after dinner speeches need a few well chosen jokes or anecdotes to liven up the material and to illustrate certain points. Practice story telling. The ability to address a group convincingly is a leap forward to success. Master the abilityand you've already taken the leap.
Participation in Group Meetings

When you take part in a meeting conducted by one of your superiors, you are being judged pro and con by all the participants. Here are some suggestions to help you stand out: 1. If you can, bone up in advance on the subject to be discussed. But be careful that you don't blow your knows in public! 2. Take notesthis flatters the leader, scares the bluff ers. 3. On points you don't understand, ask questions until you are certain that you comprehend fully. 4. Refrain from volunteering curbstone opinions or dis agreeing with the leader, unless asked. Then give it all you've got! 5. Toward the close of the meeting, summarize to the group your conclusions. Use your notes to support them. Take the attitude that you want to be sure you understood the sense of the whole meeting. State how you intend to use or apply the information you have gleaned. 6. A few days or weeks after the meetingand here's



the important suggestionmake a written report to the leader, telling him how effectively you were able to utilize what you had learned. If the idea didn't work, state how you had tried to utilize it, and what resulted. Don't criticize. Ask what you did wrong, or request further help.

When you are the group leader, the participants are judging you on your leadership ability as well as your technical competence. How well you handle the meeting can be important to your future. Hence, consider carefully these suggestions: 1. Prepare for the meeting. Study the meeting room as to lighting, ventilation, freedom from distractions, seat ing and writing arrangement. Assemble the necessary propertiesblackboard, chalk and eraser; large tablet on easel; charts and mounting; slides, projector screen and electric connection; lectern, microphone and amplifier; demonstration equipment; pencils and tablets for note taking; ashtrays; water and glasses. Make certain that everyone is notified, preferably in writing; that they know the time, place and subject; that they bring along any necessary material. Prepare for your own use an outline covering preparation, presentation and application, with their proper subdivisions, and approximate times to be devoted to each subdivision. 2. Open the meeting. Be there ahead of time, to check up on arrangements and greet members as they enter. Al low no more than five minutes after scheduled time be fore you start the meeting, regardless of how few have



arrived. Either state the purpose of the meeting or write it plainly on the blackboard. 3. Conduct the meeting. Choose whether you will lecture (tell, explain); use the conference method (questions by you, with group conclusions entered on the board), or present a problem for solution (case study). Combinations are possible. If you wish participation by members (and usually you will), set up specific questions, then designate who is to answer. This practice keeps a group "on its toes," because it forces everyone to consider each question. Control the dominant member by by-passing him: "I won't put that question to Jones, because it's old stuff to him; Smith, you tell us what you think." If he chips in anyway and carries the ball too long (i.e., lectures the group), interrupt him: "Do you agree with that, White?" Or, before the meeting, ask him to refrain because of his superior knowledge, tell him you will ask him "to summarize the main points." Control the wordy member by asking him questions answerable by "Yes" or "No." Never ask his opinion! Don't ridicule him! But don't hesitate to take the ball away from him. Control the belligerent member by humbleness, not by argument. "You could be right." "We want all points of view." Usually the other group members will discipline his hostility. Control delicate subjects by anticipating them, if you can. Discuss with a superior how you should handle certain topics which might arise. If such subjects are brought out unexpectedly, try to exclude them from the group discus-



sion or at least to lay such hot potatoes aside until noncontroversial issues are settled. Typical of delicate subjects would be company policies which seem unreasonable; interdepartment friction; immature executive behavior; questions of race, politics or religion; confidential information. Control time by reference to the time schedule set in your outline. 4. Close the meeting. Take the initiative to bring it to a close. Show how the conclusions could be applied, or ask a few members to state what actions they will take. Thank them for their cooperation. Announce the next meeting, if one is scheduled. State that the meeting is adjourned.
"Plus" Work

Recently I viewed slow-motion pictures of two athletes running a mile race. The timing of their two strides was identical, like men an a tandem bicycle. But the stride of the winner was about l/10th of an inch longer than that of the loser. He finished the race ten feet ahead of his competitor.

The winner did "plus" work. No one plus was very great1/10th of an inch. But the accumulation of all those plusses gave him a silver cup and the satisfaction of winning. There are scores of plus jobs you can do to take a longer stride toward your goal. For instance: 1. Make it a habit to get to work a few minutes before your fellow workers, leave a few minutes after. 2. Use these extra minutes for planning. 3. Make repeated written suggestions for improvements any kind of improvement for your company.



Anticipate needs of higher management. Have someone trained to take over your job. Train yourself to handle one or more higher jobs. Learn to make charts to show progress. 8. Prepare written digests of significant articles in tech nical magazines. 9. If you attend a trade association meeting, prepare and circulate a report on it. 10. Take on added tasks without demur. Actually, it's easier to do extra work than to think up alibis as to why you can't. 11. If you're given an assignment, do more than you're askedbut do the extra work on your own time, to avoid criticism. 12. In reports, if you quote authorities, cite the exact article, or book and page number, in footnotes. Also quote authorities who disagree with your point of view. In this way you get the reputation of being judicial. Then, too, you may steal some critic's thunder! Get your report type written, use plenty of subheadings, tell what, why, how, where, when and who. Attach exhibits, carefully made drawings, estimates and a bibliography. If the report con tains more than six typewritten pages, include a cover, summary of recommendations and a table of contents. Look around you. Nothing is ever really completed. Nothing is perfect. Nothing is static. Everything is subject to change, improvement, simplification. You can be the one to develop the better ways, if you really try. And in the trying you develop yourself, open paths to opportunity.

4. 5. 6. 7.



High Lights
1. Throughout each day, each of us is being judged by others. 2. There are seven fairly distinct occupational levels. 3. Persons on each level tend to possess certain character istics. 4. Develop "pipelines" to added learning. 5. Widen your interests. 6. Participate in civic activities. 7. Learn public speaking. 8. Take an active part in group meetings. 9. Learn to conduct group meetings. 10. Do plenty of "plus" work.

If you do the things which this chapter has advocated, you will be a busy (but happy) person. So the next chapter offers some suggestions as to your personal efficiency.



What It Means

By the term "personal efficiency" we mean your ability to perform useful mental and physical tasks effectively and in minimum time. In order to meet these criteria, you need to bring to each task as much skill as you can muster: trained sensory perceptions, specific knowledge and practiced coordinations.
Without a trained eye you could not be efficient in proofreading. Without adequate knowledge you could not be efficient in auditing the company books. Without adequate practice you could not be efficient in typing a letter.

Some folks possess these preparatory abilities, yet are not personally efficient in applying them. They need to develop: 1. Analytic planning. 2. Integrated performance. Let us see how you can use these two large concepts to improve your personal effectiveness.


