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Текст книги “Английский язык для студентов заочной формы обучения”

Представленный фрагмент произведения размещен по согласованию с распространителем легального контента ООО “ЛитРес” (не более 20% исходного текста). Если вы считаете, что размещение материала нарушает чьи-либо права, то сообщите нам об этом.

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Автор книги: Татьяна Минакова

Жанр: Учебная литература, Детские книги

Текущая страница: 5 (всего у книги 14 страниц) [доступный отрывок для чтения: 10 страниц] Задание 1. Прочитайте и запомните следующие слова и словосочетания

marketing research – исследование маркетинга;

marketing manager – управляющий маркетингом;

need – нужда, нуждаться;

to tabulate – составлять таблицу;

to take charge of – руководить;

to handle – обрабатывать (документы);

top manager – главный управляющий;

to assume – предполагать;

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to define – определять;

available – имеющийся в наличии;

to set up – создавать;

product – продукт; товар, изделие;

tangible – осязаемый, материальный;

to own – владеть;

to perform – выполнять;

to provide – обеспечивать;

party – участник, сторона;

to develop – разрабатывать;

to meet – удовлетворять (потребности), соответствовать;

to survive – выживать;

life cycle – жизненный цикл;

failure – неудача, крах, банкротство;

brand – марка (изделия);

branding – присвоение товару марочного названия;

trademark – торговая марка, торговый знак;

legal term – юридический термин;

craft guild – ремесленная гильдия;

merchant guild – торговая гильдия;

purchase – покупка, покупать;

sales volume – объем реализованной продукции;

costs – издержки, затраты; Задание 3. Прочитайте тексты А, В, С, переведите их письменно

Тext А. Marketing Research

The marketing concept says that marketing managers should meet the needs of customers. This means marketing managers have to rely on help from marketing research – procedures to develop and analyze new information to help marketing managers make decisions.

Most large companies have a separate marketing research department to plan and carry out research projects. These departments often use outside specialists – including interviewing and tabulating services – to handle technical assignments. Further, specialized marketing consultants and marketing research organizations may be called in to take charge of a research project.

Small companies usually don’t have separate marketing research departments. They depend on salespeople or top managers.

Good marketing research requires much more than just technical tools. It requires cooperation between researchers and marketing managers.

The scientific method combined with the strategy planning framework can help marketing managers make better decisions.

The scientific method forces an orderly research process. The marketing research process is a five-step application of the scientific method that includes: defining the problem; analyzing the situation; getting problem-specific data; interpreting the data; solving the problem.

Defining the problem is the most important – and often the most difficult – step in the marketing research process. Sometimes it takes up over half the total time spent on a research project. But it’s time well spent if the objectives of the research are clearly defined. The best research job on the wrong problem is wasted effort.

The situation analysis is an informal study of what information is already available in the problem area. It can help define the problem and specify what additional information – if any – is needed.

The next step is to plan a formal research project to gather primary data. There are different methods for collecting primary data. Which approach to use depends on the nature of the problem and how much time and money are available.

When data has been collected it has to be analyzed to decide what it all means. In quantitative research this step usually involves statistics. Statistical packages – easy–to–use computer programs that analyze data – have made this step easier.

In the problem solution step, managers use the research results to make marketing decisions.

When the research process is finished the marketing manager should be able to apply the findings in marketing strategy planning – the choice of a target market.

A marketing information system (MIS) is an organized way of continually gathering and analyzing data to provide marketing managers with information they need to make decisions. In some companies, an MIS is set up by marketing specialists. In other companies, it is set up by a group that provides all departments in the firm with information. Marketing managers often don’t know in advance exactly what questions they will have – or when. But they do know what data they have routinely used or needed in the past. They can also foresee what types of data might be useful. They should communicate these needs to the MIS manager so the information will be there when they want it.

Routinely analyzing incoming data can be valuable to marketing managers. But incoming data shouldn’t be their only source of information for decision-making. Marketing information systems tend to focus on recurring information needs. But marketing managers must try to satisfy ever-changing needs in dynamic markets. So marketing research must be used – to supplement the data already available in the MIS system.

Text C. Product and New-Product Development

Product means the need-satisfying offering of a firm.

You already know that a product may be a physical good or a service or a blend of both. A good is a tangible item. When you buy it, you own it. And it’s usually pretty easy to see exactly what you’ll get. On the other hand, a service is a deed performed by one party for another. When you provide a customer with a service, the customer can’t “keep” it. Services are not physical – they are intangible. You can’t “hold” a service. Most products are a combination of tangible and intangible elements.

Competition is strong and dynamic in most markets. So, it is essential for a firm to keep developing new products – as well as modifying its current products – to meet changing customer needs and competitor’s actions. New-product planning is not an optional matter. It has to be done just to survive in today’s dynamic markets. A new product is one that is new in any way for the company concerned. A product can become “new” in many ways. A fresh idea can be turned into a new product – and start a new life cycle. Even small changes in an existing product can make it “new”. A product can be called “new” for only a limited time. Six months is the limit according to the Federal Trade Commission (FTC) – the federal government agency that policies antimonopoly laws.

