The Management-Issues Blog

Giving it all away

09 Feb 2010 | Permalink
Brian Amble | No categories specified.

In his most recent piece for us, entitled Happiness and money, Peter Vadja observed that a vast segment of our population spends their lives doing things that they hate to make money they don't want to buy things they don't need to impress folks they don't like. All in the vain attempt to experience happiness.

Those sentiments would certainly shared by Austrian millionaire, Karl Rabeder, who is in the process of selling almost all of his assets and giving away a multi-million pound fortune because he believes that money is counterproductive and prevents happiness.

The proceeds of the sale of his luxury properties in the Alps and Provence, plus his collection of gliders and luxury car, are going to a microcredit charity he has established to help people in places such as El Salvador, Honduras, Bolivia, Peru, Argentina and Chile.

According to the Daily Telegraph, the tipping point came while he was on a three-week holiday with his wife to islands of Hawaii.

"It was the biggest shock in my life, when I realised how horrible, soulless and without feeling the five star lifestyle is," he said. "In those three weeks, we spent all the money you could possibly spend. But in all that time, we had the feeling we hadn't met a single real person – that we were all just actors. The staff played the role of being friendly and the guests played the role of being important and nobody was real."

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Crossing the line

01 Feb 2010 | Permalink
Brian Amble | Health & Wellbeing.

Almost exactly five years ago, Dab Bobinski wrote a piece here on Management-issues entitled Employer, yes. Dictator, no. His point – simply put: "when employers dictate what their employees can or cannot do in their own time, they have crossed the line. Big time."

Move on five years and it's a measure of the level of creeping corporatism in the US that we now find that employers don't just want to dictate what their employees can or cannot do in their own time, they want to dictate what family members of those employees do, too.

As Business Week explains, "the next front in the Wellness Wars is not about you. It's about your husband, your wife, and your kids….legislators have been working to give companies more power to tie healthy behavior to financial rewards. " Let's leave it to Dan to remind us of the implications of this. As he wrote back in 2005:

"With companies adopting (and getting away with) this "save-on-health-care-cost" mentality, it won't be long before they're banning obese people from their ranks. And those who ride motorcycles, go hunting, kayaking, scuba diving, or rock-climbing will also be forced to give up their "dangerous" (but legal) activities.

"...If employees don't stand up to this new onslaught of bullying, it won't be long before the workplace Gestapo is knocking on your door while you're hiding in the crawlspace, wondering if those cookies your neighbor gave you are considered contraband."

So how far will corporate intrusion into our personal lives have extended in 2015? And at what point will we stop tolerating it? Watch this space...

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Management creates finance, not the other way around

29 Jan 2010 | Permalink
Philip Whiteley | Management Thinking.

I was going to write about something other than Kraft-Cadbury, but such has been the interest in the subject here in the UK, I thought I would continue the theme.

Once upon a time, newspapers such as the Financial Times possessed both the expertise and the inclination to see through the spin produced by corporate PR departments. Not any more.

British journalists are famed for their irreverence and bluntness, but utter the words 'merger' and 'takeover' and they become blubbering sycophants. Why do they allow executives like Irene Rosenfeld to get away with promises of 'savings' that we know are optimistic projections based on one-dimensional analysis of the accounts?

Every merger since the Roman takeover of Ancient Briton has featured integration costs that are impossible to predict, and that usually outweigh any supposed benefits. They fail 70 per cent of the time – and journalists would know why they failed if they bothered to read any of the hundreds of reports on the matter, such as KPMG's Unlocking Shareholder Value, yet they get swept up in the spin and exhilaration of the deal-making and fail to ask the tough questions.

The honourable exceptions, journalists such as Simon Caulkin and Richard Donkin, have bizarrely lost space for their analysis in recent months.

In the Financial Times' view of the world, finance is king and management is a sideshow. The tail, they assert, wags the dog. But in the world I live in, money is nothing more than a by-product of what people do.

Management determines whether or not there are any organizations to invest in. Its influence is huge. I've seen it destroy the British car industry, and (almost) the banking industry, and bring down governments.

On Crimewatch this week there was the poignant tale of how the murder inquiry into the death of a girl in Nottinghamshire in 1984 went cold in part because police were diverted to handle the miner's strike – another example of industrial disaster caused by poor management.

