Be the Best in Business

What Is the Strategic Role of the CSR Manager?

2012-03-04T19:08:00.000+02:00

In their 2009 article, Mario Molteni and Matteo Pedrini “presentan analysis of the organisational position, educational background andactivities of Corporate Social Responsibility (CSR) professionals. The resultssuggest that CSR managers: l) have a growing relevance in the firm; 2) arepredominantly existing members of the organization; 3) have principally abusiness management educational background; and 4) play a key role insupporting senior management and improving stakeholder engagement. It emergesthat CSR managers are supporting senior management in different manners. The"CSR Manager Map" allows for the identification of four types of CSRmanager: (1) Specialist; (2) Generalist; (3) Process oriented; (4) Externallyoriented,” (p.26).

What’s interesting in general business debates is that thereappears little doubt that corporate social responsibility is an activity thatmost agree is both required in today’s society and at the same time, still,sadly lacking. Yet when it comes to discussions about the function itself, theposition of CSR Manager, for some reason, isn’t considered as ‘attractive’ asother positions within an organisational set-up – hence not attracting the besttalent. This contradiction might be one simple reason why CSR isn’t taking holdin organisational strategy quick enough and is a reason that needs to beaddressed.

The proposition that firms are responsible for the effectsproduced by their activities on stakeholders and society is becoming moreextensive year by year and as such Corporate Social Responsibility (CSR)represents a very real strategic issue for executives and academics. There iswidespread acknowledgement that CSR can take a variety of forms, andsignificant efforts have been devoted to developing theoretical frameworks forCSR issues and practices. Currently though, this effort is surrounded by muchthe same ambiguity as it was 30 years ago (see Sethi. 1979); (Molteni andPedrini, 2009, p.26).

CSR should attract the top business minds and those with areal entrepreneurial spirit, and great strategic vision. CSR has been shown toadd real value to an organisation and does offer a competitive advantage, ifonly slightly. Research has shown that this trend will increase over time andthus organisations need to get the best talent into CSR to maximise the realbenefits for their stakeholders, their community and their ownorganisation.

Molteni and Pedrini highlight how the importance of theeffects of CSR implementation requires that the CSR manager cover three key roles;

(1) The sensor of social and environmental changes bothlocally and nationally. Where the CSR manager weighs sustainability issues indecision making and aids strategy makers in thinking about their industriesongoing social and environmental trends. The manager has to collaborate withthe board and CEO in strategy development (Molteni, 2006);

(2) The integrator of those engaged in the CSR implementationteam. Where the CSR manager provides the cohesion between the multiple internalactors involved in CSR implementation. He or she assures that diverse membersof the firm contribute to a unique strategic plan (Panwar et al., 2006). Andwhere the implementation path requires a team composed of experts from each ofthe firm's functions that work in close contact with the senior management; and

(3) The expert in CSR issues and practices. Where the CSRmanager needs to be an ‘expert’ in those practices which translate intoexpressions of responsibility towards their stakeholders and the community,(Hess, Rogovsky & Dunfee, 2002), (p.27).

When you look at the areas CSR influences, one can begin tosee that this isn’t a ‘nice-to-have’ function, but a function that adds significantvalue at the highest level of the organisation. Molteni and Pedrini state how,“a large range of new tools and practices have emerged as direct expressions ofCSR. The presentation of an exhaustive list of practices regarding theresponsibility of a corporation in society appears difficult, but that aclassification of the CSR manager's tasks by universally recognized categoriesof CSR issues is possible. (Tborne McAlister. Ferrell & Ferrell, 2005).Where these CSR issues are:

(1) The integration of CSR in strategy and decision making;

(2) The extension of corporate governance;

(3) Responsible supply chain management;

(4) Social accountability;

(5) Socially responsible investing;

(6) Philanthropy and business in the community;

(7) Environmental management;

(8) Corporate welfare, (p.27).

CSR is an area all organisations need to revisit andre-assess, not just the roles and responsibilities of the function, but the‘talent’ they need to optimise the outputs from this valuable function.

As Molteni and Pedrini conclude “the CSR manager can playdiverse roles in CSR implementation. In some cases they are directly in chargeof the management of one or more CSR practices and assume the role ofprofessional. In other cases they coordinate the activities related to CSRissues that have an impact on internal processes or on external stakeholderopinion. Although the role may vary, it is clear that his job determines theefficiency of CSR implementation. The CSR manager's role is fundamental fortransforming executive strategy into operational activities, and, in otherwords, in establishing a new stakeholder culture in the firm,” (p.36).

So do you need to re-look at your CSR role and make it a‘best in class’ position?

References:

Molteni, M. and Pedrini, M. (2009). The CorporateSocial Responsibility Manager Map. Corporate Ownership & Control, Vol. 6Issue 3, p. 26-38.

Sethi, S.P. (1979). A Conceptual Framework for EnvironmentalAnalysis of Social Issues and Evaluation of Business Response Patterns. Academy of Management Review, 4(1), pp. 63.

How Does Your Organisation Approach the Subject of Stress?

2012-02-26T19:21:00.000+02:00

Raymond Randall, Karina Nielson and Sturle Tyedt (2009)wrote that “in current European legislation there is a clear emphasis on theuse of organizational-level interventions (changes in the design, organization,and management of work) as a way of improving working conditions and tacklingproblems such as work stress. Research has shown that these interventions canhave very powerful effects on employee satisfaction and well-being (Bond,Flaxman, & Loivette, 2006; Elo, Ervasti, & Mattila, 2008; Semmer,2006).

But what is happening in practice? ‘Stress’ can be one ofthe most misunderstood words in business today – you’ll have people reading thiswho will claim to thrive on stress, implying that they need stress to performat their best. Yet it’s not actually stress they strive on – but a challenge,sometimes under pressure – also at a stage when the ‘excited’ individual isn’tstressed in the first place. You’ll have other’s who will feel stressed butwill be too scared or nervous to talk about it within their organisation –firstly, not really knowing who they would talk to about it.

Then you’ll have a few, a small few, who work within anorganisational culture where the negative impact of stress on an employee’sperformance is recognised and ‘open’ internal systems exist to deal with stressrelated issues. Where these issues can stem from work and/or personal basedissues – but where the most common cause of stress, by far, is organisationalchange.

Of course it doesn’t help that in today’s business worldchange is the rule not the exception – so preparing for and managing potential‘stress-related activities’ should be one skill organisational management, atall levels, are equipped to deal with. But although managing change is a coretopic of many training and development courses – it still seems to be an areawhere management and leadership are sadly lacking.

I’m old fashioned, so always suggest to leaders who are aboutto implement change programmes that they treat others like they would like tobe treated themselves – but sometimes this falls on deaf ears. It’s unfortunatethat some leaders still prefer to use the gung-ho approach, using power andthreats to ‘force’ change on the organisation. In fact it’s my belief that onereason ‘leaders’ use this ‘power’ approach to change is that they are already‘stressed’ themselves and they find the use of power a ‘release’ from some ofthe stress – weird but true.

As Randall, Nielson and Tydet mention “participation plays amajor role in well-known stress intervention theories such as the German HealthCircles (Aust & Ducki, 2004) and risk management approaches to work stress(e.g. Cox et al., 2000). Participation may help to ensure employee buy-in andcommitment and make use of employees’ expertise, thus improving the chances ofintervention success (Kompier, Cooper, & Geurts, 2000; Kompier, Geurts,Grundemann, Vink, & Smulders, 1998). Line managers also appear to play animportant role in the implementation of many organizational-level stressmanagement interventions (Donaldson-Feilder, Yarker, & Lewis, 2008).Previous research suggests that the line manager is important in the communicationprocesses that underpin and determine the impact of changes (Jimmieson, Terry,& Callan, 2004). Line managers help to keep employees up-to-date aboutanticipated events, the consequences of change and employees new work roles(Øyum, Kvernberg Andersen, Pettersen Buvik, Knutstad, & Skarholt, 2006). Forexample, a study on downsizing found that information helped to reduce uncertaintyand anxiety, whereas poor communication was related to absenteeism and turnover(Johnson, Bernhagen, Miller, & Allen, 1996),” (p.4).

With many organisations still suffering from the effects ofthe global meltdown – stress levels are already high in many organisations –where uncertainty about the future doesn’t help. When the change comes - whichit has to for many organisations to survive – often it’s the simple lack ofcommunication that causes the employees to start the negative rumours on thecorporate grapevine – that just adds to the already underlying stresses withinthe organisation.

Randall, Nielson and Tydet also highlight how “quantitativemeasures of readiness for change have been used in a variety of organizationalchange interventions. Readiness for change is usually conceptualized ascontaining capability and motivation components that can be measured at an organizationalor individual level (Weiner, Amick, & Lee, 2008). Such measures show some,albeit inconsistent, predictive validity in relation to change outcomes (Weineret al., 2008). To date, these measures have not been used in the evaluation of organizational-levelstress management interventions. However, several qualitative processevaluation studies of stress management interventions have discussed the importanceof organizational and individual capability and motivation to change (Nytrø etal., 2000; Saksvik et al., 2002). In addition some authors have mentioned therole of employees’ previous experiences of similar interventions in determiningtheir response to subsequent interventions (Saksvik et al., 2002; Theberge,Granzow, Cole, Laing, & The Ergonomic Intervention Evaluation ResearchGroup, 2006),” (p.4).

So what the business world needs today are executives and managers whoare sensitive to the ‘mood’ of the organisation and who can identify ‘stress’when it appears and develop one-on-one interventions to deal with it. Thepayback is huge, as you’ll have an organisation focused on change, with adedicated support system to see the process through. A top team that recognisesthat stress harms productivity and motivation – and that if they take atransformational approach to change they can ‘lead’ the organisation through theprocess with ‘everyone’ on board and intact.

It’s organisations with these cultures instilled in theleadership and management functions that will lead the business communitythrough the 21^st century.

References

Randall, R., Nielsen, K. and Tvedt, S. D. (2009). Thedevelopment of five scales to measure employees' appraisals oforganizational-level stress management interventions. Work & Stress; Vol.23 Issue 1, p.1-23.

Are You Maximising the Opportunities from Non-Traditional Media?

2012-02-19T18:55:00.000+02:00

As suggested in a NYTimes (2007) article headline: “Anywhere the eye can see, it’s nowlikely to see an ad.” The creative potential of non-traditional media solutionsis being recognized by advertisers all over the world, as evidenced by thedevelopment of specific categories promoting non-traditional media ininternational advertising award shows such as, for example, Cannes Lions.

Micael Dahlén arguesthat “a non-traditional medium can be a (visual) rhetorical figure, morespecifically a metaphor. The rhetorical perspective suggests that the manner inwhich a statement is expressed may actually be more important than itspropositional content,” (p.14).

It might be important to pause and define the term‘rhetorical figure’ which simply means ‘a figure of speech’ – where, a figureof speech is the use of a word or words diverging from its usual meaning. Figures of speech often provide emphasis,freshness of expression, or clarity. However, it’s worth noting that claritymay also suffer from their use, as any figure of speech introduces an ambiguitybetween literal and figurative interpretation. Rhetoric originated as the studyof the ways in which a source text can be transformed to suit the goals of theperson reusing the material. For this goal, classical rhetoric detected fourfundamental operations that can be used to transform a sentence or a largerportion of a text: expansion, abridgement, switching, and transferring. Theadvertising industry has taken the rhetorical figure and expanded it fromsimple text to a visual display that does exactly the same thing and creates ‘afreshness of expression’ that allows the ‘viewer’ to form different ‘messages’in their mind.

Dahlén argues that, “in terms of rhetorical figures, anon-traditional medium would be best defined as a visual metaphor, which is oneof the most powerful rhetorical figures. Visual figures are more effective thanverbal figures because they are entirely implicit; creating an openness andambiguity that invites consumers to ‘leap to conclusions’. Furthermore,metaphors are under-coded (i.e., they provide no explanation), and thereforerequire consumers to add pieces to solve the puzzle. When the non-traditionalmedium works as a metaphor for the brand, the consumer experiences the messagethrough the medium, (p.14)

It’s worth remembering that “brand reputation can be definedas the ‘goodwill’ consumers ascribe to a brand based on their previousexperiences of the brand and its visibility in the marketplace. In other words,the reputation is a historical notion of the brand’s past behaviours thatguides consumer response when they encounter the brand.” It won’t be surprisingto find that “research shows that a brand’s reputation affects its advertisingeffectiveness, so that advertising for a low reputation brand has less impact,is counter-argued more, and interpreted less favourably (Mitra and Golder 2006)than advertising for high-reputation brands,” (p.14).

Research has also shown that when faced with rhetoricalfigures in advertising, consumers try to ‘think into it’ and figure out whatthe advertiser wants to convey (Phillips 1997). As when using rhetoricalfigures there is no explicit connection between the metaphor and the brand, andhence consumers tend to produce a number of alternative, tentative,conclusions, so-called ‘weak implicatures’, (Dahlén, 2009, p.15).

To highlight this aspect McQuarrie and Phillips (2005)suggest that the resulting ‘weak implicatures’ could best be described asgood-faith attempts to understand the message. That is, consumers tend tosearch for and find positive rather than negative aspects in rhetoricalfigures. This focus on positive aspects of the advertising, in turn, reducesthe cognitive capacity that is left for challenging the advertising (McQuarrieand Phillips 2005; Toncar and Munch 2003). Therefore, one would expect advertand brand evaluations to be enhanced. Finally, research shows that the useitself of rhetorical figures may have a direct, positive, effect on brandattitude: the advertiser is perceived as clever and entertaining and istherefore better liked by the consumer, (p.15).

The main message in Dahlén’s article is that “one shouldthink creatively in the media choice process. Whereas there is great focus onhow to ascertain a sufficient level of creativity in the advertss, mediachoices tend to be made more or less from habit. As brands in the same productcategory tend to advertise in media with some kind of overlap in audience ortheme, their advertising faces competition both from similar brands and fromthe media content. This may leave less room for positive effects of creativityinside the given advertising spaces and more room outside of them. As anon-traditional medium focuses processing on the positives and reducescounterarguments, it could also be well suited for communicating new messagesand benefits to gain greater acceptance.”

“Whereas both low-reputation and high-reputation brandsenjoy more positive advert and brand evaluations in a non-traditional medium,the former seems to have more to gain. Thus, we particularly encourage lowreputation brands to employ non-traditional media in their advertising,” (p.22).

References

Dahlén, M. (2009). A Rhetorical Question: What Is the Impactof Non-traditional Media for Low- and High-Reputation Brands? Journal ofCurrent Issues & Research in Advertising; Vol. 31 Issue 2, p. 13-23.

Is ‘Deceiving the Customer’ the new Competitive Advantage?

2012-02-12T18:54:00.001+02:00

In a front page article in the Sunday Times (5^thFeb, 2012) they report that “the car giant Toyota secretly requires its dealersto turn a blind eye to an array of faults with brand new cars.”

It’s reported that “former dealers and technicianshave spoken of their outrage about the ethics of the policy, which meant thatthey had to ignore some defects found during routine services and repairs onnew cars. The policy does not appear in the warranty manuals given to customersbut its existence is set out in internal documents seen by The Sunday Times andin a confidential manual given only to dealers.”

They go on to report that “the secret policyinstructs dealers only to fix defects in new cars if they relate to safety andreliability or if they have been flagged up as a problem when the customerbrought the vehicle into the garage. According to former dealers andtechnicians, this means garages could disregard a category of faults duringroutine service – including clutch problems, clicking steering columns,corroded alloy wheels, rusty brake discs, oil leeks and faulty wing mirrors –if they had not been mentioned by the customer.

What’s even worse (if that’s not bad enough) is that“dealers also felt that the secrecy policy was a rip off because customerscould suddenly be told of a list of previously unmentioned faults when thewarranties expired. The customer would then have to pay for the work on thecar.”

Of course as with many stories in the press we areleft to make our own judgement and expect the views on the ‘truth’ of thisstory will be split both ways. The newspaper reports that “Toyota said lastweek the minutes (where this issue was formally raised) reflect only the‘misguided’ concerns of one dealer. It said the issue had been properlyaddressed at the time and had not been raised since the meeting” – though to behonest, having seen how some big corporates work, that doesn’t surprise me – Ican image the poor employee been hauled over the coals and in no uncertainterms told if he/she ever brings the issue up again that they will never workagain…. “The national council of Toyota dealers last week wrote to thisnewspaper saying its members regarded the warranty as among the best in theindustry.” Which depending how cynical you are – could bring big smile to yourface.

It gets worse because the paper reports that“Toyota’s warranty auditors perform spot checks on dealers an can fine them upto four times the cost of any non-safety related repairs they found to havebeen carried out without receiving a customer complaint,” and then the bit thatgot my attention and made me realise that this was probably true – “Toyota saidthat the maximum fine was very rarely imposed.” – which, for me, confirmed thatthe policy did exist.

In fact later in the article it’s reported that“Toyota has claimed that its secrecy policy is commonplace in the industry,” –so I guess we all better rush out and by ‘push-bikes’ or some other mode oftransport….

Apparently Jon Williams, the managing director ofToyota GB, was on the phone to The Sunday Times within hours of the reportersputting their story to him. He promised to drop everything and travel to Londonthe following day. William and two other executives who accompanied himproduced an independent report that said the firms warranty policy had thehighest rate of dealer approval in the UK motor industry. The Toyota executivesinitially denied that Toyota had any policy of refusing to recognise ‘add-on-repairs’– a term for faults that are not reported by the customer – until the SundayTimes reporters produced the organisations confidential warranty policy manual,which clearly states that this is the case.

The report concludes by stating that “it is unclearwhy Toyota chooses to burden its customers with extra bureaucracy by insistingthat they book their cars in to the workshop all over again when techniciansfind defects with their cars, rather than repairing them on the spot.” Thoughcan personally think of many reasons why they might have to re-book, where, forexample, the ‘extra’ time to fix the ‘new’ fault might simply be too long forthe technicians to complete with the work load they already have for that day.Which could lead to delay in fixing other customers cars – who had booked andwere expecting to pick up their vehicle on the same day.

They also conclude with the fact that “nor is itobvious why Toyota operates a complex audit system that can penalise dealersfor repairing faults under warranty that are unknown to the customer if, asToyota says, its technicians are free to tell customers of any faults theydiscover.”

What’s scary about this story, if only partiallytrue, is how the world has changed in 50 years. There was a time – yes therereally was – when employees took pride in building and manufacturing products,and not just cars. A time when there was a genuine desire for the customer to‘be happy’, where the logic was that not only would the customer repeatpurchase but would also ‘encourage’ their friends to purchase, by telling themabout their customer experience.

So I guess the moral of this story is to complainabout everything – just to be safe.

As a post script, in today’s Sunday Times (12^thFeb 2012), they report that “the car giant Toyota faces investigation by themotor industry regulator over its secrecy policy of ignoring some faults in newcars,” – so maybe the truth will be heard.

However many questions will remain unanswered fornow, including, what this will do to customer confidence in the automotive sectorand maybe more importantly what kind of people work for organisations thatallegedly deceive the customer – but this is another story for another day.

References

The Sunday Times. Toyota accused of deceivingcustomers. 05.02.2012. p.1-2.

The Sunday Times. If the customer doesn’t make acomplaint, don’t fix the car. 05.02.2012. p.12-13.

The Sunday Times. Toyota faces inquiry over ignoringfaults. 12.02.2012. p.16.

Do You Know Your Brands G-Spot?

2012-02-05T19:53:00.000+02:00

Kevin Keller and Frederick Webster mention that “one of therealities of modern brand marketing is that many of the decisions thatmarketers make with respect to their brands are seemingly characterized byconflicting goals, objectives and possible outcomes. Unfortunately, in ourexperience, too many marketers define their problems in ‘either/or’ terms,creating situations where one idea, one individual or one option wins out.Opportunities are missed for finding an even better solution, a new idea thatcould have been discovered and developed by combining and refining conflicting pointsof view. As a result, resources may be squandered, consumers may be leftunsatisfied or confused and the organization may find itself struggling withlingering internal conflict,” p.13).

In fact Keller and Webster highlight the following representativemarketing trade-offs (p.15);

Strategic (targeting and positioning)

• Retaining vs. acquiring customers

• Brand fortification vs. brand expansion

• Brand awareness vs. brand image

• Product performance vs. user imagery

• Points of parity vs. points of difference

Tactical (design and implementation)

• Push vs. pull

• Continuity vs. change

• Existing vs. new channels

• Direct market coverage vs. use of middlemen

• Selling systems vs. selling components

• Creative, attention-getting ads vs. informative, product-focusedads

Financial (allocation and accountability)

• Short-run vs. long-run objectives

• Revenue-generating vs. brand-building activities

• Easily measurable marketing activities vs. difficult toquantify marketing activities

• Quality maximization vs. cost minimization

• Social responsibility vs. profit maximizing

Organizational (structure, processes, and responsibilities)

• Central vs. local control

• Top-down vs. bottom-up brand management

• Customized vs. standardized marketing plans and programs

• Internal vs. external focus

Now it’s possible that some may think that some of the‘highlighted’ trade-offs – don’t have to be trade-offs at all and can be developedand incorporated within the strategy independently of each other. Retaining andacquiring customers for example, where marketers can develop strategies foreach; however the issues Keller and Webster are raising is that the ‘marketers’need to be aware of the potential cross-over implications of the ‘independentstrategic plans’ – and in these cases simply asks the question; have we considered any multi-collinearimplications in our model development.

To understand the nature and extent of the marketingtrade-offs, Keller and Webster highlight some key questions that must beanswered: “How severe are they? Are they unavoidable, inherent in the nature ofthe decision problem and situation? How have they been dealt with before? Ofparticular importance is the ability to recognize whether the trade-offs resultfrom internal, organizational considerations or external, structural issuesinherent in the marketing environment where management has less control. Next,marketers must develop effective means for achieving marketing balance. Giventhe wide range of marketing tradeoffs that exists, it is perhaps no surprisethat a correspondingly wide range of solutions is also typically available,”(p.15).

As an example, Keller and Webster remind us that “when BMWfirst made a strong competitive push into the U.S. market in the early 1980s, itpositioned the brand as being the only automobile that offered both luxury andperformance. At that time, American luxury cars were seen by many as lackingperformance, and American performance cars were seen as lacking luxury. Byrelying on the incomparable design of their car—and to some extent their Germanheritage too—BMW was able to simultaneously achieve (1) a point of differenceon performance and a point of parity on luxury with respect to luxury cars and(2) a point of difference on luxury and a point of parity on performance withrespect to performance cars. The clever slogan, ‘The Ultimate Driving Machine,’effectively captured the newly created umbrella category: luxury performancecars. Product differentiation can occur through technological innovation orcreative repositioning,” (p.16).

The concept of an organisation taking the time to identifythe ‘right’ marketing balance can often be missed in today’s fast pacedbusiness world, where many organisations who are not actively ‘forcing’ thepace as leaders – simply react to changes in the market place. It’s in thesevery instances that organisations should take the time to assess the potentialtrade offs – so that they can in fact develop a strategy to achieve marketbalance and in doing so reach the brands g-spot.

To achieve that market balance Keller and Webster highlight6 factors that will help;

Breakthrough product or service innovation;

Improved business models;

Expanded or leveraged resources;

Embellished marketing;

Perceptual framing;

Creativity and inspiration.

In conclusion Keller and Webster state that “there certainlymay be times that given extreme circumstances, dire straits or an overwhelmingneed to achieve one objective at all costs, radical solutions are warranted.But even in these cases, marketers would be well-served to recognize exactlythe extent and nature of the decision tradeoffs they face, and the consequencesof ignoring other options. Radical solutions should be thoroughly vetted andcontrasted to more balanced solutions that offer more robust and completesolutions,” (p.17).

References

Keller, K.L and Webster Jr., F.E. (2009). The BrandingSweet Spot. Marketing Management; Vol.18 Issue 4, p12-17.

How Does One Define Trust at Work?

2012-01-29T18:55:00.000+02:00

Akram Boutros and ClaireJoseph mention that “the root cause of mostfailed personal and business relationships is the inability to build, maintainand recover trust. A cohesive team working in an environment of reciprocaltrust is paramount to success during times of extreme change. When people trusttheir leaders, they willingly get on board with a strategy, thereby harnessingtremendous speed and agility to help navigate times of great change,” (p.38).

They go on to remind us that trust is a product of choice:one chooses to entrust another with something important. Trust is visceral andis reinforced by shared experiences over time, kept promises and understandingof the motives underlying sacrifices. We must not confuse trust withcredibility. Credibility is an intellectual attribute that is based on pastperformance.

Yet in the business arena is ‘trust’ a subject that isspoken about openly or is it simply assumed that people do or don’t trust eachother – having a macro impact of the culture of the organisation. I mean, hasany one ever asked you in your organisation; ‘do you trust me?’ and if theydid, what would your answer be.

Robert Solomon and Fernando Flores, in their seminal book Building Trust in Business, Politics, Relationshipsand Life, advance the concept that “distrust is not so much theopposite, as it is the other side of trust. They go on to differentiate basic,simple, blind, and conditional trust from “authentic trust.” Where authentictrust contemplates distrust and moves beyond it, sometimes in a steady marchand at other times through leaps of faith.

Patrick Lencioni, in Five Dysfunctions of a Team: ALeadership Fable states that in his opinion trust is the basis of the remainingfour attributes of effective teams (engagement, commitment, accountability andfocus). Trust leads to engagement, which he defines as “the productiveideological conflict that has as its only purpose the attainment of the bestpossible solutions in the shortest possible time.”

What’s genuine about authentic trust is that it has abuilt-in reservoir that tolerates mistakes and setbacks without diminution oftrust. Consequently, authentic trust will bounce back of its own accord, makingit a precious insurance policy against loss of trust.

Yet how often is this true in your organisation; where thereare these ‘built-in reservoirs that tolerate mistakes and setbacks withoutdiminution of trust’; as this is one of the key factors that distinguishes thegood from the bad organisations.

Boutros and Joseph highlight how recovering trust requiresthree separate actions that when combined act as a restorative intercession thatcan heal the relationship. They are:

1. Sincereapologies

2. Permittingthe affected person to influence you

3. Fulfillingthe promise

In his book, The8th Habit: From Effectiveness to Greatness, Dr. Stephen Covey writes, “thepower of choice means that we are not merely a product of our past or ourgenes; we are not a product of how other people treat us. They unquestionablyinfluence us, but they do not determine us. We are self-determining through ourchoices. If we have given away our present to the past, do we need to give awayour future also?”

So as Boutros and Joseph mention that “one must be mindfulthat, as with a house, trust must be carefully built, lovingly maintained andsteadfastly renovated as needed.” So trust needs to incorporate three majorelements - it must be:

1. Built on astrong foundation

2.Deliberately planned

3.Structurally reinforced

Though we must ask ourselves in today’s society, whethertrust is a dying ‘art form’, where maybe the majority of people prefer toactively ‘distrust’ rather than trust and in this scenario we should considerthe impact this has on our own potential for real success and the potentialsuccess of the organisation.

But even in the 21^st century we should remember that“trust is the most basic and essential element of both personal and businesssuccess. It requires courage, determination and sacrifice. It is optimistic,full of promise, fair and supportive. It helps us negotiate troubled waters andbeseeches us to build lasting relationships. It helps us to value each other asindividual humans, not as components of a large machine,” (Boutros and Joseph,2007, p.41).

As Solomon and Flores concluded, “to survive and thrive, wemust count on each other and find leaders to follow. Like it or not, we are allin the process of creating a new way of life, and no one knows just what itwill be. That is the domain of leadership, authentic trust, and historymaking,” (Boutros and Joseph, 2007, p.41).

References

Boutros, A, andJoseph, C.B. (2007). Building, Maintaining and Recovering Trust: A Core Leadership Competency. The PhysicianExecutive, Jan:Feb, p.38 -41.

Covey, Stephen R. The 8th Habit: From Effectiveness toGreatness. New York: Free Press, 2004.

Lencioni, Patrick M. TheFive Dysfunctions of a Team: A Leadership Fable. San Francisco: Jossey-Bass, 2002.

Solomon, R.C. and Flores,F. Building Trust in Business,Politics, Relationships, and Life. New York:Oxford University Press, 2001.

Do All Organisations Recognise the Importance of Customer Equity?

2012-01-15T20:22:00.000+02:00

Customer equity places customers at the centre of a firm’sactivities, recognises customers as strategic assets and seek to measure thevalue of a customer (across the many relationships that the consumer has withthe company) in order to measure marketing productivity. Thus, understandinghow people make the consumption decisions and using that information to betterserve the consumer is a central goal of marketing, (Holehonnur, A., Raymond,M.A, Hopkins, C.D and Fine, A.C., 2009, p.166)

In their search to understand their customer’s organisationsuse various techniques which can include customer surveys, focus groups,customer relationship marketing (CRM) systems, customer platforms for generatingfeedback and even the relatively recent customer-generated content and social-medianetworking sites. These techniques and methodologies can be used at the macrolevel, product level, regional level and/or various forms of demographic levels(age, gender by product by region, etc).

The theory is quite sound and well tested, yet there seemsto be a highly-significant correlation between the most recent customerexperience and their ‘response’, where a singular bad experience can negate alife-time of good service, in respect of the response, but even then may notnecessarily change the customers buying pattern.

This highlights that what customers say at a point in timeand what customers actually do, when it’s time to make their next purchase canbe significantly different.

