Tuesday, July 22, 2014

Characters in meetings and negotiations

For the past six months I've attended numerous meetings with vendors, internal teams, external teams. The members included a range of profiles from junior engineers to all the way up to CEOs. It has been one of the best times in my professional career. Participating in these meetings made me realize what sets effective leaders from the others. Effective leaders need not come from C level title holders. neither is it a requirement. I've seen poor communicators and coordinators with tons of experience under their belt and some brilliant folks who are fresh in the industry. It is truly a potpourri of characters, experts and lousy engineers.
Some of the personalities I've come across:
I am an alpha male, so you listen to what I say
In a room full of people, this person was shouting on top of his lungs about something that no one cared a shit about. Actually in that particular instance, he was shouting about things that were already previously agreed up on, of which he chose not to participate earlier. Needless to say he lost the respect of others and was completely sidelined in further discussions. Unfortunately, it wasnt easy for either sides of the negotiation table as he holds a pretty high rank in the organization. Whew! What can I say? When you got to do it, you do it.
If you cant convince them, confuse them
When you come to a negotiation table, I think it is very important for you to be very open minded. You need to know what you really want to achieve and not get stuck up on petty details. However, there are some who come with one thing and only one thing in mind and cant get over it. They try hard to convince others that what they have in mind is the absolute solution. When they realize what they want is no longer valid or possible, they would take you on a storyline that is as complicated as the movie inception and leave you with nothing to work with. In my view they waste everyones time and should be fired immediately.
I dig my own hole
When you are negotiating it is important to know which side you are representing. You cannot represent both sides. You need to be sensitive to the other side, but not argue from their side too. However there are some people who lose sight of this point. These type of people are interesting. They start off by asking what they want from the other side. And then they have verbal diarrhea. They themselves say it is probably not feasible for the other parties to do what they are asking and retract their request. I've not yet figured out why they do this. In some cases, they seem to be proving that they know what it might entail to do what they are asking and may be want to prove they know a lot. In some cases, I think they are confused on what to ask. Or may be they are just not confident enough.
I need to show I am contributing
These folks are the most dangerous in my view. They just occupy the space/seats in the room, but have really no value. They try to insert themselves into every conversation by either just restating what others said or by directing the question to someone else. They are may be a tab bit better than the post masters. However they have no opinion nor idea on how to make the discussion more productive. I personally avoid calling these to the meetings and when they are there, I try to circumnavigate them.
Now we are coming to the section of people who make the meetings more productive. Facilitators are the folks who set the agenda, make sure things are progressing smoothly, keep track of time. Facilitators themselves may not have the capacity or the authority to make final decisions, but they play a big role in it. They facilitate both sides to come to the same page, redirect questions, confirm the agreements and make notes of it. If a discussion is going nowhere, they call it out and ask for time out or inject a different way to address it. They realize that it is ok to say we cannot agree now, but lets take an action item to follow up. Without facilitators no negotiation is effective.
Problem Solvers
These are the people who listen to both sides of the arguments and try to provide a solution that works for both. Sometimes, it may just be as simple as stating what you want and listening to the other party agreeing what you asked. Sometimes, it requires you to work through the plethora of issues brought up by the other party. Problem solvers are always tuned in to the other side's response and have clear idea of where they can compromise and where they can steer others to see what they want. Sometimes it requires being knack, sometimes need to play plain dumb. Playing dumb has many advantages, contrary to what people may think. Playing dumb allows you to know whether your opponents will take advantage of your seemingly gullible state. This will help you determine how to make your moves. If they exhibit that they indeed have your best interests, sometimes it is best to let them solve your problems. Problem solvers remember that they need to get the problem solved, either by themselves or from others. 
Decision Makers
Obviously these are the key people in a negotiation. Unfortunately, sometimes it is not so clear in a meeting who is a decision maker. You think I am kidding? Absolutely not, I've been in meetings where no one knows who the decision maker is. Sometimes it is on purpose. It is important to sense who is the decision maker in a negotiation. Decision makers need not be the problem solvers. They listen to the arguments put forth by problem solvers and the solutions and pick the best one and/or just approve what problem solvers come to conclusion. However, without their approval no solution is an agreement.

