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"Shoulds" and "oughts" in the workplace.

The most fundamental task of any manager is to enhance employee productivity and job satisfaction. Much has been written about how this can be done. Unfortunately, most of the recommended techniques have a serious shortcoming--they are very expensive. In addition, they are often difficult for managers to implement. In this article, we examine one approach which has been largely neglected--the effective use of "shoulds" and "oughts." This is not a cure all; it will not solve every productivity and satisfaction problem. However, it is a step toward these goals, and it is easy and inexpensive to implement.

How Do "Shoulds" Affect Productivity and Satisfaction?

Most managers and their subordinates live in a psychological world of "shoulds and oughts." They say or hear statements such as, "Jim, you should work harder," or "Mary, you have a bad attitude. You ought to change it and quit complaining about your job." Some of these "shoulds and oughts" are directed toward oneself such as, "I should get out and spend more time with my employees," or "I should write up those annual performance evaluations today," while others are directed toward co-workers and subordinates. The ineffective use of "shoulds and oughts" can lead to stress and lower self-esteem which, in turn, may result in lower productivity and job satisfaction.

Types of "Shoulds"

Managers typically use two different types of "shoulds"--instructional and moralistic. Instructional "shoulds," used for advice or suggestions, are helpful when spoken at the adult-adult level and when they imply, "It is in your best interest to ...." When a manager says to a subordinate, "You should wear safety goggles when spraying these chemicals," or "You should use a primer before painting the table," the manager is helping the employee do the task more efficiently or safely and is also fostering a better employee-manager relationship.

Some instructional "shoulds" take the form of wise old sage recommendations or reflect the firm's culture, such as, "If you want to get promoted, you should not leave work until after 5:00 o'clock," or "You should always wear a suit and tie to work. The President of the firm wants everyone to do this." These helpful hints typically involve a recommendation along with the reason why compliance is a good idea. They are meant to be constructive and help the employee achieve his or her goals.

On the other hand, when instructional "shoulds" are spoken in a parent-child manner, they have adverse effects. The unqualified, "You should have known that the paint needed to be shaken and not stirred," spoken in a harsh, parental tone, implies that the person was stupid and can only hurt the manager-subordinate relationship.

In contrast to instructional "shoulds," moralistic "shoulds" are spoken as a moral imperative. They evoke emotional reactions including anger, indignation, and a feeling of righteousness. These "shoulds" stem from the manager's own values or company culture and reflect his or her biased view of how the world "ought to be." They communicate that certain behavior is either right or wrong, good or bad, period. These are usually given in a parent-child manner. The manager can self-direct these imperatives or direct them toward others. The key to identifying a moralistic "should" is that there is no rationale why someone "should" do what is requested.

Given the two different types of "shoulds," how can a manager best communicate them? Let's examine this question in terms of communicating "shoulds" first to oneself and then to others.

Communicating "Shoulds" to Yourself

Communicating "shoulds" to oneself typically entails negative self talk such as, "I should spend more time upgrading my skills," or "I should get my reports in on time." By saying these statements in a parent-child manner, the manager is engaged in self condemnation and ridicule. He or she is concluding that there is something personally wrong, which reduces self respect. Furthermore, blaming oneself can lead to an obsession with the wrongdoing.

Self-directed, moralistic "shoulds" also may affect how others relate to the manager. The lowered self-esteem that results from self-blame is often sensed by others. This, in turn, negatively affects their evaluation of the manager and how they behave toward him or her. The circle continues because the manager now senses that others are behaving differently, which reinforces the idea that there is something wrong.

So what are managers to do? Bethel recommends turning off the old mental tapes that are constantly playing and eliminating this negative form of self talk.|1~ Instead of saying, "I should spend more time upgrading my skills," first ask the question, "Is it in my legitimate best interest to spend more time upgrading my skills?" This called into question the importance of upgrading skills. Is it really important to improve them?