Holehonnur et al, highlight how the customer equityframework is composed of value equity (which is driven by quality, price andconvenience), brand equity (which is driven by brand awareness, attitude towardthe brand and consumers’ perceptions of brand ethics) and retention equity(which is driven by loyalty programmes, affinity programmes, communityprogrammes and knowledge-building programmes). And where Holehonnur et al(along with many others) mention that value equity, brand equity and retentionequity have been suggested as drivers of customer equity, (p.168).

But some organisations in the 21^st century seemto take a different approach; looking to marginalise the customer, seeing themas a ‘problem’ to their success, rather than a ‘solution.’ These organisationsare usually large and have significant market share and seem to adopt a ‘couldn’t care less’ approach to value,brand and retention and use a less than ‘transparent’ approach to attract the‘customer’ in the first place. But once ‘hooked’ and signed up, theseorganisations take little to no interest in providing a service – being bigenough to ignore the ‘bleats’ of dissatisfied customers.

Also, cleverly, they ‘hive’ off the customer satisfactionresponsibilities to ‘call centres’, where minimum waged staff have to endurethe anger and frustrations of dissatisfied customers, on an hourly basis - whilethose responsible within the organisation enjoy their business lunches and golfdays, with business tycoons and celebrities. Organisations that fit this mould include firms like Vodafone andOrange, who have a clever strategy of wearing the disgruntled customer downthrough attrition, to the point that the majority of customers just throw inthe towel and give up their complaining – towing the company line as planned,like good little sheep.

This seems to be especially true in the more ‘developed’nations like the US, UK and other European countries (and where I use the worddeveloped loosely). Where these customers feel so much more disenfranchisedthat they no longer expect ‘good’ service and approach their purchasingdecisions with that in mind – it’s just a ‘cold’ purchase, based on price andconvenience – with no promise of a repurchase.

It’s worth remembering that in the business theory, valueequity is defined as the consumer’s objective assessment of the utility of abrand, which is formed by perceptions of what is given up for what is received.There are three main drivers of value equity, namely, quality, price andconvenience. It’s interesting that they mention an objective assessment of aperception which I would have thought didn’t make sense – how can you beobjective about a perception? Or at least how you can be truly objective abouta perception – if you don’t know how accurate your perception is? But maybethat’s just me.

At least brand equity is defined as the customer’ssubjective and intangible evaluation of the brand (the product or serviceoffered by the firm) and the firm, above and beyond its objectively perceived value.The three key drivers of brand equity are defined as brand awareness, attitudetoward the brand, and corporate citizenship and duties, yet I wonder in thereal world how much weighting each of these have on the customers ‘real’ brandawareness – and whether the 21^st century customer is currently‘calculating’ the brands corporate citizenship; and especially whether these‘corporate citizenship’ assessments are based on fact or corporate hype.

In myexperience too many large organisations are taking less and less interest inthe theory of customer equity and are re-writing the business rules, especiallywhere ‘customer contracts’ are involved in industries like, mobile, Internetetc – where these organisations have two sets of customer rules. First the‘trap’ where they give all the hype to attract the customer to sign thecontract (a bit like the approach to selling time-share or selling second-handcars); and then once you’ve signed the real reality sets in and you realisethat you are nothing more than just a number in their system, rather than anindividual human customer – and if you want to leave – leave – but it will costyou.

References

Holehonnur, A., Raymond, M. A., Hopkins, C. D. and Fine, A.C. (2009). Examining the customer equity framework from a consumer perspective.Journal of Brand Management. Vol. 17, Issue 3, p. 165-180.

How Should We Educate our Current and Potential Customers?

2012-01-08T19:30:00.000+02:00

I’m reminded of the quote from Henry Ford (1863 –1947) who after building his first car is quoted as saying, “if I’d asked mycustomers what they wanted – they would have told me, a faster horse.”

This brilliant quote highlights a very real dilemmafor many organisations whose products and services are influenced by keyfactors like technological growth or behavioural research – how dothey keep their average customer up to date with the real potential thattechnological developments and other influential research topics offers them.And how do they help the customer differentiate between what’s real and what isdisinformation.

Current developments in internet e-tailing, forexample, are leading to a consumer revolution – yet many, especially from the‘older’ generation, are simply unaware of the opportunities this market placeoffers and the speed of upcoming improvements linking android technology toe-tailing and payment portals.

Products and services that were once assumed to be‘immune’ to the e-tailing network, like fashion and accessories are alreadyrapidly changing the face of the e-tailing environment. It wasn’t that long agothat it was assumed that the customer would always want to ‘touch and feel’fashion items, like clothes and shoes – and yet the sudden increase in on-linefashion sites – and the rapid increase in customers purchasing from thise-tailing environment is already proving these theorists wrong.

Yet as much as the divide between rich and poor isincreasing in many countries, so is the gap between those who are e-tailingsavvy and those who aren’t. It won’t surprise people that once one haseliminated those areas of the world that don’t have easy and fast Internetaccess – then the overriding demographic of the fashion e-tailor is age.

This new e-tailing generation are swayed bycelebrities who are often the face of the sites. Cheryl Cole, for example,promotes an e-tailing shoe site, selling her own brand to thousands of fansaround the world. This e-tailing generation are happy to buy a fashion itemon-line if they know that it’s ‘worn’ (or been worn) by a celebrity or is a‘brand’ they can trust and want to be seen in.

For the older generation this may be a ‘change’ toofar – remembering a time when certain measurements were taken before buyingclothes or shoes helping the customer choose the right size prior topurchase. And while this older generation may be asking for a ‘faster horse’ –the new generation of buyers have moved into a new retailing dimension that ischanging the face of the market place.

As with many previous times in history, there willbe those that won’t believe that a dramatic shift in retail patterns is takingplace, hanging on to a distant past – maybe fearful or ignorant of the changingface of the world they live in. Yet one just has to walk around London, forexample, to see the amount of vacant retail space, something that would havebeen unheard of not that long ago.

To ensure the optimal future growth, not just fororganisations, but for communities and countries as well; we must ensure thatthose that have accumulated years of practical business skills, in respect ofkey business elements like strategic implementation, talent management,leadership development, M&A’s, market and behavioural analysis are formallylinked with the modern e-tailing experts – sharing their knowledge and learningfrom each other.

Failure to do so will lead to a further gapdeveloping between the modern e-tailing environment and the ‘standard businessmodels’ - and will lead to a wider gap between the ‘educated’ e-shopper andthose refusing to accept this new era.

As Henry Ford said, “it’s not the employer who paysthe wages. Employers only handle the money. It’s the customer who pays thewages.” So is it time for you to re-assess your business model and educate yourcustomer in what is really possible in this new technological age?

A Review of Some of the Stories from 2011

2012-01-01T19:20:00.000+02:00

Here’s a short review of some of the headlines and the less well known stories of 2011.

January 1st: Toys, left in memory of six year old cancer victim Keira Darkes, were stolen from her grave.

January 8th: Republican Gabrielle Giffords is shot in the head at a public event and survives.

January 19th: President Barack Obama gives a lavish welcome to Chinese counterpart Hu Jintao.

January 20th: President John F Kennedy’s electrifying inaugural address was delivered half a century ago today and still resonates in today’s society.

February 15th: A UK Government spending watchdog went to talks on how to save public cash – in a chauffeur-driven limo that cost taxpayers £464.

March 11th: An earthquake off the Pacific coast of Japan triggers an enormous tsunami, which kills tens of thousands of people. The tsunami leads to partial meltdowns, explosions and radiation leaks at nuclear reactors.

April 20th: The Prince of Wales becomes the longest serving heir apparent in British history, having been first in line to the throne since 1952. Prince Charles, 63 in 2011, beats the record held by his great-great-grandfather, Edward VII.

April 29th: Prince William marries Kate Middleton at Westminster Abbey.

June 3rd: Three people are left in a trance in Portland, Dorset, after the stage hypnotist David Days trips and knocks himself out during a show. The confused – two men and a woman who were told they were Martians – are finally rescued when Days recovers.

July 7th: A month after it was performed in Sweden - on a 36-year-old cancer patient - the world’s first artificial organ transplant is declared a success. The synthetic windpipe was created by scientists in London.

July 9th: South Sudan, the world’s newest nation, is born. Achieving independence from Sudan as part of a 2005 peace deal, it is the first new African country since Eritrea separated from Ethiopia in 1993.

July 21st: When Space Shuttle Atlantis landed at Kennedy Space Center just before dawn this day in 2011, it marked the end of NASA's Space Shuttle program. The shuttle was the space agency's No. 1 space vehicle for 30 years, with numerous successes under its belt - notably the deployment and repair of the Hubble Space Telescope and construction of the International Space Station.

August 5th: In the apparent absence of a plan to tackle the nation’s long-term debt, the US is stripped of its AAA status by the credit-rating agency Standard & Poor’s.

September 3rd: An advertisement for an anesthetist on an NHS website, with the words ‘usual rubbish about equal opportunity employer’ – slips through the internal checks.

September 25th: Saudi women win the right to vote – but not to drive a car.

October 5th: Steve Jobs dies. The college dropout who helped popularize the personal computer and created the iPod, iPhone and iPad. His passing was nearly two months after Apple Inc., which Jobs started in a Silicon Valley garage in 1976, briefly surpassed Exxon Mobil Corp. as the most valuable publicly traded company in the world.

October 31st: The world’s population officially reaches 7 billion.

Dec 5th: The discovery of Kepler-22b, 600 light-years away from earth. Although twice the size of the Earth, the so-called Christmas Planet is right in the "goldilocks zone" - a distance from its star that would make it neither too hot or too cold to support life. With the revelation of two more Earth-size planets a couple of weeks later, we could be on the cusp an exoplanet-discovery bonanza.

December: In the US 25 million people remain unemployed or unable to find full-time work. The unemployment rate fell from 9 percent in October to 8.6 percent in November, providing a hopeful sign. Yet the housing market remained burdened by foreclosures and falling prices in many metropolitan areas. How to fix the economy became the top campaign issue for Republican presidential contenders.

December 20th: South African media reported that between the 1st and 19th December there were 710 fatalities on South Africa's roads (one wonders, with a feeling of trepidation, what the figure will be by the end of December and after the New Year celebrations).

And in memory of a small fraction of those who said a final farewell in 2011;

6th February; Gary Moore at 58 (the former Thin Lizzy guitarist died of a heart attack while asleep on holiday in Spain);

20th March; Dorothy Young at 103 (stage assistant to Harry Houdini);

23rd March; Elizabeth Taylor at 79 (actress);

26th March; Dr Harry Coover at 94 (the inventor of Super Glue, the world’s strongest adhesive);

1st May; Sir Henry Copper at 76 (best remembered for his two momentous fights against Muhammad Ali in 1963 and 1966);

5th May; Claude Choules at 110 (the world’s last known combat veteran of World War I – after joining the navy at 15 years old);

3rd June; Jack Kevorkian at 83 (US right-to-die campaigner);

18th June; Yelena Bonner at 88 (Russian human-rights activist);

8th July; Betty Ford at 93 (former US first lady who founded the Betty Ford Center);

10th July; The News of the World at 168 (due to immoral acts);

17th July; Alex Steinweiss at 94 (inventor of the album cover);

23rd July; Amy Winehouse at 27 (way too young);

7th August; Nancy Wake at 98 (British agent and Second World War heroine);

13th September; Richard Hamilton at 89 (pop-art pioneer);

20th September; Robert Whitaker at 71 (Beatles photographer);

5th October; Steve Jobs at 56 (founder of Apple);

19th November; Basil D’Oliveira at 80 (cricketer who became a force against apartheid); and

25th December; Sue Carroll at 58 (legendary Daily Mirror Journalist - who was among the first women to break into the male dominated world of Fleet Street national newspapers).

Can You Have the Perfect Team?

2011-12-25T19:29:00.001+02:00

Following on from the 18th December, I found a great article by Saj-Nicole Joni and Damon Beyer (2009) where they remind us that “when Doug Conant left his job as president of Nabisco to take on the CEO role at Campbell Soup in 2001, he stepped into the wrong fight. Campbell was one of the world’s poorest performing food companies, and its managers were consumed by infighting over who was to blame. Conant understood that his immediate priority was to manage internal and external tensions the company was facing, while fundamentally rebuilding employee morale. In his first 90 days he set out to create what he called a tapestry of expectations, so everyone in the organisation could know where the company was going,” (p.54).

Interestingly, in an interview with Dianu Coutu, J. Richard Hackman the Edgar Pierce Professor of Social and Organisational Psychology at Harvard University mentions that “most of the time research shows that team members don’t even agree on what the team is supposed to be doing. If the leader isn’t disciplined about managing who is on the team and how it is set up, the odds are slim that the team will do a good job,” (p.100).

Hackman gives leaders five tips for how to build a team;

1) Teams must be real. People have to know who is on the team and who is not. It’s the leader’s job to make that clear.

2) Teams need a compelling direction. Members need to know and agree on what they’re supposed to be doing together. Unless a leader articulates a clear direction, there is a real risk that different members will pursue different agendas.

3) Teams need enabling structures. Teams that have poorly designed tasks, the wrong number or mix of members or fuzzy and unenforced norms of conduct invariably get into trouble.

4) Teams need a supportive organisation. The organisation context – including the reward system, the human resource system and the information system – must facilitate teamwork.

5) Teams need expert coaching. Most executive coaches focus on individual performance, which does not significantly improve teamwork. Teams need coaching as a group in team processes – especially at the beginning, midpoint and end of a team project.

Part of the problem with team performance is, as I’ve mentioned before, organisations seem to focus on individual performance much more than ‘team’ performance. Individuals are formally appraised, yet few teams get the same formal appraisal. Training and development programmes are developed around individual needs, yet rarely developed around ‘team’ needs. So until teams are appraised and developed as an entity, then one is unlikely to see optimal team performance – which implies suboptimal team decisions.

Richard Hackman highlights that ”the challenge for a leader is to find a balance between individual autonomy and collective action. Either extreme is bad, though we are generally more aware of the downside of individualism in organisations, and we forget that teams can be just as destructive by being so strong and controlling that individual voices and contributions and learning are lost. Where, for example, being a team player can be valued so strongly that individuals self-censor their contributions for fear of disrupting the team harmony” (p.105).

The ‘perfect’ team should be assessed by its output rather than how harmoniously it works together. A team should be looking for constructive input and to be challenged, so that it can consistently come up with the optimum solutions for the organisation. That will mean on occasion there will be strong disagreement about the way forward, not because a group or individual is wrong, but simply that there is often more than one business approach that will give the sought after outcome.

As Joni and Beyer state “it’s time to stop candy-coating what’s taught to executives and their direct reports. It’s time to stop pretending that conflict-free teamwork is the be-all and end-all of organisational life. It’s time to own up to the truth that the right balance of alignment and competition is what pushes individuals and groups to do their best. Let’s be clear; alignment is important, but the purpose of alignment is not harmonious agreement. It is to sustain an organisation’s ability to fight for what really matters, and to pull everyone together again once the fight is over,” (p.50).

References

Coutu, D and Beschloss, M. (2009). Why Teams DON’T Work. Harvard Business Review, Vol. 87, Issue 5, p.98-105.

Joni, S.A. and Beyer, D. (2009). How to Pick a Good Fight. Harvard Business Review, Vol. 87, Issue 12, p.48-57.

What Makes a Great Team Member?

2011-12-18T19:46:00.001+02:00

It was 4am when the executive team eventuallyfinished preparing for the group budget presentation that was to take place tothe shareholders in only 6 hours’ time. They had started 16 hours earlier atmidday – when the CEO had called his executive team together for what wassupposed to be a final run through of the budget and the presentation. Yet aswith many things in business things didn’t go to plan.

Now the sceptics will criticise an executive teamthat haven’t got their budget sorted out the day before the presentation to theshareholders – and you’ll be glad to know the executive team would be ascritical as you, being very disappointed with their performance.

But this isn’t about the process but the team that Iwitnessed sticking together till 4am in the morning – 11 executives, 1 businessanalyst, 4 finance personnel and 2 executive assistants – all working togetherto get the job done. There was no ‘huffing and puffing’, no sulking, no angrywords, just a group of people wanting to get the job done. It was very specialto watch. Having woken up at 3am that morning to catch a flight for the meeting– I was definitely the grumpiest person there by 1am.

So what did each of them have that made them greatteam players that night? One thing that really stood out was the passion andthe pride in the task at hand – they could have taken short cuts or simplyfinished earlier, saying enough was enough – and many teams would have, butthey didn’t – they stuck it out. This highlights the need for discipline andpatience: Where discipline allows the team member to focus on the task at handand to see it through, without ‘negative’ distractions.

They clearly respected each other and though therewere people there with different ‘pay grades’ that didn’t seem to matter aseveryone ‘mucked in’ to get the job done.

The leader stayed calm and focused – not offering aneasy way out – and the team followed him out of respect (and knowing that whatwas eventually presented would also reflect on them).

I’d suggest that it should be the aim of everyindividual within every organisation to support and develop a winning teamculture. Operating in today’s business world, where we find ever increasingcomplexity and continual change in the competitive landscape, organisationsneed to rely on their executive, management and other related business teamsfor effective decision making, continuous improvement and sustainable growth.

It’s said that every winning teams requires;

 Acommon direction; a shared understanding of goals and values;

 Skillsof interaction to solve complex and diverse problems;

 Theability to continually challenge themselves and expand their capabilities inresponse to change;

 Focuson team and organisational performance, above individual performance.

 Thecommitment and culture to develop a winning team.

But maybe one of the hardest things is to have ateam where all the team members are all as dedicated as one another - and canall be relied on, when the times comes, to step up and support each other.

One can’t describe in words what I saw that night –it wouldn’t do justice to the team and all the individual members. But I willnever forget get it, as it was a team working in perfect unison towards arequired goal, at a time when they were all tired and had other things to do(like sleep). The outcome was a great success and though exhausted they allattended the budget presentation at 10am that morning – it was a five hourmeeting, finishing at 3pm (as we’re talking about an organisation owning 60 subsidiariesin 17 countries in Europe). But the conclusion was that the budget wassigned-off by the shareholders and the team went home for some well deservedrest…..

Are You Happy to Admit That You Don’t Know, What You Thought You Knew?

2011-12-11T19:50:00.001+02:00

I remember some wise words given to me by the head of the South African College of Applied Psychology many years ago, when he told me that “it’s not what we know we know; or what we know we don’t know that causes us problems in life – it’s when we think we know things we don’t actually know, where the problems begin”.

Being able to be honest with ourselves about what we really know and what we think we know should not only a requirement of humility, but a genuine requirement of effective leadership in any role.

In fact most of the major leadership disasters through the centuries have been when the leader was too arrogant to realise that they didn’t really know, what they thought they did – leading them to make incorrect decisions that led to disaster. The worst fact behind the arrogance is even after the disaster – these individuals often wouldn’t admit they made a mistake. This doesn’t just relate to leaders in business, but leaders everywhere, including the role of parents.

To put it all in perspective a good example comes from Donald Rumsfeld who said “reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns - the ones we don't know we don't know” and if that statement is clear enough he also said “Secretary Powell and I agree on every single issue that has ever been before this administration except for those instances where Colin's still learning.” – Absolutely classic and it’s scary to think that this comes from a former Defense Secretary of the USA, yet this shows the true extent of someone being too arrogant to admit what they really don’t know.

It was Confucius who said “real knowledge is to know the extent of ones ignorance” words of wisdom that should be part of everyone’s value set – yet does the pressure to appear successful encourage many people to ‘defend’ their ignorance rather than embrace it and learn from it?

One of the classic examples of leaders thinking that they knew something they didn’t is encapsulated in an 1876, internal memo within Western Union that read “this telephone has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.” Classic – a real example of arrogant ignorance sending an organisation down the wrong path.

Although this basic principle of being honest about what we only think we might know applies to everyone from teenagers to pensioners – the most important place for people to be honest about what they really know, and what they just think they know, is at the board level of organisations. These are the strategic leaders of the organisation, who should be identifying future opportunities and defining the vision and culture of the organisation. This will never be done effectively if, at this level, the strategic leaders are assuming things that they simply don’t know.

Today’s leaders need to be honest with themselves if they want to really optimise their organisations future growth and set the example for others to follow. The ability to be honest about what we do and do not know is not only a fundamental requirement for effective leadership, but a basic requirement in order to earn the respect of others.

It's a principle we all have the power to adopt immediately - since if we can't be honest with ourselves, who can we be honest with....

Who Really Wants to be a CEO?

2011-12-04T20:06:00.001+02:00

In an interesting article in today’s UK Sunday Times, Eleanor Mills, writes that “it is viewed as the pinnacle of any aspiring executive’s career but, according to a new study a generation of corporate high-flyers are saying no to being the chief executive officer. Instead, say head-hunters, the elite of the business world are deciding to put their families first and walking away from the corporate life,” (p.5).

Eleanor highlights the report, Who Wants to Be a CEO in 2012?, in which MBS interviewed 40 high-profile candidates who had turned down senior executive roles, found that business leaders, despite being trained for the top in our biggest companies, are shunning the posts. The pressure to perform under the glare of the media spotlight is one reason for opting out, but lifestyle choices and a desire to avoid the stultifying demands of corporate bureaucracy – so called M&M’s (meetings and managers) – is another.

Her article goes on to say that “the trend is leaving companies with a problem. On the British high street New Look and Mothercare are on the hunt for a new chief executive. Both have been sounding out candidates for months, with no success,” (p.5).

Yet shouldn’t we ask more questions as to why this ‘migration’ might be taking place. Is it possible that with the current economic crisis and the attention of the media our CEO’s and potential CEO’s have been found wanting, in that they don’t have the overall skills required to be successful in the role. The media have always been there, as have big city business analysts, and a good CEO knows how to handle and work with these ‘partners’ – as not working with them is similar to waving a red flag at a bull.

The fact that our current CEO’s might not like this ‘intrusion’ is an unsatisfactory response especially from the CEO of a public company. In fact I’d go as far as saying they should welcome the attention of the media and city analysts and skillfully ‘use’ this attention to the overall advantage of their organisation.

Exhaustion has overcome many top executives who have either bailed or taken leave to recover – Antonio Horta-Osario, Jeffrey Kindler and Joseph Lombard to name a few. But why didn’t these CEO’s have the right team around them to support them – a CEO with the right talent throughout the organisation should never become totally exhausted and will have as much enjoyment as this new bread of CEO’s who are jumping ship for the ‘smaller’ organisation.

A new report by Lauren Leader-Chive on Generation X, would argue that “the definition of what success looks like is changing for this generation. However much money is on offer, if the price is the sacrifice of home time and prized hobbies – it’s not worth it to them.”

Yet while we have our ‘elite’ feeling the pressure and bailing, we see in the same newspaper just 14 pages further on, an article by Jack Grimston and Rosie Kinchen entitled, ‘graduates pay £100 a day to serve as interns’, where they mention that “university leavers desperate for work experience are being charged up to £100 a day by companies offering them internships,” (p.19).

So here we have the two extremes, supposedly the UK’s elite, feeling the pressure and bailing out of the top jobs and at the other end, our potential future leaders working either unpaid, sometimes for months on end, to gain experience and improve their chances of getting a ‘good’ job, or some making the decision to pay to gain experience.

I wonder what some of these youngsters would like to tell the ‘stressed’ CEO’s about real pressure. What we need is to urgently improve our leadership development, so we develop a pool of ‘potential CEO talent’ – individuals who know how to develop the right team around them to ensure the job gets done.

References:

Grimston, J and Kinchen, R. (2011). Graduates Pay £100 a Day to Serve as Interns. Sunday Times, 04.12.11, p.19.

Mills, E. (2011). City Elite Wheel Away from FTSE Highway. Sunday Times, 04.12.11, p.5.

What Does the Term ‘Accountability’ Mean to You?

2011-11-27T21:00:00.001+02:00

Henry Ward Beecher (1813-1887) said “hold yourself responsible for a higher standard than anyone expects of you. Never excuse yourself.” I wonder how many political leaders, business leaders and even parents around the world hold themselves to a belief such as this.

Not meaning to be cynical but I see more and more examples of leaders stating they are accountable, until it comes the time to actually be accountable when, too commonly, a platitude of excuses spout forth and ‘we the public’ seem to swallow them every time.

Yet an anonymous source gives the following quote “when you blame others, you give up your power to change.” This is so true, as while one is blaming or misdirecting to avoid ‘ones accountability’ you lose that precious opportunity to be transparent and to implement the actions for change. Since as Dietrich Bonhoeffer (1906-1945) stated “action springs not from thought, but from the readiness for responsibility.”

In fact the truth may be in George Bernard Shaw’s words – “liberty means responsibility. That is why most men dread it.”

An interesting way to look at Accountability is that it starts with Action and ends with You: -

A – Action

C – Commitment

C – Culture

O – Ownership

U – Understanding

N – Non-Negotiable

T – Tenacious

A – Attainable

B – Behaviour

I – Integrity

L – Learning

I – Innovative

T – Talent

Y – You

It was Ronald Regan who said “we must reject the idea that every time a law’s broken, society is guilty rather than the law breaker. It is time to restore the American precept that each individual is accountable for their actions.” So with so many people talking about accountable, why is the principle still not being applied as the rule rather than the exception – why can’t society hold those in higher office, in politics and business, to account – it was my limited understanding that this was a cornerstone of the principles of democracy.

Finally Catherine Pulsifer, one of the authors of ‘Inspirational Words of Wisdom’, makes two great statements. First that “you are accountable for your actions, your decisions, your life and no one else but you.” And Secondly that, “we are accountable for our decisions in our personal life, so why shouldn’t we be just as accountable in our work life.”

Surely, until us grown-ups start being held accountable, how can we expect today’s youth – the future leaders of our world – to accept and even grasp the concept.

References

Henrik Edberg. 7 Timeless Thoughts on Taking Responsibility for Your Life.

Who Gave You the Best and Who Gave You the Worst Customer Service Experiences in 2011?

2011-11-20T22:26:00.001+02:00

Moving back to Europe in April this year to set up anorthern hemisphere operation I expected to be amazed by the level of service Iwould receive in countries like England, for example. Sadly that has beenfarthest from the truth and in many cases I’ve experienced 3^rd Worldservice from organisations supposedly operating in 1^st Worldenvironments.

In my many experiences this year the organisation that getsthe vote for offering the worst levels of customer service that I have everreceived from any organisation in the world over the last 40 years is –VODAFONE UK.

Here you have a company that has probably grown so big thatthey don’t really give a damn about the customer as their volume of business isso high and where there approach, which seems to be based on ‘colonialarrogance’ is so outdated that I’m amazed they survive.

They have a CEO called Guy Laurence, at least in name –since he doesn’t have the courtesy to respond to couriered letters andcomplaints; though to be fair he’s probably so hectically busy building thosevital business and strategic contacts on various exclusive golf courses andputting on the pounds in posh international restaurants, that ‘we’ the customercan be ‘delegated’ (i.e. fobbed-off) as a ‘bloody inconvenience’ – havingprobably not worked out yet that putting on the pounds, doesn’t go directly tothe bottom-line of Vodafone, but just to his own bottom line.

What’s classic about this organisation is that the word‘sorry’ has definitely become a ‘four letter’ word that they push out thereunder the complete misperception that this will ‘magically make the problem goaway’.

What’s classic about this ‘ghost’ of a CEO, is you canactually contact him directly on line – campaigns.vodafone.co.uk/guylaurence/ –where he states “I’m Guy Laurence, the Vodafone UK CEO. I’m committed toensuring we provide the best service possible and am therefore passionate aboutlistening to our customers….” – nice try Guy, but you should try practicingwhat you preach.

So if you ever want to let off some steam and there isn’t apunch bag nearby, drop this man a line on my behalf….

Second on my list of the worst service providers would beanother mobile phone operator called ‘Orange’ – maybe there’s something aboutthe mobile industry we don’t know about. Here you have a guy called SandeepHeer who’s the Strategy Director at Orange in London (at least in title) andhe’s another one that seems to think the higher you get the less you actuallyhave to do and couldn’t even respond to a simple email from a potentialcustomer seeking a service provider.

Where do these people come from and worse still how do theysurvive in these positions of power, which they seem to misuse on a dailybasis. It doesn’t say much for the major shareholders of these organisationsthat ‘rubber stamp’ these people who see customers as ‘uneducated peasants’ whoare simply there to do their bidding.

When one gets rid of the trash – what’s exciting is thatthere are still many organisations and many unique individuals who take a realpride in offering exceptional levels of service. Having made a recent returntrip to Cape Town via Dubai with Emirates – I have to say that I found theirlevel of service absolutely outstanding. It’s not just one person, or oneaspect of the business, but when dealing at any level there is a real desire tosolve any problems and to give you that wow experience.

The main focus on offering service has changed over the lastfew years, from customer service and customer loyalty to customer delight.Organisations that fail to offer customer delight may think they are successfulentities, with healthy bottom-lines, but they are unfortunately delusional,like our friends at Vodafone and living on borrowed time – their customersaren’t delighted, but also aren’t as stupid as the organisations think and aresimply waiting for the right time to leave – and when they do they will neverreturn.

Can the Death of Yueyue Bring More Humanity to Leadership?

2011-10-23T07:25:00.000+02:00

Yueyue, which translates as “little joy” in Chinese,is the little toddler who sadly died in hospital after she was run over in thestreet, not once, but twice and then lay on the ground bleeding while eighteenpeople walked or cycled by and ignored her pain.

Eventually an elderly lady helped get the littlegirl out of the road. She said, “I walked up in a hurry to the child and heardher groan. I lifted her up and saw that one of her eyes were closed, that shehad tears in her eyes, and she was bleeding from her mouth, nose and the backof her head.”

