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Builder Confidence Improves for Fourth Consecutive Month in August!

From NAHB: www.nahb.com

August 15, 2012 – Builder confidence in the market for newly built, single-family homes improved for a fourth consecutive month in August with a two-point gain to 37 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. This gain builds on a six-point increase in July and brings the index to its highest level since February of 2007.

“From the builder’s perspective, current sales conditions, sales prospects for the next six months and traffic of prospective buyers are all better than they have been in more than five years,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “While there is still much room for improvement, we have come a long way from the depths of the recession and the outlook appears to be brightening.”

“This fourth consecutive increase in builder confidence provides further evidence of the gradual strengthening that’s occurring in many housing markets and providing a needed boost to local economies,” said NAHB Chief Economist David Crowe. “However, we are still at a very fragile stage of this process and builders continue to express frustration regarding the inventory of distressed properties, inaccurate appraisal values, and the difficulty of accessing credit for both building and buying homes.”

Derived from a monthly survey that NAHB has been conducting for the past 25 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

Every HMI component posted gains in August. The components gauging current sales conditions and traffic of prospective buyers each rose three points, to 39 and 31, respectively, while the component gauging sales expectations in the next six months inched up one point to 44. All were at their highest levels in more than five years.

Regionally, builder confidence rose nine points to 42 in the Midwest and two points to 35 in the South, but declined nine points to 25 in the Northeast and three points to 40 in the West in August. For the August HMI release, NAHB is introducing an alternative trend comparison of regional HMIs by also showing a three-month moving average of each region’s index. The current three-month moving averages show a two-point decline to 29 in the Northeast, a five-point gain to 35 in the Midwest, a three-point gain to 32 in the South and a three-point gain to 38 in the West.

Editor’s Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found at www.nahb.org/hmi. More information on housing statistics is also available at http://www.housingeconomics.com/.

More than 700 Builders Call on Congress to Make Housing and Homeownership a National Priority

From NAHB.org

June 6, 2012 – More than 700 home builders trekked to Capitol Hill today to call on Congress to make housing and homeownership a national priority and to take concrete steps to get housing back on track in order to create jobs and keep the economy moving forward.

“Though we are seeing some hopeful signs of recovery in many markets throughout the nation, our industry still faces stiff headwinds,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla.

Persistently tight lending standards for home builders and home buyers, uncertainty regarding the future of the housing finance system, ongoing threats to vital housing tax incentives, and overly burdensome regulations are hampering a housing recovery and keeping countless home building firms from constructing viable projects and hiring new workers, he added.

In more than 250 individual meetings with their representatives and senators, builders called on their lawmakers to:

•Support legislation to restore the flow of credit for new housing production. NAHB is urging the House Financial Services Committee to consider H.R. 1755, the Home Construction Lending Regulatory Improvement Act. Sponsored by Reps. Gary Miller (R-Calif.) and Brad Miller (D-N.C.), the measure currently has 96 co-sponsors and would remove barriers to lending while preserving the regulators’ ability to assure the safety and the soundness of the financial institutions they oversee. NAHB is seeking cosponsors for similar legislation in the Senate, S. 2078, the Home Building Lending Improvement Act, sponsored by Sens. Bob Menendez (D-N.J.) and Johnny Isakson (R-Ga.).

•Pass comprehensive legislation to reform housing government sponsored enterprises Fannie Mae, Freddie Mac and the Federal Home Loan Banks that provides a federal backstop to ensure a reliable and adequate flow of affordable housing credit in all economic and financial conditions.

•Preserve current housing tax incentives, including the mortgage interest deduction and Low Income Housing Tax Credit, as the debate on tax reform moves ahead.

•Support legislation to make much-needed improvements to the Environmental Protection Agency’s Lead: Repair, Renovation and Painting (LRRP) rule. Sponsored by Sen. James Inhofe (R-Okla.), the Lead Exposure Reduction Amendments Act of 2012 (S. 2148) would offer several reforms to EPA enforcement of the lead paint rule, including reinstating the opt-out provision to allow home owners without small children or pregnant women residing in them to decide whether to require LRRP compliance.

