That was week ending 20th July 2012

G4 what?

The G4S story was all over the headlines at the beginning of the week, but had faded out almost completely by the weekend. The media had moved on to looking for other potential Olympic disaster stories. Watch out for reports of missing toilets rolls and any other minor shortcomings which the British press will project as a national disgrace that we are somehow all to blame for.

However a question occurred to me about the G4S debacle which I thought worth exploring. That question is did G4S think it was contracted to provide security guards for the Olympics or did it think it was contracted to provide security?

It is still not clear exactly why G4S failed so badly. However there are two factors that appear significant. First following a review of the security requirements by the government they significantly increased the number of security personnel they required from G4S. This was the security requirements driving the numbers of guards to be recruited. Thereafter the recruitment process became entangled in the training process which could not train recruits in sufficient numbers.

Now you may think this does not matter because, at the end of the day G4S failed to recruit enough security staff which means they would not deliver on the security requirements either. However I think it is significant because it could have affected the way G4S approached delivering the contract. If the primary driver of its process was the recruitment of security guards then they would be less likely to anticipate the potential for the need to increase numbers nor the implications of the training that would be required.

I have seen many instances of failure to deliver caused by a supplier not fully understanding what it is the customer really wants as opposed to what it seems they have requested. I would not be surprised if this turns out to be the route cause of G4S failure on their Olympics contract.

Eurozone – the beginning of the end?

A few weeks back I wrote about how none of us could predict what was going to happen in the Eurozone but that the signs were that something was going to happen and it might happen soon. Curiously since then not a lot has happened and there has been very little coverage in the media, until towards the end of last week.

Last week Eurozone finance ministers unanimously approved €100bn bailout for Spain’s banks. In spite of this Madrid’s 10 year bond yield jumped back above 7pc and yields on short term debt are now a fifth higher than 6 weeks ago. The Spanish government introduced austerity measures that are much tougher than the Spanish Prime Minister claimed would be required when the loan agreement was announced. This pattern follows that of Greece, Ireland and Portugal so brings Spain close to the point of needing a full scale sovereign bailout. The Eurozone could rescue Spain but the next in line Italy, is just too big. Last week 10 year yields on Italian bonds climbed sharply, peaking at above 6pc and Sicily became the first Italian region to appeal for government help to prop up its finances.

The Eurozone is fast running out of workable and politically feasible options for saving the Euro. “Fiscal union”, which is the only option really likely to work, is simply not going to happen whatever the IMF says, so that leaves the breakup of the Euro as the increasingly likely outcome. By simultaneously sending their governments on holiday they have ensured that nothing can be decided and therefore nothing can happen (they hope) until the autumn. However we are probably about 3 months away from the “beginning of the end” for the Euro.

Some of the way with UKBA

The proposed strike during the Olympics by UK Border Agency staff has been condemned almost unanimously as everything from unpatriotic to opportunistic. Despite only 10% of staff voting for action the PCS union is to press ahead with the walkout.

Whilst I share the general disapproval I do have some sympathy with the front line staff involved. The standard of leadership in UKBA is so bad that if I had to work there I would be sufficiently hacked off by now to want to take it out on someone. It is not only rubbish in UKBA itself but it is compounded at the political level by Theresa May the home secretary who continues to flounder. The coalition only seems ready to accept removing a minister from their job if they have been involved in something underhand. Incompetence and failure it seems is not a reason to move a minister to where they can do less damage.

Solid Wood

On a more cheerful note and talking of leadership, best wishes to Sir Ian Wood who has retired as Chairman of Wood Group after 48 years with the company. During this time he has guided the company to become a global energy services group employing over 41,000 people in 50 countries. A great example of growing a successful business through engineering, rather than financial engineering.

With Sir Ian stepping down there is some speculation that the company could now become a bid target. No one could blame Sir Ian and the Wood family who still own s substantial share of the business from thinking about realising at least some of the value of this shareholding. However I hope that if the company is sold that the new owners will recognise the skills and culture of the people in the business that have been crucial to its success and build on this. It would be a great shame if the value created by Sir Ian and his team were be squandered as a consequence of a change of ownership.

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.