Wednesday, 25 November 2015


Praise at last.  The World Bank has published ‘Doing Business 2016 : Measuring Regulatory Quality and Efficiency’.  Britain has moved closer to its target of being one of the top five countries in which to do business.  Singapore and the UK in particular were applauded by the Bank for taking steps to cut red tape and remove administrative barriers.  The UK went up the table because of a reduction in corporation tax, lower employers’ national insurance costs and a fall in the number of days taken to start a business.  4.5 days is the present period.  20 days is the average worldwide.

Something to do?  With The Labour Party so weak in the House of Commons, an alternative check on the government is more valuable than ever. The Economist reminds us that the Lords has defeated the government 19 times since May, often with good reason. But, to act as a brake, they need clarity and a mandate. That means a written constitution to codify their powers, and election of its members. The Commons resists Lords reform for fear of a rival chamber with the legitimacy to challenge it—and then proceeds to scream foul whenever the Lords blocks legislation. If the tax-credits debacle provokes a rethink, it will be long overdue.

Robots and jobs.  The Bank of England’s chief economist, Andy Haldane, has suggested fifteen million jobs are at risk from artificial intelligence and advanced robotics. He made a major speech at the Trade Union Congress and said that unskilled and administrative tasks were in most danger from the ‘third industrial revolution’, but warned that the advance of technology is ‘hollowing out’ more and more of the labour market. ‘Machines have substituted not only for manual human tasks but cognitive ones too. The sets of skills machines could reproduce, at lower costs, has both widened and deepened.’ The implications are clear. ‘If the option of skilling-up is no longer available, this increases the prospect of large scale or un-or-under-employment. The wage premium for those occupying skilled positions could explode, further widening wage differentials.’ Haldane did not mention how long all this would take. Management Today has found that similar estimates have indicated a timespan of twenty-thirty years for this degree of displacement.  Our political masters would be wise to start thinking now.

Jobs miracle.  The figures have been looking better recently. Employment continues to rise and wages have started to move upwards. But dig a bit deeper. The picture depends upon who and where you are. Viewed from London, it is possible the situation looks marvellous. points out that good jobs are being created and lots of newcomers are arriving from abroad to fill them. In other parts of the country, people feel bemused when they hear the slump is over. The North-East, West Midlands, Yorkshire and the South East still have fewer full-time jobs than before 2008. If you were born in the UK and live in the North, you will have seen slow growth, at best, of employment. The gap might well have been filled with self-employment, much of it precarious and low-paid.
This might explain the presence of Ukip in these places. It’s not so much a case of immigrants ‘taking our jobs’ – most of the vacancies are in London and that’s where immigrants tend to go.  Do the unemployed wait for the magic.

Famous last words.  ‘There’s no chance that the iPhone is going to get any significant market share.  No chance.’ Steve Bulmer, chief executive of Microsoft, April 2007.

Muddle.  ‘The trouble with facts is that there are so many of them.’ Samuel McChord Crothers.  The Gentle Reader.

Tuesday, 10 November 2015


Watch the savings gap.  Deloitte has issued an update on the savings gap – the shortfall predicted between actual pension income and the money needed to live a comfortable life - which is currently at £250 billion in the UK.  This could rise to £350 billion by 2050, meaning that UK workers should, on average, each be saving an additional £10,000 a year.

Meanwhile the government is busy restricting the tax advantage of investing in a pension with tax relief tapering down to £10,000 for those with earnings of more than £150,000 a year from April 2016.  Further changes are mooted to increase the tax-take as government struggles to reduce expenditure. 
Beware of branders.  Colgate introduced a toothpaste in France called Cue, which was the name of a local pornographic magazine.  The name Coca-Cola in China was first rendered as Ke-kou-ke-la.  Unfortunately, Coke did not discover until thousands of signs had been printed that the phrase means 'bite the wax tadpole' or 'female horse stuffed with wax', depending on the dialect.  Coke then researched 40,000 Chinese characters and found a close phonetic equivalent, 'ko-kou-ko-le', which can be loosely translated as 'happiness in the mouth'.  Scandinavian manufacturer of vacuum cleaners, Electrolux, used the following in a US ad campaign: 'Nothing sucks like an Electrolux'. In Italy, a campaign for Schweppes Tonic Water translated the name into Schweppes Toilet Water.  Rolls-Royce was going to call a new model the Silver Mist, until it discovered that it means shit in German. The American slogan for Salem cigarettes, 'Salem-Feeling Free' got translated in the Japanese market into 'When smoking Salem, you feel so refreshed that your mind seems to be free and empty'.  Many years ago, Ford had a problem in Brazil when the Pinto flopped.  The company found out that the word Pinto is offensive Brazilian slang that mocks men. Ford removed all the nameplates and substituted 'Corcel', which means horse.