•Cosponsor House and Senate bills that would reduce the overreach of federal power under the Clean Water Act. House bill H.R. 4965, the Preserve the Waters of the United States Act, and its identically named Senate companion measure (S. 2245), would prevent the EPA and U.S. Army Corps of Engineers from finalizing or implementing their draft guidance to expand the reach of the Clean Water Act to include virtually every ditch, pond and seasonal runoff ditch in the nation.
“In this pivotal election year, it is imperative to ensure that presidential and congressional candidates on both sides of the political aisle understand the importance of housing and homeownership,” said Rutenberg. “Today, builders from across the land reiterated this message to their legislators and reminded them that there can be no economic recovery without a housing recovery.”

Debt Restructuring: Moderating Factors and Lessons Learned

Reprint from Nation’s Building News – The Official Online Newspaper of NAHB

Debt Restructuring: Moderating Factors and Lessons Learned

(This is the fifth and final article in a series on what builders need to know about restructuring their debt and planning for surviving financial adversity in today’s real estate market.)

By David McCain and Bill Albers, MPKA, LLC

Once a debt restructuring specialist has been hired and the process of restructuring begins, there are many factors — both subjective and objective — that can come into play and affect the outcome of the negotiations and the timeliness of the deal.

From a subjective standpoint, all of the participants — the borrower, capital provider, lender, outside counsel and debt restructure specialist — have different perspectives, goals and personalities that must be taken into account:

• Borrowers are motivated by financial survival, protecting their personal balance sheets and devising a strategy that will enable them to still be around to profit during the next positive business cycle.
• Capital providers and investors are focused on safety, risk avoidance, investment time horizons, geography, asset type, size and class, credibility of the developer and healthy returns.
• Lenders are focused on the balance sheet, risk-based capital ratios, earnings and quarterly profit and loss reporting. In fact, our experience is that the vast majority of debt restructure workouts are finalized during the last 15 days of a fiscal quarter. In addition, bank officers and special asset managers are driven by job retention and obtaining appropriate data summaries to support negotiated resolutions in asset review committee.
• Outside counsel is focused on carrying out the client’s orders — collecting as much as possible for the lender or paying as little as possible if representing the borrower. This inherent conflict will continue to manifest itself throughout the documentation process, even after there is a verbal agreement or written outline of the restructure settlement terms. For this reason, it is important to keep the debt restructure specialist engaged during the documentation phase to continue to referee the settlement.
• Finally, the debt restructure specialist is motivated to negotiate and mediate an effective and fair resolution. The goal is simple: get to the workout and settlement phase of the conflict as quickly and efficiently as possible while avoiding the unnecessary cost, time and labor associated with most litigation or conflict resolution procedures, or the inaction that often results from self-help remedies.

In addition to accounting for the dynamics of the various players in the debt restructuring process, objective factors need to be taken into consideration in order to achieve a successful resolution. Among the many issues that can arise:

• Whether the debt is recourse or non-recourse. Is the debt personally guaranteed?
• Whether the debt is underwater, and if so, by how much.
• Whether the lender has a true value of the property, such as a recent appraisal.
• The state law debt enforcement procedures. In a judicial foreclosure jurisdiction, the procedure can typically take 12 to 18 months, compared to a trustee sale jurisdiction, where it is 30 to 120 days.
• The type of lender. Is it a regulated entity such as a bank or insurance company, or non-regulated such as a private equity group? Much of the accounting that is required of regulated lenders is absent in a non-regulated environment.
• Disparate financial capacity of multiple guarantors.
• Project quality, geographic location, size and stage of completion.
• The integrity and quality of the borrower, which may lead the lender to perceive that the borrower “won’t pay” vs. “can’t pay.”
• Loan status — current, matured, monetary default, non-monetary default, foreclosure or bankruptcy.
• Single or multiple lenders.
• Organization and record keeping of the borrower.

Lessons Learned

From the standpoint of a builder or developer, debt restructuring can be a frustrating and emotional process. One minute can bring fear and the feeling of helplessness, and the next a sense of excitement over the possibility of a rescue. In this series of articles, we have discussed the shortcomings of attempting to negotiate on your own behalf, the confrontational nature of employing legal help and the potential benefits of engaging a debt restructure specialist.

We reviewed the debt restructure process itself, its typical length (three to six months) and the exchange of information needed to proceed toward a resolution. We also reviewed the possible outcomes in detail — including loan extensions, A and B note structures, discounted loan purchases, deeds in lieu of foreclosure or title transfers to the lender, and loan collateral liquidation.

