Car loan takers top bankruptcy list

By LEE YUK PENG
yukpeng@thestar.com.my

PETALING JAYA: At least 500 people who take out hire-purchase loans for vehicles are declared bankrupt every month.

The majority, comprising 37% (950) of the 2,565 cases in the first five months of this year, were aged between 35 and 44 years. (See Table)

Insolvency Department director-general Datuk Abdul Karim Abdul Jalil told The Star the incidence of bankruptcy from unserviced car loans was extremely high in the first five months of the year, an average of 513 cases a month.

He said this was in contrast to the average of 330 cases a month last year, 227 in 2008 and 265 in 2007.

He added that becoming bankrupt because of one’s inability to service vehicle loans had also topped the list of bankruptcy cases in Malaysia, accounting for about 24% of the total 80,370 cases between 2005 and May this year.

“Personal loan borrowers and business loan borrowers accounted for 12% and 11% of the total number of bankruptcy cases respectively within the same period.”

Once a person is declared a bankrupt he will be restricted from, among others, travelling overseas, holding the post of company director, and will have to give up his assets, including property and cars.

He must contribute to the bankruptcy estate, and will only be discharged once the sum owed is settled.

Abdul Karim is concerned that the number of bankruptcy cases involving car loans among those aged below 25 had shot up to 156 last year, against 55 cases each in 2008 and 2007.

There were 27 such cases as at May this year.
Under the hire purchase agreement, the bank repossesses the car if the borrower defaults on the monthly instalments for three consecutive months.

It will sell off the car to recover the sum owed and if the amount still owed is more than RM30,000 the bank will file a bankruptcy petition in the High Court.

In cases where the sum owed is below RM30,000, the bank will wait until the amount, with accumulated interest, balloons to RM30,000 before filing the petition.

On the rising incidence of bankruptcy involving those taking car loans, Fomca claims there is a reason why banks prefer to repossess and sell the cars instead of negotiating with the borrowers to come up with a scheduled repayment that they could afford.

According to its secretary-general Mohd Sha’ani Abdullah, some bank officers receive kickbacks from car repossessors and auctioneers for giving them business.

He said Fomca had complained to Bank Negara on the zero downpayment for car loans as advertised by some car salesmen last year: “How can this be allowed when borrowers have to pay at least 10% of the price as downpayment?”

Appeasing the Bond Gods

From Paul Krugman’s latest column:

As I look at what passes for responsible economic policy these days, there’s an analogy that keeps passing through my mind.

I know it’s over the top, but here it is anyway: the policy elite — central bankers, finance ministers, politicians who pose as defenders of fiscal virtue — are acting like the priests of some ancient cult, demanding that we engage in human sacrifices to appease the anger of invisible gods.

Hey, I told you it was over the top. But bear with me for a minute.

Late last year the conventional wisdom on economic policy took a hard right turn. Even though the world’s major economies had barely begun to recover, even though unemployment remained disastrously high across much of America and Europe, creating jobs was no longer on the agenda. Instead, we were told, governments had to turn all their attention to reducing budget deficits.

Skeptics pointed out that slashing spending in a depressed economy does little to improve long-run budget prospects, and may actually make them worse by depressing economic growth. But the apostles of austerity — sometimes referred to as “austerians” — brushed aside all efforts to do the math. Never mind the numbers, they declared: immediate spending cuts were needed to ward off the “bond vigilantes,” investors who would pull the plug on spendthrift governments, driving up their borrowing costs and precipitating a crisis. Look at Greece, they said.

The skeptics countered that Greece is a special case, trapped by its use of the euro, which condemns it to years of deflation and stagnation whatever it does. The interest rates paid by major nations with their own currencies — not just the United States, but also Britain and Japan — showed no sign that the bond vigilantes were about to attack, or even that they existed.

Just you wait, said the austerians: the bond vigilantes may be invisible, but they must be feared all the same.
This was a strange argument even a few months ago, when the U.S. government could borrow for 10 years at less than 4 percent interest. We were being told that it was necessary to give up on job creation, to inflict suffering on millions of workers, in order to satisfy demands that investors were not, in fact, actually making, but which austerians claimed they would make in the future.

