17 Oct 09 Letter to The Times – Business Negatives

You can view here a letter published in The Times 17 October 2009 that I wrote with my very good colleague Stuart McAdam of 365 Coaching.

Whilst it is popular in many circles to accentuate the positive, this approach can have dangerous downsides.  Firstly, we can end up seeing only the future we want to see rather than the rather nastier underlying issues that may pop up to confront us either in the near or longer terms.

The second downside is that looking at negative issues constructively forces us to challenge our underlying assumptions about how the business world operates.  And this process can stimulate, I argue,  some really creative thought.

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01 Sep 09 HR should do more in a recession?

I read this morning, with some interest, a web page[1] summarising a recent survey by the Economist Intelligence Unit[2].

Broadly, this survey looks at the perceived role of HR in a recession taking the perspectives of both business executives and HR executives.  The survey points to a number of issues including a perception gap between HR and business executives.

But the key findings can be summarised as follows:

(1) HR possesses  “An inadequate understanding of the relationship between workforce reduction and business goals”.

(2) Quantitative performance measurement is seen as a key priority – with over 90% of organisations either having or planning implementation of such systems.

(3) Boosting productivity without increasing employee costs is another major priority – with a focus on training, more stringent performance appraisal and process innovation.

One could conclude that the emphasis is upon cost reduction and increasing productivity.  Understandable in these interesting times, but the question must be: “Are there other elephants in the room?”

I would suggest that there are two that deserve more attention.

The first is the psychological trauma induced by a sudden and unexpected recession.  My research, conducted with colleagues, indicates that getting to grips with an unseen sea of psychological trauma should be top of the list – from the perspectives of both business efficiency and staff well-being. This research revealed some alarming statistics – for example over 80% of respondents noted multiple symptoms of stress among their workplace colleagues and over 70% of respondents said that they had themselves experienced multiple symptoms of stress.  In this survey, only 8% of respondents did not report experiencing symptoms of stress.

And do not think that that recession induced stress is going to go away.  The recovery is fragile and it looks as if we are entering a period of lower growth especially in the advanced economies[3], [4].  So uncertainty induced stress will be with us for the medium term.  The implications for productivity are obvious.  Stress management should be at or near the top of HR’s agenda and too should figure strongly in any organisation’s business planning process for 2010-2012.

But there is a second elephant in the room.  The world is not going to look the same after the recession.  We are seeing quite fundamental shifts in consumer behaviour[5] coupled with an emerging view that, in at least the advanced economies, macro economic restructuring may be needed with a reducing emphasis upon the banking sector [6], [7].  The stuff of creative destruction  – but with plenty of opportunity for externally based not internally based innovation.  Developing exploratory skills should also figure strongly in HR’s agenda – we don’t want organisations that just excel in reducing their expense bases.

We are, after all, moving towards a world where there is more to strategy making than cost reduction.  And getting to that world will take time, new externally based exploratory skills – and of course motivated staff.

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References
[1] Churchard, C “HR should do more in recession, executives say”. People Management. August 2009
[2] The role of HR in uncertain times. Economist Intelligence Unit. 2009
[3] N. Roubini, “The risk of a double-dip recession is rising,” FT.com, Aug. 2009
[4] W. Galson, “The ‘New Normal’ For the U.S. Economy: What Will It Be?” Brookings, Sep. 2009
[5] U. Haque, “The Generation M Manifesto,” Harvard Business Publishing, Jul. 2009.
[6] N. Cohen, “British outlook trailing other G7 nations,” FT.com, Sep. 2009.
[7] S. Sassen, “A global financial detox,” Open Democracy, Sep. 2009

Tags: downturn, hr executives, HR management, Human Resource Management, psychological trauma, recession

31 Jul 09 Recession: Understanding the business and psychological impact

Overview: Recession – Understanding the business and psychological impact

This briefing provides the results of a web-based survey conducted on this site between February and May 2009 to determine the real costs and impact of the recession – especially from the perspective of the psychological impact upon organizations’ human resources.

The key findings are:

• Respondents largely discount the possibility of a rapid economic recovery.

