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March 2009

February 2009

It starts with belief!

Belief makes the impossible possible. And belief is an incredibly human quality, which is another reason why organisations looking to transform business results or survive economic downturns need to pay greater attention to their people.

I don't think it will surprise anyone that I am passionate in my belief that business is about people, and I don't mind repeating ad nauseam that, even with the best plant and equipment, the latest technology and the best systems, a business cannot survive without people. People are the essential ingredient for success. That is why I gave my primary platform the title "Lighting the Fuse", based on the Mac Anderson quotation, "People are like dynamite; the power is on the inside and nothing happens until you light the fuse." That simple sentence gives a more informed insight into what is necessary to implement change, than whole business school libraries of management books. 

For most people the fuse is either belief or appreciation, or possibly a combination of the two. Henry Ford recognised the power of belief when he said, "Whether you believe you can do a thing or not, you are right." It is, however, only with belief that you can even try.

This certainly seems to be something President Obama understands very well. I was amazed to read his statement yesterday that, "today I'm pledging to cut the deficit we inherited in half by the end of my first term in office.  This will not be easy.  It will require us to make difficult decisions and face challenges we've long neglected.  But I refuse to leave our children with a debt that they cannot repay -- and that means taking responsibility right now, in this administration, for getting our spending under control." At a time when the US has a record debt and is undertaking trillions more, when 10% of federal revenues is already going towards interest payments, this is an incredible statement, right up there with Kennedy's planning to put a man on the moon by the end of the decade. Yet there are two significant things to note about it:
1. It is a pledge.
2. He expects a second term in office!
Based on his remarkable track record who would bet against either?

This is really 'lighting the fuse' but what stands out most, is the stark contrast between this approach and that of business leaders who, while talking glibly about the end of the recession, continue to perpetuate it with their employee reduction programmes. Obama clearly understands something business leaders do not; that, as Bob Nelson put it, "You get the best efforts from others not by lighting a fire under them, but by lighting a fire in them."

Dealing with falling sales

This was a headline in the February 2009 edition of Management Today. The article goes on to give the reader 7 tips, the headings of which make for interesting reading. They are:

  • Be positive
  • Don't stop marketing
  • Target your effort
  • Hold a sale event
  • Sharpen up your sales team
  • Incentivise your people to sell
  • Mind who you sell to

The first point, reinforced by Sam Walton's quip, "I was asked what I thought about the recession. I said I'd thought about it and decided not to participate," is particularly ironic. Being positive seems to be the first thing to disappear in the face of declining business. One just has to look at the number of people being laid off for evidence of that. There appears to be little or no concept amongst business leaders that laying people off is hardly positive and simply exacerbates the downward forces.

Yet this is by no means the only irony in the list. For example, the second point cites 'plenty of research' that shows 'firms that cut their advertising and marketing budgets lose out in the short-term as well as the long run.'  True, but equally so of making people redundant. Thus the message here seems to be that it is preferable to lay off people than to reduce adspend! 

I find myself questioning whether business leaders understand that business success is ultimately totally dependent on people. At the end of the day a business can have the best plant and machinery and the best systems under the sun, but it still requires people for anything at all to happen. Yet of the 7 points on the list only two are actually people focused, and even those show a dismissive attitude towards people, stating that 'in boom times sales teams are lazy and don't work as hard as they can' and thus demanding you 'cut out the dead wood', and then talking about incentivising non-sales staff for referring sales leads to the sales teams. Typical, top-down, command-and-control management attitudes.

In his latest book, "The Future of Management" Gary Hamel argues that, “For the first time since the dawning of the industrial age the only way to build a company that is fit for the future is to build one that’s fit for human beings as well. This is your opportunity – to build a management system that truly honours and cherishes human initiative, creativity and passion, essential ingredients for success in the new millennium.” None of this sees us moving forward in that direction. I would suggest that, if we are to avoid recessions like the one we are currently experiencing, this is essential.

Why you cannot bank on bonuses!

I have long questioned the implementation of incentive remuneration or performance related pay (PRP.) But I have to confess to being shocked by the brazen effrontery of the banking industry demanding bonus payments despite their disastrous performance and its impact on everyone else. With reports that industry bonuses in London City for 2007 alone were £15 billion, you would think they would recognise the gravy train had come to an end and simply be grateful for what they have already received. 

Instead, as reported on the BBC news this morning, we have these people engaging lawyers to legally pursue their contractual rights to their bonuses! This is something that even the hardiest satirist might have had difficulty imagining. Now we know for sure - the world has gone mad! Moral standards have sunk to unprecedented depths.

'Bonus' and 'legally enforceable' are almost mutually exclusive terms. Ignoring the fact that bonus is literally the Latin word for good, my dictionary gives as its first definition, "A sum of money added to a person's wages for good performance." Surely leading a company to the point where it requires a multi-billion pound bailout from the taxpayer precludes any possibility of there having been good performance? So how can there be any legal right? 

Let's go back to my starting statement: a bonus is an element of incentive remuneration or PRP. Consequently a bonus right can only exist if and when:
1. The organisation's performance itself is good.
2. The individual meets the criteria of good performance upon which the bonus terms were set.
That first point is important: it is no good saying this part of the company has done well so they can have a bonus, but this division hasn't, so they can't! Organisational performance here clearly indicates there should be no bonus entitlement.

This sorry episode, however, clearly indicates that it is time to do away with 'incentive schemes' where there are no true incentives, and which are actually nothing more than the means to increase salaries by the back door. If the shareholders do not get any return when the company makes a loss why should the people get any more than their basic salary? The time has come for the 'labour dividends' that we propose. Then no-one will be able to bank on bonuses, least of all the bankers!   

Where Does Customer Service Begin?

In a recent blog Anna Farmery questions whether companies that claim to treat their employees like customers have it completely the wrong way round. 

While encouraging them for their positive efforts to build employee engagement she states that true brand engagement comes when

"Companies treat their customers like employees."

Now long time readers (thanks Mom!) will know that this is a message I have been banging on about for ages.  I have written previously about the lessons that can be learned from reading "The Customer Comes Second" by Hal Rosenbluth, (which I think should be made compulsory reading for all business executives) and the need to get these priorities right.

You will therefore understand why the doom and gloom of current news bulletins get me onto my soapbox. Times are tough, but what are companies thinking that are laying off people like trees shedding leaves in winter? How can they expect to offer superior customer service or a great customer experience, if they show their people so little respect? Do they really not understand that customer service is always, only, solely and totally about people and the inter-action of people? 

That is why I have created my new Alternatives to Redundancy website to identify the fact that there are other options. Of course I am not saying it will be easy, but, if you do take greater care of your people, it will follow as day follows night that your people will take better care of your business.  So I invite you check out my new website, download the free guide, "Why Redundancy is Bad for Business, Even in a Downturn" and take up the cause with us.

Anna and I cannot be the only ones with this philosophy. So please share your ideas and stories and let's do everything we can to stop the insanity and reduce the ultimate impact of the economic downturn. The more people that lose their jobs, the longer any "recession" will last - and the worse customer service will get and the worse our customer experience will be!