Words To Live By
By Paul E. Lacko

Having successfully passed through a number of 5- and 10-year anniversary dates this past year, I find myself in an unusually reflective frame of mind as I write this just before year-end. I celebrated my 50^th birthday in 2004, for example. I've been living in St. Louis for 15 years as of last September, working for the same employer the entire time. Looking ahead to 2005, my wife and I celebrate our 20^th wedding anniversary in January. My son will have 10 candles on his birthday cake in August. And… can it be?! Yes, the month of May will mark 30 years since I graduated from college.

I've often been given good advice over the years. Sometimes I have even followed the good advice. I have also been given what I call "words to live by," and I would like to share some of these bits of wisdom. They are still good today.

Once upon a time, for instance, my department manager told me, "You don't have to be right, you just have to be consistent. Senior management can make appropriate adjustments for consistent bias." That was good advice to a young actuarial student. Almost always, we know ahead of time that our projections and estimates will be wrong, i.e., not exactly the results that are ultimately realized. Almost always, we do not know how far off the mark our estimates and projections will turn out to have been. One element of my actuarial maturation has been to give up trying to be right. Instead, I strive instead to be consistent. I offer the same advice to actuarial students today: You don't have to be right, you just have to be consistent.

I have also learned that some kinds of consistency are better than others. It may not be cost-effective to be right, but it is cost-effective to make sure that you're wrong in the right direction.

As another department manager observed one day several years ago after some minor malfunction in the corporate cogs, "Typically, when something goes wrong in the organization, the first thing to get fixed is the blame." I find that managers in effective organizations take steps to fix the blame immediately, so that everyone can attend to the real problem that has gummed up the works. The best response I learned to a mess that I was involved in and might have caused is to say, "It's probably my fault." That fixes the blame well enough, temporarily at least, so that everyone else can relax and focus on finding and fixing the problem.

Nowadays, of course, publicly traded corporations have to lay out most of the key corporate buck-passing and blame-fixing processes in great detail. It's called "Sarbanes-Oxley controls and documentation." SOX has made it much more difficult for a lower-level employee to take the blame for a major financial foul-up. But a senior-level manager who lets—or forces—a lower-level employee to take the blame for such a disaster should be shot, convicted, and tried fairly in a court of law. In that order.

This brings to mind something else I learned long ago, a good way to instill trust and loyalty in your staff: give them all the credit when things go right, and take all the blame yourself when things go wrong.

Where was I? (Somebody, I forget who, told me that short-term memory becomes spotty with age.) Oh, yes, "words to live by."

That same department manager told me a metaphor one day, when we were discussing the subject of actuarial career paths. He said, "There are two ways to get to the top of a tall tree. One way is to find a tall tree and start climbing. The other is to fill a watering can, climb to the top of a small tree, and start watering." This image has stuck in my mind for about 20 years. As it turns out, we both discovered that the forest has more than one tree, so there's at least one more way to get to the top of one of those trees. First, pick a tree, any tree. Climb it for a while, until you've gone as high as you can. If that isn't high enough for you, go out on a limb, take a deep breath, and jump to a higher branch of a neighboring tree. Repeat, as necessary.

To these two department managers and their words to live by, I'll raise a toast on New Year's Eve. And to so many other people who have taught me important lessons, I'll raise another toast. If I toast one person at a time, then I'll feel pretty darn young and spunky by midnight! Next day, of course, I'll have no one to blame but myself.