Most Companies Behave Unprofitably

While politicians and those close to government can be lynched for spying the dreaded green shoots of recovery, those further from the centre of power are free to cautiously identify indications of an economic upturn.

The National Institute for Economic and Social Research says industrial output has risen for two consecutive months for first time in more than a year, including a 0.2% rise in manufacturing output in April.

John McFall, Chairman of Treasury Select Committee, chooses his words carefully when he argues for "green roots not green shoots," and the idea that “things are coming forward a little bit.”

Rather than debating whether the economy has simply stabilised, or we are on the gentlest of upward curves, we ought now to ask ourselves just how profitable our behaviour will be over the coming months. Having focused on survival through cost-cutting and downsizing, there is now every possibility that orders will start coming through. Further, it is likely that customers will have re-evaluated their spending habits and requirements as a result of the events of the last year. How we meet these two challenges – of fulfilling a rising order book and responding to customers’ new requirements – will directly impact our profits.

A client of ours recently received a three million Euro commission for technology for an oil field about to come on line. This revenue was intended to form a substantial part of the company’s results, due to be published in the autumn. The supplier had to submit designs for client approval before manufacturing the equipment. Unfortunately, the technical design department of our client’s business was operating according to a different set of imperatives, and despite the stated urgency they assigned the job a low priority. As a result, the client did not sign off on time, production was delayed by six to eight weeks, and the invoice for this work will not be issued this financial year, meaning that 800,000 Euros of profit will not appear on the bottom line.

This is a hard learning curve for a business at any point in its history; for it to occur towards the end of a recession is even more damaging. We all have to learn to behave profitably, which means to be connected to the business requirement and to understand that every decision we make and action we take has some bearing on how much profit we make today.

Hamsters on Wheels

“Time Management” is a myth. No matter how slowly time seemed to drag in the meeting you just attended, no matter how quickly a deadline appears to be thundering down on you, time passes at a constant rate. We cannot manage the passage of time any more than we can influence the phases of the moon.

What we can do is make decisions about how we fill the 24 hours we have in each day. Time management is really decision making on how we spend our time.

Yet most of the advice on time management available to businesses and individuals tacitly assumes that these decisions have already been made. Type “time management” into any search engine and scan the results. You will find tips on making to do lists, prioritising activities, and putting those activities in a diary. There is information on stopping procrastinating, filing documents so you can find them quickly and motivating yourself to press on and achieve your goals.

The question is how did you arrive at those goals? When you stop procrastinating, what exactly are you going to do? After all, the major decision is not to pursue a certain goal between three and five o’clock, but to work towards that goal at all. The available information on goal setting mainly revolves around how we should formulate and subsequently achieve them. In other words, traditional time management does not cover what you do, merely when you do it.

Imagine everybody in your department improves their time management. They choose goals, focus on them, and stick to their schedules scrupulously. Unless major decisions had been taken about the department’s strategic aims and how they will be distributed and achieved on a team and individual basis, everyone will simply get better at doing what they were already doing. The status quo will be maintained even more efficiently than before, like hamsters taking steroids so that they can run on their wheels for an extra hour every night.

In the second half of 2009 sound decisions around our time usage are more important than ever before. The recession has inspired a new more frugal attitude to what we really need: businesses have slashed costs and profligate practices, over-staffing is a thing of the past and in its place is a hard focus on what investment actually produces profit.

Kevin Yates, Managing Director of Mitchell Phoenix, sounds a warning note about our appetite for time management, “as we creep out of the recession, everyone is over-stretched. Clever diarising doesn’t help staff who are covering more than one position, or teams operating at half the strength they had two years ago. This is a problem for senior management. Only informed, strategic decisions about time usage from the top of organisations will create the conditions for more profitable behaviour throughout the business and ultimately secure the future.”

The 'will' to lead

I was recently asked what I considered to be the most important attribute of a leader. It's a challenging question since we all seem to have our own idea about this and quite a few of these ideas are not shared. Perhaps it is not possible for all the people to share the same description all of the time. But if we take a step back and ask what could a leader become proficient at, given the will to do so? The answer is surprising; most leaders could learn almost all the skills of leadership you care to come up with. Charisma may escape this concept, but it would not have been on my list in the first place as it is a product of application. Other qualities deliver charisma (or not) through their use.

So I believe now, and have done so for some time, that the most important characteristic of leadership is the 'will' to do so, all the important other skills can be learned. While all else can be learned, not all is learned and I believe this dichotomy has a bearing on the quality of leadership and is a complex mix of the the same will to learn and the sense to guess that there is more to learn. This sounds a little absolute but I am interested to open up this area, our modern society needs new type of leadership as followers are much better informed and become sceptical of those they perceive as charlatans.
The will to lead is the most important attribute of a leader, the will to learn follows quickly.
Kevin Yates
Mitchell Phoenix London

Phoenix or Leopard?

