The Future of the Workplace

Comm update_10 September1

Ideas on what constitutes a fulfilling and productive working environment are shifting rapidly. They’re raising questions about mobility of talent and what it means to be an effective leader as the way in which knowledge is transferred, both within and outside an organisation, becomes more dynamic. Indeed, a perfect storm of new technology, globalisation and changing demographics is blowing away assumptions about how we work.

Lynda Gratton, Criticaleye Thought Leader and Professor of Management Practice at London Business School, suggests that the formal link between ‘work’ and ‘place’ is beginning to soften: “We are already seeing the rise of flexible and remote working arrangements as well as creative hubs where people use workspace as and when they need to.

“It seems to me that as working lives become more of a marathon than a sprint, we are going to see more emphasis on work that excites and inspires people and helps them to grow…These concepts are not just about employee well-being, they are… crucial to the competitive advantage of a company.”

It’s incumbent on leadership teams to get a grip on what is already underway. Stuart Steele, Partner for Human Capital Consulting at professional services firm EY, comments: “There is always competition for good talent and an inability to predict what the work environment will look like in three or four years’ time, I think, can put an organisation at a disadvantage.”

Let’s get digital

From the mills and factories of the industrial revolution to assembly-line car production at the turn of the 20th century, technology has reshaped working practices by reinventing notions of efficiency and productivity.

John Lewis, Chief Operating Officer for communication services provider Airwave Solutions, says: “Mobile working or process improvements are absolutely there for the taking. There are lots of different examples that I’ve seen, such as the creation of collaboration zones and the use of tools for collaborative working.”

How best to take full advantage of this flexibility is open to debate. Susanna Dinnage, EVP and MD for Discovery Networks UK & Ireland, explains: “A great deal of people working on their own, possibly at home, may benefit individuals in terms of family commitments and reduced time spent travelling… I understand that, we have busy lives… but what you lose is the alchemy of teams working together.”

John notes that organisations must be careful not to underestimate peoples’ appetite for interaction. “That can be the biggest challenge,” he comments. “How do you get over the fact that people just sometimes need to spend a bit of time gossiping or just having a reaction with others in their team to help process what’s going on?”

The hierarchy that traditionally existed in organisations is being broken down by the volume of information now available at employees’ fingertips. This is causing leaders to rethink how they engage with employees, encourage collaboration and make decisions.
Julian Birkinshaw, Criticaleye Thought Leader and Professor of Strategy and Entrepreneurship at London Business School, says: “Think back to the traditional role of the leader. Back in the industrial era, he was responsible for squeezing as much value out of his resources – money, people – as possible.

“In the knowledge era, he or she has become used to being an expert… They were also the conduit of information, the person who accesses and then disseminates information across the organisation. But if this information is now widely available, and if there are experts at all levels, the leader of the future has to think about what their value-added role is.”

According to Julian, leadership in this context will entail a more interpersonal role, helping other people to make decisions and avoid becoming overwhelmed by the volume of data available: “Good leadership… [will] be action-oriented; that is, following through with people to ensure they deliver on their commitments. One of the risks of ubiquitous information is that it causes analysis paralysis – there is always an opportunity to collect more.”

Melting pot

A more age-diverse workforce will certainly throw up some new challenges. Susanna says: “I am observing a new generation that is very smart. I look at our interns – they are engaged, they have plans and they have expectations. They don’t come here to stuff envelopes.

“They are not afraid to ask for half an hour in your diary to understand how you got your job – that’s fantastic. I love this confidence they have… [as] they step forward and… are contributing.”

There is a sense that the expectations held by millennials in the workplace are, in some respects, higher than of generations gone by. Stuart explains: “There have always been career-focused individuals, with an appetite for rapid progression, however, looking at groups, if you’re 25, your aspirations for broad opportunity and rapid progression in an organisation are typically a lot greater than what a 50-year old person’s was when they were that age.

“Where an older employee may have taken 20 years to progress three-quarters of the way up the organisation, the 25-year old wants to get to that same position in five years or less. How do you balance that? How do you meet their aspirations of rapid progression while not disenfranchising this person, who has delivered good service for the last 20 or so years?”

These are the types of questions which senior leadership teams need to be thinking about and addressing. Stuart adds: “As organisations’ demands for skills and capability change over time, the intrinsic value of the employees with 20 or so years of experience – those with real depth and breadth – changes from a position where one could arguably describe them as a commodity, to a situation where they have become ‘key retains’ focused both on delivery and the development of our younger workforce.”

It calls for a closer awareness of how to bring the best out of a diverse mix of talent. Lynda comments: “It’s clear that encouraging different age groups to work productively and harmoniously with each other can be tough. Those who have made it work often put job design and collaboration at the centre.

