What's the Future for International Trade?

An article in the Economist highlights how “the decline in multilateralism may not make much difference to big countries able to negotiate regional agreements on their own terms. Small countries without such leverage may be harder hit. But the marginalization of the World Trade Organisation (WTO) as a deterrent to protectionism is taking on new forms that are hard to deal with,” (p.16).

 

They go on to say how “free-traders in the West worry that the proliferation of regional trade agreements (RTA’s) is gutting the multilateral trading system. Arvind Subramanian of the Peterson Institute for International Economics calls for the rise of ever larger RTA’s as an ‘existential threat’ and gives warning that ‘multilateral trade as we have known it will progressively become history.’ Where the debate about whether RTA’s help or hurt the multilateral trading system has gone on for decades. Supporters argued that whenever two countries entered into an RTA, they would create incentives for others to join or to negotiate their own RTA. Trade barriers around the world would fall, one by one, and political support for multilateral deals would increase. Detractors claimed that once inside an RTA, countries would discriminate against outsiders and lose interest in multilateral liberalization, undermining the authority of the WTO. They would divert as much trade as they created and introduce big distortions.”

 

One of the key issues around this debate is “what are the forces that are driving ‘trade agreements’ and whether they are mostly ‘business’ driven or ‘politically’ driven”? It might be assumed that the two shouldn’t be mutually exclusive, but the time horizon for political decisions can be focused on a much shorter time scale and for totally different reasons than the drivers behind business decisions – where a business focus is often looking for long-term, reliable relationships that offer sustainable growth to the businesses concerned.

 

The forerunner of the European Union was established in 1957, even as the members of the General Agreement on Tariffs and Trade, the WTO predecessor, continued to cut tariffs. In the 1990s Bill Clinton signed the North American Free-Trade Agreement just as the Uruguay round of the trade liberalization was completed. Then in the early 2000s China joined the WTO and the EU expanded into Eastern Europe. In the past decade, though RTA’s have increasingly looked like an alternative, not a complement, to multilateralism. The Doha ‘development’ round, which began in 2001, immediately ran into trouble as emerging markets chafed at the central bargain: big cuts in their industrial tariffs in exchange for more access to rich-world agricultural markets. Talks faltered in Cancun in 2003 and finally collapsed in Geneva in 2008.

 

The problem with ‘developing’ regional or multilateral trade is that the negotiations and decisions are often made by government administrators in conjunction with representatives from big business (i.e. very big), with little consultation with the sme market and what their needs and/or expectations might be. Where ‘deals’ are made that help secure large government contracts with little regard for anyone else, and there doesn’t appear to be any research or data that shows whether this ends in an overall ‘gain’ for the economy or not, in both the short and long-term.

 

As the Economist highlights one of the biggest obstacles to more multilateral trade deals in today’s current global climate is the changing balance of global economic power. “Brazil, Russia, India, China and South Africa (the BRICS countries) see themselves as countries still poor enough to need protection for their industries while the rich ones lower their own barriers, especially to agriculture. But the rich world increasingly views the BRICS as fully-fledged economic competitors whose state capitalism is incompatible with a free and open global economy,” (p.14).

 

The dichotomy comes with the continued growth of multinational companies with a global reach, where there is no doubt that “regional trade liberalization is better than no liberalization at all, yet it interferes with globalization in several damaging ways. By excluding sensitive sectors or imposing onerous rules of origin, it complicates life for multinational companies whose supply chains cross multiple borders.” But further than this, the impact of the global financial crisis has had a severe effect on many sme sectors and governments would be well advised to look further than ‘negotiating’ trade deals that aid their big business partners and also actively consider the needs of their re-emerging sme sectors and their specific needs to compete on the international stage.

 

References:

 

In my backyard: Multilateral trade pacts are increasingly giving way to regional ones. The Economist. 12-18 October, 2013. P.11-16.

What Does a Talent Mindset Really Mean?

Today's businesses face increased global competition, shifting markets, and unforeseen events. No wonder they are finding it more difficult than ever to attract, develop, and retain the skilled workers they need.

