Nov 10

What kills change?

A question many managers often ask is “Why do so many big change projects fail?”

It’s not so much the steps they take – all follow the same basic steps when under way viz:

  • Record facts
  • Examine findings
  • Develop solutions

 

But, as detailed in the book ‘Productivity Knowhow’, where most go wrong is with other steps needed before, during and after the above i.e. they’re:

  • Badly set up – unclear terms of reference, unquantified targets, lack of obvious senior management support, no links to corporate plans
  • Badly manned – ‘he got us into this mess’ appointments, lack of people with past success – lack of the right skills, experience and attitude – consultants put in total charge
  • Badly project managed –  lack of a timetable and accountabilities, no focus on the customers, deadlines allowed to drift, too little or too much time and resources made available
  • Badly implemented – employees are just told to implement changes without understanding why and what’s in it for them, little effort is made to ensure the changes work well after day one

 

Another interesting (and quick) read on this topic is ‘Who killed change?’ by Ken Blanchard of ‘One Minute Manager’ fame – his focus is on why implementing change stumbles so much, not on deciding what changes are needed in the first place, nor why they’re needed

He lists 13 pitfalls that stop major change in its tracks without attaching relative weightings to each one so the reader is left to decide his or her own:

  • Culture = The predominant attitudes, beliefs and behaviour patterns of the organisation:
    • The current culture is not fully understood at first
    • Any disconnect between actual values and those posted on the wall means the latter are ignored
    • Employees become cynical about leaders who say one thing and do another
    • One must determine how to leverage the current culture to support, enable and sustain the change
    • To change the culture requires leadership, measures and incentives
  • Commitment = Employees’ motivation to engage in the new behaviours required by the change:
    • Employees are far more likely to buy in to a change they’ve influenced than one imposed on them by others – their involvement may lengthen implementation but greatly increase the likelihood of success
    • Uncovering and addressing employees’ concerns about any change increases both trust and buy-in
    • Those ignored can derail all
    • “There’s no commitment without involvement”
    • So provide forums for people affected to express their views, listen to bosses, become involved, have doubts removed, not least by others converted – do you want compliance or commitment?
  • Sponsorship = The senior person pushing for the change and with authority over resources needed:
    • He must live and breathe the change in behaviours needed to show he is serious
    • Actions speak louder than words
    • He must assemble a well-qualified change team
    • He must not announce visions such as “To be the leading XYZ company” when all employees know it’s unrealistic given the company is nowhere near that position and steadily falling further behind
  • Change team = They have responsibility for deciding and making the changes – leading people through them and delivering the outcomes wanted:
    • They must speak with one voice ALWAYS and resolve employees’ concerns
    • Members should include advocates for the change – people who have been part of successful projects, have the time, have respect of peers, are highly skilled, will speak the truth, can communicate – people from different areas, and represent diverse points of view
    • They must involve, not ignore, employees affected
  • Communication = Essential dialogue between changers and those affected on why the change is needed:
    • Mixed messages from sponsors, other managers and the change team give employees excuses not to change
    • Don’t focus on getting words out – also listen i.e. take employees’ words in
    • Use all types of media, often
  • Urgency = How quickly employees must change:
    • Employees must be convinced that the status quo is not a viable option – what is wrong with now
    • Present them with the facts, show the gaps between what is and what could be, and then ask them why the need to change
    • Spend lots of time with apparent losers
  • Vision = A clear and compelling picture of the future after the change:
    • Go beyond a slogan and present a clear picture of what the future could look like
    • Ensure (most) employees can see themselves benefiting in future
    • Don’t invent a vision off-site at some exec retreat
    • Involve the maximum number of employees in the visioning process to maximise the number who will want to be part of it
  • Plan = A detailed programme of actions to fully integrate changes into the organisation:
    • Don’t focus on the big picture and ignore the detail, the main stumbling blocks for change projects
    • Always try to include ‘early wins’ – build a momentum of enthusiasm or naysayers will prevail
    • Always include employees affected in the planning process, especially the resisters who will identify what could go wrong
    • “Those who plan the battle rarely battle the plan”
  • Budget = The allocation of limited resources:
    • Ensure the project has enough resources for the change to succeed
    • Don’t let he who holds the purse strings run the whole show
  • Training = All employees affected have all the new skills needed:
    • Pilot the changes first – to learn who needs what training
    • Employ trainers whom employees respect and will learn from
  • Incentives = Rewards for desired behaviours and results:
    • They must be meaningful/ relevant – and not necessarily monetary
    • They must be on offer to all, not just a few
    • Employees must not forget their other roles
  • Performance management = Goals and expectations:
    • Track outcomes expected of people – provide feedback and coaching
    • Ensure they have the time and capacity for the extras needed for the changes
    • Some people want change but are not willing to pay for it
    • HR should be the most important division – (not a dumping ground for failures)
  • Accountability = Delegation, follow-up and consequences:
    • Leaders must ‘walk the talk’
    • Avoid lots of action then no follow-up
    • Need clear measures of success for all, not just the leaders – which are  regularly reviewed

