Sterling Performance

The uncertainty around the graduate job market has spiked this week, with two surveys coming out with differing conclusions. This is against a background of the increasing likelihood that there will be many more applicants than university places to fit them this year, putting further pressure on an already creaking employment outlook.

The good news is that the Association of Graduate Recruiters (AGR) has published the winter edition of its twice-yearly survey on the state of the job market for graduates, with the conclusion the climate will ease for new starters. Falls in vacancies for university leavers should stabilise this year, with an upswing in 2011 — the first in three years.

The biggest recruiters in 2010 are likely to be in financial services and the oil industry. Accounting will also be a big graduate employer, providing 18 per cent of the year’s vacancies. The public sector, traditionally a safe bet, when employment goes south expects to cut graduate jobs by 7.5 per cent this year.

The average starting wage will stay frozen at £25,000, although the top earners in investment banking will start nearer £38,000. The industries with the biggest increases in starting salaries are construction, transport and IT.

Now the bad news. A survey by recruitment outsourcer Alexander Mann Solutions found half of the class of 2009 are still looking for jobs that require a degree. As a result, there are an increasing number of graduates prepared to take any job for now rather than continue searching for the one they really want. That has serious implications recruiters and managers who want to replenish their talent pool with engaged and loyal new employees.

It appears graduates will be disappointed with the jobs on offer, with the public sector being the most popular choice. Banking on the other hand is not nearly so desirable, prompting the question how have educators managed students expectations so badly?

Should any graduates be disenchanted with the lack of vacancies in their chosen area of work, ducking out of the job market altogether is ill advised. The employers who belong to the AGR take a dim view of post-graduate courses taken merely to wait out the economic downturn or gap years travelling the globe. Any work experience is better than none.

Any graduates looking for a good first job would do well to browse the Best Companies website. Here’s some of the companies on this year’s list that have been marked out as graduate-friendly.

• Mace: A consultancy specialising in the construction industry is offering places on its graduate management training programme to new starters with good relevant degrees. Two thirds of its 1,900 staff over 13 UK sites earn over £35,000 pa.
• Lexis Public Relations: Based in London, this company is running two intakes of its graduate recruitment programme. Applicants must write a response to a PR-related exercise. Trainees start on £18,000pa. 45 per cent of this 100-strong female dominated company earn over £35,000 pa.
• Micheal Page International: This graduate recruitment consultant would be expected to have a progressive graduate recruitment strategy. It has a number of graduate vacancies for intakes in July and August. Traineeships are spread across the company’s 55 sites in the UK.
• Deloitte: This management consultancy has over 11,000 employees. It is looking for five graduates in its present intake for a range of roles including audit, tax, technology, consultancy and enterprise risk services technology. All employees get an extra day’s holiday, called Deloitte Day and the company sends everyone a gift at Christmas.

(PIc: Ed Yourdon cc2.0)

It is not only banks that are too big to fail. The treatment of corruption allegations against BAE Systems shows some manufacturing companies must be protected from their own excesses too. 

As Britain’s biggest industrial company, BAE is too important to be severely punished. It employs more than 100,000 staff, earns foreign income from exports and supplies the hardware to defend the nation. And given the international counterparties to its questionable payments, prosecuting the UK company could risk upsetting important allies abroad.

So following the Serious Fraud Office’s decision to scrap its inquiry into Saudi Arabian arms contracts because of national security interests, the SFO and US Department of Justice have now extracted the maximum fines from the aerospace company that do not cause wider damage. Hurting BAE would endanger not only its own payroll but also the 400,000 workers at its suppliers.

The American prosecutors have thus imposed a $400m fine for providing inaccurate information while the UK fines it £30m on an accounting irregularity. The cost is bearable for a company valued at £12bn and with sales almost double that, but BAE emerges innocent of any serious charges and free to continue supplying governments. 

The settlement is the equivalent of the US and UK governments injecting funds into the banks that caused the financial crisis, rescuing rather than punishing them. Britain can no more function without a major defence supplier — never mind employer and exporter — than without a banking system. 

