That was week ending 4th May 2012

Mervyn swervin’

In his BBC lecture last week Mervyn King, Governor of the Bank of England inferred that he had seen the banking crisis coming but had been unable to convince the government to take action.  “In hindsight … we should have shouted from the rooftops … we should have tried harder”.

I have seen Mervyn King speak and he comes across as logical and capable with considerable brain power throbbing away under that urbane and calm exterior. However when you reflect on what he says not all of it hangs together quite as neatly as it first sounds.

In particular, given that the BoE is to have a central role in regulation of the financial sector in future, he continues to duck the issue of an inquiry into the part played by the BoE itself in the financial crisis. Mervyn King has neatly side stepped any suggestions of this mainly on the grounds that the bank had no direct role in regulating the financial sector at the time.

For us this is just another indication that we have not really got to the core of what went wrong to cause the global financial crisis and subsequent recession.  Various proposed changes such as BoE becoming the key regulator and separation of retail from investment banking sound as though they might work. However they seem rather more “knee jerk” than based on thorough analysis and assessment of cause and effect. In particular we don’t think the “people factor” has been examined thoroughly.

The flaw in the machine

There is a widely held but flawed belief that organisations can be operated like machines. Operate them according to the manual, pull the right levers and they will produce the results you expect. However there is one highly unreliable and unpredictable component in these machines – people. People have emotions so they do not always behave or respond as you expect.

Two of the most powerful of human emotions are fear and greed and it has long been acknowledged that these are powerful drivers of financial markets. They don’t just influence the bankers, investors and so on; they also influence politicians and governments. Politicians were more than happy to let the credit dance go on because they believed voters would give them the credit for choosing the music.

We believe a more thorough study of the behaviours, both within BoE and elsewhere is needed before a really robust solution for preventing or at least containing future financial crises can be devised.

Shareholders – even more revolting

After a third of Barclay’s shareholders refused to support the company’s remuneration report, 59% of Aviva shareholders voted against theirs, in spite of last minute concessions over directors’ pay. At Immarsat 61% of shareholders refused to back its report. Now Sly Bailey, CE of Trinity Mirror Group will step down at the end of the year. Ms Bailey has received around £14m in the nine years she has been in the job whilst Trinity’s share price dropped over 90% in the same period.

It is beginning to look as though shareholders big and small are starting to demand better performance from their directors. Perhaps now is the time for Vince Cable to nip smartly through the gap that is opening up and touch down with some legislation for binding shareholder votes on directors’ pay. Or even better if companies get ahead of the game and do this themselves.

Effective government.

The coalition government managed to go a whole week without tripping over its own feet. However that’s mostly politics. We are more concerned about government’s inability to deliver effectively for UK citizens. Here are just a few examples.

HMRC sent out thousands of letters fining taxpayers for not submitting tax returns who did not need to submit tax returns. It was also reported that HMRC's response time to phone calls has increased to an average of 4 mins compared 1.5 min in 2010. In our experience anyone who gets through to HMRC in 4 minutes is on such a winning streak they should make serious investments in lottery tickets. The odds of winning are better than getting through to HMRC in 4 mins. As for the person who got through in 1.5 mins in 2010, well we'd like to meet them!

UK Border Force seems to think that the only way to prevent illegal or unwelcome visitors to the UK is to make life miserable for all travellers. We were told last week of a hospital paying £200 for a computer cable that you can buy almost anywhere for £29 and being charged £800 for moving 2 computers.  There are now 33 different schemes for helping unemployed teenagers. Soon there will be enough schemes to employ all the unemployed teenagers to help each other, job done!

It seems that just “doing something”, rather than delivering effective outcomes is seen as the primary purpose for their existence by too many government departments and agencies. Ministers talk about “efficiency” (and “efficiency savings” whatever those are). We would like to hear them using and understanding “effective”.

Got no satisfaction

Yet another study from CIPD, showing that whilst 80% of managers thought their staff were satisfied or very satisfied with them as a manager only 58% of their staff returned the compliment. CIPD, as you would expect puts this down to inadequate management training.

The word “satisfied” caught our attention. Our message to managers is never be satisfied with “satisfied”, “OK”, “not bad” and so on. Seek out dissatisfied; find out what could be better and what would be really, really good if it could be made to happen. This is the way to find those golden nuggets of opportunities to improve that will pay off for you, your staff and your business.

Any sympathy for ...?

Mark Zuckerberg founder of Facebook who will sell part of his shareholding when the company goes public and collect $1bn in the process. However it is reported he will have to pay most of this in tax. So he may be an internet genius but don't ask him for tax advice.

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.

That was week ending 20th April 2012

When is BIG TOO BIG?

On Wednesday we had the long trailed statement from Tesco’s Chief Executive Philip Clarke confirming reduced profits in their UK operation. He announced a £1bn investment in UK stores focusing on improving staffing levels, smartening up stores and delivering better prices and product ranges. Clarke said this plan would “… put the heart and soul back in to Tesco”.

However commentators have warned that Tesco is now so big that it will be very difficult if not impossible to achieve a turn around fast enough to out pace the competition. So apart from wondering what Tesco have been doing if they have not been “improving staffing levels, smartening up stores and delivering better prices and product ranges” this also made us think about when is BIG just TOO BIG.

There are different types of TOO BIG - too big to manage, too big for stretched financial resources, too big for market demand and so on. However we think the real issue is when a business becomes TOO BIG TO CHANGE. So size doesn’t matter, what really matters is CHANGEABILITY, the personal and organisational ability and capacity for change. If your business has grown beyond your CHANGEABILITY then it is TOO BIG, for you at least.

So think about what might cause you to need to change your business significantly and rapidly and how you would do that, fast and effectively. How good are you right now at implementing changes in your business, fast and effectively? One tip – if you think this is “change management” you are likely to miss the point.

Off their Marks

M&S also announced disappointing sales figures. By way of explanation, they stated how many items of shoes and clothing they did not sell because they did not buy enough stock. We think it is pretty clever of M&S to actually track what they did not sell but are perplexed as to why they were not clever enough to anticipate a cold snap in February.  Have M&S now become so clever with systems that they have lost sight of some the “arts” of retailing?  Tesco also perhaps?

More Women of the Year please

Congratulations to British fashion designer Anya Hindmarch, for winning the Veuve Clicquot Business Woman of the Year Award. The run up to the awards stimulated more debate on women in the boardroom, or rather the lack of them.  There are many different views on why there are still so few women in senior positions in British companies and just as many on what should be done about it.

For us though a fundamental factor in the debate has somehow been lost. It may be considered non PC to say this but …. “women are different from men and men are different from women”. Part of the problem is an unwillingness and lack of skill to manage these differences in ways that can unlock the potential from those differences. It is easier to prefer someone who “will fit in”, “won’t rock the boat”, “will be a team player” in our team and playing the way we think it always has and always should be played.

Show us a board or management group that is largely composed of the same kind of person, male or female and we will show a group of people less productive, innovative and effective than they could be. They may have a nice time together but eventually they will waste away and fail. The “differences” are the reason why we need both women and men at all levels in all organisations.

Women showing how it's done

Finally, CIPD published a labour market analysis which reported that there are 271,000 more women over 50 in the labour market since 2008, an 8pc increase. Of these 172,000 are self-employed, up 16.3%.  By contrast only 3,000 older men are in work.

The report suggest various reason for this. However for us there is a clear message. When the going got tough these older women got going. Now isn’t that the attitude we all want to see in our businesses at all levels?

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.