Of course not everyone falls into one of the above categories. Depending on the situation, the same person might need to play more than one of the roles (hopefully not the first three).

Im sure you can find these characters in any meeting you attend. Next time you are in a meeting, get a feel for who is who. Stop wasting time of the folks who don't matter in a meeting. And if you are one of the first three types, grow up and be more effective leader.

Tuesday, February 18, 2014

A new 401k Contribution Strategy

Its tax season. We just filed our taxes and took a dent to my bank account. One thing tax consultant told us is to maximize 401k contributions. He also made another interesting comment: "You don't know how the laws will change in future, tax rates might differ, govt might cancel Roth IRA. In any case, it is better to save taxes today than later, hence go for traditional 401k"

After the initial mourning phase of the demise of good chunk of bank balance, it made me think, is there a way in which you optimize your 401k contributions in a year that maximizes returns. I am not talking about how much you should contribute, that question is easy: contribute as much as you can up to the maximum that govt allows. I am talking more about how to spread your contributions over the year to maximize the returns from the money.

The usual strategy that most people use, including me, is to contribute x% of your pay check towards 401k, every pay check. Lets call this plan A. Lets say the total amount out of our pay at the end of the year is A$. Now is there any other way to invest A$ but with in a non-uniform spread over the year.

The parameters are:
- Maximum you can contribute towards 401k
- Schedule of your company's matching your contributions
- Your salary

Here is the heuristic approach I chose:
- Contribute every month to get company's contribution
- Chose the maximum amount you can contribute per month
- Calculate the amount you need to contribute to get maximum from the company
- Every month, contribute: minimum( max you can contribute, max you can contribute per year - amount you need to contribute per month to get maximum from company*months remaining in the year - amount contributed so far in the year)

As an example:
- Salary per month: $8000
- max contribution per year allowed (2014 IRS number): $17500
- max you can contribute per month: $4000
- max contribution from the company per paycheck: 50% of your contribution up 6%
- max contribution from the company = $240
- min you need to contribute to get max from company: $480 (6% of 8K)

Depending on this the table of contributions for usual method and the new method looks like this:

Month New Old
Jan 4000 1458
Feb 4000 1458
Mar 4000 1458
Apr 1660 1458
May 480 1458
Jun 480 1458
Jul 480 1458
Aug 480 1458
Sep 480 1458
Oct 480 1458
Nov 480 1458
Dec 480 1458

What difference does it make with this contribution? For demonstration purposes, if we assume your 401K portfolio grows at 8% a year, the difference at the end of first year is: $356. Just like that, you have $356 more in your account. If you continue to do this for all your working years, the total savings may look like the following:

Of course it assumes same salary, same contributions, same growth of 401k portfolio, which is an oversimplified assumption, but hey, it shows the point.

In some companies, the employer contribution isn't restricted as what i mentioned above. Some companies pay 100% up to first $x (like QCOM, x = $1500), and then slabs as your contribution grows. The new approach might be much better than old approach in such situations.

Anyway, this is my analysis. If you have any questions, and/or comments on my analysis, I would like to know.

Monday, February 10, 2014

Satya Nadella's first email and my views on it

By now almost everyone who follows semiconductor and consumer computing markets must be aware of Satya Nadella becoming CEO of Microsoft. For anyone to be CEO of a company with such great heritage is an honor. As an Indian living in America, it is definitely a proud moment. He now joins the elite status of people like Vinod Khosla,Indra Nooyi etc. Congratulations to him and good luck to Microsoft in its future direction.
I read the first email sent by Satya to his employees. It is plain and simple as you can expect from Satya, if you have to believe what news reports say about his personality. Here are some of my thoughts on his statements. Please remember these are my thoughts, what I felt and I in noway deem to be an expect critic at the matter. Anyway, here you go..

