In the 1990s I worked with USWEST (now Qwest) Communications in a major effort to create better communications between management and union workers. At the outset, relations were hostile, distrustful, dysfunctional, and in many cases counterproductive. Management and the union, however, were seeking to form a mutually supportive partnership. But realizing even tiny steps toward that end seemed next to impossible. Our first task was to identify the “what’s in it for me” part of the assessment process. Our campaign— we dubbed it “Bridging the Gaps”—lasted about two years and shaped some of the material in this book. The key lesson was this: For this proposed partnership between management and the union to work, interdependence would be key. Having one group dominating the other would kill the relationship.
Management first had to find out what the union’s needs were. Through months of research—involving questionnaires, interviews, focus groups, feedback sessions, and so on—many needs were identified, clarified, and communicated. In the same way, union members learned more about the management side of the business—about dealing with economics, competition, regulation, and shareholders. Discovering what each party needed from the other was enlightening.
Histories of indices will be used by investors and their consultants to formulate strategic allocation policies. Asset allocators and academics also have an interest in long data histories when building allocation models. The asset–liability modeling exercises that many pension funds and insurance companies now undertake on a regular basis to review strategic benchmarks, all tend to use historical volatilities and covariances that are derived directly from index histories. There may be some advantage to investors in using the same index for the ongoing fund management benchmark as that used in the prior modeling exercise.
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