Philip Whiteley's Blog

April 30, 2013

Radical Shift: Leadership book challenges economic and political beliefs

Filed under: Uncategorized — felipewh @ 9:31 am

Following the banking crisis and amid increasing environmental pressures, it is clear that the dominant business model in the west is unfit for purpose, and that the dash for short-term growth at any cost has led to economic ruptures and, in some cases, ruin.

There are many books that demonstrate the benefits of enlightened leadership, engaged employees and environmental protection. New Normal, Radical Shift – now available for sale – is different. As well as charting the evidence that demonstrates the effectiveness of strong leadership, it questions the habits that undermine good practice. The authors, Neela Bettridge and Philip Whiteley, have used their experience as, respectively, executive coach and journalist, to explore the beliefs that have encouraged many to believe the opposite: that exploiting the workers and the environment maximizes corporate profits. They chronicle the damage that such cynical beliefs have brought, and discuss their origins in political theories, forming the momentous conclusion that the ‘left-right’ way of viewing economics and society is profoundly flawed.

New Normal, Radical Shift calls for a fundamental renewal of the business model, and a much higher priority for governance and sustainability, including environmental sustainability, in political circles.

The authors report how the organizations that have hit crisis – many western banks, and those firms brought down by accountancy scandals or reckless merger activity – followed the cynical fads that had their roots in political ideology. By contrast, many principled organizations that refused the dash for short-term or speculative profits have proved to be more profitable as well as more ethical and sustainable. The book sets out an alternative business model that is at once more practical and more positive. It features case studies with leading employers that have delivered for all their stakeholders. These include: Westpac, ISS, the Prospect trade union, and Marks & Spencer.

Neela Bettridge says: ‘The most effective business leaders understand that the modern corporation has high levels of inter-dependence and requires correspondingly high levels of cooperation. This is an inescapable reality, not a “nice-to-have” extra. In my coaching work, I encourage individuals to become emotionally, spiritually and analytically intelligent. This book explains the context and the commercial relevance for such disciplines.’

Philip Whiteley says: ‘For decades, working as a business journalist, the priorities of management fads have struck me as illogical and damaging. In particular, the tendency to overlook the importance of employee relations, despite its fundamental importance to how the organization functions, is a major weakness. I’m delighted to partner with Neela to put together a comprehensive book that seeks to rectify this and other weaknesses.’

April 13, 2013

Japanese motorbikes, flying pickets and Margaret Thatcher

Filed under: Uncategorized — felipewh @ 9:28 am

It was a shiny new 750cc motorbike, and the brand on the petrol tank said ‘Yamaha’. I was surprised. My patriotic friend had for years been extolling the virtues of British motorbikes, riding a reconditioned Triumph, but by his 18th birthday had switched to the Japanese marque.

This was the late 1970s/early 1980s, a period of British history recently revived in the collective memory following media coverage of the death of Margaret Thatcher. Nothing more clearly symbolized the decline of manufacturing in the UK, and the superior industrial leadership, skills, teamwork and product quality of Japanese (and also German) companies at the time. Even the most fierce patriots had to succumb. British police rode BMWs.

Most of the recent coverage falls into a partisan pattern: the Iron Lady either rescued the country from union militancy and bankruptcy, or savaged it with class war and unemployment. There is an alternative perspective; that it wasn’t the unions or the Thatcher Government who destroyed large swathes of British industry, so much as the fight between them; an ugly left-right sectarianism that prioritized inflicting damage on the other constituency ahead of building businesses with good pay and prospects, strong teamwork and skills. This was a colossal and historic failure of leadership – both of industries and of unions.

It culminated in the restructuring of the coal industry being settled in quasi-Mediaeval battles between flying pickets and policemen, in the hideous – and largely gratuitous – year-long strike in 1984/5. This was no way to modernize an industry, and Thatcher’s description of miners as the ‘enemy within’ was shocking and undeserved for communities who had served their country with courage in peace-time and war. But the idea that the industry didn’t require modernization was unrealistic.