Will doing so accomplish my goals? The manager may discover that upgrading skills is not as important as another goal! But if, indeed, it is worthwhile to upgrade skills, then the issue should be recorded to say, "I believe it is in my best interest to spend more time upgrading my skills." This eliminates self blame, makes the manager aware of choice in the matter, and frees him from blind obedience to a "should." In addition to these future-oriented "shoulds," some managers repeatedly blame themselves for past errors. They say things like, "I should have earned my college degree in engineering rather than history," or "I should have called that client last week--now I have lost the sale." These self-deprecating statements serve no useful function.

On the contrary, they reduce self-esteem and create stress.|2~ Furthermore, they reduce the likelihood that the problem will be corrected in the future. Rather than bemoan the past, it would be better to say, "I made a mistake in this situation. Like all other human beings, I need to recognize that I can't always be perfect. Now, what can I do to correct the mistake and prevent future ones?"

Communicating "Shoulds" to Others

Managers often feel it is appropriate to tell others what they "should" do. Indeed, they may be told to do so by their own boss. What would be the appropriate behavior in these instances? In answering this question, we consider three different situations

First are situations in which a manager wishes to give helpful suggestions or instructions to employees, while avoiding the word "should." For example, the manager could say, "Terry, I would like you to apply a primer coat to the wood before painting it with the final coat. This will reduce the chance that the paint will peel and improve the paint's appearance." Or the manager could say, "Lynn, I recommend that you try to attend all company parties. I believe that it is likely to improve your chances of getting promoted." Note that in this statement, the manager is spelling out the reason for attending parties. This gives the employee information he or she can use in deciding whether to attend them. The manner in which these statements are made is crucial. Lecturing, preaching, and moralizing are not as effective as stating information in a factual, adult-to-adult way.

Another situation encountered by managers is needing to pass along other people's "shoulds." These may originate from the manager's boss, top executives, or the personnel department. The previous suggestions apply here. The manager can state the request in a factual manner and give an explanation, avoiding the word "should." For example, "I have received a memo from the President asking that all employees wear hard hats in the construction area. This will reduce the likelihood of anyone getting hurt. The memo adds that disciplinary action will be taken against offenders." Once again, by giving a reason and stating consequences, the manager allows employees to determine their own behavior.

The third situation involves managers communicating their own "shoulds" to others. They may believe that all employees should attend meetings or keep their desks clean or treat customers courteously. The typical scenario begins when the manager observes that an employee is not doing something he or she "should" do. The manager then gets angry because of this, blames the employee, and proceeds to tell him or her what "should" be done. Each part of this scenario is counterproductive.

Wayne Dyer has noted that anger victimizes people when it keeps them from enjoying present moments or furnishes a built-in excuse for behaving in self-destructive ways. He adds that if a person can choose whether or not to be upset about reality, and neither will influence it, then choosing to be upset is crazy.|3~ In short, the issue is this: what is gained by being upset? Blaming others for not doing what one believes they "should do" is equally counterproductive. Ellis and Harper contend that saying, "I don't like what Jim is doing, and because I don't like it, Jim should change his behavior," is a grandiose non sequitur. There is no reason why Jim should change his behavior just because the manager doesn't like it. It might be nice if he did, but it doesn't follow that he should or that he is to be blamed. In addition, the more Jim accepts blame and belittles himself, the less he will be able to change his behavior, even if he faces it.|4~

Instead of communicating moralistic "shoulds" to others, managers can be more effective by taking a different approach. If employees "should" do something differently, a good starting point is a causal analysis. This involves eliminating the "who's at fault" syndrome and inserting a "let's find a solution" pattern.|5~ Suppose, for example, that employees are frequently missing department meetings. Instead of condemning them, the manager could determine why this is happening. Perhaps employees find the meetings a waste of time or have higher priority tasks. Once the causes are determined, problem solving can be used to find a solution. The manager may conclude that fewer meetings or different meeting times are in order. Occasionally, the best solution may be to talk with an employee and ask him or her to change some behavior. In communicating the recommendation, the manager could say in an adult manner, "Jim, I want you to attend all of the departmental meetings," followed by an explanation, rather than saying in a parent-child tone, "Jim, you should attend all departmental meetings." Another alternative is to tell Jim the consequences of not attending meetings and encourage him to attend. Then it is up to Jim to decide.


