Friday, 27 June 2008

Dragon's Den or Dirty Den? TV Hero James Caan Shares His Secrets

'Observe the masses and do the opposite,' said James Caan as he opened this year's Executive Recruitment Conference at the Business Design Centre, Islington yesterday. This has been his personal recipe for success, but for those of us in the audience the burning question was why on earth did he invest in the dog-walking treadmill, 'Fur for life'?

The founder of recruitment firm Alexander Mann in 1985 which he eventually sold for, well put it this way, a lot, is now a household name but remains perhaps the most unassuming of the characters on TV's Dragon's Den and yesterday's talk reinforced it. He was relaxed, funny, engaging, answered all questions and stayed behind later to talk to a waiting throng but he just could not resist getting his gratuitous plug in for his new book, 'From Brick Lane to Dragon's Den'. Ah well, scratch the unassuming part and hence my reference to Dirty Den.

James Caan's 5 Tips For Business Success

For all in business, James' tips are worth knowing:

1) Vision - have vision which is transportable to a brand

2) Create a Partnership culture which allows people to share in success

3) Attract great people

4) Hire people better than yourself

5) Encourage Intrepreneurship rather than entrepreneurship to create depth and diversity in your company

It's worth exploring a few.

Creating vision requires clear leadership and good leadership provides a strong cause which allows people to buy in. He uses the example of Ronald Reagan touring a NASA facility and coming across a guy sweeping the floor he asked the rather redundant question of what did he do. The guy replied, 'I send people to the Moon.' That is a hugely powerful force in an organisation when such a lowly employee is joined into the common cause.

He also points out that over the years he has searched and recruited for many senior executives, most of which have joined big companies but few of which were given equity in the business - not just stock options. He asserts that sharing more of the fruits of success creates a far more vigorous company and develops creativity.

In attracting great people and recruiting better than yourself he gives the great example that having started Alexander Mann in 1985 he had built after 7 years a £15m a year revenue company. So he recruited a new CEO and went into business development himself. The new CEO took the company from boutique recruiter to mainstream and the first tranche of the business was later sold for £130m because James had realised he was not the person to have done this.

Intrepreneurship was for me the best tip. He gave the great example of a young girl in her twenties who had only been at Mann for 8 months, who had previously run a nanny business, came to him with the idea that major companies would outsource their recruiting. James initially could not see why companies would do that or how the model would work but they decided to give her a new legal vehicle, a small office, some equity in the new company and within a short period she had closed the deal with Vodafone. The Company was recently sold to Private Equity Firm Graphite for £93m. His assertion is that don't let people have to be entrepreneurs and start their own business to realise their ideas.

The State of Recruitment Industry

For many in the audience some of James' points were not welcome - I loved them. He bemoaned the state of the Recruitment business and that recent developments had brought 30% fees into sharp focus. Was a phone conversation and an hour's meeting to get a job brief all that was needed to recruit for a company? His maxim was that you needed to spend a minimum of 2 days with a Company to understand expectations, culture, management style and more before you could possibly be able to spot individuals who could do the job. Hurrah for someone in the industry and so prominent to argue in the face of 'Transaction Recruiting'. I will keep this independent but he also highlighted that 30% fees are justifiable when the process is executed with diligence because the cost of getting it wrong is not only lost recruitment fees, it is the rolled up cost of the executive's salary consumed before leaving and then the ramp time to find a replacement plus the missed opportunity cost - an equation I have replayed to many hiring executives and HR people who still simply choose the cheapest. When I posed that question to James that the industry is responding to the requirements of clients, he rightly was adamant not so - this was the recruitment industry conditioning business that it is all about quantity of CVs produced and getting a fast buck. Clients, if sold to properly, would always choose to pay 30% fees for proper diligence to avoid the cost of bad recruiting.

More Serious Matters

So why did James Caan invest in the dog treadmill, much to the derision of his fellow panellists? The story goes, James arrived for his first shooting of the TV series and did some rehearsing before they went live. A short way into the filming, a wave of panic came over him - where were the documents and business plans for the participants so he could read up before they came on? Fellow panellist Duncan Bannatyne put him right - the person gets 20 minutes to pitch an idea, you have your money and 20 minutes to decide based on what you have heard. This is television and reality show business. After 5 days of filming James had not made an investment, remembering they film the entire series in one hit, because his conservative approach could not allow him to make a decision based on the model. So as he got up for another day of filming his wife asked him how it was going and he replied that it wasn't going as planned - he couldn't make a decision. She reminded him he could not go an entire series without making an investment, he would hardly be invited back if he did that. So when James got on set that morning, he backed the first person who was filmed, Sammy French and 'Fit for Fur'. I like that story.

The roaring success was Peter Moule's Chocbox. This guy had been in business a while, had sold more than £1m of his invention, made £350k profit and had £250k in the bank. He wanted £150k for 10% of his business. The other panellists scoffed and wondered why the guy wanted an investor, he had a business. James Caan was intrigued. Amongst all the wannabes who came on the show with the merest slip of an idea, no sales or proof of concept, no track record of success, no money of their own and just a vain hope of success, here was a professional guy who had the product, sales, track record and cash of his own. It was a gift horse. Peter Moule, meanwhile, had a plan.

James beat him up to get 40% of the company for £150k and they horse-traded so that 1% of equity would be given back effectively if Peter sold £1m more. By any measure it was a good deal and having seen the episode myself, I thought Peter was daft. Not so. James Caan's connections brought in a huge wholesale electrical distributor who negotiated an exclusive deal on the product in return to buy 5m units each year for 5 years. Peter Moule was nobody's fool. Overnight for 40% equity he had transformed a bumbling, profitable business into a multimillion pound success and market leader.

The corollary to the story was this. Some months later, Peter Moule called James and bemoaned the fact his entire month's work was receiving a single order from the distributor for hundreds of thousands of units, forwarding the mail to the factory and then creating one invoice. Success had made his role redundant. Further he had not touched a penny of James' money so there was £400k plus interest in the company doing nothing. So James, who received thousands of hopeful business plans a week many with 'electrical' in the heading, decided to set up a joint venture investment vehicle with Peter, 60-40 in Peter's favour. James would forward 'electrical' business plans, Peter would investigate them and together they would decide to invest or not. Peter Moule, from 20 minutes of TV in which 4 out of the 5 panellists poo-poo'd him, had become a real life Dragon.

Summing Up

I like James Caan. He is not just a hard-nosed businessman; he has true, ethical values in an industry that has forgotten them. In the era of web-based recruitment, his deep belief that reducing the cost of recruiting will ultimately cost hiring companies millions in poor recruits being jettisoned and reloaded is right on the money. The figure at senior level is 40% of all executives will fail in the first 18 months. It really pays hiring Companies to choose recruiting partners who understand them and share their pain when it goes wrong.

You know, I even think his book will be a good read.

Thursday, 26 June 2008

We Are All Equal, Just Some More Equal Than Others

Ageism is dead; Long live ageism!

We could go on for hours with these pithy remarks but how ground breaking is the news the the new Equalities Bill will finally put an end to ageism? I can tear up my gym membership and pour the Grecian 2000 down the drain - I can now look a prospective employer in the eye and say, 'I dare you not to give me this job. I have Harriet Harman's phone number, you know.'

But what is best about the new Equalities Act is that it is now legal for firms to discriminate in favour of females and ethnic minorities job candidates.

Legal Logic

I used a computerised Mr. Spock Test of Vulcan Logic on this part of the act and unfortunately it got a bit emotional and told me it did not compute. You see if you positively discriminate in favour of someone then in fact you have discriminated against someone else.

No, no, that's not what Harriet meant at all. What this actually stops is companies not just choosing from 'a pool of friends of friends' which is very rife in business as we all know - well at least in Government it is. You see when you positively discriminate in favour of a woman over a white male it is because the company in question 'Might think we don't want an all male team'. Very good point, if you have an all male team.

Right, so back to the logic machine. So two candidates with similar credentials and experience, one white male, one female for example. The Company in question invokes positive discrimination and chooses the female. So would the white male not think, 'Hang on a minute, she got the job because she's a female - that's not fair'.

Positive Discrimination, sound as it may appear, is one of those circular arguments similar to explaining time travel - sooner or later logic will go right around until you eventually disappear up your own backside.

But Harriet explains that we do not have to argue ourselves into oblivion. You see while it is now legal to positively discriminate you are not obliged to do so. As Harriet explains very clearly, 'The law at the moment is not clear and we are clarifying and saying if you want to do it, you can, and it makes it much more open.'

That clearly clarifies that then.

My Mr. Spock Program went into meltdown but before it did it posed a number of 'what ifs'. Suppose you have a female and an ethnic minority person going for the same job with similar credentials and experience? What if you have a significantly older white man and a female or ethnic person in the situation above? What if you have two females in the above situation, but one is gay or older? What happens if you have a female and an ethnic man in the same situation? The machine blew up at that point although the last output before it flickered off said, 'Why make this optional if you are sure positive discrimination is the right way to go?'

