Sterling Performance

Retail executives will be dismayed at shareholder militancy at the moment. Tesco just managed to push through a change to share options rules, against strong opposition at its AGM. Argos owner Home Retail Group had a similar groundswell against bonus payments to directors at its AGM too.

Both of these companies have been relatively recession-proof, compared to their competitors, so its safe to assume the directors who are eligible for these rewards probably deserve them.

It’s a real indication about how twitchy shareholders are about executive rewards in the retail sector at the moment, even though the banking sector appears to be sliding back towards pre-credit crunch bonus levels.

Dividends in retail shares have been cut, so it may be shareholders are reasoning that if they aren’t getting anything on top of their investments, why should directors get anything either?

The retail industry seems to have a greater than average amount of mavericks on its boards, who like to have a free rein on how they manage their companies. There have been disgruntled noises about good corporate governance being ignored in the make-up of boards in retail in the recent past too.
Now it appears shareholders want retailers to toe the line a bit more and exercise a bit of restraint in the handing out of directors’ rewards.

I can’t feel a great deal of sympathy for retail directors who want to be rewarded with multiples of their salaries for doing their jobs, when so many low-paid shop workers have been put out of work.

Having said that, retailing is a business that requires real talent to ensure success, because of the range of products and sales propositions within the vertical and because to the slim margins retailers operate in.

Mediocre management means business failure in short order in retailing, so it’s easy to see where the talent lies and deft retail executives have to be rewarded if they are going to be retained. The retail sector is a competitive market with lots of potential employers to choose from.

As long as retail bonuses and share options are channelled to directors who have made a real contribution to shareholder value, they should get the appropriate rewards. Still, the recent spate of shareholder revolts are a warning to retail boardrooms to put their houses in order.

(Pic: didbygraham cc2.0)

Bob Pearson, has just been appointed President of the newly rebranded Social Media Business Council (SMBC, of which I am also a member) after a successful stint as Vice President, Communities and Conversations at Dell. I met with him to ask few questions on how he will use the experience he gained there, in his new role and about his plans for the expansion of the SMBC.

BNET: Isn’t social media just for geeks?

BP: No, it’s important that companies take time to see the value in building a long-term relationship with their  customers via social media.  Many of the initial ideas about it may have started with geeks, who I certainly appreciate, but we live in a world today that has over 1.6 billion people online and more than 500,000 new people going online every day for the first time in their lives.  Social media is becoming mainstream for customers today and should start to become so for companies in the near future.

BNET: What are the benefits for companies who implement social media initiatives?

BP: There are many benefits for companies, but gaining ideas, co-shaping your brand and unlocking the value of employees are certainly three important ones.

Social media provides an amazing window into how customers think and what they want.  For example, why conduct a focus group with 10 people in a single location when you can build an idea community, like Dell or Starbucks and receive thousands of ideas and listen to customers discuss them over months?

For companies, it’s also important to co-shape your brand and reputation with your customers online.  If you conduct strong analytics and you know where your products are being reviewed, you’ll find that a large brand may have as many as 5,000 conversations about itself every day.  Ask yourself how many of those conversations you’re participating in or knowledgable of.

I’ve also seen how social media inside a company enables employees to share their thinking and let you know if they agree with the direction of the company via their comments or, in some cases, their silence.

BNET: What are the things you think about when implementing social media?

BP: I’ve heard people say “make the R small and the I big in ROI”.  I like that advice.  Social media does not have to cost a lot of money to try.  What you need are some courage and a willingness to engage directly with your customers.  I like asking people “how many customers do you actually speak with every day”?  For too many people in companies, the answer is zero.

Read the rest of this entry »

NEETs are back in the news. What’s a NEET? Not in Employment, Education or Training.

It’s our modern euphemism for unemployed school-leavers. As a group, they’re about to top one million strong, which is clearly bad news.

The government’s solution is to offer them jobs or apprenticeships - then stop their benefits if they don’t take them up. But it’s hard not to sympathise with both the NEETs and with the state on this one.

The recession means fewer private companies need raw recruits; the public sector is broke; and you might end up doing a really terrible or unproductive job. Meanwhile, keeping benefits going costs a fortune.

They’re far from being an army of work-shy scroungers, either. I heard a NEET on the radio this morning talking about how he spent his days surfing job boards and the Job Centre on the web site to find work. It’s heart-breaking to hear productive people who can’t find a job.

If all that sounds a little doomish, then let me tell you a good news story about a NEET I met this morning. Her name is Rosalind Roberts. She knocked at my door and introduced herself as a writer. She is self-published - and wanted to know whether I’d be interested in buying her second book, a slim volume about a girl from Tooting who goes on a journey of self discovery.

Rosalind isn’t using the internet. She wasn’t tweeting news of her book, publishing it “online only” or waiting around for a big publisher. She didn’t even have a copy of the book to give me: she’ll get the presses running when she has enough pre-orders to pay for it. And she certainly isn’t sitting around surfing the web to find work.

Instead, she’s walking door-to-door round South London, explaining herself in a confident and articulate manner. Her book isn’t expensive - she suggests £4.50, but will accept less if you don’t think it’s worth that much. I have a hand-written receipt — yes, hand-written — with her contact details and estimated time for delivery. (Yes, she might be a fraud.