But the argument has become even stranger recently, as it has become clear that investors aren’t worried about deficits; they’re worried about stagnation and deflation. And they’ve been signaling that concern by driving interest rates on the debt of major economies lower, not higher. On Thursday, the rate on 10-year U.S. bonds was only 2.58 percent.

So how do austerians deal with the reality of interest rates that are plunging, not soaring? The latest fashion is to declare that there’s a bubble in the bond market: investors aren’t really concerned about economic weakness; they’re just getting carried away. It’s hard to convey the sheer audacity of this argument: first we were told that we must ignore economic fundamentals and instead obey the dictates of financial markets; now we’re being told to ignore what those markets are actually saying because they’re confused.

You see, then, why I find myself thinking in terms of strange and savage cults, demanding human sacrifices to appease unseen forces.

And, yes, we are talking about sacrifices. Anyone who doubts the suffering caused by slashing spending in a weak economy should look at the catastrophic effects of austerity programs in Greece and Ireland.

Maybe those countries had no choice in the matter — although it’s worth noting that all the suffering being imposed on their populations doesn’t seem to have done anything to improve investor confidence in their governments.

But, in America, we do have a choice. The markets aren’t demanding that we give up on job creation. On the contrary, they seem worried about the lack of action — about the fact that, as Bill Gross of the giant bond fund Pimco put it earlier this week, we’re “approaching a cul-de-sac of stimulus,” which he warns “will slow to a snail’s pace, incapable of providing sufficient job growth going forward.”

It seems almost superfluous, given all that, to mention the final insult: many of the most vocal austerians are, of course, hypocrites.

Notice, in particular, how suddenly Republicans lost interest in the budget deficit when they were challenged about the cost of retaining tax cuts for the wealthy. But that won’t stop them from continuing to pose as deficit hawks whenever anyone proposes doing something to help the unemployed.

So here’s the question I find myself asking: What will it take to break the hold of this cruel cult on the minds of the policy elite? When, if ever, will we get back to the job of rebuilding the economy?

Building high performance teams

Leadership lessons from the ‘Special One’

SCIENCE OF BUILDING LEADERS
By ROSHAN THIRAN

“Ferguson is right. Money does not guarantee success. I showed that last season when my Porto team beat Manchester United. It’s all about leadership.” – Jose Mourinho

DURING the recent World Cup, I studied the work of leadership guru cum hostage negotiator George Kohlrieser on high performance teams.

As the new football season kicked off, I started to think about high performance sports teams. And immediately, one name comes to mind – José Mário dos Santos Félix Mourinho.

Jose Mourinho has built three high performance teams in the past few years. The moment he takes over the team, they quickly gel, start to perform and win trophies. How does Mourinho do it?

When Mourinho was asked what the secret to his success was, he humbly responded: “I pray a lot. I believe in God. I try to be a good man so He can have a bit of time to give me a hand when I need it.”

Mourinho may pray a lot but so do other coaches. Mourinho is probably the only coach who has a PhD, earning it from Lisbon’s Technical University.

But praying or having a PhD does not explain how he seamlessly builds high performance teams?
Let’s explore this paradoxical man. Mourinho, with his trademark Armani suit, is called crazy by some and genius by others. Despot and kind. Godly and arrogant. Loved and hated.

Yet, regardless of which team one supports, everyone, including women, has high respect for “The Special One”.

 In fact, when Mourinho left his old club Chelsea, his archrivals Sir Alex Ferguson and Arsene Wenger moaned his departure.

Even British Prime Minister Gordon Brown was sad.
In a recent AOS survey, Mourinho topped a poll of celebrities that most office workers would want as their boss.

He won the poll convincingly beating Richard Branson, Barack Obama, Oprah Winfrey, Jamie Oliver and others.

For corporate employees, Mourinho is the “Chosen One”, someone they secretly wish would transform their workplace.