First para:
"I saw then how clearly we empower people to do magical things with our creations and ultimately make the world a better place."
Initially I thought what is he talking about? Microsoft empower people to do magical things? What magical things are we talking about? Given the current brand image of microsoft, it might be difficult for consumers who use tablets and smartphones to realize that it was Microsoft that made consumer usage software ubiquitous, with its Windows roll out. That change along with Apple's products changed the computing world forever. When it started, it must have been magical for people. So I'll say even though today his statement might sound pompous and frankly unreal, I do understand the spirit in which he said it.

Third para:
"While we have seen great success, we are hungry to do more."

This is very interesting. In my view, the statement should be read: "while we have seen great success, we are starved to do more."
The next statement reads: "Our industry does not respect tradition — it only respects innovation"
I can't agree more. You let your guard down for a moment and you are eaten alive. Look around to see how many companies used to exist at the turn of century in consumer computing space and see how many are left now. Companies that didn't innovate or didn't copy enough of the innovation being done by their competitors just perished. Whether MS innovated enough or not is a different question. However it did keep up with the innovation, closely, may be clumsily following the competitors.

The para ends with "Our job is to ensure that Microsoft thrives in a mobile and cloud-first world". Well this is as of today. As such MS was late to jump on to mobile and cloud computing. However, as I said given the money it has, it could gobble up smaller companies that are marching ahead in innovation. However, these smaller companies have problems: how to tackle heavy investment demanding devices like tablets and smartphones. I think that's where MS can help small companies. What surprises me is, how and why did he end this para with such a statement. As of today, mobile and cloud are the happening things. I expected he would say something like, "our job is to keep MS leads new frontiers of the new technologies, including the current mobile and cloud", but well its me. I thought the context switched midway, from a very long term to mid-term view.

Monday, February 3, 2014

The No Complaining Rule

On a lazy Sunday afternoon, my wife and I strolled into Barnes and Nobles in downtown Bellevue, just to get a glimpse of new arrivals and more accurately to get a coffee from Starbucks inside B&N. While sipping hot coffee, I went to the Business & Investing section to find this book "The No Complaining Rule". It was a very timely find. Off late I've been hearing a lot of constant complaints from my colleagues at work, especially the same damn thing again and again. It was like a constant nagging of a old imbecile lady, with really no substance at all. At first I thoughts these complaints were to vent their anger and are a fleeting emotions. Unfortunately they weren't.

As someone who does think about constantly improving efficiency of people and the team, I feel complaining to the extent you call out the problems is required. It is both cathartic and helpful to note down items that need attention and to be taken care of. However, just complaining alone isn't enough. There are enough people in the world with negative outlook, and I don't need my team to be one. I don't want people around me to be that either. I've consciously made decision to distance myself from such people in the last few years.

Now back to the book I started talking about. It is a fictional story of a lady who has a great career position but complains about little things, which becomes a habit thereby effecting her moods and performance. It is about how she, with advice from a sweet nurse, turns her life around and how things change for her over time. That one little advice is: "Do not complain! If you complain, add a statement which has a positive effect ." With this one piece of advice, her home life, her social life and her career take turn for better. And everything is rosy and happy ever after.

I have a few problems with such kind of books.
1. Author has just one point to convey to the readers: "Don't complain or add something to fix that complaint." The rest of the book is just a fictional story; in fact bordering a fairy tale
2. Author tries very hard to convince this is THE essential thing to go after
3. Life doesn't turn around and not everything falls right into its place, just because one person started this no complain rule.
4. $15 for this book is useless. May be worth $5 at most

Overall, I would say the point conveyed is very good: "Don't complain, but if you do, suggest something that fixes it", but I don't like the fairy tale used to convey it.

Now it is your turn to try out this rule and tell how it affected you! For me, I stopped complaining until I find a way to help the situation. Not many times I succeed but then it does help to keep positivity around me.

Saturday, May 19, 2012

Analyze monthly expenses - know where your money goes!

This post belongs the series I am going to write for engineers who are just about to start their careers and/or have just started their career. The ideas discussed here are useful for others who are in their beginning years of investing and gaining hold of their finances.

