Monday, 16 February 2015

A FEW ISSUES



Stop-start.  Ray O’Donoghue of Barclays says there has been growth across a broad range of industries in most regions of the UK.  He predicts six hotspots for 2015.  Birmingham, because of production capabilities and automotive sector.  Bristol, on account of strength in specialised engineering and position as a service centre.  Cardiff, due to the quality of its manufacturing.  Manchester, by virtue of creative strengths, pioneering scene of innovation and a strong base for financial services.  Thames Valley and Cambridge, through their progress in technology and sciences.  And, the oil and gas industries in Scotland. 

However, there are good reasons to expect ups and downs in the short and medium-term.  We are slowly coming out of the worst recession in living memory.  Britain is trying to get back on top of the deficit and funding difficulties.  The general election is soon, with the accompanying uncertainties.  There are global worries about the West’s relationship with Russia and instabilities in the Middle East.  We are in a digital revolution now.  It is a case of being part of it or left behind.  These changes will bring new business models and industries.

Legacy stuck in the past.  Back in the fifth century, Pseudo-Dionysius wrote the definitive book on angelic hierarchies, Ecclesiastical Hierarchy.  He said there were nine orders of hierarchy.  Obviously, God was at the top.  Then there were the most elevated archangels down to the humble messenger angels.  This analysis has filtered down to the way that management structures exist today.  Hierarchy was a principle of nature.

We now have management schools in universities across the world which teach the modern version of hierarchy.  Ideas on social order no longer begin with God, at least not explicitly.  But they certainly trade on the same assertions about where authority comes from: the top.  The teachings echo the medieval stances in many ways.  As Martin Parker says, it is safe to discuss empowerment, flat organisations and 360° appraisals, as long as the structures of power are not challenged.  Careful observers will have noticed that things are moving along.  For example, co-operatives, mutuals, social enterprises, community interest companies are on the tables for discussion.  Even by Government.

Plans to get another job.  A new survey by the Institute for Leadership and Management suggests that more than a third (37%) of workers plan to leave their jobs this year.  The key to minimising staff turnover is not as simple as throwing money at the problem.  The biggest reason people cited as a motivator for leaving was opportunity for progression (59%).  The eight major factors in decisions to seek other employment are:
  •  greater opportunity for progression (59%)
  •   higher pay (56%)
  •   more interesting job (50%)
  •   better management (30%)
  •   increased chance for training/development (27%)
  •   additional flexible working (18%)
  •   nicer people (5%)
  •   extra options for parental leave (3%).
‘I name this milk float ...’   One of the UK’s electronics firms reckon some time ago that it had developed a system to camouflage the ‘signature’ of a Challenger tank and a Land Rover to make them appear on an enemy’s radar as a milk float and a wheelbarrow.  Maybe a solution to the Government’s concern about expenditure on defence would be to make a milk float and a wheelbarrow look like a Challenger tank and a Land Rover?
That’s it. ‘Advice is what we ask for when we already know the answer but wish we didn’t.’ Erica Jong.  Quoted on The Browser and in The Week.

This is a surprise.  ‘Land monopoly is not the only monopoly, but it is by far the greatest of monopolies – it is a perpetual monopoly, and it is the mother of all forms of monopoly.  Unearned increments in land are not the only form of unearned or undeserved profit, but they are the principal form of unearned increment, and they are derived from processes which are not merely not beneficial, but positively detrimental to the general public.’ Winston S Churchill, 1909.

Monday, 2 February 2015

MANAGING REMAINS DIFFICULT



Interest rates into 2016.  The Bank of England’s Monetary Policy Committee (MPC) is showing concern about deflation. With bills for petrol and utilities falling, the Bank suggests there is a real chance of a drop in prices generally. Also, there is a risk of deep-seated low inflation. This prompts a wariness of raising interest rates in case such a decision would reduce momentum in the economy and push the downward trend in prices. Deutsche Bank has observed that there is a ‘considerable uncertainty for Western economies’. It is reasonable to assume central banks will use any signs of weaker results, including inflation, as grounds for retaining low interest rates. The Bank of England is unlikely to move before mid-2016. MoneyWeek has noted the fall of unemployment in December and that the number of claimants was down by 30,000. Wages moved up for a third month, with exclusions of unskilled/untrained people.  Inequality remains a drag on economic growth.