At least as much blame falls on the unions for the decline of industry. Much of the militancy was gratuitous, with political ambitions. In the 1980s I was talking with a Workers Revolutionary Party veteran who said that during the 1970s their members, fired up by the protests of 1968, were directed to go into unions in targeted industries: automotive, ship-building, etc, with a view to disrupting entire industries and preparing the way for revolution. They spent long days door-stepping the mining communities. It is possible to overstate this influence, but it was a shocking revelation that tales of revolutionary activism in left-wing unions was not, after all, dreamt up by the Daily Mail. It’s an aspect of the history of those times that you won’t find in The Guardian or the New Statesman. Manufacturing was destroyed by class-based, short-termist management and Marxist-influenced unions. Thatcher was merely the undertaker.

Another under-reported feature of the era concerns the fall in support for the parties of left and right. To hear them talk, then and now, you would think that they represented the whole of society between them. In fact, millions of voters deserted both. In the election of 1970, Conservatives and Labour had polled nearly 90 per cent of the votes between them. By the election of 1983 this had fallen to just 70 per cent: a 20 percentage-point fall during the years of militancy. Of the two, Labour lost much more.

While class warfare and employer-union militancy are thankfully now reduced – Triumph are even exporting motorbikes again! – the cynical theory that you can only win by exploiting the other side lingers on. My new book New Normal, Radical Shift, co-authored with Neela Bettridge, points to a future based on an understanding of inter-dependence; not in a romantic way, but as a pragmatic approach to building better organizations.

March 28, 2013

Expense is not cost; people are not resources

Filed under: Uncategorized — felipewh @ 11:24 am

One of the many baleful examples of an accountancy-dominated business model is the pretence that the numbers tell the whole story. Commonly heard in management circles is the mantra: if you can’t measure it, you can’t manage it. This is nonsense. At the very least, 50 per cent of management is un-measurable, because you cannot measure the impact of a course of action you decided not to take. Every time a manager takes a decision, there is an unquantifiable opportunity/risk that is passed over. Real management involves forming a judgement on hypothetical matters; it also means being comfortable with paradox. If you only manage what you can measure, you cannot manage at all, you can only add up.

What is worrying is that the ‘financial data tells the whole story’ myth is creeping in to the personnel profession, as my new article in Personnel Today reports. Many employers are pretending that reducing the direct costs of hire always results in lower operating costs, neglecting matters such as morale, skills, communication and so on that have a direct bearing on efficiency and operating costs.

As economist Haig Nalbantian describes in this article, there is a difference between ‘expense’, the direct costs of hiring people; and ‘cost’, which is an economic construct that depends upon collective performance. The measures that he and his team have developed over the past 20 years are far more sophisticated and valuable to a management team, because they analyse the inter-relationships between deployment of people and types of reward and training, and the impact on the business.

Even here, though, a judgement has to be taken; Haig refers to ‘sleuthing’, because data, even sophisticated data, cannot tell the full story. I sometimes liken it to forensic science in a court case: necessary, but not sufficient. You also need to know about motive and relationships.

This is not an argument against measurement; it is an argument both for better measurement and for an understanding of its limits.

February 26, 2013

Do people actually want to cooperate with each other?

Filed under: Uncategorized — felipewh @ 9:35 am

A few years ago at a conference, I heard an entertaining account from a trade unionist who had become a proponent of partnership deals in the workplace – that is, where employee representatives seek to maximize their area of agreement with managers in order to promote better workplaces and opportunities. In doing so, he related how he was a convert. Back in the 1970s, he had been a militant: organizing industrial disputes, buzzing around the country in a van to mobilize the strikers. ‘Sometimes people ask me what it was like,’ he concluded. ‘And I reply: “I loved every minute of it.”’

For many people, conflict is exhilarating, harmony is dull. This includes employee relations, especially at a policy level.

You can divide the relevant issues broadly into two – the first being leadership and skills, and the second to do with legislation. In the former, the employer interest groups and the trade unions agree with one another.Taking the UK as an example, Frances O’Grady from the Trade Union Congress and Lord Heseltine of the Conservatives have begun collaborating on business development. All main political parties support the Engage for Success initiative. According to one estimate, increasing employee engagement would add over £25 billion to economic growth. If you are sceptical of this claim, look at the more detailed work by individuals such as Haig Nalbantian showing not only the gains of a more engaging workplace, but the costs of an exploitative one. Many ‘cost-saving’ initiatives where workers’ benefits are slashed don’t help the business, because employers haven’t factored in the huge costs of high staff turnover, weak skills, and so on.