But to produce a sample copy of the novel with her picture on the back was a great way of confirming she wasn’t on the make. And what fraudster would bother hand-writing a receipt for the sake of four quid?)

This struck me as the very model of entrepreneurialism. Rosalind is doing a job she loves, but she’s not afraid to wear out shoe leather to make sure she can keep doing it. She reckoned she’d sold about 6,000 copies of her first book over the last couple of years — so that’s enough to pay the rent and food bills, anyway.

And you never know — if the right person buys one of her books, she may just strike it rich. (In that sense, she’s the perfect antidote to “get famous quick” schemes like the X-Factor.)

Her lessons are simple.

• Do what you love.
• Work hard at it.
• Be friendly and articulate.
• Be creative in finding customers.
• Stay positive.
• Dare to dream.

It’s an inspiring story for all NEETs. We need more Rosalinds and fewer Sir Freds.

(Pic: timmenzies cc2.0)

People subconsciously form an impression of you within 10 seconds of meeting. So when they ask you what you do, can you add to that first impression by succinctly, accurately and interestingly describing what you do in an elevator pitch lasting no more than 15 seconds?

Your elevator pitch should describe why someone should be interested in you and should help you to make an emotional connection with them.

You may want to do it on the fly, but it’s a good idea to have a series of rehearsed phrases that you have tried out a few times and that generally get a good response.

During this conversation you are your business card. You are presenting through your own appearance that your business is professional, and you are expressing through your pitch how you can help your clients.

Please don’t say in so many boring words ‘what you do’. Your elevator pitch is not a sales pitch. People hate being sold to, so it is a chance to express in a clear and concise way how what you do can positively affect your listener’s business (or someone’s he/she knows) and it’s about getting them curious.

A ‘stop and listen’ pitch must do at least five things:

1. Let’s imagine you’re in IT. Be short and to the point, in a networking situation, you’ve got to let them know what you can do for them in a very short space of time before someone else interrupts. You don’t want their eyes to glaze over if you’re providing a long-winded explanation of your technical speciality. This might be better: “The people who find me most useful are CIO’s of FTSE-500 companies”.
2. Elicit a curious response from the listener — “Oh really?  Why is that?” or “I know someone who might be interested in that”. Find something to hook their attention, something that will solve a problem for them or someone in their network.
3. Your pitch should also identify a target market. “I’m looking for connections in……” Even if your listener is not in that target market, they may know others who are and could offer you a great introduction.
4. Make sure you’re identifying a problem that you can solve.  We are, most of us, more motivated to avoid pain than to seek pleasure, so give people a solution to their big problem.
5. Differentiate your offering by finding some unusual uses for it, and avoid jargon like, “I work in asset-specific, complex event processing, low latency reduction” Uh???? Unless you were in a similar industry you’d have no idea what was being said. Your pitch needs to leave the listener with a basic understanding of your business.

Always be aware that most people know at least 200 people and just because they’re not in your industry doesn’t mean they don’t know someone who is.

(Photo: Boblet, CC2.0)

The state sector is growing at private companies’ expense.

The Post Office is to remain state-controlled and the East Coast rail line has been nationalised. They sit in a UK government portfolio already boosted by the addition of Northern Rock, Royal Bank of Scotland, Bradford & Bingley, almost half of Lloyds and Railtrack. The government remains a reluctant owner of the Tote and our canal system while Channel 4 and the Royal Mint are still state-owned despite disposal hopes.

If this isn’t quite communism then it can’t be called capitalism either. We must accept we are living in a mixed economy whose mix has changed dramatically.

There may be special circumstances for such additions to the public sector but this creeping government ownership should concern every business in the country.

The fear is not that your company might be next but that in future, more of your customers and suppliers will be part of the state.

At the macro level that means their ability to buy may be affected by public funding or cutbacks in government spending. It has already meant telling banks to divert lending to particular customers.

But at the micro level, dealing with government can mean bureaucratic procurement procedures and a requirement for companies to conform to specified disclosure criteria or adopt particular employment policies.

You’d have to be able to demonstrate an equal opportunities programme, which might mean collating data such as an employee’s race, that you might not normally collect. Easy for a large business, but hard on smaller firms.

There is a generation that probably does not realise how important the state sector was in the decades after the Second World War. Nationalised steel companies used coal from nationalised pits to supply state-owned shipyards whose vessels docked at publicly-owned ports.

Nationalised planemakers supplied nationalised airlines that used state-owned airports.

Electricity, gas and water, like the phone system, were public bodies. The taxpayer owned car firms — Rover, Jaguar and Rolls-Royce – plus companies that put the petrol in their tanks, including a large part of BP. The roads they drove on were state-owned too, like the railways.

Other governments have extended state-ownership too, not least the US with its rescue of the auto and banking industries.

Unlike earlier waves of nationalisation, the current UK trend does not seem politically motivated. The British government wanted to sell the Post Office and resisted bailing out the motor industry.