Most managers tell others what they "should" do, and frequently do what others say "should" be done. They often do the former to control others, whereas they do the latter to win the approval that comes with conforming. In spite of these payoffs, the use of "should" often has a detrimental effect on the manager, the employees, and the organization.

Instructional "shoulds" can be helpful if communicated in an adult-to-adult manner. They tell the employee what is expected and why it is in his or her best interest to comply. On the other hand, communicating moralistic "shoulds" to oneself or to others can be harmful. These "shoulds" represent one person's peculiar view of the world, and while it might be comforting if everyone else shared it, it is not necessarily in anyone else's best interest to take that viewpoint. Moralistic "shoulds" reduce the manager's own self-esteem and make employees angry and less productive. Likewise, when instructional "shoulds" are communicated in a parent-child manner, the employee is likely to become defensive, and the manager's relationship with him or her will suffer.

In conclusion, the fundamental task of every manager is to improve productivity and enhance employee job satisfaction. Recently, many managers have tried to accomplish this task by using one or more of the currently fashionable techniques such as Management by Objectives, Job Enrichment, Behavior Modification, or Time Management. We believe that the effective use of "shoulds and oughts" constitutes an excellent supplement to any of these approaches. It is cost-free, easy to implement, and likely to have immediate payoffs.

In addition to publishing numerous texts and articles, Dr. McAfee co-authors a column for The Virginia-Pilot and The Ledger Star and conducts in-house workshops on employee motivation, managing difficult people, and performance evaluation. Dr. Glassman, who has published over 50 articles, consults widely on sales and marketing strategies and conducts seminars on sales and motivational topics through Old Dominion's Institute of Management and also privately.


1. Bethel, S. M. (1990). Making A Difference: 12 Qualities That Make You A Leader. New York: Berkley Books.

2. Helmstetter, S. (1987). The Self-Talk Solution. New York: Pocket Books.

3. Dyer, W. (1977). Pulling Your Own Strings. New York: Avon Books, p. 189.

4. Ellis, A. E. & Harper, R. A. (1961). A Guide to Rational Living. Englewood Cliffs, NJ: Prentice-Hall, p. 103.

5. Dyer, W. (1985). What Do You Really Want For Your Children? New York: Avon Books.


* The Arthur Anderson European Community Sourcebook by Iain P. A. Stitt, Consulting Editor, Arthur Andersen EC Office, Brussels, and John J. McGonagle, Jr., Research Editor, Triumph Books, Inc., Chicago, IL, 1991, 500 pages, including eight appendices and two indices, $150, casebound 8-1/2" x 11" desk reference. Reviewed by Cheryl Hein, Ph.D., Associate Professor of Accounting, Corpus Christi State University.

This sourcebook, the result of collaboration by Arthur Andersen and Co. professionals from each of the 12 EC member countries, is the businessperson's guide to the operation, regulations, and structure of the EC member countries and of the EC itself.

Those preparing to do business in Europe may find the appendices and indices especially valuable in locating the appropriate government agencies to contact, not only in Europe but also in the U.S., Canada, and Japan.

Detailed information is provided including phone numbers, fax numbers, and addresses for the EC and member country departments. The information is conveniently classified to facilitate access to references. Analytic and descriptive material of the member countries and the EC is included, together with useful notes on some of their more important requirements affecting business.

The book should be helpful to managers in all industries who wish to understand and monitor the impact of the European single market on their operations. The hundreds of official EC contacts and comparative profiles of member countries should be useful for any firm planning to do business in the EC. Additionally, economic information is provided that may help businesses to identify profitable opportunities, find European funding sources, understand complex EC regulations, and monitor European competitors.