 

With so many important factors to consider, it makes one wonder about the chances of success for any big improvement initiatives, especially those sought at national level – each one is usually announced with considerable fanfare, just as many companies announce any big changes within – but initial enthusiasm for them soon wanes, effort becomes half-hearted and any measured results are usually meagre – hence interest moves on

In particular, over the last two years the UK has announced the following grand initiatives:

  • PLG – Productivity Leadership Group – aka ‘Be the Business’ – led by a group of business leaders – main output is inspiring others with ‘best practice’ stories – now well into its second year of existence, but to what quantifiable effect?
  • PIN – Productivity Insights Network – set up this year – sponsored by Sheffield University and Lord Jim O’Neill – no known output as yet
  • Andy Haldane, Bank of England chief economist, recently appointed to lead the UK government’s drive to improve UK productivity – given HMG can only impact some 20% of national productivity via investment in infrastructure, R&D and training, Andy’s chances of quick quantifiable wins are slim

 

And only today, New Zealand has announced a similar venture

Some of the biggest names in New Zealand business are to form a Business Advisory Council and advise Prime MinisterJacinda Ardern (see below) on how to supercharge the New Zealand economy

Prime Minister Jacinda Ardern has named her business advisory council members.

The council is designed to advise the Government on how to build a productive, sustainable and inclusive economy that improves the well-being of New Zealanders

“New Zealand needs a modern economy that has the investment, innovation and skills required to ensure we can all share in prosperity and opportunity in a sustainable way” Ardern said.

A mix of six women and seven men with small to large business experience, from across New Zealand, have been selected to provide advice

The council is expected to meet three times a year with the prime minister and her representatives – it will provide high-level, free and frank advice on policies that directly affect business, harness the expertise of the private sector to inform government policy and build closer relationships between government and business

“I will also be asking the council to gather advice from their peers in the domestic and international business community on some of the most important issues facing New Zealand including how we best grow and share our prosperity, support regional development, and transition to a clean, green New Zealand” Ardern said.

Again, another grand, well-intentioned initiative, plus another feather-in- the-cap for those council members chosen – easy to set up and announce, easy to be seen to be ‘doing something’ about a well-known problem, easy for the government to park responsibility elsewhere, but unlikely to make any noticeable difference to the well-being of all

Why so cynical?

Because there are many other avenues of worthy advice that government ministers can and do tap before making their decisions – and re-election, not long term national health, is too often uppermost in many minds

CONCLUSIONS:

  • The above national initiatives are a start, but improving productivity, even at organisation level, is invariably a long haul, not a quick fix
  • Once major initiatives are announced, few get down to the detail to ‘make the hard yards’ – and even fewer try to quantify what % difference they targeted or made
  • It reminds one of being a participant in the Fastnet race – there’s much publicity and excitement at the start off Cowes as thousands of spectators watch the 200 or so boats begin their adventure – however, soon after and when past the Needles, each boat usually finds itself all alone out at sea with some 600 miles to go – whether they reach their target, off Plymouth Hoe, depends on just the skipper, crew and boat – and that’s when most of Blanchard’s 13 pitfalls become relevant for their success
  • Everyone loves the glamour of grand new initiatives – few love the hard graft that must then follow to even finish the job, never mind come in ahead of others

 

 

Oct 29

Productivity improvement must involve all employees

The following are extracts from an article in the Huffingtom Post by Mike Clancy, General secretary of Prospect – one must involve all employees, all the time, for effective productivity improvement

The UK is not productive enough and we do not share wealth widely enough:
  • Unemployment may be historically low but public satisfaction with the economy is also low.
  • Nearly three-quarters of the public think that more should be done to improve the quality of jobs.
  • Less than one in ten think all jobs are fair or decent.
  • Eye-wateringly deep cuts over nearly a decade have failed to eliminate the deficit, growth is sluggish and against the RPI measure of inflation, real average hourly pay is almost 10% lower than it was in 2008.