New-product development demands effort, time, and talent – and still the risks and costs of failure are high. Задание 4. Ответьте на вопросы по текстам А, В, С

1 Why do marketing managers have to rely on help of marketing research?

2 What does a good marketing research require?

3 Can the scientific method help marketing managers make better decisions?

4 What steps does the market research process include?

5 Defining the problem is the most important and difficult step, isn’t it?

6 Does the quantitative research involve statistics?

7 What is a market information system used for?

8 Are incoming data the only source of information for decision – making?

9 What needs must marketing managers try to satisfy?

10 Is a good a tangible item?

11 New product planning is not an optional matter, is it?

12 What does new product development demand?

2.3.4 Тексты для студентов специальности «Экономика и управление на предприятии», «Менеджмент организации», «Государственное и муниципальное управление», «Управление персоналом»

III семестр для специальностей «Экономика и управление на предприятии», «Менеджмент организации», «Государственное и муниципальное управление» Задание 1. Прочитайте и запомните следующие слова и словосочетания:

the like – подобное;

existence – существование, жизнь;

responsibility – ответственность, обязанность;

aim, goal, target, objective – цель;

to define – определить, давать определение;

to forecast – предсказывать;

to accept – принимать, признавать;

to involve in – вовлекать;

to make decision – принимать решение;

to diversify – разнообразить;

to run smoothly – работать плавно;

to respond to – реагировать на;

to chase up supplies – гоняться за поставками;

urgent order – срочный заказ;

to spell out – разжевывать (зд. расписать, подчеркнуть);

to set objectives – ставить цель;

analytical ability – аналитические способности;

as a team – как одна команда;

superior – старший, начальник;

in relation to – относительно к;

to measure – оценивать;

to get on well with – иметь хорошие отношения с;

integrity – цельность; честность.

to have much in common – иметь много общего;

to depend on the level (position) – зависеть от должности;

to spend a great deal of time – тратить много времени;

to meet (to perform) objectives – достигать цели;

interpersonal skills – межличностые навыки;

least understood – наименее попятный;

personnel department – отдел кадров;

to recruit (to hire) – принимать на работу;

training courses – подготовительные курсы;

to possess – обладать, владеть;

to chair a meeting – быть председателем собрания (заседания, совещания);

to post a list of vacancies – вывешивать список вакансий;

notice board – доска объявлений;

to be referred for a position – быть назначенным на должность;

a set of qualifications – перечень качеств;

standard application form – стандартный бланк;

one-to-one interview – интервью “один на один”;

panel interview – интервью с несколькими претендентами;

“deep” end interview – интервью, во время которого претендент обязан показать наглядно владение специальностью;

to cope with – справляться с чем-либо;

to be aware of– осознать;

organization culture – взаимоотношения в организации;

data processing – обработка данных. Задание 2. Прочитайте тексты А, В переведите их письменно

Text A. The manager’s role

Our society is made up of all kinds of organisations, such as companies, government departments, unions, hospitals, schools, libraries, and the like. They are essential to our existence, helping to create our standard of living and our quality of life. In all these organisations, there are people carrying out the work of a manager although they do not have that title. The vice-chancellor of a university, the president of a students’ union or a chief librarian are all managers. They have a responsibility to use the resources of their organisation effectively and economically to achieve its objectives.

Are there certain activities common to all managers? Can we define the task of a manager? A French industrialist, Henri Fayol, wrote in, 1916 a classic definition of the manager’s role. He said that to manage is to forecast and plan, to organise, to command, to coordinate and to control. This definition is still accepted by many people today, though some writers on management have modified Fayol’s description. Instead of talking about command, they say a manager must motivate or direct and lead other workers.

Henri Fayol’s definition of a manager’s functions is useful. However, in most companies, the activities of a manager depend on the level at which he/she is working. Top managers, such as the chairman and directors, will be more involved in long range planning, policy making, and the relations of the company with the outside world. They will be making decisions on the future of the company, the sort of product lines it should develop, how it should face up to the competition, whether it should diversify etc. These strategic decisions are part of the planning function mentioned by Fayol.

On the other hand, middle management and supervisors are generally making the day-to-day decisions which help an organisation to run efficiently and smoothly. They must respond to the pressures of the job, which may mean dealing with an unhappy customer, chasing up supplies, meeting an urgent order or sorting out a technical problem. Managers at this level spend a great deal of time communicating, coordinating and making decisions affecting the daily operation of their organisation.

An interesting modern view on managers is supplied by an American writer, Mr Peter Drucker. He has spelled out what managers do. In his opinion, managers perform five basic operations. Firstly, managers set objectives. They decide what these should be and how the organisation can achieve them. For this task, they need analytical ability. Secondly, managers organise. They must decide how the resources-of the company are to be used, how the work is to be classified and divided. Furthermore, they must select people for the jobs to be done. For this, they not only need analytical ability but also understanding of human beings. Their third task is to motivate and communicate effectively. They must be able to get people to work as a team, and to be as productive as possible. To do this, they will be communicating effectively with all levels of the organisation – their superiors, colleagues, and subordinates. To succeed in this task, managers need social skills. The fourth activity is measurement. Having set targets and standards, managers have to measure the performance of the organisation, and of its staff, in relation to those targets. Measuring requires analytical ability. Finally, Peter Drucker says that managers develop people, including themselves. They help to make people more productive, and to grow as human beings. They make them bigger and richer persons.

In Peter Drucker’s view, successful managers are not necessarily people who are liked or who get on well with others. They are people who command the respect of workers, and who set high standards. Good managers need not be geniuses but must bring character to the job. They are people of integrity, who will look for that quality in others. Ответьте на вопросы

1. What is our society made up of?

2. What is the definition of manager’s role?

3. What decisions will the managers be making?

4. What do we call the “strategic decisions”?

5. What decisions are middle management and supervisors generally making?

6. How many basic operations do managers perform?

7. What ability does manager need to fulfill the first basic operation?

8. What must manager do secondly and thirdly?

9. What are manager’s fourth and fifth tasks?

10. What kind of people, in Pater Drucker’s view, should successful managers be? Text B. Business Structure

Each company has its business structure. Many companies have much in common in their structures. The number of departments in corporation depends on the size of the company and on the nature of the goods and services it provides. All departments are headed by managers.