The book has five parts, with Part I describing the EC and the single market of 1992. This section also includes chapters on business development, key strategic issues, understanding the evolving European monetary system, a history of the Community, and a review of the interrelationships among the 12 member states.

Part II further describes the EC member states, with separate chapters on each of the 12 member countries detailing the population, currency and exchange controls, taxation, and how to establish a business.

Part III contains about 75 pages of references on EC 1992 by topic, such as regulation of business and competition, employment and labor, social and economic policy, etc.

Part IV also lists sources on EC 1992, this time by industry. There are over 150 pages of names, addresses and fax numbers for associations, publications, and industries (agriculture, food stuffs, manufacturing, health care, medicine, professional and service business, and so on).

Part V, appendices and indices, includes sections on finding other resources, a glossary of abbreviations and acronyms, EC business designations and abbreviations, single market measures by topic and industry, resources described in the book, U.S. Government contacts, data resources and publications on the single market, contacts in EC member states on the single market program, and contacts in Canada and Japan on the single market program. Additionally, there is an index of associations and organizations and a general subject index.

Since countries in the European Free Trade Association (EFTA) have a close relationship with the EC and may yet become part of it, the book might have included information on them similar to that for the EC, perhaps in a separate section.

But this is a minor criticism. The book provides a wealth of information and covers many topics of interest to any executive thinking about doing business with the EC.

The authors explain clearly the complex single market program and the impact of EC92 on competition, distribution, sales and marketing, pricing, product development, financing, cost control and information technology.

* Recruiting, Interviewing, Selecting, and Orienting New Employees by Diane Arthur, Second Edition, AMACOM, New York, N.Y., 1991, 333 pages, $49.95. Reviewed by Elwin R. Myers, Ph.D., Associate Professor of Management, Corpus Christi State University.

The title of this book clearly describes its major theme: effective and legal practices in four areas of the employment process. The broad scope of coverage would make this reference book especially helpful to a small business owner who may prefer to spend $49.95 for a single hardcover book covering the entire hiring process rather than a single component.

Small business owners would also appreciate the author's clear, jargon-free writing style. In addition, the author provides specific examples to illustrate ideas that may not be widely known or understood. For example, after stating that subjective language should not be used in post-interview documentation, she lists 68 inappropriate words or phrases as appropriate examples.

In addition to having an effective writing style, the book uses graphics creatively to help readers focus on important ideas. Such visual devices as headings, bold print, italics, indentions, enumerations, sketches, tables, newspaper reproductions, and sample letters help readers quickly absorb and retain important ideas.

The first three chapters cover recruiting. Chapter 1, "Recruitment Challenges and Opportunities," discusses the changing composition of the work force, seven target populations now under-represented in the work force, and alterative work arrangements available. Chapter 2, "Familiarization With the Details of a Job," presents such steps in interview preparation as becoming familiar with the job's duties and responsibilities, education and prior experience, and other requirements that must be understood before the interview session. Chapter 3, "Recruiting Sources," lists the advantages and disadvantages of 26 different methods of recruiting employees.

Chapters 4 through 7 cover the interview process. Chapter 4, "Preparing for the Interview," reviews the advisability of conducting telephone interviews, reviewing the application, allowing sufficient time for the interview, and planning an effective interviewing environment. Chapter 5, "Employment and the Law," reviews 12 major equal employment opportunity and affirmative action laws and regulations that must be understood before conducting interviews. Chapter 6, "Conducting the Interview," provides suggestions on developing rapport, asking the opening question, and other topics in actually administering the interview. Chapter 7, "Writing Up the Interview," stresses the importance of keeping objective, job-related written notes during the interview to assist in selecting the best applicant and providing legal documentation.