Finally, we reviewed actual debt restructure case studies involving builders and developers of varying size and experience; with properties in different geographic locations, having multiple sizes and product types, in various stages of completion; and with several lenders.

From the authors’ view, helping borrowers sleep better at night by providing financial certainty in a highly stressful environment is extremely rewarding. Helping lenders get through the decision-making process in an expedient fashion is also satisfying. We look forward to continuing to do our small part to get this economy back on track, get developers and builders back to work and place serviceable real estate back in the market at right-sized prices.

David McCain and Bill Albers are the principals of MPKA, LLC. They have successfully restructured more than $1 billion worth of home builder and developer debt over the last 24 months.

Contact Claire Spence at 281-359-2127 to schedule a call or meeting with MPKA.

Case Study: Developers Climb Out of Debt and Live to See Another Day

Reprint from Nation’s Building News – The Official Online Newspaper of NAHB

(This is the fourth in a series of articles on what builders need to know about restructuring their debt and planning for surviving financial adversity in today’s real estate market.)

By David McCain and Bill Albers, MPKA, LLC – Business Alliance Partner with Joseph Chris Partners

You have made the decision to hire a debt restructure specialist, and the process begins.
From the time you hire a debt restructure specialist to the time you reach a settlement can take as little as 60 days or as long as a year, but the process is typically completed within three to six months. The following case studies were performed within this time frame.

Case Study — Great Reputation Builder
A builder on the east coast of Florida for more than 20 years and the winner of numerous awards, Great Rep had three active but stalled communities and was facing $62 million of debt, all personally guaranteed by Founder.

Great Rep bought and developed its own land, and built, marketed and sold its own product. Like many small to mid-size builders, Founder spent 20 years rolling nearly all of his profits from completed deals into new deals. When MPKA met Founder, $18 million of accumulated profits, his life savings, had been used as equity seed capital for Great Rep’s three current communities. Unfortunately, while Great Rep, Founder and the banks were focusing on ways to extend each of the three loans supporting the three communities, none of them were addressing the real issue, which was that all of the communities were severely underwater, with the loan amounts far exceeding the property values.

At this stage, with the loans in default and discussions at an impasse, MPKA was engaged by Great Rep and Founder to negotiate with Great Rep’s banks. Following are case studies involving these negotiations.

Loan One was comprised of more than 150 finished single-family lots and 20 completed inventory homes. Great Rep owed approximately $14 million on the lots and another $10 million on unsold inventory homes and models. The bank’s release prices were $100,000 per lot and $525,000 per home. The total debt on Loan One was over $24 million and Great Rep had invested $6 million of equity in support of the development. This luxury product was well conceived and constructed. Seventy homes had been completed and delivered, but the project was completely stalled, with the inventory homes the result of cancelled contracts.

MPKA coordinated a structured transaction that allowed Great Rep to liquidate inventory, continue operations, avoid a large deficiency and recoup a portion of its original project equity. First, MPKA negotiated a deeply discounted debt purchase on the lot note using capital from newly found Financial Partner. The $14 million debt was purchased for $4 million. Additionally, as a prerequisite to the loan sale, Financial Partner purchased Founder’s guarantee. It next agreed to waive any potential deficiency claim against Founder and released him from any future guarantee going forward. In addition, by structuring the sale as a note purchase instead of a property short sale, Great Rep potentially avoided phantom income debt forgiveness of nearly $13 million and tax obligations of more than $4 million.

To dispose of the inventory, MPKA partnered with an auction company and sold all 20 homes on an absolute basis tendering all proceeds net of closing costs to the bank in total satisfaction of the $10 million inventory note. Lessons learned from Great Rep’s largely unsuccessful attempt to auction off the properties a few months earlier helped bring the superior results. Only four homes were sold in the first auction, at an average price of $240,000. In the auction of the remaining 20 homes, the average price exceeded $310,000. In addition, despite the challenges of the ongoing credit crisis, MPKA leveraged its mortgage lending relationships and expertise to arrange for a consumer mortgage lending company to pre-approve the community and finance purchases at the auction.