So how does Mourinho keep creating these high performance teams?
According to Kohlrieser in his book Hostage at the Table, there are eight key pillars to high performance leadership:

1) Leading from the mind’s eye – the power of focus;
2) Cycle of bonding – motivation, inspiration, resilience;
3) Leader as secure base – creating trust to drive change;
4) Conflict resolution – resolving differences;
5) Power of dialogue – building bridges with common understandings;
6) High impact negotiation – influencing and persuading;
7) Leveraging strengths – team self-awareness; and
8) Managing emotions – creating high energy.

Leading from the mind’s eye

Mourinho wanted to be a professional football player like his father Felix. But he was so untalented that it ended in embarrassing failure when he was not even allowed on the field.

Mourinho quit football and went to business school. But after just a day, he quit and enrolled in a sports science course, deciding to become the world’s greatest coach instead. And since that day he has kept his mind’s eye focused on being the best coach in the world.

At Porto, Chelsea, Inter Milan and now Real Madrid, Mourinho’s mind’s eye keeps him focused on winning. Even in defeat, he refuses to take the role of loser.

Every team he has managed quickly bounces back from losses because their leader has his mind’s eye fixated on nothing but success.

“It’s no fluke that after a defeat, Inter gets straight back on its feet. That’s all thanks to Mourinho,” claims Diego Milito, an Inter Milan star. In fact, winning is so engraved as Mourinho expresses: “I love players who love to win. They not only win in 90 minutes, but every day, every training session, in every moment of their lives”.

The entire team’s mind’s eye is focused on winning.

Cycle of bonding

Mourinho creates bonds with every single player in his team and personally knows each of them. Mourinho is known for his great “rapport” with his players.

He knows each player intimately and knows which button to press for each player. Some say Mourinho is avuncular and caring, while others say he is an intimidating tyrant.

Neither is true. He simply worked out how to use differing training methods for each player. “His training sessions are spectacular,” says Ronaldo. “They have great intensity but we don’t feel tired because we are extremely motivated.”

Every team Mourinho coaches, bonds like a family. Mourinho adds: “You must create a positive atmosphere and make everyone feel part of the group. In this club, if you go to the barrier, the man at the door feels part of the group and success. The people who work in the kitchen feel part of this family. And I’m one of them.”

Leaders as secure base

Research shows that teams perform best when their leader is a secure base. Mourinho was a coach, friend and secure base to all his players wherever he went. Even with personal issues, he was highly visible and accessible to all players.

The day Mourinho bid farewell to his Chelsea players, there was tears everywhere. He knew them all including their wives and kids and mentioned each one during his three hour farewell.

Inter’s Milito says: “There is no coach like him when it comes to sticking his neck out and defending everyone, that way reducing the tension within the team when things aren’t going well.”

Mourinho is the players’ secure base. Frank Lampard attests of Mourinho: “I love him as a man and as a manager.”

Conflict resolution

All high performance teams are faced with conflict. According to Kohlrieser, high performance teams “put the fish on the table”. By putting the “smelly fish”, or conflict on the table, there is opportunity for everyone to see these issues and work to its resolution.

Mourinho does similarly by constantly delivering feedback and performance assessments to each player. Some players may not like having the “fish on the table”. Joe Cole once received some stinging feedback but took it under his chin and started performing.

Power of dialogue and language

When Mourinho went to Italy, he said: “I studied Italian five hours a day for many months to ensure I could communicate with the players, media and fans.”

It is said that Mourinho speaks 17 languages. He uses the power of dialogue and language to build common understanding of the clear goals he has set for his team.

A self-confessed fan of Ferguson, Mourinho not only became Ferguson’s close friend but great rival. Their bond and dialogue enabled two strong-willed men to build a friendship in spite of their rivalry. Mourinho uses dialogue and language to ensure every single player on his team has similar friendships with him and clear understanding of the end goal.

High impact negotiation

In March 2007, Chelsea was being outclassed in the first half of a Champion League game losing 1-0. A few minutes before half-time, Mourinho angrily storms out.