Chapters 8 through 10 cover the selection and orientation processes. Chapter 8, "Preemployment and Employment Testing," reviews the types, characteristics, and policies of employment tests used and also the federal guidelines in the Uniform Guidelines on Employee Selection Process. Chapter 9, "Making the Selection," gives information on checking references and other factors to consider before making the selection. Chapter 10, "Orientation," provides specific recommendation on making the employee's first work day a pleasant, productive one.

The author provides useful supplementary items. The 13 appendixes include sample forms and checklists that readers may modify and use in their own firms. The forms, many of which were developed by the author's management consulting firm, include a Job Description Form, Interview Evaluation Form, and Employment Reference Form. The checklists include such items as a Selection Checklist and a Checklist for New Employees.

Readers should also be pleased with the author's emphasis on practical information -- "how-to-do-it" information. The following examples represent the scores of specific tips obviously uncovered through the author's firsthand experience:

* Employers should require applicants to complete the application form by themselves at the time of the interview to ensure that applicants are literate.

* Employers should not send rejections immediately to unsuccessful candidates; they should be sent after the chosen applicant actually accepts the position.

When the author prepares the third edition, she should consider using personal anecdotes to stimulate reader interest and subject credibility. Her audience is not academicians or students who might prefer textbook-like third person writing. The audience is practicing business people who may enjoy reading about real-life situations and others' mistakes -- to avoid repeating them.

The author presented several key conclusions that would benefit managers:

1. Become familiar with EEO and Affirmative Action-related laws and regulations. These laws regulate almost all areas of the employment process.

2. Prepare a clear, complete job description for the position. The job description will be invaluable in such areas as preparing the interview questions, reviewing recommendations, and others.

3. Document everything in objective language. This will ensure that the selection is made logically and will also provide a defense against future discrimination charges.

4. Try to focus on the "big picture" when evaluating candidates. Too many people make the mistake of condemning candidates for relatively minor offenses, such as wearing the wrong color tie or using the wrong fork during a lunch interview.

5. Don't jump to conclusions when evaluating interview questions or checking references. Sometimes unfavorable items, such as being fired from a job, have reasonable explanations that should be uncovered.

6. Recruiting new employees is an expensive, time-consuming task. It should not be wasted by providing inadequate orientation.

* Decision Analysis for Management Judgment by Paul Goodwin and George Wright, foreword by Lawrence D. Phillips, John Wiley & Sons Ltd., Chichester, England, 1991, 308 pages. Reviewed by Aaron H. Brown, D.B.A., Professor of Quantitative Methods, Corpus Christi State University.

Decision analysis is a divide-and-conquer strategy to systematically structure and evaluate complex decision alternatives. An analysis has three phases: identification, estimation, and evaluation. After alternative courses of action and objectives are identified, relevant factors are estimated. The relevant factors extend beyond typical economic factors (costs, revenues, and volumes) to include (1) the relative importance of conflicting objectives, (2) management's risk taking attitude, and (3) the likelihoods of future events. Management judgment is captured by estimating these factors. Then, the alternatives are evaluated in view of these estimates. This evaluation conditionally prescribes one of the alternatives.

Managers wanting an understanding of decision analysis methods will benefit from reading this book. The topical coverage is comprehensive, and without the usual mathematical emphasis -- enabling private and public sector managers to appreciate the applicability and benefits of decision analysis.

Chapter One sets the stage by delineating the characteristics of complex decisions and describing the role of decision analysis in such situations. Complex decisions can include any or all of the following: conflicting objectives, uncertainty, complex structure, and/or multiple stakeholders.

Chapter Two introduces basic decision analysis terminology and explores a comprehensive example with multiple objectives. The example is an office location decision, which illustrates the Simple Multi-attribute Rating Technique (SMART).

Probability concepts and terminology are presented in Chapter Three. The presentation includes probability trees, probability distributions, and expected values.

