Sunday, March 31, 2013

Staff Development During a Recession and Beyond

A report by NIACE highlights how “whilst organisations recognise the importance for recovery of maintaining a strategic focus and developing work in key areas such as skills activism, for many their time and resources have been diverted into implementing emergency measures to tackle business contraction, redundancies and unemployment.  In addition, the recession has challenged fundamental economic assumptions on which pre-recessionary learning and skills policy was based, and new agendas set out for recovery have yet to gain consensus.  Under these circumstances, it is vital that organisations have the space to consider and debate the emerging economic picture - nationally, regionally and locally – and to explore the implications of this for longer term, strategic planning,” (p.5).
The NIACE research found that “many employers have responded to the more difficult business climate by reducing their investment in staff training and development,” (p.6). What’s striking about this finding is that its history repeating itself, where in the aftermath of previous recessions the consensus was that the last budget that should be cut in a recession is for training and development.
What’s also interesting is that back in 2009 organisations from the TUC to the Institute of Directors and the CBI espoused the common message that investment in skills development is essential to equip individuals, businesses and the nation to confront successfully the challenges that the recession presents (TUC, 2009b; IoD, 2009; CBI, 2009). 
‘Smart’ organisations understand how important the development of their ‘human’ talent is for real sustainable growth and the ability to develop a genuine ‘competitive advantage’. They do this by ensuring their organisations continue to have that special, hard-to duplicate know-how – which along with a culture that encourages debate and innovation – creates a cohesive team, across the whole organisation that effortlessly sets the standards for other organisations to follow.
Quite a few leaders seem to forget in a recession, and unfortunately beyond, that their organisation is made up of a ‘lot of players’ that are part of one big ‘team’ and its success is determined firstly by how well they all work together towards a common goal; and secondly by ensuring that they are continually learning and developing their skills and knowledge.
It may be true that the strategic leadership team sets organisational visions and strategy; but the leadership must never forget that it is the employees at the ‘coal face’ who are often the first to identify actual or potential problems, and if the culture is right and they have the right skills and knowledge they can be the first to offer short and/or long-term solutions.
One mistake managers make, and not just in a recession, is the automatic assumption that ‘staff development’ costs money with little return – but firstly there are enough professional training and development organisations that offer ‘tailored’ solutions with practical learning outcomes, which often ensures an excellent return on investment; but, secondly, organisations can and should always consider ‘internal skills transfer’. This transfer of skills means, for example, that the financial team should be able to ‘teach’ financial skills to other functional areas; the corporate strategists should be able to transfer key skills in strategic implementation; the human resource specialists should be able to transfer key behavioural skills on an individual and team basis, as required; and those at the ‘coal face’ should be giving ‘constant’ feedback on ‘customer’ perceptions and attitudes in the current climate and hence key customer relationship management skills; etc.
Successful organisations will have loads of talent in their structures, at various levels, and you should use every opportunity, especially in times of hardship, to share and transfer those skills to others in the organisation.
So claiming you can’t afford to develop your management and staff is not correct – you can always encourage and ensure organisational development – and it doesn’t have to cost much at all. What you do need are forward thinking leaders who know the critical importance of talent management and development, beyond the nice to have rhetoric. Leaders who will always ensure that they have an organisational culture that inspires people to want to learn; question and share their knowledge to the benefit of the organisation; its innovative approach to problem solving and a genuine positive focus on sustainable growth.
This isn’t a ‘big’ corporate philosophy and can (and should) be employed by any sized organisation that wants to optimise its future. You need a culture that encourages individual and team development on a continuous basis – where this development is practically focused on innovative business; competitive advantage and future growth.
Learning in the Recession: implications of the recession for adult learning and skills in the English regions. Report by the National Institute of Adult Continuing Education. December 2009.

Sunday, March 24, 2013

Does the Weather Affect Business Performance?