Planning in Your Life Are there times when you wonder how you can live on 24 hours a day, wish you could squeeze in an additional hour each day? Do you envy some of your executive associates who seem able to accomplish so much so quickly so easily? Don't envy them. Imitate them. They have learned the secret of planning. Planning is not some mysterious idea, but is rather a series of very specific thoughts about a problem. In essence, you "use your head to save your heels." It was Rudyard Kipling who wrote: I kept six faithful serving men; They taught me all I knew Their names are what and why and when And how and where and who. These four lines present the basic elements of planning. They are worthy of careful study on your part. Plan both job and outside activities. By conserving time and energy in each one, you allow time and energy for the other.

What? You have to choose objectives. In a given year you are asked to do work for the Community Chest, Red Cross, Civic Improvement League and the Society for the Prevention of Something-or-other. You are invited to talk be-



fore the YMCA, YWCA, PTA and Women's Guild. You are not a good American if you don't go to the Republican, or Democratic, rally; join the Chamber of Commerce; vote at every election; attend your church regularly; go to the lodge meeting; become an airplane spotter; attend funerals of all your wife's cousins. Sister sells you tickets for the school play, brother for the basketball game, and the little woman drags you out to those chamber music concerts. Oh yes, I almost forgot the monthly meetings of your technical society. Of course, someone suggests that you skip them in favor of the other activities we've mentioned. You've got to choose, brother. That's what successful persons do, for they know that the surest road to the bughouse (or the poorhouse) is to try to please everybody who comes knocking at the door. Select those activities which do not interfere with good work performance, which advance you or which fit in with other large objectives of your life. When you make an affirmative selection of one activity, reject another, you do so for reasons which seem right. Legitimate reasons for selection or rejection would be income, prestige, social service, personal energy, prior obligations, family convenience or deep seated conviction. You've got to choosebecause even failing to choose is choice in itself, although a poor one. In order to plan, you must know clearly what you want to get done. Your aim should be specific, crystal clear, attainable. To make this statement live for you, here are some aims, poorly expressed in generalized terms and also expressed in specific terms:



1. Better health 2. Improved housing 3. Study for improvement 4. Get promoted

Generalized Aims

la. 2a. 3a. 4a.

Specific Aims Take off 15 pounds Buy a certain house Take a correspondence course in accounting Prepare intensively for one specific higher job

You will have trouble planning for generalized objectives, but could easily plan for any one of the specific aims listed above. Usually, there are sub-aims. For example:
Major Aim 1. Take off 15 pounds 1 Sub-aims a. Cut out starchy deserts b. Eat nothing between meals c. Take steam baths twice each week

Why? Your inquiring, planning mind should shoot "why" missiles at a problem like a small boy with a newly acquired air rifle. For instance: Why need it be done at all? Why should it be done as in the past? Why should it be done now? Why isn't it profitable? Why does it need so much space? Why should I be the one to do it? Why can't it be fractionated so that people of lower competence can handle it? Think up questions like these for each problem. The accepting mind is not a "whys" mind.




Here is the measuring stick of planning. If you are directing the work of others, tell who is to do what, when. If it's your own project, prepare a schedule or set a time limit. Time moves on relentlessly. So if you would get done all you hope, use simultation, i.e., have projects moving simultaneously. Relax as you read; review names of new acquaintances while you're dressing. Study that textbook while waiting for the dentist. Practice that forthcoming speech aloud while you're driving your car into town. Set that committee meeting as a luncheon date. Write that technical paper while waiting for friends to arrive at your home. Sign letters while waiting for the last one to be typed. When you have to go to your basement, take down that empty ginger ale bottle, bring up a jar of preserves. Make Father Time carry a double burden. Remember that in human accomplishment, time is the Great Demanderso learn how to demand something more of time. If you want a pleasant surprise, equip yourself by study and practice for some one higher job. Set a future date when you hope to attain it. The surprise comes when you get it earlier.


As you select how to do each activity, you may automatically be deciding the time element. For example, as credit man for your company, you note that a customer



owes a large bill, ninety days overdue. You can write him (5 minutes), phone him (3 minutes) or go see him (possibly 30 minutes). This comparison does not imply that phoning is the best way to collectit means rather that you weigh alternative procedures as to time invested and likelihood of accomplishing your purpose, i.e., you plan how. "How" may also decide your energy expenditure, as industry has long since discovered through time and motion studies. Let us say you have accepted an assignment to stuff, seal and stamp 500 envelopes. If you fold each letter individually, insert it in an envelope, seal it and stamp it, the job may take two hours. An experienced mailroom clerk would do it in less than an hour and use less energy than you. He knows how. Instruct your secretary always to record the telephone number of folks you are to call back. Such working habits on her part can save for both of you. Tasks that are repeated daily, or that consume much time and energy, deserve careful study as to the one best way.


A successful efficiency engineer once observed that "the quickest and cheapest way to increase productivity is to improve the working environment." This means proper lighting, free from glare; temperature and humidity within the "comfort zone" limits; avoidance of noise and other distractions.



"Where" refers also to the placement of objects you use regularlyyour razor, fountain pen and letter opener; where you park your car, eat your lunch, keep your trade magazines. Each time your hand moves farther than necessary, or you take extra steps, you are wasting time and energy which might be spent more productively in your behalf.


The ability to get others to do things for you is the mark of a good executive. The poor executive does not delegate, excuses himself by asserting, "Oh, it's easier to do it myself." Learn to use the clerical assistants in your office to the fullesta motion picture of them and you for eight hours would likely show you busy 90% of the time, some of them only 60%. Friends, family, acquaintances, committee members, salesmen, tradespeople and a host of others you contact throughout the day can be called upon to assist you legitimately, and perhaps with little extra effort on their part. As quid pro quo, you can often do similar favors for them. Successful men learn the art of getting help from others.

Planning Factors Interact

Almost any one of the six planning factors can trigger them all. The availability of a person (who), the necessity



for action (why), a time limit (when) or one of the other three can be the instigating cause. Nor do they unfold in a predetermined sequence, like pearls on a chain. Rather, they are mutually interactive a decision on one may force reconsideration of a tentative decision on another. Typically, the six might occur in the following sequence: Why: You decide that some accomplishment would be in line of your self-interest. What: You establish a definite objective, with its subobjectives. How: You plan how you will proceed toward each subobjective. When: You determine when you will start on each one, estimate how long it should take. Who: You decide who can help you attain each subobjective. Where: You put yourself into the place where you are most likely to get what you want. Let's apply it to a situation: Why: You note that accountants in your company seem to move ahead rapidly to senior positions. What: You decide to get an accounting degree (major objective) by night study in a prescribed course at your local university. Each subject you take is a sub-objective. How: You enroll; set aside three nights each week. When: You plan to complete requirements in eight years. Who: You join the local accountants' society, make friends of accountants in your company.



Where: You ask your employer for a transfer to the accounting department. What's your major objective: Foreman? Comptroller? Sales manager? Whatever it is, list your six "faithful serving men" to get it accomplished. You may then be surprised to see how simple it will be to take the first step toward your goal. And this much is sure: if you don't take that first step, you'll never take the second!

