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Friday, January 14, 2011
Sunday, October 10, 2010
Re-position HR Department to Support Evolving Business Strategy
Situation
A large academic medical center initiated an aggressive strategy to distinguish itself from its market competition. Several key objectives were central to this undertaking. These included; a focus on improved customer service; visible improvements to the campus; enhanced academic offerings; and distinction as “employer of choice”.
With more than 11,000 employees, the organization has a very high profile in the community. They were recognized for excellence in academic quality and patient care. However, their reputation as a preferred employer was far more tenuous. The Human Resources function had suffered from a chronic lack of resources and was poorly positioned within the management hierarchy. Additionally, minimal HR support was available to managers and application of talent management policies and practices varied widely.
Strategy
HResults was engaged to study the effectiveness of HR services throughout the enterprise; recommend improvements to the infrastructure and design a model for HR service delivery.
Client engagement and HR staff involvement is essential to the success of this type of undertaking. Balancing the needs of the university, hospitals and physician practices presented an additional challenge on this project. Critical steps were to:
* Obtain senior leadership sponsorship and buy-in through development of a clear set of guiding principles and defined outcomes;
* Establish a senior level advisory team comprised of representatives from all major constituencies to provide input, hear feedback and endorse recommendations;
* Gather feedback through interviews, focus groups and process audits;
* Apply HR Effectiveness measures and competitive practice data to design recommendations;
* Engage joint HR and operating management teams in targeted re-design activities;
* Pilot process changes and service delivery model in key client areas and evaluate outcomes
Outcome
The evaluation and re-design of the HR function resulted in significant change for this organization. Most significantly:
* The functional departmental structure was abandoned and replaced with a service delivery model with three major components:
o A client facing “Business Partner Team” with experience and competencies matched to the diverse customer base;
o An “HR Service Center” which is responsible for all processing and automation
o “Centers of Excellence” for talent acquisition, reward programs and development
* Senior HR staff were appointed to steering committees for major organizational initiatives
* HR function moved to new, modern facilities to improve service and access for employees
* Key processes were automated and employee self service was introduced for routine tasks such as open enrollment
* Short term savings of nearly $200,000 were realized and longer term recurring annual savings opportunities of over $1mm were identified enterprise-wide
A large academic medical center initiated an aggressive strategy to distinguish itself from its market competition. Several key objectives were central to this undertaking. These included; a focus on improved customer service; visible improvements to the campus; enhanced academic offerings; and distinction as “employer of choice”.
With more than 11,000 employees, the organization has a very high profile in the community. They were recognized for excellence in academic quality and patient care. However, their reputation as a preferred employer was far more tenuous. The Human Resources function had suffered from a chronic lack of resources and was poorly positioned within the management hierarchy. Additionally, minimal HR support was available to managers and application of talent management policies and practices varied widely.
Strategy
HResults was engaged to study the effectiveness of HR services throughout the enterprise; recommend improvements to the infrastructure and design a model for HR service delivery.
Client engagement and HR staff involvement is essential to the success of this type of undertaking. Balancing the needs of the university, hospitals and physician practices presented an additional challenge on this project. Critical steps were to:
* Obtain senior leadership sponsorship and buy-in through development of a clear set of guiding principles and defined outcomes;
* Establish a senior level advisory team comprised of representatives from all major constituencies to provide input, hear feedback and endorse recommendations;
* Gather feedback through interviews, focus groups and process audits;
* Apply HR Effectiveness measures and competitive practice data to design recommendations;
* Engage joint HR and operating management teams in targeted re-design activities;
* Pilot process changes and service delivery model in key client areas and evaluate outcomes
Outcome
The evaluation and re-design of the HR function resulted in significant change for this organization. Most significantly:
* The functional departmental structure was abandoned and replaced with a service delivery model with three major components:
o A client facing “Business Partner Team” with experience and competencies matched to the diverse customer base;
o An “HR Service Center” which is responsible for all processing and automation
o “Centers of Excellence” for talent acquisition, reward programs and development
* Senior HR staff were appointed to steering committees for major organizational initiatives
* HR function moved to new, modern facilities to improve service and access for employees
* Key processes were automated and employee self service was introduced for routine tasks such as open enrollment
* Short term savings of nearly $200,000 were realized and longer term recurring annual savings opportunities of over $1mm were identified enterprise-wide
Associated Press sells German unit to ddp news agency
According to a report published by the Sueddeutsche Zeitung daily newspaper, ddp paid tens of million of euros for AP's German services, which provide news content for media customers such as newspapers, broadcasters and online portals.