In most companies the activity of a manager depends on the level at which he/she is working. Top managers are involved in long range planning, policy making, and the relations of the company with the outside world. Middle management and supervisors make day-to-day decisions. Managers at this level spend a great deal of time communicating, coordinating and making decisions affecting the daily operation of their organization.

Effective managers meet their company’s objectives through a successful combination of planning, organizing, directing, and controlling. In order to perform these management functions, managers need not only organizational and technical but also interpersonal skills. Managers perform various functions, but one of the most important and least understood aspects of their job is proper utilization of people.

A corporation with many employees may need a personnel department. Personnel department recruits new employees and organizes training courses. A qualified personnel manager should possess good communication skills. He/she should be able to chair a meeting, to conduct an interview with job applicants. There are many ways in which an organization can recruit personnel. Posting a list of vacancies on the company notice board is fairly common. A subordinate may be referred for a position by his/her superior. Advertising is a commonly used technique for recruiting people from outside. The personnel manager has two sets of qualifications to consider if he wants to choose from among the applicants. He/she must consider both professional qualifications and personal characteristics. A candidate’s education, experience and skills are included in his/her professional qualifications. These can be listed on a resume (American English) or CV (Curriculum Vitae – British English). Many companies expect all personal information to be entered on a standard application form. Personal characteristics must be evaluated through interviews. There are different kinds of interviews: traditional one-to-one interviews, panel interviews where one or more candidates are interviewed by a panel of interviewers and even ‘deep-end’ interviews where applicants have to demonstrate how they can cope in actual business situations. The atmosphere of an interview may vary from the informal to the formal ones.

A good manager should be aware of the type of organization culture his/her corporation adheres to. There are now five broad fields of business that offer exciting careers: management, marketing, accounting, finance, and data processing. Within each of these fields there are specific jobs in which one can specialize. For example, within the field of management you can specialize as a general manager, a production manager or a personnel manager. Ответьте на вопросы

1 What does the number of departments in corporation depend on?

2 Who is the head of all departments?

3 What are the top managers and middle managers and middle management involved in?

4 What skills do all managers need?

5 What department may a corporation need? 6 What does personal department do?

7 What kinds of interview do you know?

8 What should a good manager be aware of?

9 How many broad manager be aware of? What are they?

III семестр для специальности «Управление персоналом» Задание 1. Прочитайте и запомните следующие слова и словосочетания:

Text A. What is Personal Management?

personnel [.pasa’nel] management – руководство кадрами;

recruiting [n’kruitin] – вербовка, набор, наем;

hiring [‘haiann] – наем (сотрудников);

to encourage – поощрять;

to encounter – встретиться, столкнуться (с чем-л.);

salary scale – шкала заработной платы, тарифная сетка, расценки;

to put in(to) practice – осуществлять;

fringe benefits – дополнительные Льготы (пенсия, оплаченные отпуска и т.п.);

development – улучшение, усовершенствование;

to develop – развивать;

employee development – усовершенствование служащих;

direct compensation of employees – прямые выплаты служащим;

employee benefits – пособия работающим по найму;

employee (personnel) policy – кадровая политика;

operating procedure – способ эксплуатации;

organization plan – схема организационной структуры;

personnel department – отдел кадров;

to implement – выполнять, осуществлять;

policy – стратегия, политика, линия поведения, установка, курс;

policy definition – выработка стратегии;

placement – определение на должность;

labor relations – трудовые отношения;

to afford – позволить себе;

assessing – оценка, определение;

screening – (тщательная) проверка, рассмотрение, отбор;

employee trust – ответственность сотрудников;

guideline – директива, указание;

explicit [iks’phsrt] – ясный, подробный; подробно разработанный;

well-proven – хорошо отработанный;

expediency [iks’pi:d39nsi] – целесообразность; выгодность;

job analysis – анализ производственных операций путем разбиения их на элементы; изучение трудовых операций;

job title – название должности;

job description – должностная инструкция;

mental requirements – психические ограничения;

physical requirements – физические ограничения;

manual dexterity – ловкость, быстрота, сноровка, проворство рук;

hazard [‘haezed] – риск;

job specification – квалификационные требования к исполнителю работы. Задание 2. Прочитайте тексты А, В переведите их письменно

Text A. What is Personal Management?

Personnel management is concerned with the effective use of the skills of people. They may be salespeople in a store, clerks in an office, operators in a factory, or technicians in a research laboratory. In a business, personnel management starts with the recruiting and hiring of qualified people and continues with directing and encouraging their growth as they encounter problems that arise in working toward established goals.

In addition to recruiting and hiring, some of the responsibilities of a personnel manager are:

1 To classify jobs and prepare wage and salary scales.

2 To counsel employees.

3 To deal with disciplinary problems.

4 To develop safety standards and to put them into practice.

5 To manage fringe benefit programs, such as group insurance, health, and retirement plans.

6 To provide for periodic reviews of the performance of each individual employee, and for recognition of his or her strengths and needs for further development.

7 To assist individuals in their efforts to develop and qualify for more advanced jobs.

8 To plan and supervise training programs.

9 To be informed of developments in personnel management. Personnel managers often deal with the following difficult situations concerning the employees:

– The firm’s employees – especially-the most qualified ones – can get better jobs with other employers.

– When a firm has not enough supervisory and specialized personnel with adequate experience and job capabilities, it has to train and develop its own people. This can be time consuming and expensive.

– The cost of hiring and training employees at all levels is increasing, for instance, several thousand dollars for a person. A mistake in hiring or in slow and inefficient methods of training can be costly.

– Most employees want better direct compensation, employee benefits, and working conditions that the firm cannot afford, but other employers can. So, all employee policies and operating procedures should be developed with great care.

The personnel department has the responsibility to define and implement policies, procedures and programs for recruitment, selection, training, placement, safety, employee benefits, compensation, labor relations, organization planning, and employee development.