Chapter Four discusses three decision criteria -- expected monetary value,

single-attribute utility, and multi-attribute utility. These criteria are applicable when uncertainty is a significant aspect of the decision situation. Management's attitude toward risk taking and the number of objectives determine which criterion is appropriate for a specific situation. Two methods of eliciting utility measures are included.

Decision trees and influence diagrams are described in Chapter Five. These are simple, yet powerful methods to identify the structure of a decision situation. Decision trees are temporal road maps of sequential choices and random events -- at some intersections the decision maker chooses the course, at others the path is randomly selected. Each route through the tree terminates with a reward to the traveler -- the decision maker. Influence diagrams are more flexible than decision trees, but lack the prescriptive value of decision trees. They are a convenient way to represent dependencies between events and decisions, and can be translated into decision trees for prescriptive analysis.

Fundamental concepts and techniques of Monte Carlo simulation are presented in Chapter Six. Product selection and investment decisions are used to illustrate the techniques. Various decision criteria are presented -- stochastic dominance, mean-standard deviation, and utility. A brief appendix contains an example of calculating a standard deviation.

Chapter Seven introduces Bayes' Theorem and its use in decision analysis. It is the means of revising probability estimates when new, imperfect information is available. The effects of varying degrees of reliability and the expected value of perfect information are explored. The latter establishes an upper limit on the economic value of new information, before it is purchased.

Chapters Eight and Nine provide a survey of research on the 'quality of human judgment' -- an issue fundamental to decision analysis credibility. Chapter Eight focuses on results from laboratory experiments, and Nine reviews real-world studies.

Methods for eliciting decision makers' subjective probabilities are explained in Chapter Ten. The coverage includes assessment methods for discrete events and probability distributions. Consistency checks, coherence checks, and techniques for very rare events are also included.

Chapter Eleven explains mathematical and behavioral methods of combining individual judgments for group decision making. Mathematical aggregation may be used to combine individual probability, value, and utility judgments. Behavioral approaches, such as Delphi and decision conferencing may be used to elicit group judgments.

Two examples of group decision making are explored in Chapter Twelve. A resource allocation example examines divisional budgeting for a national retailer of furniture, and a negotiation example analyzes a labor contract negotiation.

Chapter Thirteen assesses decision analysis, expert systems, and linear modeling as paradigms for decision-support systems. Summaries of expert systems and statistical models for judgment are followed by a comparison of the three models.

The end-of-chapter materials should prove valuable to readers. All of the technique chapters have exercises with check figures; most chapters have extensive references for further reading; and an appendix lists the names and addresses of companies supplying related computer software.

The following additions would add value to the book: additional reading references in the probability chapter; more details on the capabilities of related computer software; and the perspective, that for unique trials, the only viable interpretation of probability is as a subjective, degree of belief.

Managers may find the book's following points most useful:

* Decision analysis is applicable in private and public sector organizations;

* Decision trees help identify the structure in a decision situation;

* Personal judgments of uncertain events may be quantified;

* Using decision analysis increases communications possibilities;

* Decision analysis documents may be used to explain and justify a recommendation;

* Decision analysis can determine the maximum worth of additional information;

* Particularly helpful exhibits include the flowchart of decision analysis phases on page 114, the summary of SMART on page 10, and the summary of Monte Carlo simulation on page 134.

* Direct Investment and Joint Ventures in China, A Handbook for Corporate Negotiators by James E. Shapiro, Jack N. Behrman, William A. Fischer, and Simon G. Powell, Quorum Books, New York, N.Y., 1991, 342 pages, $55.00. Reviewed by Cheryl Hein, Ph.D., Associate Professor of Accounting, Corpus Christi State University.

China has great potential for foreign businesses who wish to provide capital and consumer goods and services. This book addresses the need of business managers and governmental officials for information on how to proceed with joint ventures and direct investment. The unique Chinese business and cultural environment is described at some length. Examples of joint ventures are given, supplying insights into potential difficulties.