The Good Parts

It was not all illogical. The rest of the Bill deals with getting some sense into the wage gap making Companies more open about pay scales between men and women and that is a very good thing. Further, the Law will enforce doctors to treat pensioners who have been denied treatment because of their age, which is interesting as this seems to have inflamed in the last 10 years while the NHS has been bombarded with budgets and targets by the same Government. The caveat is that the same doctors can refuse the treatment on clinical grounds - would such a clinical ground be that the pensioner has less time left to live, I wonder? Even better though is that Age Discrimination will be outlawed in the holidays and insurance business. Quite where that leaves Health Insurance actuarial calculations I don't know.

But before you pensioners call Club 18-30 it's exempt. However, there is nothing stopping me being on your next Saga Holiday.

Are we Better off Then?

I have no idea. Certainly the Bill is unlikely to have been drawn up by anybody who employs people because it just seems so daft. Positive Discrimination is either right or wrong; making it optional is absurd. But more importantly, how on earth do you properly decide and act within the law? How similar do the credentials have to be to allow positive discrimination to be invoked? What are the repercussions if positive discrimination is used and it is subsequently proven all was not equal after all? Would the white male blighted by the decision have a case in law to claim actual discrimination as opposed to being positively discriminated against? Finally, why wasn't age included in the positive discrimination part - would that also have been logical if this was so much of an issue?

I can hear the Employment Law eagles tapping their calculators furiously as the answer is 'Billable Hours'. Hands up all those in Government who are lawyers by qualification! Quite a few - my, my is that not a strange coincidence.

Top Tips For Job Seekers

Following on from the last blog article, it is worth highlighting the tips I gave. Please also note Calx Europe has eBooks and courses designed to help you create your own strategy for your career move, how to 'Ace The Interview', 'Sex up your CV' (no not by Alistair Campbell) and create your 'Personal Value Proposition' and 'Personal Elevator Pitch' to differentiate yourself above all other candidates.

Please call +44 (0)207 193 2356 or email for more details.

20 Top Tips

1)Make your CV look professional - well laid out, everything spelt correctly, chronologically correct and your best achievements highlighted

2) Make sure you can corroborate all you put in your CV - do not 'ham it up' but 'sex it up'

3) Have references ready and briefed

4) Be punctual for interviews

5) Dress 'business ready' as if you want the job - first impressions and appearance count

6) Do your research - make sure you know about the employer's business and read news about them

7) Have your personal 'Value Proposition' rehearsed - make sure you are clear about what you can do for the Company

8) Make impact - have your personal 'Value Statement or Elevator Pitch' ready and stated early

9) Be confident and clear - don't mince your words, say them with confidence

10) Attitude - walk into each interview as if a) you want the job and b) you can get it

11) Reference your past - draw upon your knowledge and skills you have learnt at other jobs, courses or qualifications that directly augment your suitability for the job and help illustrate your answers to questions

12) Don't waffle or tell stories - make any anecdotes short and keep to answering the question

13) Ask questions - when you are invited to ask questions, have some well-thought ones prepared and even if they have been partly answered already, ask them again and for clarification

14) If asked questions about your age, sex, sexuality, marital status, childcare arrangements, race, religion, political views politely decline to answer the question - if pushed simply state under law you do not have to answer such questions

15) If you are at all worried that discrimination in the selection process has occurred ask for written clarification as to why you were not selected and you may also ask to have access to any and all interview notes taken. If you suspect discrimination has occurred from the answers and notes, seek professional guidance

16) If you have independent assessments such as psychometric test results or a Professional Profile, make sure you take copies to leave with the interviewer

17) Always ask 'How have I done?' and 'What are the next steps?' at the end of the interview

18) If at the end of the interview you still want the job, tell them you do and why. Say how you 'feel' about the company and the job and re-state your 'Personal Value Proposition'

19) Tell the interviewer what you thought of them - compliment them if you can

20) Follow up the interview quickly with either a call or better still an email summarising your feelings, re-stating your enthusiasm and 'Personal Value Proposition' and again ask for next steps.

The list is not exhaustive - call or write for more information.

Discrimination - Political Correctness Gone Daft or Right?

The UK Government's Laws to prevent discrimination in the workplace and specifically at interview for jobs are causing a stir but according to Which? research bosses are still asking taboo questions. According to Which? research the most popular questions are 'Do you plan to start a family?', or 'What are your childcare arrangements?', and 'Are you married?'.

The fact is the law is there to ensure that employers do not use a person's race, sex, sexuality, religious or political views or if a candidate is a parent of a young family as part of their selection criteria. What employers are typically not aware of despite the abundance of literature and web information is that firms found guilty of discrimination in any of the categories face unlimited fines and compensation.

The Which? research found employers still commonly asking several discriminatory questions at interview, some phrased more innocuously as to disguise their intent. Professional bodies advise that candidates should politely refuse to answer any such questions.

When Did All This Happen?

The sweeping changes in Employment Law occurred in October 2006 and it made it illegal to discriminate against employees and potential employees on the grounds described above. Employers found the implementation of the laws both confusing and the subject of debate within the legal community itself. There seemed also a very marked shift toward en employee having the right to 'protect' himself or herself from poor performance by invoking the law in their favour under fairly tenuous circumstances.

I personally attended a lengthy tribunal in which discrimination was alleged and I can say from personal experience that the subject is exceptionally complex.

I can also say from personal experience that the UK has very often been the first port of call for North American firms setting up base in Europe - some believed that continental Labour Laws were too onerous. The shift now puts the UK into a similar league as the rest of Europe and there is no doubt that many North American firms have been more reticent to start up in Europe and the UK specifically since October 2006. European Labour Laws are very different to US ones in particular where 'Fire at Will' still pervades in employment.

Is This All a Bad Thing?

Let's be absolutely clear, discrimination is a bad thing and should be driven out of employers' thinking. Let's also be clear, discrimination is still alive and kicking in all walks of life and particularly in business. Age plays a huge part in the selection process - too many times I have heard the phrase 'He/she is too experienced for this role' or 'He/she lacks experience'. Many of my blog articles subtlety ask questions and the responses are indicative of a still biased view on what experience, qualifications and job requirements are and how they relate to ability.

At interview stage I have seen too many instances of interviewers making judgements based on CVs or shaping questions designed to find out information which negates the candidate's knowledge and skills which may be appropriate for the job. The issue also lies in recruiter screening. Many hide behind the 'Client's Tick Box' which may be biased and so they screen people out via CV or interview for the wrong reasons. Recruiters gain little credibility sending candidates they know do not conform and only cause delays in getting fees.

Talent vs Tick Box

'Tick Box' recruitment is a numbers game - fast candidate turnaround based on poorly drawn up selection criteria and high fees at stake. The faster the turnaround the better. Recruiters and HR play a strong part in this and the further the recruitment is done from the hiring executive or employer the easier for this to happen - so outsourcing generally is a poor option and outsourcing abroad is just plain negligent because the filtering process becomes driven by process only.

And, above all, recruiters are less likely to be considered viable long term if they send certain types of candidate forward. It becomes the ultimate screening point because the employer could naturally point a finger at the recruiter and legitimately say 'I never laid that down as criteria', while the recruiter could say, 'The employer said minimum 5 years experience required' or 'needs to be flexible on location or hours'.

Most Common Discrimination

Without doubt age, sex and race still lead the league table in my eyes. As a for instance, in times when there is heightened tension between Christians and Muslims (let's not forget we are directly at war with two Muslim countries and you cannot avoid the issue in the media) it is impossible to gauge the effect this has on employers, hiring managers and recruiters but I would suggest that it has a profound one. There is also no doubt that employers, when selecting new employees, are trying to find out the child care arrangements of parents and how that will affect their ability to do the job properly in their eyes. Finally, there is absolutely no doubt that employers are screening potential new candidates on age, whether too young or more likely too old. And there is no doubt that ageism is rife in the workplace, we can all cite experience of this.

What About Employers? Don't They Have Rights?

Has this all gone too far? What about an employee who exhibits unacceptable behaviour or poor performance and when questioned about it 'plays the race card'? Suddenly the person becomes 'protected species' within the workplace and the law overly protects people on some of the flimsiest of premises, making it incredibly difficult and expensive for employers to manage their business effectively.

What happens when a business hits bad times and cuts have to be made fast in order to survive? Unwieldy, protracted and almost self-defeating processes have to be invoked and suddenly survival for the rest of the employees because the cuts don;'t have the desired effect fast enough becomes a real threat.

The Quest for Talent

Personally, I see such poor techniques for recruitment in both hiring executives and recruiters that I have grave concerns that prejudices do play a huge part in the process. I think that employers do not spend enough time defining the talent they require for roles that will fundamentally affect their future profitability because they have preconceived ideas on what sort of people they want to employ in the main. They have a closed mind approach which defaults to 'Tick Box'. That suits the recruitment industry as it makes it simple to phrase adverts, search on keywords and it makes filtering at interview easy. It ensures numbers are kept high.

Meanwhile 40% of all executive recruits will fail within the first 18 months. Nobody knows fully what the figures below that point are but in the sales environment I see many firms use their 'quartile measurements' to continually isolate low performers and that usually is 20-40% of the sales staff underperforming at any time.

When you start thinking about how much those mistaken hires are costing the business in terms of lost opportunity cost and wasted money, it really does pay to emphasise skill, knowledge, leadership, innovation, creativity, and talent above things like knowing their sexual preferences, marital status, religious beliefs, political stance or date of birth. Talent rises above all those factors and is worth looking for.