Effective human resource management develops the abilities of job candidates and employees to meet the needs of the firm. Human resource (HR) management is a balancing act. At one extreme, you hire only qualified people who are well suited to the firm’s needs. At the other extreme, you train and develop employees to meet the firm’s needs. Most expanding businesses fall between the two extremes i.e., they hire the best people they can find and afford, and they also recognize the need to train and develop both current and new employees as the firm grows.

Functions of Personnel Management

One function of personnel management is to hire and train the right people. The effective personnel system is:

– Assessing personnel needs.

– Selecting and hiring personnel.

– Orienting new employees to the business.

– Deciding compensation issues.

The second function of human resource management is the training and development of employees.

A third function is raising employee trust and productivity. These three functions stress the importance of a good human resource management climate and provide specific guidelines for creating such a climate.

Text B. Developing a Personnel System

Assessing Personnel Needs

The firm’s personnel policies should base on explicit, well-proven principles. Firms that follow these principles have higher performance and growth rates than those that do not follow them. The most important of these principles are:

– All positions should be filled with people who are both willing and able to do the job.

– A written job description and definition are necessary.

– Employees chosen on the basis of the best person available are more effective than those chosen on the basis of friendship or expediency.

– Employee training results in higher performance.

The process of selecting a competent person for each position is best accomplished through a systematic definition of the requirements for each job, including the skills, knowledge and other qualifications that employees must possess to perform each task. To guarantee that personnel needs are adequately specified personnel manager has to:

1) conduct a job analysis,

2) develop a written job description, and

3) prepare a job specification.

Job analysis is a systematic investigation that collects all information related to each task performed by an employee. From this analysis, you identify the skills, knowledge and abilities required of that employee, and determine the duties, responsibilities and requirements of each job. Job analysis should provide information such as

– Job description – major and implied duties and responsibilities.

– Characteristics of the job including location.

– Types of material used.

– Types of equipment used.

– Mental and physical requirements.

– Manual dexterity required.

– Working conditions (inside, outside, hot, cold, dry, wet, noisy, dirty, etc.).

The job analysis is used to generate a job description, which defines the duties of each task, and other responsibilities of the position. The description covers the various task requirements, such as mental or physical activities; working conditions and job hazards. The approximate percentage of time the employee should spend on each activity is also specified. Job descriptions focus on the what, why, where and how of the job.

The best way to develop job descriptions is to ask employees themselves to describe their jobs. A good employee may know more about the job than anyone else.

Job Specif ication

The job specification describes the person expected to fill a job. It details the knowledge, education, qualities, skills and abilities needed to perform the job satisfactorily. The job specification provides a standard to measure how well the worker matches a job. The job specification should be used as the basis for recruiting. Задание 3. Ответьте на вопросы по текстам А, B

1 What are the responsibilities of a personnel manager? Name them.

2 What difficult situations concerning the employees may be encountered by personnel managers?

3 What are the responsibilities of personnel department?

4 What are the three functions of personnel management?

5 What are the most important principles of a firm’s personnel policies?

6 What is a job analysis?

7 What information is contained in a job analysis?

8 What is a job description?

9 What information is contained in a job description?

10 What is a job specification?

11 What information is contained in a job specification?

Представленный фрагмент произведения размещен по согласованию с распространителем легального контента ООО “ЛитРес” (не более 20% исходного текста). Если вы считаете, что размещение материала нарушает чьи-либо права, то сообщите нам об этом.

Professional Trading and Being more Consistent Brings more Power

LEAD The spice trade was important during ancient times and the Middle Ages. Spices ___________to the creation of vast empires and powerful cities.

The Costs of Investing

All investments carry costs—real costs—not merely the opportunity costs of an investor choosing to forego one asset in favor of another. Rather, these costs and comparisons are not that dissimilar to those consumers face when shopping for a car.

Unfortunately, many investors ignore critical investment costs because they can be confusing or obscured by fine print and jargon. But they don’t have to be. The first step is understanding the different types of costs.

Types of Investing Costs

Different investments carry different types of costs. For example, all mutual funds–one of the most common investment instruments—charge what’s called an expense ratio. This is a measure of what it costs to manage the fund expressed as a percentage. It is based on the total assets invested in the fund and is calculated annually. This fee is typically paid out of fund assets, so you won’t be billed for it, but it will come out of your returns. That means if the mutual fund returns 8% and the expense ratio is 1.5%, you’ve really only earned 6.5% on your shares.

There are two problems with a high expense ratio. First, a higher portion of your money is going to the management team instead of to you. Second, the more money the management team charges, the more difficult it is for the fund to match or beat the market’s performance.

Ironically, many higher-cost funds claim they’re worth the extra cost because they enjoy stronger performance. But, expense ratios, like a leak in a bathtub, slowly drain some of the assets. Therefore, the more money management takes out in the form of fees, the better the fund must perform to earn back what’s been deducted.

Marketing costs. Moreover, in some cases, these fees help pay for marketing or distribution costs. This means that you are paying managers to promote a fund to other potential investors. This particular cost is called a 12B-1 fee.

Annual and custodian fees. Annual fees are often low, about $25 to $90 a year, but every dollar adds up. Custodian fees usually apply to retirement accounts (e.g., IRAs) and cover costs associated with fulfilling IRS reporting regulations. You can expect to pay anywhere from $10 to $50 per year.

Other costs. Some mutual funds include other costs, like purchase and redemption fees, which are a percentage of the amount you’re buying or selling.

Beware loads and commissions. A front-end load is a fee charged when you buy shares, a back-end load is a fee incurred when selling. Commissions are essentially fees that are paid to the broker for their services.