The initial chapters describe economic conditions in China, the reasons China seeks outside investment, and the present status of foreign business ventures. In the following sections, investment, cultural, and legal environments are discussed, showing how they can affect negotiations by joint ventures and direct investment in enterprises.

The authors assess the suitability of China as a production base, taking into consideration its consumption patterns, managerial competence, labor conditions, transportation, research and development and customer/supplier relations. The contributions of foreign direct investment are examined, including both those sought by China and those provided by transnational corporations. The lack of managerial skill and sophistication hampers attempts to forge a new domestic economy, and this appears to be a concern of the Chinese government.

Technology transfer is also reviewed, and the authors discuss the Chinese government's consistent support of a wide variety of scientific and technical activities, including industrial research and development. They point out that China has several research institutes which are world leaders in their field, typically either military technology or pure science.

In the section on negotiating a joint venture, useful steps and procedures as well as lists are given, although in somewhat general terms. Examples illustrate some of the conditions which can be expected in negotiating and implementing an agreement. The problems presented by changes in Chinese government policies and practices, particularly as a result of Tiananmen Square, are briefly mentioned.

The authors conclude with an appraisal of prospects for development and modernization, taking into account China's current economic difficulties and recent trend toward re-centralization. They offer their view of prerequisites for modernization and the policy decisions of the Chinese government necessary to meet them.

The book provides a clearly written description and discussion of conditions in China in the context of its potential for foreign investment. Prospective investors and business managers will find it an excellent source of general information and it will also be valuable to students in international business programs. Many small cases and a more comprehensive one toward the end of the book are particularly informative.

In spite of the title description and although well indexed, it lacks categorized lists of information. Particularly useful to those wishing to explore investment opportunities and procedures would have been a list of appropriate government agencies, their addresses and functions.

* The Financial Impact of Corporate Events on Corporate Stakeholders by Sharon H. Garrison, Quorum Books, 88 Post Road West, Westport, CT, 06881, 182 pages. Reviewed by James O. Desreumaux, D.B.A., Associate Professor of Finance, Corpus Christi State University.

This book discusses the financial impact of events within and outside the corporation on common share market values in the short -- and long-run, e.g., stock splits, change in government regulations.

Those planning further research in the area of the effects of corporate events on stock prices will be especially interested in the excellent, clear material on past studies in Chapter 5 and two Appendices.

The book has ten parts. Part One defines a corporate event and the impact of various events on the stock prices of the corporations, from the Bhopal disaster to the Tylenol murders.

Part Two covers financial markets and the valuation of common shares, explaining market mechanisms, market functions, information, and market efficiency and inefficiencies in a manner that is understandable to an average reader.

Part Three deals with risk, emphasizing expected return and standard deviations of expected returns. The Appendices deal with more sophisticated risk measures such as Beta.

Part Four covers the sources of information and data an individual needs to know about to interpret events.

Part Five describes different methods used to measure the effects of events on stock prices, as well as experimental design methodologies. This section with its two Appendices will be of interest to researchers seeking to learn more about the cause and effect relationship of events on stock prices.

Parts Six through Ten deal with the effects of proxy fights, dividends, stock splits, repurchases, death, dissolutions, mergers and divestitures on stock prices, along with miscellaneous events. This section will be especially valuable to the general public trying to participate in short- and long-term stock movements.

Most of the book should be understandable to a reader with a basic knowledge of investing. The two sections that require some understanding of finance can be skipped with no loss to the reader not planning on future research.

The Appendices in Chapter Three, which are longer than the chapter, could stand alone as a separate section. A short coverage of comparative and trend analysis could be added to the Appendix on financial statement analysis.

* The Commerce Clearing House Financial and Estate Planning Guide, by Sidney Kess and Bertil Westlin, 1991 Edition, Commerce Clearing House, Inc., Chicago, Illinois, 1991, 869 pages. Reviewed by Pamela P. Stokes, J.D., Professor of Business Law, Corpus Christi State University.