 

Cindy McCauley and Michael Wakefield highlighted in a 2006 article how “talent management, which incorporates the cooperation and communication of managers at all levels, has become an imperative in the face of today's business challenges. In addition, talent management processes must be more strategic, connected, and broad-based than ever before.”

 

Talent-management processes include workforce planning, talent gap analysis, recruiting, staffing, education and development, retention, talent reviews, succession planning, and evaluation. To drive performance, deal with an increasingly rapid pace of change, and create sustainable success, a company must integrate and align these processes with its business strategies. By assessing available talent and placing the right people in their best roles, organizations can survive and thrive in today's increasingly competitive markets.

 

But before aligning the processes one has to fully understand them – how to develop them, how to manage them and how to get the best out of them. Yet for some strange reason the multiple benefits of HR processes and systems like these are often talked about with passion and vigour, but rarely understood and implemented correctly.

 

According to a recent benchmarking study on talent management conducted by the American Productivity and Quality Center and the Center for Creative Leadership, organizations that excel in talent management follow eight best practices:

 

1. Defining "talent management" broadly.

2. Integrating the various elements of talent management into a comprehensive system.

3. Focusing talent management on their most highly-valued talent.

4. Getting CEO's and senior executives committed to talent management work.

5. Building competency models to create a shared understanding of the skills and behaviours the organization needs and values in employees.

6. Monitoring talent system-wide to identify potential talent gaps.

7. Excelling at recruiting, identifying, and developing talent, as well as performance management and retention.

8. Regularly evaluating the results of their talent management system.

 

A well-known McKinsey & Company report coined the term "talent mindset" to describe the "fundamental belief in the importance of talent" that high-performing organizations exhibit. By viewing your workplace through the eyes of a talent manager, you will learn to develop such a mindset. Get into the habit of asking:

 

Do we have the capability to do what is asked of us? What talents do we need to improve on or acquire? How will we further develop those talents? Think about how everyday work can serve as a further talent development for you and those you manage.

 

Organisations need to look at talent as the rule rather than the exception, where they embrace a talent mind-set at the top, which cascades down as part of the organisational culture. They need to start their talent management culture at the recruitment phase – having a sound recruitment policy that ensures that they attract and recruit the best talent available in the market place for their specific needs now and into the future.

 

Looking after talent management, into the future, requires a direct link between the corporate strategy and the human resources strategy. Where organisations, regardless of size, have a ‘view’ of what their organisation structure will look like in the short to medium term (often, one to five years, depending on the industry) and being consciously aware of all the possible changes in job functionality.

 

This allows organisations to plan proactive development programs for their talent at the individual and team level, throughout the company – ensuring that they are constantly ‘fit for purpose’ and optimising the development of their talent – who in turn ensure they optimise the performance outcomes of the organisation.

 

Very few organisations dedicate the time and effort, to identify and install the right systems and processes to optimise the development of their current and future talent – but maybe the leaders of different business sectors in the future, will be those that go beyond just talking about talent, and actually embrace and implement talent management on the ground.   

 

References

 

McCauley, C. and Wakefield, M. (2006).Talent Management in the 21st Century: Help Your Company Find, Develop, and Keep its Strongest Workers. Journal for Quality & Participation. Vol. 29, Issue 4, p.4-7.

 

How Do We Help Bad Leaders Realise They’re Bad?

Amy Anderson wrote that “when good leadership is in place in a company, it can be felt throughout the entire organization. With good leadership, corporate culture isn’t forced, it is developed. Communication is daily and open. Everyone understands the vision and goals of the organization, and everyone has input into how they can be improved. Employees feel that they are an important part of the whole and that every job matters within the company. Decisions for promotions are based on picking people of integrity whose talents and experience best fit the positions. Employees are encouraged to compete with their own best to get ahead and they understand that helping their coworkers to succeed is the best way to get ahead themselves. The result of good leadership is high morale, good employee retention, and sustainable long-term success.”

 

Amy writes what many of us know – in fact, it’s good common sense – but we still seem to operate in a business environment where ‘good’ leadership is the exception rather than the rule. Part of the problem is that many of the discussions around leaders and leadership development talk about the development of our future leaders – but what about the current leaders and what about the multitude of bad leaders – how do we develop and change them?

