It’s six months before you know what they are really like, I was told this week.  I heard another story about a candidate who interviewed well and seemingly had all of the knowledge, technical skills and experience to do the job.  Unfortunately he was completely lacking in people skills and the appointment turned out to be a costly mistake from which the organisation is currently trying to extricate itself.

According to the Chartered Institute of Personnel and Development, the cost of recruitment error is between £5000 and £50,000 depending on seniority and potential for business errors.  I suspect that figure does not take include the lost opportunities, management time and stress associated with a poor appointment.

So what can be done to improve selection and reduce the risk associated with recruitment?

A key predictor of performance and staying powers is personality – what’s under the surface.  By using tools such as the 16PF, it is possible to get the full picture - a comprehensive measure of an individual’s whole personality, rather than just the traits they may selectively display at interview.

Candidates lacking competencies such as an openness to change, the ability to manage pressure or relate well to people can be selected out before appointment.  Additionally where a number of candidates may appear to be equally suited to a role, it is possible to differentiate and identify the one most likely to succeed.

Now that organisations are starting to recruit again, surely it makes sense to take a more objective look at personality and reduce the risk in employee selection?

I have avoided contentious or political posts so far but cannot sit on my hands over this one. 

Yesterday I received an email from QinetiQ – as a “valued supplier” (sic) - saying that their standard payment terms have been increased to 60 days from 30 and that “this change is in line with the terms of payment for many other companies”.

Fortunately QinetiQ is not a major customer so this change will not affect me significantly.  But many small companies are dependent on large organisations such as QinetiQ.  Arbitrarily changing terms in this way can make a serious dent in cashflow and in some cases may be enough to take a business under.

Whether I can still count QinetiQ as a customer is probably a moot point after this posting.  Whether I would want to count them as a customer with such aggressive terms and conditions is an entirely different matter.

Government policy on payment terms is quite clear; it’s 30 days but departments are encouraged to pay SMEs within 10 days as can be seen from the link below:

http://www.ogc.gov.uk/Model_terms_and_conditions_for_goods_and_services.asp

Perhaps QinetiQ should be reminded of their genes.

So there we have it.  It’s when times get tough that you discover how important espoused core values such as integrity and team work really are.

http://www.qinetiq.com/global/about_us/our_strategy.html

Perhaps it’s just me, but this does look a bit misguided and misaligned.

It really does seem that the UK is coming out of recession.  Today’s PMI (Purchasing Managers Index) figures show a robust January for the manufacturing sector with the strongest figures since 1994.  Since manufacturing forms a significant part of GDP, this implies that business conditions generally are improving.  That is very welcome news but concerns of a double-dip recession have not gone away entirely.

The big challenge facing manufacturers and service industries is being flexible enough to mirror demand.  Too much capacity eats away at profit, while insufficient capacity gives market share to competitors.

I like the notion of lean manufacturing and see this as a valuable way of achieving flexibility.  Lean manufacturing is based around the principles of value creation and the elimination of waste.  A recent addition to the types of waste is “unused human talent”.

Tapping into that rich vein of unused human talent may not be as easy as it sounds - particularly if the culture does not actively and explicitly encourage this.  For example, cultures where managers stifle initiative by controlling everything or where people “get hung out to dry” for the slightest mistake will not result in the realisation of latent talent.

In my experience most organisations have huge pools of talent which they fail to capitalise upon.  Just imagine how many processes could be improved, how efficiency could be driven up and how costs could be reduced.

Realising these benefits does not happen of its own accord, it needs a different culture – one in which achievement, initiative and teamwork are nurtured.

Changing culture means changing individuals’ behaviours, which is never an easy thing to do.  A good starting point is to understand the organisation’s culture by measuring it, then putting a plan together to change it.

It’s not rocket science; it’s just common sense really.  

Mike West

www.novaconnection.com

At the risk of sounding like Doctor Doom, 2010 is going to be a very tough year, but I do believe that there will be opportunities for resilient organisations (see previous blog on resilience).

UK plc is in much worse economic state than the US and quite a bit worse than most major European nations.  The UK has yet to exit recession, faces rising unemployment and is running a budget deficit of 13.2% of GDP.  VAT takings are down 14.2%; we have spent £190.4 billion on quantitative easing and there are worrying signs that inflation might be starting to rear its head.

Interest rates can only go in one direction – upwards – and inflation could trigger that move sooner rather than later.  Higher interest rates will lead to more house repossessions and business failures which will further reduce tax receipts and increase the burden of benefit payments. 

By contrast unemployment seems to have bottomed out in the US and investment there is projected to increase by 2.1%  while UK investment will be reduced by -5.2% according to the OECD.  Canada will increase their investment by a whopping 4.4%.  So how can that be?  Oh yes, by regulating their banks effectively, they avoided the credit bubble.

On the subject of bubbles, we’ve had the dotcom bubble, the housing bubble and the credit bubble – so what’s next.  I suspect that it will be the sovereign debt bubble.  The PIGS (Portugal, Ireland, Greece, Spain) are weighing on the Euro and a number of other nations including Dubai aren’t in great shape either.