To get hold of your financial life, you must first understand how your current spending habits are. Here I broke down expenses of a typical engineer. By typical I mean:

·        single
·        works full time (and often times, overtime)
·        not much partying on weekdays
·        eats lunch outside most of the days
·        weekends are for enjoyment
·        shares an apartment with one or two apartments
·        has a smartphone and a cable connection
·        drives to work about 10 miles roundtrip every workday

A typical monthly expense is shown in the table below. All numbers are in USD.
Food 310
Gas 134
Housing 675
Connectivity 120
Entertainment 89
Shopping 167
Travel 250
Insurance 69
Car loan 365
Total 2179

A pie chart of the expenses is given below:

Before we start talking about the numbers, let’s look at how I got them. 
I gathered the data from my own expenses during the first couple of years after joining my first job and also by talking to my friends who were in similar situations.  Your expenses might be different, but I think the percentages will come about the same. There are a couple of my friends who had student loans, which I didn’t include here. I need to gather more data before I can do that.
Now let’s look at the data in more details.

Housing (31%)

It is no surprise that housing is the biggest chunk of our expenses. No matter whether we own a car or not, no matter whether we party or not, we need to pay rent every month. Since most of my friends live in Bay Area, San Diego or Seattle, I only considered the housing prices in these areas. Since most of the engineering companies are in or around these cities (apart from Austin and Dallas) I suppose we can agree that this is a true representation of the housing expenses. A two bedroom apartment in these cities run anywhere between $1300 and $2000. Assuming you share the apartment with at least one person, the rent would come about $650. I have also added basic utilities into housing expenses.

Transportation (23%)

Car loan: Most of my friends bought a new accord, civic or Mazda when they started their careers. Some of them bought 1 or 2 year old cars. These used to cost just around $20,000. The loan amount I calculated is on $20000 loan with 4.75% interest rate. The monthly payment comes about $375. Currently I pay $365 towards my car loan. This puts car loan at 16% at the second place.

Gas: Assuming you drive about 10 miles per weekday and about 100 miles per weekend, you would be driving about 10000 miles an year. With an average mileage of 25mpg, it would need 400 gallons. With the current gas prices ~$4/gal it would be $1600 / year or ~$164/ month.

Food (14%)
Most engineers eat out almost every day at lunch time. Assuming each meal costs about $7 (almost the cheapest you could probably find in a food court, not counting for McDonald’s type fast foods), that’s at least $140 for lunches. Add your dinners, breakfasts and those weekend party dinners we go to, the bill came up to be $310 for me during the last year. My eating habits haven’t changed in years; so I assume I was spending more or less the same during my first couple of years in my career.

Travel (11%)
I am an Indian. I go visit my family once in a year mostly during Christmas and New Year given that we have about 15 days of vacation at office. This is typical of most Indian engineers. Each trip now a days cost about $1500. Add on the top of this the long road trips we make during all the long weekends, the hotel, car rental, gas for the car, food, etc and you would end up raking about $3000 a year just for the travel. I haven’t included the gifts we buy for our family and friends back home, but I figure $3000 for travel is a very good representative.

Connectivity (6%)
Everyone nowadays has a smartphone. In fact we are forced to buy a smartphone even if you want a decent looking phone. And it costs us a whopping $90 or so. Add your internet/cable bill split amongst your roommates and you are close to $120 per month on the connectivity. If you have ipad/kindle or such devices with 3G/4G on them, add $30 at least extra on it.

Shopping (7%):
I just pulled my last year’s shopping expenses to arrive at this number. You should know that I hate shopping. I probably go shopping 4 or 5 times a year. Please check your shopping habits to find out the number.

Entertainment (4%)
How about shooting some pool or going for bowling? These two used to be my favorite pastimes with friends when I was single and working late hours. Now I was not much into drinking and hence I should say my entertainment expenses are lower than most others.

Insurance (3%)
If you own a car, then you pay car insurance. If you don’t have employee provided health insurance, then you pay health insurance premiums. Some employers only pay partial premiums and employees need to pay the rest. I paid car insurance and also my health insurance premiums for 3 months. Your number might differ.

