Monday, 26 September 2016


Forecasts.  The Organisation for Economic Co-operation and Development (OECD) is the rich countries’ talking shop.  It has just published forecasts for the UK.  The major feature is that weak growth in trade and financial distortions are worsening slow global economic growth.  John Ashcroft points out that unusually low – and sometimes negative – interest rates are distorting financial markets and increasing risk across the financial systems.

‘Brexit means Brexit’ our new Prime Minister declares. But non-one is brave enough to give us a definition, other than it is the UK’s withdrawal from the European Union.  Propaganda is trying to convince us that there has been no damage to the economy since the Government’s announcement of its decision. Figures on the economy challenge the claim. Living standards have fallen. The international purchasing power of the UK fell immediately as the pound depreciated in the wake of the referendum’s result. The Bank of England’s measure of the value of the currency has fallen by 15% or so since the poll. Such a fall will lead to higher prices.

The unexpected result.  The Office of National Statistics has reported that 29% of graduates last year are earning less per hour than a non-graduate who had taken an apprenticeship.  This figure is up from 25% in 2014.

Footall in England.  Mark Halsey is a respected and admired referee of matches in the Premier League.  This is the most watched league in the world, a product that generates substantial revenue and profits. The intense competition creates significant pressure on clubs, managers and players to get positive results. Mr Halsey has claimed he was told to state he had not seen in incident in a game he was officiating in 2011 between Stoke City and Blackburn Rovers, in order to make sure that the offending player was punished after the fixture. This admission prompted immediate denials, confirmations and debate. There are now good reasons to reconsider the management, networks and protocols relating to referees in England.

Confirms our suspicions?  ‘Alcohol enables Parliament to do things at 11 at night that no sane person would do at 11 in the morning.’ George Bernard Shaw (1850-1950), Irish dramatist and critic.

The battle.  ‘Class distinctions do not die; they merely learn new ways of expressing themselves.’ Richard Hoggart (1918-2014), British academic in sociology, English literature and cultural studies.

Wednesday, 14 September 2016


British investment in America.  Confederation of British Industry (CBI) has published the eighth edition of Sterling Assets, its annual survey of British investment in the United States.  The report highlights this country’s position as the largest foreign investor, employing over one million Americans. British businesses create jobs in every state. Texas leads the way – with 102,000 of jobs supported by British companies – followed by California and New York.

‘Brexit means Brexit’.  That was the crisp statement from Prime Minister Theresa May. It does not help those citizens employed outside the Westminster bubble. The biggest concern of many managers is that Brexit will be seen as something easy to do.  There is pressure to cut the UK’s ties quickly, but there is a lot of devil in the detail.  A terrible error would be for post-Brexit UK to use its newly-found powers unwisely.  The specialist Secretaries of State (Rt Hon David Davis MP and Rt Hon Liam Fox MP) must show a desire to reduce red tape.

Agility.  Managers face the constant demand for corporate agility. The HR Magazine points to several enemies of effective action. These include : Hierarchical structures which hide how a business actually functions day to day. Organisational politics. Treating change as a destination. Absence of clear purpose. Fixed or too prescriptive job descriptions. Sub-standard managerial practices.

Traingate in August. Rt Hon Jeremy Corbyn MP (since 1983) is leader of the Labour Party. He has encountered the difficulties of a big jump from lone protestor to a collective motivator, who eschews spin of any kind. The media and their users watched Mr Corbyn and his aides reveal they were unable to stage a photograph opportunity. His sitting on the floor in a corridor of a Virgin train was explained by a trivial untruth. Basic research would have shown that the 11.00 am from Kings Cross to Newcastle is never overcrowded. The alleged lack of available seats was claimed to be part of the major case for nationalising railways.

Do politicians tell lies? Donald Trump has introduced them to new approaches.  The Economist says he is the leading exponent of ‘post-truth’ politics. This is a reliance on assertions that ‘feel true’ but have no basis in fact. His brazenness is not punished, but taken as evidence of his willingness to stand up to elite power. This is a worrying situation. Strong democracies can draw on inbuilt defences against post-truth. Authoritarian regimes are more vulnerable. For them, the novelty of post-truth may lead back to old-fashioned oppression.

Of course.  ‘The older I get, the better I used to be.’ Connie Hawkins, baseball star.  Quoted in Harper’s Magazine and TheWeek.

And again.  ‘When a stupid man is doing something he is ashamed of, he always declares that is his duty.’ George Bernard Shaw (1850 – 1950), Irish dramatist and critic.