Geddit?  And current?  In December 1992, Neil Kinnock reflected on his policies as Labour leader, saying: "If it had been possible to have led the Labour Party of 1983 or 1987 or 1992 by Attlean acerbity, or Bevanite evangelism, Wilsonian wiliness or Callaghan bonhomie, then the task would have been much easier... In the event, however, the condition of the party made management an obligation, so I got on with it.

"It would have been useful to have had a neat and magnetic central theme... I have to say, however, as a matter of fact rather than self defence, that until as late as 1991 there was always a significant risk that any progressive lunge that was too big or too quick could have fractured the developing consensus... And as far as the central theme was concerned, I and others put repeatedly: ‘the purpose is to win’."

Ukip and worry.  The conventional political wisdom of the left said that Ukip was on the far right and largely a problem for the Conservatives.  Anyway, Nigel Farage’s ‘people’s army’ was stopped in its tracks when it won only one seat in the House of Commons in May and its leader failed to be elected for Thanet South.  Just a few unobservant activists believe this is the current situation.  Ukip’s supporters tend to have some leftish opinions.  They do not show concern about the state intervening in their lives.  Instead, they fear that government is not doing enough to protect them from the consequences of free-market globalisation – for example, mining, some manufacturing and steel.  They see freedom of movement inside the European Union as driving down wages and pushing-up competition for housing, school places, and maternity and health services.  The overall economic benefits can be abstract for those at the bottom of society.  The downsides are visible.  Could something similar to Scotland happen in the north of England?

The last word.  ‘Next Christmas the iPad will be dead, finished, gone, kaput.’ Sir Alan (now Lord) Sugar, in February 2005.  Business magnate and media personality.

The law.  ‘We do not get good laws to restrain bad people.  We get good people to restrain bad laws.’ G K Chesterton (1874 – 1936).  English essayist, novelist and critic.

Monday, 26 October 2015


Deflation for September. The UK returned to deflation last month. This is twice since April that prices fell, year-on-year. An annual rate of the consumer price index (CPI) moved to -0.1% from 0% for August. Before April, prices had not dropped since 1960. Unemployment went down to 5.4%, a new low since 2008. In the three months to August, employment rose by 140,000. The number of people in work, 31.1 million, was the highest since records began in 1971. These figures are good and bad news. The downsides reflect a lack of overall demand. Indebted firms and households become cautious. Retrenchment brings lower purchases. The other side of this proverbial coin has falling energy and food prices. This gives households a boost and together with increases in pay should lead to higher expenditure by consumers. It is feasible that recent predictions saying the Bank of England’s increase for interest rates is more than a year away will be wrong.

All-time record? But. This country’s motor manufacturers are on track to break the record by 2020 of 1.92 million cars a year. Such a forecast assumes there will not be more global shocks and we remain in the European Union (EU). The Society of Motor Manufacturers and Traders (SMMT) says that with more than 1.5 million cars built in the UK last year, plus higher productivity and increasing volumes towards the end of this decade, it is likely 1972’s record will be exceeded within five years. Additional jobs and a move to premium-end vehicles were possible outcomes as local investment of £2 billion to date in 2015 makes its impact. The report went on to say ‘. . . there is a clear danger that changes in manufacturing systems, which the UK will not be able to avoid, will place many existing and imminent new jobs at long-term risk.’ And later, ‘As a result, industry and government need to future-proof training and skills development and apprenticeships must prepare people for very different manufacturing environments . . .’