“Those that design jobs in an inflexible, linear way have found that they cannot be responsive to a person’s life stage and aspirations…. Right now, companies are struggling with this inflexibility – for example, not knowing how to handle mid-career hires because their processes are all geared towards hiring graduates.”

A multigenerational workforce will require organisations to consider different career paths and job designs simultaneously, rather than opt for a cookie-cutter approach. Specialisation, limited contracts and partnerships are expected to become the norm.

Julian comments: “The workplace of the future I would like to see is one in which people are given a lot of freedom to pursue the work that interests them, with a lot more bottom-up accountability, and far fewer formal bureaucratic systems for co-ordinating our activities. This is the model we see in many start-up companies, but once they go above 100 people or so they often lose this vitality.”

The impact of what is happening in the workplace will be genuinely game-changing and that’s why it’s something boards must take the time to try and understand. Unless they’re thinking about what it means for an organisation’s future, they won’t be able to turn what’s occurring into a tangible competitive advantage.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

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Creating a Culture of Succession

Comm update_6 August1

Egos, personal agendas and the demands of the day job frequently undermine good succession planning. It’s up to the CEO to establish the agenda and set the tone by giving full support to programmes which identify future stars and nurture those who may one day occupy important management positions. Indeed, the whole board needs to be pushing and probing to find out where the talent lies in an organisation.

Tim Eggar, Criticaleye Board Mentor and Chairman of Cape, which provides services to the resources sector, suggests that risk, strategy and succession should be seen as priorities for discussion in the boardroom. In terms of the talent agenda, he says “it’s probably the area where the board can both protect and create the most shareholder value”.

It’s about identifying potential leaders who can fill the top roles and getting a picture of the strength of the management within an organisation. “The board has a clear obligation to form a view on the quality of people at the ‘ex-co’ level,” he comments. “In my view, it should actually be taking an interest in… one layer below the ex-co [too], and also all management development plans by the ex-co.”

Big picture

Beyond asking the standard question about what to do if a CEO falls under the proverbial bus, there needs to be other conversations taking place, such as whether graduate recruitment is taken seriously or whether there is a junior management development plan. Ian Ryder, Chairman of information services provider DatacenterDynamics, says: “Its leadership skills for all levels, not just board level. If you don’t have an embedded process… within the organisation for developing and growing talent, then you’ve got a problem.”

Kai Peters, Criticaleye Thought Leader and CEO of Ashridge Business School, says: “What you’re trying to do with leadership development is fast-forward people’s experiences… If you want someone to get up-to-speed faster you have to present them with all kinds of different contexts to make sense of.

“What then happens, psychologically and neurologically, is they start absorbing these different experiences. People begin to understand how to behave in many more situations than they otherwise would have known, not only on the basis of different projects but also with different nationalities for organisations that work with or have sites in other countries.”

For Hayley Tatum, Senior VP for People at retailer Asda, it’s important to take into consideration what’s happening in people’s lives when looking to develop them and take them to the next level. She explains: “You’ve got to balance what people are doing, the ages of their children and the likelihood of them being as mobile as you need them to be.

“You’ve got to be very personal about this and not too process-minded so that you don’t forget that these are people’s lives. That’s a big point. Secondly, it is about giving people breadth of experience, so you are building capability to deal with the unknown.”

Being part of Walmart, says Hayley, provides Asda with plenty of scope to move people into both start-up businesses and mature operations of immense scale across a range of locations. “This is very testing and challenging,” she comments. “You know that it’s providing a good grounding for leaders of the future to have those experiences.”

It’s about taking people out of their comfort zones. Howard Kerr, Chief Executive of business standards company BSI Group, recalls that he was working for private trading group SHV Holdings when, at the age of thirty-six, he was made Managing Director of a joint venture in Thailand. “When you promote people early you find out quickly whether they really have the capacity. Not everybody succeeds. You’ve got to take risks.”

The difficulty lies in judging which people not only have the talent but are serious about fully committing. Hayley comments: “It goes wrong when there isn’t enough transparency. Individuals worry about telling the truth. They’ll tell you they are fully mobile and will go anywhere, but the reality is they can’t, not all of the time.”

First-class leaders

It’s easy to think of companies which have made the headlines when a CEO departs and there’s no replacement in the wings. The fact is many companies are flying blind about talent and fall woefully short when it comes to creating a plan that caters for the short, medium and long-term needs of the business.

According to KPMG Partner Robert Bolton, who leads the Big Four firm’s Global HR Transformation Centre of Excellence, it’s appropriate to have a next-in-line approach to succession for the executive team, but more imagination is often required when it comes to identifying and developing the tier of leaders who are coming through below.

He says: “A lot of what is done for leadership and management development is a waste of time and money. It’s effectively an exercise in junkets. There’s a lot of delusion about people going on these events and they say, ‘Oh, it was fantastic and wonderful, it’s transformed my life,’ and it makes not one jot of difference to organisational performance.”