As at the banks, BAE’s board has been cleaned out, a new code of ethics written, and tougher regulation imposed, but it will be allowed to flourish because, like the lenders, it is too big to fail.

That was the test applied to British manufacturing industry many years ago and used to justify the wave of nationalisation after the Second World War. In the 1970s, Rolls-Royce and British Leyland were rescued by the state because the aircraft and car companies were considered too big to fail — and the US government adopted the principal last year to save Chrysler and General Motors.

But having been held to ransom by the banks, governments are urgently examining how to stop companies again becoming too important to lose. Barrack Obama wants deposit-taking banks to shed their risk-taking activities such as private-equity and hedge funds. The UK’s parliamentary inquiry into exactly that danger will report soon.

If “too big” becomes unacceptable, politicians must rethink their views on big business. Anti-trust and competition rules have been used to prevent consumer exploitation rather than break monopolies because their size endangers supply or could cause consequential failures.

But unless the risk can be taken out of commerce, or unless governments turn against big business, the state must be willing to accept companies can fail or prepared to step in when they make mistakes.

Whether car companies, defence companies or banks, it is the economy that the state is protecting, not the erring corporations.

David “two brains” Willetts has been lending both of his brains to exploring a new political split: not between left and right, but between old and young. In his new book “The Pinch” he lays out in scary detail the problem I outlined last year in my post “Generation Poor Y Me”. He argues that the baby boomers are systematically ripping off the younger generation. Here are some highlights:

•  Housing: The over 45s have more than six times as much property wealth as the under 45s: £5.8trn versus £0.9trn.The rapid inflation of property prices is a huge windfall to the baby boomers and a burden to the younger generations. The young can not get onto the housing ladder, so are forced to stay at home (”boomerang kids”) prompting derision from the older generation.
• Environment: baby boomers will let the next generation deal with the challenge of global warming, thank you.
• Education: University education used to be free. Now graduates emerge with a degree and an average of £23,000 of debt, which may change their attitudes to the value of government greatly.
• Pensions: baby boomers have the index linked pensions; the new generation must pay their own way.
• Taxes: the explosion of government debt is spending by today’s generation. We will kindly let the next generation pay our debts off for us. The government is spending £4 for every £3 of income it receives. Try that with your family budget and see how long you can last.

Against all this the baby boomers have some pretty thin arguments:

•  ”We went to the moon, invented the internet and iPods”. Not true for 99 per cent of us who were not walking on the moon and were not inventing iPods.
• “We have paid our taxes so we deserve a good retirement”. The data shows we have not paid nearly enough for all the care and pensions we expect.
• “We worked hard”. Not true: annual working hours are at an all time low: around 1600 hours compared to 3,200 hours in the Industrial Revolution. With later entry and earlier exit from the workforce the baby boomers may be the idlest generation in all history.
• “We had our ideals, our hopes and dreams”. True maybe, but ideals do not pay the bills and have not stopped the baby boomers with their rip off.

David Willetts is a conservative MP. He knows the electoral arithmetic. The ageing baby boomers are keen voters and are set to become 24 per cent of the electorate. No sane politician will take away their free bus passes, free television licences, free health care, winter heating subsidies, pensions and all the other perks of retirees. The Pinch is not going to go away, it is going to get much worse as the baby boomers take a sudden interest in the welfare of pensioners – themselves.

If you want a depressing but insightful read on the way to work, The Pinch is a good start.

(Pic: revolution cycle cc2.0)

The Observer

Branson predicts an oil crisis by 2015 Virgin boss Sir Richard Branson has warned UK ministers to act now or face a ‘peak oil’ crisis in as little as five years. “Don’t let the oil crunch catch us out in the way that the credit crunch did,” says Branson as he and other business leaders including Scottish and Southern Energy Group’s Ian Marchant call for government to take urgent action to avoid severe oil droughts.