Appraisals away. The annual ritual is disliked by many employees and their managers.  Peter Cheese, chief executive for the Chartered Institute of Personnel and Development, suggests that among the drivers for a shift is a desire among younger workers for instantaneous feed-back, increasing fragmentation of the line manager’s job (with fewer people managed by a single individual) and a change in the opinions of human resources’ professionals who have seen the failings of performance management. Also, there is an overall wish to reduce the number of processes imposed on organisations. Accenture announced in July it was scrapping annual appraisals for its 300,000-plus workforce.  Deloitte is piloting other options in its US-based offices. Microsoft, Gap and Expedia are moving towards less formal and more frequent methods accompanied by faster action. Facebook, Google and Netflix have bypassed the conventional approaches. Sheila Heen, co-author of ‘Thanks for the Feedback’, reckons people seek three types of response: appreciation, coaching and evaluation. Traditional appraisals tend to muddle them together. Of course, and properly, there are no intentions to abandon measurement and management of performances.

Excellence.  The UK is the world’s largest net exporter of financial services, with the City of London as frontrunner. This country has a creditable $95 billion (£61.2 billion) of net exports, nearly twice as high as it was worth in 2005. Second in the table was America at $36 billion, then Switzerland ($24 billion), Luxembourg ($23 billion) and Singapore ($15 billion).

Pay-back. ‘We have no more right to consume happiness without producing it than to consume wealth without producing it.’  George Bernard Shaw (1856 - 1950). Irish dramatist and critic.

Reach for the top! ‘Nothing is impossible for the man who doesn’t have to do it himself.’     A H Weiler. American newspaperman and former editor of The New York Times.

Graffitti project:

'Woman's faults are many,
Men have only two:
Everything they say
And everything they do.'


'When in doubt, do what the chairman does.  Guess.'

Monday, 12 October 2015


Productivity.  Economists tell us we ought to be worried about the UK’s productivity, especially in manufacturing.  What is it?  Put simply, it is the financial output per unit of input (usually labour). The government uses either Gross Domestic Product (GDP) or gross added value divided by total hours worked. Managing a business is more nuanced than this formula. Martin Wheatcroft points out that we might choose to reduce efficiencies to meet strategic goals faster. Or improve services for customers to assure retention over the long-term. The managers your scribe admires give constant attention to profitability, return on investment, quality, customer-service and completion of action plans on time. All of this is accompanied by creating an ability, including skills, to generate even better results for the future.

Trouble?  Lina Saigol (Financial Times) has concluded that ‘Rainmakers with bonuses riding on the number of deals they push through insist the merger and acquisitions party has only just started’. Chief executives devoted to creating megadeals have already entered a ‘cycle of excess’. Buyers are paying around twelve times the earnings of their targeted companies.  This is above the dizzy heights of the dotcom boom. Debt to finance the deals has exceeded a record at £290 billion, almost three times the same period last year. Paying too much can be hidden in a rising market, with cheap funds on demand. When interest rates rise the camouflage will disappear. These major transactions do not have a successful history, other than for executives who cash-in their options before the crash and investment bankers who are paid substantial sums for advice. Will the ‘too big to fail’ defence be collected from the major banks?

It can only get worse for the high streets.  There are hazards for profitable sales. A crash in PR China. America’s Federal Reserve getting round to raising interest rates. Continuing downward pressures on commodity prices. A raft of corporate defaults. Closer to home there are likelihoods of collapses in retailing. The banks have huge exposure to the sector and even more to the property companies which find themselves with fewer tenants and lower rents. Squeezes on cashflow look certain.  We have heard in recent years about crises on the high streets.  The blunt truth is that the serious difficulties are only just getting underway.  There is more pain ahead for both retailers and their investors.

Standards. The British Standards Institution (BSI) has published its new standard for managing people. The title is: BS76000, Human resource – Valuing people – Management system – Requirements and guidance. It is based upon recognising the inherent importance of people at a workplace. The standard is relevant to all organisations with employees, volunteers or temporary staff.  BSI says ‘Businesses that demonstrate this understanding are increasing their attractiveness as employers. Not only is this a great way to draw and keep the best talent, it raises the bar and boosts reputation’. Some managers might wonder if the initiative will be pushing systems and processes a bit too far.