The misanthropic inversion, placing money as somehow above the people who create it, needs challenging. Pretending that the most important aspect of a merger is the sale price – as the papers have in recent weeks – is like assuming that the most important point of a football transfer is the agent's fee. The performance on the pitch is, in the strange world that business correspondents inhabit, a matter of supreme indifference.

More optimistically, I've discovered dozens of bloggers and other commentators who are up for the challenge. My plan is to gather the comments together; produce a regular 'blog of blogs' and start to challenge the supine business press. Watch this space.

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Ad for 'reliable' workers deemed discriminatory

27 Jan 2010 | Permalink
Brian Amble | Discrimination. Public Sector.

Ronald Reagan once memorably said that "the nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"

That's probably a phrase that would resonate with Nicole Mamo, who runs a recruitment agency supplying British hospitals with temporary staff. She wanted to place an advert post with the government-run Jobcentre Plus for a domestic cleaner who "must be very reliable and hard-working". As she pointed out, her company's reputation would be at stake if the staff they recruited are not reliable.

Jobcentre Plus, incidentally, describes itself as "a government agency supporting people of working age from welfare into work, and helping employers to fill their vacancies."

But according to the Daily Telegraph, "a Jobcentre Plus worker claimed that the word ''reliable'' meant they could be sued for discriminating against unreliable workers" and refused to display the advert.

Ms Mamo was, unsurprisingly, flabbergasted at this nonsense and took what now seems to be the only effective course of action when faced with such incidents of institutionalised insanity – she went to the media.

This elicited a typically evasive response from a government spokesperson who insisted that adverts for "reliable applicants" had not been banned and the advert had now been posted online.

She said: "I can confirm that we took the advert from the employer and put it onto our website. "Every advert goes onto our website and onto the Jobpoints. Reliability is important to employers, as it is for Jobcentre Plus, and we welcome ads seeking reliable applicants."

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Who cares?

22 Jan 2010 | Permalink
Nicola Hunt | Management Thinking.

After it's self-inflicted near-collapse the financial crisis and massive bail-out by the British taxpayer, it's hard to see how the Royal Bank of Scotland – now 84 per cent owned by the taxpayer - could make itself much more unpopular.

But never one to buck a challenge, RBS has managed to damage its brand in the eyes of the British public still further by agreeing to lend Kraft Foods hundreds of millions of pounds to buy chocolate maker Cadbury – something of a national institution – a move that will almost inevitably lead to job losses and damage the British economy.

As more than one commentator has pointed out, it seems utterly perverse that the UK taxpayer is essentially funding the destruction of an iconic brand and probably thousands of UK jobs in order to profit a US company.

No wonder this particular brand of leveraged capitalism isn't flavour of the month any more.

This comment posted yesterday on the Times Online by Richard Sullivan seems sums up the prevailing sentiment pretty neatly.

Welcome to the capitalism you all wanted so much....Company heritage? Who cares. Quaker traditional values? Who cares. Employee loyalty? Who cares. Local economy? Who cares. The quality product itself? Who cares. UK employment? Who cares. Just as long as the shareholders get a good profit, that's the only thing that counts.

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Kraft, Cadbury and the Antiques Roadshow

18 Jan 2010 | Permalink
Philip Whiteley | Management Thinking.

The phrase that most puzzles me in management circles is 'we are dealing with an ever-increasing pace of change', and variants thereof. Why? Because I have never come across a field more resistant to change, more stubbornly clinging to ancient habits, repeating their mistakes over and over again, than corporate management.

Strategic decisions are based almost exclusively on measurement by accountancy – a 500-year-old technique, pioneered by the Venetian mathematician Luca Pacioli in the 1490s. Any approach to valuing or understanding the business that isn't based on the 'bottom line' is viewed with suspicion.

Most months the Harvard Business Review publishes 'new' findings on leadership that are at least 50 years old, and can probably be traced back to Plato. If the world of publishing had developed at the same pace as management, we would just about be phasing out the quill and parchment and be introducing this innovation called 'the printing press'.

Such conservatism is never more evident than in the discussions on mega-mergers. The most depressing aspect of the Kraft-Cadbury saga is that neither side refers - even in passing - to the actual strengths, weaknesses or skills of the two companies, or the formidable task of combining two enormous organisations.