Jobs and courses culled as UK universities face cut-backs More than 15,000 jobs could go across the UK’s universities as institutions look to adapt to “devastating” cuts in funding. Post-grads may step in to teach instead of professors, bursaries and scholarships could be cut, courses or whole campus closed as institutions look for cost savings of around five percent a year.

Tiffany the target of of Bushmen protestors Diamond purveyor Tiffany & Co’s donation of money to the Botswana government to create water boreholes in its national park has raised a stink among protestors. Tiffany’s money is being used to “oppress” local Bushmen whose access to water has been blocked, they say, by the government.

The Sunday Times

Bonus storm as losses hit £7bn at Royal Bank of Scotland

The Treasury is about to approve a bonus pool of £1.3bn at RBS even though the bank is expected to announce huge losses in 2009. RBS leaders claim they have no choice but to follow other banks, such as Goldman Sachs, or risk losing star employees to rivals. The Scottish bank lost 1,000 top performers last year.

Big contractors squeeze out the little man

The National Federation of Builders claimed a quarter of small and medium-sized building companies have been forced to lay off staff after missing out on government contracts. The federation said big property companies are able to offer cheaper rates and mount better bids.

Independent on Sunday

Big oil funds anti-climate change research

Anti-climate change thinktanks including the UK’s International Policy Network have been given grants by oil giant ExxonMobil. Organisations such as the IPN, as well as the US-based Atlas Foundation, have staged global gatherings of climate-change sceptics, while last year’s “Global Warming: Was it Ever Really a Crisis?” meeting in New York was co-sponsored by Atlas and the Heartland Institute, another recipient of ExxonMobil money.

HSBC denies US senate accusations of corruption

HSBC bank has strongly defended itself against criticisms over its anti-money laundering processes. A US senate report slammed the bank’s conduct over dealings with an African woman who it failed to detect was related to a Gabonese public official. The bank insists its processes are within the spirit of US regulation.

FSA switches auditors

The Financial Services Authority has been forced to ditch its private sector auditor, Grant Thornton, for the National Audit Office. The change will save the FSA £100,000 a year. The Public Accounts Committee recommended the change as a result of criticism of the FSA’s performance before and after the credit crunch.

News of the World

Geordies spend more on Yorkshire puddings than families in Yorkshire A survey by mysupermarket.com has found UK consumers are not loyal to their regional foods. More Yorkshire puddings are bought by shoppers in the Tyne and Wear than in Yorkshire, while Welsh consumers are more fond of Cornish pasties than shoppers in the West Country. On average, East Anglians spend nearly £5 more a year on Cheddar cheese than consumers in its region of origin.

Nick Hine, partner at law firm Thomas Eggar, responds to your employment law questions:

A female member of my team complained to me that she is being harassed by somebody else within the company. She says that his emails and texts are bordering on the pornographic and she doesn’t know what to do about it.  What should I do about this?

– Name Witheld

If an employer becomes aware of harassment in the workplace then really they are duty bound to do something about it. This is especially so if you are in a senior or managerial position as the buck essentially stops with you. 

Once a senior person is aware of an accusation, effectively it will be deemed to be constructive knowledge by the employer. 

The first stage is probably to go to the HR department to explain to them the position so that they and start an investigation to see whether or not there is substance to the complaint. 

This may mean looking at the emails in question. If there sufficient evidence is found, the next stage is to meet with the employee being harassed and to discuss it with her. 

Even if she does not wish the investigation to go any further, the wheels have now been set in motion and the whole process needs to be completed.

As an employer you have a duty to ensure that this sort of activity does not happen again and a stance on the behaviour concerned should form part of your equal opportunities and anti-harassment policies. 

If an employer is aware of harrassment activity and does little or nothing to stop it then they will have little opportunity to defend any claim for compensation that may arise as a result. 

Once investigated, the employer will have to decide whether or not to speak with the offending employee and whether to start disciplinary proceedings. 

It is possible that the employee being harassed may wish to raise a grievance and it can be dealt with through this disciplinary process.  Although senior managers and employers may find investigating a sexual harrassment complaint distasteful, or view it as disruptive, sweeping the issue under the carpet is not a good idea. It’s far better to deal with these issues sooner rather than later.