Planning Devices There are numerous planning devices which can aid you in getting more done, in working toward higher goals. Here are a few of them: 1. A calendar, Mark on various dates in the future exactly what you should accomplish by each date. Keep striving to meet your own deadlines. 2. A tickler file. Such a file can be purchased in a stationery store. It consists of twelve monthly pockets plus 31 daily pockets. Advance material (carbon copies, memos, etc.) is filed in the month due. At the beginning of each month, it is distributed over the 31 days. Daily, some one reviews what is due that day and either gets it or advances the due date into the future, advising someone in authority that the expected obligation has not been met. The uses here suggested of a calendar pad and tickler file differ somewhat from their uses to bolster memory, mentioned in Chapter 18.



3. A check list. List all items required for your purpose books, subjects, tools, materials, interviews, approvals, funds, plans, specifications, etc. As you get each one, check it off. This idea can be combined with the calendar, so that you set a date deadline for each item. 4. A planning board. This is especially useful if others have to perform their parts properly, and on time. One simple board has a number of hooks on it. Job tickets are made out as assignments are made; tickets are hung on the hooks (one hook for each person), with the top ticket showing the assignment each person should com plete next. A simple glance at the board shows who are falling behind or have too many assignments. 5. Charts and graphs. In some situations it is possible to prepare a chart or graph which will help you keep track of some planned project. The Gantt chart is a well developed example, and is explained in many management text books. There are available several kinds of production control charts. Another is the Plan-Trol Chart, shown as Figures 24a and 24b, which includes instructions for use of this device.1 The situation you face will frequently dictate the kind of planning method you will use. Remember'most any device is better than none at all. Scrutinize, Kipling-ize the activities ahead of you. Undoubtedly you'll see many situations where better planning will yield better performance, so permitting you to take on added tasks and turn them out with such ease that you will be the envied, not the envier. If you save a minute on
1 The Plan-Trol Chart can be purchased in packets of 10 or 100 from Management Service Company, Mclntyre Building, Asheville, N. C.



sixty activities each day you will, indeed, have achieved the impossible: a 25 hour day!

PerformanceThe True Test

Shakespeare, in his Troilus and Cressida, tells of those who: Swear more performance than they are able; And yet reserve an ability that they never perform; Vowing more than the perfection of ten, And discharging less than the tenth part of one. How true for many of us! The proof of the planning is in its performance. Principally, your personal efficiency is tested in three areas: 1. Your work life. 2. Your social life. 3. Your home life. The average man spends a week of 168 hours about as follows:
Activity Sloping (and 16 meals) Working (and 5 meals) Social activities Reading and study Pleasure Other necessary activities Leisure Hours 66 45 17 7 8 10 15 Percentage 39 27 10 4 5 6 9

Mark you well the 9% for leisure; we shall be referring to it again.



Your Work Life-27%

Here, for most of us, is the severe test, because we are in direct competition with fellow employees for opportunities and higher earning power. In your daily work you may see possibilities for personal efficiency in space, time, energy or materials, as detailed in Chapter 2. Instead of applying the ideas to the work of a department or company only, you focus them upon your own job activities. A related approach is to apply to your work principles of time and motion economy. Here are some of these principles, selected because of their applicability to a single task: 1. Before starting a task, list all accessories needed; either get them in advance or schedule them for delivery to you. 2. Have work brought to your work place instead of go ing for it yourself. 3. Keep frequently used articles readily available. 4. Keep working surfaces (like bench or desk tops) clear of infrequently used articles. 5. Avoid rehandling, lifting, storing, reaching, searching, sorting or counting, if possible. 6. Utilize mechanical devices, machines, holders, fixtures or other job aids. 7. Let repeat motions travel the minimum distance for work performance. 8. If work involves repetitive motions, try to use both hands in simultaneous motions in opposite directions, in cycles of equal length of time. Rhythm is useful.



9. Discard unnecessary motions and standardize the nec essary. 10. Utilize all forms of waiting time for constructive reading or other work. 11. Change your working position from time to time, especially with sedentary occupations. 12. In advance of any kind of contact, decide what you want to accomplish by it. 13. Make important contacts face to face, particularly with superiors and peers. 14. Make most other contacts by phone, memo or letter if the other person is located at some distance from you. 15. Set high standards for yourself of quantity, quality, cost, time limits and specific attainments.

Your Social Life-15% The assignment of 25 hours per week for social activities and pleasure, for the average man, may not apply to you at all. Your figure may be much smaller, or larger, depending largely on how you spend your weekends. Personal efficiency for this portion of your life means something different than in your work or home lives. Consider how many of these benefits you are getting from your social activities (i.e., how efficient is your use of time allowed for this kind of thing?): 1. Do you get a bang over your social hoursor a hangover? 2. Are your companions uplifting, depressing or deprav ing? Do they burden your life or lighten your burdens?



3. Do you like and admire them or wish you knew peo ple superior to them? 4. What will be their probable effect on you and your design for living over the next ten years? 5. Is the entertainment you seek frivolous, humorous, relaxing, vapid, informational or inspiring? And which of these results do you need? So often, your social life is the result of "happenstance" rather than conscious planning. It's easy to cultivate the family next door, but it may not be wise.

Your Home Life-58% In the distribution of hours per week, about 98 hours are spent in sleeping, home meals, reading and study, other necessary activities and leisure. This is well over half your life. If you live it efficiently, you will have time for more things which can help you get ahead. Here are some suggestions: 1. As you undress at night, put out the clothing you will want in the morning. 2. Follow the rules on sleep given in Chapter 16. 3. Take stretching, or setting up, exercises upon arising. 4. As you dress, plan your day; make this a habit. 5. Eat the kind of breakfast advocated in Chapter 15. Visit with your family; make it a congenial meal. Don't rush it. 6. If you drive alone to work, use the time constructively: repeat technical information aloud; recall the names of new acquaintances; rehearse a joke or an anecdote; even



whistle or sing. These activities have a double value; they crowd out fears, resentments and anxieties which often prey upon you when you're alone. 7. Driving home from work, let your mind dwell on the pleasant evening ahead of you; your good fortune in home and family; ways you can make the house more comforta ble or a happier home for your family. 8. If you go to and from work by train or bus, perhaps the time can be used for reading or study. 9. At home seek a quiet spot for any concentrated study you have to do. 10. Finally, examine that 9% (15 hours) spent in lei surethat half hour before the evening meal, those long loafing evenings, time over weekends. You can get more than pleasure from leisure, if you have the will power to turn on your thoughts rather than the T.V. Couldn't you spare perhaps five hours per week to complete a correspond ence course, go to night school, do intensive reading along some line of use in your work? If your answer is yeswill you?
High Lights
1. Introduce efficiency into your own life, both in planning and performance. 2. Planning is likely to involve what, why, when, how, where and who. 3. Aims (what) should be specific, not generalized. 4. Strive to do two things in the same period of time. 5. The six factors of planning can help support one another. 6. Learn to utilize planning devices.



7. Apply scientific management principles to your own job. 8. Make certain that your social life contributes to your success and happiness. 9. Conserve time and energy in your home life activities. 10. Use some leisure hours for self improvement

"Dream no little dreams; they have no power to stir the imaginations of men." But there is an art to imagineering, as the next chapter will disclose.