The shocking incident was caught on CCTV and hasstunned millions in China and around the World, with many saying their society,which has enjoyed 30 years of rapid development, is rotten and immoral.

Li Xiangping, a professor of religion at HuadongUniversity, asked “what prompted such a sad phenomenon? Officials? The rich? Oris it our own cold heartedness?”

What’s frightening is that many people in China arehesitant to help people who appear in distress over fears that they will beblamed. High profile law suits have ended up with good Samaritans ordered topay hefty fines to individuals they sought to help.” Of course the leadership, TheCommunist Officials, have called for tighter controls over reporting theincident for fear of a public backlash.

How mad is this? But let’s not fool ourselves thatthis is an incident peculiar to China – as this could have been a story fromanywhere in today’s world. The professor from China asked if it is coldheartedness and others ask if it’s the fear of being blamed – but who’s askingif this should even be acceptable, in the slightest.

Those reading this far may be asking, but what hasthis to do with business and leadership – and the answer is – everything.Leaders set the example and define the values and ethics for others to follow.When values become engrained they become part of our daily lives and our basicmoral compass. If one can turn ‘values’ on and off, one set of values for whenyou’re at work and then another set for when you’re away from work, then youdon’t ‘own’ those values and you are simply pretending to enact them throughcompliance.

One of the core attributes of effective leadershipis creating a culture that is owned by the whole organisation – hence the greaterthe number of effective leaders in the workplace then the greater the change in‘positive values’, both in and outside the work place.

There are still too many colonial leaders in thebusiness world, living and enacting an outdated form of ‘poor’ leadership –maybe scared of their own fragile weaknesses – and using a form of colonialpower to have their way (and hide their inadequacies).

The worst outcome for our future is that thesecolonial leaders are scared of real talent and ensure that their successors areas weak as they are – ensuring a further generation of inadequate leadershipwithout the backbone to stand up and ‘fight’ for the values the world yearnsfor.

In my lifetime I have seen amazing progress intechnology, medicine and science - all improving our knowledge, our health, andour understanding of the earth and our universe. But sadly as fast as this amazingknowledge has developed – we, the human race, don’t seem to have made much progressfrom our sad and barbaric past.

If we are going to ignore a child bleeding in thestreet, whether out of fear or cold heartedness, don’t we all need to take areal good look at our moral compass?

Are the E7 About to Take the Lead Over the G7?

2011-10-16T18:16:00.000+02:00

They say the only place to go, once you’ve reachedthe top, is down. The G7 countries have been sitting at the top for some timenow and maybe, just maybe, their time at the top is coming to an end and sevenemerging markets are about to take over. History will tell us that no singlenation has stayed at the top and, probably, all those that were there and thenwere knocked off their perch never saw it coming either – maybe something to dowith the arrogance of dominating for too long.

Can you name the top seven emerging economies –that’s a good place to start? If you can it means you’re up-to-date withcurrent trends and who’s driving the global economic recovery. If not, maybe,you’re still embracing a ‘status quo’ that is out of date and ignoring a scenario which may have asignificant impact on the future growth of your own organisation.

The seven countries that make up the E7, as thelargest emerging economies are – China, India, Brazil, Mexico, Russia,Indonesia and Turkey. It’s these seven countries that Michael Queen, 3i CEO,states will surpass the G7 group of the largest industrialised nations withinfive years from now; and he goes on to predict that these same seven emergingeconomies will be twice the size of the G7 by 2050, (Helen Power, The Times, 13^thOctober, 2011, p.48).

Unless the current G7 countries wake up to the factthat the world is changing, they will fall into the trap of many countriesbefore them – of believing they are invincible (and being proved wrong).

What’s interesting in this specific era is that onecould argue that it appears as if the citizens of the G7 countries, seem to bemore aware of the global environment than their business and political leadersaround them, who seem determined to cling to a past state that gave them ‘power’and refuse to see the need for change or maybe it’s simply they don’t know howto change.

Clever, forward looking organisations have beendeveloping trade links with the seven emerging economies over many years –developing sustainable strategies and long-term relationships that will givethem a competitive advantage as the global economy shifts its dominance.

Those organisations who can’t embrace the change aredoomed to fighting for the local scraps of business with other arrogantpost-dominant wannabe’s. What’s sad about this forthcoming scenario isn’t thatthese blind leaders will be brought down to earth with a thud, but the damagethat they will do to their local communities in the process, through thecreation of horrific levels of unemployment and deprivation, all through theirblind arrogance.

However the good news is that the tide hasn’tcompletely turned yet and there is still scope and time for the G7 countries,or some of them, to make the required changes that will allow them to competewith the strong emerging economies and play a significant part in the nextgeneration of global economic dominance. It will just take some humility andhonesty, both by those in power and those ‘reporting’ events, like the media –who could through their constant desire for sensationalism, drive some of the G7economies into oblivion, just for the sake of a story – and taking noresponsibility in their role as the country declines, until they too are just ablast from the past.

The main message for organisations is to look afterthemselves through detailed strategic analysis, strategic formulation andimplementation – seeking the ‘real’ opportunities in the global economy andbeing totally honest about their real weaknesses and the real threats on theirbusiness, both in the short and the long term.

Emerging from the next few years will be the trulygreat leaders within the G7 business environment – but don’t expect to becounting them on more than two hands….

Which is the Best Strategic Model?

2011-10-09T15:03:00.000+02:00

Strategy is one of those business phrases, a bit likeLeadership, that can be on everyone’s lips as a key business topic – but when youask what strategy actually is, you can end of with a lot of fancy words andwaffle, that doesn’t define anything - except that the person hasn’t a realclue what the subject is about.

First and foremost strategy is nothing withoutimplementation – and that means effective, efficient and successfulimplementation.

Many organisations have ‘collections’ of strategicdocuments, analysing this and recommending that, which never get implemented –these documents are often either generated internally after a few nights awayat a luxury conference centre or generated for a hefty fee by less thanscrupulous consultancies that use the organisations knowledge to develop a‘future’ that the organisation hasn’t a hopein hell of achieving – because they’ve analysed a future state without matchingthe implementation requirements against the current skills, productivity, cashflow, and other ‘real’ constraints….creating a fictitious masterpiece.

When business people talk about strategy, why do they manyonly talk about the plan and not about the results of the implementation?Strategic planning without implementation is a waste of time and resource.

There are various strategic models that are ‘punted’ asoffering the best approach to the ‘strategic processes’, including; MichaelPorter’s – Five competitive forces that shape strategy; Strategic mappingmodels; Six Sigma (and the several variants of the programme) and the conceptof Strategic herding which many follow blindly….

All of these models offer a valuable insight to thestrategic process but none of them give a blue print for successfulimplementation. It’s assumed that organisations will take care of this lastlittle bit themselves. But this last little bit is dependent on the leadershipaccurately recognising their skills and expertise, and accurately identifyingwhat skills they may have to ‘recruit’ to successfully reach their strategicgoals.

It appears obvious – but in practice is a lot harder than youmight think, as it requires theleadership to admit that they have developed the right strategic plan for theirorganisation, but that they don’t currently have some of the core skills theywill need to reach their goal. This can prove to be the biggest stumbling blockan organisation can have. Because they’ve developed the strategy, they oftenfind it hard to admit they aren’t geared to achieve it – seeing this as afailure. All it means is that sometimes if you can dream it you’re going toneed some other skills to achieve it.

For strategy to be truly beneficial it must deal with;

1) The systematic identification of emergingopportunities and threats;

2) Preparedness to meet change;

3) Risk assessment and analysis;

4) The specification of sustainable competitiveadvantage;

5) Improved communication among executives,management and staff;

6) Prioritising of strategies;

7) Reduction of conflicts between individuals anddepartments;

8) The involvement of all levels of management inthe planning process;

9) More appropriate allocation of scarce resources;

10) Consistency of approach across the organisation;

11) Developing and following through on a detailed,flexible implementation plan.

The primary responsibility business leaders have is todevelop organisations that will be more successful tomorrow than they aretoday, (Harper and Glew, 2008). To the frustration of executives and employeesalike, many firms get caught in a performance rut that prevents them fromreaching their true potential.

Implementation has too often been considered a strategicafterthought, possibly because some consider execution less ‘glamorous’ thanformulating vision and strategic content. In fact the main cause for executivejob turnover is the failure to execute strategy. There is a big differencebetween formulating strategy and executing it.

Many businesses need to shift from relying on superiorstrategy to developing superior strategic implementation capabilities.Ineffective implementation can cripple a business, as the needed strategy goeswanting. So while we often think of the strategic planning process as a corecompetency, I propose that implementation expertise and capability is anequally important entity for creating and maintaining a sustainable competitiveadvantage.

“Effective implementation of an average strategy beatsmediocre implementation of a great strategy every time” (Sterling, 2003).

Who Is Setting the Example for Corporate Reform?

2011-10-02T21:45:00.000+02:00

Despite the efforts of national governments andinternational organisations to improve corporate governance in emergingmarkets, the response of the companies themselves has been underwhelming. Manycompanies ignore the initiatives - which primarily involve reform of boards ofdirectors - or just pay lip service to them. Little attention is paid to thedirectors' qualifications, even when reforms are mandated, as they are in SouthKorea, where 25 to 50 per cent of a company's directors (depending on its sizeand sector) must now come from the outside. Could the problem be that thewould-be reformers are focusing on the wrong reforms? (p.89).

Paul Coombes and Mark Watson mention that “over half(55 per cent) of the respondents in a recent McKinsey survey of private equityinvestors said that reform of the institutional context – reform driven bygovernments, local stock exchanges, and regulatory watchdogs - was at least asimportant as reform of companies. Within the institutional context, the twomain concerns were weak enforcement of legal rights and the management of theeconomy,” (p.91).

What’s particularly interesting about this 2001article is that they state that “the corporate-governance model usuallyprescribed is the one that prevails in the United States and the UnitedKingdom. Its emphasis on shareholder value reflects the environment in thosetwo countries, where a very large, dispersed class of investors, with no priorconnection to the companies listed on the public exchanges, insists on boardsthat are similarly independent. These investors also demand a high level offinancial and business disclosure,” (p.90).

Yet we see ten years later that the governancemodels of the United States and the United Kingdom have not stood up to thetest – and maybe it was assumptions like these that have let first worldorganisations and their external analysts, become over-confident about their ‘real’operational control. In fact contrary to the article some emerging markets wereenforcing credit controls prior to the global crisis – showing strongleadership, which though never spoken about, made these emerging markets muchstronger than their first world counter parts.

It’s as if the first world economies really didn’tbelieve they could be affected by a ‘global crisis’ in such a catastrophic way,compared to their ‘lowly’ counter-parts around the world - proving once againthat arrogance is the worst predictor of future success.

Going beyond the mistakes of some of the toporganisations and their respective analysts – another question that seems tohave been cleverly avoided is; ‘how have first world countries managed theirsuccess or rather failure?’ If a CEO or CFO allowed their organisations to accumulatea tenth (or even less) of the debt some first world countries have amassed –they would not only be fired but criminal charges would swiftly follow.

I reckon we’d all be reasonably ‘successful’ to theoutside world, if every time we mismanaged our finances, we could simply borrowmore – wow, what a life that would be. People are often critical of family or friendswho mismanage their finances and ‘over-extend’ themselves – going for expensivecars or holidays when they can’t afford them. Yet not only is no one, seemingly,being held accountable for the debt crisis in these first world countries – worsestill, without a care in the world, they will spend billions of dollars (orpounds) on wars around the globe – while their people back home are suffering.

What example does this set for the next generationwhen it comes to financial control – I can hear sons and daughters in the notso distant future arguing that they might be in debt, but would still like mumand dad to bail them out, considering they’ve managed their finances betterthan the US, Greece, Ireland, Portugal, Italy and numerous other countries.

So where are the leaders of the future who are goingto put organisations and countries back on a ‘real’ sustainable path of growthand success, rising above the game playing both with their respective organisationsor the lives of their citizens?

References

Coombes, P. and Watson, M. (2001). Corporate Reformin the Developing World. The McKinsey Quarterly, No. 4, p. 89-92.

Identifying and Curing Adult Syndrome?

2011-09-25T18:37:00.000+02:00

We normally know who they are in the organisation orhave torrid memories of ‘them’ when we first started our careers. We also knowthat adult syndrome has several types, but each type creates similar end results- lowered levels of productivity. After reviewing the symptoms listed here, you’llhopefully find that you’re not infected, though unfortunately for some at theother extreme you may find that you are infected with more than one type. If thisis the case, you may need to spend extra time working on the cure (Bobinski, D,2006, 18).

Dan Bobinski defines, Type 1 adult syndrome as imaginedunderstanding. “This form of the disease is carried by those who imagine thatbecause they are adults, they should already understand what someone is saying beforethey say it. The condition is usually observed by others through the frequentrepeating of the phrase 'I know.' It is sometimes referred to as arrogance,”(p.18).

Type I adult syndrome can be acute in people holdingany senior position from executive to supervisory, and often where thepromotion has solely been based on past performance.

Interestingly, this form of the disease affectspeople trying to hide something - mainly because they're afraid they'll looklike idiots for not being omniscient, (ok, who had to look up omniscient?).

Dan Bobinski defines Type II adult syndrome as intentionaldeflection. “This type of the disease is all about self-preservation. It foolsthe observer by redirecting attention when the infected person doesn't know theanswer, or doesn't want to know,” (p.18).

What is concerning about these two types is thatthey are far too common to be healthy for organisational and industry growth,in today’s global economy. The global crisis itself is,to some extent, due toadult syndrome and the current ‘mess’ in sorting it out has adult syndromewritten all over it as well.

Babinski states that “curing adult syndrome ispossible, but the treatment can be a tough pill to swallow. The best antidoteis a large, thick slice of humble pie. Don't misunderstand, this is far from grovelling.It's just a dose of reality. Sadly, many deny humility's healing powers,viewing it as a weakness rather than a strength,” (p.19).

It’s worth noting what author Rick Maurer says that weneed to be willing to be changed by listening to another person. This doesn'tmean we desire to be changed, but rather that we are willing. It's a fine lineof difference, but an important one. Misunderstanding this difference is whymany continue to suffer from adult syndrome.

It’s unfortunate that with all the access peoplehave to information and learning that organisations still ‘accept’ culturesthat allow for the use of “imagined understanding” and “intentional deflection”– as both approaches are painfully obvious to the employees that have to dealwith it on a regular basis and yet this transparent ‘stupidity’ appears to go unnoticedby the ‘user’, similar to the ‘King who wore no clothes’.

What organisations need are individuals, at alllevels, who are clear and transparent about what they ‘know they know’ but who,even then, are willing to ‘listen’ to other points of view. But moreimportantly individuals who are willing to acknowledge what they ‘know they don’tknow’, and are open to find the answers from those who have the knowledge,(regardless of that persons level in the organisation).

So as Bobinski states in conclusion; “bottom line,if we are willing to listen to someone else in a mind-set that acknowledges wearen't omniscient and we don't have all the answers, the symptoms of adult syndromebegin to fade away. Then reality comes to the surface, and workingrelationships become healthy,” (p.19).

References:

Bobinski, D. (2006). Adult Syndrome: Is There aCure? Management Services, Summer, p. 18-19.

Who Should Decide Executives Pay?

2011-09-04T20:00:00.003+02:00

How much should the Executive Team be paid and who should be involved in the decision? Executive pay has always been an emotive issue, but this issue is raising new concerns as the world comes out of a global recession and many workers are struggling to make ends meet - as John Cridland, the director-general of the Confederation of British Industry stated, "at a time of austerity, when everyone is seeing their income squeezed, executive pay is a particularly sensitive issue."

An article by Robert Watts sites a poll that was commissioned in the UK that found that almost half of the 2,000 people polled thought the annual pay of FTSE 100 chief executives was less than £1 million. When they were told that the true figure was almost £5 million, just 1% believed that such a sum was justifiable.

But who should be involved in the decision around executive pay - for most organisations in the public sector the board and shareholders are involved with pay decisions. These days organisations will undertake comprehensive surveys to benchmark their pay structures with other organisations - so it's not that boards are just coming up with a figure. Shareholders to have a significant vested interest in the performance of the CEO and executive team and hence shouldn't vote through unrealistic pay agreements.

In the UK, Vince Cable, the Business Secretary believes that workers should be given new powers to help decide how much their bosses should be paid - but I wonder how exactly that would work in practice. I can just visualise someone who hasn't been active in business for some time, sipping their single malt whisky in their private club, thinking that in a perfect world how great it would be for workers to determine their bosses pay. Imagining Joe from maintenance and Joyce from Reception, strutting into the board room and productively discussing the current global trends in executive pay and while puffing on their first Cuban cigar telling the CEO that they will have to cut their pay this year by 10% to be in line with their expectations.

Executive teams that abuse pay at the highest level aren't going to have their ways changed whoever you send in from the employee base. It is a culture that resides at the top and can only be changed from the top. These orgnisations use power and fear within the organisation and decide their annual pay rewards with little fear of being questioned. What's interesting, is those that moan about their bosses salaries, quickly change their tune if and when they rise to the same positions - then all of a sudden they 'cash' in on the cultural norm for this establishment.

Of course these organisations with the questionable ethical approach to executive pay are most likely to only invite those employees to join a pay review panel that are going to do as they are told - making a further mockery of the system.

It's not all doom and gloom, in Germany for example, supervisory boards set executives’ pay. Half the members of each board are lay staff, often trade union representatives.

The simple answer in a transparent organisation is that the executive pay should be understood and acceptable to all (or at least most employees). Where you need to legislate around executive pay - you actually need to change the culture as no 'forced measures' will get the required response.

Great organisations with great leaders have transparent pay and reward systems - poor organisations with poor cultures live in a world of secrecy. Change the culture and you'll change the approach.....

References

Watt, R. (2011). Cable may give workers a say in bosses' pay. Sunday Times. 4th September, p.10.

What Makes a Job Enjoyable?

2011-08-30T20:24:00.002+02:00

What makes a job enjoyable and how many people actually get up every morning to go to a job they enjoy? The thought, for some, may be of money - but money in itself is unlikely to make a job enjoyable (though it may ease the pain).

In the Sunday Times dated 21st August, John Harlow wrote an article describing how in the next twelve weeks, a US government agency will make the first decisions, about flying mankind to the nearest inhabitable planet and whether we leave the solar system in giant tankers or personal ‘space yachts’, in deep sleep or frozen embryos.

Does this sound like an enjoyable and exciting job?

The government department called the Defense Advanced Research Projects Agency (Dapra) will seek to draw up ground rules for exploration and colonisation of worlds beyond the solar system. Depra is not ‘science fiction’ and is currently testing driverless cars in the Californian dessert, remote-controlled mechanical insects for crowd surveillance and thought-activated prosthetic arms.

One of the people who is employed for Depra is Regina Dugan, a Director, who will oversee the first meeting to define the first steps towards this interstellar adventure. At first this may seem an adventurous and exciting job, taking away the day-to-day monotony that many employees endure. Yet the decisions that have to be made go way beyond science, and include the missions destination, the legal ramifications, the sociological impact and the philosophical issues. Questions like ‘who should travel – should it be a small team of scientists or a cross-section of humanity.’ What about religion, law and order etc – and do we want them to represent a current fixed vision of humanity or to be free to create something else out there?

This is likely to be a thankless task – as it will be impossible to please ‘all the people’ that will have an opinion. Though appearing exciting, this could well be a highly stressful job and not that enjoyable at all. It’s the kind of job that looks exciting on the surface but where you are being set-up to disappoint the masses (who will need someone to blame) and you will never actually know the results of your decision – good or bad.

It seems to be human nature to look at other peoples job’s and feel envy for the excitement, adventure and challenges the job appears to offer – yet what we see on the surface, can often hide the real day-to-day role and accountabilities that truly define the job in totality.

Defining enjoyment in the work environment can prove problematic, unless one can fully empathise with the whole business environment and understand ones day to day responsibilities in respect to ‘the whole’. It’s in this area that some managers lose the plot - by not ensuring that all their employees understand the importance of their role and how their contribution, however minor they may perceive it, adds to and supports organisational success.

An organisation should be a cohesive unit of individual parts, which through effective strategy and leadership, work like a well oiled machine to optimise the organisations performance and ensure continuous improvement and sustainable growth. Any one of these individual ‘parts’ that is not working, as one, with the rest of the organisation will guarantee a sub-optimal solution – which in itself will impact the potential ‘cash’ that is available to be ‘shared’ by the organisation, whether as salary increases, bonuses, or both.

Management could do a lot more to make the less than attractive jobs more enjoyable to those employed in these roles. It’s a simple fact that though the job might not pay much, might not require university degrees and doesn’t in itself hold great responsibility – someone has to do it, and a motivated employee is much more productive than a demotivated one.

Simply put, your organisation won’t function without them – regardless of how many qualifications and years of experience your executive team has – so be smart, and try to make all jobs in your organisation enjoyable to do – you’ll be surprised by the positive impact on performance.

References

Harlow, J. (2011). Stock up your fridge, ET – we’re coming to stay. The Sunday Times, 21st August, p.7.

What Makes a Good Boss in Unsettling Times?

2011-08-21T19:17:00.001+02:00

In an interesting article in the Harvard Business Review, Robert Sutton wrote that “when people – independent of personality – wield power, their ability to lord it over others causes them to (1) become more focused on their own needs and wants; (2) become less focused on others’ needs, wants, and actions; and (3) act as if written and unwritten rules that others are expected to follow don’t apply to them. To make matters worse, many bosses suffer a related form of power poisoning: They believe that they are aware of every important development in the organization (even when they are remarkably ignorant of key facts). This affliction is called “the fallacy of centrality” – the assumption that because one holds a central position, one automatically knows everything necessary to exercise effective leadership,” (p.44).

But does this mean that everyone who has any form of organisational power thinks like that – and does it also mean that they are unable to control their ‘power thoughts’ over the needs for effective leadership - for if so, we are in for a rocky ride in the leadership dimension….Fortunately not, as there are good bosses who respond to the needs of their people in unsettling times.

Sutton highlights how followers devote immense energy to watching, interpreting, and worrying about even the smallest and most innocent moves their superiors make. This is something we’ve long known about animals; studies of baboon troops show that the typical member glances at the alpha male every 20 or 30 seconds to see what he is doing. And although people don’t check what their boss is doing two or three times a minute, this tendency is well documented in human groups, too. As the psychologist Susan Fiske puts it, “Attention is directed up the hierarchy. Secretaries know more about their bosses than vice versa; graduate students know more about their advisors than vice versa.” (p.45). Related studies also show that when people down the pecking order feel threatened by their superiors, they become distracted from their work. They redirect their efforts to trying to figure out what is going on and to coping with their fear and anxiety – perhaps searching the web for insight or huddling with their peers to gossip, complain, and exchange emotional support. As a result, performance suffers.

The importance of predictability in people’s lives is hard to overstate, and has been demonstrated in numerous studies. The most famous is Martin Seligman’s research on the signal/ safety hypothesis. Seligman observed that when a stressful event can be predicted, the absence of a stressful event can also be predicted. Thus a person knows when he or she need not maintain a state of vigilance or anxiety. Seligman cites the function of air-raid sirens during the bombing of London in World War II. They were so reliable a signal that people felt free to go about their business when the sirens were silent. The hypothesis was bolstered by studies in which some animals and not others were given a warning in advance of a shock. Those that were never warned lived in a constant state of anxiety. (p.45)

During overwhelming times, a good boss finds ways to keep up a drumbeat of accomplishments, however minor. The organizational theorist Karl Weick shows in his classic article “Small Wins” that when an obstacle is framed as too big, too complex, or too difficult, people are overwhelmed and freeze in their tracks. Yet when the same challenge is broken down into less daunting components, people proceed with confidence to overcome it. (p.48)

Compassion can and does take many forms. At its heart it is as simple as adopting the other person’s point of view, understanding his anxiety, and making a sincere effort to soothe it. (p.48) Compassion is most important when it helps people retain their dignity. (p.49)

Bosses who increase predictability, understanding, control, and compassion for their people will allow employees to accomplish the most in a time of anxiety – and will earn their deep loyalty. A manager who provides all four will be perceived as “having people’s backs.” That’s a good phrase to keep in mind when you know your people are feeling vulnerable, because it will inform all your actions, big and small. (p.49)

So are you a Good Boss and are you being responsible in terms of what your people may lack the most in unsettling times: predictability, understanding, control, and compassion.

References

Sutton, R. I. (2009). How to Be a GOOD BOSS in a Bad Economy. Harvard Business Review, Vol. 87 Issue 6, p.42-50.

What Do Shareholders Really Want?

2011-08-14T18:14:00.002+02:00

In a 2010 article in the Harvard Business Review, Roger Martin asks the question “have shareholders actually been better off since they displaced managers as the centre of the business universe? The simple answer is no. From 1933 to the end of 1976, when they were allegedly playing second fiddle to professional management, shareholders of the S&P 500 earned compound annual returns of 7.6%. From 1977 to the end of 2008, they did considerably worse – earning real returns of 5.9% a year. If you modify the start and end dates of the two periods, you can produce performance numbers that are at parity, but there’s no sign that shareholders benefited more when their interests were put first and foremost,” (p.60).

One may be asking why Martin is looking at these specific years and that is because modern capitalism can be broken down into two major areas, the first, managerial capitalism, began in 1932 and was defined by the radical notion that firms ought to have professional management. This period is noted for the famous work by Adolf Berle and Gardiner Means who published their paper entitled “The Modern Corporation and Private Property”, which stated that management should be divorced from ownership.

Then in 1976, the second era of modern capitalism started, when managerial capitalism was strongly criticised by Michael Jensen and William Meckling in their paper entitled “Theory of the Firm: Managerial Behaviour, Agency Costs and ownership Structure. This paper, which Martin highlights has become the most-cited academic paper of all time, argued that “owners were getting short changed from professional managers, who enhanced their own financial well-being rather than that of the shareholders. Stating that managers were squandering corporate and social resources to feather their own nests,” (p.60).

There seems to be a lot of criticism about ‘fat cat’ organisations and their ‘greedy shareholders’ – but how true are these comments in reality. Many institutional shareholders are responsible for pension funds and similar investment vehicles. These portfolio’s aren’t short-term in nature, in fact far from it, these institutional investors are looking for long-term sustainable results – and short-term gains followed by a big loss doesn’t instil confidence in these investors.

Also similar to customer theory, many individual shareholders have unrealistic expectations in respect of investment returns – some are looking for a quick profit for themselves with little concern for the long term interests of the organisation. Wanting to get in and get out with a quick profit – where in this instance the focus of the investor is purely self-interest.

So why is it that companies that don’t focus on maximising shareholder value deliver such impressive returns? Because, says Martin, their CEO’s are free to concentrate on building the real business, rather than managing shareholder expectations. Martin’s article highlights how, back in 1997, just after the IPO, Research in Motion (RIM), makers of the Blackberry, made a rule that any manager who talked about the share price at work had to buy a doughnut for every person in the company. In 2001, the COO mentioned RIM’s surging stock price and was subsequently actioned with buying 800 doughnuts for the employees - apparently he had to make special arrangements to have that many made and delivered. Either way there hasn’t been a recorded infraction of the rule since then, (Martin, R, 2010, p.64).

What organisations want are shareholders who seek an investment that is in the interests of both parties and not the shareholder that has only their self-interest at heart, especially if it’s short term self-interest. These short-term focused investors will never optimise sustainable organisational performance, which is more likely to give greater returns over the long haul and will have little interest in strategies that optimise anything beyond this years returns. A short-sighted view that is likely to lead to long term disaster.

As Martin concludes “managers like profits as much as shareholders do, because the more profits the firm makes, the more money is available to pay managers. In other words, the need for a healthy share price is a natural constraint on any objective you set. Making it the prime objective, however, creates the temptation to trade long-term gains in operations-driven value for temporary gains in expectation-driven value,” (p.65).

References:

Martin, R. (2010). The Age of Customer Capitalism. The Harvard Business Review. Vol. 88, Issue 1, p.58-65.

Are First World Leaders Above the Law?

2011-08-07T18:22:00.002+02:00

I overheard a young boy ask his mother for more pocket money the other day. When she explained that she couldn’t afford to give him more, I heard the young man say “but Mum, can’t you just raise your debt ceiling?”

If a Financial Director managed an organisations finances like some first world governments have managed there’s – not only would the individual be fired, but they would also face criminal prosecution and most likely jail time. Are political leaders above the law and if so, aren’t they then exactly the same as the dictators we abhor and vindicate around the world.

First world citizens are beginning to look like puppets, being the easiest bunch of people to be pushed around and dictated to by the very people they ‘democratically’ vote in to power every few years. In the West we have been taught to expect Third World countries to need financial assistance on an annual basis as they try to ‘build their economies’ in order to be able to compete with the First World masters of economic ‘best practice’. But First World countries are showing themselves to be fraudsters when it comes to financial management – and while their own finances get into deeper and deeper trouble, they are still prepared to spend money they don’t even have on an odd war here or to support another country there – with apparently no one to answer or account to. That can’t be right and can’t be democratic, surely?

I have often heard criticism of today’s younger generation for not being responsible – often as a general comment, rather than anything specific – but who’s showing them how to act responsibly. Can we really blame this generation for not being financially astute, when all a country has to do when they need more cash or get into financial trouble is simply to raise their debt ceiling and borrow more cash. What a life – wouldn’t it be great if we could all do that?