Yet are these the issues that make the pulse race in the bi-partisan lobbying world? The second policy area, legislation, concerns ‘rights for workers’ if you support them, or ‘red tape’ if you don’t. This is what really excites activists on both sides. There is no clear evidence that a ‘flexible labour market’ automatically helps business development (the employers’ lobby case); but nor does it necessarily diminish job and career opportunities for workers (the trade union argument). It is extremely unlikely that legislative changes could have anything like the economic impact of better leadership and skills, but these are less appealing subjects because their discussion raises the risk of having to agree with the other side. It gets in the way of the Two Minutes’ Hate. Sometimes, when there is a bitter political conflict, it’s not the issue that motivates, but the fight.

Those of us who agree with the idea of Appreciative Inquiry – that people can learn to cooperate much more effectively if they take the trouble to understand one another – are in conflict with the world view that it’s always better to get your retaliation in first. The former is a rational, not a utopian case. For the trade unionist I quoted at the start of this article, switching from militancy to reasonable cooperation was a victory of head over heart. Normally, being ‘nice’ is portrayed as the opposite.

A relish for conflict is something we have to acknowledge and discuss: it’s not that folk cannot believe the evidence that cooperation can be mutually profitable, it’s that many don’t want to.

For more on sustainable leadership and cooperation, go to the Radical Shift blog here.

From 28 April, the New Normal, Radical Shift book will be on sale.

February 16, 2013

Party politics can’t reform meat industry and NHS

Filed under: Uncategorized — felipewh @ 9:21 am

Never have I felt more smug about being a vegetarian with private health insurance. Indeed, for some years I’ve been fascinated that eating meat and the British National Health Service are so popular, and felt somewhat alienated and distanced from my compatriots as a result.

In the past two weeks, the horsemeat scandal and the Francis Report into the corporate manslaughter[1] at Mid-Staffordshire NHS hospital expose some truly shocking examples of poor management, almost certainly including unlawful conduct, at the heart of these two industries.

There’s been much written on these two affairs; you can go elsewhere for the details. As a management writer, I’d highlight what we need to learn, and specifically, the limitations of conventional analyses for understanding what has occurred.

The left-right perspective would treat the two as being very different, because one is private sector and the other is public sector.

So the left would complain that ruthless supermarkets, dedicated to outsourcing and creating long supply chains, practically invite corner-cutting which has resulted in products labelled ‘beef’ to contain cheaper ingredients, including horse.

A right-wing analysis of corporate manslaughter (sorry, there I go again) at an NHS hospital under a Labour Government would focus on the complacency that monopoly state providers tend to exhibit.

What both analyses miss is that fraud in the food industry, and neglect in the NHS, do not constitute the whole story: hopefully, they are very much minority practices. So there are more similarities between the failing institutions in different sectors than between different institutions in each.

The problem with left-right way of thinking is to focus on structures and ownership, rather than values and qualities of leadership. It is a limited way of understanding organizational performance, and has probably outlived what little usefulness it has.

For more on the uselessness of left-right politics, go to the Radical Shift blog here.

From 28 April, the New Normal, Radical Shift book will be on sale.


[1] Note: Mid-Staffs campaigners have informed me that they’re not allowed to use the term ‘corporate manslaughter’ to describe conditions of neglect that led to large numbers of vulnerable patients to die of poor care or dehydration. Go ahead, Mid-Staffs lawyers, you can sue.

February 9, 2013

Bad metaphors, useless data

Filed under: Uncategorized — felipewh @ 9:32 am

Don’t read the newspapers, Professor Cary Cooper told the audience at the recent Chartered Management Institute Book Awards. The UK is doing well! We have some of the best business schools, producing great business leaders. There is a strong economic future.

So why are there so many harbingers of doom from the economics profession, at least the type quoted in the Business section and by politicians? And why this disconnect between economists and the world of business? Debt and malfunctioning banks are obviously part of the picture, but the disjuncture between economics and business is an aggravating problem.