Yet in spite of all of this, life will carry on; some organisations will fail while others will do spectacularly well.  Whether the strategy is survival or growth, resilient organisations seem to do best.  These are some attributes of resilient organisations: 

·         Resilient organisations have resilient leaders  

·         They focus on the longer term; it’s the short term which got us into this mess  

·         Productivity is the key to growth – they don’t simply cut costs 

·         They build organisational capability  

·         Resilient organisations have a clear sense of purpose which is based on customers   

The keys to resilience are leadership and culture.  Winning over hearts and minds is never easy but right now the “touchy-feely” stuff is more important than ever. 

Mike West 

www.novaconnection.com

I enjoy the warm feeling of good customer service.  Sometimes it’s hard to put your finger on exactly what made the difference between a good and bad experience – especially when the coffee was just the same. 

My point is that most jobs, whether customer facing or not, require a combination of hard and soft skills.  Hard skills are the technical aspects of getting the job done – making the cup of coffee, delivering the parcel or getting the broadband connection to work.  By their nature, hard skills are relatively easy to identify and measure.  

Soft skills, by contrast, are more challenging to identify and measure since they normally revolve around behaviours.  Yet soft skills can make such a difference to outcomes; the dental receptionist who puts you at ease, rather than simply processing you; the call centre operator who actually listens to what you are saying; the boss who takes the trouble to develop and coach her or his staff. 

Smart organisations value these behaviours because they know that soft skills play an important role in achieving long term goals.  These behaviours can be described as competencies, which can be role-specific or generic within an organisation. 

Examples of frequently identified competencies include: 

• communication skills
• people management
• team skills
• customer service skills
• results-orientation
• problem-solving

For competencies to be of value they need to be relevant, understandable and, importantly, measurable.

For smaller organisations, particularly, it can be hard knowing where to start.  How do you identify competencies, how do you measure individuals against them and how do you make use of the information?

• some excellent competency frameworks exist, so there is no need to start from scratch; instead, the focus can be on identifying the 8-10 most relevant competencies
• measuring individuals against the chosen competencies can be achieved using tools such as 16PF, which is mapped to a proven competency framework
• training and development needs can then be identified to align individual behaviours with the needs of the business 

Understanding and encouraging the behaviours which lead to business success would seem to be a no-brainer, yet many organisations bury their heads in the sand and deny themselves the competitive advantage this can bring.

Mike West 

www.novaconnection.com

I have never played Dungeons and Dragons (an on-line fantasy game) but understand that it has a huge following. It’s a role-playing game where each participant is assigned a character which embarks upon imaginary adventures in a fantasy setting.   Together, the characters solve dilemmas, engage in battles and gather treasure and knowledge.

What’s really interesting is that the characters are assigned “alignment”, including lawful good, good, unaligned, evil and chaotic evil.  The purpose of this alignment is to describe and apply the moral and ethical perspectives of the players, societies and monsters in the game.  For game players this additional variable adds complexity, uncertainty and excitement.

As real-world organisations engage in battles to gather treasure and knowledge , they too need to consider the implications of alignment and the impact this has on performance .   After all, organisations are dynamic systems and like other systems they function best when their components are working together smoothly and efficiently.

There is much that organisations can do to improve their alignment and increase performance.  Achieving a constructive culture – one which places equal emphasis on customers, employees and shareholders is one example of alignment.    Leadership Development programmes which encourage constructive behaviours while valuing performance and teamworking are another example.

Achieving better alignment is always a challenge but there really is treasure to be gained from slaying the odd dragon here and there.

www.novaconnection.com

We have supposedly seen some more “green shoots” of recovery over the last few weeks.  It’s true that many companies have exceeded analysts’ expectations but their accounts reveal that, in most cases, this has been achieved by cutting costs rather than growing revenues.  Microsoft, for example, announced its first ever sales drop this week, but in their case cost cuts didn’t make up for revenue reductions.

Personally, I remain bearish on the economy.  Just because GDP numbers are less bad than last time does not mean that they are good, that we are into a new bull market or that the recovery has started.

But recessions do not have to be all doom and gloom.  Interestingly, they have given rise to some enduring brands and innovations - Edision’s incandescent light bulb (1873), Colour TV (1929), Rice Krispies (1931), Diet Coke (1982) and the IPod (2001).  All of these innovations went on to produce substantial revenue streams, jobs and shareholder value.

Here’s the interesting point about this list; at the time when most firms went into lock-down these organisations had the vision to identify opportunities for innovation and growth.  They actually invested in their future rather than simply cutting costs.

Clearly, some cost cutting is inevitable during a recession – even in the best run organisations.  However for the weaker, highly-geared and less resilient organisations times are harsh and Darwinian.

So, what can organisations do to ride out the recession and be stronger for the upturn?