Now you might be asking yourself: “What is the point of all this analysis?” There is, in fact, a point to it my friend.
  • It gives an insight into where your expenses go. 
  • It shows how much money you need to be making, bare minimum, to keep up with your lifestyle. (psst… don’t forget taxes, but we will defer to another day).
  • You can make an informed decision on setting your monthly budgets
  • Check whether your intuition on your expenditure tallies with the reality of the numbers
We will look at ways to cut down these expenditure in another post. But for now, I encourage everyone to pull out one’s credit card and bank statements and construct your own monthly expense pie chart. Happy analysis! Leave a comment if your percentages differ significantly from what I showed here. Leave a comment if you have suggestions on reducing any costs.

Thursday, May 10, 2012

Dos and Donts for newly joined employees

It is the time of the year when after years of toiling people graduate and are eager to join their jobs. First off, congratulations to all the graduates; you worked to hard to earn your degree; enjoy the moment.
Joining in a job has its challenges. New place, new people, no matter how talented you were in school, you would have to reestablish your identity. This post talks about a few DOs and DONTs to smooth your transition into a new company. Here we go..

Your job is NOT your life 
One of the most common mistakes new graduates do is to think job is their life. I've seen a many new employees working overtime, putting in extra hours to impress their bosses. This is a huge mistake. You raise the expectations from your boss. Your boss will expect the same commitment every time from you. You are now stuck for your career. If you cut back, it can be construed as slack. So think before you work too much on your job.
Your job is at most a part of your life. Job is your vehicle to get your life where you want it to be. Read this article to know how much your extra hours will be worth financially.

Don't be afraid to say NO to deadline
When your boss assigns you a task, don't jump right into it. First thing you need to negotiate is the deadline for the task. This is the first time your boss is working with you, hence he/she may not be the best judge of how much time you take on the task. When your boss sets a target date it is an estimate. He/she would really appreciate you if you are upfront and talk about the deadline, rather than come the day before deadline and say you cannot finish it. Negotiate the time, and once you do it, own the task and see to its completion.

Don't eat lunch alone
You are new to the company and the place. You need to make friends and learn about the place. What better way to do it than make friends with the folks already working there. Invite your colleagues to join you for lunch. Everyone has to eat, and they would welcome an invitation from a newcomer. They will be more willing to talk about their experiences. Take the opportunity to know about the team, its members, duties, tips on how to get more work done. Ask about the place, things to do, best places to eat, anything that comes to your mind. Bottom line : make friends, quickly

Learn or Perish
As a new employee your primary focus should be on learning the company culture and to enhance yourself with the toolset used and the technology used. I bet that not more than 30% of what you learned at school will be applicable at your job. A new job equals opportunity to learn new technology, new methods of analysis, new approaches to problems. Take the opportunity and learn or soon you will find yourself ignored by others. As a new comer you have an advantage of asking help from others. Since you just joined everyone will be willing to help you and teach you. As the time goes by, you would be stranded with less people willing to answer your questions. Moreover they would start judging you. The best time to learn as much as possible is right after you join. Do not procrastinate.

Take ownership of your work
This is very important. When you accept a task from your boss, own it. If you need other folks to help you, go ask for the help. Don't sit around and wait for others to fix things for you. You would face a situation where you would find a problem that is not directly under your responsibilities, but if not solved would direct affect your project. These are golden opportunities to shine in a company. It is how you handle these situations that determine how others perceive you. Own up, roll up your sleeves, tackle them and grab such opportunities by horns.

Be honest to yourself
Many a people tend to work only to impress their bosses and/or when it is time for a review. This is absurd. Don't fool yourself. Be honest. Don't slack off just because your boss isn't watching or it is not review time. A good boss will constantly monitor your progress. Don't worry about ratings, don't worry about hikes. Don't get caught in the rat-race of promotions. Do your best, learn as much as you can from your job and just be a better professional. Don't ever become complacent. The day you become complacent is the day you are done in a company.

Accept your mistakes
Don't ever make excuses for the mistakes you committed. Just admit you made a mistake and make a point not to repeat it. Do not open your statement with an excuse or an explanation. I would say even explanation at that moment will sound like an excuse. And for god sake, never say "oh! I dont know what happened, it used to work." Your boss will immediately know when you are making excuses and will sure remember to mention that during your performance review. And when your colleagues critique your work and give feedback, be open and accept it. Later sort through and figure out what is useful to you and what is not.