Alarming results from a survey conducted by consultancy Right Management reveal how unwilling UK managers are to address the issue of engagement within their teams. The figures suggest companies are being hamstrung in trying to give employees that feel-good factor by management personality issues.

Three out of five of the 300 middle managers surveyed from large national and international businesses in the UK and Ireland agreed an engaged workforce improves the company’s performance and just under half had seen engagement suffer in their workplaces during the recession, yet less than 20 per cent said they were doing anything serious about it.

A good many of the respondents said they didn’t know how to go about raising the level of engagement in their staff, suggesting there is a serious lack of training resources available to them.

Even if that were put right, it’s likely to be a case of leading a horse to water, but being unable to make it drink.

The same survey revealed nearly three quarters thought the health and wellbeing of their employees was a big factor in how engaged they were with the company, but over two thirds were either convinced their own teams didn’t have any wellbeing issues or were reluctant to say.

This acknowledgement that engagement has suffered, but a belief that the people around them haven’t been affected hints at a refusal by managers to accept they need to take any action personally.

Right Management senior management consultant Kirsten Sholl pointed out the main factor in reduced feelings of wellbeing is stress. And it’s the stigma attached to stress-related problems at work that may be the root of this reluctance by managers to identify it.

Sholl said: “Anyone who has to deal with problems of stress in their own team needs to be tooled up with the necessary skills. Managers need to be able to recognise the symptoms when they occur and to understand how to have those difficult conversations.”

If managers are reluctant to meet the problems of disengagement head-on, government business department advisor David MacLeod has his work cut out constructing a strategy for nurturing employee engagement in UK plc.

The website the Department for Business, Innovation and Skills is developing to provide a detailed guide on how to improve engagement will go some way in pointing managers in the right direction, but it won’t solve the unwillingness in individual managers to admit they have a problem.

MacLeod recommends managers take a lead from examples of best practice internally or from other companies. He asserts intransigent managers will eventually be sidelined by peers who have taken engagement to heart. Let’s hope he’s right, although the research from Right Management suggests the rebels will be in the majority and in any case, the problem may be a bit more deep-seated than just a wariness of change.

(Pic: kyknoord cc2.0)

Following on from David Bolchover’s comparison between what passes for talent in business and prowess on the football pitch, here is a real-world example of how stellar pay-outs are bending corporate conventions out of shape.

Marks & Spencer and Morrisons are retailers, not football teams, but the £7.5m payment for the latter’s chief executive moving to Marks is a transfer fee in all but name. 

Marc Bolland will receive a further bonus of £6.3m is he performs well at this new employer – plus his near-£1m annual salary – but that £7.5m is his merely for turning up on his first day. In business it’s known as a golden hello.

The payment represents the value of the bonuses Bolland could have received from Wm Morrison if he had stayed there: Marks is paying it so that he doesn’t lose out and his old employer thus saves having to pay the sum.

So even though the money goes to the chief executive, Marks is £7.5m worse off and Morrisons that much better off, the same effect as if Marks had passed the cash directly to its rival.

Bolland’s ability to demand such compensation says something about his perceived management skills but M&S’s need to pay it smacks of desperation.

Shareholders had put the pressure on the company to fill the void left by Sir Stuart Rose’s departure from the roles of CEO and chairman as soon as possible. They were not consulted on Bolland’s pay but they ought to be concerned. If Marks had had better succession planning it would have had a pool of internal candidates who could have moved into the top post without the need for a transfer fee.

Marks has paid a premium for having to poach an outsider and his remuneration runs contrary to compensation trends in other c-suites.

The average pay for FTSE 100 chief executives fell 1 per cent last year with bonuses plunging 20 per cent, according to accountants PricewaterhouseCoopers. In the next 250 largest quoted companies, pay was flat with bonuses tumbling by a similar amount.

But while incumbent managers’ pay was frozen, there are still rises for those recruited from outside. And if moving is the means to obtain a substantial increase, it is easy to see why chief executives are so ready to switch jobs.