"The Highest Achievement"

Genius is said to be 10% inspiration, 90% perspiration. So far in this book we have largely considered how you can become a more effective worker. But without that 10% of inspiration, you can become dray horse instead of race horse. So, let's consider how you can become a more effective imagineer. George R. Harrison, dean of the School of Science at Massachusetts Institute of Technology, has written1:
Intelligence dawns as reason begins to be joined by common sense, prudence and expediency, and eventually by imagination, the ability to bring separate images together into new associations. With the dawn of creative imagination in man, nature took another stride forward in her ability to solve problems, a step fully as important as that which she had taken when reason first dawned. The factor in which a true genius excels is often not judg ment or memory or even intelligence, but creative imagination, the highest achievement of man's new brain.

In "How the Brain Works," The Atlantic Monthly, Sept., 1956.




Virtually all progress has resulted from some original imagination. Someone had an idea. That idea attached so much interest-significance to itself that it required action. Thus great institutions have been born. Since few, if any, of us can suddenly create a new idea which is unrelated to anything that has existed heretofore, it seems obvious that imagination can bring about only changes or modification in existing ideas. Old ideas may be adapted to new situations or new slants may be put upon old devices. So the more old ideas (information) you possess, the more your imagination has to work with. Hence your newly imagined ideas may be sufficiently different that they become accepted in people's minds, i.e., they are seized upon by the imaginations of other individuals, and so grow in acceptance.

Trust Your Subconscious

Psychologists distinguish the unconscious from the subconscious. The first is the total effect of your life's experiences upon your personality; you are unaware, and cannot become aware, of most of these deep hidden effects. The subconscious, on the other hand, is a vast storehouse of memories, more or less available to you. A hypnotist, for example, can get you to recall long-forgotten childhood incidents. The conscious mind (information and reasoning, principally) may be untrustworthy because it can be affected by hampering attitudes, emotions, physical stress or environmental factors. These distracting influences may ac-



tually prevent you from using your subconscious powers in problem solving.
Years ago when I held a fellowship at Carnegie Tech, I wanted to ask the president's permission to substitute a course of my choosing for one of the required courses. But he was such an overwhelming person that, on several contacts, I completely forgot my intention. The door into his large office was very heavy, almost like a bank vault door. So I charged my mind with an association: the feel of the heavy doorask to switch courses. The very next time I walked into prcxy's office, the needed memory popped into mind.

Louis Bromfield, renowned novelist, avowed that he trusted his subconscious "thinking" while asleep or relaxing more than his consciously-arrived-at judgments. When you sleep, your ten billion brain cells remain active in fact, they demand one quarter of bodily consumption of energy available at that time. Compared with the amazing capacity of these brain cells, modern electronic computers are mere stumble-bums! No wonder your brain can do some amazing things while you are sleeping.

Two Kinds of Imagination Imagination is a fugitive thing. You know that you have it, yet it is difficult to describe it. In a sense it is like a parade of your past memories which marches on beyond you into the future. If you contemplate building a home, you project your home conditions into some future status. If you are ambitious for some other job, you contemplate



your future in that job. If you want to learn public speaking, you imagine yourself swaying audiences to your point of view. As you read this particular book please try to imagine the kind of person you want to be. This is another example of imagination projected into the future. Sometimes ambition springs from these projections. By imagining yourself in some different status you come to want that status very much. Hence you prepare yourself to achieve it. Imagination can be either free or controlled. Both kinds can be useful in your life. We shall here examine them, to see how you can put them to work in your behalf.
Free Wheeling Imagination

Free imagination is not just daydreaming, although daydreaming is one form of it. In the proper use of free imagination, you do not call upon reason and judgment in an attempt to solve some particular problem in your life. You strive to be creative, keep applying your thoughts to the same problem again and again, never restricting yourself to the rules of logic. Thoughts race up and down the corridors of your mind like children at play. When you read a novel, for example, you exercise your free imagination. That is why, when you see a movie built around some book you have read, you may be disappointed. The way the movie depicts the characters and the scenes may not be the way you have conjured them up in your imagination. Not infrequently, the correct solution to a problem arrives intuitively before the reasons are apparent. Sir Isaac



Newton enunciated a mathematical principle which was not proved until 200 years later! But such magnificent intuitions do not germinate in sterile clay; rather they grow and multiply in rich soil which has been carefully mulched and generously seeded. Sometimes a single transient thought, flitting into your mind like a joy-born butterfly, can be the most important event of your day; keep a net handy to capture it.
Controlled Imagination

You can learn to direct your imagination so that it accelerates your advancement. Free imagination may be as aimless as the fallen leaf in a gust of wind. Yet, ages ago, man watched the wind blowing a leaf, imagined a windmill, then built one. Normally, imagination is as fugitive as a flash of lightning. Yet a century ago, man imagined what electricity might do if it could be harnessed; then he built a generator and a motor. Normally, too, imagination is as unreal as an atom. Yet, within our lifetime, man imagined what might happen if the power in the atom were unleashed; then he built an atom smasher, ushered in the atomic age. An important principle is illustrated by these three examples: the thought precedes the actuality. Valuable clues, even if somewhat fugitive, may come from unusual sources, seemingly unrelated to your specific problem. Will you forgive me if I cite a personal example?
In 1926 I went on the payroll of a multi-company corporation to head up a job evaluation program. At that time only



a few companies had done job evaluation, using a simple point system. After a few months it became evident that a point system was inadequate to cover the wide range of skills, and of pay rates, in our situation. We were stymied. One night, while reading a war novel, the answer came as a "leap in thought," to use John Dewey's descriptive phrase. The U. S. Army had a system of merit rating officers on a "man-to-man" basis for various attributes. Why not rate jobs on a job-to-job basis, by comparing them, one factor at a time? From this simple concept we were able to evolve a workable plan. It is known as the factor comparison system of job evaluation and has been applied in thousands of concerns over the world.

Your Background Is Unique Imagination, by recombining your ideas, can be a useful tool. Generally the ideas come from four major sources: 1. Education or reading. The ideas are stored in your conscious or subconscious memory. 2. Your memory of personal experiences. 3. Your powers of reasoning, which help you select and reject ideas for new combinations. 4. Your prior imagination which, in contradistinction to reasoning, may have created new combinations of ideas, not necessarily in logical form. You possess a unique combination of ideas arising from these four sources. Hence you have the potential to generate certain ideas not possible to other persons who have differ-



ent backgrounds. The harsh fact that so few of us actually create new ideas results from lack of understanding how to direct imagination and from inability to capture excellent but fugitive ideas and to do something about them.