The board is broken? Jay Vaananen (Banker’s Umbrella) reckons if shareholders do not get a grip on companies’ power, there will be more Tescos. His conclusion deserves amplification and possibly action. Ever since the changing 80s, corporate managers have been successful in removing power from shareholders. Simultaneously, they preached the message of ‘shareholder value’ as their goal.  There were some positive outcomes. However, a look at the owners of listed firms shows that the largest shareholders are investment and pension funds. They rarely take an active stand on issues. The textbooks and specialised commentators argue that corporate boards keep a check on management of a business. This is not true. Closer examination reveals that there has been cross-pollination by chief executives and managing directors from other corporations.  Top managers oversee other top managers. This not a recipe for good governance and how do they find the time? There is beginning to be evidence that increased shareholders’ representation brings better results.  Moreover, the financial sector has given many examples of breakdowns in corporate governance and the sad impacts on employees and shareholders.

The internet affects economies.  The dramatic expansion in the use of the internet is a major factor in economic success.  It doubles every 100 days, says America’s government. Economists estimate that without the internet, inflation in the US would be higher than the present figure.  Consumers employ the internet for everything from buying shares and holidays to weekly shopping. Analysts predict an enormous rise in tax revenues as a result of these transactions.

Shifts in colleges and universities.  The PIE News (for professionals in international education) sets out seven emergent trends for this year.  These are:

1      More industry consolidation.
2      Increase in public/private partnerships (PPS).
3     Significant growth in access to higher education via pathway programmes and foundation courses.
4      Retention strategies will be more ‘professional’.
5  Elections in Denmark, Nigeria, Spain and Britain could signal changes in policies.
6      Apps in mobile education will rise.
7      Greater scrutiny of agents.

We all see it. ‘This is the terrifying paradox of zealotry: no one hates humanity more than those who believe they know what’s best for it.’ Howard Jacobson, in The Independent.

Preparation for a job.  ‘He knows nothing and he thinks he knows everything. That points clearly to a political career.’ George Bernard Shaw (1856-1950) Irish dramatist and critic.

Monday, 19 January 2015

ANOTHER SIDEWAYS LOOK



The medium is still the message.  The product is not everything.  What is conveyed by telephone, emails, letters, websites, sales people, a receptionist’s greeting?  The grumpy signals transmitted by contacts through which a buyer does business speak volumes.

Change or get changed. Back in the ‘80s, Japanese companies working closely with their government’s bureaucrats seemed to make unstoppable advances.  There were books, articles, pamphlets and courses telling us what to do.  Since the mid-90s, there has been non-stop decline.  The problem was in the links between manufacturers, the financial sector and government, which were regarded as strengths.  The stock market was riven with corruption, banks made imprudent loans – they were too close to say no.  The consequential difficulties were compounded by built-in weaknesses:  inflexible labour markets and a structure of power which left little room for entrepreneurs.  However, shintoist capitalism is getting its act together and introducing some openness.  Note the lessons.

..... or go bust.  Downsizing is a dreadful word and a troubling symbol of continuous change and relentless competition.  It emphasises a future that is not only difficult to predict but essentially unknowable.  The primary cause of downsizing is acknowledged rarely:  companies have more employees than they need or can afford to pay.  A vast majority of managers are not callous scrooges shouting ‘good riddance’ as they shove loyal workers through the door.  Generally, they are responding to a reality which demands they become more productive.