The deal also grants ddp a 15-year license to adapt and use English-language content from AP's network of 3,000 reporters based in 250 bureaus in 97 countries. Observers say that will allow the Berlin-based agency to go beyond its traditionally domestic focus and provide customers with international coverage of global events.
Competitive pressures
The acquisition will see 110 AP reporters from Germany, Austria and Switzerland join ddp's pool of 140 journalists.
Peter Loew, who co-owns ddp with Martin Vorderwuelbecke, told the Sueddeutsche Zeitung that he had high hopes for the enlarged company.
"We are going to be the best full-service agency in Germany," Loew said. "Our strategy is to make the Deutsche Presse-Agentur (dpa) dispensable."
German newspapers on sale at a kioskBildunterschrift: Großansicht des Bildes mit der Bildunterschrift: German newspapers rely on agencies for much of their non-local contentThe aggressive strategy pursued by ddp adds to a string of bad news for dpa, which has been struggling to maintain its position as Germany's leading news agency.
Last month Berlin's Tagesspiegel newspaper announced it would stop using dpa services in the summer of 2010, citing high costs, while the WAZ group of regional newspapers cancelled its contract on January 1, 2009.
Growth, not cutbacks
Loew told reporters management would focus on expansion, not cutbacks, and that he expected redundancies would be limited to about 15 positions.
Representatives from AP's German works council said employees were disappointed that top managers in the United States had not kept them up to date on negotiations with ddp, and that they only found out the deal had been finalized in the press.
AP, a cooperative whose customers are mainly US newspapers, has been cutting costs to help offset weakening demand from core clients hit by a plunge in advertising revenue.
An attempt to sell its French unit failed last year due to stiff resistance from local staff.
The deal also grants ddp a 15-year license to adapt and use English-language content from AP's network of 3,000 reporters based in 250 bureaus in 97 countries. Observers say that will allow the Berlin-based agency to go beyond its traditionally domestic focus and provide customers with international coverage of global events.
Competitive pressures
The acquisition will see 110 AP reporters from Germany, Austria and Switzerland join ddp's pool of 140 journalists.
Peter Loew, who co-owns ddp with Martin Vorderwuelbecke, told the Sueddeutsche Zeitung that he had high hopes for the enlarged company.
"We are going to be the best full-service agency in Germany," Loew said. "Our strategy is to make the Deutsche Presse-Agentur (dpa) dispensable."
German newspapers on sale at a kioskBildunterschrift: Großansicht des Bildes mit der Bildunterschrift: German newspapers rely on agencies for much of their non-local contentThe aggressive strategy pursued by ddp adds to a string of bad news for dpa, which has been struggling to maintain its position as Germany's leading news agency.
Last month Berlin's Tagesspiegel newspaper announced it would stop using dpa services in the summer of 2010, citing high costs, while the WAZ group of regional newspapers cancelled its contract on January 1, 2009.
Growth, not cutbacks
Loew told reporters management would focus on expansion, not cutbacks, and that he expected redundancies would be limited to about 15 positions.
Representatives from AP's German works council said employees were disappointed that top managers in the United States had not kept them up to date on negotiations with ddp, and that they only found out the deal had been finalized in the press.
AP, a cooperative whose customers are mainly US newspapers, has been cutting costs to help offset weakening demand from core clients hit by a plunge in advertising revenue.
An attempt to sell its French unit failed last year due to stiff resistance from local staff.
After-market & servicing business: Bosch’aggressive strategy
Is the vehicle servicing business in India undergoing a transformation? Looking at recent developments, the first impression is a definite ‘yes’. Steps are being taken for creation of a national chain of organized workshops that is likely to vastly change the vehicle servicing market.