My logic was completely wrong on this question where I assumed, before checking the research, that most people and hence most businesses would perform better on a sunny or bright day, compared with a wet or cloudy one. I know that I personally always feel better on a sunny day, waking up with the sun shining and not feeling cold just seems to be invigorating, giving me a feeling of increased energy and ‘drive’ and hence I assumed that I would therefore be more ‘productive’.
But Carmen Noble, writing in the Harvard Business Review, highlights how “a new research paper reports that a decrease in sunny weather is directly related to an increase in worker efficiency. In Rainmakers: Why Bad Weather Means Good Productivity, the authors show that workers are especially productive on rainy days, simply because they're not tempted by the possibilities of a sunny day, a walk in the park, for example, or an afternoon at the beach. The paper also explores the practical implications of these findings. For example, should managers save certain tasks for days when skies are grey?”
In a research study covering a period of two and a half years they found that an increase in rain correlated with a decrease in the time it took for workers to complete their tasks. Low visibility and extreme temperatures also matched periods of high worker productivity. Clear, sunny days correlated with relatively low productivity.
What’s intriguing about the research is that having observed it in a business setting they then tested it under ‘lab’ conditions, where the researchers found that “the top performers (those who completed the task the fastest and the most accurately) were the rainy-day control group participants, who had seen neither the actual sun nor pictures of the sun before doing the task.”
What’s interesting is that “exposure to the sunny-day photographs significantly decreased the performance of participants who came to the lab on rainy days. For those who came in on sunny days, the added distraction of the sunny-day photographs had little effect on performance.”
So their findings indicate that workers are indeed most productive when the weather is lousy but only if nothing artificially reminds them of good weather where the researchers conclude by suggesting that “although weather conditions are exogenous and uncontrollable, organisations could assign more clerical work on rainy days than sunny days to tap into the effects of bad weather on productivity, ideally assigning work on sunny days that does not require sustained attention but does allow for more flexibility in thinking,"
The danger of course with these kind of findings is that in the right organisational culture with the right leadership it can be used to add that little bit of extra value to their business performance; but in the wrong hands you can image someone taking a weather chart to their performance appraisal and blaming the sun for them not achieving their targets or job responsibilities and quoting Professors from Harvard to back their case.
What’s even more interesting is that research shows that stock market activity is also affected by the weather where, Professor Ben Jacobsen’s paper ‘Is it the Weather?’ confirms that “there is definitely a strong seasonal effect in stock returns in many countries: stock market returns tend to be significantly lower during summer and autumn months than they are during winter and spring. However, says Professor Jacobsen, it is premature to conclude that weather affects stock returns by causing mood changes in investors - while the effect on the markets is there, we still don’t know why.”
One can’t help wondering what the future might hold, if any, for the incorporation of ‘weather patterns’ into business thinking and performance? It shouldn’t be completely laughed off, as we know a lot of effort has been invested by organisations into finding out what makes their customers ‘tick’; where this includes the impact of weather conditions, or ‘pleasing’ visual displays of ‘sunny scenes’, for example, on consumer purchasing behaviour - so why not look at improving employee performance in the same way?
Noble, C. (2012). Blue Skies, Distractions Arise: How Weather Affects Productivity. Harvard Business Review. September. [On-line:]
Does the Weather Affect the Stock Market? [On-line:]. Dec, 2005.

Sunday, March 17, 2013

Are First World Countries Paying the Price for Outsourcing Offshore?