• Rather than just being an economic recession, severe misgivings were expressed regarding the values and culture that have developed in both the business world and society in general. These cultural attributes are seen as the real driving cause behind the economic downturn. We therefore face not just an economic recession, but a cultural recession.

• The psychological impact at the human level is worryingly high. Over 80% of respondents reported seeing multiple symptoms of stress amongst colleagues and over 70% self-reported experiencing multiple symptoms of stress.

In the light of these findings a range of coping and response actions for managers is introduced at the end of this briefing.

Introduction: Survey structure and objectives
When this survey was constructed, we were particularly interested to discover views of:

(a) How long the recession would last.
(b) What was its real cause.
(c) The perceived long-term business impact.

But, most importantly, we wanted to ascertain the human cost, not in financial terms, but in terms of the stress and anxiety that respondents saw around them and experienced on a day to day basis.

The survey was therefore structured to focus on these four key issues.

This briefing firstly analyses findings in respect of the economic dimensions – views on how long the recession could last and how deeply businesses’ products and services could be affected.

We then proceed to look at the perceived real cause of the recession – who or what really is to blame?

The penultimate section is arguably the most important and examines the human psychological costs.

Finally, pointers for the role of corporate leaders and managers in a recession are provided in the last section.

Recession: The economic impact
Two broad questions concerned us:

1. How long did respondents think that the recession would last?

2. What impact would the recession have on their business – in terms of what they offered to their customers?

1. How long did respondents think that the recession would last?
We firstly asked respondents to estimate the duration of the recession or “downturn”* in respect of the country in which they were based. In this study, 91.8% of respondents were located in the UK. Therefore, we report here views in respect of the outlook for the UK only as shown below in Exhibit 1:

* Note that “the downturn” was defined as “the period embracing either negative or sub 1% GDP growth”.

Only just over 8% of respondents thought that we faced a quick “V” shaped recovery.  Most saw a longer period of effectively, economic stagnation.

Respondents thought that the UK would fare comparatively well when contrasted with the global economy.  Respondents’ views on the global outlook are shown in Exhibit 2:

Here, respondents expect a lingering recovery globally.

In terms of returning to normal levels of profitability after the downturn ends, respondents were divided broadly 50/50 with just under 50% thinking that recovery of profitability would just take a year – of the remainder just over 20% were looking at three or more years to recover profitability:

2. What impact would the recession have on their business – in terms of what they offered to their customers?

Just under 10% thought that there would be no impact on offerings – the majority acknowledging that some adjustments would have to be made.  13.9% however felt that deeper changes would have to be considered in terms of the products and services that their businesses offered:

Recession: The real causes

Next, we wanted to understand what, in respondents’ minds, were the real causes of the downturn.  We gave respondents a range of suggested causes to choose from plus a free format option.  Respondents could choose more than one cause and the result is shown in Exhibit 5:

The results surprised us and point to more deep-rooted and widespread problems than we first envisaged. The survey results indicate that far from facing a conventional economic recession, society and business in general are both facing a cultural recession.

The findings point to the values that are perceived now to be a deeply ingrained part of government, the business world and even social behaviour as being the real instigators of the economic meltdown. In terms of the underlying cause of the downturn, over 75% of respondents pointed towards a “short-term profit focused culture”, but an analysis of supporting comments from respondents showed us that cultural shortcomings were seen to exist within most, if not all, elements of our society.

Recession:  The human cost

The last section of the survey introduced the need to look beyond the financial cost that the downturn is imposing on business and society. In this section we try to look at the human cost – particularly in terms of anxiety and stress.

There were two perspectives that we wanted to examine. The first was the degree to which respondents were seeing symptoms of stress amongst their colleagues. The second asked if respondents themselves felt under pressure.

Exhibit 6 looks at the question of stress amongst respondents’ colleagues:

If any of these symptoms were experienced in isolation they may cause mild to moderate concern, but when experienced in combination they can make for worrying reading. For example, over 80% of respondents noted multiple symptoms of workplace stress amongst their colleagues. Only 2.5% of respondents did not see any of these symptoms amongst their colleagues.