Currently the players in the vehicle servicing market are vehicle dealers and their service centers, authorized service centers of vehicle manufacturers, some organized multi-brand vehicle service centers, and roadside mechanics. India adds a million new cars every year, half-a-million commercial vehicles and eight million two-wheelers to the vehicle population. There is a definite requirement for quality service at reasonable prices.
Identifying a huge opportunity in this segment, Bosch is planning to expand its presence in the automotive independent after-market business. The company is targeting a turnover of Rs. 1,000 crores in the after-market and service equipment business by 2010 against the current Rs. 700 crores.To know more about the company’s business plans I recently met Mr. K. Ravi, Regional Sales Director – India and SAARC (Automotive After-Market), MICO.He said there is huge potential in the after-market and service equipment business in India.
The car business in the country is just picking up volumes, and cars are increasingly becoming computers-on-wheels with 35 per cent of the vehicle dominated by electronics.He feels that the country still doesn’t have sophisticated service equipments and diagnostic tools to cater to the growing requirement. In order to tap this potential, Bosch is expanding the product range in this business by bringing some of its global technology products into India. It is also planning to manufacture some of these products in India.
A core competency centre has been created in the country to manufacture these equipments in the MICO production complex.Indian after-market Mr. Ravi further said that, in the Indian after-market business Bosch registered a 12 per cent growth in 2006. The company has had a good first quarter in 2007 and expects the after-market business to fare very well in the coming years. The reason is that the sales of vehicles, across all segments, have been growing satisfactorily for the past three-four years.
Usually for any new vehicle, the service requirement for the first three years are met by the manufacturers through their network. Vehicle manufacturers are now offering extended warranty. As a result, vehicle owners continue to use the OEM service network even upto five years. It’s only after five years that all these vehicles come to the open market for service and repairs.
In India 50 per cent of Bosch’s current business is accounted for by the diesel segment. The products offered by Bosch in the after-market include auto electricals, batteries, belts, braking systems, clutch plates and cover assemblies, diesel systems, filters, gasoline systems, gear pumps , glow plugs, horns, lighting, lubricant oils, relays, spark plugs, wiper blades.Going forward, Bosch plans to position itself as a one-stop shop for sales and service and to make available the entire range of products to those who come for service.
The service points would not only sell the parts but also service them. The company is providing intensive training to its business partners for service of components in the after-market. It has created a training centre in each and every State and is offering training in nearly 10 languages. Training is also given on soft skills.Mr. Ravi said Bosch has a network of 750 diesel service centers and 60 auto electrical workshops throughout India, plus 150 Bosch car service centers.
There are plans to raise the number of service and customer contact points to around 1,500 to 2,000 from the current 950 in the next three to five years. Global scenarioFurther, at the global level Bosch has given a boost to its workshop equipment business. It recently acquired brands like Beissbarth and Sicam. This will further strengthen Bosch’s diagnostics unit in the workshop equipment business segment, especially when it comes to diagnostic systems.
For Bosch, the main outcome of the acquisition will be an expansion of its chassis-measurement systems product segment. Its workshop equipment range will also now include tyre-servicing equipment. Moreover, the acquisition will serve to strengthen its workshop equipment business at OEMs’ authorized repair centers.
An agreement for acquiring Beissbarth and Sicam was signed on February 14 last. Together, the two companies generate sales of roughly 90 million Euros and employ a total of some 430 associates at two locations, as well as in several sales companies. Beissbarth GmbH manufactures chassis measurement systems and tyre-testing equipment, and also sells tyre-servicing equipment. Sicam s.r.l. focuses on tyre-servicing equipment. JV with MahaBosch has also agreed for joint development of new test equipment and processes with Maha.
The two companies will jointly develop new test equipment and processes. In this, they will be merging Bosch’s know-how in testing technology related to engine segment, such as vehicle diagnostics, and Maha’s expertise in the wheel and chassis-related business, such as chassis dynamometers.With mutual co-operation, Bosch and Maha are responding to the increasing cross-linkage of mechanical and electronic systems in vehicles.