Tuesday, 30 August 2016


Quantitative easing (QE). The Bank of England’s latest programme has hit a proverbial brick wall. The plan was to buy £1.17 billion of long-dated gilts. Not enough bondholders wished to sell, despite the Bank being prepared to pay prices well above those in the market. What’s going on? Pension funds and insurance companies are keen to have the payments from bonds. They especially want long-dated paper, which helps them to match their liabilities with almost guaranteed income. However, reinvestment of funds at historically low and consistently falling interest rates and yields are not attractive options. Investors are worried that they will end-up with too little money to cover payouts in the future. In other words, HM Government’s plan for quantitative easing faces major difficulties caused by earlier quantitative easing.

Getting better. Orders for the UK’s exports were higher in August than each of the previous two years. This reduced fears of a further fall in manufacturing. The Confederation of British Industry’s (CBI) industrial survey found that demands for 505 of this country’s largest exporters had risen to their highest level since 2014. 21% reported orders at above their normal levels. The CBI said the major factor in the figures was by chemicals’ manufacturers, which accounted for over half the increase. Of course, the weakness of the pound has helped these companies, but pushes up costs and prices. Capital Economics reckons the results are a reason to be ‘tentatively optimistic’ about outlooks for the UK’s economy.

Innovation is a much-used word. Our government loves it. The UK has been ranked third, after Switzerland and Sweden, in the World Economic Forums’ Global Innovation Index for 2016. This country was second last year and scores ‘highly for infrastructure, as well as market sophistication and creative outputs.’ This index is produced by the World Intellectual Property Organisation (WIPO), Cornell University and INSEAD. The group assesses 128 of the largest economies.

Decisions, decisions, decisions. All decisions should be made as near to the action as possible. The charge of the Light Brigade was ordered by an officer who was not looking at the territory. There are two kinds of decisions: those which are expensive to change, and the rest. A decision on relocation from Manchester to Cardiff must not be made hastily. Nor should one to build the self-drive motor car. Plenty of contributions from operating people and specialists are important, too. But the common or garden decisions ought to be made quickly. Brand of pencil and times for canteen can be decided in three seconds and changed at little cost later. The company might lose a lot of business while you oscillate between blue and white coffee cups.

A warning. ‘Education costs money. But then so does ignorance.’ Claus Moser. British statistician. Quoted in and in MoneyWeek.

The future. ‘That period of time in which our affairs prosper, our friends are true and our happiness is assured.’ Ambrose Bierce, 1842 - 1914.  American journalist and humorist.

Monday, 15 August 2016


Carney’s cut.  The Bank of England recently reduced its interest rate to an historic low of 0.25%. This is the first change since height of the financial crisis in 2009. Governor, Mark Carney, said the action was needed to ‘cushion’ the impact of the decision to leave the European Union (Brexit) and avert recession. He announced also a £60 billion increase in the Bank’s programme of ‘quantitative easing’ to pump more money into the economy, and the creation of a new £100 billion fund to encourage cheaper lending by commercial banks.  These plans confirm the view of most economists that Brexit has hit the economy hard. The Times said ‘the Bank has very limited ability to compensate for this’. Mr Carney insisted Britain can ‘handle’ these difficulties.

UK and information technology.  Helen Margetts (University of Oxford) points out that the Government’s use of IT has lagged behind other countries until recently. Low penetration of digitised services made them expensive and inefficient. They were often handicapped by complex legacies of networks and systems. Some of them went back to the 1970s. Installation of long-promised ‘digital era government’ became mixed in a series of large projects. They were huge in terms of cost, scope and timescale and bigger than any others throughout the world. These ventures were delivered by the same handful of computer consulting firms that rarely saw challenges to their hold on publicly-funded contracts. Departmental silos in the civil service and local authorities ensured there were few economies of scale and the failures of shared services. HM Treasury negotiated with departments individually for their expenditures on IT. There is evidence of some lessons being learned.

Economic trends shaping society.  Many developing countries are experiencing a rise in total employment. In most cases this is explained by the growing number of women in the workforces. Increases in credit and debt reduce confidence. There is a feeling the world could soon face another financial crisis. One sign is the Bank of England has a target at 2% for inflation. There is not any, despite the fact that some inflation is good for us. There is a boom in transportation – railways and airways grew globally in 2015. Sales of motor vehicles continue to rise. Another key trend is increasing poverty of young adults. And housing is a major issue for this group. The higher number of low-paid jobs has led to additional claims for welfare benefits and challenges to the government’s aims to reduce expenditure. Politicians are giving priorities to the needs of older people to reduce outgoings. Are young people paying the price? Will inequality widen?