They restrict themselves the discussion of bid prices, proportions of cash and shares in the mix; a passing reference to culture might be the nearest you will get to a discussion on the actual organisations and the task of managing them.

Even the defiant Cadbury team talks mostly in terms of 'the right price'. Flogging off a huge, complex, highly performing human organisation is treated as if it were a question of determining a price for an inanimate object (which is what accountancy pretends the organisation is). This is corporate management as if it were the Antiques Roadshow. Antique; like the methods they use.

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Becoming an employer of choice

15 Jan 2010 | Permalink
Brian Amble | Employer Brand. Engagement & Motivation. Management Thinking.

A couple of weeks ago, Wayne Turmel spoke to Joyce Gioia, President of The Herman Group, for our last podcast of 2009, about the ways your organization can become an employer of choice in 21010 – and why, despite the recession, this matters. Knowing just how quickly most New Year's resolutions get forgotten, here's a reminder of her salient points.

1. Resolve to train all of your managers before you move them into supervisory positions. Doing so will cut your employee turnover and increase engagement substantially.

2. Commit to investing five to ten percent of gross receipts on training ― a major driver of retention. Your staff will appreciate it and so will your customers.

3. Make up your mind to invest time and effort in crafting an excellent onboarding program for new recruits --- one that starts with their first contact with the firm and ends at least at the end of the first year of employment.

4. Decide to begin now to provide a re-orientation (and onboarding) for all of your long-term employees. Think about how much has changed in the last ten years. Create a special re-orientation for your long-tenured people.

5. Resolve that this year you will smash the silos that reinforce fear and hostility in the organization by creating a culture of caring inclusion and mutual support. Replace your outdated authoritarian culture with one in which people know they matter.

6. Commit to becoming "green" and promoting your good corporate citizenship throughout the community and your industry. Be the leader in your industry that other organizations seek to follow. People want to work with companies that "make a difference" for the environment and the community.

7. Choose this year to capitalize on the bonus that truly embracing diversity can provide. Understand that we have many types of diversity besides cultural and religious differences. Realize that every employee brings a unique set of gifts; your mission is to find them and encourage people to express themselves.

8. Make the decision that this year, you will develop and implement an effective employee suggestion program that rewards people for giving you their best ideas.

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Investing in troubled times

06 Jan 2010 | Permalink
Brian Amble | Entrepreneurism. Management Thinking.

Here's an interesting insight from the tail end of last year. According to Babson College Associate Professor, Joel M. Shulman, in these troubled times, one of the few sensible pieces of investment advice is to bet on entrepreneurs.

Writing in The Investment Professional, Shulman says that his research into 27,000 publicly-traded global companies using over 12 years-worth of data demonstrates that entrepreneurial companies consistently outperform their nonentrepreneurial peer companies by a wide margin.

In 2009, for example, stocks of entrepreneur-led companies significantly outperform non entrepreneurs – in fact as of December 2009, 650+ global entrepreneurs were up 93%.

Shulman argues that the reason for this is simple. Entrepreneurs try to keep costs low while vigorously growing the business, meaning that entrepreneurial companies are well positioned to perform better than ever in a sluggish, recovering economy. Apple Computer is one classic example he cites of this mindset.

Nonentrepreneurial companies, on the other hand, require cheap capital to support their inefficient ways. They create bloated organizational structures, payrolls, and layers of red tape – becoming, as Shulman terms them, of "bureaucrat" companies.

But he warns: "Many large bureaucratic organizations began with a great entrepreneurial founder with a vision reaching far into the future. Well-known examples include Ford Motor Company and Xerox, both of which started with dynamic, visionary entrepreneurs. Today, however, Ford and Xerox are no longer perceived as entrepreneurial. In fact, they are often depicted as the embodiment of corporate bureaucracy and competitive decay."

Interestingly, Shulman also points out that the CEOs of entrepreneurial companies such as Research in Motion (makers of the Blackberry), Google, Infosys, and Apple Computer, all earn considerably smaller salaries than other members of their senior staff and generate the bulk of their wealth through stock appreciation.

Just to underline the importance of entrepreneurial businesses, last November, a report from the Kauffman Foundation revealed the startling fact that since 1980, almost all net job creation in the US can be attributed to firms less than five years old. As the Foundation's blog put it, it seems that "the key takeaway message: size doesn't matter... age does".