The joint development work is focused on enabling test institutions and workshops to provide efficient and expert testing of modern vehicles.Bosch car service In India a vehicle owner has two options – one is to use the authorized service centers (ASCs) of vehicle manufacturers or roadside mechanics for their repairs. ASCs offered customers standardized service at costs predetermined by vehicle manufacturers that ensured transparent operations. The huge premium charged by vehicle manufactures for their genuine parts and the cost of labor meant that customer had to settle for a higher bill.
On the other hand, the roadside mechanic used spare parts openly available in the after-market that is cheaper compared to genuine spare parts. The problem with roadside mechanics is the lack of transparency in operations as customers are short charged in components used. The structure of the market created a gap in terms of customer’s needs and expectations.
This is were Bosch has positioned itself to fulfill these needs – quality service using genuine and OE quality spare parts at an affordable price. According to Mr. Ravi, India is one of the key growth markets for Bosch. The global partnerships in the area of automotive service equipments will have a huge business opportunity in India.
Currently, the multi-brand car service market is witnessing exponential growth in India. At the same time, the second-hand car market is also expanding fast. A customer buying a second-hand car is looking for a reliable service solution, and this market has touched close to two million cars and the customers want a branded reliable service solution.
Normally the OEM takes care of service for the first three years, and now with extended warranty some manufacturers retain customers even for upto five years. But in India, the life of all these vehicles is anywhere between 10 to 15 years, and from the fifth year till the end of product life it is the independent garages that provides service to the vehicle.
The Bosch Car Service (BCS) is a global phenomenon. Worldwide there are more than 8000 BCS centers. The company brought this concept to India a couple of years back. Today it operates more than 150 of its car service centers throughout the country. The company targets 200 BCS centers by the end of the current financial year. This is a ready market available for the new range of service equipments which Bosch plans to launch in the Indian market. In the service equipment business, Bosch currently offers battery testers, auto electrical test bench, multi-functional tester, diagnostic tester (Bosch KTS and ESI tronic software), engine analyser and MICO FIP test bench.
The company is also planning to launch a low-cost version of the diagnostic equipments to suit independent garages to be sold at an affordable price.Currently the garage equipments business is dominated by many Indian and international players. Madhus, RAI and Elgi represent most of the global brands in India. Snap-On has a direct presence in India and sells the popular JBC and Hoffmann range of products. Manatec, the Indian brand has its strong presence in the domestic market. Bosch Diesel Service CentreMr. Ravi disclosed that Bosch is also planning to expand its Diesel Service Centre and provide end-to-end service solutions for all diesel powered vehicles.
Apart from being an expert in the repair of conventional diesel injection pumps and components, it is well-equipped to repair all Bosch systems and components such as Electronic Diesel Control pumps & Common Rail pumps both on and off the vehicle.There are approximately 500 Bosch Diesel Centers worldwide, including 35 in the Asia-Pacific region alone.
In India, Bosch recently inaugurated its first diesel service center in Gujarat. This center, the first of its kind in India, exhibits highest level of capability with round-the-clock service. Bosch plans to open another five more centres in the coming year, depending on market conditions and future customer needs. He said: “With the state-of-the-art testing and repair equipment imported from our parent company, the BDC, initiated by its channel partners is authorized for all Bosch after-sales service and warranty work on diesel powered vehicles.
The center is well-equipped to service a large number of modern cars and trucks, as also provide regular diagnostics and repair diesel and auto-electrical units.Bosch is well poised to take the big leap forward. It has its service network in place and is continuously expanding its reach. With the automotive after-market set for exponential growth, Bosch is well on its way to scripting another success story.
Energy Efficiency Study a Microcosm of the Global Energy Crisis
What we like about this study is that it can serve as a microcosm for the rest of the world. Look – if we want to reduce the need to scramble for energy resources and production of that energy in the future, then all sectors should realize that energy efficiency has this vast potential. A potential that needs to be unlocked.
