Sterling Performance

You do not need books or psycho babble to work out how to motivate people. Start by thinking about the best boss you have ever worked for. What did the boss do to motivate you so well? Do you do the same things with your team?

In practice, most of us respond to some simple motivational measures. Here are my top ten:

1. Show you care for each member of the team, and for their career. Invest time to understand their hopes, their fears and dreams. Casual time by the coffee machine, not a formal meeting in an office, is the best way to get to know your team members.
2. Say thank you. We all crave recognition: we want to know that we are doing something worthwhile and we are doing it well. Make your praise real, for real achieverment. And make it specific.  Avoid the synthetic one minute manager praise (”gee, you typed that email really well…”). (more…)
   Jo Owen is a serial entrepreneur, author and business speaker. Got a leadership idea for Jo to tackle?

The recruitment freeze isn’t lifting any time soon, but companies are focusing more on keeping their existing key staff happy, so that their elite workers aren’t tempted to stray, according to a panel of HR bosses.

NSG Group (formerly Pilkington) human resources VP Luis Henrique Souza, Axa head of global resourcing Samantha Rich and De Beers Goup HR director Phil Volkovski aired their views on talent retention at the launch of a report by the Economist Intelligence Unit called Companies at a Crossroads. The report was sponsored by workforce management software company Stepstone, of which all three panellists are customers.

Issues arising from the report included:

• Organisations need to focus on talent retention at all levels of the business
• Talent drift is a becoming an increasing danger to company’s talent pools as key workers become disaffected. (more…)

Two companies in the news illustrate how arbitrary the government’s decisions are over what is too important to fail and how lucky banks are to have been viewed as such.

Lloyds Banking group has just announced it lost £24bn on bad debts in 2009, heaping much of the blame on subsidiary Halifax Bank of Scotland’s commercial property lending arm for much of this.

CEO Eric Daniels had already announced he would forgo an annual bonus of £2.3m — a prudent move in the circumstances. Surely he must be breathing a sigh of relief that similar moves from Barclays, HSBC and RBS meant he didn’t have to do so in isolation.

Lloyds doesn’t have as big an investment arm as Barclays and so will probably be able to escape a huge bonus budget and the accompanying ire from customers. Even so, the UK taxpayer is still being asked to stomach a £200m bonus bill for Lloyds staff.

On the same day Portsmouth Football Club has announced it is going into administration over a debt of a mere £60m. Far from anyone swooping in to save the company, it is being penalised with a nine-point deduction which will almost certainly see the team relegated from the Premiership to the lower tier Championship League. This is through no fault of the company’s star performers, the players who have actually suffered delays in pay as a result of the club’s financial strife.

Considering the talent for which these player are paid for is evident on the pitch, it’s ironic that they are being penalised while star bankers, whose talent is debatable are given huge payoffs.

You might argue that there is a great deal of difference between a huge national bank and a – it must be said – football club of middle standing, in terms of significance. But, the citizens of Portsmouth, for whom the club is a big cultural icon, might disagree. For them it is just as much of a blow.

Lloyds, like other banks were bailed out not only to save them, but also to save the reputation of the UK banking system as a whole. By the same token isn’t the reputation of the UK Premier League, which is a sizeable export to the rest of the world, also damaged if one of its clubs is allowed to sink into financial ruin?

Compared to Lloyds which still relies on the cushion of taxpayer support to survive, Portsmouth will have its opportunities to make the money needed to get back on its feet taken away, by being moved into a less lucrative league. It’s already had to sell off star players to recoup losses.

Perhaps Lloyds should take a similar line with its star performers, instead of rewarding them.

The long winter of pay and bonus stagnation is set to lift according to two reports from the CIPD and CMI, but the trade-off may be increased redundancies to pay for it.

The CIPD annual Reward Survey found 53 per cent of the 800 respondents expected salary spend to increase in 2010, while 15 per cent said it would shrink and 21 per cent said it would stay level.

The response towards bonus packages was positive, but there was an increased focus on aligning reward with business strategy and making it internally fair.

CIPD reward adviser Charles Cotton told BNET UK that this did not necessarily mean the pre-crunch bonus culture was coming back and employees could not expect big payouts regardless of their impact on the business.