• Develop a clear, well thought out strategy
• Regularly test assumptions made about customers
• Ensure that leaders are visionary
• Build a culture which values innovation and achievement
• Up-skill the workforce – and leaders – particularly - are not exempt from this process

I agree that this list may seem daunting, but as the Roman poet, Virgil, famously said – fortune favours the brave.

Mike West 

www.novaconnection.com

Heard of organisational resilience? No?  Neither had I before attending a conference last week, organised by Human Synergistics.

Gary Hamel first wrote about organisational resilience in 2003 saying: 

You can't predict what the world will look like in 10 years, so you try a variety of things.  Some will work. The crunch comes because in many organisations it's very hard to move resources from old things to new.  All the resources are devoted to perpetuating legacy programs.

He argues that most organisations defend the past rather than build their future.  That’s an interesting idea.  So would “building the future” have prevented the recession?  Unlikely because economies run to cycles of boom and bust.

So what exactly does building for the future imply?  And how do you move resources from old things to new?  The American automotive industry is a good example of defending the past and failing to build for the future.  Europe and Japan, by contrast, recognised the long term imperatives and continue to adapt. 

In the electronics sector, Apple certainly shows how it can be done - announcing their best ever Q2 results last month ($1.05 billion) achieved by selling innovative products at the right price.  Incidentally they are also sitting on a cash pile of $29 billion.  I guess that’s what resilience looks and feels like. 

Achieving organisational resilience can be a huge challenge, but here are some themes from the conference:

·         Resilient organisations need resilient leaders

·         Focus on the longer term; it’s the short term which got us into this mess

·         Don’t simply cut costs, productivity is the key to growth

·         Build organisational capability

·         Make sure that you have a clear sense of purpose which is based on your customers 

All of that sounds logical and sensible but in practice it’s not going to happen without effective leadership at all levels, a supportive culture and a robust strategy.  

Mike West 

www.novaconnection.com

It is easy for firms to become overwhelmed by recessionary doom and gloom at times like these.  The reality is that most firms survive; it’s just that some survive better than others and emerge much stronger.

This recession will almost certainly bite harder and deeper than the eighties or nineties recessions as a consequence of the dual effects of the financial (credit crunch) and economic crises.  It is true that interest rates and inflation are much lower than in the nineties, but the availability of credit is being reduced by the very institutions which led us into this mess. 

So what are the survival strategies?  I’ve been reading around to identify why some companies do better than others in a recession.  Here’s a summary of what I found:

• Ambition – drive, commitment and strong leadership
• Adaptability – the ability to recognise and respond to changes quickly
• Distinctiveness – forget “me too”, well-researched customer value propositions really matter
• Value for money – price is important and discounting is inevitable but don’t make the mistake of competing on price alone
• Optimal use of resources – a few extra pounds can be carried in boom times, but you need to be fighting fit now
• Finance – high gearing may be sustainable during better times but liquidity matters in a recession (of course, reducing debt is not easy at this stage of the economic cycle)

Just as banks are withdrawing established lines of credit, some organisations are allowing themselves to become over-whelmed by a siege mentality - becoming inward rather than outward looking - and not responding to evolving customer needs. 

Smaller firms have a real advantage in this regard; they tend to be more adaptable than larger organisations and have the ability to respond faster to changing circumstances.  This can make the difference between life and death, while the best organisations will seize the opportunities presented by the recession and emerge even stronger. 

If this blog has struck a chord, you might like to check out our strategy, change management and leadership development web pages. 

Best wishes for 2009. 

Mike West 

www.novaconnection.com

“You can’t manage what you can’t measure” is a quote dubiously attributed to one the wise men of management science, Dr W Edwards Deming.  Putting the attribution to one side for the moment, the quote makes a good point because what gets measured tends to get done.

But there is a problem with this in that we often go for easy metrics rather than the most effective metrics.

Take hospital bugs as an example.  We know the number of poorly people succumbing to C. difficile and we also know that it is spread by hand to mouth faecal contamination; in other words it’s caused by poor hygiene.  There’s no nice way of putting this – you have to ingest poo to catch it and one of the most common ways that this happens is by people not washing their hands after using the toilet.  Clearly, collecting personal hygiene information could inform a campaign focused on reducing the cause of C. difficile.  But these measures would not be easy to obtain.

Before I start sounding too much like Howard Hughes, let’s get back to Deming.  What he actually said was that the most important things cannot be measured  Well, there could be a good deal of debate around that.  He also said that the most important things are unknown or unknowable.  By this he was referring to Taleb’s black swans - large-impact, hard-to-predict, rare events beyond the realm of normal expectations.  A year ago, for example, few people predicted the credit crunch and even fewer anticipated its impact.  911 is another black swan example.

It’s true that we cannot anticipate and measure everything; it’s also true that we shy away from some of the more challenging measures which can have a profound long-term impact on our organisations.

I was with a prospective client last week who described the excellent work being done on leadership development and culture change.  When I enquired about measures for  culture change, there were none.  Culture certainly falls in the area of hard to measure but as I explained, there are now highly effective tools for doing this.

And what gets measured tends to get done.

Mike West

www.novaconnection.com