Great Rep was allowed by Financial Partner to continue to market, sell and build homes on the purchased lots as a fee builder. In addition, Great Rep was given a profit participation position after specified return hurdles to Financial Partner.

Loan Two was originally for a $27 million development comprised of 60 single-family lots and 21 boat slips on the intercoastal waterway, with the anticipated construction of homes valued between $900,000 and $3 million. It took three years just to obtain the boat slip permits. The loan was comprised of $21 million in acquisition and development debt and approximately $6 million of Founder’s equity. Less than 5% of the final infrastructure work needed to be completed — in 90 days at an estimated cost of about $1 million. With the evaporation of the local market and personal capital, Great Rep found itself unable to make its loan payments, at which point the bank stopped funding construction. The loan went into default, construction was halted and the bank initiated foreclosure. MPKA coordinated a structured transaction that allowed Great Rep to continue operations, avoid a deficiency and have an opportunity to recoup equity and earn a fee.

First, although the bank had received two recent appraisals of the property greater than $17 million, MPKA knew it was under regulatory pressure to liquidate assets and got it to accept a discounted note purchase price of $10 million. On behalf of Founder, MPKA also negotiated a release of the guarantee and deficiency claim with Financial Partner, the note purchaser. By structuring the transaction as a note purchase instead of a short sale, Great Rep was able to avoid $11 million of debt forgiveness phantom income and a tax obligation of $4 million.

Great Rep remained in the deal, completed the infrastructure with capital from Financial Partner, marketed the lots for sale and received a management fee and profit participation from Financial Partner.

Loan Three was for a $23 million development comprised of 85 luxury town homes just blocks from the Atlantic Ocean in a beautifully revitalized pedestrian urban infill location. While all of the site work and pads were finished, only one seven-unit building was completed and only two units were sold. Original selling prices ranged from $500,000 to $875,000. The remaining construction loan was $17 million, and Founder had invested $6 million. MPKA negotiated a transaction that allowed Great Rep to continue operations, avoid a deficiency and earn fees.

MPKA convinced the bank to accept $8 million on a discounted note purchase. Two current bank appraisals valued the collateral at $15 million in its partially completed state, but MPKA convinced the bank that the appraisal was far too high because it overestimated the units’ market absorption and their ultimate selling prices. As part of the transaction, MPKA was able to negotiate the elimination of any potential deficiency against Founder by structuring the deal as a note purchase instead of a short sale. As a result, Great Rep avoided phantom income debt forgiveness of $9 million and $3 million in taxes. In addition, MPKA was able to secure a commitment from a third-party lender to provide a construction revolver to build out the remaining town home units despite the constrained credit market. As with its two other deals, Great Rep remained engaged as a fee manager with a profit participation.
Case Study — Direct Equity, Debt Restructure and Tax Incentives

The developer of active adult communities in central Florida for nearly 100 years, Fourth Generation Builder had five active communities with slowing sales volume. None of Fourth Gen’s $25 million in project debt was guaranteed. In addition, Fourth Gen’s bank had issued a short-term debt — secured by Fourth Gen’s profit sharing plan — of $18 million.

At the recommendation of its lender, Fourth Gen engaged MPKA to restructure its debt, raise capital and review expenses just 14 days before the end of the company’s fiscal year. About to run out of cash within 90 days, Fourth Gen needed a survival plan that would provide more than $10 million. After reviewing Fourth Gen’s balance sheet, assets, operations and expenses, MPKA provided a solution that provided in excess of $17 million of savings, cost reductions and capital.

In Fourth Gen’s largest community, it owned 150 finished single-family lots and another 450 entitled lots. The finished lots had book value of $8 million, or $55,000 per lot. Of the few sales it had, Fourth Gen was able to sell home buyers finished lots on which it would build within two years for between $80,000 and $150,000. Fourth Gen’s bank had loaned $5 million, or $35,000 per finished lot. The loan was performing. MPKA convinced the bank to write down the loan to $2.9 million, or $20,000 per lot, and then accept a deed in lieu of foreclosure from Fourth Gen. As a result, Fourth Gen was able to show a capital loss of $2.2 million and consequently recapture $1 million in previously paid taxes under FAS 109 rules. The bank did not want to own the lots and was facing its own fiscal year-end 30 days later, which made it a highly motivated seller. Within those 30 days, MPKA negotiated the purchase of the lots at the written down value and it subsequently marketed them, several of which were available to Fourth Gen on an escalating option basis.

