11 June 2012

That was week ending 8th June 2012

After a week off to celebrate the Queen’s diamond jubilee, which whilst a bit damp was one of the best parties anytime, anywhere we look at some of the non-jubilee stories from last week.  This week our theme is “why would anybody think that was a good idea”?

£80 million plus to save £8 million

The Royal Mint issued new 5p and 10p coins in February. They’re 0.2mm thicker than before and made of cheaper steel coated in nickel. The Treasury claimed switching to steel in the new coins would save the Royal Mint £8million a year.
However one council has already had to spend £7,200 widening the slots in 24 meters in its car parks to accommodate the new coins at a cost of £300 per machine. The estimated cost to councils and private car park operators is a massive £80million over the next two years. The bill for modifying ticketing and vending machines and the like could be similar.
So why would anybody think that was a good idea? The Royal Mint thinks its purpose is to produce and issue coins and bank notes. But what are these coins and notes used for? They are used for financial transactions. Coins are used for small financial contractions often involving some form of “slot” machines.
Because the Mint does not understand that its actual purpose is to provide the means by which citizens can make financial transactions it can come up with a money saving scheme that makes it impossible to carry out a significant proportion of those transactions. We are speculating here but we would not be surprised to discover that senior managers and civil servants at the Royal Mint and Treasury will receive significant bonuses in recognition of the “savings” they have delivered.

Spanish practices

The Eurozone crisis continues to dominate the economic and political debate with the prospect of a bailout for Spain the main focus. One of the triggers for this has been the request from the Spanish bank Bankia for £15bn of state aid.
What you may not be aware of is that Bankia was formed from the merger of seven regional lending banks and, wait for it, was floated on Spain’s stock exchange in July 2011. Now who in July 2011 would think that buying shares in a Spanish bank formed from a merger of regional lending banks was a good idea? Those that did have so far lost 70% of their investment with the rest disappearing fast.
Spain’s Attorney General has now ordered the country’s anti-corruption unit to investigate and they may or may not uncover illegal practices. However we think that the massive potential short term rewards that senior management and their advisors can earn from floatations like this push the greed factor into the driving seat. It is the only rational explanation for why investors can be persuaded to throw common sense and sound judgement out of the window.  This is not just a “Spanish practice” it goes on everywhere and it needs investigating everywhere.

Good news and “I don’t believe it”!

The biggest story for me last week was the arrival of our fifth granddaughter Freya Marie. That was the good news. The not so good news was when Mum told us that all the mothers who like her had stayed in the maternity unit overnight had to queue up to collect their own breakfast!
Why would anybody think that was a good idea! Who on earth came up with the money saving idea of a self service breakfast for mothers who have just given birth and spent a virtually sleepless night on a maternity ward? It has to be a man and what’s more a man who is only thinking about catering and saving money and no connection with providing care for new born babies and their mothers. Given the proliferation of “efficiency savings” bonus schemes throughout the public sector we would not be at all surprised if this wasn’t a factor as well.

Harvey Wet Nicks

First prize in what was clearly becoming a “why would anybody think that was a good idea” competition goes to Harvey Nichols. They sent out a mail shot showing a woman with her clothes soaked around the groin next to the slogan “The Harvey Nichols sale … Try to contain your excitement”.
Now why a top fashion store would think that associating human waste with their clothing ranges would boost sales is beyond me.  The individual golden prat award goes to their spokesperson who explained that the images were “a visual representation of a well-known phrase” which depicted the expression in “playful, inoffensive manner, which was in keeping with the tongue-in-cheek spirit with which we intended our campaign to be taken”. Where do these people spend their time?  Was there a bonus in it somewhere? It wouldn’t surprise me!

Unite … can’t be right?

The Unite union is threatening to call a strike of London Transport workers if employers do not agree to pay a bonus of up to £500 to their employees who work during the Olympics. Whilst I can see why Unite would think “this was a good idea”, at first sight the claim does seem unreasonable. After all if you are driving a bus you are driving a bus. Apart from more passengers than normal what’s different about driving it during the Olympics?
However the spraying around of bonuses for almost anyone connected with the Olympics has obviously caught Unite's attention, starting with the Olympic Delivery Agency. Here the directors will be paid a bonus "if they deliver the Olympic facilities in time for the Olympic Games in 2012". Quite why ODA directors need a bonus to remind them that the Olympic facilities are needed this summer and not February 2013 is a mystery. However the principle is in line with driving a bus during the Olympics so you can see where Unite got the idea from.

So thought for last week is: "If you are thinking of giving someone a bonus to encourage them to do what you want them to do, don't be surprised if that's exactly what they go and do"!

So that was some of the week before this week. We hope you found some of the above thought provoking and useful for you and your business. We trust you had a good weekend and hope you have a great week this week.

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