Finally, Some Tips For Job Seekers

- Make your CV look professional - well laid out, everything spelt correctly, chronologically correct and your best achievements highlighted
- Make sure you can corroborate all you put in your CV - do not 'ham it up'
- Have references ready and briefed
- Be punctual for interviews
- Dress 'business ready' as if you want the job - first impressions and appearance count
- Do your research - make sure you know about the employer's business and read news about them
- Have your personal 'Value Proposition' rehearsed - make sure you are clear about what you can do for the Company
- Make impact - have your personal 'Value Statement or Elevator Pitch' ready and stated early
- Be confident and clear - don't mince your words, say them with confidence
- Attitude - walk into each interview as if a) you want the job and b) you can get it
- Reference your past - draw upon your knowledge and skills you have learnt at other jobs, courses or qualifications that directly augment your suitability for the job and help illustrate your answers to questions
- Don't waffle or tell stories - make any anecdotes short and keep to answering the question
- Ask questions - when you are invited to ask questions, have some well-thought ones prepared and even if they have been partly answered already, ask them again and for clarification
- If asked questions about your age, sex, sexuality, marital status, childcare arrangements, race, religion, political views politely decline to answer the question - if pushed simply state under law you do not have to answer such questions
- If you are at all worried that discrimination in the selection process has occurred ask for written clarification as to why you were not selected and you may also ask to have access to any and all interview notes taken. If you suspect discrimination has occurred from the answers and notes, seek professional guidance
- If you have independent assessments such as psychometric test results or a Professional Profile, make sure you take copies to leave with the interviewer
- Always ask 'How have I done?' and 'What are the next steps?' at the end of the interview
- If at the end of the interview you still want the job, tell them you do and why. Say how you 'feel' about the company and the job and re-state your 'Personal Value Proposition'
- Tell the interviewer what you thought of them - compliment them if you can
- Follow up the interview quickly with either a call or better still an email summarising your feelings, re-stating your enthusiasm and 'Personal Value Proposition' and again ask for next steps.

In the mass of candidates out there, it really is important to make sure you stand out. Calx Europe has eBooks and runs professional courses to help candidates get the jobs they want.

For more information please call 0207 193 2356 or write to - today.

Monday, 23 June 2008

Where Next for eBay?

This year's annual eBay gathering eBay Live was not the usual happy-go lucky affair celebrating the rise of the individual, small time seller. The expected 10,000 attendees was rumoured to be much reduced as the auction pioneer experienced the effects of boycotts from the small sellers it built its business on.

One of the more controversial areas in the firing line is the new eBay seller transaction ratings. In a move to stop retaliatory negative feedback, eBay has introduced a new system where sellers can only leave positive feedback ratings. Lorrie Norrington, President of eBay Marketplaces said, 'Building trust is a priority for us and it should be for you too. But some of our users have developed bad habits.' It was part of a talk that received much booing.

There was much talk of small sellers quitting and moving to rivals, many talked of lobbying Google to become a credible rival. Meanwhile eBay is changing. CEO, John Donahoe, stated 'The Company wants to operate less like a car-boot sale and more like a shopping mall'. Therein lies one of the issues.

The issue of trust in using eBay is a major problem as it has long been dogged with an image of dodgy dealers, scams and fraud. I have personally been on the end of an attempted scam when having bid on a car and failed to win, I was offered a 'second chance' at my derisory offer price. Being the trusting sort and tempted by an amazing bargain I was completely sucked in by the official-looking eBay email and so ignored the fine detail that the transaction was to take place outside of eBay. I was given a phone number, email address and details to transfer the deposit of £2,000 by Western Union. Looking back, I was really dumb, but I can understand how people get sucked in by this official-looking scam. Luckily, Western Union came to the rescue and put me straight onto a special security department who informed me in the London area alone, eBay scams were running at the level of around £1.6m per week. Even that could buy enough petrol, gas and electricity for an average British family for a few weeks. Meanwhile, eBay had an email address I could send the attempted fraud to from which I got an automatic reply. I had supplied the email address and phone number and to my knowledge none of it was followed up.

How is the eBay Model Changing?

In the quest to find its nirvana, eBay is moving its model evermore away from its auction roots - the idea a seller could put a reserve on an item and over a short period buyers could bid against each other and buy at the highest bid. In the last quarter of 2007, fixed-price sales accounted for 42% of the total revenue for eBay which is now a staggering $60bn last year from 233m customers. However, despite a 22%leap in profits thanks to a superb performance by its Paypal subsidiary, the eBay core business was pretty flat and listings rose only 4%. Its business is vastly underperforming the ecommerce market where Amazon is growing at 32%.

Part of the cause in underperformance of its core business is that small sellers are not the only ones affected. Larger sellers like who have sold over $13m on eBay have estimated to continue their business under new fee changes would increase selling costs by 40%. The claim is that large discounts for the massive sellers will be offered by eBay and there will be changes in its search processes to favour them with good feedback.

eBay seems to be looking to drive toward the Amazon model. Its major issue is that Amazon does not have the weight of all those small sellers to carry and it has virtually zero fraud. What happened to the integration of the Skype acquisition - well there was no mention of that particular 'weight' around the corporation's neck.

Is This The End of The Housewife Millionaires?

So does this signal that eBay is about to ditch the generation of small time business folk who from their homes bought and sold items and made a very healthy living out of it? The stay at home entrepreneurs who used eBay initially to get a supplementary income and found that their reach was way beyond the boundaries of their home and all across the US and beyond. Will this be the end of the era when anyone could pop onto the web, participate in a short auction and find a secondhand barbecue for the Summer months at a bargain price?

Inevitably businesses have to change to maintain their momentum and deliver consistent growth and returns for shareholders but I cannot help feeling eBay has rather cynically ditched the very customers who fuelled the staggering growth of its business. I also think that it has a long, long way to go to match the simplicity, logistical expertise and image that an Amazon has in terms of trusted buying. The difference in the model is that Amazon is a true internet retailer - in charge of its own logistics, product buying, selling and payments; an end-to-end online store. eBay is a platform for traders to sell and buyers to buy, only the payment side is owned by eBay the rest is delivered by the traders and buyers amongst themselves. It still means that eBay is very dependent on the trustworthiness of those who use its platform and their logistical expertise and honesty which means the eBay brand will forever be the sum of its traders.

eBay might have done well to contemplate that as it moved toward the goal of an online shopping mall, because once you have ditched the small market traders there is no turning back should eBay fail to achieve its goals. I think it's a massive gamble.

Friday, 20 June 2008

So you think you are a good manager?

Did you know 9 out of every 10 employees say they have worked for a bad manager? So claims research carried out on behalf of UK law firm Eversheds. The research further says that 97% of employees want their bosses to communicate better.

'That can't be me,' I hear you say. 'I use email, I have a mobile phone, a Blackberry, Instant Messenger, am on Facebook, Bebo, Linked In, Twitter - heck I am participating in Web 3.0 fully, how the heck can any of those ungrateful employees say I don't communicate? The key point is that THEY don't listen.'

Evolution in Communication

1894 - the dawn of the communication era when the first phone calls were made and someone had the idea that a free wire to every home would allow postal services to 'monetise' real-time communications rather than mail. Fast forward to 1989 and the birth of the internet and we are undergoing 7 year cycles we are told from Web 1.0 which was essentially the era of 'Find me', Web 2.0 was 'Join me' and Web 3.0 in which we are now living unless you hadn't realised is about 'Follow me'. Will Web 4.0 be the era of 'Oi, what are you looking at?' or 'Stalk me'? The very act that you are reading this, written by a guy in London connected to the web via thin air but presented to a web population of over 1 billion people world wide, is evidence of the 'Follow me' era (you can follow me also on which works over Instant Messaging and your PDA/phone - go on you know it makes sense.....really).

So why they heck are 97% of employees saying bosses don't communicate? Bosses have never been more accessible and communicative - they don't even have to have an open door anymore, the communication network means they can be seen while working at home by any one or more fancy devices.

The Lost Art of Communication

As we enter each phase of web and communication development it seems that the exciting part is the ability for each individual to be found, joined and followed. This is a very narcissistic point of view. If you think that is a big and clever word for a chap like me it's because I borrowed it from Graham Jones, an Internet Psychologist who is a co-member at my club. Not one of those snooty clubs in London that don't allow Ladies, I am talking about The Ecademy. I think Graham has a point. The web has exploded all around us and it provides us with such an amazing platform to communicate and yet we have siezed it in the main as tools for self-promotion.

So when we communicate, are we really just saying what we want to say and people hear only what we say, yet that actually is not what they want to hear? I have read that back to myself and convoluted though it may sound, it makes some sense.

I remember the late Robin Cook, who a few months into his job as a Cabinet Minister, woke up one day and found that Britain had overnight become involved in a small fracas in Sierra Leone or somewhere similar. As we he pulled on his dressing gown and watched the TV he must have called his Private Secretary (no not the one that may have been on his 'company's books'-type who also makes the breakfast, although I did see him with his then 'Secretary' on a train to Brussels once doing anything but taking notes, the rest of that is history), and he demanded why had no one told him. The be-suited Civil Servant cleared his throat and probably said that the memo was in his 'Red Box' with all the other memos which he had declined to read. The Ministerial equivalent of a 'cc' on an email which did not get read.