We asked respondents how well equipped they felt do deal with these issues. Encouragingly, just over 31% felt that they could handle this challenge on their own. A further 48% thought they could help with access to some specialist support. Finally, just over 7% thought that they either could not help or would need access to significant levels of specialist support.

In Exhibit 7 below we can see that a similar picture emerges when looking at respondents’ personal reaction to the downturn:

These results show respondents’ own, personal reactions, to the downturn.

Again the results give cause for concern – 70% noted multiple symptoms ranging from “lack of focus” through to “depression”. A small number, only just over 8%, had not experienced any symptoms.

Taking Action:  More than waiting for green shoots

Obviously, more needs to be done than waiting for “green shoots”.

Leaders must now consider how they are going to face the strategic, cultural and the psychological implications of this downturn.

Whilst many of the issues being observed and experienced by people in the workplace stem from pressures both personal and professional, business leaders must play a critical role in supporting their employees through this difficult time.

This research points to at least three inter-linked key tasks for business leaders.

The first is the management of businesses through a potentially protracted period of either negative or negligible economic growth that we refer to as “the downturn” in this report.

Businesses now need to strongly consider the competitive strategy that they need to operate in such an environment.

The second task is to respond to the major cultural concerns that this exploratory study has surfaced. As we have already mentioned, there are opportunities for leaders to ensure that their businesses’ culture and values are clearly separated from “the root causes” described in this report.

The final task is of course helping employees to deal with the psychological implications of the recession and the uncertainty it brings. Without attention to this dimension, there could be considerable costs both in terms of individual anxiety and loss of business efficiency.

There are at least two broad courses of action for business leaders to consider at this stage. The first concerns the issue of business strategy itself. The second focuses upon the human impact of the recession.

Looking firstly at business strategy, there is great uncertainty regarding the recovery path that the advanced economies will follow. The newspapers are full of reports of “U”, “L” and “W” shaped outlooks. Additionally, it is held that recessions are times of change and “creative destruction” – new opportunities will eventually rise from the ashes.

From a strategy perspective there are two actions that businesses can undertake to help manage this period of transition and ambiguity.

Firstly, businesses should consider the impact of two alternative scenarios – the first a relatively rapid “U” shaped recovery, the second an extended “L” shaped outlook. Both will require different responses. Having a thought out plan for each now will help businesses respond rapidly.

Secondly, new opportunities will appear as we move out of recession. Some of the respondents have echoed this view in their responses to this survey. It is important now to set up projects to sense how customers’ needs are changing so that this new knowledge can be brought back inside the organisation. This early capture of knowledge and experiences will form a vital foundation for the crafting of new strategies going forward.

Both these exercises provide an opportunity for staff engagement and act to demonstrate that the organisation is constructively tackling the challenges of recession.

The second broad course of action focuses more directly on the human costs revealed in this survey.

There is now obviously the need for managers to actively look for the symptoms of anxiety and stress. Once symptoms are identified, if they are tackled appropriately it can have a direct and positive impact on issues such as employee mental health, productivity, staff recruitment, retention and customer relations.

Managers who have been coached in how to identify the signs can often tackle it at source. Research consistently demonstrates that managers with an ‘open door’ policy and those who ‘walk the floor’ and get to know their team will have lower instances of stress and related issues in their teams. Managers need to be aware of their role in managing and influencing their teams. Coaching managers to understand the significance of stress and its impact and how to create a ‘culture of communication’ is critical.

In conclusion, in the current economic climate, stress and related symptoms are on the increase. It is vital for the health of both the individual and the organization that managers are trained to be aware of the signs and are supported to act swiftly and appropriately to reduce the triggers to the stress that they have control over.

If you would like to talk about the actions that businesses can take to mitigate the impact of the downturn please do contact me.

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Tags: economic downturn, economic recession, human resources, psychological impact, symptoms of stress

23 Apr 09 Overcoming change barriers

Summary

The latest Executive Briefing on my main website focuses upon the question of how to predict where change barriers might be in an organization, particularly at the level of the individual.