The key is to look at what commonly wastes energy. What are a few things that require energy to run or charge that everyone has? An air-conditioner? A cell phone? A laptop? Some people have multiple cell phones or laptops. In total, 500 Billion consumer electronic and semiconductor (products with computer chips) products are produced, sold and used each year. 500 BILLION!!! Most, if not all, are vampire products – meaning they consume energy while not in use or serving their primary function. Likewise, those products account for Hundreds of Billions of Dollars of wasted energy per year and trillions of unnecessary pounds of CO2 emissions.
The key is to look at what commonly wastes energy. What are a few things that require energy to run or charge that everyone has? An air-conditioner? A cell phone? A laptop? Some people have multiple cell phones or laptops. In total, 500 Billion consumer electronic and semiconductor (products with computer chips) products are produced, sold and used each year. 500 BILLION!!! Most, if not all, are vampire products – meaning they consume energy while not in use or serving their primary function. Likewise, those products account for Hundreds of Billions of Dollars of wasted energy per year and trillions of unnecessary pounds of CO2 emissions.
Implementing a smart grid, mass-producing electric vehicles and ultimately discovering new eco-friendly raw energy sources are crucial to our planet’s long-term stability, but the low hanging fruit is energy efficiency in the most prolific and commonly used energy wasters – the chargers and energy supplies of those 500 Billion vampire products. Aggressive implementation now means discovering a new eco-friendly raw energy resource for the future. That new eco-friendly raw energy resource – energy efficiency.
Asset allocation for fund investors
The importance of diversification
Sometimes it seems like the deck is stacked against small or "retail" investors. These investors compete on an uneven playing field against large institutional managers and the people on Wall Street who make the rules of the game. As members of the investing hoi polloi, most individuals would fare best if they followed a diversified asset allocation strategy using mutual funds.
Diversifying across asset classes allows fund investors to mitigate market risk because, the theory goes, different investments perform differently under various conditions. An easy way to get exposure to many different areas of the market is to buy funds that focus on different types of assets -- for example, domestic funds containing shares of small, middle-size and large companies, plus international and emerging markets funds. For additional diversification, add other noncorrelating asset classes to the mix, such as real estate investment trusts, or REITs, and bond funds.
To determine your ideal asset allocation strategy, start by assessing your goals, risk tolerance and investing time horizon.
Consider your spending needs
Your tolerance for risk goes hand in hand with what you can afford to lose. Though you may have no problem snoozing through tectonic shifts in the stock market, liabilities on your balance sheet can be hazardous to your financial well-being. Liabilities can appear in the form of debts or future cash needs.
"If you are someone who has a spending need -- tuition, spending in retirement -- that you can factor in and put a present value on, incorporate that as a liability as you're doing your balance sheet analysis," says Dorsey Farr, Ph.D., investment strategist and portfolio manager at French Wolf & Farr in Atlanta.
"That means that most people can take less risk than they might otherwise think because they have to take into account that planned spending or liability when they're doing asset-liability modeling," he says.
Some people just cannot stomach the thought of losing money even if they own their home and may never need to touch a penny of their investments. Account for your personality when considering risk tolerance to avoid bailing out of high-risk investments at the slightest sign of turbulence.
Time horizon an important factor
In a broad sense, the amount of time you have to invest will dictate your investment strategy.
The retirement portfolio of a 25-year-old is necessarily different from retirement portfolios of 65-year-olds heading into their nonworking years.
"When you're investing, the time frame is extraordinarily important. As we've seen in recent years, you could have the greatest investment in the world, but in a matter of weeks it can come down drastically because of panicked selling that has nothing to do with that company or security," says Paul Mladjenovic, Certified Financial Planner and author of "Stock Investing for Dummies" and the "Unofficial Guide to Picking Stocks."
A recovery can take several years, which may be too long if you have short-term goals such as buying a car or house or funding college.
As a general rule, the more time you have, the more risk you can take.
Sometimes it seems like the deck is stacked against small or "retail" investors. These investors compete on an uneven playing field against large institutional managers and the people on Wall Street who make the rules of the game. As members of the investing hoi polloi, most individuals would fare best if they followed a diversified asset allocation strategy using mutual funds.