Follow office culture
Try to fit into the office culture. If the company culture is to dress up formally, then do dress formal. If it is casual, then wear casual clothes. If the office hours are flexible, then go at your own time. If the culture is to come and leave on time, stick to it. If your company frowns on using instant messengers and social networking sites, don't do it at office. In fact, reduce the amount of time spend on personal browsing, especially social sites like facebook and twitter.

I am sure there are other dos and donts, but I hope this list will get you thinking in the right direction. If you have any that you would like to share with others, please leave a comment.
Good luck with your new job!

Acknowledgements: Thanks to my friends who shared their experiences and advices especially to Kotesh Bandhamravuri & Suresh Sistla.

Wednesday, April 25, 2012

Is your salary hike worth the extra hours you put in?

As engineers starting our careers, we are all motivated to work hard and make a mark for ourselves. We are driven by various factors: the type of work we do, competitiveness, our desire to get ahead in the company, get promotions and salary hikes.  Whatever it is, we tend to work overtime and dedicate ourselves to our work. Companies reward us for our hard work and dedication with salary hikes, bonuses and potentially stock options. These are some powerful incentives that would make any person prioritize work over personal issues and put in extra time.

Managers and directors will tell you that the best way to climb up the ladder is to dedicate yourself to the company and work hard to impress your boss. It sure is good to impress your boss with your good work. However, before we dedicate all our time to the company, I think we should take a harder look at what the outcome would be.  As engineers we should take a look at each problem in an analytical way.  What would be our salary at the end of all the extra hours that we put in? Let’s look at that.

A good way to do that is find an engineer senior to you who you know is a star and find out what his/her salary increase is over the past two years. Now of course salary details are supposed to kept secret. However most people have no issues mentioning the % hike they got, without giving the absolute numbers. You can be assured in a typical engineering company, which most are multi-national company, the number your gather from your senior is what you are mostly likely to get, no matter how hard you work.

Talking with friends and seniors I know with stellar performance records, I was surprised to see how their salaries increased. Typically it is in the range of 2-3%. Of course they were awarded bonuses, but their base salary only rose by maximum of 3% , unless there is a promotion involved. By the way 3% is unusual these days; it’s more likely to be 2% or upper 1%s.
Let’s see what this salary increase does to your take home salary at the end of year. Before we get into analysis, here are the assumptions in the following charts

  •  Base salary:  $75000 (a typical fresher’s salary in an electrical engineering company
  •  401k contributions: 10% (a number that I am a proponent of. Reasons to come in another post)
  • Lives in CA and pays both state and federal taxes
  • Tax Filing status: Single
  •  The tax calculations assume only standard deductions (pretty typical for a fresh engineer
  • The tax numbers are taken from www.irs.gov and www.ftb.ca.gov for the year 2012
  •  Net income is the income you are left with in your bank account after paying state and federal taxes, medicare and social security taxes.
  •  Net income doesn’t include your 401k contributions. You cannot use 401k contributions until a few years anyway.
  • Disclaimer: I am not a tax expert. The tax calculations were based on my understanding and using simple 1040 form.
Salary increase
New salary
Net Income
Increase in Net Income
 $  75,000
 $  49,061
 $  75,750
 $  49,453
 $      392
 $  77,265
 $  50,245
 $   1,183
 $  79,583
 $  51,456
 $   2,394
 $  82,766
 $  53,119
 $   4,057

So taking a typical increase of 2% salary, you can see that your net income increases only by $1183. Over a year you spend about 1960 hours ( I am assuming you get 3 weeks of vacation) at your job. As you can see your hourly increase in pay is just about $0.60. The question you need to ask yourself is: do I dedicate my time to my company for a trifling $0.60/hr increase or shall I do something else with my time that would get me better than $0.60/hr.

We will explore the options to make more than $0.60/hr in another post. But for now, I think we can all agree that those extra hours you put in to impress your boss didn’t really make sense.
If you were wondering where your salary goes to, here is a pie chart of the pre-tax salary.