Chelsea came out of the dressing room a completely new team, winning the game. This happened numerous times throughout Mourinho’s career. Why does his half-time talk always work? He does not yell, he does not scream but he negotiates and influences his players to change.

“I asked the players to enjoy the situation,” Mourinho said of one of his half-time talks. “We had 45 minutes to change things, and I asked them ‘are you scared of it or are you going to enjoy it?’ Psychologically, I just made the players think a little bit.”

According to sports psychologist Andy Barton: “Mourinho will always look to turn a negative into a positive. If a team is 3-0 down at half time and the manager starts screaming about all the mistakes made, it doesn’t help. Instead he’ll focus on things they are doing right, and then tell them how they can turn the game around.”

Mourinho is very specific about what is required to win and influences his players to build a mental image of what is needed.

He spends significant amount of time preparing each player differently for games. He influences and persuades big stars to train and conform to his team patterns.

He treats them all as equals.

Leveraging strengths

Mourinho is a man who knows his strengths and limitations. He once said: “If Roman Abramovich helped me out in training we would be bottom of the league and if I had to work in his world of big business, we would be bankrupt!”

Mourinho understood what he was good at and what each member of his team was capable off. He worked within the strengths of his team and gets the best of each individual. Jim Collins, in his book Good to Great, talks about how great leaders build great teams by “getting the right people on the bus.”

Mourinho has trusted lieutenants that he brings into every team he manages. One of them is fitness coach Rui Faria, who has been with him at every club.

When Faria was asked what Mourinho’s secret was, he responded: “Every other top coach says they work hard and they prepare better than anyone else, but they can’t make what Mourinho does. Everything he does is better. He works harder than anyone else. He knows everything about every player and every game.”

Mourinho knows every single player’s strengths and weaknesses. He knows how to leverage their strengths fully as a team and minimise their weaknesses. And every single player knows each other’s strengths and this team self-awareness is the difference between Mourinho and other top coaches.

Mourinho himself displays great personal self-awareness when he quit football to focus on coaching. This “quitting” is termed the hedgehog principle by Collins.

It is simply to be very clear about what drives you and what you can be genuinely great at, and then relentlessly focus on that.

How many of us persist with things we know deep down, are not going to lead us to success? How many organisations persist on doing things the same way?

Insanity is doing the same thing but expecting different results. Once, Mourinho was termed insane for making three substitutions in the first half of a game he was losing. Mourinho was just addressing the brutal reality of a situation.

Mourinho learnt quickly that there is no relationship whatsoever between functional expertise and managerial ability.

Managing emotions

“Players don’t win you trophies, teams win trophies, squads win trophies,” rants Mourinho daily. But Mourinho does much more than build teams. He builds leaders in each team he manages. At Chelsea, more than half his first team became captains of their national team.

To ensure you build high performance teams, you need to grow leaders. Leadership is needed in every part of your team. You cannot be a giant surrounded by midgets.

When Mourinho arrived at Chelsea there were no stars – he fashioned them. John Terry and Frank Lampard were good players he turned into world class.

He says: “You must work hard and work well. Many people work hard, but not well. You must create good leadership with the players, which is an accepted leadership, not leadership by power or status.”

If we look at back at our careers, most will admit that the period we developed the most was when a manager pushed us to our limit.

Mourinho, more than anyone else, believes in pushing a person to their limits, enabling his team to constantly move out of their comfort zone and into a courage zone.

Final thoughts

That is the lesson of Mourinho. We need special ones. We need leaders like Mourinho who have their mind’s eye focused. “The thing about Mourinho is that you don’t know what he’s going to do next but whatever it is, it will be because he thinks it is beneficial to the team,” says Barton.

Mourinho built numerous high performance teams being an authentic leader through the power of bonding. He worked hard and had thorough forensic preparation for each match but his unique relationship with his players, and his relentless focus made the difference. What are you doing to build high performance teams?

Roshan Thiran is CEO of Leaderonomics, a social enterprise passionate about creating a few Jose Mourinhos’ in Malaysia. For more information on how your organisation can build leaders, call +60123291968 or login to
www.leaderonomics.com.