When economic times get tough, resist pulling up the drawbridge

This century has only just become an adult, but has managed to fit in an unprecedented amount of upheaval and disruption. From the September 11 attacks in 2001, through various wars, natural disasters, disease outbreaks and the global financial meltdown and subsequent debt crises. We’ve seen the launch of Facebook, YouTube and the iPhone – and that is just the tip of the technological iceberg that arrived on the scene. Then this year we’ve seen GDPR land, and the Brexit pendulum continues to swing causing the pound to see-saw. And all of that against the backdrop of a Trump presidency that continues to sow uncertainty on a global basis.

Is it any surprise that you might hear the sound of drawbridges being pulled up across the corporate world? Are you feeling the pinch as budgets are being tightened, again, as senior management doubles down on a strategy of retreat, keep your head down, and don’t do anything even vaguely out of the ordinary.

I’d say at this stage we should be used to managing our way and driving our business through this level of global and local disruption and change. We’ve been riding this wave for a while now, and it doesn’t seem like it’s dying out any time soon. We should accept that these crises are becoming the norm and that we need to find a way to navigate through them that positions us for growth and not decline once we emerge on the other side. 

But still, too often the tendency will be to batten down the hatches.

For financial managers this usually means, tightening up on expenses. Actually, that’s putting it mildly. Control gets ratcheted up to 11 and expenses get put under the microscope. Makes sense, right? Actually, not at all, so it’s worth revisiting why this is a very bad idea.

Don’t be tempted to micromanage your way through tough economic patches

One of the most fascinating effects of a recession, or other financial turmoil, is that fear and panic turns leaders, who previously saw their people as valuable team members, into autocrats who fixate on targets and are oblivious to everything else. As a result, spending becomes lean and managers turn into checkbox-ticking watchdogs.

It doesn’t take a HR guru to tell you that this is almost always counterproductive. This is the best way to demotivate a previously well-functioning team, and, demotivated employees are less efficient than their counterparts. I’m not suggesting adopting an indulgent approach when it comes to budgeting and expense management, but to rather take a smart approach.

Instead of tightly controlling your managers, give them control over their individual budgets. After all, only the manager really knows what costs can be effectively cut without having unfortunate consequences down the line. The way to do this successfully has two parts. First, ensure your vision and strategy is both inspiring and realistic, so that the people tasked with implementing it are convinced by it. Next, ensure there is a central, user-friendly space where information can be stored and easily accessed and shared. This probably does not look like an organisation-wide ERP system, which are often too complex for managers to understand. Inevitably misinterpretations arise, or the managers develop a parallel system of their own, somewhat flawed, and definitely out of date, spreadsheets.

Empower your managers with actual performance data that relates to their budget on a daily, not monthly basis. Information is transformative – it is persuasive, it inspires action and it clarifies goals and expectations for everyone. If you want your staff to pull together as a team, especially in tough times – equip with them with the right tools and information to do their jobs.

Now, your team will be empowered to make the decisions that only they are in a position to make, but you still have enough oversight to keep a close eye on the overall financial health and spending of the company. And then, despite any downturn, you’ll have happier, loyal employees; a clear picture of where you are in the world; and the confidence to lower the drawbridge and engage with the world, while your competitors are nailing the shutters into place and becoming a distant memory in the market’s mind.

As published in Accountingweb - September 2018

Don't forget about real life intelligence

The unintended consequence of forgetting people in the age of the machines

While there is a fair bit of moral panic over the idea that machines are going to take all our jobs -- some reports say that robots and artificial intelligence will replace almost a third of the workforce in the UK in the next 15 years – today it is more important than ever to keep your people front of mind. Especially when considering recruitment and succession planning.

Previously a wash, rinse and repeat approach was fine: make sure you have enough mini-me managers and leaders moving up through the ranks, and a good supply of top talent at entry level. This has all changed. Today you are recruiting for roles, like data scientists, that have no formal career path. You need to find people who are both comfortable working with machines, and flexible enough to change their roles as the machines get more capable. Despite the headlines, the sweet spot for the foreseeable future is going to be humans and machines working together. This last point became incredibly obvious during Facebook’s last earnings call, where it emerged that the company was hiring more people to filter inappropriate content, to make up for the limitations of artificial intelligence.

Finally, once you’ve hooked top talent with promises of barista coffee and a relaxed dress code in the job spec, you’ve got to keep them hooked. And you don’t do this by making them work in old-fashioned ways. In my world this looks like the way too many companies still do budgeting and forecasting. Usually this is done ineffectively using spreadsheets that get sent around the office like ticking time bombs. The process takes time and is open to errors, thanks to the limitations of spreadsheets compared to better, more up-to-date ways to do this task. This is also typically a top-down process, with finance dictating budget parameters to non-financial managers, so there is little chance for the budget to reflect the realities of the coalface of the business.

Working like this is not going to fly with the next generation. They digitalise and automate things in their day-to-day life, so why should they grapple with spreadsheets or any other out-dated systems, processes and hierarchies in the workplace? And worse, not having the freedom to innovate and fix these anachronisms and inefficiencies.

An example of this conundrum: There's a thread on the Workplace StackExchange site from 2017, where a developer asked for advice on the ethics of them having automated their job. They had been hired full-time to maintain a legacy database using SQL scripts.

The job was pretty boring, and after a year the person had written a program that completed a month's worth of work in 10 minutes. An added complexity is that the analyst who created the spreadsheet in the first place typically spent a fair bit of time verifying the completed work because the task was so mind-numbingly dull that it was easy to make mistakes. So ingeniously, the developer deliberately added a few bugs and errors every month, to make it look like a human did the work. In total, they spent one to two hours a week on what was supposedly a full-time job.

Interestingly, while the advice that followed was mixed, ranging from ‘fess up (and different ways to do this while still keeping their job), to keep doing what you're doing and don’t lose any sleep over it. But, the point most people had an ethical concern with, was the introduction of deliberate errors, which wasted other people's time and created the risk that the errors would not be picked up and so enter the live data.

In this case, the developer is a contractor working remotely, so the time they save is spent on things that are meaningful to them. But similarly, if full-time, on-site employees were empowered to innovate themselves out of their mundane jobs, they would free up their time to do more meaningful, creative, and strategic work in the business. Which is a win for the employee and a double win for the organisation – they keep their good people, and their operations are improved, dramatically.

The developer in the story above is an excellent example of someone who is quite happy working hand-in-hand with machines, plus is flexible enough to shift their role as the machines gain capabilities. Unfortunately, their current employment culture doesn't favour this, and in fact, works against it.

Which is a double whammy for organisations as they start to lose their best recruits, and also start falling behind the digital transformation curve. No number of C-suite appointments will transform your organisation without an influx of the new generation who understand your future market, because they are your future market. For real change, an organisation needs to drive this progress by hiring a lot of people at entry level who understand technology and its impact.

And then, this needs to be underpinned by a shift away from a top-down, command and control leadership culture and hierarchical org chart that is more suited to the industrial revolution and its assembly line. For companies to be nimble and responsive, they need to prioritise transparency, collaboration, trust and the free movement of the information people need to get their jobs done. This will enable better decision making and more ownership through the ranks.

So, it turns out, our machine-filled future is still all about the people.

As published on ITWeb - 14th August 2018