Jean Lipman-Blumen's wrote in her book, The Allure of Toxic Leaders : Why We Follow Destructive Bosses and Corrupt Politicians—and How We Can Survive Them, “that there was and still is a tendency among contemporary society to seek authoritative, even dominating characteristics among our corporate and political leaders because of the public's own personal psychosocial needs and emotional weaknesses.”

Where Jean noticed "toxic leadership" was not about run-of-the-mill mismanagement. Rather, it referred to leaders, who, by virtue of their 'dysfunctional personal characteristics' and 'destructive behaviours' inflict reasonably serious and enduring harm not only on their own followers and organizations, but on others outside of their immediate circle of victims and subordinates, as well. A ‘noted’ rule of thumb suggests that toxic leaders leave their followers and others who come within their sphere of influence worse off than they found them - either on a personal and/or corporate basis.

But one question that seems to have been avoided is ‘do bad leaders actually know they are bad? Or do they generally think they are good? – and hence don’t even realise that they need to change.

In large corporate organisations there can be a very ‘unique and unusual’ cultural traits that some outside the organisation may consider unhealthy, but those inside the organisation consider simple ‘survival’. Individuals work for large corporations for many reasons that go beyond the simple ‘job satisfaction’ tag and can include access to unbelievable financial awards that are achieved after lengthy terms of tenure. To put things in perspective, these financial awards or incentives, aren’t just small amounts of money but are life changing amounts – that can allow employees and their families to be set for life and enjoy the fruits of early retirement.

But of course with these incentives come ‘choices’ in respect of what employees are prepared to ‘put up with’ to gain access to this ‘potential wealth’. In the aftermath of a global crisis where many have lost their jobs and poverty is increasing what advice would you give someone with these choices when they find themselves ‘lead’ by a bad leader – should they leave and take their chances that the next boss they meet is going to be that ‘rare’ good leader – or would you advise them to keep their head down, do the time and take the rewards that go with it – then you can stick two fingers (or one) up to the ‘leader’ and ‘organisation’ and go and enjoy life.

So if employees aren’t going to tell bad leaders just how bad they are because it’s simply not in their interests to do so, we need leaders themselves to become more self-aware and the organisation from the top-down, led by the board, to focus on developing good and effective leaders now – for today not just for tomorrow.

It’s worth looking at some of the traits of bad leadership and Barbara Kellerman wrote in her book ‘Bad Leadership: What It Is, How It Happens, Why It Matters’ that toxicity in leadership (or simply, bad leadership) may be analysed into seven different types:

1) Incompetent – the leader and at least some followers lack the will or skill (or both) to sustain effective action. With regard to at least one important leadership challenge, they do not create positive change.

2) Rigid – the leader and at least some followers are stiff and unyielding. Although they may be competent, they are unable or unwilling to adapt to new ideas, new information, or changing times.

3) Intemperate – the leader lacks self-control and is aided and abetted by followers who are unwilling or unable to effectively intervene.

4) Callous – the leader and at least some followers are uncaring or unkind. Ignored and discounted are the needs, wants, and wishes of most members of the group or organization, especially subordinates.

5) Corrupt – the leader and at least some followers lie, cheat, or steal. To a degree that exceeds the norm, they put self-interest ahead of the public interest.

6) Insular – the leader and at least some followers minimize or disregard the health and welfare of those outside the group or organization for which they are directly responsible.

7) Evil – the leader and at least some followers commit atrocities. They use pain as an instrument of power. The harm can be physical, psychological or both.

 

What the business world and beyond needs now are good leaders and we have to find effective ways to let bad leaders know they are bad without employees being burnt at the stake. Since as Amy Anderson mentions, “for anyone who is ever granted the opportunity to take a leadership position, remember that being a true leader doesn’t come from a title, it is a designation you must earn from the people you lead.”

References:

Anderson, A.R. (2005). Good Leaders Are Invaluable To A Company. Bad Leaders Will Destroy It. Forbes. [http://www.forbes.com/sites/amyanderson/2013/01/14/good-leaders-are-invaluable-to-a-company-bad-leaders-will-destroy-it/]