This morning the New York Times made the most promising noises yet, that the recession may be about to end. Unemployment is down, house prices are rising, productivity is up; all positive indications that things are improving. President Obama gave a stirring speech in Cairo committing to greater efforts for peace. GM’s Chief has told Congress “it’s our obligation to be open and transparent in all we do to reinvent G.M.”

It seems that we are on the brink of a new era. New thinking, new goals, new plans….change. A chance for us all to make that ‘New Year’s resolution”. Who of us has consistently stuck to their resolutions?

So there is the rub. What has business learned over the last 18 months and what will be the commitment to be different in the future?

The meaning of the phoenix in Mitchell Phoenix is derived from ancient mythology; the sacred firebird. The phoenix is a bird with beautiful gold and red plumage. At the end of its life-cycle the phoenix builds itself a nest of cinnamon twigs that it then ignites; both nest and bird burn fiercely and are reduced to ashes, from which a new, young phoenix arises. The bird was also said to regenerate when hurt or wounded by a foe, thus being almost immortal and invincible. The phoenix is a symbol of rebirth, regeneration and renewal.

If we view the recent past as a cathartic experience, emerging purged and refreshed, we have tremendous opportunities to be even stronger as a business. We can seize the moment to Govern Change, pro-actively operating in different ways at higher levels. It is also possible to let out a huge sigh of relief as we emerge from the bunker into watery sunlight, hand shielding the eyes, squinting at the sky. “Right! Where were we?” is the first phrase spoken on the road ahead.

What is the old saying about a leopard and spots? Be a phoenix instead.

Leadership - We Know It When We See It

Amid the public outcry over MP’s expenses and their discontent at the conduct of the Speaker, those seeking lessons on leadership might be forgiven for looking anywhere other than the Houses of Westminster at the moment.

And yet the Speaker can furnish us with some useful insights into what is required of leaders. His recent behaviour in firstly being unwilling to see the importance of the brewing scandal over MPs’ expenses, and then in savaging members of his own party when they questioned his judgement on the issue has dissipated his authority. The result of this has been a loss of confidence in the Speaker among MPs and calls for his resignation.

We might justifiably ask ourselves how this has happened – after all, it seems that he has done no more than misjudge the public mood and respond cantankerously to some hostile questioning. But in fact, he has not offered the leadership his position demands.

In business a position of authority is bestowed on a manager by those above him or her in the hierarchy. This authority is accompanied by a set of responsibilities and a level of trust. Should the manager then break this trust, it will not be long before he or she loses the job.

In order to successfully wield the power which accompanies a position of authority, a manager also needs the respect of the people below him or her in the hierarchy. If this respect is lost, the manager’s ability to exercise the power of their position is greatly reduced.

While the Speaker’s office is more complicated than that of a hypothetical business manager, the lesson for business people is that it is not enough simply to occupy the position of authority and wield the accompanying power.

Kevin Yates, Managing Director of Mitchell Phoenix, explains, “leadership is not simply an idea, nor is it expedient - something we can believe in one day and not the next. People will see straight through that. It has to be visible, applied, and strong enough to gain the respect of the people you lead.”

In fact, argues Yates, after it has been bestowed one then has to prove one is worthy, and to do this, one has to display the fundamental qualities of leadership: a sense of purpose about what it is one wishes to achieve, decisiveness in fulfilling that purpose, the ability to mobilise others in adversity, and a character which commands respect.

Mitchell Phoenix and the Kirkpatrick model of training evaluation

Donald Kirkpatrick developed a very popular evaluation model that has been used since the late 1950s by the training community. The focus is on four kinds of outcomes that result from training programs and identifies four levels of evaluation:

Level 1 Evaluation - 1st Reaction
Level 2 Evaluation - Learning transfer
Level 3 Evaluation – Behavioral change
Level 4 Evaluation – Positive, attributable results


Level 1— 1st Reaction

Here the goal is to measure participants’ reactions to the training program. You should measure their reactions immediately after the program. Level one evaluation should not just include reactions toward the overall program “Did you enjoy the program?” it can, and should, include measurement of participants’ reactions or attitudes toward specific components of the program, such as the relevance of topics, the style and structure, the schedule and participation.

Level one evaluation is the measurement of initial delegate satisfaction with the training experience.

Learning (Level two outcomes) and transfer of learning (Level three outcomes) are unlikely to occur unless participants have positive attitudes toward the training program. The measurement of specific aspects of the training program can provide important information about what aspects of the training program can be improved in the future.

The following point applies to all four levels of Kirkpatrick’s outcome evaluation. Evaluators should establish performance standards on outcomes, so that common evaluative judgments can be made on all four steps.

Finally level one evaluation is useful for immediate reaction to the events but does not signal improvement.