 

UK productivity performance post-crash remains absolutely woeful, with a growth of 0.3% per year leaving us trailing behind other G7 economies whose output is now, on average, 20% higher per hour of work. This is not evenly spread across the economy, but on aggregate it is acting as a handbrake on our attempt to accelerate away from the financial crisis.

Growth forecasts were not rosy in 2015, but every year since the EU referendum forecasts have been downgraded as growth targets have been missed.

There is some recognition of this at the top of government, but the central economic challenge facing the country is something that requires more than episodic engagement and half-hearted policy initiatives.

What is needed is an understanding that poor productivity growth is not something that can be put right by pulling a few levers in Whitehall – it is intrinsic to our current economic model. If we want to change it, we need to change that model.

The appointment of the Bank of England’s Andy Haldane to lead the government’s work on productivity may herald the advent of some badly needed fresh thinking. In a forensic speech this summer Haldane explained what he sees as the root causes of our current malaise. There was a lot in the speech, but two themes stand out:

  • Lack of innovation
  • Lack of institutional economic infrastructure.

It is time to call time on this top-heavy economic model and its defenders. The belief that all wisdom in a company is contained within the boardroom is central to our productivity and wages crisis.

If we are serious about ending it, we need to shake up the power imbalance in companies, reverse the decline of collective bargaining and involve everyone, government, employers and trade unions in a national mission to raise productivity.

 

Oct 25

The perfect working environment?

According to an article by Michael Odell in The Times, Basecamp is a US software/ tech company that supposedly runs without the scourge of 80 hour weeks, unrealistic deadlines, weekend emails and meetings

Two American guys, Jason Fried and David Heinemeier Hansson, run Basecamp – they’re also authors of a new book called It Doesn’t have to be Crazy at Work covering their creation of a ‘calm office’ where everyone is happy and well paid, and stress doesn’t exist

The two brim over with iconoclastic views about work, including:

  • Meetings should be a last resort – pull your eight most talented people into a one-hour meeting and that’s eight hours of quality work lost
  • Sustained exhaustion is not a badge of honour, it’s a mark of stupidity
  • No-no’s re staff attendance:
    •  Are they working? – Dunno
    • Are they taking a break? – Dunno
    • Are they at lunch? – Dunno
    • Are they picking up the kids from school? – Dunno – Don’t care
  • Adopt traditional workplace titles reluctantly – there’s often a lot of bullshit around them
  • 40 hours a week is enough for anybody – workaholics who slave all hours out of loyalty to the mission are advised to “f*** the mission”
  • Staff benefits should include:
    • Pay the best rates in the US tech industry
    • Take proper holidays, not ‘fakecations’
    • While on holiday – “log out, delete the company app, go dark” and “here’s $5,000 towards your trip”
    • Only work four days a week in the summer
    • Have a paid sabbatical every three years
    • A free monthly massage at a spa
    • A free monthly fruit and veg delivery, to their homes
  • Our goal? – We have no goals:
    • No customer count goals
    • No sales goals
    • No retention goals
    • No revenue goals
    • No profitability goals (other than to be profitable)
  • People who say ‘doing nothing is not an option’ are dumb – nothing should always be on the table
  • If you’re the multi-billionaire gorilla in the room, why not pay good rates to your staff?
  • We make good money so why try to avoid taxes – why not set an example instead – it really rubs us up the wrong way when people don’t pay enough tax

 

Many of these views were prompted by a survey they conducted of 600 people, asking “who managed three to four hours effective work in a day?” – only 30 put their hands up

Such a result will come as no surprise to regular readers of our posts

And when, in 2016, Basecamp showed signs of booming sales and growth, they took action to slow things down, stopped hiring and tripled selling prices – it worked – they continue to exist but stopped growing

They say they don’t want to be the next Jeff Bezos and Amazon:

  • “I don’t want to meet the Canadian Prime Minister for lunch”
  • “Colonising space is not on my to-do list”

 

So what do they want?

“We don’t want a bigger company – and if that means leaving some money on the table, so be it”

“We love work, but we want a life too”

 

Oct 24

Robots at Work

The Financial Times has just reported on a study “Robots at Work,” written by Georg Graetz, a researcher at the Department of Economics, Uppsala University, and Guy Michaels, London School of Economics, which examines the impact of industrial robots on jobs, productivity and growth.

Industrial robots are programmable and are widely used for assembly, packaging, inspection and agricultural harvesting. In recent years, use of industrial robots has increased sharply, while the price of the robots has declined by about 80 per cent, taking into account increased quality.