Boom and bust for UK’s universities? The removal of controls on the number of admissions to each university in England has caused a scramble for students from both home and abroad. Retention of market share is a major factor. This country’s decision to leave the European Union will pour doubt upon the strategy. A report from the Russell Group of universities says its 24 members planned to invest £9 billion between 2012 – 13 and 2016 – 17 on building projects. The Higher Education Statistics Agency (HESA) has revealed that around £3.7 billion was spent in 2014 – 15 by British higher education institutions. Of course, some were entering a beauty contest to avoid being rejected as an ugly duckling.

The Association of Directors of Estate found that 67% of prospective students viewed facilities as crucial when choosing where to study. Universities are funding these expenditures through various sources, including accumulated surpluses, bank loans, public bonds, partnerships and donations. Kerry Barker points to a shift to debt. Demographics and our decision to leave the European Union (Brexit) bring more risk to the managerial table. The availability of 18-year-olds is going down and will continue to do so for several years. There are fewer students to go round. Also, bear in mind the doubts about the recruitment of students from the European Union. The UK Council for International Student Affairs estimated there were 107,925 full-time, non-UK EU students in the UK’s higher education in 2014 – 15. This would yield an income in the order of £1 billion a year. There are worrying signs that students from the EU will regard post-Brexit Britain as a less attractive place. There is room for innovation and marketing.

Five lessons from last season’s soccer are:  seize upon competitors’ weaknesses; break from conventional wisdom; money does not buy success; employ older and experienced workers; and never give up. Even if you are not successful immediately, keep plugging away.

Been there. ‘The single biggest problem in communication is the illusion that it has taken place.’ George Bernard Shaw, 1856 - 1950. Irish dramatist and critic. Nobel Prize winner.

Monday, 1 August 2016


Interest rates.  Nat West Bank is owned by the Royal Bank of Scotland.  It has just warned business customers that it might start negative interest rates. The reality of such a decision would be the bank charges customers for holding their money.  This is partly due to fears that the Bank of England’s base rate could turn to a minus figure.  Moves in this direction have happened already in several countries around the world. For example, Denmark, Finland, Germany, Holland, Japan and Switzerland.  More than $10 trillion of bonds trade at yields below zero.

Executive pay under scrutiny. The Executive Remuneration Working Group of the Chartered Institute of Personnel and Development (CIPD) is chaired by Nigel Wilson, chief executive of Legal and General Group. This influential committee has called for more transparency in the way senior managers/executives/directors are rewarded and intends to recommend wider disclosure of ratios in pay.  Also, businesses should end any reliance on long-term incentive plans (LTIPs). This is a bid to simplify and reduce the size of remuneration for executives. The approach is supported by some of this country’s largest shareholders and investors. Stefan Stern, director of the High Pay Centre, has said a greater proportion of chief executives’ salaries should be fixed and cash is preferable to shares in bonus schemes. ‘Performance-related pay is hard to operate successfully. To claim one individual has effectively been solely responsible for a big company’s performance is ridiculous. People are free to buy shares in their company, but to use them in pay is flawed.’ Research by the CIPD last year found that six in ten employees believed the high level of pay to chief executives across the UK demotivated them at work. Dr Almuth McDowall (Birkbeck University) has added that executive pay has risen beyond effective sums. Watch this space.

Know thyself.  Research in America shows that eight out of ten subordinates have a more accurate opinion of a manager’s performance than her/his own boss. The survey questioned 1,100 people from seventy firms, many are in Fortune’s top 500.  None of this is new.  Protective pyramids at employers have prevented reliable access to informed comments.  A manager should earn her/his mandate. And it’s not about popularity. Leaders make you feel different, not always better.

Pensions, again. The Intergenerational Foundation says employers in the UK spend twenty times more on direct benefit schemes than on defined contribution ones. And this is an advantage for only one-third of eligible people. The calculation concludes that around £42 billion is paid into defined benefit schemes, compared to £1.8 billion for those based upon defined contributions. The Foundation recommends a change in the measure of inflation, removal of ‘fair value’ from presentation of deficits in balance sheets and cessation of the tax-free lump sum for members of defined benefit schemes.

Leadership. Leadership seems to be discussed seriously when it is absent. Your scribe notes that those who think about it a lot are not leaders. Natural leaders are those who do not reflect on leadership, but have never considered any other position.

Be careful. ‘Always remember that the crowd that applauds your coronation is the same crowd that will applaud your beheading.’ Sir Terry Pratchett, 1948 - 2015. English novelist. More than 85 million books sold worldwide in 37 languages.

Think ahead. ‘The art of statesmanship consists as much in foreseeing as in doing.’ John Bright, 1811 – 1889. A Quaker, British radical and Liberal statesman. President of the Board of Trade, 1868 – 1871.