The point being that the explosion of communication has its downside - too much information can lead to filtering otherwise our poor heads would simply explode. People want knowledge, direction, information and news but they would like relevance, context and delivered via they way they work, with a skinny latte to go if you please.

What can Managers do Better?

So if 9 out of 10 of you ungrateful people who I have ever managed think I'm that bad and 97% of you who didn't bother to listen to me wanted me to communicate better, what the heck was I saying that a) you didn't understand and b) didn't want to know? And for that matter, what on earth did you want me to say?

As I sit here, bristling with communication devices - I have Skype, email, IM, phone, PDA, camera, headphones, loud-hailer and even a plain old landline - I have never been more able to communicate but still it isn't good enough? I haven't got time between answering all the emails you people below me send clogging up my Blackberry-style device to answer everyone or for that matter think of what you might want to know. Go read my Twitters, my blog and free downloads on my website - somewhere in all that guff will be what you need to know.

Is that standard management practice or have I got it wrong? Perhaps this Web 3.0 'Follow me' stuff is going to take us further away from what is required. The problem with all this self-promoting, follow me webby communication is that it is very much like Robin Cook's dilemma. How do you know what is relevant in all this communication? Do people really want to know once I have finished this blog article I will be walking the dogs?

Management 101

How I hate such pithy lines - what the heck is '101' anyway? What I mean is that sometimes we have to go back to basics. In a world full of twittering, IM'ing, pinging, running up the flapoles and see who saluting, reaching out, bouncing off, internalising perhaps the more we communicate the less we say.

Certainly, the numbers don't lie - 97% reckon managers could communicate better. Wow. So as you hunch over your Blackberry reading my twitter advertising this blog on your journey to the office, don't delete it as irrelevant. Take a look, think about it and then perhaps the first person you see who works for you just take them over to the photocopier and ask them 'Do I say anything that makes sense to you? What actually to do you want to hear from me that will help you do your job better or help you develop?'

I know it's whacky, but it may just catch on. Then again they may just look at you as if you "just don't get it". But it's worth try.

Thursday, 19 June 2008

Who Tracks Quality of Recruitment in Your Company?

According to research by US firm Manchester Partners, 40% of executive hires fail in the first 18 months.

I have to say my experience puts the figure closer to 50% but it is still a staggering proportion. Recruitment costs vary but if you took a rough average of 30% of the executive's first year salary you would not be far out. Then multiply it by the remuneration you have wasted on a poor recruitment decision over the 18 months and you will start to understand why bad recruitment is costly. Then add on the opportunity loss for not finding the right hire in terms of the profit not obtained because the hire failed to achieve finding it, suddenly you get an inkling of the true cost to the business in both cost and missed profit opportunity.

Accountability for Poor Hiring

Going back to my article on responsibility vs accountability, is there a person in your company or organisation who is specifically accountable for making poor hiring decisions? I am sure there is not. The last CFO at Lehmans took the blame for the company's massive losses - incredibly she had only been in the role for 6 months. Why was the person who made the appointment similarly not fired?

The fact is that there are few executives who are held accountable for poor hiring decisions - and therefore the same mistakes will be repeated, year after year. The same staggering costs will be associated with the poor decisions and the loss of opportunity will drag on the profit performance.

The cost of bad recruitment is one of the largest underlying drags on corporate profitability and it continues every year while executives are not held accountable for their poor hiring decisions.

I have written a free downloadable document on the subject, I hope it will illustrate the issue more clearly.

Where Does the Fault Lie?

It would be convenient to blame recruiters for the whole problem. After all, beyond a period of 3 months they usually have zero accountability for poor hires. Given most executives are on an initial guarantee and given it would be an amazingly poor hire that gets found out in 3 months or less, the recruiters are virtually guaranteed their money once the candidate starts work. They have zero incentive to help the client or candidate succeed - in fact it may pay to see the candidate fired after say 6-12 months as they more than likely will get engaged to replace the hire. That's 30% on average of the first year remuneration for a few actual days of work and a couple of meals maybe. Contingent or retained, neither have skin in the game to work long term with clients in a real sense, they see recruitment as filling slots in the main and pretty much easy money.

But recruiters are not all the problem. HR Depts are looking to drive down costs in the face of poor recruiting and so they exacerbate the problem. Larger companies even outsource the whole shebang, abdicating even the responsibility for recruitment let alone accountability - just to hit the cost line. Reverse auctions and outsourcing are becoming rife in the industry - I mean, how can an Eastern European based call centre add value to the recruitment process? Am I really missing something here?

Then there are the hiring executives. Under pressure to hit targets and manage their staff, they hardly have the bandwidth to do a good job on recruiting - they need to offload the issue as much as they can. Again they are happy to abdicate the accountability to some other area, yet the new hires will be crucial to their future performance - why would you take that chance?

So much of modern day recruiting is about vast quantities of cheap advertising and jon boards to generate quantities of CVs and then match as many words as possible to produce enough warm bodies to statistically satisfy the requirements. It is a numbers game - throw enough manure at the wall and at least some will stick.

In general, the quality of hiring is fast becoming a process-driven, box ticking exercise which no one is really accountable for in the true sense. It is small wonder why such a huge percentage of executives fail within 18 months in such an environment.

Turning The Tide

As we enter more uncertain and recessionary times, costs to the business come under the magnifying glass and the cost of bad recruitment becomes an even bigger issue in times of less profitability. Recruitment processes and techniques become far more important to companies in such times.

When you think about it, if an executive is recruited and lasts say 5 years in the role but cost 100% of the first year salary to recruit, then most CEOs would cough at the cost but take the equation given the extra time they had the executive performing to plan or better - with all that incremental profit gained over a poor executive lasting only 18 months. The actual cost of recruitment then is not really the issue - it is simply the quality.

Quality is derived from thought and planning. It is absolutely pointless starting a recruitment process after headcount is signed off as there is minimum lag of 3 months required to find a candidate, which means the impact on performance in any given 12 months is at best 9 months but more realistically 6 months given ramp up time. Recruitment planning should be done BEFORE the headcount is signed off.

Recruitment viewed as slot or headcount filling will inevitably lead to a high proportion of poor hires as managers hit time constraints to get people onboard and therefore take second best or worse still compromise too far on requirements vs candidates returned. Contingent recruiting where the recruiter is engaged only when the headcount is signed off offers little value to organisations in my opinion and certainly does not justify he very high fees associated with it. Fully retained recruiters have absolutely no incentive to find the right fit - there is little accountability on guaranteed, non-committal advice so expensively given.

In reality recruitment should be viewed as a constant process because it is the company's investment in the ability to attain its future goals.

A Novel Approach

I am not a recruiter but as part of my engagement with clients expanding internationally I do find them exceptional talent to man their subsidiaries. Just like any other part of my business and services it is performance-related and is all about results - anything less is of no value to my clients. So while I may take retention fees for my time invested with my client, my upside is all earned on the performance of their international business. If I find and place a candidate for a client, I am paid my upside in direct proportion to that candidate's performance in the role against pre-agreed targets over a pre-agreed time. It is my skin in the game and it is all about results and accountability.

I think it is time executives were penalised for bad hiring decisions, I think HR should be incentivised not on fill rates and driving down fees but increasing quality while CEOs should have full visibility on the actual cost of bad hires and have it as a constantly reviewed metric in their business.

As we approach tougher times, there is an urgency to get this right. I do not have all the answers but I would stand accountable alongside any client if I had contributed to poor hiring decisions, so I challenge any hiring executive to try my services and I will help them put money straight back on their bottom line. I am really looking forward to your calls.

Tel: +44 207 193 2356

Wednesday, 18 June 2008

David Davis - Political Stunt-man or Hero to the Cause of Civil Liberties?

Well he made his way to the Treasury and resigned as an MP, but unlike the last high profile resignation (Tony Blair) he fully intends to continue as a career politician at least. I'm talking about Conservative (former) MP, David Davis and his bizarre method of making a stand against the Government's newly won legislation which allows authorities to detain suspects up to 42 days without charge.

I am a huge believer in freedom and particularly civil liberties and in general the need to hold someone without charge for 42 days I believe is a massive erosion in civil liberty. But when used in the context of terrorism and its prevention, I think it requires more flexibility. I do ask the question, what can be found out in an extra few days that cannot be found out in existing detention time but I understand the potential need. I also think that we need to allow more forms of evidence to be used such as phone-tapping and in some ways would this negate the need to hold someone that long?

Political Stunt

But you cannot help feeling this is just a self-seeking political stunt by Davis designed to embarrass the Government and bloody Gordon Brown's nose. As I write, Labour have confirmed they will put no candidate against Davis in the by-election. So he will be just running against a few other candidates as the Liberals have also withdrawn.

It is also a weird system that allows an MP to resign and then fight the by-election again. It's an expensive and wasteful use of energy, time and money. Initially I thought he had voted with his true conscience and actually stepped away from politics in disgust, instead it seems to be just some puerile gesture to gain publicity and wound the Government.

Is the Cause the right one?

In reality, there are a lot of issues worth debating with this Government in a by-election. On a day when 4 British soldiers died in service in Afghanistan, bringing the toll in the last week alone to major levels, should we not be asking why are we risking the lives of our young, brave professionals in an increasingly bloody and futile war? The aim was originally to find and capture Osama bin Ladin but it appears that was never an agenda item. And to Iraq as well, a far more questionable war indeed. So when Davis considered that the detention of terrorists was worth staking his political career on, did he not think that the public may be equally concerned about civil liberties as terrorism? It is arguably a balance betwen freedom and security when used properly.