This survival plan enabled Fourth Gen to stay in business in its original ownership for two more years. However, the debt burden of the company’s profit sharing plan and land loans ultimately became too great. Accordingly, MPKA brought in a new set of investors who purchased most of the remaining assets, assumed the liabilities for the homes under construction and the employee costs, and restarted Fourth Gen under a capital structure that has allowed it to continue to build profitably to this day.

The final article in this series will discuss potential moderating factors within the confines of the debt restructuring arena and review some of the lessons that have been learned.
________________________________________
David McCain and Bill Albers are the principals of MPKA, LLC. They have successfully restructured more than $1 billion worth of home builder and developer debt over the last 24 months.

Please call Claire Spence at 281-359-2127 to schedule a conversation with David McCain or Bill Albers.

JCP/JCRESI's own Susan Vaughan and NAHB on hiring in the industry!

Hiring Again? How to find — and keep — the best employees

An interview with Susan Vaughan, VP of operations at an executive search company for construction industry.

With the recession, nearly every company in the home building industry reduced its staff. In anticipation of a recovery in the market, business owners will likely need to consider hiring again, perhaps for the first time in several years. For answers on how to find and keep the best employees, Building Women turned to the expertise of Susan Vaughan, senior vice president of operations for JCR Executive Search International, a Joseph Chris Partners company. JCR Executive Search International is dedicated to the real estate development, construction, finance, investment, and civil infrastructure industries.

What is the current trend with small businesses and hiring?
Our clients seem to be exhibiting cautious optimism. Some positions that were on hold have opened up, but clients are highly selective regarding candidates. Most will only consider those who are a very close match to their ideal profile and are not inclined to think outside the box, regarding that approach as too risky. The general process for search and hiring is slower to close, and decisions are very carefully analyzed.

Is it picking back up?
There has been a slight uptick, with the indication that the last quarter may improve.

Even in the building industry?
The homebuilding industry showed the highest increase in our firm. This could be indicative of a combination of the tax incentives, lower mortgage rates and the tendency to call us first, given our longevity and recognized position for access to top talent in the industry. Ancillary groups, such as general contracting, design/ build and third-party services, seem to tend toward direct hiring.

How should a small business owner decide when it’s time to hire staff?
There should be two primary considerations. First, have they cut too deep and stretched their current staff (or themselves) beyond reasonable limits, running the risk of low morale, productivity or burnout? Second, are there future projects or growth potential to be achieved by adding personnel? It is generally better to invest in hiring in either of those circumstances.

Is it better to hire a full-time or part-time employee, or even a contractor?
If the need is project driven and the long-term requirement is questionable, it makes perfect sense to bring in a contract employee or utilize a respected third-party provider. Those selections should also be made with extra care in the current economy.

Where are the best places (job search engines) to look for candidates, particularly in the building industry?
Employers may choose particular job boards relative to the level or type of the position to be filled. Mid-level management and construction jobs can be found on popular sites, such as Monster, Career Builder, Indeed, Simply Hired and LinkedIn. Senior level and more specifically targeted sites might include Select Leaders, ICSC, theladders.com, constructionjobs.com or aecjobbank.com, depending on the candidate’s skill set. We recommend that candidates who are actively pursuing employment treat their search as they would any other serious project — plan, strategize, organize, network and use time management.

How do you know you’ve found the best candidate?
If that question is approached being as overly complex as “How do you know you’ve found the perfect mate?” there will likely be eventual dissatisfaction with the hire. The reality is that employment situations should be easier than that, given the employer has a clear understanding of their needs and company culture. There is no way to avoid risk in any serious decision, but the best insurance is to have a clear understanding of your critical needs and look for a person who will fit well in your organization to achieve them, whether through existing skills or training.

How does a small business owner avoid the long process of finding the “perfect” person, only to have that person not perform as expected, or leave after a short time?
“Paralysis by analysis” is a real hazard in this economy. Companies are not willing to take big risks when revenues are low and the future is in such question, but having a recognition that there is no way to avoid risk in any serious decision is important. It is equally important to be transparent with the new hire about your expectations of them and how performance will be measured. Lastly, employee satisfaction is fundamentally grounded in having opportunities to be engaged creatively and feel a valued part of the success of their company. Good assessments of critical skills and emotional intelligence are possible prior to hiring, if the employer takes care to conduct a careful interview and check appropriate references.