As you can see, the financial world has not made it easy to untangle all of these complex and often hidden expenses. However, the U.S. Securities and Exchange Commission (SEC) has taken steps to clarify these costs for investors. In an effort to protect retail investors, the SEC, in its 2020 priority list, indicated its intent to “Focus on firms that have practices or business models that may create increased risks that investors will pay inadequately disclosed fees, expenses, or other charges.”

In other words, the SEC planned to take aim at firms that engage in practices like receiving compensation for recommending specific securities, ignoring accounts when the assigned manager has left the firm and changing fee structures from commission-only to a percentage of client assets under management.

While the SEC plays a valuable role in safeguarding investors, the best defense against excessive or unwarranted fees is doing careful research and asking plenty of questions. Taking the time to understand what you’re paying is critical because fees, over the long-term, rob investors of their wealth.

Why Investing Fees Matter

Fees almost always appear deceptively low. An investor might see an expense ratio of 2% and dismiss it as inconsequential. But it’s not. A fee expressed as a percentage doesn’t reveal to investors the dollars they’ll actually be spending, and more importantly how those dollars will grow. The result may be anchoring bias, in which irrelevant information is used to evaluate or estimate something of unknown values.

Simply put, everything is relative. This means that if our first exposure to investing involves excessive fees, we may view all subsequent expenses as low even though they are, in fact, high.

Just as compounding delivers growing returns to long-term investors, high fees do exactly the opposite; a static cost rises exponentially over time.

Scenario 1

Suppose you have an investment account worth $80,000. You hold the investment for 25 years, earning 7% per year and paying 0.50% in annual fees. At the end of the 25-year-period, you’ll have made approximately $380,000.

Scenario 2

Now, consider the same scenario, but with one difference; you aren’t paying attention to costs and you hand over 2.0% annually. After 25 years you’re left with approximately $260,000. That “tiny” 2.0% cost you $120,000.

Are Expensive Investments Always Worth it?

Imagine that an advisor or even a friend tells you that a mutual fund, while pricey, is worth it. She tells you that while you’re paying more, you will also get more in the form of a superior annual return. But that is not necessarily true.

Studies have shown that on average, lower-cost funds tend to produce better future results than higher-cost funds. In fact, researchers found that the cheapest equity funds outperformed the most expensive ones across five-, 10-, 15-, and 20-year periods.

This finding has been proven time and time again. Consider similar research from Morningstar, which found, “Using expense ratios to choose funds helped in every asset class and in every quintile from 2020 to 2020. For example, in U.S. equity funds, the cheapest quintile had a total-return success rate of 62%, compared with 48% for the second-cheapest quintile, 39% for the middle quintile, 30% for the second-priciest quintile, and 20% for the priciest quintile.”

What’s the message? “The cheaper the quintile, the better your chances.” This finding was consistent across various asset classes. That is, international funds and balanced funds all showed similar results. Even taxable-bond funds and municipal bond funds exhibited this characteristic of low costs being associated with better performance.

Brokerage Fees Come in All Shapes and Sizes

Account Maintenance Fee

This is usually an annual or monthly fee charged for the use of the brokerage firm and its research tools. This fee is occasionally tiered. Those who want to use more robust data and analytic tools pay more.

Sales Load

As mentioned above, some mutual funds include a load or a commission paid to the broker who sold you the fund. Be wary of these charges for two reasons. First, many mutual funds today are no-load and are therefore cheaper alternatives. Second, some brokers will push funds with larger loads to pad revenue.

Advisory Fee

This is also sometimes referred to as a management fee for the expertise the broker brings to the table in the form of wealth strategies. This cost is a percentage of the total assets the investor has under the broker’s management.

Expense Ratio

As discussed earlier, this is a fee charged by those managing the mutual fund.


These are common and they add up fast. As mentioned above, commission fees are the cost of executing any buy or sell trade. This payment goes directly to the broker. This cost usually ranges from $1 to $5 per trade and, in some cases, will be waived if the investor reaches an account minimum. Occasionally this fee is calculated as a percentage of the value of the trade.

Remember that full-service brokers who provide complex services and products like estate planning, tax advice, and annuities, will often charge higher fees. As a rule-of-thumb, this fee is usually 1-2% of the value of the assets managed.

The burden of expensive fees becomes greater over a longer period. Therefore, young investors just getting started face a bigger risk because the total dollars lost to costs will grow exponentially over the decades. For this reason, it’s particularly important to pay attention to costs in accounts that you will hold for a long period of time.

Active vs. Passive Management

Passive management describes investments like mutual funds that are designed to replicate market indexes like the S&P 500 or the Russell 2000. The managers of these funds only change the holdings if the benchmarked fund changes. Passive management seeks to match the market’s return.

In contrast, an active management strategy is a more involved approach, with fund managers making a concerted effort to outperform the market. Not happy with simply matching the return of the S&P 500, they want to make strategic moves that seek to exploit the value of unrecognized opportunity in the market.

Different Costs

Active and passive funds carry different costs. The average fee for actively managed funds in 2020 was 0.76%, whereas passive mutual funds averaged just 0.15%. Despite a continued decline since 2020, it’s important to note that as the total amount of assets in an actively managed fund decreases, these funds, in general, raise the expense ratio.

As one study from ICI Research determined, “During the stock market downturn from October 2007 to March 2009, actively managed domestic equity mutual fund assets decreased markedly, leading their expense ratios to rise in 2009.” This finding underscores an important truth: Expense ratios are often not tied to performance. Instead, they’re tied to the total value of assets under management. If the assets decrease—usually due to poor performance—the managers will simply raise their prices.

Some investors will argue that “you get what you pay for.” In other words, while an active fund may charge more, the higher returns are worth the expense because investors will earn back the fee and then some. In fact, these advocates for active management occasionally have the annual performance to back up such claims. There is, however, often a problem with this assertion: survivorship bias.