Daily, First World countries are seeing an increase in individuals and families suffering from poverty - being made homeless and needing food donations – yet many of these countries are prepared to spend money beyond their shores for no immediate benefit – while leaving their own citizens to suffer. Until you’ve been homeless you can’t underestimate the negative impact this has on individuals and families - the shame, the desperation, the sadness – which can even lead to the ‘head of the household’ committing suicide, as the stresses just become too unbearable.

Many of the political ‘policy makers’ within our First World community sit in their fancy private clubs, sipping their 50 year old whiskies making decisions, with no semblance of understanding of the impact their ‘simple’ decisions have on the lives of the very people they have been put in ‘power’ to help and support.

As much as there appears to be a lot of debate and criticism of the lack of good and effective leadership in business around the world, we actually need these less than perfect business leaders to help gather citizen support to hold their political leaders to account and if necessary to prosecute them as well. These indefensible arrogant and self absorbed politicians need to be held responsible for their actions – since through their decisions, they set the very foundation for their countries organisations to be successful in the global business market, where they can create ‘real’ wealth and employment opportunities.

There still appears to be a dreadful colonial arrogance to political leadership in the First World that can only have a negative impact on the optimal development of our future leaders across all spheres of human interaction. It’s time only true experienced professionals were allowed to lead nations and develop countries….

Are You Empowering Creativity in Your Organisation? Two Key Drivers for Success

2011-07-31T18:25:00.003+02:00

Xiaomeng Zhang and Kathryn Bartol (2010) state that “given increasingly turbulent environments, heightened competition, and unpredictable technological change, more and more managers are coming to realize that they should encourage their employees to be creative (Shalley & Gilson, 2004). Considerable evidence indicates that employee creativity can fundamentally contribute to organizational innovation, effectiveness, and survival (Amabile, 1996; Shalley, Zhou, & Oldham, 2004),” (p.107).

Organisational ideas, in respect of opportunities and threats, can come from any level within an organisation and often some of the best ideas come from the most unusual sources. It’s a myth that the leader is solely responsible for ‘idea generation’ and creativity. Leaders want a culture that encourages creative ideas, which then allows the strategic leadership to assess and prioritise these ideas in respect of ROI, time frames, diversification and other key strategic drivers. To get the culture of idea generation, leaders need to empower all employees to be creative

Zhang and Bartol highlight that “creativity refers to the production of novel and useful ideas by an individual or by a group of individuals working together (Amabile, 1988; Madjar, Oldham, & Pratt, 2002; Shalley, Gilson, & Blum, 2000; Zhou & Shalley, 2003). For creativity to occur in organizations, managers need to support and promote it, as they are the individuals who are most knowledgeable about which employees work outcomes should be creative and they have considerable influence over the context within which creativity can occur (Shalley & Gilson, 2004),” (p.107).

What’s interesting is that it’s often assumed that everyone wants to be creative, (given the chance), where theoretical arguments have suggested that psychological empowerment, in turn, makes a critical contribution to employee creativity by positively affecting an employee’s intrinsic motivation (Amabile, 1996; Spreitzer, 1995), but empirical evidence of such an effect has been lacking (Shalley et al., 2004). This connection is important because, conceptually, intrinsic motivation is considered to be a well-established predictor of creativity (Amabile, 1996; Shalley et al., 2004).

Two key drivers influencing the development of an effective creative culture are firstly, the empowerment role identity, which is the extent to which an individual views him or herself as a person who wants to be empowered in a particular job. Then leader encouragement of creativity refers to the extent of a leaders emphasis on an employee being creative and actively engaging in processes that may lead to creative outcomes. (Zhang and Bartol, 2010, p.108)

Zhang and Bartol’s research found that “empowering leadership has the capacity to positively influence employee psychological empowerment, an element of importance in affecting creative outcomes. However, managers are likely to find differences in the extent to which employees wish to be empowered - that is, identify with an employee role that includes empowerment. Hence, managers may find that their empowerment efforts are more successful in engendering cognitions of psychological empowerment in those who view empowerment as part of their role identities. Indeed, evidence suggests that managers do not attempt to empower all employees to the same degree, at least at a given point in time (Forrester, 2000; Yukl & Fu, 1999), a strategy supported by our empowerment role identity findings,” (p.123).

One implication is that, when empowerment role identity is low, leaders may need to expend some time gradually increasing empowerment behaviours so as to encourage employees to begin to view empowerment as part of their role identities. Fortunately, role identity theory suggests that adding role identities is possible through such a process, particularly over time (Stryker, 1980).

Zhang and Bartol's research results suggested that “creativity gains may be boosted if an employee is willing to spend the time and effort necessary to thoroughly identify a problem, search for extensive information, and generate multiple ideas from different perspectives - that is, engage in an effective creative process. Fortunately, our findings also indicate that a leader can play an active role in encouraging such creative process engagement by elucidating to a follower the need for creative outcomes, spelling out what their organization values, and explaining the elements of an effective creative process, such as the one we have considered here. Training employees in creativity-relevant methods or processes is likely to enhance such efforts,” (p.123).

The research is interesting in that it reminds executives and management that not everyone wants to be ‘creative’ to the same degree as everyone else; and it can be dangerous to assume everyone wants to be treated in the same way. As Zhang and Bartol highlight the process involves three key drivers for success: psychological empowerment, intrinsic motivation, and creative process engagement.

The optimum solution for an effective creative culture is understanding, at the individual level, the importance of; the empowerment role identity and the leader’s encouragement of creativity. Understanding the effect of both and optimising both for each employee will give the organisation an effective creative culture.

References

Zhang, X and Bartol, K.M. (2010).Linking Empowering Leadership and Employee Creativity: The Influence of Psychological Empowerment, Intrinsic Motivation and Creative Process Engagement. Academy of Management Journal; Vol. 53 Issue 1, p.107-128.

Regret and Disappointment: Do Customers Respond Differently?

2011-07-24T18:15:00.002+02:00

One might think that there is little difference between regret and disappointment yet the reference point for regret is external (encompassing both the chosen option and the foregone alternatives), whereas the reference point for disappointment is internal (encompassing only the chosen option). Disappointment generally leaves one powerless with a tendency to want to get away from everything and not wanting to do or have any association with the outcome (Zeelenberg et al. 1998). Regret, on the other hand, involves feelings of responsibility and results in not being able to get away from such an experience (Das and Kerr, 2010, p.172).

Neel Das and Anthony Kerr explain that “regret is experienced as a result of a comparison between what is and what might have been, where regret may arise as a result of an unfavourable decision-making process or an unfavourable product choice. The important notion to appreciate is that an unfavourable decision-making process is separate from an unfavourable product choice, and individuals may experience regret from either one or both,” (p.172).

Further Marcel Zeelenberg and Rik Pieters suggest that regret is a cognitive emotion, in that it “contains all the elements typical of emotional experiences” (p. 6) such as a sinking feeling, thoughts about opportunities lost, and thoughts about mistakes made and the desire to correct them, if given a chance.

From a customer perspective Das and Kerr state that “only highly involved consumers are likely to adopt a long-term motivational perspective in terms of decision making. In contrast, consumers with low involvement are likely to take a short-term decision-making perspective and not separate an action relating to a decision into separate phases. In other words, highly involved consumers are more likely to separate the source(s) of regret, whereas less-involved consumers would simply recognize that the regret emotion exists without distinguishing the particular source(s) of the emotion.” They furthermore highlight how “regret is viewed as a cognitive emotion; where high need for cognition individuals have a greater tendency to think elaborately on relevant information, compared to low need for cognition individuals,” (p.175).

So what does this mean for customer behaviour and what can organisations learn from understanding the principles of regret and disappointment. Kowalski (1996) describes consumer complaint behaviour as behavioural expressions of dissatisfaction or unfavourable attitudes directed toward an individual, a situation, or an object. Using the disconfirmation paradigm as his basis, Kowalski expressed that complaint behaviour reflects dissatisfaction from an exchange generated from a negative disconfirmation of expectancies. Yet existing regret research in marketing has found no effect of regret on consumer complaint intentions (Tsiros and Mittal 2000). Research has shown that although satisfaction affects complaint intentions, the effects of regret are mediated via satisfaction (Tsiros and Mittal 2000). Essentially, one may be satisfied with the product but may experience regret when a foregone alternative is perceived to perform better than the chosen product. In such a situation, it is not likely for one to complain to the manufacturer (of the chosen product) about another product that is perceived to outperform the chosen one. Switching to a better-performing product in the future is the likely outcome, (Das and Kerr, 2010, p.177).

Also another important factor is that ‘responsibility’ is an important precondition for regret. The more responsible one feels for the decision action, the more regret one is likely to experience subsequent to an unfavourable result (Zeelenberg et al. 1998; 2000). While responsibility is likely to drive the feelings of regret, it may also help consumers adjust their behavioural intentions accordingly. Das and Kerr explain this by stating “regret arising from the decision-making process may be looked upon as an outcome of procedural accountability, and regret arising from the product choice a result of outcome accountability,” (p.178).

In conclusion it should not surprise us to find that the greater the intensity of the regret experienced, the lesser the likelihood of repurchasing the product and the greater the likelihood of switching to a different product in the future.

But what is really interesting is that neither Tsiros and Mittal (2000) nor Zeelenberg and Pieters (2004) found any effects of regret on complaint intentions; which is something organisations need to be aware of in respect of their strategy towards customer service and customer loyalty. Just because your organisation hasn’t had any complaints doesn’t mean the customer is happy with the product or service.

So how are you going to find and retain those customers that regret their purchase from you and next time will buy from one of your competitors?

References

Das, N. and Kerr, A.H. (2010). "Woulda, Coulda, Shoulda": A conceptual examination of the sources of post-purchase regret. Journal of Marketing Theory & Practice; Spring2010, Vol. 18 Issue 2, p.171-180.

Zeelenberg, M. and Pieters, R. (2007). A Theory of Regret Regulation 1.0. Journal of Consumer Psychology, Volume 17 Issue 1, p.3-18.

Who Responds Best to Exclusive Price Promotions: Men or Women?

2011-07-17T18:23:00.002+02:00

Michael Barone and Tirthanker Roy mention in their 2010 article that “the notion that targeted deals are more efficient than across-the-board sales promotions, that provide unnecessary discounts to price-insensitive consumers, has prompted a dramatic growth in customized pricing and sales promotions. Recently, however, questions have been raised regarding the efficacy of targeted offers in general (Homburg, Droll, and Totzek 2008) and customized price promotions in particular (Acquisti and Varian 2005; Feinberg, Krishna, and Zhang 2002)” (p.121).

One might be tempted to assume, without checking the research, that targeted deals will always be the better way to go, both for the customer and the organisation. Yet, Barone and Roy highlight how “equity theory suggests that evaluations of a targeted offer will depend not only on the relative outcomes associated with the offer (i.e., whether the consumer is a recipient or non-recipient) but also on the inputs or costs associated with receipt of the promotion,” (p.122).

In a world where we’re often told it’s every man for himself the theme adds further credence to the logic that any exclusive price promotion must be beneficial to those receiving it and the offer ‘bought’ with appreciation and thanks.

What’s interesting is how Barone and Roy highlight that “research on self-construal suggests that recipient gender can influence how deal exclusivity affects the evaluations of customized offers. Specifically, Western men are often characterized as possessing independent self-views, while Western women more typically adopt interdependent self-construal’s (Markus and Kitayama 1991). Men’s independent self views should prompt them to value unique (i.e., exclusive) offers that provide them with the basis for self-enhancement to a greater extent than women, whose interdependent self views should result in less favourable evaluations of targeted deals,” (p. 123).

The research by Barone and Roy addresses an important theoretical void in the current literature by establishing the presence of ‘deal exclusivity effects’. Across their three different studies, they demonstrate that some consumers (e.g., male participants and those with independent self views) favour exclusive deals over inclusive ones. The findings further show that under certain conditions (e.g., when the level of relationship equity consumers have built with a marketer through their past patronage is low), both types of offers are evaluated equally favourably.

Perhaps most intriguing are the results indicating that certain consumers (e.g., female participants and those with interdependent construal’s) react negatively to receiving a targeted offer that is exclusive, instead preferring discounts that are more widely available, (Barone, M.J. and Roy, T.; 2010, p.129).

There can be a temptation at times like this to think of the women we know who don’t fall into this category – but that is often the natural inclination when one finds that the conclusions and answers to the research don’t meet our previous expectations. We also have to be honest with ourselves in respect of how much information we had prior to the research becoming available.

Bayone and Roy mention how “these results indicate that consumers who prefer more exclusive deals do so because receiving selective offers provides them with a basis for self-enhancement (e.g., by helping them attain values related to autonomy). In contrast, the negative reactions of participants exhibiting an aversion to exclusive promotions were driven by the superiority of inclusive offers to allow them to self-enhance (e.g., by confirming their desires to maintain harmony with others),” (p.129).

Barone and Roy conclude by highlighting how “evidence documenting the moderating effects of self-construal and gender on deal exclusivity underscores the need for marketers to judiciously consider the use of targeted offers on a segment-by-segment basis. Although gender has long been employed as a segmentation variable, note that self-construal is correlated with several demographic variables that represent market segmentation bases, such as country and ethnic group (Ahluwalia 2008). For example, consumers in the United States tend to have independent self-views, while those in other countries (e.g., Mediterranean nations) typically exhibit interdependent self-construal’s (Oyserman, Coon, and Kemmelmeier 2002),” (p.130).

Maybe it’s worth evaluating your customer base again and looking at how you can optimise your marketing and promotional strategies with your current target markets. Getting the strategy right will add value directly to your bottom-line; where as getting it wrong not only gives you a sub-optimal bottom-line, but can seriously upset some of your current customers. It’s worth giving your strategy another look.

References.

Barone, M.J. and Roy, T. (2010). Does Exclusivity Always Pay Off? Exclusive Price Promotions and Consumer Response. Journal of Marketing; Vol. 74 Issue 2, p.121-132.

Murdoch: Evil Tyrant or Brilliant Strategist?

2011-07-10T18:24:00.002+02:00

Like many in the UK I went to buy the last ever copy of the News of the World this morning; after over 200 employees of the NotW lost their jobs yesterday as the paper printed its last Sunday paper and closed its doors over allegations of phone hacking that the current staff weren’t even party too.

Entities like a newspaper don’t make mistakes, only the humans running them do, and it’s this human element that must be held to account when laws have been broken and distasteful reporting allowed. Here we have a newspaper that was first published in 1843 closing down after 168 years and the woman at the helm during the phase of the ‘phone hacking’ allegations and the current CEO of News International, Rebekah Brook’s, stays in her job with the full support of the owner Rupert Murdoch.

In the old days, the passengers and crew were ushered to the life-boats while the Captain stayed behind and went down with the ship. Today, with the Murdoch Empire, we have a new sordid form of ‘honour’ where the leaders rush to the life-boats and leave the crew to go down with the ship.

It’s believed that at least nine journalists and three police officers are facing jail in connection with the NotW phone hacking scandal and Scotland Yard have accused NotW of orchestrating a five year cover up (The Sunday Times, 10th July, p.1).

This story will be a blockbuster movie soon, as we have a media empire hacking phones of celebrities, royalty, missing children, families of dead soldiers, and God knows who else. We have police officers who were bribed for information and we have members of parliament, including the current Prime Minister, who kowtowed to this media mogul because of the ‘power’ he wielded over their future aspirations.

But behind the repulsive hacking of phones of missing children and the deletion of messages by private investigators, giving the family the belief that their child was still alive; and the sacrifice of a paper and its hardworking staff there is a leadership team that seems to have very little feeling towards the human race. Rupert Murdoch, his son James and Rebekah Brooks have a lot to answer for and personally hope they are brought to account for their actions sooner rather than later.

This story clearly has a long way to go – if it is ever given the opportunity to run its full course. But one can’t help wondering just how much ‘dirt’ these media moguls have on their ‘pray’ and what strings they will pull to ensure their tune is still played out to the public.

The Murdoch bunch knows that the ‘public’ are a less than attentive crowd, who can quickly turn their attention from one issue to another at the drop of a hat – especially if sufficiently motivated. A scandal with the Prime Minister or the head of the Metropolitan Police would probably be enough to change peoples focus from the disgusting hacking claims.

Murdoch hasn’t got this far without knowing how to deflect issues and play people off against each other. So is Murdoch an evil tyrant or a brilliant strategist. Some might admire this man who, through his mafia style, is able to control politicians and big business. They may think he's doing what they believe any good businessman should do – maximising shareholder value.

I didn’t get the memo indicating the changes to a leader’s responsibility myself, but I remember a time when leaders were held accountable for their actions and their organisations. A time when giving an excuse like ‘I didn’t know’ wasn’t acceptable, as it was the very fabric of their job to know (besides they were paid massive salaries to know as well).

If leaders can simple use the phrase ‘I didn’t know’ every time something goes wrong then it looks like the organisational pyramid is about to be turned upside down; and leadership programmes will need to change much of their content.

The Murdoch’s along with Rebekah Brook’s need to step up and face up to their responsibilities, even if it takes them all the way to a public trial and to face the consequences of their actions. Currently too many of the top organisations seem to be portraying a very poor level of leadership and basic judgement.

Do You Always Apply ‘the Golden Rule’ in Business?

2011-07-03T18:18:00.003+02:00

The Golden Rule, or the Ethic of Reciprocity, states that we should treat other people as we would wish to be treated ourselves. As a concept, the Golden Rule has a history that long predates the term itself, as the ethic of reciprocity was present in certain forms in the philosophies of ancient Babylon, Egypt, Persia, India, Greece, Judea, and China.

Harry Gensler mentions that “the golden rule is best interpreted as saying: ‘Treat others only as you would consent to being treated in the same situation.’ To apply it, you'd imagine yourself on the receiving end of the action in the exact place of the other person (which includes having the other person's likes and dislikes). If you act in a given way toward another, and yet are unwilling to be treated that way in the same circumstances, then you violate the rule.”

The Golden Rule has received a lot of criticism as we don’t all have the same likes and dislikes and questions the basic assumption that others would want to be treated like we would, in the first place.

George Bernard Shaw commented that if your values are not shared with others, the way you want to be treated will not be the way they want to be treated; stating that the sadist is just a masochist who follows the golden rule. An example of an inconsistency of the Golden Rule would be a man walking into a bar looking for a fight.

Further, the philosopher Immanuel Kant (1724-1804) famously criticised the golden rule for not being sensitive to differences of situation, noting that a prisoner duly convicted of a crime could appeal to the Golden Rule while asking the judge to release him, pointing out that the judge would not want anyone else to send him to prison, so he should not do so to others.

Gensler states “that to apply the golden rule adequately, we need knowledge and imagination. We need to know what effect our actions have on the lives of others. And we need to be able to imagine ourselves, vividly and accurately, in the other person's place on the receiving end of the action. With knowledge, imagination, and the golden rule, we can progress far in our moral thinking.”

In US history, President John F. Kennedy appealed to the Golden Rule in a 1963 anti-segregation speech at the time of the first black enrolment at the University of Alabama. He asked white members of the audience to consider what it would be like to be treated as second class citizens because of the colour of their skin. He asked whites to imagine themselves being black and being told that they could not participate in voting, or go to the better public schools or eat at public restaurants or sit at the front of the bus. Would whites be content to be treated that way? He was sure that they wouldn’t and yet he noted that this is what that particular demonstration was all about. He further said that the “heart of the question is whether we are going to treat our fellow Americans as we want to be treated.”

Marilyn Lustgarten makes a great point when she states “treat people like assets and they’ll create wealth,” which might be a play on the golden rule, but is surely worth remembering in the business environment.

But how often in business do we take the time to think about the Golden Rule and treating people like we would want to be treated. Does an effective leader need to apply the Golden Rule consistently or is there a time and a place when the Golden Rule doesn’t apply?

Gensler concludes by mentioning that “the golden rule is best seen as a consistency principle. It doesn't replace regular moral norms. It only prescribes that our actions (toward another) aren’t out of harmony with our desires (toward a reversed situation action). It tests our moral coherence. If we violate the golden rule, then we're violating the spirit of fairness and concern that lie at the heart of morality.”

References:

Gensler, H. [On-line] http://www.jcu.edu/ philosophy/ gensler/ goldrule.htm [last updated: unknown] Reviewed 3rd July, 2011.

Lustgarten, M [On-line] http://www.imcstlouis.org/ artman/ publish/ article 12.shtml [last updated: unknown] Reviewed 3rd July, 2011.

The Golden Rule [On-line] http://www.wlconnect.com/ pubs/ golden.pdf [last updated: unknown] Reviewed 3rd July 2011.

How Do You Respond in a Crisis?

2011-06-26T18:47:00.010+02:00

I’m reminded of the announcement from an airline that said, “in the event of a sudden loss of cabin pressure, masks will descend from the ceiling. Stop screaming, grab the mask, and pull it over your face. If you have a small child travelling with you, secure your mask before assisting with theirs. If you are travelling with more than one small child, pick your favourite."

The word Crisis is derived via Latin from the Greek root definition, meaning a decision, a choice, a turning point for good or bad. It should strictly refer to a moment rather than a continuing process, so that uses such as a prolonged crisis are strictly speaking self-contradictory. However, a word as useful as crisis will not allow itself to be strait-jacketed in this way, and many examples of the disputed use will be found.

Crisis is often used with a defining word, either an adjective or an attributive noun as in economic crisis, energy crisis, financial crisis, food crisis, hostage crisis, identity crisis, midlife crisis, refugee crisis, etc.

It’s interesting that the Chinese word for crisis is written by joining two ideograms together. When these ideograms, are presented separately they stand for two different ideas or concepts. The first ideogram stands for danger and the second ideogram stands for opportunity.

What’s also interesting about the word crisis is that it relates to an unstable condition, as in political, social, or economic affairs, involving an impending abrupt or decisive change; and is usually linked with an emotionally stressful event or traumatic change in a person's life.

We, as individuals, will respond to a crisis in many different ways, as a ‘crisis’ is felt on a personal level. Even a ‘global crisis’ effects people in different ways, so the immediate response from individuals will be based on their perception about the ‘crisis’ (in respect of what they feel is at stake) and their ‘skills’ in dealing with it.

The two ideograms for the Chinese word for crisis give us a good indication of an effective approach to dealing with a crisis – first to appreciate the danger, but second to see the opportunity.

A crisis has the ability to bring out the best and worst in people (at all levels of an organisation). Some people simply cannot handle certain crises and will turn and run for the hills. This is often due to panicking about the perceived outcome from the crisis and its implications on the individual; and is also due to the person not having the skills to deal with the crisis in a timely and efficient way. These are the people that work on the principle that “eagles may sore, but weasels never get sucked into an airliners engine intake.”

In any crisis, business or personal, the most important thing is to remain calm. You must be strong enough to appear calm, regardless of how you might feel inside.

Effective leaders give inspiration in a crisis through their controlled approach, bringing calm to almost any crisis situation. They attract followers by having a confident plan of how to deal with the crisis and communicate this calmly and clearly to the whole organisation. This gives the organisation a confidence that the crisis will be averted and things will either return to normal or, in fact, get better.

Effective leaders vary their behaviour in a crisis, reacting to individual situations and use their words sparingly but clearly throughout the crisis situation. In fact maybe one of the true tests of an effective leader – is how they deal with a crisis – and how their organisation follows them through the crisis and comes out the other side.

In conclusion we should always remember that: Conflict builds character. Crisis defines it.

References:

Crisis: Definition, Synonyms from Answers.com: Found on 26th June 2011 at [http://www.answers.com/topic/crisis]

Wilken, T. (2001). Crisis: Danger and Opportunity. Uncommon Sense Library, Volume IV.

Does the Media Influence Our Future Leaders in the Right Way?

2011-06-19T18:38:00.001+02:00

The media industry is a business, and like all businesses has a need to make profit to survive, but do they also have a responsibility, direct or indirect, towards the influence they have on the development of our future leaders – where our future leaders are effective and ethical, focusing on sustainable growth and continuous improvement?

The global media is so prevalent in our lives and has the ability to influence our thinking and perception, so what standards exist and how are they applied.

Most codes of media ethics, standards and good practice are directly applicable to the specific challenges faced by the journalists and reporters. Historically and currently, this subset of media ethics is widely known as their professional "code of ethics" or the "canons of journalism". While various existing codes have some differences, most share common elements including the principles of truthfulness, accuracy, objectivity, impartiality, fairness and public accountability, as these apply to the acquisition of newsworthy information and its subsequent dissemination to the public.

One of the leading voices in the United States on the subject of journalistic standards and ethics is the Society of Professional Journalists. The preamble to its code of ethics states that, “public enlightenment is the forerunner of justice and the foundation of democracy. The duty of the journalist is to further those ends by seeking truth and providing a fair and comprehensive account of events and issues. Conscientious journalists from all media and specialties strive to serve the public with thoroughness and honesty. Professional integrity is the cornerstone of a journalist's credibility”.

Yet, as with other ethical codes, there is a general concern that the standards of the media industry are being ignored. One of the most controversial issues in modern reporting is media bias, especially on political issues, but also with regard to cultural and other issues, including sensationalism which is often a common complaint. Also minor factual errors are also extremely common.

There are also some wider concerns, as the media industry continues to change, for example that the brevity of news reports and use of sound-bites has reduced the focus on the truth and may contribute to a lack of needed context for public understanding. From outside the profession, the rise of news management contributes to the real possibility that news media may be deliberately manipulated. Selective reporting and double standards are very common allegations against newspapers, which are forms of bias not easy to establish or guard against.

But in a world where one wants freedom of press; how should this freedom be used for the ‘good’ rather than the ‘sensational’ – where the sensational ‘sells’ and has that shock value. But where sensationalism diverges from true and ethical practices, and can give the wrong impression and create wrong perceptions about issues like effective leadership.

There appears to be a constant stream of headlines reporting on highly placed businessmen and women who have taken advantage of their leadership positions and associated powers to be unethical and poor models of effective leadership. Yet where are the pictures and stories of the effective leaders around the world, for today’s employees and students to see and aspire towards.

Looking at the media industry at it’s worst, Christopher Goodwin’s article in the Sunday Times reviews the incendiary new book by Benjamin Shapiro entitled “Primetime Propaganda: The True Hollywood Story of How the Left Took Over Your TV.” In his book Shapiro claims that “Hollywood, with its godlike power, has succeeded beyond its wildest dreams, shaping Americas styles, tastes, politics and even family structures” and what shapes the US often shapes other countries as well.

As Goodwin highlights, “it’s not exactly a surprise that most people in Hollywood are liberal or that conservatives are upset about it. What is shocking about the book is that a number of the most important players in US television openly admit to Shapiro that they have deliberately used programmes such as Friends, Glee, Will and Grace, Sex and the City, The Mary Tyler Moore Show, even The Simpsons and Sesame Street, to push their liberal agenda.”

If the media industry is prepared to push their own agendas, then the public have a right to voice a concern about this misuse of power and how this is the ultimate betrayal of trust and public manipulation. Don’t we need to take a good hard look at the media industry to ensure that power isn’t misused and that they focus on meeting the very standards and freedoms we have been so keen to defend all these years - so that they influence our future leaders in the right, rather than the wrong way?

References

Goodwin, C. (2011). The brainwashing machine in your sitting room. The Sunday Times, 19th June, news review, p.6.

How Do Effective Leaders Balance Risk and Sustainability?

2011-06-12T19:27:00.003+02:00

“Even when the dust settles, economic downturns will not be a thing of the past. Business cycles - which entail ups and downs by their very definition - are here to stay. If companies are willing to accept that, the key question becomes: How can organizations adopt reliable risk management through the business cycle to deliver sustainable performance?” (Wim van der Stede, 2009, p.24).

Though organisations are often good at reacting to downturns, they can have a tendency to forget about them when times are good again. Business teams talk about times gone by as if they won’t return – as if some nightmare from the past.

Van der Stede raises an interesting point, that “the tendency inside many firms to investigate an unusual profit is smaller than the tendency to investigate an unusual loss. But, as post-mortems of crises suggest, unusual profits are often where the seeds of future distress are sown. The unusual profit may be a sign that managers have been too aggressive, been taking too much risk or been excessively short-term focused,” (p.25).

It takes an effective leader to balance the focus on risk and performance and to optimise the reporting and decision making process through the organisations business cycle.

For as van der Stede mentions “companies tend to oscillate between under and over-scrutiny triggered by strong versus poor performance, respectively. Under scrutiny often prevails during expansion times when there is a “top-line” focus driven by aggressive, rose-tinted growth plans, ‘can do’ attitudes, minimally required compliance and control weaknesses. It often results in ‘empire building’ through risky investments and ill-advised acquisitions. Over scrutiny, on the other hand, is manifested by tightening the screws during contractions through cost cutting, lack of investments (even worthwhile ones), balance sheet ‘clean ups’ and divestments (sometimes at huge discounts) driven by too much risk aversion, over compliance in the face of potential litigation and other stifling, protective attitudes,” (p.25).

Research by CFO Research Services and IDG Research Services in 2009 found that “to compete successfully, companies need to look beyond simply improving operating efficiency to improving their processes for managing performance. Now, high performance companies compete on their ability to identify emerging threats and opportunities and to respond to them quickly, with well-informed decisions. The challenge for senior finance executives is this: How to implement excellent processes for managing performance and, by doing so, institutionalize excellent managerial decision making?” (p.36).