Key performers would do well, which leaves the question of whether employees who are not stars, but nonetheless are critical in keeping the company afloat, will be left out. Cotton advised it was essential these employees’ efforts were recognised in their basic pay. (more…)

The business is in trouble. The finance director has bought some time from the creditors, and now you need to deliver a turnaround in the trading performance. Here are the five basic steps you need to follow.

1. Identity Check that everyone around the table is absolutely clear on what the business is about; “what you do” and, more importantly “what you don’t do”. A diversified or multi-segment business needs fast decisions on which parts have a future, and which would be better owned by someone else. The decision needs to be logical and simply explainable, to everyone in the business, so the ones that are staying know what the future holds. Move fast, move once, and move on. (more…)

Portsmouth University is one of a number of colleges kicking off an initiative to boost graduate recruitment amongst small and medium businesses (SMBs) in their area with a government funded internship subsidy.

Earlier this year, the Higher Education Funding Council for England (HEFCE) announced £13.6m for a graduate internship scheme designed to give new entrants a way into the job market and at the same time, provide support for local businesses by giving them access to educated interns for a limited time.

The scheme in Portsmouth has enough funding for 90 graduate internships. Employers will receive £1,200 towards the intern’s salary, provided they match that with a further £2,400. Internships have to last for at least 12 weeks. That’s a wage of around £8.50 per hour — more than the £5.80 per hour national minimum wage.

So far, 54 other colleges have received funding for between 20 and 700 placements in their area.

In total, just under 7,000 placements have been created, but there is still funding available for a further 1,500 internships to be created by colleges not yet applied to the scheme.

Although this won’t solve the problem of the chronic shortage of vacancies for the 22,000 graduates on Job Seekers Allowance, it will go some way to taking the heat off those who have just finished or are about to leave university.

Alice Hickman, recruitment manager at Purple Door Recruitment, the in-house recruitment agency at Portsmouth University explained how involved she was in the selection and ongoing development of the graduates she places. (more…)

Barclays Bank’s proposed bonuses to high performing staff illustrates the dilemmas banks face — reward high-flyers or risk them skipping off to rivals, increase lending and risk being accused of abandoning fiscal prudence.

Barclays has tried to offset any umbrage caused by the doubling of its yearly profits for 2009 to £11.6bn by announcing the chairman, president and CEO will not take their annual bonuses and that it lent £35bn to individuals and businesses last year — three times more than it promised at the beginning of the tax year.

That said, it is paying 22,000 investment bankers £2.7bn in short-term and long-term bonuses — about £100,000 extra in their pay packet. The announcement looks selfish against the background of a report out by the Institute of Directors which found 60 per cent of small businesses have been refused the loans they need to keep their heads above water and many have been forced to rely on unsecured credit, such as credit cards.

Undoubtedly there will be a real fear that if investment bankers don’t get the remuneration they feel they deserve, they will defect, especially after the news that two senior investment bankers at majority state-owned RBS have done just that, a week before the bank announces its bonus package. Barclays glowing figures are entirely down to its investment arm, with the retail division halving its yearly profits. Is it not good business sense then to invest in the booming part of the business and cut back on the poorly performing part?

It’s understandable that banks are more careful in lending to small businesses, which carry a higher risk of defaulting on debt. The banks were branded the irresponsible catalysts of the credit crunch and are much more risk averse in all areas of business than they were two years ago.

However, Barclays and all the other UK big banks have a duty to the economy now. Barclays didn’t take any of the government hand-out, but it benefitted from the banking industry as a whole being propped up by the public purse. Business customers are also tax-payers and so deserve to benefit from banks’ stellar profits.

There are lots of good business reasons too for banks to release more funds to small businesses. Foremost, it wasn’t lending to small businesses that caused the credit crunch, so there is little good reason that they should be penalised any more than they were before the economic downturn. As a group, they are a significant customer group for the banks. This customer group may find their custom is more welcome elsewhere if UK banks restrict credit for the long-term.

More than this though, although many small businesses fall by the wayside, some eventually become big businesses that are prudent investments. To throttle small businesses now limits the potential for profits for banks in the future.

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)

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)