Formal economics is a discipline that prides itself on analysis of factual data and mathematical measurement. This is preferred to qualitative information, held to be subjective. Yet when asked to describe what is going on, economists still search for a narrative. Unfortunately, the tendency to believe that economies follow laws, like the laws of physics, leads them to some misleading narratives. They link data points together – the primary indicator being changes to Gross Domestic Product (GDP). The assumption that laws of motion are propelling the economy upon a certain path tends to result in a transport metaphor.

Nautical ones are common. So if GDP ‘growth’ is less than expected, we are ‘facing head winds’, or ‘heading for the rocks’, or ‘becalmed’. If things pick up, suddenly we’re in a spacecraft! We have ‘escape velocity’! Wow, that’s a lot more exciting than being stuck in the Doldrums with half the crew dying of scurvy.

GDP is not even a useful indicator. It tells us nothing about business performance. Using GDP to measure growth is rather like using the number of visits to the leisure centre to measure your fitness, without recording whether you worked out in the gym or went to the café. Rising GDP can reflect sustainable growth in trade and development of highly networked ‘clusters’ of businesses, or it could simply be the development of an unsustainable credit boom, of the kind that afflicted Ireland, the UK, Spain, Greece and Iceland in recent years. Or it could be a mixture.

Too many economists match weak quantitative data with misleading narratives. The problem is not that they prefer the quantitative to the qualitative – it’s that they are bad at both.

The daily reality is that an economy is not on a journey and GDP does not measure progress. The economy does not follow laws of motion; indeed it is not governed by laws at all. Fiscal and monetary policies are not the only ones with influence because the economy does not consist of money, it consists of people.

  • In defence of the more enlightened economists, there is a much more intelligent blend of quantitative and qualitative information that the profession has developed, but which seems to feature very little in macro-economic decision-making. I shall blog about this soon.

 

 

January 17, 2013

A positive case for ‘None of the Above’

Filed under: Uncategorized — felipewh @ 11:45 am

This is a mostly UK-focused blog, but some of the trends will be discernable in other western countries. It concerns our political parties and whether their obsessions reflect the nations’.

Participation in general elections has been falling in recent years, and membership of political parties has plummeted. This blog suggests that the reason is that party political activists are captured by the state, and obsess over matters that prioritize the influence of the party, rather than concerns of the citizens. If you look at the single issue that most excites and energizes the respective parties, they are:

  • Conservative – to regain statutory powers that have been granted to the European Council of Ministers and the European Parliament.
  • Liberal Democrat – to reform the voting system and the second chamber to enable more representation for the third party.
  • Labour – to increase the size of the state.
  • UKIP – to leave the EU completely, as ‘Brussels’ should not be allowed any say in our affairs.
  • SNP – to leave the United Kingdom, as ‘London’ should not be allowed any say in our affairs.

They look like disparate aims, but there is a common thread: each party has as its primary aim increasing its own relative power. The parties are acting as lobbyists on their own behalf.

Conservatives back-benchers, for example, have recently formed a campaign group. What is their noble cause? Reform of the banking system and economic management to ensure that a credit crisis never recurs (their efforts in Government in this direction so far have been weak)? Ideas for innovation and investment so that Britain can compete with hi-tech economies? No. It is to ‘claw back’ (their preferred metaphor) some powers from EU institutions. It gets worse. The calculations they use to claim that EU laws on the workplace are costly amount to nothing more than bean-counting. All the evidence from the past 70 years or so show that changes to the skills, morale, motivation and deployment of people in the workplace vastly outweigh such minor matters as statutory working hours or the rate of the minimum wage. In some cases, such as the European Works Council, the regulation probably adds value, as it forces managers to talk to their employees.

This example shows how, to be fair to the political leaders, sometimes the pressure comes from their activists. David Cameron has to strike a more euro-sceptic pose than he probably wants, to stop his members defecting to UKIP. Ed Balls was booed at a conference of his own supporters for striking a reasonable note on the affordability of government promises on public sector pay.

But the bigger picture is that the UK political parties see themselves primarily as custodians of the state and reformers of its regulatory duties, rather than stewards of society or leaders of the country. The state and its apparatus is all they know. The law has replaced values. Expedience has replaced conscience. Lobbying has replaced public service. The political party is just another interest group.