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The myth of progress

04 Jan 2010 | Permalink
Philip Whiteley | Management Thinking.

I wrote last month about the puzzle in which a 50-year-old insight was being presented as a 'new' breakthrough in management thinking in the Harvard Business Review

It reminded me of an observation made by Richard Kwiatkowski at Cranfield University, that some of the 'new' ideas such as emotional intelligence and employee engagement were well understood, and supported with a research base, in the 1920s and 1930s.

Similarly, economists have been dusting off the textbooks of Frank Knight from the early 20th Century. He made a crucial distinction between risk and uncertainty and warned against pretending you can 'model' uncertainty – a warning that would have helped prevent the credit crisis.

What's going on here? Why do we forget great learning? In the December post, I mentioned the fatal lure of technology and wider cultural influences that encourage a cynical approach to management.

Another contributory factor is a misunderstanding of what constitutes science. The cultural assumptions that the physical sciences constitute the only 'true' science, and that social sciences ought to be treated like physical sciences.

This sounds a bit abstract – but it explains why we have the fascistic term 'human resources' – instead of dealing with real people, let's pretend that they behave like billiard balls. This has caused executives to overlook research based on real people, and favour approaches based on restructurings and measurement of cost.

A great book exposing this error is Making Social Science Matter, by Bent Flyvbjerg.

Mary Midgley reviewed a book making a similar point in the Guardian newspaper: The Master and his Emissary, by Iain McGilchrist, which discusses how the left brain has overly dominated.

What a shame and an irony that the same Guardian/Observer last year sacked Simon Caulkin, the only columnist to have consistently exposed how these damaging beliefs have stymied progress in management.

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The Edward I approach to running call centres

15 Dec 2009 | Permalink
Philip Whiteley | Customer Service. Management Thinking.

A story in this month's Harvard Business Review was heartening in its initial impact, but depressing upon reflection. The article, To Be a Better Leader, Give Up Authority, reported on how two large manufacturers had improved results by giving up a dictatorial, cost-measurement approach to management in favour of empowered teams.

It was heartening because it illustrates the power of this enlightened approach, but depressing because this knowledge has been around for at least half a century, and W Edwards Deming's spectacular results with teamwork at Japanese manufacturers.

Why does it keep having to be reinvented, before managers relapse and implement failed hierarchical models? I have some ideas as to why in Meet the New Boss which looks at the wider cultural influences that encourage a cynical approach to management.

Another problem is technology. IT systems appear to make dictatorial, cost-based management easier and more efficient. Many executives are misanthropes, and the prospect of replacing people with gadgets is a fatal lure. Their anachronistic business theories are based on the pretence that people are a resource manipulated by the company – when in reality it is the other way around.

In the past two decades we've had wave after wave of introductions of mediaeval management practices under the guise of 'modernisation'. A paradox.

Most call centres are based on an approach that involves measuring the process, rather than customer satisfaction, including even internet providers, as I have found recently. They treat the customer with disdain, and prevent call centre staff from being able to solve customers' problems. It is as though the past 50 years' research on management had never occurred.

They use IT as a castle wall – automated phone systems, automated generic advice – to protect the people with accountability from any direct contact with their customers, the way Edward I built castles to protect him from the Celts.

Because everyone has to have broadband, telecoms providers have a captive audience, and are able to treat customers the way feudal barons treated peasants: easy fodder for the poll tax.

Has it never occurred to the business process re-engineering geeks that this is a vicious circle? That if you got the service right first time, by skilled, empowered teams – as demonstrated by Deming half a century ago – you would not have so many calls to deal with?

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Hourly-paid workers are happier

14 Dec 2009 | Permalink
Brian Amble | Compensation & Benefits. Engagement & Motivation.

It's often said that money doesn't bring happiness. But the truth could be more complicated, according to researchers at University of Toronto and Stanford University who have discovered that people paid by the hour are far more likely to be happy than those earning a monthly salary.

It seems that the reason being paid by the hour has more of an impact on employees' wellbeing is that they give pay more attention to what they're earning than those who earn a salary.

"Income was uncorrelated with happiness for salaried employees, whereas it was significantly associated with happiness for people paid by the hour," the research published in Personality and Social Psychology Bulletin concluded.

"Hourly payment doesn't make you happier per se," said Sanford DeVoe, co-author of the paper. "Hourly payment makes you happier if you earn a lot of money per hour, but it makes you less happy if you very little per hour.