In my opinion, I think this is not where the fight against the Government should be. I think this is personal grandstanding and headlining designed to increase Davis' own popularity and try to further his career. My opinion of him, such as it was before, has gone down appreciably.

Tuesday, 17 June 2008

Responsibility vs Accountability

Definition of Responsibility, courtesy of the Merriam-Webster Dictionary:

1: the quality or state of being responsible: as a: moral, legal, or mental accountability b: reliability, trustworthiness
2: something for which one is responsible : burden - has neglected his

Definition of Accountability, courtesy of the Merriam-Webster Dictionary:

: the quality or state of being accountable; especially : an obligation or willingness to accept responsibility or to account for one's actions - public officials lacking accountability

In this day and age of finger pointing or what is often referred to as 'blame culture' or to put it in legalise 'litigious society' there is often a tendency to blame others. At some extremes it is the trigger happy, ambulance-chasing lawyers as parodied in the Simpsons where 'no-win, no-fee' lawyers bring cases against companies or authorities for seemingly innocuous and possibly self-inflicted accidents. It is perhaps indicative of human nature that we always want someone or something else to blame for our misfortune or even our failings (cf: my earlier blog post on the subject of failure).

However, equally we can look at the issue from the other viewpoint that asserts for instance, that if a car manufacturer makes vehicles with faulty brakes that cause a number of accidents, surely it should be brought to book for the consequences. In this instance, the manufacturers will do everything within their power to deny or pass on responsibility for the accidents even if the facts glare them in the face.

So this article looks at when someone or something assumes responsibility, should there be an equal expectation of accountability?

Assuming Responsibility

When I was a young manager, due to being in the right place at the right time and attrition of managers above me, I got landed with, at the tender age of 26, full responsibility for a whole division of 56 people, turning over £13m and all the graphs pointed upwards. It was a massive step up for me and I couldn't begin to tell you how proud I was to be promoted. For a while, everything went according to the script - sales continued to rise and there was little I had to do to keep it going, it seemed a little easier than I thought it would be. Then came the bombshell. Around 70% of our business was based on DEC products at a time when DEC had the MicroVax which was all the rage in the City - orders were put out with the milk-bottles. Then DEC hit some margin issues and decided, pretty much without notice, to revise their strategy and take the major account business themselves through a new organisation called DEC Direct. In order to prevent companies like ours continuing to service those customers, our discount structures were adjusted and it became unviable to sell to these accounts. With over 70% of our DEC business in such accounts, overnight the party ended and I faced graphs hurtling downward.

I had failed to understand the implications and because of it our division hit a wall, People started to leave, we had to make redundancies and we had to re-invent our business and do so fast. It was a baptism of business fire in a short space of time. A year later and we had retrenched but the business was smaller and I had aged.

What it taught me is that responsibility is huge burden.

Assuming Accountability

What I hadn't realised at the young age was that with responsibility comes accountability, in equal proportions. It is all very well to accept the promotion, a flashier car, and the kudos of managing a team of people who look to you for guidance and wisdom, what I hadn't expected was the weight of those eyes and those of my executive team above me burning holes in my back when things started to go wrong. Despite my ifs and buts about what our lead vendor had done, I was responsible for the plan and accountable for the results. As the Americans would say, 'That's why you're paid the big bucks'. And so I learnt very much the hard way.

I can't tell you much it hurt me to have to make people redundant for the first time in my life - literally grown men cried in my presence - and how lonely I felt in accepting the blame for the catastrophe that lay before me.

But if there was one piece of credit with which I emerged from the episode was that I understood and accepted what responsibility and accountability really meant. It is facing up to your mistakes, your failures and dealing with it.

Learning the difference

Having had my epiphany in business, I quickly learnt that accepting responsibility had its downside and so it was best to plan with that in mind. It did not stop me from making mistakes and failing again as in my own business later but I never again flinched from accepting the responsibility for my actions in business. There are always things you cannot account for but that's part and parcel of doing busines, you just have to take it on the chin, absorb the lesson and change your plans to accommodate and mitigate. From it you can definitely plot a better route if you can accept accountability.

I do get annoyed when CEOs of major companies fail to be accountable for their actions. I don't want to harp on about it but the current economic crisis has cost very few senior jobs so far, while in government we see sloping shoulders daily for serious errors for which ministers and their senior aids have responsibility and it seems no accountability.

Repeatable behaviour

Linking to my early blog articles, once again it is the thread of denial and failing to accept and embrace failure which leads to lack of accountability. This becomes a repeatable behaviour. Executives and ministers who use these blame-shifting tactics ultimately make big mistakes for which we have to pay. I cannot help thinking that the war with Iraq which has cost the lives of too many brave soldiers from several countries, mainly USA, is a direct result of repeatable denial of accountability. As President Bush glad-hands people on his farewell tour as did Tony Blair, he seems to be oblivious of the legacy of two terms of office which has left the world a much more dangerous place.

The CEOs of most of the major banks and their executive and trading teams will never repay the vast monies in bonuses they have earned on their trades despite the fact they have written off almost all of the gains in the last few months. They will survive by invoking the theory of market forces betting against them whereas most people on a bar stool at your local pub or bar could have accurately predicted the crisis we are in financially. And even when they get fired they walk away with hundreds of millions of dollars as in the case of outgoing CEOs at Citigroup and Merrills.

Why accountability is important

So rather than pick on a negative illustration let me turn to the positive. One of my favourite films was Ron Howard's dramatisation of the ill-fated real life mission to the moon, Apollo 13. By this time the amazing feet of taking men to the moon, landing and safely returning had become old-hat so much so that TV stations did not even air the launch of the mission. A day or so into the mission, an explosion in an oxygen tank ruptured the craft and vented the precious gas and caused a failure in power - the craft with its human contents was in mortal danger.

The catastrophic failure of the mission was fast becoming 'Nasa's worst disaster' according to an official to which Gene Krantz, the Apollo 13 mission controller, replied, 'With respect, sir, I think this will be our finest hour.' That moment, whether precisely true or not, was when Krantz assumed total responsibility and accountability for the outcome of the mission. To take a JK Rowling observation, failure had allowed Krantz 'to strip away the inessential' and concentrate on one goal to the detriment of all others - to get the astronauts home alive.

The rest is history but what that assumption of accountability did was to allow the team to work on a single, collective goal with the freedom of a lack of accountability for the outcome - that was Krantz's job. When the Grumman Rep was asked if the Lunar Excursion Module could be used to be a life-raft for the crew, he waved his hands and said the craft was not designed for that. Krantz immediately takes the accountability from him and the Rep instantly works with the team to help solve the problems.

The illustration here, at the extreme of real life, is that accepting responsibility and accountability in equal measure, gives those within your teams, company, organisation the power to do their job with a single goal in mind. It is powerful way to empower your staff and join into to common goals.

Applying the principle to business

So how can the Apollo 13 'success' be applied to business? Well, let's take a perennial example of management abdication of accountability - the convenience of Call Centre-based customer service centres. We could go on about this as everyone has had enough bad experiences to prove the concept is flawed but bear with me. The biggest problem with call centres is not that they are manned by idiots but that they are manned with intelligent people who are unempowered. How many times have you called a call centre with a problem or issue and you get stone-walled so you ask to speak to someone in authority? The line comes back 'I am not allowed to do that', or 'There are no managers here', or ' I will take your number and have them call you back' (a neat fob off) or the ultimate sin 'They don't take calls'. The last one is the one that drives me insane - why would a company want its managers or directors not to take customer calls? It is a complete and utter abdication of accountability, let alone responsibility. It basically says, these people, if they exist, don't just not care but taking calls actually gets in the way of their work such as it may be.

I will make a basic assertion - any company that tells managers they should not take calls from customers has no right to be in business.

The power of accountability

I will give you an example of the power of accountability at work. When I was MD at Genesys I would occasionally get an explosive call from a client whose meeting had gone wrong and, because they could not get any gratification from our support staff, they got hold of the MD's name and called. It surprised me as our complaint statistics were always encouraging. But whenever I got such a call I went overboard to sort it out, inevitably giving away a large credit to pacify the customer. Meanwhile, our support staff were complaining that they should not have to handle abusive customers, rare though it was. The penny dropped eventually when customer support staff, not me, suggested that it would make a huge difference if they could, at the time of initial call, have the responsibility to hand out credits if need be in order to stave off escalation. We decided to give it a go and authorised credits up to the cost of the call. The effects were dramatic. I certainly got no calls at all from irate customers but amazingly credit notes fell immediately and the support staff were far more motivated in their work.

By my taking accountability for the results, the support staff had the freedom to exercise their judgement on each call in order to achieve the goal. The only calls I got afterwards were ones to praise individuals who had helped out.

The lesson to learn here is brilliantly illustrated in Geoff Burch's book 'The Writing is on The Wall'. By management assuming accountability and devolving responsibility you can get dramatic results in terms of customer service and loyalty while motivating the staff through empowerment.