Effective leaders ensure that their organisations have the right systems to give the right information, to the right people, at the right time. This helps the strategic leaders and business teams assess business risk from a position of ‘understanding’ and legitimacy – where decisions can be made with a strong degree of confidence (and a full understanding of the risk) which is often lacking in other poorer led organisations.

Van der Stede highlights how “research suggests that companies often still treat performance and risk management separately. For example, one study suggests that companies implement ERM (enterprise risk management) primarily as a reaction to regulatory pressures and corporate governance requirements. In other words, they don’t seem to do it primarily because it makes good business sense, but rather because they feel pressured to do so. But when asked about the benefits of risk management, these same sample companies hint primarily at performance benefits, such as allowing them to make better-informed decisions, to obtain greater management consensus, to improve management accountability, to better meet strategic goals and to use risk as a competitive tool. Not surprisingly, they also mention some compliance benefits such as better governance practices and better communication with the board. They even mention some ‘cycle busting’ benefits, such as reduced earnings volatility and increased performance,” (p.27).

One of the interesting conundrums of effective business and leadership is how a solid business principle, such as analysing performance and risk together, can be agreed in discussion, but can then fail to be implemented effectively into the business operation. It’s the old principle of ensuring you walk the talk.

The research by CFO and IDG concludes that “for a time, many companies were able to differentiate themselves through their ability to deliver goods or services faster, less expensively and more accurately than their competitors. High-performance operations are now more common place and as a result operating process improvements are less of a source of additional value for companies. Today, companies increasingly compete on their ability to identify market opportunities and risks, and their ability to respond to them faster than their competitors can,” (p.37).

So the two questions you should ask yourself are; do you agree that a source of competitive advantage is your organisations ability to respond to opportunities and risks quicker than your competition? - and if you do, what are you doing about it in practice?

References

CFO Research Services and IDG Research Services. (2009). Structured management processes lead to better business performance. CFO. Vol. 25, Issue 2, p36-37.

Van der Stede, W. A. (2009). Enterprise governance: Risk and performance management through the business cycle. CMA Management. Vol. 83, Issue 3, p.24-27.

How Does the Leadership Role Differ Between the Chairman and the CEO?

2011-06-05T19:22:00.005+02:00

One interesting question that hasn’t received much attention yet is the leadership relationship between the Chairman and the CEO, (specifically in organisations where CEO duality does not exist). For example, what are the leadership roles of each and how do they differ? And what is the direct relationship between the two roles – or at least what should it be?

There are numerous definitions of what constitutes effective leadership within an organisational context. Some believe that effective leaders generate higher productivity, lower costs and more opportunities and others that effective leaders create results, attain goals, realise visions and other key objectives in a shorter space of time and with a greater degree of quality than ineffective leaders. Leadership is definitely about consistency of excellence and best practice. Consequently numerous leadership models have been developed, including transformational leadership, transactional leadership, functional leadership, situational leadership, charismatic leadership, path-goal leadership and authentic leadership.

But the leadership relationship between the Chairman and the CEO isn’t about theories but a practical relationship between two leaders, that influences organisational performance - so how should these leaders operate together in the best interests of the organisation?

There have been various attempts to identify the behaviour traits and skill set required to become a ‘great’ leader over the years; hence it would seem fair to assume that both the Chairman and CEO would already possess the following skills set (if they are effective leaders);

Honesty: Good leaders are honest with themselves and others. They know their strengths and weaknesses and aren’t afraid to openly discuss them.

Passion: Good leaders are passionate about what they do. This is often a sub-conscious rather than conscious behaviour, and is an attribute that is noticed and admired by those that work with them. This passion resonates itself through endless positive energy and apparent self-sacrifice.

Vision: Good leaders have a clear vision that they understand and are committed to. They can communicate it clearly and succinctly to all who follow them. This vision is never static, but is dynamic, exciting and very much alive.

Ethical: Good leaders have strong values and ethics which they proudly defend. They don’t sit on the fence or move the goal posts but have a set of values and beliefs that define them and what they do, and allows them to stand out from other leadership ‘pretenders’.

Set the example: Good leaders are not afraid to set the example for others to follow, and often get their hands dirty and muck in with the team to achieve the required results. They will often be perceived as part of a team by on-lookers and do not put themselves up on pedestals or use power traits to achieve results.

Inspire: Good leaders inspire others to be better and do better. Employees (at any level) with a good leader follow them because they want to and for no other reason.

Best practice: Good leaders embrace best practice by not only implementing current best practice, but by encouraging their organisations to set the standards for others to follow. They set high but realistic standards in everything they do.

Strategy: Good leaders are effective strategic planners and implementers. Good leaders do not just have the vision but have the foresight to develop the required implementation plans to ensure that strategic visions are translated into reality.

The relationship between the Chairman and CEO is unique to the specific organisation and the two incumbents of these key positions. The Chairman should be someone that the CEO can privately refer to for mentoring and support, but there appears to be little evidence that the CEO takes advantage of this kind of relationship – often feeling that they must put their own individual stamp on the organisation. So what should the roles and relationship be?

A best practice culture requires effective leadership from the corporate board of the organisation, where the leadership may come from an individual like the Chairman or CEO, or from the corporate board in general. This high level focus on leadership is commonly referred to as strategic leadership. As part of the continued research into effective leadership this area requires just as much attention as any other, (if not more) as it is here that the strategic direction and high level decisions are made that impact on the organisations culture and opportunities for sustainable growth. Yet, even at this level, not all agree on the best format for effective strategic leadership.

Reference

Brownbill, N. (2009) Be the Best in Business. Advanced Corporate Concepts: Cape Town.

Social Media: A Curse or a Blessing?

2011-05-29T18:22:00.004+02:00

With seemingly no ‘control’ of what’s written on social media sites, have we opened the flood gates for the most unreal reality ‘show’ ever developed. In fact has social media given a voice to people who shouldn’t have a voice in the first place, those who can suddenly claim to have an unsubstantiated cure for one or more of the world’s problems?

Where is the reality check? And should there be one?

Should our children be able to access social media without any control about what is true and what is fantasy? Youngsters are easily influenced by those they consider role models – but how many real role models are giving solid sound advice through social media sites, which will help ‘guide’ our children forward and how many just love using these global networks for their own glorification through bullshit and shock appeal.

Most social media sites are meant to be moderated by their owners, but it seems these individuals, who have a crucial role in controlling content, are mostly out to lunch (and just forgot to put the sign in the window). In fact it seems to be more about quantity than quality – where the more ‘members’ or ‘followers’ I have the brighter and more popular I must be.

As a case in point on a discussion around accountability one gentleman recently wrote “Nigel, I will stand by my statement that management should not and cannot be trusted. My argument is a moral one that was suggested to me by my Auditing Professor decades ago and I have mulled it over and come to accept it ever since,” now suffice to say I won’t mention his name, but his profile describes him as a Mathematics Education Specialist Helping Parents Take Control of their Children's Math Education – now I have to ask myself, one, what business experience someone like this has to make such a ‘global’ statement on management, that is so clearly wrong and insulting to many managers and, second, what parent would want their kids taught by someone who clearly believes ‘all’ management should not and cannot be trusted.

At least one social media site is now being sued for liable, due to members being able to say anything they want about anyone else, without the need for proof and, up to now, having no fear of being made to account for the statements they make, regardless of how fabricated the comments might be.

Apparently it’s all about ‘free speech’ – but surely as a global community we want free speech to focus on ‘the truth’ and ‘real facts’ and not just being able to say whatever we like because, for example, we’re jealous of someone’s achievements. Does that mean we’ll always agree, no, but at least we’ll have the facts to debate and be able to draw our own conclusions?

Isn’t it about quality rather than quantity – don’t we want to be a part of a business network where we can ‘trust’ the information shared as being accurate, and where we can learn from healthy debate; and social networks where we can ‘share’ with like minded people who want to use the media for good rather than evil. Those individuals looking for some kind of celebrity status should create their own ‘network environment’ – where each week they can argue about whose the best and have some ‘mirror mirror on the wall’ concept to keep them happy and content.

Social media has so much potential to add real value to its groups and members, but only if it is used to promote honest debate and the honest sharing of information. I believe we are fast coming to the time, where unless some proper guidelines are put in place and enforced, there is the potential for social networking to degenerate into a squabble of unintelligent ‘point scoring’ and psychotic rhetoric.

Is the Supervisory Role Dead (as we know it)?

2011-05-22T19:07:00.003+02:00

“In the popular management literature, the ‘death of the supervisor’ is confidently pronounced and not much mourned. From the 1980s onwards, there has been an insistence that traditional forms of direct supervisory control are inappropriate for new forms of management and organization. This assertion takes its cue from the more general management discourse of ‘turbulence’, ‘flexibility’ and entrepreneurship’ in which radical changes in managerial work are predicated on an equally radical shift in organizational forms from bureaucratic hierarchies to post-bureaucratic networks, a shift that, in turn, is necessitated by increasingly unstable organizational environments,” (Hales, 2005, p.476).

The ‘typical’ supervisor could be described as the non-commissioned officer or ‘sergeant’; someone with years of practical experience who had no interest in ‘formal’ old fashioned management, and would be the link between the work-force and the management; someone who was often well respected by all levels of the organisation.

As Colin Hales mentions “it is argued, the traditional ‘manager’, individually responsible and accountable for planning, co-ordinating and controlling a clearly defined area of work within constraints set by procedure and regulation, is being superseded by the performance-driven leader, ‘conductor’ or ‘coach’ charged with the fuzzy, unregulated task of facilitating and co-ordinating the performance of a variegated network of actors both inside and outside the organization. The implication is that managerial work shifts from narrowly-defined routine administration to more wide-ranging, non-routine ‘leadership’, whilst the managerial gaze switches from the vertical to the lateral,” (p.477).

Part of the logic behind the ‘death of the supervisor’ is the belief that much of the managerial theory is actually put into practice, which may be disputed by those at the coal-face. For example it’s said that, “with the spread of self-managing teams, through which there has been a transfer of responsibility for day-to-day planning and monitoring of work operations from managers to team members, front line managers (FLM’s) have either disappeared or lost their supervisory function and acquired the residual function of facilitating, co-ordinating, mentoring, coaching and leading teams that otherwise supervise themselves. The FLM’s tasks are, therefore, to build the team; give technical assistance and advice; train, develop and coach team members; brief teams and communicate business objectives; inspire and motivate team members; co-ordinate people, processes, materials and equipment and liaise with other teams,” (p.477-478).

Secondly, “that instead of, or as well as, losing their routine supervisory functions downwards to work teams, FLM’s are acquiring broader managerial functions from above. As the result of a conscious devolution of managerial responsibility as part of market-driven decentralization to smaller business units, FLM’s have acquired erstwhile middle management functions and become ‘minigeneral managers’ of an area of work designated as a cost- or profit-centre,” (p.478).

The research by Colin Hales, was developed from a comprehensive survey of 135 organisations in the UK that examined how the FLM role is presently constituted and how far and in what ways it has changed; and hence should be taken seriously.

Colin Hales found that “on the one hand, the well-documented task and authority characteristics of the traditional supervisory role appear to have changed very little. For FLM’s in the great majority of organizations, the core responsibility remains the immediate direction and control of an area of work and day-to-day supervision of those who carry it out, rather than management ‘at a distance’. Their span of control is relatively narrow, their contacts are primarily internal and vertical and their authority, involvement in decision-making and accountability are mainly confined to operational routines.

However, FLM’s are not merely supervisors: in most organizations routine supervision is framed by responsibility for actively monitoring and improving performance. Apart from a few exceptions, ‘performance-oriented supervision’ is at the heart of the FLM role,” (p.495).

One problem facing some organisations is that the FLM is too far removed from their work-force and hence can’t resonate with their needs and concerns; especially if these positions are filled by people who haven’t moved up from the ‘grass routes’ and have been brought in from outside. That was the strength of the ‘old fashioned’ supervisor – the ‘old timer’ who was the conduit between the work-force they ‘parented’ and the management structures above.

Hales concludes that, “developments in the role of FLM have not taken the form of a radical transformation away from supervision and towards team co-ordination or business management. Rather the role exhibits remarkable stability over time and consistency across organizations. Performance-oriented supervision is at the core, surrounded by a penumbra of additional managerial responsibilities relating to stewardship, translating strategy into operations, unit management and, exceptionally, business management. Most FLM’s remain part of a hierarchical system of direct supervision, individual managerial responsibility and vertical accountability. Their authority is usually confined to operating routines, sometimes extends to resourcing and only exceptionally to HR matters and they are more likely to be consulted on routine operational matters than strategy. Yet they are personally accountable for day-to-day operational fluidity and, in some cases, broader performance metrics. Where responsibilities, authority and accountability are shared, it is upwards with more senior managers or specialists not downwards with members of the work team. Changes to the FLM role have been as much a strengthening of the supervisory core as a broadening of the role into business management responsibilities,” (p.501-502).

Hopefully the role of the FLM will not be diluted over time as this still remains the critical link between employees and management. This one position is often more aware, than any other, of the problems and concerns facing the organisation; are able to accurately gauge the commitment and motivation of the work-force; and through their role have a significant impact on customer service and organisational performance. Understanding the importance of this position is critical to optimum organisation design and performance.

References

Hales, C. (2005). Rooted in Supervision, Branching into Management: Continuity and Change in the Role of First-Line Manager. Journal of Management Studies; Vol. 42 Issue 3, p.471-506.

How Do You Define Accountability in Business?

2011-05-15T18:42:00.006+02:00

Gerald Ferris et al, in a 2009 article mention that perhaps one of the most fundamental principles of best practice is accountability; that is holding employees answerable for their decisions, actions, and behaviour; where “organisational characteristics and job characteristics affect accountability which in turn affects employee influence tactics. Furthermore, the accountability-outcomes relationships are believed to be moderated by job characteristics, like job ambiguity,” (p.519).

The argument made by Ferris and his colleagues is that “hierarchical level influences both the degree of accountability the employee experiences, as well as the amount of ambiguity or uncertainty present in their jobs. Job ambiguity is believed to increase with increased hierarchical level, whereas the hierarchical level-accountability relationship is less clear. On the one hand, there is conventional wisdom and thought that as one occupies jobs in higher levels of the organisational hierarchy, there should be concomitant increases in accountability. An individual is more visible with more power and is held more responsible for the performance of their unit or the company as a whole. On the other hand, we see evidence of abuses in terms of CEO compensation, unethical behaviour, and so forth which has led some to actually suggest that certain types of accountability decrease with increases in hierarchical level. So, there appears to be a rationale for either a positive or a negative relationship between hierarchical level and accountability, depending on the type of accountability,” (p.520).

Also, job ambiguity is proposed to relate to accountability such that as ambiguity increases, accountability decreases. The logic here is that as ambiguity or uncertainty in the job and its outcomes are higher, certainty or clarity in performance outcomes should decrease, thus decreasing feelings of accountability.

There is an argument that job ambiguity shouldn’t exist at any level, and that the existence of any ambiguity would be a reflection of poor leadership or poor organisational culture or both. Any job ambiguity is likely to be caused by the fact that as you climb the corporate ladder, the boundaries of accountability can start to overlap, forming potentially ‘grey’ areas. However, I personally believe, that in a best practice organisation the hierarchy would formally or informally remove any grey areas that were found to directly impact optimum organisational performance.

What Ferris et al highlight, and which one might think is obvious, is that “if one knows that they are going to be evaluated by their boss, they will employ both behavioural attempts to perform well, as well as influence tactics that may sway the judgments of the evaluator,” (p.521). Yet this seems to assume that the evaluator, which would be the manager or supervisor, is going to be swayed by ‘influence tactics’ in the first place. I would expect a best practice manager to simply evaluate the outcomes in relation to the ‘brief’ and not be ‘swayed’ by behavioural influence.

Ferris et al mention that “a foundational element in organisational systems is that people in the workplace are held accountable or answerable for their decisions and actions. Yet our understanding of accountability antecedents, processes, and outcomes is woefully deficient. Our knowledge base to date has been largely drawn from laboratory experimental research in social psychology,” (p.528).

But are the right people being held accountable in organisations – are they in yours, for example. Is it clear who is accountable for what or can this change depending on whether there is a positive or negative outcome to the task?

Ferris et al conclude that, “while accountability is generally believed to be fundamental to the functioning of organizations and the practice of management - employment discrimination litigation, the demonstration of unethical behaviour, and abuses of CEO compensation suggest to us that accountability mechanisms are not automatic features of organizational systems, and must be actively implemented. It is critical that individuals be held accountable for specific job-related behaviours, and not simply be allowed to create the impression (i.e., through employee influence tactics) they are doing the right things. Goal setting systems (e.g., MBO) allow such abuses when subordinates set challenging goals (thereby creating a favourable impression on the supervisor), and supervisors subsequently fail to follow-up to ensure goals were attained,” (p.530).

The word accountability links to organisational and behavioural values, like honesty, pride, transparency, participation; and is, or should be, ingrained in the organisational culture. Otherwise accountability can become a tap that is turned on when things are going well, and turned off when they aren’t.

So, as Ferris et al found, accountability can be a word that is banded around organisations on the assumption that its meaning and importance are understood by all. Just maybe we shouldn’t be so quick to make these assumptions, regardless of the hierarchical level of the person in the organisation. In fact the direct meaning and influence of accountability should be revisited on a regular basis, ensuring the right level of accountability is being placed in the right hands within the organisation.

References

Ferris, G. R., Dulebohn, J. H., Frink, D. D., George-Falvy, J., Mitchell, T. R. and Matthews, L. M. (2009). Job and Organizational Characteristics, Accountability, and Employee Influence. Journal of Managerial Issues, Vol. 21 Issue 4, p.518-533.

Corporate Governance: Is It Still Mostly Window Dressing?

2011-05-08T18:46:00.002+02:00

In a 2002 article in the MIT Sloan Management Review, Lawler, Finegold, Benson and Conger highlight how, “corporate boards in the United States have been experimenting with new governance initiatives. Several have become widespread practices among the largest U.S. companies. Many boards are now composed primarily of outside directors and have a profile that is more representative of society as a whole; they operate according to written guidelines, meet regularly in executive sessions without inside directors, and conduct formal appraisals of the CEO. But have these changes resulted in more effective boards? Regardless of these actual potential changes, we believe boards must have three key ingredients in order to be effective: knowledgeable members, up-to-date company information and the power to counterbalance the CEO,” (p.92).

Of course it’s not enough for corporate governance compliance just to evaluate the CEO’s performance, as there also needs to be an honest evaluation of the individual board members performance, including the chairperson; and then an evaluation of overall board performance as a team.

John Carver mentions in his 2007 article that, “just as with the measurement of CEO performance, the chief utility of evaluation of board performance is not in producing a report card. Although a thorough review of past performance is worthwhile, its core importance is the guidance it can provide for future performance. Thus the real virtue of evaluation of the past is its effect on the future. The purpose of board self-evaluation, then, is the continual improvement of governance,” (p.4).

But what business principles are organisations using to assess the performance of individual board members and are these ‘tests’ being used openly and transparently to improve board effectiveness or being used covertly to simply show some kind of compliance to board evaluation?

Lawler et al found that “a well-informed board is close to useless if it can't act. Effective boards have the power to oppose and challenge the CEO; in our research, such power was the single board attribute with the largest direct impact on company financial performance. To be more specific, boards that conducted a formal evaluation of the CEO, that were made up primarily of outsiders (10 out of 12 directors, say), and that had clear control over the nomination of new directors and the CEO's successor had significantly higher returns on assets, sales and investment than those that did not. We are convinced that these elements of board power will remain essential to effective boards for the foreseeable future,” (p.92).

Just having outside directors that control board nominations and CEO succession is not enough, unless these same board members are being evaluated under the same strict criteria. Otherwise all boards are doing is shifting the ‘power’ from a single CEO to a group of non-executives, who may have their own personal agendas, if not evaluated and kept in check.

What corporate boards need are a group of highly effective individuals who bring their unique skills and experience to form a highly focused and diverse team of professionals, consisting of both non-executive and executive directors, whose sole purpose is the ethical sustainable growth of their organisation into the future and where any personal agendas are left outside the door.

To conclude, Carver states that “although most boards are aware that they have options about how they operate, few inspect whether their practices are any more than a collection of happenstance activities that evolved from organizations or individual board members history and preferences. In other words, even though burdened with the responsibility of governance, board members typically do not study governance. This oversight, one we’d never tolerate in other important jobs, is rarely even noticed either by board members, executives, or those who observe, teach, or criticize them,” (p.5).

References

Carver, J. (2007). Beyond Board Self-Evaluation. Board Leadership. Jan – Feb, p. 4-5.

Lawler III, E.E., Finegold, D., Benson, G. and Conger, J. (2002). Adding Value in the Boardroom. MIT Sloan Management Review, Winter, p. 92-93.

How Do We Differentiate between Individual and Group Leadership?

2011-05-01T18:40:00.001+02:00

In a 2010 article in the Academy of Management Journal, Joshua Wu, Anne Tsui and Angelo Kinicki highlight how until recently the study of leadership and of groups had constituted two large, but very separate, literatures. Now, however, researchers have begun to integrate these two literatures in an attempt to understand the role of leadership in groups.

Wu, Tsui and Kinicki’s research “aimed to investigate transformational leadership on groups (as wholes) and on individuals within groups. They focused on transformational leadership behaviours, which inspire followers to pursue higher-order goals and to exert extraordinary effort. Research has shown that the construct of transformational leadership is flexible as to levels of analysis, comprising behaviours targeted at both groups and individuals. Some of its behavioural components are aimed at influencing individual employees by addressing the uniqueness of each follower; where such behaviour represents individual-focused leadership. Other behavioural components are aimed at influencing a group as a whole; where such behaviour represents group-focused leadership. Wu, Tsui and Kinicki adopt the label Differentiated Leadership to refer to the case in which a leader exhibits varying levels of individual-focused leadership behaviour to different group members, for instance paying more attention or providing more support to some members than to others,” (p.90). Where the key question is how differentiated leadership may negatively impact a group’s effectiveness as a consequence of the different levels of individual attention given by the leader.

The logic in this approach is that effective leadership shouldn’t just be praised by the majority of the leaders group, but by the group as a whole.

In their article Wu, Tsui and Kinicki remind us that “group-focused leadership is based on the idea of average leadership style, a concept that implies that leaders view group members as a whole and treat each in the same fashion. Members’ perceptions of their group leader’s behaviour are assumed to be similar and shared within their work unit. Two transformational leadership behaviours – idealised influence and inspirational motivation – are more likely to influence a group as a whole than individual members because of their emphasis on common ground, shared values, and ideology,” (p.92).

“Group-focused leadership is expected to shape members’ group identification, which is a shared cognitive process in which each member defines the self in terms of his or her relationship to the group. The collective nature of group-focused leadership triggers followers’ self-categorisation as group members. A member no longer views themselves as a unique individual but construes there identity to be that of a member of the group. Group attributes such as shared values and common goals become salient to the members, while individualised idiosyncratic characteristics lose prominence,” (p.92).

Some reading this may think that to lead each member in the same way is an impossibility as each individual must have different strengths and weaknesses and be at different levels of development. But the research isn’t looking at the micro level, but the macro level, and individual perceptions; where the leader should be seen by the individuals to give each the same amount of attention – where in that time, different discussions will be taking place. When the whole group needs new skills or direction, the leader gives these to the group at a single meeting.

At the other extreme, “individual-focused leadership is grounded in situational leadership theories and leader-member exchange (LMX) theory. These theories suggest that effective leaders vary their behaviour on the basis of individual differences and contextual factors, resulting in differentiated leadership of group members. The influence in this case is individual members rather than their whole group. Two components of transformational leadership behaviours – individualised consideration and intellectual stimulation – appear to focus more on individual needs, capabilities and effective states than on their collective interests,” (p.93).

Followers under the influence of individual-focused leadership are likely to develop close, direct and unique relationships with their leaders that are characterised by mutual trust, support, and satisfaction.

The importance of this research is that it highlights how “at the group level, differentiated leadership captures the variation of individual-focused leadership among a work group’s members. A high level of differentiated leadership indicates that a leader behaves differently towards different members; where the leader spends more time coaching certain members than others or provides intellectual challenges to some followers more than others. Importantly LMX studies have reported that when leaders form relationships with followers differently within the group, these followers are likely to be divided into sub-groups; an in-group and an out-group, with the former enjoying a better relationship with the leader than the latter,” (p.94).

As we continue to focus on developing the most effective leaders for the future, these privileged individuals must learn to effectively lead individuals and groups into the next decade and beyond – where the leader is as effective leading individuals as he or she is leading their organisational teams.

References

Wu, J.B., Tsui, A.S., and Kinicki, A.J. (2010). Consequences of Differentiated Leadership in Groups. Academy of Management Journal, Vol. 53, No. 1, p.90-106.

It’s Your Future (You Can Cry If You Want To).

2011-04-24T19:08:00.004+02:00

While the business world continues to recover from a global recession that has forced the closure of many organisations (both good and bad) and when many individuals have lost their jobs around the world (both young and old) - have you spent enough time considering your future career and developing a well thought out strategy that will take you to where you want to go.

As the world’s population continues to grow and more and more people search for their dream jobs, it will become your responsibility (and not anyone else’s), to define your own future and to ‘fight’ for it. Guaranteed employment is a luxury of a past age that will soon appear as myths and legends of a lost civilisation. In many cases a hundred years ago, sons followed their fathers into their occupations, with a virtual guaranteed place after school and a lifetime of employment with a trophy, like a gold watch, your only reward for offering your services for thirty to forty years.

Now the world has changed and there is keen competition for placements all over the world, from sixteen year olds upwards (until you retire). You can no longer afford to relax or assume that a top qualification will guarantee you anything other than a more focused look from a recruiter – certainly there are fewer and fewer guarantees of getting a job – and even fewer, if any, guarantees of having the career you always dreamed of.

The smart individual will start planning their career from an early age, building the appropriate contacts and networks, both from family connections and from those offered by schools, colleges and universities. This will mean a significant change in the current approach to career planning – which was something that was often left until after leaving school or the final year of university. In today’s global economy that may be too late, with the supply of talent likely to outstrip demand over the next few decades. It will be important for you to have the right contacts and practical experience, beyond the basic qualifications, that will make you stand out from the crowd and give you your own individual competitive advantage.

For those currently in jobs and planning their future careers the same will be true – individuals will need to form and build strategies that support their career ambitions, which will be based on a solid contact base, a unique individual brand and the right mix of proven practical experience and recognised qualifications.

In fact a smart strategy for career planning will include;

1) Building a diverse and professional network that can support your career goals and allow for flexibility as your career develops;

2) Constantly learning from those with experience in the recruitment field - but not expecting them to do your work for you;

3) Learning about different career paths and the appropriate vertical and horizontal tracks to success;

4) Knowing yourself; and ensuring that you have your feet firmly on the ground, so that your career expectations are always realistic (otherwise the only person who will be disappointed is you);

5) Developing your own ‘unique’ individual brand that gets you noticed for the right reasons from an early age;

6) Never stopping learning;

7) Having regular interviews to keep yourself up-to-date with the market and interview techniques (as you never know when you might need it);

8) Remember it’s your future and you have the power to influence your own career destiny – so start planning your career options today, whether you are sixteen or sixty – and maybe your dreams will come true.

There are less job opportunities today than ever before and the outlook is bleak, with many organisations around the world still automating manual jobs, meaning the market will only get tougher. One can take a slightly arrogant perspective that this applies to everyone else but you – confident that your experience and qualifications will always make you sought after and hence always employable. But if you don’t have the right contact base and aren’t ‘visible’ for the right reasons – it’s just possible that in today’s job market you might not get noticed. When this time comes, it’s too late to change the past – so the only thing you can do is influence your future and your future career opportunities.

Whether at school, university or currently working, use all the services and activities that are offered to support you and your career quest to the full. There’s no time like the present to assess your career path and devise the right strategic path to take you where you want to go – just making sure that you implement it correctly.

It’s your future – so take control of it and your own future success; or you can expect others to do it for you and then when it doesn’t work out ‘you can cry if you want to.’

How Complicated Can Transformation Be?

2011-04-17T18:11:00.020+02:00

Transformation requires teams that are focused on success, and requires the leadership to focus on five main areas – talent, culture, strategy, decision making and execution (Wiseman and McKeown, 2010, p.118).

Transformation, as a business methodology, is often misunderstood and it’s worth noting that some definitions of transformation from the concise Oxford English dictionary include the act or instance of transforming; and the induced or spontaneous change of one element into another. Yet too often in organisations the ‘transformation’ process is anything but ‘spontaneous.’

Robert Miles highlights in his 2010 article how if you “ask any CEO who has overseen a corporate transformation want should have been handled differently; you’re likely to get the answer: we should have and could have moved faster.”

In fact Miles highlights the most common responses as;

 Wishing they had unified the leadership team right away;
 Wishing they had engaged the employees sooner and quickly drummed up support for the new vision;
 Wishing they hadn’t waited so long to test the assumptions and refine their key initiatives;
 Wishing they had generated some visible returns early on, to accelerate the commitments and reinforce the expectations of employees, customers, suppliers and investors.

Of course many consultants reading this will be confident that this doesn’t apply to them and only describes an organisation that probably needed a consultancy intervention in the first place – but that is more bravado than anything else; transformations are hardly ever a smooth process and lessons can always be learnt. As Miles mentions “transforming an enterprise requires intensive cooperation among executive peers. Strong traditional units have to share resources with unproven or underperforming units, and often they must sacrifice something they value for the good of the whole,” (p.70).