Anna van Zoest from the Institute of Public Policy and Research states how it appears that “the dominant argument for companies to move business processes offshore are lower production costs caused mainly by low wages in countries outside of Europe, the US and Japan. An average ICT worker in India earns one seventh of the amount earned by his British counterpart, and a call centre agent even less. According to the McKinsey Global Institute, companies can save over 45% on production costs when moving business segments offshore, (McKinsey, 2003).”
This is supported by Katerina Rudiger of the Work Foundation, who highlights in a 2007 article that, “to this date, the phenomenon of labour arbitrage, the huge wage gap between industrialised and developing countries, has played an important role in offshore outsourcing. This is why Alan Blinder has called the phenomenon of offshore outsourcing the migration of jobs, but not the people who perform them, from rich countries to poor ones.”
Actual data seems to be very limited, as if the subject of outsourcing offshore is taboo and the less said the better. The problem with this is, in a depressed economy with high unemployment and areas of real poverty, the lack of data just fuels the flames of discontent, concern, misunderstanding and fear around ‘local’ jobs being sent overseas.
An article by Alex Lach highlights how in the US “data from the U.S. Department of Commerce showed that U.S. multinational corporations, the big brand-name companies that employ a fifth of all American workers cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million.”
Where, “according to a report on outsourcing by Working America, manufacturing employment collapsed from a high of 19.5 million workers in June 1979 to 11.5 workers in December 2009, a drop of 8 million workers over 30 years. Between August 2000 and February 2004, manufacturing jobs were lost for a stunning 43 consecutive months - the longest such stretch since the Great Depression. Manufacturing plants have also declined sharply in the last decade, shrinking by more than 51,000 plants, or 12.5 percent, between 1998 and 2008. These stable, middle-class jobs have been the driving force of the U.S. economy for decades and theses losses have done considerable damage to communities across the country”.
According to research from the Hackett Group, the cost gap between the United States and China has shrunk by nearly 50 percent over the past eight years, and is expected to stand at just 16 percent this year. Labour costs in China and elsewhere are rising, and coupled with rising fuel prices raising shipping costs, the economic argument for sending jobs overseas may be becoming less persuasive. Despite these increasing costs, the Duke survey found that only 4 percent of large companies had any future plans for relocating jobs back to the United States. The Duke survey does not identify the reasons for this reluctance to bring these jobs back to the US, but Alex Lach suggests that “a key factor could be the U.S. tax code”, which, as Seth Hanlon explains, “rewards companies for making investments abroad and leads to them shifting offices, factories, and jobs abroad even if similar investments in the United States would be more profitable absent of tax considerations.”
Although a complex topic, the basic equation for disaster is simple – if you create local unemployment because you outsource part of your business set-up overseas, then although you may have reduced you own costs, you have in the process reduced the disposable income available in your own country.
Once the cycle starts, it can become a never ending spiral of disaster, where with less domestic income available to spend, other organisations across the industry spectrum automatically presume the only way forward is to cut their prices to attract the diminished spending power. This will inevitably lead them to look at ways to reduce costs in order to keep their shareholders happy, and in the process they are likely to look offshore - where in a ‘heartbeat’ you’ve the potential to create more unemployment and even less disposable income at home – and so the cycle continues.
There are strong views on both sides, from the economic view of a free market economy and optimising shareholder value to the social view, concerned with the impact of unemployment on society. But the two shouldn’t be considered mutually exclusive, where government and business should focus on socio-economic solutions for their home country first, and then they are in a stronger position to help developing nations. But there is a real danger if you help develop other countries at the expense of your own citizens that sometime in the not too distant future your whole country could lose.
Lach, A. (2012). 5 Facts About Overseas Outsourcing. Centre for American Progress. [On-line:]
Rudiger, K. (2007). Offshoring, a threat for the UK’s knowledge jobs? Globalisation and the extent and impact of offshore outsourcing. The Work Foundation. [On-line:]
Van Zoest, A. (2004). Offshoring Practices in the UK – Where Are the Limits. Institute for Public Policy and Research. [On-line:]

Sunday, March 10, 2013

Are Business and Education in Sync?

In an article by Carol Lewis (The Times, 7th March 2013), she comments that “the education system, careers services and companies are failing to equip the workforce of the future with the skills they need to revive the economy,” (p.46).
In the same article Neil Carberry, director of employment and skills at the CBI, agreed that “there are three things we need to achieve: inspiration, opportunity and employment. Businesses are at the heart of a delivering all three. There has never been a golden age of careers advice. It’s just that in the past, the economy was simple enough for people to muddle through to finding work.”
What we need and what makes sense is for business and education to collaborate to ensure that communities and countries develop the right skills for their future business development – otherwise the outlook will be bleak, where we could end up with a future state in which parents start to question the basic usefulness of education if they don’t see it providing some form of opportunity for work and employment.
And in a sense it’s already beginning to happen in some areas of Britain, where only last week I visited a College in Essex, where the community is experiencing significant high levels of unemployment and as I walked from the station to the College I could see the signs of neglect, where gardens were overgrown and littered with rubbish – and where passing a couple in my suit and tie, I heard one say to the other, ‘hmm, he must be lost.’  The vice principal made it clear that they have parents at the moment that have given up and genuinely don’t see the benefit in their children going to school and getting an education.
It’s quite a condemnation on society when you encounter such a drastic reaction to education, especially when most parents only want the best for their children and normally will do anything they can to help them have a better life than their parents had. Where in the past parents wanted their children to get an education to enable them to move out of the area and create a better life for themselves. So there is something very wrong when parents in disadvantaged areas start to question the very fabric of education – no longer seeing it adding value to their child’s prospects for the future.
Richard Sykes, the chief executive of ISS UK, a facility service company says that “if you get to pupils early enough and keep in touch, then you have a chance to inspire. If it is too late, or irregular, then it won’t be integrated into their life. The challenge is that there isn’t the bandwidth in the curriculum for regular interaction (with business);” and Nansi Ellis, the head of education, policy and research at the Association of Teachers and Lecturers, emphasises that “employment skills are broader than work skills and encompass communication and the ability to form relationships. Who knows where the economy will go, but the skills of communicating, thinking and reflecting will be vital whatever happens. This makes it critical that we broaden today’s debate from just being about employability.”
Matt Hancock the Skills Minister, was adamant that the education system did not need a radical overhaul, which sounds more like a defensive response rather than an enlighten one; though Carol Lewis does mentions that “it appears that collaboration between schools and business was not lacking, although it might sometimes be misguided.”
What education establishments need to do is to optimise their own ‘natural’ business networks through their community and their alumni, where important business sector knowledge and experience can be fed back to pupils in a ‘real time’ fashion so that pupils have no illusions about their chosen career path and are much more prepared when it comes time to look for gainful employment – able to look at careers they have researched and discussed in advance, rather than looking for the first available vacancy, just to ‘get a job.’
This way business and education can streamline and optimise the future manpower needs of business, ensuring a greater benefit for everyone involved.
Lewis, C. (2013). Business must take the lead in giving the next generation the skills to rebuild Britain. The Times, 7th March 2013, p.46.