 

Job opportunities and wages

“We can see that industrial robots increase employee wages and increase productivity and that the  of jobs for low-skilled employees, and also to some extent for the medium-skilled, decreases, while job opportunities for the highly skilled increase,” says Georg Graetz.

In other words, the analysis shows that industrial robots increase wage levels for employees.

“Most likely the profits realised through the introduction of robots are divided among the company and its employees.” (N.B. maybe in well-led companies, not in others)

The composition of the labour market is changing towards a higher proportion of highly educated employees while at the same time the study suggests that the total number of jobs is not affected by industrial robots.

Increased productivity

Industrial robots increased the annual growth in GNP in the countries surveyed by 0.37 percentage points, and labour productivity increased by 0.36 percentage points.

“This means that without industrial robots, growth in labour productivity would have been about 5 per cent lower during the 14 years we have studied.”

The contribution of robots to the economy is comparable to the economic importance of the railways in the 19th century or the more recent contribution from ICT (Information and Communication Technology).

“In this context, it is interesting to note that industrial robots account for only 2 per cent of capital, which is much less than technological driving forces for growth in the past.”

Of the surveyed countries, the number of robots increased most in Germany, Denmark and Italy. Countries that had a more rapid increase in the number of robots also had a greater increase in labour productivity.

Continued increases in productivity likely

The study suggests that an increasing number of robots produces a reduced increase in productivity – that is, there is a limited potential for utilising robots in production. (I strongly disagree – now is take-off, not slow-down, time – and what of the impact on all other sectors?)

But the researchers still believe that robots will continue to contribute to an increase in growth and productivity.

“Industrial robots are evolving and will be able to do more. At the same time, new types of robots are coming, such as medical robots that can perform surgery or different types of robots for transport. This development will contribute to continued growth and production increases.”

 

Oct 19

Uncontrolled immigration reduces UK productivity

The following are extracts from an article in Moneyweek by James Lewisohn

September’s Migration Advisory Committee report on immigration to the UK from Europe was much commented on, largely because it claimed that European migration into the UK has caused only “small impacts” to our economy compared to other events such as the post-Brexit Referendum devaluation of sterling, for example.

Overall, its main takeaway appeared to be that the many immigrants to the UK from the EU (who arrived in waves, first after we opened our borders to Eastern European states in 2004, and again during the economic crisis from 2008 onwards) have made a much more fiscally positive contribution to the UK than immigrants from elsewhere.

This conclusion fitted nicely with the views of most politicians and journalists and so generated a good few headlines along the lines of “Immigration myths that fuelled Brexit blown apart” (the Independent).

But is the conclusion really so simple? It seems not.

Last Tuesday, the Committee’s chair, the LSE’s Professor Alan Manning, gave evidence to the Home Affairs Select Committee (a third of whose members were too busy to attend). The SNP’s Stuart McDonald MP asked the important question: given the research, he asked, should the conclusion just be that the best thing for the UK to do would be to “just carry on with free movement of people” from the EU?

The answer was a surprise.

No, replied Professor Manning. He and his team had, regrettably, failed to synthesise their argument.  “It’s all in there – but it’s not brought together in one place”, he apologised. What they actually meant, he explained, is “that lower-skilled migrants have been fiscally-negative […] They make the UK a slightly lower wage, lower productivity kind of economy.  Any effects that they have on innovation are not positive… And, basically, if you ask what have been the benefits of this lower-skilled migration, there isn’t very much on the positive side of the ledger.”

“That doesn’t come through very much in your report”, said Mr McDonald.  And indeed, it doesn’t. But it is very very important.

If Professor Manning’s conclusion is correct (and a lot of work has gone into it) then he may just have put the UK’s 14-year debate over the EU’s bedrock principle – free movement of labour – to bed.

By the time of the EU referendum, the UK had seen more EU immigration (and vastly more low-skilled immigration) than any other country – it has, for example, been the primary reason why the UK’s foreign-born population, rose from 8.6% in 2003 to 12.3% even at a time when major economies such as Germany and Italy actually saw their foreign-born populations slightly contract.

If, as many have argued, that has come with huge fiscal benefits for the UK it isn’t necessarily a bad thing. But if it has not, as seems to be the case, a more restrictive policy post Brexit might be a very good idea.

It could, for example, force Britain’s employers of low-wage labour to invest in greater automation, leading to greater productivity (this by the way is already happening even in advance of Brexit) – and to real wage growth.  That, surely, would be a result welcomed by both sides of the Brexit debate.