In fact as Miles states “successful transformations call for a rigorous confrontation of reality, both external and internal.” This requires the full engagement in the process of the strategic leadership team, top and supervisory management, without an exception. Anyone left out of the process can become a significant ‘block’ on progress when the transformation process is at its most critical stage and this individual has absolutely no idea why ‘their area’ needs to change – to the extent that they can sabotage the whole process (or try to).

But “beyond mandating involvement, you have to provide safe passage, as this enables managers and employees to be brutally honest about what they see as the company’s greatest weaknesses and encourage them to contribute ideas on how to launch the transformation and keep it going,” (p.71).

One of the biggest problems with transformation is that the process has to be done in parallel to the ‘current day-to-day business activities.’ It’s not like many of these reality shows where you can close the business for a while, make the transformation and then re-open again. The transformation process is an extra activity on top of the daily activities, and hence it’s vital to manage;

1) The allocation of time and expectations;

2) Supporting the transformation and focusing on ‘short-term’ goals or key events;

3) Communicate ‘successes’ as soon as they happen and constantly motivate the organisation at all levels;

4) Dissident voices in the organisation. The worst thing for a transformation is a manger who will agree to the process in front of the leader and be against it in front of their own team;

5) The appropriate training and development to add value to the process;

6) The three key motivational moments, when energy levels may drop, which are;

(a)post launch (when there’s a feeling of, phew, we’ve started);

(b) event specific over confidence (when certain areas of the organisation find things are going better than expected and become over confident and ‘relaxed’); and

(c) the assumption that once implemented ‘gravity’ will ensure continuous improvement from now on.

7) Don’t take on too much at the same time – you’ll just cause a bottleneck.

This last point is vital, because, as Miles highlights “in the most successful corporate transformations, managers restrict their action agendas to three, or at most four, well articulated companywide initiatives – each one containing only two or three carefully selected areas of focus tied to clear outcome metrics,” (p.72).

Finally, when managing the process just remember that “if the team members feel they don’t have quite enough time, you probably have the pacing about right. And remember as the excitement of the launch wears off, some executives may lobby for old, familiar methods that are more to their liking,” (Miles, 2010, p.70; p.75). A good transformation manager will anticipate the changing moods during the process and will skilfully keep the project on track.

References

Miles, R.H., (2010). Accelerating Corporate Transformation (Don’t Lose Your Nerve!). Harvard Business Review, Vol. 88, Issue 1, p.68-75.

Wiseman, L. and McKeown, G. (2010). Bringing Out the Best in Your People. Harvard Business Review, Vol. 88, Issue 5, p.117-121

When Do Political Games Impact Business Strategy?

2011-04-10T18:01:00.010+02:00

A budget stalemate that gripped the United States ended just before the midnight deadline on Friday, 8th April, as congressional leaders and the White House agreed to a package of ‘stopgap’ spending reductions to avert a federal government shutdown, and keep things running for the next few days until the budget agreement can be formally enacted, (LA Times, 9th April, on-line; and The Telegraph, 8th April, on-line).

Preceding the last minute compromise, the White House was actually drawing up detailed plans to shut down the federal government from Saturday, 9th April, that would mean the suspension of an estimated 800,000 employees without pay and the disruption of hundreds of services, including the processing of tax returns and the processing of about 30% of tax refunds, loans to small businesses would not be processed, there would be no home loan guarantees, the National Institutes of Health would stop taking new patients, and national parks would be closed, (cited in the guardian.co.uk).

However The Telegraph in the UK reported that the biggest incentive for a deal may not have been the concern for the hundreds of thousands that could be out of work or the impact on the infrastructure; but the risks that failure might have on the public perception of Democrats and Republicans as the 2012 presidential election campaign gathers steam, (7:19 am BST, 09 April 11).

The mere threat of the shutdown sparked a procession of negative economic news, fuelling the decline in the value of the dollar, which in turn helped push up oil prices by 2.3%, to more that US$ 112 a barrel, and was cited as the main cause for the 30-point drop in the Dow Jones industrial average.

Despite the apparent resolution of the impasse, the bitter political fight raised questions about the ability of Obama and the divided congress to deal with the bigger issues looming down the road, from the federal debt ceiling to reining in budget deficits.

One must remember that this ‘fight’ is over the 2010/11 budget that they still have not agreed on and which expires in September this year. At which point the government should have agreed a budget for 2011/12.

Can you imagine running a business like this and what the response of the shareholders would be? The Board would be fired. What this ‘political brinkmanship’ seems to show is that marginalised government does not work and has a significant impact on the economy and the citizens of that country. Imagine a divided Board, how would they be able to optimise the running and growth of their organisation? So one has to ask how a divided government can optimise the growth of a country – especially at a time when the ‘dissenters’ are vying for power and worse still the world is trying to recover from a global recession?

The problems in agreeing the budget are part of an ideological battle being waged over the size of the federal government and the size of the national debt; as well as the republicans looking to ensure trillions are cut from the federal deficit in the decade ahead. Also, it should not be forgotten that if the US can’t agree to an increase in the current debt ceiling then the government will actually go broke – so this recent spat is nothing compared to the fights to come.

Yet as the US government was arguing about a budget that should have been signed-off months ago, they agreed with little hesitation to spending US$ 4 million a day to keep 50 fighter jets and nearly 40 support aircraft in the Libyan conflict, including the cost of munitions. Air Force Secretary Michael Donley told reporters that, as of Tuesday 5th April, the US Air Force had spent US$ 75 million on the war in Libya; worse still, the total cost of the entire US military operation, on 28th March, was already estimated to be US$ 500 million.

Budgets define and constrain corporate strategy. If the strategic leadership have a vision for the future, the organisation will ‘normally’ develop the strategic plan and the financial budget to get them there in advance of the strategic implementation. As if you can’t agree the budget, then you can’t agree the strategy going forward. This impasse would lead to the organisation being forced to focus on ‘very short-term’ strategic goals, based on the money available – which would never allow the organisation to optimise their future opportunities. This strategy would be one of day-to-day survival, with little hope of getting the organisation to buy in to a long term positive future vision.

Governments would be well advised to seek a little bit of business and strategic input – and concentrate on principles that allow for the development of future optimal growth strategies for their country, rather than on short-term political success for themselves.

How Does Family Influence our Business Success?

2011-04-03T16:10:00.006+02:00

“One of the very best predictors of a child's self-esteem, school success, and a rewarding life is a secure, open, and loving relationship with his or her parents (also known as attachment). A child with a secure attachment carries the feelings of being loved, respected, and guided by their parents through their entire life-span.”

In an interesting article, Pedro Carneiro, Flavio Cunha and James Heckman mention how “human capital accumulation and skill formations are dynamic processes. The skills acquired in one stage of the life cycle affect both the initial conditions and the technology of learning at the next stage. Human capital is produced over the life cycle by families, schools, and firms, although most discussions of skill formation focus on schools as the major producer of abilities and skills, despite a substantial body of evidence that families and firms are also major producers of abilities and skills; where a major determinant of successful schools is successful families.”

Yet “in an era where 49% of UK workers report that balancing work and family responsibilities is an issue of significant concern to them (JP Morgan Fleming, 2003, cited in Alexandra Beauregard), the influence of family and personal life on career decisions is receiving increasing amounts of media attention. Today’s business school graduates are looking for a work style to go with their lifestyle; claims the HR consultancy Hay Group (The Economist, 2006). Generation X and Generation Y workers, who are younger than 40, are more likely than boomers to say they put family before jobs; says an article in USA Today (Elias, 2004). Today’s younger employees are working to live rather than living to work; states a newspaper manager in the journalism newsletter Fusion (Williamson, 2006).”

It’s interesting that Jerome Kagan highlights that “of the four important influences on personality— identification, ordinal position, social class, and parental socialization—identification is the most important. By six years of age, children assume that some of the characteristics of their parents belong to them and they experience vicariously the emotion that is appropriate to the parent's experience. A six-year-old girl identified with her mother will experience pride should her mother win a prize or be praised by a friend. However, she will experience shame or anxiety if her mother is criticized or is rejected by friends. This process of identification has a great relevance to personality development. In addition, all children must learn to control two important families of emotions: anxiety, fear, and guilt, on the one hand, and on the other, anger, jealousy, and resentment.”

In fact Pedro Carneiro et al, state that “the following conclusions emerge from the recent empirical literature on child development. Cognitive ability is affected by environmental influences (including in uteri experiences) and is formed relatively early, by age 8 or so. It is hard to change IQ after this age. Non-cognitive skills (motivation, self-discipline, time preference) associated with development of the child’s prefrontal cortex can also be affected by environmental interventions. These skills are more malleable at later ages than cognitive skills. Non-cognitive skills are valued in the market place and also affect academic and social achievement.”

So the family environment has a direct impact on a child’s development, as they form their morale compass along with developing key social skills that will significantly impact their start in the business world. Of course, as much as the family impacts the child’s development, family has a significant impact on the adult’s career development and career choices as well.

For example, Alexandra Beauregard highlights how “of the five career development stages identified by Greenhaus and Callanan (1994), occupational choice is perhaps one of those most influenced by family concerns, both present and anticipated. Preparation for work involves developing an occupational self-image, wherein an individual attempts to match his or her strengths and weaknesses, values, and preferred lifestyle with the requirements and advantages of a range of different occupations.”

In fact Beauregard found that “employee concerns for balancing work and family are set to grow. Workers values and expectations regarding the combination of work and family are modelled on those exhibited by their parents (Sanders et al., 1998), and dual-earner households are on the rise in both the UK and USA (Brannen, Moss, Owen and Vale, 1997; Cornell Employment and Families Careers Institute, 1999). As more and more young people whose parents were in dual-earner partnerships enter the workforce themselves, organizations will need to find ways to allow these young workers to meet their expectations of integrating a successful career with a meaningful family life.”

So it’s interesting to note in conclusion that as Beauregard states “attitudes toward balancing a career with family commitments, as well as the actual experience of managing competing demands from work and from home, are likely to be a significant predictor of employees’ satisfaction with their career outcomes (Sanders et al., 1998) and perceptions of career success.”

Most importantly both dual and single parents must never forget the influence they have on their children’s development, both in life and business. Richard Branson gives an example of how family should be, when he mentions how “I cannot remember a moment in my life when I have not felt the love of my family. We were a family that would have killed for each other - and we still are.”

Those few parents, who abdicate their responsibilities in respect of their children’s development, not only miss out in sharing their ups and downs, but simply don’t realise what a significant negative impact this has on their lives.

References

Beauregard, A. (2007). Family influences on the career life cycle. http://eprints.lse.ac.uk/3320/1/Family_influences_on_the_career_life_cycle_(LSERO).pdf

Carneiro, P., Cunha, F. and Heckman, J. (2003). Interpreting the Evidence of Family Influence on Child Development

Kagan, J. Personality Development - Influences on Personality Development. http://psychology.jrank.org/pages/485/Personality-Development.html

http://www.education.com/question/influence-children/

How Can We Best Learn from Failure?

2011-03-27T18:13:00.002+02:00

“Neuroscientists have long understood that the brain can rewire itself in response to experience – a phenomenon known as neuroplasticity. But until recently, they didn’t know what causes gray matter to become plastic, that is, to begin changing. Breakthrough research by a team at MIT’s Picower Institute for Learning and Memory, led by Earl Miller has documented one type of environmental feedback that triggers plasticity - Success. Equally important and somewhat surprising - its opposite, Failure, has no impact,” (cited in Berinato, S., 2010, p.28).

The research by Earl Miller and his team at MIT showed that “neutrons in the prefrontal cortex and striatum, where the brain tracks success and failure, sharpened their tuning after success. What’s more is that those changes lingered for several seconds, making brain activity more efficient the next time the same task was completed. Thereafter, each success was processed more efficiently.”

But most importantly Miller found that “after failure, there was little change in brain activity, meaning that the brain didn’t store any information about what went wrong, to use the next time around.”

So Miller’s research shows that “on a neurological level, success is actually a lot more informative than failure. If you get a reward, the brain remembers what it did right. But with failure (unless there is a clear negative consequence, like the pain a child feels when they touch a hot stove), then the brain isn’t sure what to store, so it doesn’t change at all,” (cited in Berinato, S., 2010, p.28).

Miller’s research is fascinating in that it shows that there has to be a consequence to failure for the brain to react. This can give an insight to parents, teachers, managers, and even law makers, as to why some individuals don’t seem to learn from their mistakes. At the business level a lot more research will have to be completed before we can fully understand the complexities of the brain and how to maximise the brains ability to learn from failure.

In general many people don’t seem to like talking about failure, to the extent that some people remove the word from their vocabulary completely – not wanting to talk about failure, but preferring to talk about opportunities or other ‘positively framed’ words. This is especially true in the parent child relationship, yet this research by MIT may prove that this positive reframing may be the worst thing you can do and in fact hinder learning from mistakes. It might show that highlighting and discussing failure allows the brain to ‘understand’ the mistake and to learn from it – similar to putting your hand on a hot stove.

This research should be a reminder to organisations that unless the employee can ‘see and feel’ a consequence to ‘failure in a task,’ however slight that failure might be, it cannot be assumed that the individual has learnt from the mistake - meaning that failed tasks should be discussed and formally reviewed so that ‘real’ lessons can be learnt. We cannot assume anymore that simply saying, “okay but don’t make that mistake again” will in fact have any impact on the individual, regardless of age or position.

Understanding the complex brain functions used in business requires the ability to record activity in several regions of the brain simultaneously, and Miller’s team is being credited with pushing the technology further than any other research group. Miller has collected data from three regions of the brain at the same time with as many as fifty electrodes. That number will increase, as neurologists use more and more electrodes to record brain activity, they will gain much more insight into decision making and attention. In a report in The New Scientist, autumn 2009, Miller’s research was cited as “the tool of the future.”

So, as Scott Berinato explains, the lesson is to know that the brain will learn from success and hence you don’t need to dwell on it too much from a learning perspective. However you do need to pay much more attention to failures and challenge yourself to understand why you failed, if you want to ensure learning for the next time.

This fascinating research may help us to further develop our business talent, accepting that failure does happen and learning how best to deal with it.

References:

Berinato, S. (2010). Success Gets into Your Head – and Changes It. Harvard Business Review. Vol. 88, Issue. 1, p.28.

Innovation and Implementation: Have You Got the Balance Right?

2011-03-20T18:04:00.002+02:00

Whether you admire him or not, Richard Branson is a unique entrepreneur who ensures that he has the right management team to implement his ideas; and where Virgin’s success is undoubtedly due to his own ability to ‘innovate’ and consistently develop and deliver on a brand promise; as well as his willingness to be a central part of the brands publicity.

Branson has firmly held views on management, where “good managers are worth their weight in gold: they are the people who organise and handle the pressures of an ongoing business – the glue that binds the business together. Entrepreneurs have the dynamism to get something started – they create opportunities that others don’t necessarily see and have the guts to give it a go, but are not necessarily good at the nuts and bolts of running a business,” (cited in Altman, W, 2009, p.81).

The problem that many organisations encounter is having the correct balance of innovators and implementers within their leadership teams; where each individual is consciously aware of their own specific strengths and those of the team. One of the biggest failings of many great ideas is when the innovator isn’t honest enough to see that they don’t have the skills themselves to implement the idea successfully. Often these individuals will continue on a path of self-destruction, knowing the ‘idea’ is sound, but without being able to recognise their own failings in implementation, until it is too late.

As Wilf Altman highlights, when it comes to the Virgin Group and Richard Branson, “purists among top business school academics and senior executives might argue that no single group can run railways and airlines, mobiles and media, finance, health clubs, and spaceships and musical businesses. It goes against all proven arguments in sticking to core businesses. Diversification on this scale has rarely worked; yet Richard Branson has proved the opposite can be true,” (p.81).

There are some reports that he’s a tough business man, and ruthless with investors; yet I’m not sure why this would surprise people. He has had individuals and organisations wanting him to fail since he started the Virgin phenomenon 37 years ago. The lengths British Airways were prepared to go to in an attempt to destroy Virgin Atlantic is a good case in point.

What’s unique about the Branson-Virgin empire is that it is organised into about three hundred limited companies, creating a branded group of separate, individual organisations. Although as a combined entity the Virgin Group is the largest group of private organisations in Europe, each individual organisation is relatively small in its sector.

It hasn’t all been about success for Branson and he’s had his problems like any other entrepreneur and innovator;

1) The Virgin Media ‘disagreement’ with BSkyB;
2) Its £4.3 billion debt (payment of which has been deferred to 2012);
3) Starting and failing in a drinks war with Coca-Coal (though it could be argued that the publicity helped Virgin soft drinks in the US);
4) The failure of Virgin Clothes;
5) The unfulfilled dream of taking over EMI;
6) The failed efforts to save Concorde; and
7) The failed bid for Northern Rock.

Even with the few failures, the Virgin record (no pun intended) speaks volumes of its own success, where Branson leads from the front and believes “business requires astute decision making, leadership, discipline and innovation if you want to turn entrepreneurial ideas into outstanding business,” (cited in Altman, W, 2009, p. 81).

So the question must be: how good is your organisations mix of innovators and implementers; and do you know with certain which skills reside where? – Since you’ll need both sets of skills to be sure of optimising your future sustainable growth.

As a leader you need to be able to recognise both of these unique talents and manage them appropriately; and as an individual you need to recognise and embrace your core strengths as you are unlikely to be good at both. Believing you have both sets of skills could just be the equation that ensures you self-destruct your own career.

References

Altman, W. (2009). Branson: The Global Brand Builder. Engineering & Technology, Vol. 4, Issue 2, p.80-81.

When Does the Quest for Profit Become Greed?

2011-03-13T18:16:00.003+02:00

Patrick O’Rourke, the American journalist and novelist wrote; “if we're looking for the source of our troubles, we shouldn't test people for drugs, we should test them for stupidity, ignorance, greed and love of power”.

So at what point does making profit become greed – or doesn’t it? Organisations need to make profit, year on year, not just for their shareholders, but so they can invest in their futures and create employment for their communities. That has to be good – so when could it become bad?

Even basic economic theory states that organisations charge a price for a product or service that the consumer accepts, based on supply and demand; otherwise they wouldn’t sell anything and hence wouldn’t make profit. So if significant profits are made it’s because customers are happy with the value for money they received for the product or service.

Yet there is a negative connotation with excessive profit, which in today’s world is perceived by many to be nothing more than self-indulgent greed; where excessive profits are not used for organisational growth, but for ‘rewarding’ the few at the expense of the masses - but who defines 'excessive'? The sole concentration on shareholder value, for example, has been widely criticised by academics and others, particularly after the financial meltdown of 2009. While a focus on shareholder value can benefit the owners of a corporation financially, it does not provide a clear measure of social issues like employment, environmental issues, or ethical business practices. A management decision can maximise shareholder value while lowering the welfare of third parties.

Margaret Wheatley, the author and speaker, stated that; “in our daily life, we encounter people who are angry, deceitful, and intent only on satisfying their own needs. There is so much anger, distrust, greed, and pettiness that we are losing our capacity to work well together”.

Adam Smith, the Economist, believed that markets and profitability took care of themselves; where he first described the ‘invisible hand’ theory, also known as the invisible hand of the market, which is the term economists use to describe the self-regulating nature of the marketplace.

The theory of the ‘invisible hand’ states that if each consumer is allowed to choose freely what to buy and each producer is allowed to choose freely what to sell and how to produce it, the market will settle on a product distribution and prices that are beneficial to all the individual members of a community, and hence to the community as a whole. The reason for this is that self-interest drives actors to beneficial behavior. Efficient methods of production are adopted to maximise profits. Low prices are charged to maximise revenue through gain in market share by undercutting competitors. Investors invest in those industries most urgently needed to maximise returns, and withdraw capital from those less efficient in creating value. Students prepare for the most needed (and therefore most remunerative) careers. All these effects take place dynamically and automatically.

It also works as a balancing mechanism. For example, the inhabitants of a poor country will be willing to work very cheaply, so entrepreneurs can make great profits by building factories in poor countries. Because they increase the demand for labor, they will increase its price; further, because the new producers also become consumers, local businesses must hire more people to provide the things they want to consume. As this process continues, the labor prices eventually rise to the point where there is no advantage for the foreign countries doing business in the formerly poor country. Overall, this mechanism causes the local economy to function on its own.

In respect of the US, Barak Obama said, “we didn't become the most prosperous country in the world just by rewarding greed and recklessness. We didn't come this far by letting the special interests run wild. We didn't do it just by gambling and chasing paper profits on Wall Street. We built this country by making things, by producing goods we could sell.”

So, in theory, free market economics ensures a fair and reasonable accumulation of profit, which is used to finance growth and offset risk. So if this is true, why does there appear to be so much anger from people from both first world and third world countries – as the rich get richer and the poor get poorer. The economics seem sound – but only if they are applied correctly, which means reinvesting in the organisation and rewarding staff appropriately – but, if the profits are pocketed by the few, how does this equate to creating fair value and fair distribution of wealth.

So at what point does 'profit' equate to 'greed'? Maybe it’s time to go back to basics……...

How Well Do You Know Your Customer?

2011-03-06T18:15:00.002+02:00

“Despite all the money invested to promote loyalty among high-value customers, it is increasingly elusive in almost every industry,” say Stephanie Coyles and Timothy Gokey after completing a two year study of customers approach to purchasing decisions and ‘loyalty’ to organisations from 16 industries, covering a diverse range of products and services, from airlines to consumer products, (McKinsey Quarterly, 2002, p.81).

They found that managing migration, in respect of customers who spend more, as well as customers who spend less, was a crucial next step in understanding customer behaviour. They found, in fact, that many more customers change their spending behaviour, leading to a more significant impact on organisational performance than those customers who ‘defected’ to competitors.

Coyles and Gokey found that “managing migration not only gives companies an early chance to stem the downward course before their customers bolt entirely but also helps them influence upward migration earlier.” The also found that “by learning to understand why customers exhibit different degrees of loyalty and combining that knowledge with data on current spending patterns, companies can develop loyalty profiles that define and quantify six customer segments,” (p.82-83).

Three of the key segments are related to customer loyalty profiles and the other three to downward migrators.

The three loyalty profiles are;

1) Emotive customers are the most loyal, feeling strongly that their current purchases are right for them and that their chosen product is the best, they rarely assess purchasing decisions. Coyles and Gokey’s research showed that emotive customers generally spend more than those who deliberate over purchases, and hence, are a primary focus for organisations and their marketing efforts;

2) Inertial customers rarely assess their purchases, but unlike emotive customers their inaction results from high switching costs or lack of involvement with products. Utility and life insurance companies are good examples of this segment. Also they noted that these customers aren’t prone to spend more or less than they currently do;

3) Deliberators are on average the largest customer segment, representing 40% of all customers across all industries. However the rewards from influencing deliberators can be twice as high as the other two segments, above. Deliberators frequently reassess their purchases by criteria such as products; price and performance and the ease of doing business with an organisation.

For the other three segments, Coyles and Gokey found that the downward migrators have one of three reasons for spending less;

1) Their lifestyle has changed (for example, having lost a job or having a baby);

2) They have developed new needs that the company isn’t meeting; as they continually reassess their options and have found a better one; or

3) They are actively dissatisfied, often because of a single bad experience.

Coyles and Gokey highlight how “although changing needs are often dismissed as uncontrollable, our work shows that they can be addressed, especially if a company invests in a new product or channel. Meeting these new needs is a smaller but relevant part of the overall loyalty opportunity,” (p.85).

It’s also been shown that loyalty profiles differ across industry sectors, and that each industry has an average behaviour pattern that influences customer decisions. Where these patterns are generally determined by five structural factors;

1) How often purchases are made;
2) The frequency of other kinds of interaction (e.g. service calls);
3) The emotional or financial importance of a purchase;
4) The degree of differentiation among competitor offerings; and
5) The ease of ‘switching.’

Coyles and Gokey’s research adds a third dimension to developing specific customer-centric strategies. Most customer profiles analyse the product or service in relation to the industry and the micro target-market segmentations. Now organisations can develop detailed three dimensional customer profiles for their products or services, in relation to the industry segment, the appropriate target markets, and their related loyalty or migratory segment. This allows organisations greater clarity and focus in developing effective customer-centric micro-strategies that will improve customer relations and loyalty, increase sales, and critically ensure that the marketing budget is spent in the most appropriate three dimensional quadrants.

References:

Coyles, S. and Gokey, T.C. (2002). Customer retention is not enough. The McKinsey Quarterly, No.2, p.80-89.

Are You Living Up to Your True Potential?

2011-02-27T16:47:00.002+02:00

“Expecting life to treat you well because you are a good person is like expecting an angry bull not to charge because you are a vegetarian” – Shari. R. Barr

How do we know what our potential is in life and how can we find the opportunities that will allow us to assess and identify our true potential? Individual potential goes way beyond business to incorporate all aspects of life, but if we just look from a business perspective, do you really know what your ‘true’ potential is? Can we be sure that the aspirations we currently have are in line with our potential and not, for example, being influenced by society or our misguided desire to achieve goals, which might not actually be in line with our real potential?

When do you as an individual take stock of your business career to assess your real potential - to assess whether the career path you are on is actually the right one for you? Don’t some people get caught in their own ‘vortex’, where self-imposed constraints and beliefs guide their future careers; without challenging themselves to find new opportunities that may open the door and identify their latent potential? Without exploring opportunities some people will never allow their true potential to shine through.

When it comes to finding your true potential; who is responsible and who will find the opportunities that will allow you to identify where your real potential is. While growing up, it is the parents who should be exposing their children to as many opportunities as possible, so real individual potential can be seen and identified at an early age.

Then as one moves through life it’s up to you to continually try new things, giving yourself the opportunity to identify any hidden potential; and that curiosity should stay with you as you journey through life. Just because you have entered into a business career and are moving steadily up that business ladder, doesn’t mean this is where your true potential lies. We are often afraid to try something new, partly for financial reasons or the concern of financial security, (which makes sense); but others miss the opportunity to try something new because they fear what people may think of them if they don’t succeed. As Kerry Packer said “life isn’t a dress rehearsal”, so this isn’t a trial run where next time around, you’ll remember what you should and shouldn’t have done, and get it right – this is it; so if you don’t take the risks and explore the opportunities, you may never find your true potential – that one special gift you were given may stay dormant your entire life.

However, besides you and your parents, it’s also the responsibility of organisations to find and identify the potential of all their employees, or at least it should be. By an organisation identifying any latent potential in their employees, they can plan their future business a lot easier, and if they can match organisational needs to individual potential, imagine the performance and culture that organisation will have.

As individuals we must make it our responsibility to find our true potential in our life time and we should affiliate ourselves with organisations (and people) that are just as keen to identify potential as we are. That way it will be a win-win situation for everyone. This goes for CEO’s and Executives, as much as individuals starting out in their careers – it’s never too late to find out whether you have some latent untapped potential just waiting to change your life.

There will be some people who will be disappointed when their individual expectations exceed their potential, but that is in business and maybe their true potential resides elsewhere.

It was Amelia Earhart who said “dreams have no boundaries”. So, with that in mind, it’s worth the effort to find your true potential and then create your dreams around it – imagine what might be possible and what you could achieve in your life time.

Who’s Assessing the Board’s Performance?

2011-02-20T18:16:00.002+02:00

It’s interesting that with the constant changes taking place in the global market place and organisations having to constantly evolve to stay ahead, that most corporate boards seem pretty static.

So who’s assessing Board performance and ensuring that they have the right mix and calibre of executive and non-executive directors to lead the organisation forward? As it is this group that define the future vision and direction of the organisation, through their strategic leadership.

Static boards that have been formed by a buddy-buddy network or through any other method are unlikely to be able to adapt quickly enough to changes in the market place. They are unlikely to have the right selection of non-executives to ensure the organisation optimises its future, which may lead to sub-optimal solutions that will mean a drop in performance and may lead to a fight for organisational survival. In these scenarios the blame is often placed firmly at the executive or management level, without sufficient investigation into the reasons for poor performance and the role and influence of the Board, including the non-executives, in the specific failings of the organisation.

Board’s that are simply there to ratify decisions are also going to be the downfall of their organisation, sooner or later, as organisations need both skilled and flexible board members, especially at the non-executive level, who can contribute to the organisations future through strategic insights and challenging the executive team.

Financial and business analysts are just as guilty as they often see Board changes as problems rather than solutions; often looking for something to report, before actually assessing the benefit of the proposed Board changes.

Creating a Board with the correct knowledge and skill set will have an impact on the organisations sustainable growth. There has been considerable research into the key knowledge areas that should be understood and practically applied by Board members, and these include; corporate strategy formulation; competition; global markets; leadership; strategy implementation; change management; group effectiveness; organisational design; corporate governance; investor and community relationships; functional knowledge and ethics.

The amount of time directors have to dedicate to their roles and accountabilities has also changed and it’s worth noting that many Corporate Boards have not transformed to the legislative, operational and leadership requirements of the 21st century, and are still caught in the ‘old ways’ of operating. Unfortunately there isn’t an option, Board structures need to change to ensure effective governance and compliance, as Board members are now under greater pressure to govern their organisations adequately. Board members are now being held responsible for financial performance, for monitoring compliance with legal requirements and with appropriate standards of conduct. This has had a major impact on the amount of time directors have had to devote to their role and their respective organisation – but like other jobs, if you can’t dedicate the time, you shouldn’t be in the position.