The Guide is designed primarily for estate planning professionals in the field of law, trust, insurance, financial planning, investments, and accounting. Other individuals will find it useful as well, if they have a basic knowledge of estate and tax planning topics. The Guide could be particularly helpful to professionals who are new to the field, who only occasionally deal with estate planning matters, or who are unfamiliar with specific types of property or planning situations. It is a great refresher for the multitudes who are not able (or tire of trying) to keep track of which tax proposals pass and which fail in a given year, and of the planning implications that result.

Part I, "General Principles and Techniques," begins with an overview of various considerations involved in drafting an estate plan, including a fairly thorough questionnaire to help analyze a client's estate. A valuable chapter on co-ownership of property contains practical advice on the pros and cons of various ownership options, covering personal concerns, planning pointers, and potential income, estate and gift tax ramifications. Various estate planning techniques are then discussed, including gifts, charitable contributions, trusts, insurance, annuities, employee benefit plans, will provisions, powers of appointment and use of the marital deduction. This section winds up with chapters on choosing fiduciaries and post mortem planning.

Part II, "Special Situations," approaches planning from the perspective of the client's particular business or personal circumstance. The business chapters cover planning for the executive, professional, close corporation owner, partner, sole proprietor, and farmer or rancher. On the personal side, the topics are planning for marriage, divorce or separation; couples living together; the elderly and disabled; and generation-skipping provisions for the wealthy. This portion of the Guide also has chapters devoted to the closely held business, estate freezing, planning for a personal residence and medical care by proxy.

The final section, "Building the Estate," focuses primarily on income tax matters. Topics are investment strategies, family income-splitting, year-end and new year tax planning, maximizing deductions, minimizing taxes, social security benefits and Medicare.

The Guide's exhibits include many useful quick-reference tables such as "Basic Types of Trusts, Their Benefits and Tax Treatment" and "Comparison of Basic Insurance Policies" along with the traditional tax rate tables. The Appendix is full of tax computation formulas, life expectancy tables, time value of money charts and more tax rates.

This book has many good points. Clear explanation (albeit somewhat technical) of topics covered provide an excellent review for the experienced professional and a good source of information for the novice. A summary of recent changes in the law is a beneficial refresher. Throughout the text, "planning pointers" demonstrate techniques designed to utilize the tax laws advantageously. Given the technical nature of the subject matter, the Guide is written in an easily readable, and sometimes even enjoyable, style. It is a classic, nearly indispensable reference for the estate planner.

Suggestions for improvement are few. Comprehensive as it is, it sometimes does not go far enough to answer questions on specific matters or complex situations. For example, in the section on tax-free exchanges of real estate, no mention is made of the treatment of gains or losses if the properties are of different values. Regarding employee benefit plans, no detail is provided regarding maximum contribution limits. Also, a more complete reference to Internal Revenue Code sections or other sources of information would be helpful.

The constant use of examples representing only males as wage earners and decision makers is archaic and will be offensive to many readers. With the growing number of women in the work force, in professional positions, and as heads of households, the book could be made more realistic and applicable by moving away from the stereotyped role of the man as the controller of the wealth. In future editions, the authors might consider a more balanced portrayal of the female as an active participant in the estate planning process.

Also, an error was noted: the Index lists the topic of Depreciation and Cost Recovery under ACRS in paragraph 804, when in fact that paragraph covers Tax-Exempt Government Obligations (I never did locate the depreciation information and suspect it was inadvertently omitted.)

On the whole, the Guide is a well written, comprehensive and practical source of information on estate planning topics. The tables, charts, and worksheets offer clear, concise data. The continually changing tax laws in this country make such a publication a virtual necessity, and it is a pleasure to see the new version on the shelf.
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Author:McAfee, R. Bruce; Glassman, Myron
Publication:SAM Advanced Management Journal
Date:Mar 22, 1992
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