These tendencies has been exacerbated by the increasing tendency for front-bench politicians to have spent all their working lives in politics. The days when Labour MPs had worked in industry and Conservatives had run a farm or a business are long gone.

The economy is seen as consisting of fiscal, monetary and constitutional powers; not people, businesses, skills and innovation. There is a non-cynical alternative to political parties; a positive reason for saying ‘None of the Above’, and it is set out in the new book New Normal, Radical Shift. Please see this blog for more information http://radical-shift.net

January 9, 2013

Time for a radical shift in 2013

Filed under: Uncategorized — felipewh @ 2:16 pm

A Happy New Year to you. I hope that 2013 holds much promise for you. It is set to be a major year for me, as it sees the launch of my first major policy book in March (April in the USA). New Normal, Radical Shift, is co-authored with executive coach and sustainability mentor Neela Bettridge, and is published by Gower Publishing. We’ve received some highly promising pre-publication reviews from Diane Coyle, vice-chair of the BBC and author of The Economics of Enough; and from Jim Neal, founder of the Agema Group and Democrat candidate for the Senate in 2008.

We challenge the central belief of the ‘old normal’, that profits are made by exploiting workers and the environment. In New Normal, Radical Shift we seek to demonstrate that this belief is false, opening up enormous possibilities in a ‘new normal’ of enhanced working lives, environmental protection and business success. It is a challenging read for business – but also for trade unions, NGOs and campaigners for better working conditions. The central case of New Normal, Radical Shift is that progress is prevented by shared beliefs across the traditional political spectrum.

Featuring case studies, and based on considerable evidence and the experience of the two authors, New Normal, Radical Shift creates a positive and practical agenda: that the scope for cooperation to solve some of the bigger challenges is far greater than the bi-partisan political culture of the West would assume.

More details and articles on the theme can be found at the blog here: http://radical-shift.net

During 2013, I will naturally be promoting themes from the book. In addition, I am seeking to expand the range of publications to which I contribute, as I emerge from a period of research and writing for the book. To summarize some of the themes that I can cover, I have categorized them into those that relate to the book, and others.

Themes from New Normal, Radical Shift are summarized in the mini-manifesto, published last November.

Other subject areas that I will be looking to cover this year are:

  • Risk management and how it has to encompass people. It is increasingly well recognized, following the influential books by Nassim Nicholas Taleb, that economic and market risk has to encompass a behavioural dimension, but much discussion understates the matter. Behavioural economics is a tautology, not a sub-branch: ultimately, all economic data merely reflects human decisions.
  • Rethinking retirement and the ageing demographic. Increases in the age profile in the UK and other countries is not tapering off. This is leading to sharp rises not only in people above normal retirement age, but also of very old people, and coincides with declining pension fund returns. The Conservatives are talking about abolishing the retirement age. Is this inevitable?
  • Communication, teamwork and engagement. These are not peripheral or ‘soft’ issues, but rather the key to making teams and departments work, as numerous studies show.
  • Business and personal development, hand-in-hand: As the UK economy rebalances, it is essential to encourage start-up companies to grow, including internationally. There is now a body of knowledge on how this is most effective when it combines personal and organizational development (see http://4eandg.com/).
  • Is there too much law? Are we making the law our conscience? In many areas of activity, such as employment relations, taxation and consumer standards, there is a huge body of law and a marked increase in litigation. This makes matters fairer for many, but when a defence of tax minimization or risky trading is: ‘We’ve done nothing illegal’, it raises the question of whether the law has replaced values, and if we are leveling down, not up.

December 7, 2012

You’re doing it all wrong, politicians

Filed under: Uncategorized — felipewh @ 10:57 am

Recent events expose the weakness of the two-party system that many of the West’s leading economies have. The credit crisis and associated economic forces are close to overwhelming our elected representatives as they grapple with problems on a scale for which they are unprepared.

National Government debts keep rising, economic development is faltering, zombie banks keep their toxic assets hidden by opaque accounting, while skills and business development and leadership continue to be neglected. The set narratives are to pitch ‘old normal’ supply side remedies of cutting the state and making labour markets more flexible (right-wing) against the ‘old normal’ Government stimulus in the hope that the next tranche will somehow turn out to be magically fruitful and create enough investment and growth to make both new and inherited debt affordable (left-wing).