Sunday, March 3, 2013

How Should You Benchmark Business Performance?

Way back in 1998, Sik Fong, Eddie Cheng and Danny Ho wrote a great article citing Camp (1989) referring to benchmarking as “the search for industry best practices that will lead to superior performance”.  Where they state that “this definition is broad enough to accommodate all levels or types of practices to benchmark;” going on to say that “benchmarking can work in all possible areas of products, services, and related processes across different national or business boundaries. It involves changing the current work practices or business methods to achieve predetermined goals. For example, Motorola’s general systems division learned from the delivery systems of Domino’s Pizza and Federal Express, aiming at shortening the cycle time between order receipt and delivery of its cellular telephones,”(p. 408).
But in 2013 with most organisations operating in a double or triple dip recession, or the aftermath thereof,  is it smart to benchmark yourself against other organisations when whole industries are operating in uncharted territory and ‘comparisons’ could easily give a false picture, as you might not be comparing like with like in terms of the business environment.
Benchmarking against competitors makes sense in a reasonably stable business environment where you’re looking to ensure you’re either setting the standards for others to follow or at least being competitive; and making strategic and operational changes to improve specific key performance areas in line with current ‘best practice’ in your industry sector.
But what if the market is so volatile that benchmarking yourself against your competition could just lead you to follow them to obscurity, highlighting that maybe there are times when the business environment is so uncertain that it requires ‘great leaders’ to go with their experience, knowledge and instincts (not necessarily in that order) to lead their organisation through the ‘hard times’, where they prefer to ‘watch’ and manage their internal key indicators; have a very dynamic strategic process, where the organisation is ‘primed and able’ to change direction at a moment’s notice; and actively listen to their customers. 
Maybe there are times in the business cycle where ‘optimal future success’ is more dependent on leadership than comparing yourself with your competition through benchmarking in its classic form; and where you, as the leader, have the confidence in your people and your products and/or services to make it through to better times.
Where at the same time those unfortunate leaders promoted to a level beyond their real capabilities find themselves standing out like a sore thumb, following traditional business practices hoping (and praying) this will see them through and simply survive until normality returns to their market and business environment.
There are times in business and the industry life-cycle when history can tell us a lot and help us define our future strategies and actively allow us to monitor and improve performance; but we must be alert to the fact that there also times when history in itself can detract from performance improvements, and if used as a benchmark can lead to unrealistic performance target and expectations; leading to misdirection, demotivation and suboptimal outputs that could, if not checked in time, lead to corporate failure.
Sik Fong, Eddie Cheng and Danny Ho highlight four essential themes for performance benchmarking offered by the Design Committee of the International Benchmarking Clearing House in the USA, (p. 408);
1. The value of learning from contexts outside an organization’s usual frame of reference (Cox et al., 1997);
2. The importance of undertaking this learning using a structured, formal approach (Cox et al., 1997);
3. The comparisons of practices between oneself and the best-in-class on a continuous basis; and
4. The usefulness of information to drive actions for performance improvement.
Critically though even these definitions neglect to highlight the possibility of benchmarking based on internal comparisons when the external environment is too uncertain to be trusted to guide you to ‘best practice’ performance.
When the business environment is uncertain, you cannot simply assume that your competitors, who were successful ‘yesterday,’ are actually on the right strategic path for sustainable growth; and if you’re a truly effective leader you must trust your instincts to guide your organisation through these uncertain times to arrive safely ‘on the other side’. Check on what the competition are doing by all means, but don’t blindly follow them, as they could be more lost than you.
Fong, S.W., Cheng, E.W.L. and Ho, D.C.K. (1998). Benchmarking: a general reading for management practitioners. Management Decision. Vol. 36, Issue 6, p. 407-418.