As a final illustration, I recently had an issue with my gas bill from E.On to the tune of £900 extra charges for 6 months of use - something amiss in a reasonably average household. The customer service rep who I shall call James could only tell me to read my meter and send in the result. Knowing the meter reading was not the issue, I asked to speak to a manager as clearly the conversation was going nowhere and out came the usual lines of the managers don't take calls and I don't know who the directors are, which are all red rag to a bull for me. Having ended the call in a slight rage I called the parent company in Germany who directed me immediately to the Director's office where a nice lady listened, argued a little but subsequently came back not only with the correct bill but with a goodwill gesture too. If only the young representative in customer service could have been empowered to do this, instead the poor guy will probably get disciplined for not fobbing me off properly.

Accountability leads to empowerment

Accountability by senior managers allows the organisation to have the freedom to exercise its imagination and creativity to get results unencumbered by the restraint of firing if it gets it wrong. What is more, by taking on the burden of accountability it will foster accountability in your team members who will more readily buy in and play their part in achieving the common goals - feeling the hurt if they are not achieved but sharing the glory when they are. Few business people really understand the difference between responsibility and accountability - but I always think it is on the one hand accepting a flashier car to do a job and on the the other earning it.

Are Your Social Network Contacts Owned By Your Employer?

I read recently on Peter Gold's Talent Technology Blog and in yesterday's Daily Telegraph that a former employee, Mark Ions, of recruitment firm Hays has been ordered to hand over business contacts built up on his personal page of the social networking site Linked In.

The Telegraph article says, "The decision is one of the first to highlight the tension between businesses encouraging employees to use social networking websites for work but then claiming that the contacts remain confidential information at the end of their employment".

The ramifications of this decision are quite scary. While it is implicitly obvious that if your firm has invested in CRM technology like or ACT! as a business tool to manage your business contacts and interactions that you regard the contacts and information contained as the company's property and therefore are covered by confidential information clauses in your contract, it is almost certainly not the understanding of most employees that the business contacts they accrue on sites like Linked In are also bound by these contract clauses.

Now there may be special cases at work here. The recruitment industry has particularly taken to sites like Linked In which has revealing profiles of over 23 million people with current job titles, career information and sometimes contact information. It has been a particular gold mine for recruiters to not only find potential candidates for jobs but also to network as widely as possible to a) increase their chances of getting recruitment assignments and b) increase their working database of potential candidates. If you were to look at certain recruiter contacts on Linked In you would quickly realise that their 2500+ connections cannot possibly be anything than their office Rolodex of business contacts.

How will this affect Social Networking in Business?

This is perhaps the most important question. Linked In's official response to the decision was from 'a spokesman' who said that its members should not use the site to publish information that they have no right to disclose, such as insider, proprietary and confidential information. "It is important that customers abide by their current employment contract and ensure that they have the right to use the information provided."

This is a surprisingly uncontroversial statement from a company that thrives on business networking. This is a company that has built up its 'customer' list based on individuals signing up and freely entering their information on a publicly-viewed site knowing full well that their details can be viewed by other members of the site. Further many of the members have listed their interests as seeking new job opportunities. In other words, they could be construed to be 'fair game'. In most instances, sign up is for free. Similarly, the search facilities to find people by job function, keywords, locations, company names are quite sophisticated and lend themselves to recruiters or similar browsing to find juicy contacts for their next sale. Linked In has positioned itself well to cater for both needs, so why the non-committal response to this case that damages freedom of use by the individual?

Linked In has more recently started working with Corporations to look at providing some different services for companies. Advertising for jobs and services is one important area but there is no doubt that Linked In is slowly, having accumulated a vast list of business contacts from around the globe, repositioning itself as an online CRM system of sorts.

In Linked In's attempts to further 'monetise' its member base it is now marketing itself as a Corporate service having grown from a focus on the individual, not worrying who the person worked for. It is a subtle change in focus that justifies the spokesperson's statement perhaps. But perhaps gone are the days of Linked In being a Social Network, it is now very much a Business Network and is in the camp of the employer.


I should mention that I am not a lawyer and so consider this as my personal opinion only and should not be considered a legal opinion.

The clear ramifications are for those who do their prospecting via Linked In as part of their company's business. Recruiters fall slap bang into this category and Hays is the first to make a call on this and test it in law - with a successful outcome. But does this also affect everyone else who uses Linked In or similar networks at least in part for prospecting for business on behalf of their company or themselves in company time?

I think it does and certainly it calls for people to review their strategy in using Linked In at a personal level in order to increase their business network and win more business for their companies. Recruiters should certainly be concerned about this and seek clarification from their employers. I would suggest that employers should also be more clear on what constitutes confidential information as contract clauses are notoriously woolly and online social/business networking is a relatively new phenomenon which needs some special attention. Sharpen your pencils HR managers.

The interesting aside is how Mr. Ion's solicitors (Jonathan Stokes Solicitors) presented the case on his behalf. From my point of view, I would be concerned about data that is not within the Corporate firewall or VPN and freely available on the internet being considered company confidential, particularly if it has not been paid for.


Linked In has been slow to monetise its membership from a Business-To-Business stand point. There are firms such as Jigsaw who have made a business on exchanging 'business cards' between contacts to build up data lists which can be filtered and then rented for mailing use. There is already plenty of legal thought about this type of service as the act of giving someone your business card or details has an inherent confidentiality associated with it and it does imply that the data is not to be distributed without permission - yet Jigsaw relies on that free distribution.

Linked In seeks the best of both worlds. It wants the data to be freely available and has the consent of its members to make it so, but it also wants to side with employers who encourage its employees to use Linked In to further its business, ultimately because it wants those employers to spend money with Linked In and therefore give some comfort on use of data afterwards.

Should we be scared?

I think so. This precedent has wide ranging implications beyond Linked In, although it is the major business to business network at the moment, others like Plaxo, Xing, Konnects, Viadeo etc fall into similar categories. With the rise of instances of Corporations involving themselves in networks such as Facebook, Flickr, Twitter, Bebo and the rise of the Corporate position of 'Chief Networking Officer' the emphasis on the 'Social' is moving toward the 'Business' in networking.

Then again, to monetise all those juicy names, we knew it always had to. The party may well have been spoilt.


Yesterday Linked In by coincidence raised finance of $53m valuing the company at a tad over $1bn. In discussing the implications of the ruling in favour of Hays, a friend pointed out the possible implications for each of us who has a profile on Linked In. We postulated that if Hays claimed some kind of 'possessary' title over the data accrued by the employee, then we wondered if that was made aware to the people who had connected with the Hays employee? Or indeed were any of us by connecting to anybody who solicited a connection, implying that our contact information could be used by a third party (i.e. the person's company) to use the data in whatever way it wished - for instance to be added to the corporate mailing list? Or indeed are we always assuming that we are connecting with an individual who we are think will help us achieve some of our goals like get a new job?

I am not a legal person, but it certainly I have experienced daft emails from recruitment companies advertising inappropriate jobs because of their loose keyword selection. Am I now to assume that when I connect to anyone at Linked In I am implicitly handing over my personal data in Linked In and contact information for use by a third party to do whatever they wish with? Or is there a law that protects me here in the UK or abroad? I know some will leap up and shout 'Data Protection' but the question might arise, where is the data stored in the UK or USA and so where is the governing law? There may be perfectly good answers to these concerns but at a time when Linked In have raised $56m is there a potential that the sheen on the service has been tarnished?

Monday, 16 June 2008

Failure - Crucial Factor in Success?

I recently asked a small audience of pretty powerful business types, one of whom had recently received over £1m of bonus while his employer had written off billions, if anyone had ever failed at anything. Not one hand went up. I prodded them asking surely they failed at something - still negative. So I volunteered and said, I fail at something almost daily - often simple things like failing a loved one by devoting just a little too much time to work, or avoiding a potential sale because I was reading the news on the internet. I had also failed at much bigger things. A previous business of mine had failed because I arrogantly assumed a number of things which transpired to be untrue. Failure hit me very hard because I had planned without failure and its consequences in mind.

With the help of a few colleagues at, notably Rosemary Slosek, Laury Burr, Robert Zarywacz and Nick Bush with whom I debated the subject and by listening to the profound and stimulating recent address by JK Rowling to the Harvard Alumni, I believe recognising and embracing failure can help you succeed.

Understanding the Importance of Failure

So had my audience been denying they failed at things or were they honest they simply have never failed at anything? And why was the question important? I often ask would-be candidates for jobs if they have ever failed at anything and most lapse into interview-speak and say no. They have hit every sales target, achieved every challenge and went on every Chairman's Club etc. I usually avoid such people because they clearly do not understand what I'm asking and at best are fooling themselves if they do and at worst outright lying. The fact is failing at things is very common. The clear learning point is achieved by recognising the failure and modifying your approach or behaviour in order to avoid repeating the failure. I am very suspicious of those who say they have never failed in case they have and just deny it or worse still they don't know they fail at certain things and so will probably fail spectacularly when it all catches up with them.

And that's why failure is important. Many highly successful people like JK Rowling understood when they failed they needed to learn from it and applied themselves in a different way in order to be successful. In her Harvard address, Rowling says:

"So why do I talk about the benefits of failure? Simply because failure meant a stripping away of the inessential. I stopped pretending to myself that I was anything other than what I was, and began to direct all my energy into finishing the only work that mattered to me. Had I really succeeded at anything else, I might never have found the determination to succeed in the one arena I believed I truly belonged. I was set free, because my greatest fear had already been realised, and I was still alive, and I still had a daughter whom I adored, and I had an old typewriter and a big idea. And so rock bottom became the solid foundation on which I rebuilt my life.