There is no meaningful debate if the biggest subjects are taboo, and no counter-balancing when the respective dominant interest groups have overlapping interests; exhibit similar behaviour; share some common beliefs, and maintain more or less complete ignorance of the importance and the nature of business leadership, from which ultimately most wealth derives.

Deregulated markets, instead of creating the efficient markets that were expected, have created destabilising credit bubbles that inevitably burst, and the ‘zombie’ banks. This is the cause of what is called ‘austerity’: it’s not a policy choice, it is a by-product of collectively living beyond our means. The ‘growth’ that we pretended we had was based partly on money that we never really had. Governments made this worse by making use of easy credit to spend on programmes to keep their electorates happy. So centre-left governments, in Washington, Paris and London, have not counter-balanced the hated markets, but rather encouraged them.

We get political pantomime like this week’s debate in the UK Parliament on the Autumn Statement. What needs to happen instead is the following:

  • End the ‘left-right’ way of looking at politics, and look at the actual money flows and needs of business and society.
  • Make business development, and the development of business leaders, employee skills and engagement, the top priorities for economic development.
  • End use of Gross Domestic Product. It doesn’t even measure growth, it hides liabilities, and it encourages short-termism. Similarly, scrap quarterly reports for businesses. Ditch completely all talk of economic ‘projections’, and start to understand economic data as nothing other than the by-product of human endeavour and behaviour.
  • Develop long-term decision-making processes into the Constitution, so that a single-term government is never again able to build up massive debts for future generations to deal with.
  • Do all of the above while protecting the most vulnerable.
  • Regard environmental protection as an economic opportunity, in which societies can become more efficient and self-reliant.
  • Buy New Normal Radical Shift, available from Gower Publishing in April 2013. <smiley face>http://radical-shift.net

November 21, 2012

Low pay, high pay it’s still about motivation

Filed under: Uncategorized — felipewh @ 2:53 pm

Inflation is increasing because low wages are starting to rise in China, economists are warning us. The dismal science truly does have a problem for every solution. A decade ago, low pay in China was a problem because it took jobs away from west without increasing aggregate demand in the low-wage economy.

But never mind, as usual, economists miss the bigger part of the story, so biased are they against notions such as employee motivation, skills, performance and anything that can’t be measured on an abacus or a spreadsheet. Just about everything that matters, in other words.

When a country is in the early stages of conversion from mostly peasant farming to an industrial-based economy, almost any urban job paying real wages offers the chance of a better future for a family. People are often escaping extreme penury. They are motivated. They work hard; very hard. Many have little or no concept of leisure time.

In the two-dimensional analysis of formal economics, these crucial dynamics are arbitrarily absent. In the real world, however, they are what make workplaces productive. All an economist sees is the wage that is lower than in richer countries, ergo they conclude it is the lowness of the wage that offers the competitive advantage. This is reinforced by the rhetoric of anti-corporate campaigners, who seek to ‘name and shame’ western companies that use low-wage suppliers, arguing that they gain an unfair and unethical advantage in this way. Entire outsourcing strategies are based on this superficial understanding, and as a consequence they often go wrong, as this recent feature by Simon Caulkin shows (£).

Is this equation of low wages and competitive advantage, however, a case of correlation, not cause-and-effect? Are the bigger factors the motivation and the work ethic? Would wage rises, handled in the right way, actually increase the competitive advantage? This is an exciting discovery we have made in research for New Normal Radical Shift, that higher wages and productivity in Bangladeshi clothing factories are leading to better quality and margins for Marks & Spencer.

A recent example of the institutional bias towards low wages was the report of China Labor Watch last year. Even the supposed campaigners for the low-paid repeat the myth that it’s good for business. But a press report at the time indicated a growing problem of high staff turnover – which in many cases represents a higher cost than a wage rise. Because the dismal science fails to measure or take into account such an important matter, it fails to be incorporated into analysis, decision-making, economic understanding or the dominant business model. Hashtag fail, as they say in Twitter.

What if low wages have never offered any competitive advantage at all, whatsoever? What if it has all been a terrible mistake?

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