Before leaving this question, I’d like to take the opportunity to demonstrate the value of our services. During this economy, most employers have the notion that there are volumes of good talent available without the added expense of utilizing a search firm.

To continue reading this article please click this link: http://www.nahb.org/generic.aspx?genericContentID=146101&channelID=33

JCP/JCRESI’s own Susan Vaughan and NAHB on hiring in the industry!

Hiring Again? How to find — and keep — the best employees

An interview with Susan Vaughan, VP of operations at an executive search company for construction industry.

With the recession, nearly every company in the home building industry reduced its staff. In anticipation of a recovery in the market, business owners will likely need to consider hiring again, perhaps for the first time in several years. For answers on how to find and keep the best employees, Building Women turned to the expertise of Susan Vaughan, senior vice president of operations for JCR Executive Search International, a Joseph Chris Partners company. JCR Executive Search International is dedicated to the real estate development, construction, finance, investment, and civil infrastructure industries.

What is the current trend with small businesses and hiring?
Our clients seem to be exhibiting cautious optimism. Some positions that were on hold have opened up, but clients are highly selective regarding candidates. Most will only consider those who are a very close match to their ideal profile and are not inclined to think outside the box, regarding that approach as too risky. The general process for search and hiring is slower to close, and decisions are very carefully analyzed.

Is it picking back up?
There has been a slight uptick, with the indication that the last quarter may improve.

Even in the building industry?
The homebuilding industry showed the highest increase in our firm. This could be indicative of a combination of the tax incentives, lower mortgage rates and the tendency to call us first, given our longevity and recognized position for access to top talent in the industry. Ancillary groups, such as general contracting, design/ build and third-party services, seem to tend toward direct hiring.

How should a small business owner decide when it’s time to hire staff?
There should be two primary considerations. First, have they cut too deep and stretched their current staff (or themselves) beyond reasonable limits, running the risk of low morale, productivity or burnout? Second, are there future projects or growth potential to be achieved by adding personnel? It is generally better to invest in hiring in either of those circumstances.

Is it better to hire a full-time or part-time employee, or even a contractor?
If the need is project driven and the long-term requirement is questionable, it makes perfect sense to bring in a contract employee or utilize a respected third-party provider. Those selections should also be made with extra care in the current economy.

Where are the best places (job search engines) to look for candidates, particularly in the building industry?
Employers may choose particular job boards relative to the level or type of the position to be filled. Mid-level management and construction jobs can be found on popular sites, such as Monster, Career Builder, Indeed, Simply Hired and LinkedIn. Senior level and more specifically targeted sites might include Select Leaders, ICSC, theladders.com, constructionjobs.com or aecjobbank.com, depending on the candidate’s skill set. We recommend that candidates who are actively pursuing employment treat their search as they would any other serious project — plan, strategize, organize, network and use time management.

How do you know you’ve found the best candidate?
If that question is approached being as overly complex as “How do you know you’ve found the perfect mate?” there will likely be eventual dissatisfaction with the hire. The reality is that employment situations should be easier than that, given the employer has a clear understanding of their needs and company culture. There is no way to avoid risk in any serious decision, but the best insurance is to have a clear understanding of your critical needs and look for a person who will fit well in your organization to achieve them, whether through existing skills or training.

How does a small business owner avoid the long process of finding the “perfect” person, only to have that person not perform as expected, or leave after a short time?
“Paralysis by analysis” is a real hazard in this economy. Companies are not willing to take big risks when revenues are low and the future is in such question, but having a recognition that there is no way to avoid risk in any serious decision is important. It is equally important to be transparent with the new hire about your expectations of them and how performance will be measured. Lastly, employee satisfaction is fundamentally grounded in having opportunities to be engaged creatively and feel a valued part of the success of their company. Good assessments of critical skills and emotional intelligence are possible prior to hiring, if the employer takes care to conduct a careful interview and check appropriate references.

Before leaving this question, I’d like to take the opportunity to demonstrate the value of our services. During this economy, most employers have the notion that there are volumes of good talent available without the added expense of utilizing a search firm.