Survivorship Bias

Survivorship bias is the skewing effect that occurs when mutual funds merge with other funds or undergo liquidation. Why does this matter? Because “merged and liquidated funds have tended to be underperformers, this skews the average results upward for the surviving funds, causing them to appear to perform better relative to a benchmark,” according to research at Vanguard.

Of course, there are some actively managed funds that do outperform without the help of survivorship bias. The question here is do they outperform regularly? The answer is no. The same body of research from Vanguard shows that the “majority of managers failed to consistently outperform.”

The researchers looked at two separate, sequential, non-overlapping five-year periods. These funds were ranked into five quintiles based on their excess return ranking. Ultimately, they determined that while some managers did consistently outperform their benchmark, “those active managers are extremely rare.”

Moreover, it is nearly impossible for an investor to identify these consistent performers before they become consistent performers. In attempting to do so, many will look at previous results for clues on future performance. However, a critical tenet of investing is that past returns are no predictor of future gains.


The underlying reason for underperformance in most actively managed funds is that practically no one is able to consistently choose well-performing stocks over the long-term. One study, for example, found that “less than 1% of the day trader population is able to predictably and reliably earn positive abnormal returns net of fees.”

Active managers are no better. In fact, this figure of 1% is eerily consistent with other research that examined the performance of 2,076 mutual funds from 1976 to 2006. Those results showed that fewer than 1% achieved returns superior to those of the market after accounting for costs.

Moreover, the challenge of beating the market is growing. A multi-university study determined that prior to 1990 an impressive 14.4% of equity mutual funds outperformed their benchmarks, but by 2006 this figure had dropped to a miniscule 0.6%. Consider these figures when asking if an active management solution is the right move.

Ways to Minimize Investing Costs

Know When to Buy and Hold

The more you move money around, the more costs accrue. As discussed above, there are fees and charges associated with buying and selling. Like a pail of water passed from one person to another, each successive hand-off causes a little spill.

Moreover, buy-and-hold strategies yield better returns than those based on frequent trading. According to the Financial Times, “Over 10 years, 83% of active funds in the U.S. fail to match their chosen benchmarks; 40% stumble so badly that they are terminated before the 10-year period is completed.”

Consider Tax Implications

This is the most ignored aspect of investing costs. It’s also the most complicated. Even seasoned investors find it beneficial to get help from a professional when it comes to taxes. The savings generated often more than compensate for the professional’s fee. For example, many investors are unaware that realized losses on investments—that is, money lost after selling a stock for less than it cost, can be used to offset taxable gains. This is called tax-loss harvesting.

Ordinarily, an investor will pay either a long-term capital gains tax (securities held over one year) or short-term capital gains tax (securities held for less than one year). If it’s a long-term capital gain the investor will pay either 0%, 15%, or 20% depending on their income level and their filing status (single, married filing jointly, married filing separately).

Short-term capital gains are taxed as ordinary income. These rates range from 10% to 37% again, depending on your income level and filing status. You can find out exactly what percentage of long and short-term capital gains tax you’ll pay by visiting

Tax-Deferred or Tax-Exempt Accounts

Investors might be surprised to see how much they hold on to with a tax-deferred, or tax-exempt account. Tax-deferred accounts, which safeguard investments from taxes as long as the assets remain untouched, include 401(k)s and traditional IRAs. These account options are great ways to save big on burdensome taxes.

However, there’s a catch. As mentioned earlier, you’ll lose the tax advantage (and get hit with penalty costs) if you withdraw money early–.before the age of 59½. Younger investors should consider Roth IRA accounts. Provided you have owned the Roth for five years, both earnings and withdrawals made after 59½ are tax free. These are great ways to save over the long-term if you know you won’t need to touch the money.

The Bottom Line

Do your homework. We live in times of unprecedented access to information. While some investments may obscure their costs in the fine print, anyone can quickly get to the bottom line with the wealth of information available online. There’s no excuse for investing in an asset without knowing the full costs and making the choices that are right for you.

Take me to a leader
Corporate headhunters are more powerful than ever

The benefits of using them are hard to measure. They may be most useful as diplomats


F OR A FEW months last year Matthieu (not his real name) was on the most important team in finance. SWIFT, a global payments-messaging service owned by 11,000 banks, was looking for a new chief. So was CLS, an institution that settles four-fifths of worldwide foreign-exchange turnover. Each had hired Matthieu’s firm to find one. He was aware of the stakes. Both outcomes were going to “impact everything” that money touches, he told The Economist at the time. His voice barely rose over the mellow music of a Manhattan hotel’s bar but nonetheless it carried a bass note of self-importance.

The firm got the job done. Javier Pérez-Tasso, SWIFT’s former Americas head, took over as boss in July. Marc Bayle de Jessé, an official at the European Central Bank, started at CLS in December. The placements testify to the brokering brawn of executive-search firms. The industry’s top tier is busier than ever. The bosses of 311 of America’s 3,600 listed firms left their jobs in 2020—the highest share on record. Someone needs to find their replacements.

Like Matthieu, the search industry is secretive, and numbers are hard to pin down. Estimates from AESC, a trade body, suggest that the business has enjoyed strong growth for much of the past 30 years—with the exception of slumps after the dotcom bust in 2000 and the financial crisis of 2007-09 (see chart 1). AESC reckons global executive-search revenues grew by 12% in 2020 and that many firms had their best year ever in 2020 (for which it is still crunching the numbers).

Today, the biggest search firms hold sway over who rules many of the world’s most potent organisations. The best deserve their hefty fees, clients say. But the industry is facing increased scrutiny, amid suspicions that it may be holding back performance and diversity at the top.