The Morrison bonuses scheme was designed to encourage Bolland to stay: Marks’s payment to buy him out has demolished that objective. Yet unless Bolland intended to remain at Morrisions for life – unlikely, as he has now had three chief executive roles in five years – then he should have assumed that those future bonuses would be lost when he left.

If transfer fees are to become common, then long-term incentive schemes lose their value in retaining executives for the long-term.

(Pic: captain.orange cc2.0)

In the 1990s I argued that globalisation and technology’s advances were rendering competitive advantage unsustainable. Today, many companies are in the grip of an even more virulent form of hypercompetition – the commodity trap.

A commodity trap is where a company’s competitive position is eroded so that it can no longer command a premium price in its market.

Falling into your own trap

Tempting as it is to blame cheap producers in China or some other external factor, most commodity traps are very much related to how managers act or do not act.

The reality is that commoditization rarely happens to a business. It is usually the result of a failure to act early enough. It most often results from managers failing to innovate, issuing bad products, or denying trends already in motion.

Managers don’t see commoditization coming. Many are so focused on achieving short-time goals they could be said to be incentivised to ignore its onset.

What’s more, companies can be guilty of setting their own traps. Typically, they continue to fight against low-end competition by discounting higher-value offerings, inadvertently increasing the depth and severity of the trap.

Conventional wisdom argues for either cost and capacity reduction (without sacrificing margin) or increased differentiation (to maintain a higher end position).

But there’s little advice on how to identify the root cause of commoditization so it can either be avoided or turned to your advantage.

The Three Commodity Traps Framework offers strategies that have been proven to work in companies often caught up in fearsome price and proliferation wars. Read the rest of this entry »

Your CV should trumpet your many unique strengths. Experienced CV reviewers know that most strengths also reveal a weakness, so they routinely look at the other side of the precious coin you are presenting to them.

What you say and they hear are quite different things. This is what they find when they look at your CV or at a reference you have provided:

• Analytical and insightful: Doesn’t get people and achieves nothing.
• Very goal focused: Ambitious, tramples over people.
• Entrepreneurial: Not a team player; largely uncontrollable,
  won’t fit in.
• Great team player: Yes man; little drive or initiative; blindly follows insane orders.
• Good networker: Politically devious and untrustworthy.
• Honest and reliable: I can find no meaningful strengths in this person.
• High achiever: Puts self ahead of anything or anyone else.
• Empathetic: Likes hugging people and trees, expect neither action nor insight
• Mature: Past it, low energy levels.
• Expert: Anorak who will bore you to tears, cannot manage and lives in a silo.
• Strong values: Opinionated, fully signed up member of the awkward squad.
• Outstanding leader: “My way or no way” person who doesn’t like working for others.
• Diligent: Boring plodder who stays in the box.
• Action oriented: Shoots first, thinks second, dangerous liability.
• Strong track record of success: Good at telling fairy stories, likes to steal the credit.

All of this confirms what most job seekers fear: you can’t win.Whatever you say or do will be taken down as evidence and will be used against you.

But at least if you know how your cynical interviewer will twist everything against you, you will be better prepared for the ritual humiliation of the interview process.

(Photo:kthypryn, CC2.0)

Gentlemen, have you ever stared despairingly at your open wardrobe and felt deeply sapped by its array of boring, uniform, black/grey or navy suits?

Or, ladies, sat in a meeting distracted by worries over the appropriateness of your outfit?

Putting together a wardrobe of elegant, contemporary and individual clothing is a day-to-day challenge, especially in a work environment. 

It’s dull to be always in a boring dark suit, but difficult to be too ‘different’ in case you’re thought of as outrageous or inappropriate.  However, it can be done, you can be different and I hope that I can help you to find your own style and banish some of your dark suits to the second-hand shop.

Getting the basics of good dress is similar to good business — it’s about a sensible budget and getting the team mix right. It makes sense to ask yourself whether your wardrobe is cost effective and you are making the best of every garment hanging there. Read the rest of this entry »