Treasury Department pay czar Kenneth Feinberg last week announced sharp cuts in total compensation at the finance and auto companies under his control. But while he cut total compensation by half, he substantially increased one important element, regular salaries. The move reflects the complexity of regulating something that mixes politics and economics.

Mr. Feinberg oversees seven firms that accepted bailout packages:

1. American International Group Inc.

2. Citigroup Inc.

3. Bank of America Corp.

4. General Motors Corp.

5. GMAC Financial Services

6. Chrysler Group

7. Chrysler Financial.

Is this smart? Is this effective? Is this even American? I say, “no” on all three counts! My over twenty years as a recruiter tells me that supply and demand works! Trying to control salaries is not smart. This is something one would expect from a socialist or communist country. Furthermore, it is not efficient from a market standpoint. The supply for top-notch executives capable of bailing out these seven firms is very small and the demand is very high. Therefore, staffing experts at these firms need to do everything possible to recruit the best and brightest. Tying their hands in the employment process is not what they need in such a critical moment in their existances.

According to the National Assessment of Educational Progress, less than 40% of 4th and 8th graders are proficient in mathematics! This test is often called the nation’s report card and was given early this year. It also found significant scoring gaps between white students and Hispanic and African-American students.

Countries such as Hong Kong, Singapore and Taiwan faired a lot better than the U.S. What this means is these countries are better prepared for the technical future! Future scientists, engineers, researchers and technical professionals start with education today. As a result, we need to completely overhaul our science, math and technical educational system if we are going to continue to be a leader in technology in the future. This also means a lot more in the way of public and private partnerships including mentoring promising minds.

The Dow Jones industrial average has reclaimed 10,000 for the first time in a year.

The Dow crossed five figures in trading Wednesday, seven months after it hit a 12-year low of 6,547.05 on March 9. The comeback by the stock market’s best-known indicator is the most visible sign yet that investors believe the economy is indeed recovering from the financial crisis and recession.

Cheering erupted from traders on the floor of the New York Stock Exchange as stocks briefly moved above the psychological barrier. The Dow at times fell back below 10,000 in the normal ebb and flow of trading, but finished at 10,015.86, up 144.80 points.

“People feel more comfortable and feel like there’s less risk in the market when you get above a psychological point like 10,000,” said Carl Beck, a partner at Harris Financial Group.

Upbeat earnings reports from chip maker Intel Corp. and banker JPMorgan Chase & Co. Wednesday gave the Dow its final push past 10,000.

Investors are increasingly shaking off lingering doubts about the economy. However, analysts still warn that problems like rising unemployment and a weak housing market pose a threat to a solid recovery.

This combined with other recent economic reports confirms that the recession
is likely over and our economy is starting to recover. However, we may see a
spike to 10% unemployment before a major drop because the jobs data
traditionally trails other economic indicators. The last time we had a 10%
or higher national unemployment rate was June, 1983 when it the rate was
10.!%

The Dow is now up more than 50 percent from its March low. But it remains nearly 30 percent below its peak of 14,164.53 hit in October 2007.

The index first finished above 10,000 on March 29, 1999, in the midst of a powerful rally that ended with the dot-com bust at the start of this decade. Stocks then fell below that mark last October as investors sold stocks in a feverish panic following the downfall of Lehman Brothers.

The latest round of earnings reports, which will continue to pour in over the next few weeks, are the key to keeping the market’s rally alive, analysts say. If earnings fall short of expectations, stocks could stumble.

Together, the reports quieted fears that major U.S. companies won’t be able to boost profits through sales growth and not just massive cost-cutting, which was a main driver behind the improvement in second-quarter results.

Investors displayed little reaction to minutes from the Federal Reserve’s last meeting that indicated policymakers were conflicted over whether to expand or trim a program intended to drive down mortgage rates and support the housing market.

Fed Chairman Ben Bernanke and his colleagues agreed to slow down the pace of a $1.25 trillion program to buy mortgage securities from Fannie Mae and Freddie Mac. Instead of wrapping up the purchases by year-end, the Fed last month said it would do so by the end of March.

Source: Associated Press

One of the most misguided policies of the Obama administration is focusing on ways to reduce executive’s pay. Even having a pay czar is a waste of valuable time and money! This is contrary to everything I have learned about the free market system.

In theory, this policy has some merit including placing a huge chunk of compensation into stock that cannot be touched for several years. This supposedly will better link a manager’s efforts with the economic well-being of the company. Unfortunately, this will also have many bad side effects including complicating efforts to recruit the best and brightest to run underperforming companies like Bank of America, which is currently recruiting for Kenneth Lewis’ replacement.

Instead, the “invisible hand” espoused by Adam Smith has guided companies and managers through free markets for centuries. True, there are criminals that misuse their power, but does any evidence exist that criminals are less prevalent in highly regulated situations? In fact, evidence shows the contrary. Look no further than communist countries like Russia and China where payoffs and corruption run rampant!

Instead of trying to reduce executive’s pay, having a pay czar and focusing in on all these big government programs, the administration needs to re-focus on the real engine for jobs creation, small businesses. To that end I have two suggestions: 1) providing more and easier access to capital and 2) expanding successful programs like SCORE (Service Corps of Retired Executives), which provide training to entrepreneurs to start and expand small businesses. These will be the real drivers for more jobs, which will do more for our economy than being on an executive pay witch-hunt.

Please go to http://www.strategicsearch.com/technical-recruiting-tips/ and click on #4 to view this month’s technical recruiting tip, the 4th magical interview question, “What does that mean?” As I mentioned last month, open-ended interview questions tend to elicit a lot more useful career information from candidates.

As a result, you want to ask, “What does that mean?” in conjunction with other interview questions such as, “what do you do?”
This will prevent a job candidate from talking in generalities during their interviews and help you to better pinpoint their true job skills per your employment requirements.

I interviewed Gerry Crispin co-founder of CareerXroads at the 12th annual HR Technology Expo today. A visionary on recruiting trends, he is always fascinating to talk to. He shared several points. First, social networks continue to explode. The caveat is no one seems to know what the outcome will be. Related to this, hiring companies increasing seek and job seekers need to possess skills in this area. One caveat he mentioned was, “90% of students still don’t use LinkedIn or Facebook to uncover and contact alumni to assist them in their job search. Mr. Crispin offered that candidates should be using these tools to explore connections with others and engage them to help their job search. Another statistic he cited was, “99% of job candidates apply for a job without having anyone refer them.” This is particularly problematic since a referral carries a lot of weight in the employment process! He went on to say that one needs to meet people in the company that they wish to work at to: a) give them a job referral and b) help facilitate the employment process.

Another caveat Mr. Crispin shared was, “just because you use technology, doesn’t mean anything. For example, a poorly developed resume using the best technology tools still will find its way into the garbage.” Therefore, one needs to use technology wisely and also spend time making sure the fundimentals are correct.

Lastly, he shared several tools for technical recruiting. The job board Dice was excellent for IT recruiting. He also recommended two aggregators: 1) Simply Hired and 2) Indeed. They point to the best avenues to fill a particular job.