But the post-war trend has been Labour nationalisations followed by Conservative privatisations and a new Tory government could be expected to pass the banks, the East Coast line and other state assets back to the private sector. The UK steel industry has been nationalised twice and privatised twice. Parts of the rail system look like repeating that double, too.

Such parcel-passing between public and private sector is unsettling for the rest of business. Companies may prefer the capitalist structure but they like stability, too.

Constantly changing their buying and selling procedures to meet whoever currently owns their suppliers or customers is unsettling.

(Photo: IngytheWingy, CC2.0)

Stephen Martin, chief executive of Yorkshire-based property development company Clugston, took part in Undercover Boss, shown on Channel 4.

He jumped at the opportunity to work incognito as a labourer to understand the company at grass roots, but what happened once the cameras disappeared?

Here what he has to say about what Clugston has done since his part in the programme was completed:

Information gathering

Communicating

Rewards and Training

Understanding, developing and exploiting your company’s strengths and competitive advantages is at the heart of any strategy for business growth. Yet many business leaders do not fully understand how and why their company wins.

Executive teams often draw up a list of strengths and competitive advantages based on gut feel but have few robust facts to support their beliefs and they risk building their business strategy on flawed assumptions.

A UK supermarket chain I worked with needlessly invested in a multi-million pound bonus package. Management held a belief that the quality of their store teams gave the company a competitive advantage versus other grocers. To underpin this belief the company created a bonus for store managers based on the satisfaction of their store staff.

The problem was that there was no discernible link between staff satisfaction and customer satisfaction for this retailer. Customers were focused on speed, convenience and price, which don’t always tally with satisfied staff. Read the rest of this entry »

Organisational trust has been studied for many years. Only relatively recently however have events helped to drive this issue to the top of many business agendas.

The near collapse of the financial system and the actions of senior bankers is one of the most damaging. The recent behavior of British MP’s in claiming expenses has undermined trust in UK democracy.

We have also seen oil companies being attacked for their impact on the environment and on staff safety, pharmaceutical firms being exposed for ethical issues around drug trials and airlines vilified for poor customer service when operations have gone wrong.

While many of these reputation and trust issues impact on customers and investors, there are also significant workforce implications.

Dr Cecily D. Cooper recently explained the complexity of organizational trust at one of our forums. According to Dr Cooper, employee related trust can facilitate acceptance of organizational change, it can build good corporate citizens, and can help develop credible leadership.

Organizational trust can also stop people leaving, being absent, becoming disruptive, or even stealing a firm’s assets.

However, until recently, there has been little research into the building blocks of trust and even less about trust failure and repair. For Dr Cooper, fairness or justice is key.

For example, how an organization behaves in difficult situations, such as during layoffs, can have a significant impact on levels of staff trust.

This is of course highly relevant in the current recession. But interactional justice is that most closely linked to trust and this arises in day-to-day staff relations. In this respect, one key lever of trust building arises through the actions of managers.

With trust breakdown, Dr Cooper’s research looks at trust failure in terms of competence and integrity, and it is the latter that can cause most damage. So when trust breaks down what is the best approach –- apologize, deny, shift blame or stay silent?

Read the rest of this entry »

Been invited to Wimbledon this year? Or Glyndebourne? Or the Big Chill? Or have you taken clients to such events?  Perhaps not, given the recession, but how would you feel if details of such hospitality became public?

Summer 2009 should be remembered for the major advance in transparency. After the MPs’ expenses became public, the BBC voluntarily disclosed its top executives’ claims and in future will include lower management tiers in its publication.

The spirit of self-exposure has yet to reach corporate boardrooms, but watch the trend. There are demands for declarations of interest and the receipt of hospitality:

some companies, especially investment managers, already keep internal registers while some public bodies publish lists of gifts received and meals bought.

Companies may think their own affairs are private but they risk being caught in the public sector’s disclosure regime. Savills may not reveal it gave six bottles of champagne to a member of the Bank of England’s monetary policy committee but the Bank’s register reveals it (and that she handed the estate agents’ gift to staff).

Does being bought lunch or attending a football match corrupt the recipient? Unlikely. If the hospitality puts the recipient at a disadvantage, why has it been accepted?

But the practical issue is not about bribery but appearance. What will be remembered of the BBC expenses disclosure will be petty claims for parking or champagne rather than accusations of unfair influence. It is about wasted money and mean executives, rather than palm-greasing.

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Unemployment has now hit 2.26 million, and still climbing. As jobs become increasingly insecure, it’s more important than ever to stand out from the crowd.

If you can’t define your differentiation in your speciality you have a problem.

Here are my tips for being the stand-out candidate in your marketplace or your boss.

• As an employee, consider how you would run the business if you owned it. The mindset of being a cog in a wheel won’t bring rewards. Believe in your importance to the business, and that your expertise, and your interactive, active and enthusiastic contribution is vital to its success.
• Always keep a ‘challenge-action-result’ record. Whenever you have a project, make a note of what it was, how you dealt with it and the successful result. It’s good for bosses to be reminded that you have achieved great things for the business. Read the rest of this entry »
  Tessa Hood is an author and founder of specialist executive coaching business Changing Gear.