Executive search—headhunting, in the vernacular—emerged in the post-war boom, when fast-growing firms in Europe and America began fighting over experienced leaders. The battle intensified in the 1970s as the internationalisation of business turned a consulting backwater into a mainstream profession. One recruiter’s ex-boss recalls opening 30 outposts that decade, from Singapore to Sydney.

Just as quickly, the business earned a reputation for sloppiness. Recruiters were “golf-course, back-slapping sales guys”, as one veteran admits. Candidates in their Rolodexes were lazily recycled. Criteria for drawing up shortlists were often a mystery, says Angeles Garcia-Poveda of Spencer Stuart, a search firm.

Fifty years later they have become tightly woven into the fabric of corporate life, and are seen by most multinationals as indispensable. Five giants—Spencer Stuart, Heidrick & Struggles, Russell Reynolds Associates, Egon Zehnder and Korn Ferry—dominate CEO search. This quintet, known as the “Shrek” firms, earned fees of $4.8bn in 2020, 14% more than the year before and 43% more than in 2020, according to Hunt Scanlon Media, a trade publisher. Spencer Stuart places an executive in a leadership role or boardroom 11 times a day, says Ben Williams, its boss. (The Economist Group has recently employed Egon Zehnder and Heidrick & Struggles to fill senior roles, including CEO and chairman.)

Interviews with more than 50 insiders suggest that 80-90% of Fortune 250 or FTSE 100 companies pay headhunters to find their CEO, even when the successful candidate is likely to come from within a firm’s own ranks. Among the next tier of companies, perhaps half do. Universities, sports clubs and officialdom enlist them, too. Last year their clients included English football’s Premier League and the International Paralympic Committee.

As the big headhunters have grown bigger, boutique firms have struggled to keep up. Nonetheless, some with deep expertise in specific industries or corporate functions have thrived, says Nancy Garrison Jenn, who helps multinationals headhunt the right headhunters. True Search, a tech-focused outfit, saw its revenues jump by 64% in 2020. Lower down the scale, the rise of online social networks has clobbered recruiters specialising in mere mortals like department heads and middle managers—since, as one puts it, “anyone can buy a computer, get a LinkedIn licence and call themselves a search expert”.

The big headhunters have benefited from the confluence of four forces. First, boards are looking for an ever broader skillset in modern CEOs. Bosses should be physically fit to withstand the brutal workload, comfortable dealing with the media and, increasingly, woke. They must grapple with complexity as big firms get bigger and industries converge—giants like Apple or Amazon are at once retailers, consumer-goods companies and tech firms—and with new threats, such as cybercrime.

Second, the rise of private equity (PE) means greater management churn at firms subject to buy-outs. America has some 8,000 PE-backed companies, double the number in 2006. Headhunters hustle in the hope of supplying bosses for PE firms’ entire portfolios. A partner at a buy-out giant says it works with just three providers because it wants VIP treatment.

The third reason for the headhunting boom lies in emerging markets. Scions of business dynasties in places like India increasingly want to devolve control of subsidiaries to professional managers, says Dinesh Mirchandani of Boyden, one of the oldest search firms. Startups like Ola, a ride-hailing firm, are looking for executives to help them conquer foreign markets. China, too, has champions keen to expand abroad but lacks managers with international expertise.

Lastly, boards and regulators are increasingly urging firms to plan for succession years in advance—and not, as in the past, to rely on a name in an envelope, to be unsealed should the boss be hit by a bus. Headhunters gladly help by benchmarking internal stars against potential external candidates. The pressure to plan ahead has led to the growth of all sorts of other ancillary services too, from leadership development to board-effectiveness assessment. Those now account for 43% of revenue at Korn Ferry, the largest Shrek.

Growth in demand has affected headhunting’s supply-side. Nobody has ever studied to become a headhunter but the profession is becoming more diverse. Those serving in its ranks include ex-engineers, a former Olympic gymnast and an erstwhile neuroscientist. The big five are big employers of former McKinsey consultants. New recruits like the fast pace and the opportunity to interact with boards.

They also enjoy the money. A median partner at the Shrek five typically earns $600,000 a year, according to industry veterans. The top 1% get $3m-4m, most of it bonus. Those hiring for finance usually earn the most.

Seven-figure slice

Generous pay comes courtesy of eye-watering fees. For decades headhunters charged one-third of the chosen candidate’s first-year compensation (including any bonus). Caps became more common over the past decade as CEOS’ salaries climbed into the stratosphere, fees more often exceeded $1m—and clients started to rebel. Now fees at the top end are typically limited to between $500,000 and $1m, though the boom in ancillary fees means overall revenues continue to grow fast.

The search for a CEO takes anywhere from 90 days to a year. The board forms a committee to oversee the process, which the headhunter helps shape. It then helps directors crystallise what they want the new boss to achieve, such as boosting profits or expanding into new markets, and draws up a list of required competencies.

Once the actual headhunting begins, recruiters hire armies of researchers to comb through databases containing millions of profiles; gone are the days when a cabinet full of CVs and organograms of superstar firms like IBM would suffice. Lists of candidates who look good on paper are then compared against tips from informants, who are typically former colleagues or chatty middlemen.

To whittle down a longlist of 15 or so people, consultants quiz candidates’ suppliers, clients, ex-bosses and subordinates. They check Glassdoor, a website which lets workers rate employers. The phone is fine, but visits are better—valuable information can emerge in the last minutes of a meeting, or on the way to the lift.

It is often only at this point that candidates are contacted. Since the most desirable hires typically already hold plush posts, and are constantly wooed by rival recruiters, headhunters must fight hard for their attention. They look to breakfast regularly with high-fliers, and mark their job anniversaries and dates when bonuses are due—discreet inquiries may elicit news of a disappointing payout, and signal that an executive may be looking for a change. They offer a shoulder to cry on when the going gets tough. Denis Marcadet of Vendôme Associés, a search firm in Paris, remembers humbled financiers weeping for hours in his office during the subprime meltdown.