You might never fail on the scale I did, but some failure in life is inevitable. It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all - in which case, you fail by default.

Failure gave me an inner security that I had never attained by passing examinations. Failure taught me things about myself that I could have learned no other way. I discovered that I had a strong will, and more discipline than I had suspected; I also found out that I had friends whose value was truly above rubies.

The knowledge that you have emerged wiser and stronger from setbacks means that you are, ever after, secure in your ability to survive. You will never truly know yourself, or the strength of your relationships, until both have been tested by adversity. Such knowledge is a true gift, for all that it is painfully won, and it has been worth more to me than any qualification I ever earned."

This is a strong statement. Failure allowed Rowling to 'stop pretending that she was anything else other than what she was', and it helped 'strip away the inessential'. JK Rowling insists she failed cataclysmically but she does point out we all need to define what constitutes failure to us. And that's the essential learning point - understanding when you have failed, accepting you have done so and then making the conscious effort to change and modify your approach will help plot a path closer to success.

Further, failing has a powerful benefit. It makes you truly understand what success really is, help you be able to define it better and it will make it that much sweeter when you attain it.

Failing and Making Mistakes

My illustrious audience insisted that my minor failings in forgetting a birthday or coming home late from work are just minor errors or mistakes with no real consequence. My response was 'Not so'. I believe strongly that my personal foibles are symptomatic of a poor attention to detail on seemingly minor matters which fundamentally affect much more important things. My consideration that these matters are less important is a behaviour pattern that will ultimately bring a catastrophic failure if not dealt with. Should I continue to value work more important than my relationship with my wife there is no doubt it will have an impact on my marriage. This was the gist of my argument. My audience were quick in response that you can easily recover - a nice meal, a bunch of flowers or some perfume will soon rectify the situation.

At that point, I drew their attention to the fact that BA and BAA conspired to bring about the dreadful Terminal 5 saga at Heathrow. In the same quarter as CEO Willie Walsh being named an Executive of the Year by a newspaper and guiding BA to powerful profits, thousands of passengers languished at T5 as 'teething problems' failed to deal with their needs or their baggage. While it was fine to fire a couple of executives, issue platitudes and fob off the press, the failure was of an immense proportion. What is more, the whole plan to commission T5 was almost totally conceived with that level of failure built in because of the symptomatic laissez faire attitude of the executives involved. While the T5 fiasco was a big failure, when married with the high profits, many would argue that BA have weathered the storm and that it was just a blip in progress. My assertion is that if BA do not accept and embrace the failure it will ultimately permeate into everything they do. As long as the numbers are ok, failing the passengers is fine. If left unchecked, the problems could spill over not just onto profitability but, heaven forbid, on safety.

There is a thin line between failing and making mistakes. It may be a genuine error to forget an anniversary or important meeting but that is what planning tools are for. Failure is acceptable in the short term and considered a mistake. Forgetting more than once starts to indicate a trend in behaviour that is beyond a mistake. It is better, in the long run, to consider mistakes as failures and plan not to repeat them.

The Butterfly Effect

I wrote in an earlier blog article on single random events or Black Swans as Nassim Nicholas Taleb would describe them, destroying well ordered systems like the financial market. The interesting thing is that senior people like Stuart Green of HSBC have now come out and said that the business model which led to the credit crunch was fundamentally flawed and 'bankrupt'. Yet in nearly every answer to my blog and Linked In question, people have asserted that the warning signs were there, that the economy had built itself on high gearing and history showed that the model was flawed already. So what compelled the banking executives to pursue that strategy knowing that at some point or another, Black Swan event or not, the market would catastrophically fail causing losses which make Third World Debt look trivial? And even as they speak, the UK Prime Minister pumps £50bn into the asset backed security market to restart it knowing full well it was the finance system which failed us the first time around.

Comparatively small failures compound and start to magnify their potential outcome like the butterfly effect as in each cycle they are overlooked. In the competitive world of free market enterprise it would have taken a brave bank to have stepped back and not participated in the boom. But the self same bank would not be in the financial mess that the likes of Northern Rock, Bear Stearns at the extreme end and RBS, Citigroup, UBS, HSBC et al got themselves into.

Failing while Succeeding

I sometimes read with interest how highly successful people, who have all the visible signs of amazing success like money, image, and great careers are often those who court massive personal or business failure. It comes as no surprise that many a great relationship has been destroyed as a cost of success, both on a personal and business level. Again, I wrote a blog article about Denial and there is a link here. It is the successful person's ability to deny failure that allows them to concentrate on success. As an example, how could Willie Walsh feel successful after the T5 fiasco? Easy, his success is based on the numbers which were fine. By simply denying the failures at T5, he can continue to drive his profits. My assertion would be that if BA continue to ride rough-shod over its customers in such a way, ultimately the business will start to fail at the profit level. Perhaps more sadly, how many successful business people like possibly Roman Abramovich who owns Chelsea FC have had a failed marriage while at the pinnacle of their business success? Denying failure, may lead to short term success but long term it adds fuel to a potential catastrophic failure in the business.

Your own Failings Affect the Success of Others

The problem about not being able to recognise, deal with and learn from your own failures will ultimately start to affect the performance of others and potentially lead to failure for them. A good example of this is relationships. Little failings can build up over time and contribute to failure of the partnership. While it takes two to tango as they say, failing and recognising it is a personal thing. As Rowling points out, defining what is failure yourself is personal, but recognising and dealing with it may not be. From a business perspective, failure by an executive or staff member may ultimately lead to failure of another person or part of the business. An argument could be put that failures by say Nick Leeson brought down Barings Bank. It's why it is critical in business to be honest with yourself and recognise when you have failed and do something about it - because it will not only be yourself that's affected.

Recognising and Dealing with Failure in Others

The Nick Leeson example was wrong. Leeson was part of an organisation and industry that continually ignores failures. Self regulation in business is always a danger and in the financial industry where greed pervades more than anywhere, it's like the cat being asked to guard the cream. Leeson was guilty of deception no doubt but those around also failed to recognise the failings because their motivation to make money outweighed their ability to make judgement calls. How history repeats itself - in identical ways the derivative-led business of the banking industry has pretty much caused the current economic climate. Comparatively small failures combining and compounding to produce catastrophic failure and losses. The failure of managers and executives to intervene and recognise failures ultimately caused catastrophic failure.

The problem the financial industry has is that it has shown repeatedly that even when spectacular failure has been attained, they simply point a few fingers, mumble platitudes, make a few cuts, blame the customers for demanding too much service for too little spend and then plan the next frenzied boom. If Taleb has got one thing pretty close to right is that strip away the derivatives, mortgage books, loan syndications and such like and you might have a profitable business ongoing, all the rest just boosts the salaries of a swathe of upwardly mobile gamblers. The inability of the financial industry to recognise failure in itself and others and inaction against the power of greed will continually lead to boom-bust cycles and I believe at some point will lead to a financial disaster that would make the 1930's look like a holiday. No one knows for sure but the combined positions of the world wide derivative book is upward of $516 trillion according to a post on my blog by Eric Leibowitz. Just one butterfly not even a Black Swan and the whole lot could collapse like a house of cards. At every conjoin of the cards, failure stalks.

Back to The Real World

So when I ask if people have failed I am looking for people who recognise what failure is and I am looking for how they dealt with it and did things differently. I am not necessarily looking for whether they became super-successful because of it as people like JK Rowling are rare, although it's worth noting Steve Jobs dropped out of a Stanford degree course, Bill Gates was unsuccessful first time out, and Anthony Hopkins faced all the demons at his lowest ebb before rising to be the superstar he is today. The fact is we fail and recover at some level every day - failing big is not fun but it can become a profound positive force when it is dealt with the right way.

So when I asked earlier in my blog whether people felt degrees or MBAs mattered or made a difference, the answer is yes they can make a difference. But of more relevance is understanding how people deal with failure - this builds a more compelling picture. That someone elects not to go to University to 'experience life' is fine but how they deal with that experience is the critical issue. You can learn all you like or experience as much as you can but if don't act differently because of it then none of it is of great relevance.

Failing is important - in science some of the greatest innovations were by-products (euphemisms for failure to find what they were looking for) of research or as I like to call it 'trial and error'. Acknowledging, accepting and dealing with failure is arguably the driving force that differentiates human beings from any other organism on this planet. Recognise it, embrace it, learn from it and apply the new knowledge and ultimately you will be far more successful in life.

Thursday, 12 June 2008

UK Economic Meltdown?

Yesterday's Daily Telegraph could not have been more depressing on several fronts. First came the news that Tesco, that bastion of growth and barometer of the UK good times, announced slower sales growth as like for like sales growth was 3.5% and below forecasts. Second was the words of the HSBC Chairman Stephen Green that the banking model that delivered soaring debt was 'bankrupt'. Thirdly, the news that one of Britain's top house builders, Barratt, requires £1bn just to survive. Hot on the heels of this HBOS saw shares dip below their rights issue price potentially scuppering their plans for a vital £4bn injection of capital.