How to Boss Your Imagination

1. See your goal clearly. Vague goals, such as "getting ahead" or "creating something new, are not likely to in spire you. But specific goals, like "cutting the production time" of a certain article, can provide an energizing goad to your imagination, guiding it into the right pastures. 2. Take advantage of existing knowledge. The raw material of imagination is ideasin logical, integrated combinations; in kaleidoscopic, fantastic patterns. If you al ready possess broad information in a given field you may be able to sculpture finely chiseled ideas from the solid marble of facts. So read, study, listen, discuss. Let's suppose you are an accountant and I ask you to let your imagination run wild in the field of biometrics. Probably you won't get very far. But if I ask you to dream up a new record keeping system, you could have a satisfying time devising, rejecting, revising various hunchesand you'd likely come up with considerable improvement over the existing methods.

Your aim should be to start your thought-pioneering where existing knowledge leaves off. There's no joy in discovering that you've just discovered something which someone else discovered a decade ago.



3. Work on two or more problems in somewhat related areas. When you grow stale in one, drop it temporarily and resume work on one of the others. This practice will amaze you. I know a writer who always has three or four pieces of writing under waya novel, a short story, a business article, a research thesis. He is sure that each one helps the other. An electrical engineering graduate writes technical advertising copy for his livelihood. He's also a radio "ham" and helps hospital physicians apply electronic devices to some of their problems. It's easy to see that his imagination as a copywriter would be improved because he does his ham work. 4. Take your time. You are not likely to cook up a brilliant idea right off, or just because you want to. Your sub conscious must be allowed time to mull over your problem arranging, sorting out, combining. If the answer proves elusive, don't try to force it from its hiding placejust add more knowledge, spend additional time ruminating on the subject

Creative Thinking Graham Wallas, famed English scholar, divides the process of creative thinking into these four steps: 1. Preparation; recognition of the problem; analysis; consideration of similar problems and their solution. Here a wide range of knowledge and interests may prove valuable, since clues may come from unexpected sources. 2. Incubation: Allowing subconscious processes to mull



over the problem, under leisurely conditions. Sleep on it; take a walk; sit in silent, unpressed meditation. 3. Illumination: A "good idea" begins to scintillate. Keep a notebook handy, lest it flit away like a vagabonding butterfly. 4. Verification: Testing by reasoning or by practical trial. All steps may be repeated a number of times before a successful conclusion is reached, or the attempt is abandoned. Profound thinker Bertrand Russell has put it this way: In all the creative work that I have done, what has come first is a problem, a puzzle, involving discomfort. Then comes concentrated voluntary application involving great effort. After this, a period without conscious thought; and finally a solution. This last stage is usually sudden. Creative thinking burgeons in circumstances which are quiet and peacefulwithers in an atmosphere surcharged with hate, fear or guilt.

Role Playing in Imagination An effective way to give practice to your imagination is by use of role playing. In it, you act out a part as you think it might happen in reality. You can do this alone just by talking aloud, using gestures and actions, or do it with others. You don't just think it outyou act it out. For exampie:
You take the role of your company's general manager. A key employee has just told you that he has an attractive



offer from a competitor. Try facing a mirror and talking to the fellow you see there. You are president of your company. At the annual meeting, a prominent stockholder criticizes the board policy of giving only 50% of earnings to stockholders. Your reply? In a depression, jobs in your company are being abolished right and left. The vice president has asked you to tell him what you do (and you know what's in his mind!). What say you? Although you are not in sales work, you unexpectedly find yourself facing a potentially large customer for your company. He will decide immediately after your presentation. How will you handle this suspenseful situation?

In all role playing, you call upon your imagination for material. You learn what not to say and do, as well as get practice in the right actions. You gain confidence in your ability to meet certain conditions, should they arise and this confidence spills over into other roles for which you may not have "tried out, Role playing is a little-used, but wholesome and effective application of your powers of imagination.

Meditation on You Your imagination fears no adversary; but there may be one that it is avoiding. That one is You. Undoubtedly you do a lot of thinking about yourself.



Most of it is free wheeling, and much of it is tinged with doubts, hopelessness, futility. Your ferris wheel thinking takes you high up for a time, but always brings you back to earth. How about using some controlled imagination to solve the problem of You? If you want your dreams to come true, you must wake up!

Put Your Imagination to Work

Millions of men before you have had bright ideas, starryeyed hopes, wonderful intentions. In each generation only a handful of them ever translate their dreams into action. Nature is profligate with man's imagination, casting a thousand seeds to the winds for every one that takes root and grows. Young children say funny things which should be preserved in a family's memory. How many parents bother to record them? You, yourself, have had illumined moments when important ideas took shape in the crucible of your subconscious, white hot and glowing. How often have you captured them? Learn to write them down under such headings as changes in working method, material for a speech, idea for an article, suggestion for some friend, solution to a problem, help for a family member, goal for yourself. Don't try to evaluate them. Don't be afraid of concepts which are unusual, radical, bizarre, difficult or even impossible. Remember that accomplishing the difficult takes time; the impossible takes just a little longer.



If you record enough bright ideas you will soon see ways to classify and integrate them. For some you will need added information. Goals can be either immediate or long term. Many will likely apply to your work life; others to home life or social activities. By such organization you are beginning to subject the figments of your imagination to the discipline of reasoning. If you put your imagination to work on the solution of some difficult problem, the practice of writing down your willo'-the-wisp ideas will soon jell into a plan. Otherwise they evanesce back to the thought vapors from which they came, like cirrus clouds on a sunny day. Write out your plan or solution. Now you are ready for the final step.

Test Out Your Imagined Solution Here you drop from the clouds back to the earth. You are no longer floating in imagination's revery, are rather working with practical hands on the actual problem. You test-rejectmodify experimentamplifycrystallizecapture. But should you meet defeat, don't give up. Back to the clouds again!

High Lights
1. Imagination is probably the "highest achievement of man's brain." 2. Learn to call upon your subconscious.



3. Free imagination can occasionally come np with a bril liant idea. 4. Controlled imagination can be focused upon a specific problem or objective. 5. Acquire vast knowledge in the field of your problem before you try to "imagineer" it. 6. Work on related problems concurrently, if possible. 7. Allow time for your subconscious to mull over the problem. 8. Role playing can sometimes assist 9. Set your own future as an important problem for your imagination to solve. 10. Test out imagined solutions.

A strong imagination is frequently an attribute of the leader. There are other characteristics, too. How you can learn to acquire them is the subject of the next chapter.



Need for Leadership

That hidden ability of an executive, which we term leadership, is not some mysterious power of occultism. Rather it is a skill which, like any other skill, can be acquired by understanding, by correct practice and by repetition. Your point of view toward subordinates is important. Studies have shown that production supervisors, for example, conceive their job as follows: production 78%, human relations 7%, combinations of the two 15%. Some supervisors were so production-oriented that, when it came to helping their employees, they would stop at nothing! Yet studies by the University of Michigan and other research studies, many of them reported in The Harvard Business Review, indicate that there is a high relationship between "employee-centered supervision" and both productivity and employee morale. The employee-centered supervisor is interested in his people, their problems, well-being and future. He is friendly and supportive; goes to bat for his employees; shows interest in how they get along; shows



concern for employees as individuals; gives consideration to their points of view; trains them for their jobs and for higher jobs. There is no leadership without the consent of those led. Some employees go through the motions of doing work because they are supposed to, to hold their jobs, to receive a weekly pay envelope. But if they respond to good leadership, they want to do their jobs. A man can work well at his task because of some motivation, and yet not have high morale. Morale in general results from the work satisfaction which an individual receives from his job plus that which he enjoys from giving to his job or to others. In other words, morale results from both giving and receiving. It is not always true that high morale yields high productivity and low morale yields low productivity. But it is possible to motivate employees to high productivity with accompanying high morale. This is leadership.