"The key thing is that it makes how much you earn a bigger aspect of how you define your happiness."

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How not to handle an internship

11 Dec 2009 | Permalink
Brian Amble | No categories specified.

It hardly needs restating that securing an internship is a great way of gaining experience and often leads to a full-time position. So here's some advice. If you land a temporary role with a major-league financial institution, don't use it as an opportunity to dabble in a little illegal insider trading.

British student Matthew Uberoi must wish he had heeded this advice after he was jailed for a year for passing information about forthcoming merger and takeover deals to his father, who made nearly £110,000 from three stock market deals. Neel Uberoi, a 62 year-old dentist, was also jailed for his part in the scheme.

Matthew, who was just 21 at the time, was on a six-month placement with Hoare Govett, the brokers of Dutch bank ABN Amro, who were advising on the deals being announced.

Bizarrely, the younger Uberoi apparently used coded messages about Chinese food to send his father tips on forthcoming deals.

We suspect that a career in finance no longer beckons for him (but had this happened a few years ago, who knows?)

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Welcome to the new normal

10 Dec 2009 | Permalink
Philip Whiteley | Customer Service.

Traditionally, we look at organisations through the lens of their ownership structure and set-up. Are they mutual or shareholder-owned? Private or plc? Governmental or private sector? In discussion recently with Neela Bettridge from Article 13, I learned of a much more useful distinction: between those organisations where there is an 'It's not my job' mentality, versus those with a 'Let's get it done' mentality.

This is the crucial indicator that distinguishes a healthy, well performing organisation from a sick one. Of course, the one with the 'Let's get it done' approach may be heading in a mistaken direction, but it at least has some momentum, and is more likely to be adaptable.

You can only discover which culture the organisation has by getting in there and assessing it. The days when investors and others rely entirely upon superficial and proxy measures must surely be numbered. Reputation can be of little use as a guide.

I have recently had experience of the 'It's not my job' mentality from Virgin Media, a company supposedly built on customer service, but whose representatives simply did not bother to supply me with the promised broadband service, and didn't see it as their problem to fix it when I called.

This is appalling service – among the worst I've ever received – but it is just one example; one cannot make safe assumptions about the whole of Virgin based on this (though I shall write to Richard Branson and cancel other Virgin accounts).

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Suffering in silence

08 Dec 2009 | Permalink
Brian Amble | Bullying.

Bob Sutton, author of the indispensible book The No Asshole Rule, has a pretty unequivocal attitude towards the sort of appauling bosses who poison so many workplaces.

Asshole bosses, he believes, poison the work environment, decrease productivity, push qualified employees to quit and are therefore are detrimental to businesses, regardless of any individual effectiveness they might display. His solution is simple: they have to go.

That's great in theory, but as Sutton discusses in this thought-provoking post, it is not always possible. Indeed others argue that if you're unfortunate enough to work for an impossible boss, is your only option to suffer in silence until you can escape.

What makes this particular post so interesting is the lengthy list of comments and the huge variety of approaches that they discuss. We'd all applaud the sentiment that "you never, EVER surrender your dignity to anyone, for any reason," but as others point out, the reality – particularly in a recession –can leave many with no other choice but to suffer in silence.

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Tough challenge on soft skills

30 Nov 2009 | Permalink
Philip Whiteley | Communication.

I hosted a brilliant talk by Mary Louise Angoujard and Fiona Coleman at last week's Human Capital Forum. They illustrated how influential seemingly tiny matters of personal presentation can be, even at – or perhaps especially at – senior executive levels.

Intonation of words; confidence of presentation, even the angle at which we hold our heads as we talk, are hugely influential. This does not make us 'shallow', but rather shows how the whole of the message has to line up: content, delivery, belief, conviction, passion.

Mary Louise and Fiona, from Rapporta, also showed how our own limiting and empowering beliefs can respectively block or assist our delivery. And the truly fascinating part of this whole subject area is the paradox: to succeed in business; to become effective business partners if you're from an HR background (the context of yesterday's talk), you needed heightened skills of sensitivity and empathy. You need to put yourself in the shoes of the finance director and CEO.

This goes against all the traditional, cynical beliefs of business, as I hope to illustrate in Meet the New Boss.

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