Looking behind these headlines, HBOS shares have dropped a colossal amount from nearly £11 at the beginning of the year to around £2.58 while Barratt has seen its share value decrease by nearly 80% in 2008. And we're only half way through. In fact only one of the UK's top house builders has seen its market capitalisation decrease by less than 50% this year - that's Redrow and their shares have dropped a mere 49%.

Banking, Housebuilding & Groceries

The three industries are very indicative of the UK economy as a whole. As the UK suffers the implosion due to unregulated greed by banks funding the once limitless credit and cheap cash which in turn fuelled a 170% increase in the average house value in the UK in the last 10 years, finally the staple industries like groceries and clothing which represent that which we cannot do without have begun to creak - Tesco being the mightiest. To boot, in the last few weeks there has been a 20% drop in sales of petrol as Britain counts the cost of its greed and wrong decisions. Mervyn King, Governor of the Bank of England, at the meeting of the British Banker's Association, hinted that Britain faces a return to 'stag inflation' which is experienced when high inflation coincides with shrinking economic growth. As if on cue, it is estimated that a further 23,000 people went into negative equity recently as house prices began to fall - those with 100% mortgages became the next wave of victims after the swathe who had 100+% mortgages. Then it was announced average family energy bills could rise to £1,300 per household and just to add to the gloom, it was estimated that 200,000 more pensioners were classed as in poverty in 2006/7 compared to the previous year. We do not have to mention growing trade deficits and rampant government borrowing - the picture tells the story. Britain is in the early stages of a serious economic meltdown.

Unemployment & Unemployability

Amidst all this gloom and doom, the one statistic that has not had a great airing is unemployment. Well, it's probably going to be the next big area to be concerned about. After the government managed to decrease unemployment by around 1m over the last 10 years it has been paradoxical to see an almost identical number added to those who are long term incapacitated and cannot work - we shan't dwell on that strange statistic even though it smacks of false accounting. However, it is almost certain that the next major bad news will be that inflation and economic slowdown will start to affect the unemployment figures in the next few months as companies strain in the face of rising costs and less profit.

The fact that Britain has become a nation of obsessive spenders and negative savers will inevitably come home to roost. For many, as the potential of employment decreases, there will be little left to rely on other than state handouts. In turn, the burden on the state will rise and accordingly there will be cuts in spending and an even greater call on taxes. The failure to deal with the immigration issue will come home to roost which will ring hollow for the likes of William Hague who 'mistakenly' fought an election on it and was poo-poo'd by Blair as being out of touch, as several million new arrivals will be affected as low-level casual jobs at restaurants, coffee bars and labouring will go first when finances get thin. These are predominantly young, unskilled workers who will be starting families here. The burden on the state could be enormous.


I will be devoting more of my blog space to the concept of accountability, but let's just consider this for now. The Chairman of one of the world's largest banks (HSBC)has decreed that the world's banking model is bankrupt and that there should be a return to 'good old fashioned principles'. He highlighted to the BBA that 'The huge build up of leverage in the system over the last five years where profit depended on high and ever increasing leverage, that model is gone, and that model is gone because it is bankrupt. You simply cannot build a business that way. Those that will propser will be those that remember the basics - the importance of customers, deposits, capital and balance sheets...good old fashioned stuff.' He went on to say that banks will have to adjust to a future where profits and return on capital will be lower and that the bubble had burst. He also said. 'It's worth noting that some of the returns on capital looking backwards were inflated, and much of the returns were subsequently given back....the banking industry has not covered itself in glory in recent months.'

While this is a stark and honest appraisal of the situation, it also beggars belief. HSBC has not been alone in writing off almost incredible amounts of loss in the last few months to pay for its wrong decisions and mistakes as it took a greedy place at the feeding trough. He, along with many bank executives, traders and analysts, across the industry will take their extortionate bonuses and not pay them back. They will just have to look gloomily ahead and conjure up another way to keep the money pouring into their salary pots. How they can stand there and say such things and keep their jobs is amazing.

My recent article on Nassim Nichloas Taleb springs to mind. He ascerted that banks never make money on loans, mortgages, derivatives and the like - they only ever make money on the interest on current accounts and charges, all other profits being surrendered shortly after they make them. Yet, it will be the front line banking staff and everday customers who will bear the cost of all this. In higher interest and bank charges, the blame will be passed on in the form of job losses of front line bank staff, higher costs to customers and poorer services.

So when, exactly, does this industry and the government that allowed it to feed at the frenzy of unsustainable growth become accountable? Taleb believes Black Swan random events caused the sub-prime collapse and aftermath. But if anyone ever read the book 'Fantasy Island' by Larry Elliott and Dan Atkinson you would have known that the New Labour Project of 'a surfeit of consumption, a surfeit of speculation and a surfeit of deceit' was at the heart of the causes. They also believe that the New Labour movement has brought about a culture a destruction of personal accountability - 'blame anyone but me' - and that flows from the very top, Gordon Brown and Tony Blair, to the bottom, you and I, plus all those greedy banking executives in between. We are all accountable.

Bricks & Mortar Turned to Gold

It has always been the mantra by the government that the previous Conservative government were 'boom and bust' and there is some truth to that. But what we have seen from the 'prudent Chancellor' is nothing short of lunacy despite all that Oxford-bred intelligence. How could he have not possibly seen the looming danger of the over-egged housing market in the UK? With over 40% of all new mortgages being re-mortgages, it was obvious the nation was leveraging the new-found equity and using it to fund a spending bonanza. With it came bundles of extra credit in the form of interest free credit cards, 125% mortgages, 5 times salary mortgage lending, cheap loans and plenty of places to spend the money. Designer fashions boomed, coffee shop culture rose, all day drinking hours and foreign home ownership shot up - Majorca turned to Mauritius for holidays and is it me or are there actually more Aston Martins, Bentleys and Range Rover HSE Sports on the roads than before.

How could we have all possibly ignored the warning signs? How could we all have forgotten that if something looks implausible it's because it probably is?

Hindsight & Foresight

With the benefit of hindsight, would the bankers and consumers have done anything different? Of course not. You do not have to look far back to see the evidence of similar mistakes - the Dotcom boom is there for us to see and the dramatic collapse of the share markets was so profound that they have never recovered the ground to this day. So why do we allow the banking industry and government to employ such people who repeatedly make the same mistakes? Why do we allow people like Stuart Green at HSBC keep his job (sorry to pick on him as he is not alone)? Why do we allow a system to build up incredible profits on the back of assets that cannot possibly sustain it?

And do not think they learn from their mistakes. As the banks suddenly realised that their credit spree was going to leave them with incredible debts backed by worthless assets, they stopped lending to one another for fear of making the problem worse and we saw for one of the first times in modern economic history, the complete disconnect between the Bank of England Base Rate and the cost of mortgages. Gordon Brown had lost his magic wand. So what did he do? First he rescued Northern Rock by putting it into government ownership and gave us all a liability of £125bn and started paying the advisors millions to do the obvious, then he stumped up £50bn to mortgage companies to try to kick start the credit bonanza again and hope the asset-backed security market would become unpetrified. The very thing that got us into the mess in the first place.

Experience & Education

There is a theme on my blog about experience and education and how that is valued or not in the recruiting process. Well consider this - you can have a ton of education from the best universities in the world and all the experience your time on earth will allow but it will not stop people making appalling and greed-driven decisions that are not in the long term interest of the corporations and government they serve. I will later assert that interviewing potential candidates for roles has little to with what's on their CVs and here is the demonstration why. We, as experienced citizens and consumers, should also shoulder blame. We swallowed the hype, took the money, spent it and will carry the can. While taxes grew stealthily and wars were declared in our name we allowed the country to be led down a path that could only end up in one place. In the meantime, we allowed the guff about health care, education, security and transport to be spouted and gotten away with. We sit in a country with outrageous taxes that do not have to be paid by the richest people, we have become a playground for the super-rich to make more money, we have allowed our school children to become dumber, carry knives and murder each other while we concentrate our efforts on 'democratising' suitably well-resourced countries, risking the lives of professional soldiers, while we hand out more parking fines and speeding tickets and let the country become flooded by immigrants who will ultimately make our system strain even more.

Meanwhile, the elite write their jocular memoires, re-write history to enhance their glory, get fat-paid jobs in the companies they helped get rich, and carry on making decisions that will affect the future our next generations.

Taking Responsibility

We are all stakeholders in this country and in the banks who hold the deeds to our houses and the money we make. It is time we stood up to the responsibility that gives us. We should make it very clear by our actions that we do not want the wealth of this country squandered and given to speculators who don't live here and we don't want officials who cannot apply the experience and knowledge they have without their greed getting in the way. We have become too dependent as a nation on the strength of the City of London's financial market - it is high time it came under the jurisdiction of proper governance, the scrutiny of the law and do the bidding of its real customers. And it is high time we wised-up to the government's lack of ability to focus on the real issues we face in society today and get the country back into financial order - that will mean us first voting out the jokers who got us into this mess.

These are the views of humble voter and bank customer. I deliberately stoke up the fire to find out what your views may be. I have put the case from one point of view but it is something that requires debate and I hope you will feel you can contribute. It's hard not to get political about this but I see this more as highlighting failure on a grand scale rather than political comment.