Workers Have More Education

Workers in the United States are getting smarterat least they are getting better educated. In 1940 the average worker had had 9.3 years of education. By 1950 it was 10.9 and by 1960 11.9, virtually the equivalent of a high school education. About 10% of those employed are college graduates. These figures suggest that methods of supervision which might have been adequate 20 years ago need revision to meet the higher education level of people at work.



Research on Leadership

Nearly twenty years ago a famous researcher, Dr. Daniel Starch, assigned three assistants to interview 150 executives to discover their backgrounds, attitudes and actions. As a result, he produced an important book, How to Develop Your Executive Ability.1 It presents these four fundamental requirements: 1. Organize your thinking: Basic techniques; what to think, and to learn more about; put new ideas to work. 2. Tackle your work with enthusiasm: Stir up your inner drive; concentrate on your goals. 3. Fit yourself to assume responsibility: Accept responsibility; develop leadership traits. 4. Learn to handle people: Discover their wants, set an example, communicate with them. Starch observes that: Most management is good by intent, but mediocre in achievement. The repercussions of bad management are so insidious, and the benefits of good management are so leavening, that it makes executive leaders just about the most influential single group in our society. The well-being of all of us depends on them more than on any other group.

The Executive's Job Is Difficult

Because so much of executive leadership deals with people and their problems, the job is a nerve wracking one. The life expectancy of industrial policy holders of the Met1

Published by Harper and Brothers, N. Y., 1943.



ropolitan Life Insurance Company is just about 70 years. But the average life span of business executives is six years less. They develop strong senses of loyalty to their companies and employees. They feel the responsibilities thrust upon them. Yet they neglect their own health. As a consequence they are more susceptible to heart disease, neuroses, peptic ulcers, asthma and high blood pressure. No, it's not healthy to be an executive. However, if you master the principles of leadership, you will be able to take your problems in stride so that they will not tear down your health. Perhaps you suspect that you are too timid to be a real leader. Research shows that there are some individuals whose childhood preparation for leadership has been so poor that they should never be thrust into positions of responsibility for the work of others. However, this is probably a small percentage. Your timidity about whether you can acquire leadership traits is no indication that you are part of this small group. In fact, timidity, as it reflects itself in humbleness, can be a decided asset. But those who continue to lack faith in themselves build no bridges, discover no great principles, lead no great causes. Let us consider what an executive should be and know and do. These have been themes of this entire book, here brought together from the standpoint of executive leadership. What Must a Leader Be? The primary requisite for an executive leader is that he be emotionally mature. Let us see what we mean by this term.



If a ten-year-old child can solve intelligence test problems normally done by ten-year-olds, he is said to have an intelligence quotient (I.Q.) of 100. If he can only do eightyear-old problems, his I.Q. is 80; if twelve-year-old problems, his I.Q. is 120. If a ten-year-old child lay on the floor, kicked and screamed to get his way, we would consider his actions infantile, immature. But we have no comparable "emotional quotient" (let's call it E.Q.) to measure his lack of maturity. If a father strikes a year-old baby because it cries, we are horrified; emotional immaturity again. But what shall we say of the business executive who shouts at subordinates, pounds the desk or fires employees in a fit of temper? If we could measure his E.Q., it would probably be 50, for he is handling his problems in a childlike fashion. Somewhere along the line, he stopped maturing emotionally. The significantand dangerousfact is that such individuals are adult in physique, possessed of power to harm and are accepted by others who in varying ways may be equally immature. An emotionally mature executive is truly interested in his job. Hence he likes his subordinates and is proud of them as a team; they find him approachable. He is cheerful most of the time, consistent in his thoughts and actions and impartial in settling disputes. He is humble about his accomplishments and always open to understand the other fellow's point of view. Finally, he suffers that itching sensation resulting from irritation of the wishbone which we term ambition.



What Must a Leader Know?

Primarily the leader must know most of the answers to the problems in his field of leadership. This includes knowing what is going on among his subordinates and associates. On the other hand, when he doesn't know the answer he should be free to admit it; no one expects a leader to be an encyclopedia. He knows that people around him will make errors, just as he will himself. Hence he will not expect perfection. Per contra he will not expect errors to be repeated again and again, without action on his part. He will have a considerable comprehension of the theory and practice of management. Along with this he will have developed a basic philosophy as to management and his own part in it. He knows that employees can't do today's tasks with tomorrow's enthusiasm. Accordingly, he masters the principles of human motivation and how to develop subordinates to higher levels of performance and attitudes. Finally he will know that he can't win over every person to his way of thinking, conquer every problem, or win out in every situation. Hence he will understand when it is wise to compromise.

What Must a Leader Do?

A former college classmate of mine, Dr. Harry W. Hepner, professor of psychology at Syracuse University, has



written that: "Personality is an activity, not a possession not a stagnant pool but a running brook." * Executive actions are so varied and so important that we shall here consider them from the following four points of view: 1. Planning 2. Getting loyalty 3. Persuading 4. Handling discipline.

The leader has a long plan span. Wherever possible he plans in advance, doesn't wait until the situation demands it of him. But he undertakes both long and short range planning, which may include listing objectives, forecasting, budgeting and subdividing work to meet the abilities of the people available. The leader causes change; followers endure it. He will initiate action to get started with the plan and give specific assignments to his subordinates. These assignments should be understood and he must see to it that they are followed. From time to time he will review the unfolding of the plan, including how well standards are being met, with inspection as to quality. He may have to coordinate the work of individuals or even to revise the original objectives and the initial assignments. In doing these things he will use established channels within his group and will not by-pass intermediate levels. Moreover, he will understand and will himself follow the rules and customs of his own group.
1 How to Live and Work Successfully with People in Business, Hall, N.Y., Prentice1952 (p. 87).



In planning work for others he will endeavor to avoid potential trouble as close as possible to its original source. Two incidents will illustrate what this means.
The first incident was in a textile plant An accountant was compiling a record of average weight of cloth produced Investigation revealed that frequently the amounts of underweight were offset by overweightsbut that was no consolation to customers who chanced to buy the underweight material. Arrangements were made to catch over- and underweight conditions at the weighing scales. The second happened in a bottling plant. Dozens of cases had been returned because the carbonation had escaped. The trouble was finally traced to faulty bottles, ever so slightly oval at the mouth instead of being perfectly round.

In both these situations the principle of stopping trouble close to its source had been neglected. It took disgruntled customers to change practices in the textile plant and in the plant manufacturing bottles.
Getting Loyalty

Sociologists who have studied high loyalty and low loyalty groups say that the high loyalty groups have these five characteristics: 1. The members feel that they belong to the group. 2. They have friends in the group and in the company, as well as outside. 3. They have good interpersonal relationships among the members of the group. 4. They have favorable attitudes toward job, boss and company.