Been rumbled!  ‘Facts are stubborn things.  Statistics are more pliable.’ Mark Twain (1835-1910).  American author and humorist.  Pen name of Langhorne Clemens.

Wise actions.  ‘Almost all quality improvement comes via simplification of design, manufacturing, layout, processes and procedures’.  Tom Peters. Born in 1942.  Joint author of ‘In Search of Excellence’. Advocate of empowerment at all levels in an organisation.

Good analysis.  ‘To see ourselves as others see us is a salutary gift.  Hardly less important is the capacity to see others as they see themselves.’ Aldous Huxley (1894-1963). English novelist and essayist.

Monday, 28 September 2015


Continental Europe.  For a change, there has been some good news from the eurozone in recent weeks. Services and manufacturing have been at their highest performances for four years.  Spain’s economy went up by 1%, with stagnation in France. Germany achieved exports at €103.4 billion in July, a new record. Life will become difficult for the eurozone if China suffers a slowdown. Germany accounts for nearly half of the European Union’s exports to China. She is driver of eurozone and accounts for about 30% of the territory’s GDP. Capital Economics points out that many of its exports create demand for products from other eurozone countries. The president of the European Central Bank might have to reintroduce quantitative easing (‘printing of money’) if growth goes down and inflation stays weak. Mind you, that would be good news for European equities.

A crisis for housing. Yes, there is one and it is a good example of what happens where our kind of democracy wobbles. Everyone says s/he supports the building of affordable homes. Most of them do not want such initiatives to be taken where they live. Green fields and Green Belts near cities are untouchable. Governments are faced with the danger of losing votes and stimulating protests in those parts of the country where people most want to live and work. They have avoided the issues year-in and year-out.  One after the other. Of course, the changing demography of Britain is a large part of the problem. Not only more people, but older ones and many living alone.  Immigration is a factor, but only a small one.  The difficulties cannot be solved without central government. This is the one institution which can set the balance between national needs and local planning. Or construct railways and roads so that people can easily live in one place and work elsewhere.

Disconnect. Between programmes for learning and development of employees.  This is one conclusion of a survey by The Cegos Group.  It covered 600 directors of human resources and 2,500 employees in Britain, France, Germany, Italy and Spain.  84% of the directors said training is becoming increasingly digitised. They use e-learning modules, virtual classrooms and web conferences.  Massive Online Open Courses (MOOCs), Small Private Online Courses (SPOCs) and Corporate Online Open Courses (COOCs) have a growing importance.  Of those asked, 62% across the five countries said computerisation was one method for reducing costs.  There is not a reduction in satisfactory results.  Of course, individual learning and group-based training remain the largest, if diminishing choice.

Society is changing.  We have less time and additional people in work – for longer hours. As customers, we have more products available to us, extra information and a baffling range of accesses to it and means to make purchases. We can shop at all hours, do banking on the move, research for a new car on the internet and book travel through television.  Relationships with loyal buyers are recognised increasingly as the only reliable source of competitive advantage and primary component of corporate survival and long-term profitability.  The better we know our customers, the better we serve them and the longer we benefit from their loyalty. Tomorrow’s winners are listening to their customers at every opportunity to understand their needs and wants, create personalised messages and offers, and react with them on their terms – wherever, whenever and however they choose.  It’s ‘hear today or gone tomorrow’.  If we don’t listen to customers we will lose them to someone who does.  After all, our competitors are just a click away.

A real danger.  Business has only two functions – marketing and innovation.  The modern corporation is a political institution; its purpose is the creation of legitimate power in the industrial sphere.’  Peter Drucker; academic/economist, author of successful books on management, professor of social sciences at the Claremont Graduate School in California from 1972. 

And it works.  ‘The only way to convert the heathen is to travel into the jungle.’ Lane Kirkland;  an American trade unionist in 1980, on working with capitalists.