Philip Whiteley's Blog

July 27, 2010

Events, dear boy. Events

Filed under: Uncategorized — felipewh @ 8:28 am

The Mail reports that Cadbury executives are losing key executives. Well, well! Who would have guessed? Certainly Irene Rosenfeld didn’t. The chief executive of Kraft projected reassuringly positive ‘cost savings’ from the merger back earlier this year. As I blogged at the time (https://felipewh.wordpress.com 8 February 2010):

“Irene Rosenfeld, CEO of Kraft, was quoted in the Financial Times as having identified ‘cost savings’ in the merger, but was unchallenged by journalists on this. The fact is, she has no idea whether potential savings will outweigh costs of integration and loss of talent. Not even a CEO can foresee the future.”

So, Ms Rosenfeld, what is the cost of losing these 120 managers? Have you prepared the figures for shareholders? What is the cost of losing Phil Rumbol, the marketing executive behind the hugely popular ‘gorilla’ adverts? Will any of them go to work for Felicity Loudon, the Cadbury heiress so upset by the sale that in June she put her £27 million mansion up for sale to launch a new chocolate company? You didn’t expect these developments? No, we never do. They belong in the category of what former prime minister Harold Macmillan called ‘events, dear boy, events’. Woody Allen’s take was: ‘If you want to make God laugh, tell him your plans.’

The problem is not so much over-optimism by Ms Rosenfeld and her bean-counting advisors, as a fundamental misunderstanding of what a company is. And, indeed, what money is. It is people who create money, not the other way around. Yet mergers are proposed on the basis of an analysis of the financial accounts and market share. It’s like looking at your bank account and grocery bills as a basis for assessing where your career might be in five years’ time.

Human capital isn’t just ‘an asset’, it’s the generator of all assets. All of them. To pretend otherwise is a misanthropic delusion. But it’s precisely this delusion that guides pretty much the whole of management and economic orthodoxy; the sort of nonsense reasoning that concludes: ‘let’s arrange a mega merger on the basis of a look at the books.’

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1 Comment »

  1. It is also interesting to note that the Civil Service is not imune from a “head in the sand” way of looking at staff. One would assume that senior managers of HMRC would acknowledge that staff morale was a critical part of their activities. However the following extract from the HMRC 2009/2010 Accounts does not appear to support this assumption. In fact it could be seen as a purile attempt to blame the staff for management decisions?
    Employee Engagement
    6.22 There is a risk that HMRC’s ability to perform and change to deliver its Purpose and Vision will be seriously impacted by the low engagement of our workforce. There are a number of causes for this but the major one is our people lacking confidence in senior leadership and their management of change. The Treasury Select Committee has expressed deep concern about employee engagement at HMRC and its effect on performance. They have called on us to re-double our efforts to re-engage with the workforce, and publish a clear and detailed plan to provide focus and direction to our actions.
    6.23 The Executive Committee and other senior leaders are committed to taking action to improve employee engagement including addressing the causes of low morale and performance issues. Senior leaders are increasing their visibility and working to ensure people feel they have a voice through providing them with more opportunities to raise important issues at Town Hall events, Hot Seat forums and Staff Dial-Ins.
    6.24 The Department’s 2010-11 Business Plan includes a strategic objective to ‘Create a working environment which motivates and develops our people to give of their best and take pride in working for HMRC in order to contribute to the transformation of our business.’ Employee engagement is one of the key measures of this for the Department. In order to address these concerns HMRC is developing a portfolio of measures and to date it has started to develop an Engagement Strategy, a Corporate Action Plan and has also commissioned a key piece of research around colleague segmentation which will be incorporated into the engagement strategy during 2010-11. All of these measures look critically at the root causes of low engagement at HMRC and suggest innovative solutions for addressing this.

    Comment by Matt Boyle — July 29, 2010 @ 10:20 pm | Reply


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