Diversifying across asset classes allows fund investors to mitigate market risk because, the theory goes, different investments perform differently under various conditions. An easy way to get exposure to many different areas of the market is to buy funds that focus on different types of assets -- for example, domestic funds containing shares of small, middle-size and large companies, plus international and emerging markets funds. For additional diversification, add other noncorrelating asset classes to the mix, such as real estate investment trusts, or REITs, and bond funds.
To determine your ideal asset allocation strategy, start by assessing your goals, risk tolerance and investing time horizon.
Consider your spending needs
Your tolerance for risk goes hand in hand with what you can afford to lose. Though you may have no problem snoozing through tectonic shifts in the stock market, liabilities on your balance sheet can be hazardous to your financial well-being. Liabilities can appear in the form of debts or future cash needs.
"If you are someone who has a spending need -- tuition, spending in retirement -- that you can factor in and put a present value on, incorporate that as a liability as you're doing your balance sheet analysis," says Dorsey Farr, Ph.D., investment strategist and portfolio manager at French Wolf & Farr in Atlanta.
"That means that most people can take less risk than they might otherwise think because they have to take into account that planned spending or liability when they're doing asset-liability modeling," he says.
Some people just cannot stomach the thought of losing money even if they own their home and may never need to touch a penny of their investments. Account for your personality when considering risk tolerance to avoid bailing out of high-risk investments at the slightest sign of turbulence.
Time horizon an important factor
In a broad sense, the amount of time you have to invest will dictate your investment strategy.
The retirement portfolio of a 25-year-old is necessarily different from retirement portfolios of 65-year-olds heading into their nonworking years.
"When you're investing, the time frame is extraordinarily important. As we've seen in recent years, you could have the greatest investment in the world, but in a matter of weeks it can come down drastically because of panicked selling that has nothing to do with that company or security," says Paul Mladjenovic, Certified Financial Planner and author of "Stock Investing for Dummies" and the "Unofficial Guide to Picking Stocks."
A recovery can take several years, which may be too long if you have short-term goals such as buying a car or house or funding college.
As a general rule, the more time you have, the more risk you can take.
A conservative strategy for "Retired Ray"
One rule of thumb calls for investors to have the percentage of their portfolio in bonds that represents their age. So a 60-year-old would hold a 60 percent position in fixed income.
With life spans increasing and the very real possibility of being retired for 30 years or more, some investment advisers are recommending more aggressive allocations later in life.
"I have some retirees that still have 60 percent equity positions," says Kevin Brosious, certified public accountant, CFP and president of Wealth Management in Allentown, Pa. "As long as they have the liquidity to pull funds out when they want to, that's fine."
"It's really the lack of liquidity that will kill a plan or not allow a person to realize their goal," he says.
With enough liquidity, long-term investors can ride out market volatility and wait out the recovery.
For an investor who can't afford to take much risk due to time constraints or emotional disposition, a portfolio heavy on the fixed-income side and light on equities can offer some growth with some safety.
The conservative asset allocation model includes equities for growth, REITs and TIPS for inflation protection, and bonds as stabilizers.
One rule of thumb calls for investors to have the percentage of their portfolio in bonds that represents their age. So a 60-year-old would hold a 60 percent position in fixed income.
With life spans increasing and the very real possibility of being retired for 30 years or more, some investment advisers are recommending more aggressive allocations later in life.
"I have some retirees that still have 60 percent equity positions," says Kevin Brosious, certified public accountant, CFP and president of Wealth Management in Allentown, Pa. "As long as they have the liquidity to pull funds out when they want to, that's fine."
"It's really the lack of liquidity that will kill a plan or not allow a person to realize their goal," he says.
With enough liquidity, long-term investors can ride out market volatility and wait out the recovery.
For an investor who can't afford to take much risk due to time constraints or emotional disposition, a portfolio heavy on the fixed-income side and light on equities can offer some growth with some safety.
The conservative asset allocation model includes equities for growth, REITs and TIPS for inflation protection, and bonds as stabilizers.
A moderate strategy for "Ethel Equilibrium"
A moderate asset allocation strategy involves a higher allocation to stocks than does a conservative strategy. Stocks are generally more risky than bonds for a few reasons.