It’s one thing to identify leadership potential and to develop the strategic leadership team through training and development initiatives, but we need to go further and actually make sure that the Board has the best set of members at the executive and non-executive level to ensure the maximum input and representation in respect of corporate strategy and business enhancement. This will give the organisation a real competitive advantage and, in the not so distant future, will be one of the key factors in differentiating between those organisations leading the way and setting the examples for others to follow; and the rest.

So who is assessing that the current Board structure has the required skills for today’s complex competitive environment and who is prepared to reconfigure the Board to ensure the best structure for the future of the organisation? This is the key question facing organisations – and it will be strong, confident leaders who will make sure that they have a Board that represents the needs of the organisation; a Board that will challenge their ideas and thinking; and have the special talents and business networks for the good of the organisations future. In fact the true leaders of tomorrow will crave a Board that is diverse and challenging rather than one that is passive.

Finally, if organisational restructuring and change management are seen as accepted and basic business principles in today’s business world, then the Board should not be excluded from the same rigorous process.

Leadership: The Mad Dash to Find El Dorado

2011-02-13T18:21:00.002+02:00

When assessing the great leaders of the past, whether military, political, or business, it’s likely that you’ll find a very short unique list of truly gifted people who are regarded as ‘great leaders’ of their time.

Yet today leadership has become a topic that has attracted a lot of attention – it’s like teenagers wanting to be celebrities or reality TV stars – it appears everyone suddenly considers themselves a leader or even a great leader and knowledgeable enough to give advice on the subject.

Within this mass of expertise we have some so called top companies using psychometric tests to assess leadership potential – where these tests are firstly based on generic behaviours, where leadership is anything but generic; and worse these tests were never designed to assess leadership in the first place.

There’s a big difference between being assessed as a great leader after a period of time (as all great leaders have been in the past) and striving to be one, day after day. Great leadership is about meeting the challenges faced, head on and through many campaigns and difficult situations, being considered as a great leader; both by those who have followed you over the years and those who have opposed you – and certainly isn’t something that is achieved overnight.

Yet it appears in today’s world that everyone wants to be a great leader, without having ‘worked’ for the honour or having proved themselves to be worthy of the title – and of course there are plenty of people, many who haven’t ‘lead’ themselves who can tell you the secret of overnight success – for a sizeable fee, of course.

The reason leadership is so highly sought after is that it is something that is rare and unique. Amongst the throng of wannabe leadership ‘experts’ there are people and organisations that can help improve leadership skills and the potential that one-day you might be considered ‘great’, but it takes time, a lot of time. Leadership goes way beyond a set of behaviours that may contribute to you becoming an effective leader, especially as these behaviours are certainly not a guarantee of success.

Great leadership is about a journey, where different situations and challenges are met and overcome; where leaders have other great leaders supporting them in their quest; where followers follow because they want to, through being inspired and through loyalty; and where the objective of the journey isn’t about titles or money, but about a continuing challenging vision, experiencing and learning new things and creating a better life for those back home.

The recognised great leaders of the past didn’t create their success through power, but through loyalty and inspiration and through the ‘management and development’ of their talent (having the best people in the right places at all times). Their drive was a vision and not a title – a vision that their followers aspired to as well.

So if you aspire to be a great leader – check who you’re going to get any advice from, as it’s likely that 99% of them haven’t aspired to any form of leadership themselves. You’re looking for people and organisations that aren’t offering quick solutions to a complex problem, (which can take a life-time to achieve) and who aren’t assessing your potential from simple out-of-date personality profiles. The 1% will have been leaders themselves (but will be humble, and won’t consider themselves great); and they will guide you, over a period of time, on your journey, assessing success; not from fancy tests, but from actual achievements and the constant ‘feedback’ of your followers.

So be cautious of the many organisations who claim to be the oracle of fast-track leadership development, as they are only in a mad rush to cash in on everyone’s desire to hold this prestigious title and reach their own El Dorado. Avoiding them may be one of the smartest leadership decisions you’ll make.

Are You an Authentic Customer?

2011-02-06T18:43:00.002+02:00

A lot is written about authentic leadership; but what about an authentic customer, does this phenomenon exist?

Do customers walk their own talk? For example, does the customer who complains about the lack of real effort and focus in corporate social responsibility avoid purchasing products or services from these organisations; only giving their custom to organisations that have a proven track record in CSR?

Do customers that complain about the lack of leadership in organisations, assess the leadership prior to their purchasing decision, or are the two mutually exclusive?

In fact is there any evidence that customers vote with their feet when organisations don’t meet their ‘values and ethics’; or does the average customer talk one thing but when it comes to the purchase decision walk in an entirely different direction?

Haven’t the majority of customers become lazy, convincing themselves that it won’t do any good to complain anyway and that all organisations are as bad as one another – so I might as well stay with the ‘devil I know’.

It’s in the interests of organisations to ‘fuel the flames’ on the debate about the power consumers have with negative rhetoric, implying that no amount of complaints will make a difference so why waste that valuable time by trying to make a difference.

But properly focused consumer activism has enormous power, especially coming out of a recession – but is the customer strong enough to ‘force’ organisations to change by withholding their purchases until change is effected.

Is the consumer really prepared to walk their own talk, even if it means employees in the non-compliant organisations losing their jobs? The consumer would be fully tested – the headlines could read ‘local consumer activists cause 500 jobs to be lost as they withhold purchases while demanding fully implemented CSR initiatives’.

How would that fit with the CSR debate – the loss of jobs because an organisation wouldn’t change – how far is the customer really prepared to ‘fight’ for their beliefs, for service and for ‘ethically’ run organisations.

If not then step aside and don’t engage in the debate, as you’re not really serious about change, and like many organisations only interested in being seen to embrace the socially acceptable rhetoric – which probably makes the consumer just as bad as the organisation. It’s like someone being against global warming and driving a gas-guzzling 4x4 – the two aren’t compatible

What the business world needs now are authentic customers who buy on the principles they openly talk about – this will effect change in the fastest possible way. Might some employees suffer along the way, until organisations are socially responsible – possibly. Will it be the right employees who suffer – no.

But to make change one has to stand by ones principles until the change is complete – otherwise the sad truth is that you were never actually that committed to the changes you advocated in the first place.

So are you an authentic customer? And if the answer is no, shouldn’t you become one?

Does CSR Improve Corporate Performance?

2011-01-30T18:03:00.001+02:00

“For more than 35 years a quest has been underway to determine whether corporate social responsibility (CSR) produces higher financial returns (Margolis and Walsh 2003, p. 273). For example, a number of theorists have developed an array of substantial literature arguing that socially responsible practices are part of a constellation of management behaviours that contribute to better financial performance (Jones 1995; Kotter and Heskett 1992; Pfeffer 1998; Reichheld 1996; Ullmann 1985; Waddock and Graves 1997). Also, more than 127 empirical studies have been conducted on the subject (Margolis and Walsh 2003).

If work on this subject clearly established that CSR produced stronger corporate financial performance (CFP), there would be major benefits. Then it would not be necessary to attempt via normative arguments alone to persuade those who believe business should focus primarily on financial returns that some profits should be sacrificed in favour of CSR (cf. Wood and Jones 1995, pp. 230–231),” (DeMaCarty, 2009, 394).

Peter DeMaCarty highlights in his article how, “it is clear that many companies continue to be longer on CSR words than action (Moskowitz 2002; Waddock 2002). Thus, despite excellent progress in a substantial number of companies, we are still a long way from seeing CSR become fully adopted by business (see Franklin 2008, pp. 3–6, 22–24). So it is apparent that the normative arguments, theoretical work and empirical research in favour of CSR have left many business leaders unconvinced. As a result, it is clearly worthwhile to continue seeking a better understanding of the CSR-financial relationship,” (p.395).

Yet it seems a shame that there are so many people making the argument for CSR, but don’t seem to be presenting the facts in a way that attracts the majority of organisations and encourages them to realign themselves with a workable CSR strategy.

Unfortunately as DeMaCarty mentions “the effects of managing apparent CSR skilfully, along with other obstacles to developing accurate CSR measurements, probably explain a positive correlation of CSR as measured in studies with financials. Again, what makes higher CSR ratings correlate with better financials probably is an ability of skilful companies, whether they are actually responsible or irresponsible, to both ratchet up their CSR ratings as appropriate and to achieve better financial returns,” (p.419).

One of the most interesting discussions, that may surprise some is whether, we, the human race, can in fact possess ‘moral freedom’, and as DeMaCarty reminds us, “the key controversy surrounds the question of whether causal determinism is true and implies that people cannot possess moral freedom, and therefore cannot be held responsible for their actions (O’Connor 2000),” (p.420). To counter this a further perspective, “termed agent causation, denies that determinism actually does account for all decisions, and holds that the person himself or herself is the cause of his or her actions (O’Connor 2000; see also Descartes 1641/1984, p. 343). Variations of such views claim that our nature or circumstances might limit our choices, but we have freedom in choosing among those open to us.

Finally, “another range of theories holds that our decisions are all caused by events we do not control. Some of them argue that we nevertheless have free will. One variety essentially equates free will with freedom to act without an external constraint or threat (see Hobbes 1651/1997, p. 116; and Widerker and McKenna 2003),” (p.420-421).

What is clear after all the research and mentioned by DeMaCarty is that, “from a financial standpoint, managers have a choice between adopting Corporate Social Responsibility (CSR) or Corporate Social Irresponsibility (CSI) that is not compelled by financial considerations, because they can get equally strong financial returns either way”.

DeMaCarty highlights how “there are strategic principles that can help managers maximise the financial benefits available to responsible companies (see Jones 1995; Kotter and Heskett 1992; Pfeffer 1998; Reichheld 1996; Waddock and Graves 1997). As a result, decent managers who no longer believe they are pressed by financial consequences to adopt certain CSI practices are likely to choose responsible management,” (p.427).

References

DeMaCarty, P. (2009). Financial Returns of Corporate Social Responsibility, and the Moral Freedom and Responsibility of Business Leaders. Business & Society Review, Vol. 114, Issue 3, p. 393-433.

Who are the Worlds Best Business Leaders?

2011-01-23T17:50:00.004+02:00

In a controversial article in the Jan/Feb (2010) issue of the Harvard Business Review, Morten Hansen, Herminia Ibarra and Urs Peyer compiled the first ever ranking that shows which CEO’s performed best over their entire time in office – or, for those still in the job, up until September 30th 2009,

To create their ranking they identified all the CEO’s of all publicly traded companies that made the Standard & Poor’s Global 1200 or BRIC 40 lists since 1997. To be included a CEO had to have assumed the job no earlier than January 1995 and no later than December 2007.

To calculate the rankings they assessed the daily company returns for each CEO for the entire length of tenure or until the 30th September 2009. They calculated three performance indicators, (1) the country adjusted company returns; (2) the industry adjusted company returns; and (3) the market capitalisation change. The logic for the three performance indicators over the tenure was to give a more balanced approach.

They identified 1,999 CEO’s world wide making the criteria, and assessed them as follows;

1) Steve Jobs – Apple (1997 – present). Information Technology (USA). Market capitalisation change $150 billion.
2) Yun Jong-Yong – Samsung Electronics (1996 – 2008). Information Technology (South Korea). Market capitalisation change $127 billion.
3) Alexey Miller – Gazprom (2001 – present). Energy (Russia). Market capitalisation change $101 billion.
4) John Chambers – Cisco Systems (1995 – present). Information Technology (USA). Market capitalisation change $152 billion.
5) Mukesh Ambani – Reliance Industries (2002 – present). Energy (India). Market capitalisation change $72 billion.
6) John Martin – Gilead Sciences (1996 – present). Health Care (USA). Market capitalisation change $39 billion.
7) Jeffrey Bezos – Amazon.com (1996 – present). Retail (USA). Market capitalisation change $37 billion.
8) Margaret Whitman – eBay (1998 – 2008). Retail (USA). Market capitalisation change $37 billion.
9) Eric Schmidt – Google (2001 – present). Information Technology (USA). Market capitalisation change $101 billion.
10) Hugh Grant – Monsanto (2003 – present). Materials (USA). Market capitalisation change $35 billion.

The reason you don’t see names such as Bill Gates, Jack Walsh, Larry Ellison, and Warren Buffet, is that they all assumed their CEO roles before 1995, (though the authors feel they would have done well if included).

What’s interesting is that the top 50 increased the wealth of their companies’ shareholders by $48.2 billion (adjusted for inflation, dividends, share repurchases, and share issues); compared to the bottom 50 who produced a loss of $18.3 billion in shareholder value over their tenure, (p.107).

Some other interesting facts from their assessment include;

 The median age at which these executives became CEO’s was 52.
 Only 1.5% are women.
 Only 15% of the CEO’s worked for companies that were situated outside of their country of birth.
 16 countries are represented in the top 50.
 14 of the top 50 had MBA’s.
 12 of the top 50 were recruited from outside the organisation.

Compared to the Barron’s list which is compiled through discussions with investors, analysts and executives, five executives appeared in the Barron’s list and the top 30; Steve Jobs (Apple); John Chambers (Cisco); Jeff Bezos (Amazon); Hugh Grant (Monsanto) and Terry Leahy (Tesco).

The controversy comes from a variety of angles. For example, questions were raised about the validity of Alexey Miller at number three, and the circumstances under which this company generates such large returns. Also questions were asked about non-profit and SME organisations, but then they wouldn’t meet the criteria under which this analysis was conducted. Other questions were around why someone’s ‘favourite’ leader wasn’t on the list.

However, whether ones favourite isn’t in the top 10, or one disagrees with their ranking criteria, what we shouldn’t disagree with is their closing statement, where they conclude that “only by analysing performance over their tenure and beyond can we begin to understand the nature of great leadership,” (p113).

Those who were ranked 11th to 50th were; (11) Robert Tillman (Lowe’s – USA); (12) William Greehey (Valero Energy – USA); (13) Gareth Davis (Imperial Tobacco – UK); (14) William Doyle (PotashCorp – Canada); (15) Benjamin Steinbruch (Companhia Siderurgica Nacional – Brazil); (16) Bart Becht (Reckitt Benckiser Group – UK); (17) Masahiro Sakane (Komatsu – Japan); (18) Terry Leahy (Tesco – UK); (19) John Thompson (Symantec – USA); (20) Graham MacKay (SAB Miller – UK); (21) Mikael Lilius (Fortum – Finland); (22) Mikhail Prokhorov (Norilsk Nickel – Russia); (23) Mark Papa (EOG Resources – USA); (24) C. John Wilder (TXU – USA); (25) Frank Chapman (BG Group – UK); (26) Paul Chisholm (Colt Telecom Group – UK); (27) David Snow, Jr. (Medco Health Solutions – USA); (28) Tomeo Kanbayashi (NTT Data – Japan); (29) Chung Mong-Koo (Hyundai Motor – South Korea); (30) John Lau (Husky Energy – Canada); (31) Stanley Fink (Man Group – UK); (32) Antoine Zacharias (Vinci – France); (33) Juan Villalonga (Telefonica – Spain); (34) Harry Roels (RWE – Germany); (35) Charles Goodyear (BHP Billiton – UK); (36) Matteo Arpe (Capitalia – Italy); (37) Florentino Perez (Group ACS – Spain); (38) Fujio Mitarai (Canon – Japan); (39) Roy Gardner (Centrica – UK); (40) Thierry Desmarest (Total – France); (41) Wang Jianzhou (China Mobile – China); (42) Fu Chengyu (CNOOC Ltd – China); (43) Mark Pigott (Paccar – USA); (44) William Osborn (Northern Trust – USA); (45) Craig Donohue (CME Group – USA); (46) David Simon (Simon Property Group – USA); (47) Larry Glasscock (WellPoint – USA); (48) AJ Scheepbouwer (Royal KPN – Netherlands); (49) Fred Kindle – (ABB – Switzerland); (50) David Pyott (Allergan – USA).

To view the top 100 and access a list of the top 200, go to http://www.hbr.org/top-ceos

References

Hansen, M. T., Ibarra, H. and Peyer, U. (2010). The Best-Performing CEOs in the World. Harvard Business Review, Vol. 88, Issue 1, p.104-113.

Are You A Flexible Leader?

2011-01-16T17:05:00.002+02:00

Daniel Goleman, in an article in the Harvard Business Review, “suggests that the most effective executives use a collection of distinct leadership styles each in the right measure, at just the right time. Such flexibility is tough to put into action, but it pays off in performance” (p.78). In fact Young and Dulewicz, support this view highlighting previous studies, covering the 50 years from 1958 to 2008, by a variety of authors, (Tannenbaum and Schmidt; Fiedler; House; Reddin; Hersey and Blanchard; Senge; Jaworski; Higgs and Rowland; and Dulewicz and Higgs), which all show that effective leadership will vary with circumstance; and where recent authors have moved on from focusing on the leader/follower variables to examining the efficacy of different leadership behaviours in different contexts of change, (p.384).

Goleman highlights how effective leadership eludes many people and organisations. One reason he gives is that there is very little quantitative research to demonstrate which precise leadership behaviours yield positive and lasting results. Then you have leadership experts offering advice based on inference, experience, and instinct. Sometimes that advice is right on target; sometimes it's not. And finally you have the leaders themselves, who often are not aware of the most up-to-date leadership results and techniques that could help them become more effective in their role, be it at the strategic leadership or the team leader level.

One key area that does play a role in effective leadership is Emotional Intelligence (EI), where as Goleman explains “EI is the ability to manage ourselves and our relationships effectively; and consists of four fundamental capabilities: self-awareness, self-management, social awareness, and social skills. Each capability, in turn, is composed of specific sets of competencies”, (p.80).

1) Where Self-Awareness, includes:
a) Emotional self-awareness,
b) Accurate self-assessment,
c) Self-confidence.

2) Where Self-Management, includes:
a) Self-control,
b) Trustworthiness,
c) Conscientiousness,
d) Adaptability,
e) Achievement orientation,
f) Initiative.

3) Where Social Awareness, includes:
a) Empathy,
b) Organisational awareness,
c) Service orientation, and

4) Where Social Skills, includes:
a) Vision,
b) Influence,
c) Coaching and mentoring,
d) Communication,
e) Innovation,
f) Conflict management,
g) Relationship building,
h) Teamwork and collaboration

When it comes to leadership styles however, although most agree there is a need to flex the style to the circumstances, part of the confusion comes from each ‘author’ creating their own ‘names’ for different approaches to leadership, rather than trying to find some conformity. A common language of leadership would make it easier for both incumbent and potential leaders to understand and effectively utilise the different leadership styles.

For example Goleman highlights six different styles of leadership, (p.80).

1) Coercive leaders, demand immediate compliance,
2) Authoritative leaders mobilize people toward a vision,
3) Affiliative leaders create emotional bonds and harmony,
4) Democratic leaders build consensus through participation,
5) Pacesetting leaders expect excellence and self-direction, and
6) Coaching leaders develop people for the future.

Where as Young and Dulewicz highlight only three;

1) Goal-orientated: Where the leader sets the direction and plays a significant role in directing others (though this does not imply an authoritarian approach, but a leader-centric approach).

2) Involving: Where the leader provides a strong sense of direction, but with more focus on involving others. Not only in setting the direction, but also in deciding how the goals and objectives will be achieved.

3) Engaging: Where the leader is focused on facilitating others in, firstly, deciding the future goals and direction, and secondly, the approach to be used for achieving these desired goals.

And it doesn’t end there as there are a multitude of other suggested approaches including the ‘Full Range Model of Leadership’, where the late Bernard Bass (founding editor of the leadership quarterly journal) back in 1990, attributed four behavioural characteristics to a transformational leader: (1) charisma; (2) inspirational motivation; (3) intellectual stimulation and (4) individualised consideration. It was only later, in 2003, when John Antonakis, Bruce Avolio and Nagaraj Sivasubramaniam replaced the characteristic of charisma with, what they termed, ‘idealised influence’.

What is clear is that the global business environment is continually changing, and a leader must be able to respond appropriately. Leaders first need to learn, internalise and understand the different approaches to leadership; not from an academic, put a practical perspective. Then they can intuitively adapt to the changing environment, in the process becoming effective flexible leaders. This in turn will lead to sustainable organisational growth and the attraction and retention of the best talent. The payoff will then be in the sustainable results.

References

Goleman, D. (2000). Leadership That Gets Results. Harvard Business Review; Vol. 78, Issue 2, p78-90.

Young, M. and Dulewicz, V. (2006). Leadership styles, change context and leader performance in the Royal Navy. Journal of Change Management, Vol. 6, No. 4, p.383-396.

Yung-Shui Wang and Tung-Chun Huang. (2009). The Relationship of Transformational Leadership with Group Cohesiveness and Emotional Intelligence.
Social Behavior & Personality: An International Journal; Vol. 37, Issue 3, p.379-392.

Is Business Planning Overrated?

2011-01-09T18:18:00.002+02:00

In a 2004 article in the Academy of Management Executive, entitled ‘If You Fail to Plan, Do You Plan to Fail?; Brett Matherne mentions that “faced with a multitude of forces encouraging speedy action, many firms respond to the pressure by reducing or even eliminating the time allocated to planning. In a nutshell, it seems as if the pressures of the new competitive landscape are pushing planning aside and forcing companies to simply act faster,” (p.156).

In most organisations, but especially SME’s, the availability of time, or the perceived amount of time required to complete a business task, is the single most common reason given by management for not planning properly. So is it really surprising when so much management time is spent on reactive problem solving.

Yet, in a study by Frederic Delmar and Scott Shane they found that planning before action leads to three major benefits;

1) Speedier decision making;
2) Better management of resources; and
3) Clearer identification of the action steps needed to reach important goals.

“Building on prior studies Delmar and Shane suggest that planning facilitates speedier decisions by identifying missing information about the assumptions and consequences associated with possible business actions before funds are actually committed to these actions. Second planning improves the management of resources by identifying specific action steps and the timing of their execution, allowing required resources to be brought to bear in a more effective manner. Third, planning helps focus firm management on action steps necessary to attain the stated goal and minimise distractions,” (cited in Matherne, 2004, p.156)

In fact to be effective, organisational and/or departmental planning should end up in writing and be used as a source document for periodic review. The advantages of a written plan are that it:

1) Forces the organisation to think more realistically, objectively and unemotionally about their business;
2) Leads to the questioning of past and future assumptions;
3) Makes it easier to communicate planning objectives and strategies to stakeholders, employees, suppliers (or other collaborative partners), financial backers etc;
4) Helps to ensure that all aspects of the plan are clear and integrated (something that is very often lacking);
5) Serves as a reference point when determining the effects of alternative courses of action on business operations;
6) Provides a basis for review;
7) Offers a framework for analysis, especially where objectives have not been achieved.

And while it has been acknowledged that business planning does not guarantee success, studies show that organisations which consistently undertake planning perform better than those where planning is lacking.

Why? Because an effective planning process produces a number of benefits for your organisation, including;

1) Forces an early consideration of essential goals and basic policies;
2) Helps to challenge old ideas and create a climate for new initiatives;
3) Gives you a clear focus;
4) Enables problems to be recognised that call for external sources of information and assistance;
5) Increases your objectivity by converting everything to numbers, planning prevents you viewing the future in ways that the facts do not support;
6) Increases personal motivation throughout the organisation;
7) Enables growth to be planned and associated capital requirements to be determined in advance;
8) Provides feedback of information and periodic reappraisal against established objectives and performance standards.

The benefits cited above are just as true for the large multi-national as they are for the sole proprietor and hence planning before you act is likely to reduce the amount of time management waste on reactive tasks. So it’s worth asking, how efficient is your organisational planning process and how effective do you think your current plan for 2011 will be?

References

Department of Economic Development. Planning Your Business Success. website: http://www.development.tas.gov.au

Matherne, B.P. (2004). If You Fail to Plan, Do You Plan to Fail? Academy of Management Executive, Nov, p.156-157.

2010 Reviewed: What Can We Learn to Make a Better 2011?

2011-01-02T17:59:00.002+02:00

As a human race we seem, in general, to be very bad at learning lessons from the past, but maybe this year we can change that trend. With 2010 being a difficult year for many, what can we learn from the good, bad and ugly events that made up the last twelve months; that will help us define our future?

The fun, miraculous and tragic events that took place over the last twelve months, included the following that are worth remembering;

The Worlds Broken Promises. On January 12, a 7.0-magnitude earthquake shook Port-au-Prince, Haiti, toppling buildings and destroying most of the country's infrastructure. The Haitian government estimated 230,000 people were killed, more than 300,000 injured, and more than 1,000,000 people left homeless. Humanitarian aid began flowing into the country within hours of the quake; however it was not enough to prevent rioting in the economically ravaged nation.

Nearly a year on from the earthquake, Robert Muggah writes in the Guardian (31st December 2010) that more than a million people are still living in tents and less than a tenth of aid cash has been delivered, and much less has been spent. Even if some allowance is made for the extraordinary devastation wrought by the disasters, few disagree that the Haitian government's handling of the situation has been spectacularly poor. Likewise, with few exceptions, the international aid sector's record has been dismal. And while 2010 was grim, there are few guarantees that 2011 will be any better. As Robert Muggah states, the international community could not stop the earthquake, but surely it can deliver on its promise to help Haitians reconstruct their battered country.

The Rapid Pace of Technological Change. On January 27th, after months of speculation, Apple Inc. CEO, Steve Jobs, unveiled the company's first tablet computer, the iPad. The mobile tablet provided the functionality of a MacBook laptop and the mobility of an iPhone. The iPad hit shelves in April of 2010 and sold more than 3 million units in just 80 days.

Safety First or Second? On January 21, Toyota instituted its second recall after reports of pedals sticking to floor mats, causing people to accelerate without being able to use their break. The recall included 2.3 million vehicles sold in the U.S. and 1.8 million sold in other countries. An additional 1.1 million more Toyota vehicles were recalled a week later. In April 2010, Toyota agreed to pay a record fine of $16.4m (£10.7m) in the US for failing to report defects.

Yet this was just the beginning, as by 21st October 2010, Toyota had issued 14 different recalls, equating to more than 10 million cars worldwide.

A Medical Miracle. On March 20, a team of 30 Spanish doctors completed the first ever full face transplant. The patient 'Oscar' had been injured in a shooting accident.

The Power of Our Planet. On April 14, the Icelandic volcano Eyjafjallajökull erupted for a second time, causing a massive plume of smoke and ash. In just one week the cloud had forced the cancellation of 95,000 flights over Europe.

Do Organisations put Profitability before Responsibility? On April 20, The Deepwater Horizon, an offshore floating oil rig exploded, killing 11 workers and forcing other workers onto life boats. The explosion set off a three month oil leak that reached American shores in Louisiana, Mississippi, Alabama and Florida.

Oil was estimated to be leaking into the Gulf of Mexico at a rate of between 504,000 and 798,000 gallons a day throughout the summer - the Gulf oil spill resulted in 18 million to 30 million gallons accumulating in the Gulf of Mexico dwarfing both the Ixtoc I oil spill and Exxon Valdez oil tanker disaster.

On 17th June, Mr Hayward the CEO of BP sat in front of a US congressional committee, where he was questioned for over five hours. It seemed that Mr Howard had two well planned answers, firstly “we await the results of the investigations before rendering conclusions” and secondly, “I was not involved in the decision making process.” This event made Mr Hayward and BP look incompetent and uncaring. What was even more questionable was when asked when the investigation would be completed, Mr Hayward didn’t have an answer.

Congresswoman Betty Sutton from Ohio probably stated it best when she told Mr Hayward that his lack of answers showed a real detachment and disconnect with the situation – which Mr Hayward denied (and then went sailing two days later).

A First for Africa. On June 11, South Africa welcomed soccer fans from around the world as the World Cup opened for the first time on African soil. Spain defeated The Netherlands in the World Cup Final 1-0, the nation's first World Cup title.

Another Sporting First. On June 24, American John Isner defeated France's Nicholas Mahut 70-68 in the final set, in an 11 hour, and 5 minute tennis match, which spanned three days. The Wimbledon match was the longest match in history. Both players received an award for their efforts.

Can the Freedom of Information Go Too Far? On July 25, the website Wikileaks releases thousands of classified military intelligence documents dating from 2004-2009. The documents revealed startling information on what the U.S. knew about the Taliban, Iran and Pakistan's involvement in the insurgency, and the amount of civilian casualties. Wikileaks founder Julian Assange (pictured) would not reveal the source of the leaked documents. The Wikileaks website continued several more 'document dumps' through the year.

Later on 28th November 2010, WikiLeaks began publishing the first batch of more than 250 000 US diplomatic cables, many of them classified as "secret", that the website is believed to have obtained from a disaffected US soldier. By 3rd December the original wikileaks.org domain was taken offline by its American domain name system provider, EveryDNS.net, following reports of massive cyber-attacks on the site. This followed Amazon booting Wikileaks from its computer servers on Wednesday following pressure from US politicians.

The Power of Nature. On July 26, 2010 huge quantities of rain flooded 1/5th of Pakistan. The resulting flood disaster affected 20 million people creating the worst flood disaster in Pakistan. Over 1,700 people have died and close to 3,000 were injured.

In the month of September, the World Food Programme (WFP) provided food rations for more than six million people in 47 districts, with a daily peak of 440,000 individuals reached on 27 September alone. Yet on 1st October WFP’s emergency food assistance operation in support of flood-affected communities faced a shortfall of more than US$414 million.

A Time for Giving or a Time for PR? On September 22, it was reported that 26-year-old Facebook founder Mark Zuckerberg would donate $100 million to the Newark Public Schools. Zuckerberg later made the official announcement on Oprah. The timing of the announcement was a bit peculiar; as it came just weeks after a movie allegedly about Zuckerberg called 'Social Network' was released. Facebook was heavily criticized in 2010 for allegedly allowing outside sources to pull personal information from its users, but Zuckerberg was later named 'Time Person of the Year' on December 16th.