Level 2—Learning transfer

Level two evaluation is done soon after the training event to determine if participants gained the knowledge, skills, or attitudes. A couple of issues present themselves in leadership development:

1. How does a business measure knowledge, skills, and attitudes?

2. What instrument(s) can be used to determine improvement in level two outcomes?

It is here in the area of Leadership development that the Kirkpatrick model has less currency. Firstly: Should we try to measure things that are almost entirely subjective – improvement in attitude from one week to the next? Or secondly: Create such tenuous measurements and connections that the process takes more energy than making the improvements.

Ready & Conger (London Business School) in their review of training in the workplace, call these “make-believe metrics’ and suggest that trying to measure here is less cost effective that in later stages.

Level 3—Behavioral changes

Here your goal is to find out if training program participants change their on-the-job-behavior as a result of their having attended and participated in the training program. The level three question is,

“To what extent has the training had a positive effect on job performance?”

Level three evaluation specifically involves measuring the transfer of knowledge, skills, and attitudes from the training context to the workplace.

Learning is likely to transfer more effectively if the conditions in the work setting are favorable for transfer.

Here Ready & Conger identified 3 Key Success Factors

1. Managers at all levels accept joint responsibility for leadership and management development - Ownership is distributed, demand for change is established as a cultural requirement. The organizational culture and climate must change in order to support individual change.

2. Leadership Development should be based on the company’s own strategic drivers and requirements. These must be understood at the levels involved and communicated at the start of training.


3. Make believe Metrics – Already mentioned. Don’t spend resource measuring what continues to elude measurement. Attend to business outcomes and the development of common culture and practice. The training or learning is directly linked to workplace activity and outcomes; Project themes set and live business issues addressed using learning from the training. Provide real world examples and focus on actual experience performing and practicing the behaviors.

Level 4 – Positive and attributable results

Here your goal is to find out if the training program led to final business results that contribute to the “bottom line” (i.e., business profits). Level four outcomes are not limited to return on training investment, they can include other major results that contribute to the effective functioning of an organization. These include outcomes that most people would agree is “good for the business.” and can be changes in financial outcomes (such as positive ROI or increased profits) or changes in variables that should have a relatively direct effect on financial outcomes at some point in the future, for example:

• Improved quality of work. Higher productivity.
• Reduction in staff turnover, Improved quality of work life
• Improving human relationships
• Improved vertical and horizontal communication
• Fewer grievances. Lower absenteeism. Higher worker morale
• Fewer accidents. Greater job satisfaction
• Increased sales

And, as a result, increased profits.



Mitchell Phoenix Limited was established as providers of Leadership and Management development in 1988. Since then, more than 4000 managers worldwide have benefited from the unique blend of training, coaching and consultancy.

www.mitchellphoenix.com

Sustainability in Business – What does it mean?

Sustainability is an increasingly common term in today’s world. It is most widely used to communicate goals around ‘saving the planet’, renewable energy and feeding the Earth’s population. The concept of sustainability refers to the ability to maintain balance of a certain process or state in any system and is central to studies of ecological and biological systems.

If we see business as an organism and start to explore sustainability as an overarching goal we will find that this idea has been around for hundreds of years. At Mitchell Phoenix we often ask people to consider ‘What is the purpose of Management?” the ultimate conclusion being “To secure the future”. If we accept that our purpose is to secure the future, then what is the implicit responsibility? It is to Govern Change.

Governing change is the act of generating sustainability in business through being pro-active. Adapting to change is evidence that learning has taken place Reacting to change based on how we have always done it simply stores up the need to handle the same thing again in the future. The ability to change and adapt is the key to sustainability.

President Obama, since his election, has made several speeches and has often used the question “Will our children thank us?” around difficult issues that need addressing now. Business needs to start thinking more about what it is creating rather than what it is taking, not what it is losing but what it is gaining. Change is often seen as a cost rather than an investment. “I haven’t got time” is a basic example.

We can wait for change to force our hand, new legislation, for instance, and conform. We can see the writing on the wall and reluctantly implement measures in readiness, ruing what once was. We can embrace change and make it our strategy, forging ahead with clarity and purpose. Already, corporate governance is upon us. We need to educate our people over Diversity and demonstrate our policies. Social Responsibility will become more and more of a requirement and managing our carbon emissions will be a burden or a boon.

If we want an adaptable, sustainable organization, Governing Change has to be core thinking for every business. In his book, “The Future of Work”, Tom Malone from the Harvard Business School explores in one of the chapters, putting human values at the center of business. By nurturing, growing, planning a legacy, preparing the future, he states that it is highly likely that we would automatically embrace and adopt principles and policies that are currently being legislated.

The World Commission on Environment and Development has articulated what has now become a widely accepted definition of sustainability: "[to meet] the needs of the present without compromising the ability of future generations to meet their own needs.” Sounds like a plan to me.