"An equity is a security which is a residual claim on the assets of a firm. If there is a bankruptcy, other folks get paid before the equity owners. In exchange for coming last in line, there is potentially more upside," says Farr.
Upsides of stocks include possible dividend payments and increases in share price, also called capital appreciation.
To find the best mutual funds for your allocation plan, Mladjenovic recommends first determining the appropriate category and then filtering down the choices from there.
"People often choose the (fund) that is just in the wrong category," he says. He cites an example in which an adviser put his client's college fund into an Internet stocks fund.
"I thought it was a ghastly decision," he says. "In that fund, they could have chosen the greatest Internet stocks in the world, but it was too great a risk," says Mladjenovic.
When evaluating actively managed funds (as opposed to index funds), compare their cost, management tenure and their performance relative to their peers and benchmark.
A moderate asset allocation strategy involves a higher allocation to stocks than does a conservative strategy. Stocks are generally more risky than bonds for a few reasons.
"An equity is a security which is a residual claim on the assets of a firm. If there is a bankruptcy, other folks get paid before the equity owners. In exchange for coming last in line, there is potentially more upside," says Farr.
Upsides of stocks include possible dividend payments and increases in share price, also called capital appreciation.
To find the best mutual funds for your allocation plan, Mladjenovic recommends first determining the appropriate category and then filtering down the choices from there.
"People often choose the (fund) that is just in the wrong category," he says. He cites an example in which an adviser put his client's college fund into an Internet stocks fund.
"I thought it was a ghastly decision," he says. "In that fund, they could have chosen the greatest Internet stocks in the world, but it was too great a risk," says Mladjenovic.
When evaluating actively managed funds (as opposed to index funds), compare their cost, management tenure and their performance relative to their peers and benchmark.
An aggressive strategy for "Bold Betty"
Stocks aren't the only asset class to consider for investors interested in a growth-oriented portfolio.
The goal of an asset allocation strategy is to have a number of different asset classes with a low correlation to one another. Even if someone is diversified through the entire universe of equities, all can react similarly to a bad business cycle.
"You have to think about the underlying factors that they might be exposed to," says Farr.
Farr recommends that investors consider gold and Treasury securities when looking for assets that are not correlated with the stock market.
Both "would be a safe haven when the economy starts to do poorly. Or gold sometimes responds to concerns about inflation. Treasury securities ... are counter-cyclical in that when the economy gets weak, interest rates tend to decline and investors pursue safer assets," Farr says.
Heed this warning, though: In 2008, when the financial crisis unfolded and the stock market tanked, every asset class was adversely affected.
Since that's bound to happen from time to time, your investment plan should be based on the worst-case scenario while you hope for the best.
Stocks aren't the only asset class to consider for investors interested in a growth-oriented portfolio.
The goal of an asset allocation strategy is to have a number of different asset classes with a low correlation to one another. Even if someone is diversified through the entire universe of equities, all can react similarly to a bad business cycle.
"You have to think about the underlying factors that they might be exposed to," says Farr.
Farr recommends that investors consider gold and Treasury securities when looking for assets that are not correlated with the stock market.
Both "would be a safe haven when the economy starts to do poorly. Or gold sometimes responds to concerns about inflation. Treasury securities ... are counter-cyclical in that when the economy gets weak, interest rates tend to decline and investors pursue safer assets," Farr says.
Heed this warning, though: In 2008, when the financial crisis unfolded and the stock market tanked, every asset class was adversely affected.
Since that's bound to happen from time to time, your investment plan should be based on the worst-case scenario while you hope for the best.
Lilly's Rough Patch Has Analysts Questioning Strategy
Eli Lilly (LLY), which has taken one body blow after another of late, on Tuesday threw in the towel on its much-anticipated Alzheimer's treatment, semagacestat.
The drug failed in its phase-three trials, Lilly said.
Lilly separately has recently suffered two court losses to generic-drug makers.
Eli Lilly CEO John Lechleiter wants the drugmaker to reinvent its
Eli Lilly CEO John Lechleiter wants the drugmaker to reinvent its "innovation engine," but some analysts want to see a more aggressive strategy. AP View Enlarged Image
Observers say it's time for the company to change strategy and look to make some acquisitions.