5. They will accept higher production goals and will produce more with less strain or pressure than is the case with low loyalty groups. These are some of the things which the executive leader does in order to earn such loyalty: 1. He believes and acts as though his people constitute a group or team. And he supports them in their efforts. If things go wrong he accepts responsibility as though it were his personal obligation. He treats each member as a unique individual and not merely as a pawn. From time to time he tries to make each one feel important, especially as to his contribution to the group. He seeks the cooperation of individual members, sometimes by asking that things be done as a personal favor. He will give credit, and in front of other people, especially for a job well done or for extra effort. He himself will pitch in to get things accomplished. Finally he lets individual members of the group know where they stand, both in his esteem and in relation to their fellows.

The executive leader understands the wisdom in the ancient maxim that "you can lead a horse to water but you can't make him drink, He knows that if you turn on a machine it will go through its required motions, but that if you simply turn on a human being and he merely goes through the required motions, you have not gotten the fullest which in him lies. Hence the executive leader will endeavor to enlist the spirit of his subordinates by persuasion. Some of his approaches in this may be the following: 1. He will request rather than order.



2. He will suggest so that ideas may ripen in the minds of subordinates. 3. He will sometimes ask questions where the answers will lead to a conclusion or show that his point of view is correct. 4. He will try to avoid the pet peeves of associates and subordinates. 5. He will be willing to meet subordinates half waygive a little to gain a lot. 6. He will discuss problems or differences of opinion with the persons involved, not tattle to their superiors. 7. He will avoid forcing subordinates to back down on issues which they feel are important to them. If they take the correct actions he will know that they have made the proper decisions, without forcing them to say so in so many words. 8. He will quietly stick with the main point of any discussion and not allow himself to be led into bypaths. 9. He will find reasons (motivations) why his point of view can be advantageous to the other fellow. Additionally reread the section on "How to Become Persuasive" in chapter 6.
Handling Discipline

There are times when the leader feels that he must discipline some recalcitrant member of his group. How he handles the disciplinary action may either engender loyalty or hatred in the mind of the person disciplined. Good leaders follow some or all of these practices: 1. Have a good reason to correct an employee. Just to get something off your own chest is not a sufficient reason.



2. Investigate before the corrective action, so that you are in full possession of the truth. Be more interested in fact finding than fault finding. 3. Wait until you are emotionally calm. 4. Do not make your comments in front of other per sons. 5. Never use disciplinary tactics in an endeavor to put someone in his place. Even where a situation arises in which this end result may be desirable, it is not the right time for a disciplinary or critical session. 6. When you hand out penalties, let the "punishment fit the crime." Too heavy a sentence for a first offense may only arouse a feeling of injustice in the mind of the of fender. 7. Endeavor to use the well known sandwich technique which involves finding a point to praise, inserting the point to be criticized and closing with another point to be praised. (See section on "Criticism" in Chapter 5.) We have commented on things which you, as an executive leader should do in planning, in getting loyalty of subordinates, in persuading them and in disciplining them. These actions should be built up by you as leadership habits.

High Lights
1. Employee-centered supervision yields both productivity and morale. 2. What an executive is and does are more important than what he knows. 3. An executive leader needs to be emotionally mature.



4. The true executive knows both his field of work and the psychology of handling subordinates. 5. He plans for others. 6. He takes steps to deserve loyalty from subordinates. 7. He learns to become persuasive. 8. He is careful in administering discipline.

The greatest enemy of your future success is the man you have developed to date. How to smite asunder the shackles of your past is the stimulating theme of the last chapter of this book.



Energy Characterizes Outstanding People Sir Francis Galton, English physician and scientist (1822-1911), made a comprehensive study of men of genius, found that driving energy was a characteristic of virtually all of them. A review of outstanding figures of our times bears out his observation. Great men and women produce great energy, release it wisely. But we have already seen that physiological energy (sugar, oxygen, muscular activity) is sparked by psychological wants (position, power, fame, praise, acceptance, possessions, security, home, etc.). Further, we have noted that fears, guilts and hatreds can produce negative emotion power, which depresses eagerness for action and ultimately depletes all energy reserves. Outstanding energy does not necessarily make a genius. We have all known energetic people who got nowhere, perhaps because they tossed their energies to the wind, like pollen from a flower, instead of funneling them in one direction.



If you would make great advances in your own life, you too must: 1. Produce great energy. 2. Concentrate it wisely.

Many Kinds of Success

Success, like love, is a many-splendored thing. You are successful when you accomplish something worthwhile and get satisfaction from it The second part is equally as important as the first. Most of us are convinced that we could make a success of our livesif we only had the time. Yet the successful person enjoys no more hours than you or I; it's how he spends them that counts. Time is the only currency that cannot be counterfeited. Here's an interesting success formula: Mix one part of native ability with two of health, three of extroversion, four of integrity and ninety of stick-to-it-iveness. For inspired genius may dream great projects, but perspiring persistence carries them out. This book has been aimed at job success. Its ultimate value to you must be measured in terms of: Promotions. Higher earnings. Greater job satisfaction.



The Harsh Facts

Rather few individuals so want to improve themselves that they will do anything constructive about it. Of every 100 persons, it is likely that: 60 are not even concerned with the desirability of selfimprovement. 20 are interested, but take no steps toward it. 18 make occasional feeble, and frequently futile, gestures. 2 undertake serious and systematic efforts to improve their minds, personalities and emotions.
Want to Make Money?

Do not apologize, even to yourself, for wanting to earn far more than you now do. It is quite normal. Those who sneer at financial success are covering up their own feelings of inadequacy. High income can give you security, a fine house, protection for your loved ones, the thrill of travel, vacation variety, interesting hobbies, leisure for self development or pleasure, physical comforts, prestige, association with other progressive persons, adequate medical care, cultural opportunities for yourself and your family. Why shouldn't you want these things?
Battle Against Mediocrity

Your real struggle is not so much against adversity, as mediocrity. To be ordinary is easy, to be outstanding takes a



lot of doing. If you do nothing you can probably escape criticism, can certainly escape success. One characteristic of mediocrity is carelessness or indifference to the seemingly minor activities. But if you learn to do the little tasks well, soon greater things will come within your ken, begging to be done. You don't have to do extraordinary things; merely do ordinary things extraordinarily well. So say to yourself: "I will not choose mediocrity; instead I will rise." Say it aloudnow.