A Human Miracle. On October 13, after nearly 70 days trapped below the earth in a Chilean mine, 33 miners are rescued through a tiny capsule taken, like an elevator, up a narrow shaft. All 33 miners were rescued and were in good condition. The miners became instant celebrities and each was greeted by Chile's president upon their rescue.

In Memory. Finally let’s remember a few of the special people, who passed away during 2010;

January 11th; Miep Gies, aged 100, the office secretary who defied Nazi occupiers to hide Anne Frank and her family for two years and saved the teenager's diary, in Amsterdam, from a neck injury sustained in a fall at her home.

January 16th, Glenn W. Bell Jr., 86, an entrepreneur best known as the founder of the Taco Bell chain, in Rancho Santa Fe, California. No cause of death was specified.

March 20th, Stewart Udall, 90, who sowed the seeds of the modern environmental movement in the United States as secretary of the interior in the 1960s, in Santa Fe, New Mexico, of natural causes.

May 11th, Giuliana Coen Camerino, 90, an Italian designer credited with making handbags a fashion item, in Venice. No cause of death was given.

May 15th, John Shepard-Barron, 89, the Scotsman credited with inventing the world's first automatic cash machine, in Inverness, after a short illness.

May 31st, Chris Haney, 59, co-creator of the popular Trivial Pursuit board game, in Toronto after a long illness.

June 28th, Nicolas Hayek, 82, chairperson and former chief executive of the giant Swiss watch-manufacturing firm Swatch and credited with reinventing that country's watch-making industry in the 1980s, in Biel Switzerland of heart failure.

July 19th, David Warren, 85, an Australian scientist who invented the "black box" flight data recorder after investigating the first crash of a commercial jetliner in 1954. No place or cause of death was given.

July 23rd, Daniel Schorr, 93, whose career in American journalism over more than six decades landed him in the dark corners of Europe during the Cold War and the shadows of President Richard Nixon's "enemies list," in Washington, after a brief illness.

July 28th, “Papa Jacques" Montouroy, 63, a legendary French aid worker for Catholic Relief Services for 41 years in several African countries and Haiti, in Freetown, Sierra Leone, of complications from an ulcer.

September 8th, Allen Dale June, 91, one of the 29 original Navajo code talkers who confounded the Japanese in World War II by transmitting messages in their native language, in Prescott, Arizona, of natural causes.

October 9th, Maurice Allais, 99, a French Nobel economic winner and an early critic of shortcomings in the worldwide financial system that led to the latest crisis, in Saint Cloud, France of natural causes.

November 16th, Britton Chance, 97, an American scientist whose work in biomedical optics helped develop spectroscopy as a non-invasive way to diagnose medical problems, in Philadelphia of heart failure.

December 18th, Sarah "Sally" Goodrich, 65, who lost a son in the September 11 attacks and later established a foundation to promote education in Afghanistan, at her home in Bennington, Vermont, of cancer.

In Conclusion

Let’s hope that 2011 can be a better year for everyone and that we can remember, learn and implement solutions from the mistakes of our past. 2011 needs more visionary focus and effective communication from our organisational leaders, creating a greater cohesiveness as employees operate from a position of ‘accountable ownership’ and not simple compliance.

Also we need more focus on developing the effective leadership of the future (and not only in business); individuals who can raise the standards and find solutions for the challenges ahead.

Embracing the Principles of Best Practice

2010-12-26T16:17:00.002+02:00

Best practice is often misunderstood, as what’s best for you is constantly developing and changing over time. What is best practice today won’t be best practice tomorrow. Also best practice for one organisation won’t necessarily be best practice for another, so it isn’t just about copying what everybody else is doing; but is about identifying your organisations specific needs to get you from where you are today to where you want to be tomorrow.

I often tell clients that you can find many reasons why you shouldn’t do the right thing in business; the trick is to find the one reason why you should. Best practice only appears daunting because we allow it to be, we create negative images in our head of unachievable goals and create unrealistic expectations and happily reject a solid business principle based on our uncertainties and fears. However best practice, when implemented correctly will;

 keep your organisation focused on realistic goals and objectives,
 have realistic timeframes for implementation, (that you’ve agreed),
 will take your organisation on a journey of incremental improvement and sustainable growth,
 will be ‘enjoyable’ and enhance job satisfaction as all employees will be contributing to organisational efficiency and improvement.

Deciding to adopt a best practice approach to business is not a difficult step and can start today. In its simplest form, adopting a philosophy of best practice, is asking you and your organisation if there are ways to improve your approach to business. In fact, best practice asks;

 Do you have a best practice culture, where the organisation looks beyond just continuous improvement to improvement via best practice;

 Do you fully understand and engage with your customers (and do you engage with those who aren’t your customers, but could be);

 Have you developed the optimum strategy for your organisation, and in doing so considered all the potential strategic options;

 Is your strategy being implemented in the most efficient and effective manner;

 Have you identified a credible and sustainable competitive advantage that is understood by the whole organisation;

 Have you the right people in the right positions;

 Are your leaders effective and leading and developing your leaders of the future;

 Are your business teams working efficiently together, at all levels, where the
focus is on the organisation rather than the individual;

 Do your systems, processes and performance measures support your strategic objectives;

 Does your organisation have a solid business foundation for it to grow.

So as 2011 approaches, decide that it is going to be a year when you and your organisation challenge your business principles and practices to become the best that you can be.

References

Brownbill, N. (2009). Be the Best in Business. Advanced Corporate Concepts: Cape Town

Defining Corporate Social Performance.

2010-12-19T16:09:00.002+02:00

As the year comes to an end much has been written about corporate social responsibility, with many organisations adding socially responsible statements to their websites and mission statements. Some organisations have even established ‘high level’ positions, accountable for developing their socially responsible ‘footprint’ and then a few, a very few, have truly integrated corporate social responsibility into their organisational strategy and culture; and are year on year making a real difference. But how many organisations are actually measuring their contribution to social responsibility?

The essence of corporate social responsibility isn’t about the talk or the plans, but the continuous improvements generated through corporate actions, where corporate social responsibility is defined as actions and activities that improve and/or protect social welfare on a local or global level; and where corporate social performance is the ‘measurement’ of the organisations overall performance in improving and protecting social welfare compared to their leading competitors in the industry, measured over a period of time, (Luo and Bhattacharya, 2009, p. 201)

In their 2009 article Luo and Bhattacharya take the time to explain the difference between corporate social responsibility and corporate social performance, where “corporate social responsibility initiatives are related to but different from corporate social performance in several aspects;

First, the former refers to firms’ programs and investments in responsibility and/or sustainability, while the latter represents stakeholders’ assessment of the overall quality of those programs and investments (McWilliams and Siegel 2000).

Second, the former captures the noncumulative, one-time involvement in corporate pro-social behaviours, while the latter can be a proxy for a firm’s cumulative, historical involvement in these behaviours (Barnett 2007, p. 797).

Third, the former is a non-competition based construct, while the latter is relative to the competition in the industry. While firms invest in corporate social responsibility initiatives; corporate social performance, as the measure of firms’ aggregated historical social performance relative to competition, is what stakeholders reward the firms for and, therefore, what is potentially linked to firm financial performance”, (p.201).

Organisations need to take the next step in 2011 and not just make statements about what they’re doing and how much they are investing in social responsibility projects, but actually show how they are performing year on year. In this way, social responsibility performance can become a meaningful measurement of organisational performance and continuous improvement along with the other core performance metrics.

It’s no good organisations ‘promising’ social responsibility initiatives that aren’t congruent to their own business success, just to get on the social responsibility band-wagon, as this will only be a recipe for disaster. In fact Luo and Bhattacharya highlight that “too often, executives pursue a corporate social responsibility agenda without prudently considering broader contexts of the firm. Disconnected responsibility initiatives not in synergy with firms’ marketing strategy instruments can obscure many opportunities for companies to benefit society and can even lead to more harmful, unintended stock risk (good intentions end up with bad numbers; Porter and Kramer 2006)”, (p.210).

Organisations need to spend the time integrating corporate social responsibility into their formal strategic development processes – identifying the opportunities, the strategic options and the long-term benefits for their social focus and their organisational growth. As part of their long-term focus corporate social performance needs to become a key business indicator, not just for the strategic leadership but, for their stakeholders and their customers as well; as it won’t be long until both investors and customers are asking organisations to prove their achievements, in a meaningful, quantified and sustained way.

Finally, Luo and Bhattacharya “urge firms to conduct rigorous research to determine stakeholder perceptions of firm actions and more precisely map how corporate social performance and firm strategic levers interact and align before settling on the appropriate corporate social responsibility initiatives. In doing so, managers may build a more resilient firm that can leapfrog the competition and better ride out economic downturns”, (p.211).

References

Luo, X. and Bhattacharya, C.B. (2009). The Debate over Doing Good: Corporate Social Performance, Strategic Marketing Levers, and Firm-Idiosyncratic Risk. Journal of Marketing; Vol. 73, Issue 6, p.198-213.

The Gender Imbalance: Why Aren't There More Women Executives?

2010-12-12T16:30:00.003+02:00

In an excellent Harvard Business Review article in March 2010, entitled ‘Women in Management: Delusions of Progress,’ Nancy Carter and Christine Silva mention that, “the accepted message on gender disparity in the workplace has for the past 10 to 15 years been one of acknowledgment and reassurance: Yes, women represent just 3% of Fortune 500 CEOs and less than 15% of corporate executives at top companies worldwide, but give it time. It’ll change. After all, women also make up 40% of the global workforce, with double-digit growth in certain countries. They’re earning advanced professional degrees in record numbers and in some areas surpassing men. Companies have implemented programs to fix structural biases against women and support their full participation in leadership. Women are finally poised to make it to the top, the argument goes. Not yet, but soon,” (p. 19).

Shareholders and other corporate owners should start demanding fully diversified boardrooms and executive teams, so that they can reap the strategic and performance benefits.

Robbie Melton, Chairwoman of Women in Bio, believes that “women and men need to do more to educate business leaders and stockholders that a diverse workforce affects the bottom line to the positive. There have been studies that show this to be true, but who is paying attention? Marc Pritchard, president of Global Strategy at Procter & Gamble, spoke at a global businesswomen’s conference about how a diverse workforce has increased P&G’s profits. He needs to tell this to groups of male CEOs, not women. Men need to speak out on behalf of women; only then will the paradigm shift,” (cited in Ibarra and Hansen, 2010, p.14).

Organisations shouldn’t pay lip service to the principles of effective talent management and should be looking for the best talent to take the organisation forward into the future It’s no good asking for the best talent to step forward and then saying, ladies where do you think you’re going..

A 2009 article by Susan Adams, Atul Gupta and John Leech, reports on a study of 61 female CEO’s between 1992 and 2004 that found, “women continue to be under-represented in the senior ranks of corporate executives, and the literature documents a variety of barriers to women’s advancement in the corporate hierarchy. These realities, combined with recent findings suggesting that women leaders are more willing to take risks than men, suggest that women may self-select into leadership positions at firms in precarious financial health. If true, such self-selection would increase the likelihood of ‘failure’, in that successful leadership outcomes are less likely at firms in precarious financial condition, and provide another possible explanation for the under-representation of women in the senior ranks of corporate executives. In their attempt to find any chance to move up, such less risk-averse women leaders may in fact be hurting themselves,” (p.10).

Anne Mulcahy (Xerox chairwoman) proposed a simple test for companies to see if they have systemic bias; “take the resumes of the last 100 people hired, remove the names, do an assessment of where the hires should be positioned, and compare that with where they were placed,” (Carter and Silva, 2010, p.20). Anne Mulcahy’s statement is true for all kinds of bias and possible prejudice and one would hope that this process is being carried out as part of the HR department’s internal audit on a regular basis – as this should be a requirement of good governance and compliance within all organisations.

Carter and Silva (2010) highlight how, “research shows that diverse talent supports innovation and business success, yet organizations underutilise and undervalue their highest-potential female talent. Given the commonly held misperception that the talent pipeline is robust, companies are at risk of allowing complacency to inhibit their competitive advantage. While progress has been made in many firms, more work clearly needs to be done,” (p.21).

References

Adams, S.M., Gupta, A. and Leeth, J.D. (2009). Are Female Executives Over-represented in Precarious Leadership Positions? British Journal of Management; Vol. 20, Issue 1, p.1-12.

Carter, N. M. and Silva, C. (2010). Women in Management: Delusions of Progress.
Harvard Business Review; Vol. 88, Issue 3, p.19-21.

Ibarra, H., and Hansen, M.T., (2010). Women CEOs: Why So Few?: Interaction. Harvard Business Review; Vol. 88, Issue 3, p.14-15.

Are Leading Organisations Effectively Using Social Media?

2010-12-05T17:12:00.002+02:00

A 2009 study found that the CEO’s of top U.S. companies tend to avoid social media, according to UberCEO.com. The study found that most of the Fortune top 100 CEO’s were markedly absent from the social media community, including Facebook, Twitter, LinkedIn, and Wikipedia. The study specifically revealed that;

1) Only 2 CEO’s had Facebook accounts;
2) Only 13 CEO’s had profiles on the professional networking site LinkedIn;
3) Three-quarters of the CEO’s had a Wikipedia entry, but nearly a third of these had limited or outdated information; and
4) Not one Fortune 100 CEO had a blog.

But what is social media? Professor Nora Barnes highlights six prominent social media tools, (2010, p.9);
1) Blogging;
2) Podcasting;
3) Online Video;
4) Social Networking;
5) Message Boards; and
6) Wikis.

This list includes the micro blogging service of Twitter and the popular social networking sites like Facebook, LinkedIn and MySpace.

Looking at the Fortune 500, research has shown that 16% of the Fortune 500 companies were blogging in 2008, double the figure for 2007 which was only 8%, (cited in Barnes, 2010, p.10). Yet, Jose Esteves writes in the 2008, Business Strategy Review, after analysing the blogging strategies of the companies in the Fortune 500, that “blogs have moved from being sales support tools to becoming essential elements in brand advocacy and communication. There is no longer any question that corporate blogs have become a channel to engage brand enthusiasts (rather than simply engaging in light dialogue with consumers: ‘thanks for your feedback’ and the like) and a communication tool for stakeholders and potential investors,” (p.65).

Barnes highlights how “the adoption curves for different social media technologies are not the same. Interestingly, while social networking and blogging have enjoyed growth in actual adoption, the use of message boards, online video, wikis and podcasting has levelled off or declined. The addition of Twitter (considered both a micro-blogging site and a social networking site) in the latest study showed that 35% of the Fortune 500 are already using this tool for their business. In addition, as they ramp up their usage, companies are also seeking to protect themselves legally with 22% of the Fortune 500 companies having implemented a formal policy concerning blogging by their employees,” (p.13).

Some still believe that CEO’s aren’t embracing social media enough and Sharon Barclay states that “it’s shocking that the top CEO’s can appear to be so disconnected from the way their own customers are communicating. They’re giving the impression that they’re disconnected, disengaged and disinterested. Barclay said many CEO’s are cautious about social networking because of regulations, such as the Sarbanes-Oxley Act. However, she says the ones who are not involved in the rapidly growing form of communication are missing a great opportunity to connect with customers and raise their company’s profile.” (cited in IM, 2009, p.10).

In her 2009 article Lyne Noella, gives 10 simple tips to raise your visibility in social networking (p.17);

1) Join several networks;
2) Get a great head shot;
3) Create a compelling message;
4) Make invitations a habit;
5) Join special interest groups;
6) Update your profile regularly;
7) Share knowledge;
8) Use you network as a resource;
9) Stay alert to opportunities;
10) Engage.

Though maybe considered obvious by many, the tips above also highlight the need to invest quality time in developing ones social media activities. The underlying business principles are similar to talent management, in that you want to attract and retain the ‘best talent’ to your social networks, where this talent should be both current and future focused.

Finally as Barnes mentions, “the continued steady adoption of blogs and the growth of Twitter among Fortune 500 companies demonstrates the growing importance of social media in the business world,” (p.13). “In his own blog, Jonathan Schwartz, President of Sun Microsystems says that we’ve moved from the information age to the participation age, and trust is the currency of the participation age,” (cited in Esteves, 2008, p.65). Esteves concludes that “at best, corporate blogging is about leadership, visibility and conversion in the digital world. It is an excellent way for CEO’s to express their opinions and visions about their companies and about topics such as corporate social responsibility, diversity, market sector evolution and even crisis management,” (p.67).

So how social media savvy are you and your organisation?

References:

Barnes, N.G. (2010). Tweeting and Blogging to the Top. Marketing Research. Spring, p.9-13.

Editorial. (2009). CEO’s Cautious About Social Networking. Information Management, Vol. 43 Issue 5, p10-11.

Esteves, J. (2008). Where is your blog? Business Strategy Review. Vol. 19, Issue 4, p.62-70.

Noella, L. (2009). Ten Tips to Raise Your Business Visibility Through Social Networks. Financial Executive. Vol. 25, Issue 9, p17.

Is December a Month to Reflect or to Panic?

2010-11-28T18:03:00.004+02:00

At this time of year, with the end of the year approaching, most organisations will soon find themselves operating at the extremes; the retail sector, for example, can find this the busiest time of the year (hopefully); and other business sectors can come to a virtual standstill.

Organisations in the SME sector, especially, often finds themselves in a reactive ‘panic’ trying to finish outstanding ‘tasks’ before the December holidays; with little time to reflect on the year they’ve just had. Where reflection would include, which objectives they succeeded in reaching, those they didn’t, changes they didn’t foresee coming and how they reacted, opportunities lost, and threats combated. December should be a time to reflect and review the year gone by; highlighting lessons that have been learnt at all levels in the business.

December is important for another reason, especially for organisations whose staff are going to have some extended holiday – and that is to remind the organisation of the motivational challenges for the year to come, before they go on leave. The reason for this is that January will come around soon enough; and you want all your employees to be refreshed when they return, focused and excited about the year ahead.

It’s in this hectic period before many organisation go on holiday that these two important business principles are often forgotten. This means that the leadership misses the ideal opportunity for strategic reflection and employee motivation, claiming to be ‘just too busy’ and ‘putting things off’ until next year. Yet this period is a perfect time to re-motivate, re-focus and re-energise the organisation for the year ahead; giving them something to look forward to. Hence the organisational leadership should find the time for reflection and review before the opportunity passes them by.

This is especially true considering the global economic climate and the past year most organisations have had to deal with – if you are a SME and have survived the year, however bad it might have been, you should be proud of what you’ve achieved. So in between the end of year parties and the rush to get last minute tasks completed, ensure that you use this opportunity and find the time to be open and transparent with your organisation about two key business principles;

1) How has the past year gone, and what has been achieved?
2) What are the motivational challenges for the year ahead?

Why? Because you want your employees to end the year, proud of what they have achieved and to start the next year motivated to tackle the new challenges ahead.

Are You a Transformational Leader?

2010-11-21T16:15:00.004+02:00

Wang and Huang state in a 2009 article, that “in the last few decades, within the field of leadership, transformational leadership behaviour has come to represent the most effective form of close engagement between leaders and followers that motivates the latter to perform beyond their transactional agreements. Robbins (2001) defined transformational leaders as, leaders who provide individualised consideration and intellectual stimulation, and who possess charisma,” (p.381).

Yet research also tells us that many employees in leadership positions at various levels of an organisation, and especially leaders of small to medium organisations still seem to know very little about the different leadership styles, let alone which are recommended; as well as the key behavioural attributes and benefits of each.

If was the late Bernard Bass (founding editor of the leadership quarterly journal) who back in 1990 attributed four behavioural characteristics to a transformational leader: charisma, inspirational motivation, intellectual stimulation and individualised consideration. It was only later, in 2003, when John Antonakis, Bruce Avolio and Nagaraj Sivasubramaniam replaced the characteristic of charisma with, what they termed, idealised influence.

Wang and Huang (2009) remind us that “a leader only possesses idealised influence if his or her followers seek to identify with, and want to emulate, him of her. This type of leader is admired, respected and trusted.” Further, “transformational leaders behave in ways that;

1) Motivate and inspire their followers by providing meaningful challenges;
2) Encourage followers to envision attractive future states, which they can ultimately envision for themselves; and
3) Aim to expand their followers efforts in terms of innovativeness and creativity by questioning assumptions, reframing problems and approaching old problems in new ways;” (p.381).

Research has also linked transformational leadership with levels of emotional intelligence. Where, for example, Wang and Huang mention that “emotional intelligence is an emerging topic within psychological, educational and management research, and that it was Daniel Goldman back in 1995 who suggested that the best predictor of who eventually emerges as a leader is based on emotional intelligence (EI), which includes abilities such as;

Self-Awareness;
Self-Management;
Self-Motivation;
Empathy; and
Social Skills;” (p.382).

There appears to be an unfortunate assumption, by some, that once they have ‘made it’ to a leadership level, that they, de facto, must be a good leader. There can be a reluctance to engage in leadership analysis, often due to their own insecure behavioural traits, that tell the ‘leadership incumbent’ to avoid self-analysis, as this could be their downfall. Hence, they often find it easier to denounce years of practical leadership studies and research for perceived self-preservation. Organisations, especially corporate boards and business owners, should take a fresh look at leadership and leadership development; as it is not there to make individuals fail, but to help organisations succeed.

The findings from Wang and Huang’s study “indicate that leaders exhibit more transformational leadership behaviour when they have the ability to perform self-emotional appraisals; others’ emotional appraisals; regulation of emotions and constructive use of emotions. Their findings support the view that emotional intelligence is an important variable for understanding and predicting transformational behaviour. Their results also contribute further evidence that transformational leadership influences not only individual level consequences, but also group level consequences,” (p.389).

In the last few years transformational leadership has become one of the dominant leadership theories and applications for successful organisational development. Occasionally as a leader, it’s worth stepping back and asking; are you a leader who is admired, respected and trusted by your followers and your peers – do people in your organisation strive to be like you? An honest reflection will help you understand the difference between being in a leadership position and being an effective transformational leader.

References

Yung-Shui Wang and Tung-Chun Huang. (2009). The Relationship of Transformational Leadership with Group Cohesiveness and Emotional Intelligence. Social Behavior & Personality: An International Journal; Vol. 37, Issue 3, p.379-392.

Job Satisfaction: A Realistic Expectation or a Utopian Myth?

2010-11-14T17:13:00.002+02:00

One of many business topics most talked about in the 21st Century, so far, has been talent management, and how to attract and keep the best talent for your organisation. Attracting talent and keeping talent require two different strategies, but shouldn’t creating job satisfaction be at least part of the focus for talent retention?

Job satisfaction can mean different things to different people, though it is likely to include key elements like, recognition, reward, business environment, being treated with respect, meeting career aspirations, having the support from the organisation (in decision making), business challenges and personal development.

Linking job satisfaction to talent retention will lead to increased motivation and increased personal performance. Job satisfaction should become a strategic goal for the top team or organisation as a whole, ensuring you have a team of highly motivated, highly productive employees. It all seems logical; so is this happening in organisations today? Are today’s leaders interacting with their management teams and key employees to find and respond to their needs when it comes to job satisfaction and talent retention?

Many leaders may not even be aware of the different ‘theories and models’ in measuring job satisfaction. In a 2008 article Timothy Judge, Daniel Heller and Ryan Klinger wrote that “increasingly, (job satisfaction) research has coalesced around three theoretical approaches: positive affectivity (PA)/negative affectivity (NA), the five-factor model of personality (FFM), and, most recently, Judge, Locke, and colleagues’ core self-evaluations (CSE) taxonomy.
Each of these approaches has its merits. The PA/NA framework is advantaged by its affective nature, making it well suited to the affective nature of job satisfaction. The FFM has the advantage of being the most popular and widely investigated personality taxonomy, whose traits have proven their relevance to many criteria in organisational psychology, including job performance, leadership, and work motivation. Although CSE is the newest taxonomy, each of the core traits comprising the taxonomy; self-esteem, locus of control, generalised self-efficacy, and emotional stability have been shown to be conceptually and empirically relevant to job satisfaction. These theoretical frameworks have provided important support for the dispositional source of job satisfaction. At the same time, it is hard to know what to make of the results cumulatively, as researchers who test one framework rarely mention the other, much less formally compare the frameworks”, (p. 362).

But not knowing the current theories and research shouldn’t be an excuse for not being focused on understanding what creates job satisfaction with your employees, especially if your organisation really wants to retain its talent.

There have been numerous journal articles over the last ten years to help organisations understand job satisfaction, and how this has a positive impact on organisational culture, cooperation, motivation and performance - and most importantly how job satisfaction should be an integral part of your talent retention strategy.

These journal articles include titles like; Do What You Love and Love What You Do by William Locander and David Luechauer (Marketing Management, 2010); Linking Empowering Leadership and Employee Creativity: The Influence of Psychological Empowerment, Intrinsic Motivation and Creative Process Engagement by Xiaomeng Zhang and Kathryn Bartol (Academy of Management Journal, 2010); Surviving the Boss from Hell by David Silverman, Gini Scott, Brad Gilbreath and Lauren Sontag, (Harvard Business Review, 2009); Total Quality Management Now Applies to Managing Talent by Howard Stevens, (Journal for Quality and Participation, 2008); The Leadership Advantage: How Best Companies are Developing their Talent to Pave the Way for the Future by Robert Fullmer and Jared Bleak, (Personnel Psychology, 2008); Talent Management in the 21st Century: Help Your Company Find, Develop and Keep its Strongest, (Journal of Quality and Participation, 2006)…to name a few…

So if you really want to retain your talent and take talent management seriously, then spend the time to find out how your employees define job satisfaction. Re-quoting JFK, maybe organisations shouldn’t just be asking ‘what can our employees do for us?’ but also asking ‘what can we do for our employees?’

References

Judge, T.A., Heller, D. and Klinger, R. (2008) The Dispositional Sources of Job Satisfaction: A Comparative Test. Applied Psychology: An International Review; Vol. 57, Issue 3, p361-372.

Focus on Your Customer Not on Your Price

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With the effect of the global recession still being felt around the world, organisations may be tempted to look at price cutting strategies to retain their market share, yet some researchers suggest that this may not be the most sensible approach and could lead to an eradication of your future market share. Marco Bertini and Luc Wathieu wrote in the Harvard Business Review, May 2010, that “many, perhaps most, markets today are mature enough to feature intense price-based competition. The constant undercutting to capture customers sometimes spurs efficiency gains, but more often damages brand equity and erodes profit margins. To make matters worse, customers in these markets develop low expectations and grow disengaged: They fixate on price and lose interest in marketing communications and all but the most radical innovations,” (p.85-86).

When developing ‘survival’ strategies, organisations have to look beyond the short-term to see the future ‘state’ they are proposing. A price reduction can always be one of your strategic options, but you need to ‘play’ this scenario out to fully understand the implications it will have on your business, which goes far beyond a reduction in profit margin.

When considering a price reduction strategy to ‘keep’ your existing customer happy, you should consider and analyse the following, which may have significant medium to long-term implications for your organisation;

1) When the market turns the customer can be so fixated on your price that you will find it hard, to impossible, to increase prices back to pre-recession levels. Leading to a significant loss of revenue and brand/image status;

2) If your price reduction attracts new customers do you have the capacity to meet this new demand and what are the implications on the organisation, both short-term and long-term. Increasing capacity now, only to see it eroded when the market turns again can leave the organisation in a further financial crisis;

3) What implications does a short-term price reduction have on perceptions of your organisation and brand in your market?

As Roger Martin (2010) says, “determining what your customer’s value and focusing on always pleasing them is a better optimisation formula. Of course, companies face obvious constraints on customer satisfaction; they’d quickly go bankrupt if they made customers happier by charging ever-lower prices for ever greater value. Rather, companies should seek to maximise customer satisfaction while ensuring that shareholders earn an acceptable risk-adjusted return on their equity,” (p.62).

In a state of reactive ‘panic’ it can sometimes be too easy for organisations to rush the strategic decision making process, and go for the price cutting option. This can seem the easiest option to implement at the time and perceived to give immediate benefit to the organisation, without analysing the medium to long-term effect on the business. The excuse can be that if we don’t so something now, we won’t have a medium to long-term to worry about - but the reverse is just as true, if you make the wrong strategic decisions now, without proper and effective business analysis, at best your organisation will never fully recover and at worst it won’t survive the upturn in the market.

When customers only consider price in their buying decision, they have effectively commoditised the product. Bertini and Wathieu highlight how “research shows that commoditisation is as much a psychological state as a physical one. A commoditised market is one in which the buyers display rampant scepticism, routine behaviour, minimal expectations, and a strong preference for a swift and effortless transactions regardless of product differentiation. The key, therefore, to escaping commodity status is not what you do to your product; it’s what you do to your customer. You must find a way to reengage a buyer who is past caring – and to do that you must make the customer sit up and take notice,” (p.86).

Even in times of crisis it’s worth spending the time to analyse and define the best strategic options to take you forward as an organisation, ensuring sustainable growth, rather than a quick and easy short-term fix - often what seems the easiest option is not the best option.

References

Bertini, M. and Wathieu, L. (2010). How to Stop Customers from Fixating on Price. Harvard Business Review, Vol. 88, Issue 5, p.84-91.

Martin, R. (2010). The Age of Consumer Capitalism. Harvard Business Review., Vol. 88, Issue 1/2, p.58-65.