That runs smack-dab opposite the strategy extolled by Lilly CEO John Lechleiter. His strategy is "reinventing our innovation engine here," as he put it in an earnings conference call with analysts last month.
But the engine is sputtering. Lilly is appealing a judge's ruling Thursday that invalidated its patent for the ADHD drug Strattera. On Monday, Lilly asked a U.S. District Court to block all generic versions of the drug until Lilly exhausts all appeals.
The patent was to run until 2016.
Generic-drug makers Teva Pharmaceutical (TEVA), Mylan (MYL) and others are ready to launch generic Strattera. Generic competition commonly knocks 80% off the cost of a branded drug.
And on July 28, Lilly failed in another court to protect the patent for its chemotherapy drug, Gemzar. That patent was to expire in 2013.
A failed drug in phase-three trials means a write-off of many millions in already-incurred costs. The loss of a product to generic competition can cost billions in future revenue.
Lilly's stock has fallen more than 9% since Aug. 10, after sliding 2.3% Tuesday to 34.75.
Gemzar sales were $750 million in 2009. Lilly's Strattera sales last year were $600 million worldwide, $450 million in the U.S.
If prices fall 80%, then that's more than $1 billion off the company's top line, which was $22 billion last year. Add it up over the years until patent expiration, and that's more than $5 billion in forgone revenue.
"It's hard to see a reason for the stock to go up without a major pipeline success or without the company making some aggressive strategic moves," said Seamus Fernandez, an analyst with Leerink Swann, which has done business with Lilly.
Lilly's last big deal was its $6.5 billion purchase of ImClone in 2008, though it has made some acquisitions since. Last month, it bought privately held Alnara Pharmaceuticals for an undisclosed sum. Alnara is working on biologic drugs for metabolic diseases.
The drug failed in its phase-three trials, Lilly said.
Lilly separately has recently suffered two court losses to generic-drug makers.
Eli Lilly CEO John Lechleiter wants the drugmaker to reinvent its
Eli Lilly CEO John Lechleiter wants the drugmaker to reinvent its "innovation engine," but some analysts want to see a more aggressive strategy. AP View Enlarged Image
Observers say it's time for the company to change strategy and look to make some acquisitions.
That runs smack-dab opposite the strategy extolled by Lilly CEO John Lechleiter. His strategy is "reinventing our innovation engine here," as he put it in an earnings conference call with analysts last month.
But the engine is sputtering. Lilly is appealing a judge's ruling Thursday that invalidated its patent for the ADHD drug Strattera. On Monday, Lilly asked a U.S. District Court to block all generic versions of the drug until Lilly exhausts all appeals.
The patent was to run until 2016.
Generic-drug makers Teva Pharmaceutical (TEVA), Mylan (MYL) and others are ready to launch generic Strattera. Generic competition commonly knocks 80% off the cost of a branded drug.
And on July 28, Lilly failed in another court to protect the patent for its chemotherapy drug, Gemzar. That patent was to expire in 2013.
A failed drug in phase-three trials means a write-off of many millions in already-incurred costs. The loss of a product to generic competition can cost billions in future revenue.
Lilly's stock has fallen more than 9% since Aug. 10, after sliding 2.3% Tuesday to 34.75.
Gemzar sales were $750 million in 2009. Lilly's Strattera sales last year were $600 million worldwide, $450 million in the U.S.
If prices fall 80%, then that's more than $1 billion off the company's top line, which was $22 billion last year. Add it up over the years until patent expiration, and that's more than $5 billion in forgone revenue.
"It's hard to see a reason for the stock to go up without a major pipeline success or without the company making some aggressive strategic moves," said Seamus Fernandez, an analyst with Leerink Swann, which has done business with Lilly.
Lilly's last big deal was its $6.5 billion purchase of ImClone in 2008, though it has made some acquisitions since. Last month, it bought privately held Alnara Pharmaceuticals for an undisclosed sum. Alnara is working on biologic drugs for metabolic diseases.
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