In interviews headhunters deploy their charms to get candidates to lower their guard. But face-to-face assessment can be “a bit of voodoo”, says one. (It can also go awry if the chemistry is wrong. In his memoir, Robert Iger, Disney’s boss, recalls his interview for the job with Gerry Roche of Heidrick & Struggles as “one of the most insulting experiences of my career” because he viewed the questions as irrelevant and, worse, there was no food.) So recruiters have acquired tools to make it more scientific. They administer psychometric tests. Questionnaires gauge candidates’ norms and values. Synthesis, an advisory firm inspired by the recruitment of elite units in the Israeli army, even has shrinks dissect candidates’ answers to seemingly innocuous questions about their life stories.

Boards or headhunters sometimes outsource deeper probing to specialists such as Hakluyt or StoneTurn, two British firms staffed with former spies, journalists and cops. (Paul Deighton, The Economist Group’s chairman, also chairs Hakluyt.) These corporate sleuths aim to tease out how bosses do deals, how they behave under pressure and whether they have ever crossed any ethical lines.

Simulations are also becoming increasingly popular with clients (if not with candidates). Frontrunners might, for instance, be sent reports about an imaginary company, then asked to run mock board meetings, calm down emotional managers of troubled divisions or weather earnings calls with aggressive analysts.

In the end, though, closing a big deal still often requires the human touch. Jill Ader, the chairwoman of Egon Zehnder, recalls taking an ideal but hesitant candidate off-site for three days to discuss the purpose of his life.

For the headhunters, their candidate’s signature on a new contract equals success. For their clients, it’s more complicated. Plenty of data exist on would-be CEOs. Korn Ferry estimates that 87% of all executives aspire to become bosses; over one-third of applicants had career blow-ups before winning a top role, reckons ghSMART, an advisory firm; and so on. Yet it is trickier to measure the wisdom of choosing one candidate over another; it is impossible to know whether one of the rejected candidates might have done the job better.

Getting it wrong can be costly. The Conference Board, a think-tank, finds that the costs of changing bosses (severance, search, lost productivity during the transition, and so on) are generally equivalent to 5% of annual profit.

Lacking objective measures on which to judge headhunters’ performance, board members often rely on their own impressions. And although some praise the service they receive, among others frustration is mounting.

Plenty of the things that hamper the industry are no fault of its own. Many companies make exasperating demands of headhunters and candidates. Some, for instance, want would-be CEOs to have a tête-à-tête with each member of the board, which in America and Britain typically numbers at least ten people. They may also demand regular testing of in-house candidates, which can poison a firm’s internal politics. Others request assessments that seem bizarre to candidates. After being asked to take a graphology test, one contender for the top job at Alstom, a French engineering giant, asked sarcastically if he would also be subjected to an intrusive medical examination, recalls a recruiter.

Another problem stems from contracts that bar headhunters from poaching people from firms they have previously recruited for, usually for at least a year. As the Shrek firms grow, in other words, their hunting-ground shrinks. It is clients who demand such clauses, but it does not stop those shortchanged by them from getting irate. “They tell me the candidates aren’t there,” fumes an executive who has chaired several companies. “Then I find there’s an ideal candidate at PepsiCo, but they already work for PepsiCo so they can’t touch it.”

Some of the big recruiters’ problems, though, are of their own making. Growth, especially at the Shreks, also leaves senior partners with less time for any one client. They jet around to sign contracts, but leave underlings who have less access and experience to do most of the heavy lifting. Moreover, since the rainmakers pocket the largest cut of the fee, their subordinates have less incentive to do a fine job. “Clients pay for haute couture but they get prêt-à-porter,” says a former chief of a Shrek firm.

And although headhunters have grown less languorous since the easy-going 1970s, in one way they remain as lazy as before: many still seek to score easy wins by rehashing past work. A PE partner recounts being sent the same shortlist for two different finance-chief searches. A disproportionate share of CEOs are old-timers from a handful of blue chips, not all of which have had a stellar run (think of GE, several of whose past executives went on to Boeing).

Senior headhunters admit the industry is sometimes too quick to recommend the safe option when boards are reluctant to gamble on unconventional candidates. Despite progress in recent years, just 38 of the bosses of America’s 675 largest listed firms are women, and 59 non-white. It has grown harder for bright young things to get a look in. The average age of incoming CEOs has risen sharply, to 58, since 2005 (see chart 3). A survey by AESC, which represents 16,000 search professionals, ranks “attracting diverse talent” as the seventh-most-pressing issue for their firms in 2020, behind such things as “attracting digital talent” or “creating a culture of innovation”.

The search within

Growing doubts about the value headhunters bring has led some clients to take the work in-house. An expanding list of corporate titans, including all of the tech giants, are building private squads of headhunters—often by poaching from the Shrek firms. Having focused at first on junior hires, these are working their way up to the C-suite, says Ms Garrison Jenn.

Some company chairmen may wonder why they need an outside recruiter at all, when the ideal candidate is often staring them in the face. A recent Conference Board survey of executives and corporate secretaries found that 73% thought there was no need for a firm with a strong internal candidate for CEO to conduct an outside search. There appears to be no shortage of such talent within. Last year almost four-fifths of new S&P 500 bosses came from inside the firm, including that of Intel, a chipmaker. IBM recently picked the head of its cloud division to replace Ginni Rometty.

Yet most large companies will continue to use search firms—even if they do not fully buy the science, or harbour other doubts. That is because external validation has a value all of its own. Recruiters can be crucial in helping build consensus when, as is so often the case, boards are split. It is as diplomats that the best headhunters earn their keep. ■

This article appeared in the Briefing section of the print edition under the headline “Take me to a leader”

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