From my personal experience, understanding the power bases that an individual possess within an organization is key to this process of discovery.  You can the full article here.

Tags: barriers to change, Change Management, organizational change

25 Feb 09 Recession: Looking for stress points

In my last posting Davos 2009, Recession and Business Strategy: Quo Vadis? I included some straightforward questions to start the process of “stress testing” your business strategy.  In this posting I would like to explore the issue of “Stress” from a different perspective, which has a distinctly human element.

Unfortunately all the dials (or most of them) are pointing to a period of prolonged economic recession.  And we cannot be sure, with any degree certainty, what the post recession world will look like. As I explain in my recession scenarios,we could face four completely different worlds.

This means, probably for the first time in our lives, that we will have to live through a period of extended business and strategic ambiguity.  Some observers tell us that we are entering a depression that could last for up to 10 years.

We know too little, from both strategy and human perspectives, of what the challenges are for living and managing in a such a period of extended ambiguity.  Together with my colleagues, I am interested in exploring further the strategic and psychological implications both of this economic downturn and the prospect of a long period of “strategic ambiguity”.

I would therefore be grateful if you could spare a few minutes to complete the following survey.  It can be completed anonymously and only the aggregated findings will be published.  The results will help us to gain a deeper understanding of the challenges that we face. To participate, please click on the button below.

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Tags: business strategy, economic downturn, economic recession, human perspectives, survey

31 Jul 08 Recession – A business survival guide (Part 4: Human Resource Acquisition)

Recession is a time to think innovation and expanding market coverage – a quick synopsis of the general theme in this briefing series.

Research conducted into companies that have grown, rather than contracted, during periods of economic stagnation shows us that these companies are good at, amongst other things, spotting attractively priced acquisition targets. But it is not just under-priced competitors that we should be thinking about. It is also the pool of talent that is becoming available as companies go into job-shedding mode.

I was therefore very interested to learn that in the finance sector some players were actively looking at the talent pools that are becoming available – described by one corporate leader as “a historic opportunity to recruit bankers, traders and risk managers” – to gear up their capability to:

• Push into product areas where demand is growing or will grow, rather than contract
• Expand geographically and
• Strengthen their position to move quickly when the economy recovers.

An example drawn from the finance sector that applies of course to any industry.

Information Source: Guerrara, F (2008) Morgan Stanley to use $1bn job savings for top-level hiring spree. Financial Times July 31

Tags: economic stagnation, human resource, recession, resource acquisition

08 Apr 08 Financial Services, outsourcing, strategy and innovation: Time to rue past decisions?

Frequent visitors to my website will be familiar with my long-running concerns with outsourcing or BPO – especially in the financial services industry and the insurance sector in particular. I have dealt with outsourcing issues in some detail in two briefings – most notably Outsourcing Problems and Disadvantages Revisited.

My concerns have centred around the accepted trend to outsource two functions in particular –customer contact and Human Resource Management. The rush to outsource these areas is may be surprising if one discounts immediate cost savings.

The offerings or products of insurance companies, for example, are by their very nature intangible. Most of the value, and therefore the source of competitive differentiation, comes from human interaction. And the quality of that interaction is determined by the values and attitudes of employees – in other words the organisation’s culture – a difficult dimension of quality to measure and control at the best of times. So why outsource (a) one of the few sources of differentiation in what has historically been seen as a commodity sector and (b) an area where ‘quality control’ is so difficult?

And then we have the Human Resource Function. Research tells us that it is more than a cost function. It has a central role to play in stimulating change in service organisations that wish to break out of a cost reduction mindset. But it also has another key role and that is building, shaping and maintaining those behaviours, values and attitudes that together make up an organisation’s culture. As I have said earlier, culture is an intrinsic part of a service organisation’s ‘product’ and arguably the only true differentiator. So should we be outsourcing this function in insurance and other professional services firms?

An interesting topic to debate I believe.

Tags: bpo, Human Resource Management, outsource, Outsourcing, outsourcing issues, outsourcing problems, professional services firms, service organisation