Misfit or Failure? Some individuals are misfits rather than failures. A surprisingly large percentage (59% in one survey) of people at work think they're not in the right line, would do better at some other work. Professor Donald G. Paterson in a lecture at Ohio State University has reported that unsuspected talents have been found among misfits. One classic case was that of a selfstyled failure, a job drifter who was found by aptitude testing to possess unusual capacity. Encouraged to go to college he was graduated magna cum laude, later earned master's and doctor's degrees. Because an individual is mediocre or a failure in one line of endeavor does not mean that he must necessarily be so in some other line. This finding of psychology is important for you to realize, to believe, to act upon. Some men move on to satisfying success, some to heart-



breaking failure. Ella Wheeler Wilcox posed the problem when she wrote in The Winds of Fate: One ship drives east And another drives west With the selfsame winds that blow But note the poet's conclusion: Tis the set of the sails And not the gales Which tells us the way to go.

Hitch Your Wagon to a Nearby Star By hitching your wagon to a nearby star, you set a goal which you can achieve within a year or so. Achieving that attainable goal brings you satisfaction which in turn generates emotion power to tackle the next higher star. Years ago the great psychologist William James developed a simple formula which underlies the "nearby star" idea. James pointed out that: Achievement Self Esteem = Pretension Thus if your pretension is to earn $10,000 and you only achieve $5,000 your self esteem is 5/10ths, or only half of what it should be. But if your pretension is to earn $5,000 and you achieve $10,000 your self esteem is 10/5ths which really does something for you! Nor is it necessary always to place the dollar mark on the equation. Isn't it obvious that:



Exercise All Faculties

We understand clearly that muscles atrophy when they are not used. But the same rule holds for mental, emotional and social powers.
In his Victims of Social Leveling, Leonard E. Read tells of a wild duck that joined domestic ducks but, after some months of being fed, couldn't fly above the barn; of gulls that fattened up at a shrimp plant but starved when it shut down.

So with you. If you don't use your ability with mathematics, for example, you'll lose it. And this result holds for public speaking, helpfulness to others, saving face in social situations, planning your time, making decisions, seeking new knowledge, maintaining hopeful attitudes, tackling difficult tasks and other aspects of advance-ful living. Read concludes that: "The fullest possible employment of one's faculties is what makes for strength of body, of character, of spirit, of intellect." Persistence in using your abilities is the reactor which splits asunder the atom of your faith, to release the energy-power of enthusiasm.

The Shackles of Habit On a large rock in the Lake of Geneva stands the 9th-century Castle of Chillon. It was there that the Duke of Savoy imprisoned Francis Bonnivard from 1530 to 1536. Several centuries later the story gave rise to Lord Byron's poem, "The Prisoner of Chillon." It tells of Bonnivard's gradual change



from anguish to acceptance. Finally, when friendly hands rescued him, he doubted that he wanted to be free from his bondage.

Every life has a parallel to this classic story. We forge chains of habit, one link at a time: habits of choosing, habits of thinking, habits of doing. Occasionally we stand up straight to look through the prison window, as did Bonnivard, and see the great beyond, with its green pastures and lofty silver-capped mountains. But soon we huddle back into our old routines. When the friendly hands of opportunity reach out to rescue us, we look with longing at the security of the cell to which we have become so accustomed. In contrast, consider the man who decides with stubborn finality that he will no longer be bound by the limitations which he and his environment have piled upon him. Such a man whittles his obstacles down to manageable size. By first conquering himself he becomes invincible against others.
So You're Too Old, Are You?

As you have read this book perhaps you have said to yourself: "I'm too old. If I were only ten years younger, I'd really do a lot of these things."
In one important research, 400 important men throughout the ages were studied. They included writers, painters, poets, soldiers and statesmen. For each name a group of informed judges decided the greatest accomplishment Further research disclosed the age at which each accomplishment was completed. Here are the results:



Percentage of the
400 great achievements

Decade in life when achieved

6% 23% 35% 25% 10% 1%

80 and beyond 70 to 79 60 to 69 50 to 59 40 to 49 Up to 39

Eighty-nine per cent of the great accomplishments of the world have been performed by men of 50 or over! Sorrybut you can't let yourself hide behind that age alibi. Maybe your problem is laziness instead of "ageiness," won't instead of want, yearn instead of earn. No, my friend, it is not by the gray of your hair that one knows the age of your heart.
Your Development

Just as a strong wind can extinguish a match but fan a fierce burning fire, so can time shrivel a little ambition but bring to flower a great one. Your personal development is more a growth state of mind than the acquisition of certain knowledge or specific skill. It means a determination to progress physically, intellectually, vocationally, socially, emotionally and in firmness of character. To carry out these determinations sporadically may prove difficult; to do them as habits becomes easy. If you wish you can draw a profile of your present state of development in the ten aspects shown in Figure 25. Fact finding precedes fact facing. An honest appraisal of yourself can well point out areas where you need to make further improvement.



And such improvement will make of you a high level executive, with corresponding earning power, respect and personal satisfaction.
Figure 25 Self Rating of Your Development



High Lights
1. Outstanding people display great energy. 2. Your success involves doing worthwhile things and get ting satisfaction from them. 3. Keep battling against mediocrity; be superior. 4. You may fail in one line, yet succeed in some other. 5. Hitch your wagon to a nearby star. 6. Keep exercising a large number of your faculties. 7. Break the shackles of habits which hold you back. 8. Age is no barrier. 9. Youand you alonecan choose the course of your life. There is a spot in the Swiss Alps where you can empty a glass of water and choose one of three ultimate destinations. One slope will carry it to the Black Sea, a second to the North Sea, a third to the Mediterranean. So with your life: you can head to dark despair, cold mediocrity or warm success.

You're standing on the mountain peak right now. Which way do you select? The choice is yours.


Finding and Using Your Magic Emotion Power, Eugene J. Benge, Prentice-Hall, N. Y., 1958 How to Get the Most Out of Your Social Security, Harvey Gardner, Frederick Fell, Inc., N. Y., 1958 How to Live and Work Successfully with People in Business, H. W. Hepner, Prentice-Hall, N. Y., 1952 How to Develop a Super-Power Memory, Harry Lorayne, Frederick Fell, Inc., N.Y., 1957 "Guides to Common Sense Management," Nations Business, Washington, D. C. (reprints) How and Where to Look It Up, Robert W. Murphy, McGrawHill Book Co., N. Y., 1959 How to Use Tact and Skill in Handling People, Dr. Paul P. Parker, Frederick Fell, Inc., N. Y., 1959 President's Guide, Prentice-Hall, N. Y., 1959 How to Live 365 Days a Year, John A. Schindler, M.D., PrenticeHall, N. Y, 1954 Advanced Management (monthly to members), Society for Advancement of Management, N. Y.
Selected publications of the American Management Association, 1515 Broadway, N.Y. 36, N.Y.:

Appraising Executive Performance, Carl Heyel (1958) A Company Guide to Effective Stockholder Relations (1953)



Control of Non-Manufacturing Costs, (1957) Cost Reduction at Work (1959) Defining the Manager's Job (1958) Developing Executive Skills (1958) Effective Communication on the Job (1956) Ends and Means of Modern Management (1959) Establishing a New Product Program (1958) Management for the Smaller Company (1959) Management in Action (1959) People at Work (195S) Planning Ahead for Profits (1959) Reporting Financial Data to Top Management (1957) Supervisory Responsibility and Authority (1957)