It’s all a bit odd.  Small businesses are told daily they play the primary part in rebuilding UK’s economy and assuring growth.  Leaders of the major political parties confirm this certainty and the government’s ministers devise plans to retain their contribution and enthusiasm.  Our Establishment honours entrepreneurs. They receive a significant proportion of awards and titles.  BUT, formal behaviour shows we do not trust them.  For example, there is an almost universal objection to the idea of privatising any of the National Health Service.  Maybe, we ought to consider actions of the admired Scandinavians?  The approach entails a pragmatic judgement on public services.  So long as they work, it does not matter who provides them.

Sounds familiar. ‘Insanity : doing the same thing over and over again and expecting different results.’ Albert Einstein.

And. ‘How many crimes committed merely because their authors could not endure being wrong!.’ Albert Camus (1913-60), French philosopher in ‘The Fall’.

Tuesday, 6 January 2015

INTO 2015

Issues for managers include:
  • handling disillusionment. Expect an extension of austerity after the general election in May 
  • dealing with politics going local as economics move more global 
  • balancing the impact of falling costs. There are losers and prospects of deflation in some countries 
  • responding to the inevitable increases in taxation of assets/wealth. They are more difficult to hide 
  • alleged decline in social mobility. This topic will attract political intervention 
  • discovery of unusual friends for the UK in Eastern Europe and the Middle East 
  • the ‘internet’ of things. Cisco estimates that 25 billion devices will be connected by the end of this year. Up from 12.5 billion in 2010 
  • the end of cash. UK Payments Council expects 2015 will be the year when payments by cash will become fewer than half of transactions.
Parliament of pain in May. None of the main political parties denies the certainty of sustained austerity. All tell us about the ‘tough choices’ ahead. Indeed, Chancellor George Osborne in his Autumn Statement sought to convert economic failure into political success. He asserted that only the Conservatives can be trusted to complete removal of the deficit. Labour has popped up with the slogan, ‘Big reform, not big spending.’ The Liberal Democrats split the difference by pledging to reduce the deficit faster than the opposition, but in a fairer way than the Tories. George Eaton has pointed out that, ‘Here the truth telling largely ends.’ No party is prepared to itemise the next dose of financial severity. There are short populist statements. Labour and the Conservatives respectively target the wealthy and welfare. But seeking to raise more from these sources is the politics of easy choices, not hard ones. The Institute for Fiscal Studies (IFS) suggests that £12 billion of additional consolidation will be needed simply to maintain cuts in departmental spending at their present delayed level. Senior politicians have not come close to revealing plans for bridging this gap. Is there an unstated conspiracy of silence? The reality of Britain’s fiscal situation is being hidden. 

The business of government has been modified. Managing an economy is no longer about ownership/control, but to assure the conditions for flourishing businesses. Companies rely on the absence of despotism, not on democracy. Oligarchy in one form or another has become a fashionable answer. Real opposition has withered on the vine throughout Europe. There are some signs of disenchantment. We can expect a continuing fall in the quality of public debate. Consensus is all the rage. 

Culture. We talk a lot about culture and blame it for many managerial ills and some successes. But nobody tells us the meaning of this word or situation. So here goes. Broadly speaking culture is the adhesive that binds people to their employer and guides their actions when hard and fast rules are ambiguous, insufficient or absent. When it does not work, the company/institution has got a problem. Opinions and behaviour get ingrained in every group/level – from structure of pay, methods of promotion and how people are recognised. Employees are likely to do what they think their managers approve. You can declare values and encourage particular behaviour, but if there is not a constant link between the two, failure will come your way. You are not walking the walk. Success is not immediate. Consistency with a desirable culture can be uncomfortable. The result of shortcomings is rarely criminality or malfeasance. Incompetence and confusion can be just as damaging. 

Good idea. ‘First learn the meaning of what you say, then speak.’ Epictetus (50 – 120 AD), Greek philosopher. 

That’s experience. 'Management by objectives works if you know the objectives. Ninety per cent of the time you don’t.' Peter Drucker, American commentator on management.