The underlying issue is the structure of the organisation they’re working within. Robert says: “Some of the best leadership development is opening up the eyes of potential leaders to the organisation system: to be able to stand back and understand the influence it has on them and other employees as well as how they, as leaders, can shape it to drive behaviours and… performance. It’s absolutely fundamental.”

This is where it can get difficult as, in the short term at least, it may not be in everyone’s best interests to think differently and challenge the status quo. It’s one of the reasons why a CEO has to show courage so that the mentoring and coaching programmes, combined with projects and secondments, are creating people who are capable of getting the best out of themselves. Moreover, it requires a CEO to realise that good leadership goes way beyond their own character, personality and desire to ‘lead from the front’. 

David Dumeresque, Partner at executive search firm Tyzack Partners, says: “It should be driven by the board and the chief executive should be putting pressure on all of his direct reports to develop their subordinates for leadership roles. How they drive it may well be through the HR departments, but HR won’t succeed without engagement from the line leadership.”

In many ways, good succession planning should form part of the cultural fabric of a business. Ian says: “Frankly, the quality and approach to talent development in an organisation is almost wholly, in my 35-40 years’ experience, linked to the values, ethics and behaviour of the chief executive.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

What Innovation Really Means

Comm update_28MayNew ideas and fresh thinking are fundamental if companies are to retain a competitive edge. To drive innovation, you need to create a culture where ideas come from both within an organisation and by working with others. Increasingly, the art of doing this successfully lies in being able to utilise various channels and by harnessing the skills at a company’s disposal to capture those moments of inspiration.

It’s crucial that, when it comes to innovation, employees don’t fear failure. Anand Gupta, Principle Innovation Evangelist for Europe at business solutions company TCS (Tata Consultancy Services), says: “We have an annual competition across the group… all companies are required to submit entries under broad categories such as, ‘Promising Innovation’, ‘ Leading Edge’ and ‘Dare to Try’.

“The ‘Dare to Try’ category is interesting because it rewards people who try to make something completely new work in the business that actually turns out to be a total disaster. But unless we encourage people to try they’ll always be scared. We want them to go beyond this fear and decide if the idea is worth it. It cannot be a wild decision, it needs to be valid within the environment… but then, if they fail, that’s perfectly OK.”

Jane Griffiths, Company Group Chairman for EMEA at Janssen, the pharmaceutical division of Johnson & Johnson, comments: “We’ve had projects going on recently where some have worked and some actually haven’t done so well; I think you have to make sure heads don’t roll as a result of attempts at innovation that don’t work out, because if you come down heavily on people who try to innovate… that stops other people from trying new things.”

There has to be consistency. Costas Markides, Criticaleye Thought Leader and Professor of Strategy and Entrepreneurship at London Business School, questions how many corporates actually get this right: “Companies ask people for certain behaviours to promote innovation, but in reality they have an environment or incentive system in place that does not encourage those things.”

If employees are to believe they have a licence to think differently, then executives have to lead by example. Costas continues: “[When] the leadership of an organisation begins questioning; going outside their industry for ideas and starts experimenting… once they start behaving in the way they want everybody else to behave, pretty soon everybody else in the organisation will follow suit. That’s how you create a culture of innovation.”

Cath Keers, Non-executive Director of Home Retail Group, says: “There has to be a brave, passionate and determined leadership to really take those risks on innovation. Encouraging cross-functional teams, who share, collaborate and adopt the ‘have-a-go’ mentality with a clear view of what success looks like, is essential.”

Once the ecosystem is right ideas will, in theory, be able to flow through an organisation far more easily. Martin Hess, Vice President of Enterprise Services at IT company Hewlett Packard, comments: “Most innovation in business comes from being close to the customer, [it] doesn’t start at head office. Try and keep an organisation as flat as possible… so the ideas don’t get diffused and diluted as they go up through the company.”

Businesses need to remain agile and if new ideas are to come through, it may be necessary to develop them in isolation to the core business. Mark Wood, SVP and Managing Director of EMEA for US-based cosmetics firm Revlon, comments: “Our normal new product development pipeline may take two-and-a-half to three years to bring an idea from concept to getting it onto the shelf, because you’ve got lots of internal processes, checks and ‘stage gates’ that you need to go through.

“We acquired a business that was run on a completely different platform. It was all about bringing the latest catwalk trends into cosmetics quickly. To maintain the ethos of that brand… we kept it outside of our normal processes.”

Going outside of the business to tap into ideas can also prove game-changing. Martin Grieve, SVP of Corporate Business Planning at FTSE 100 listed consumer goods company, Reckitt Benckiser, says: “We have many external collaborations with third parties. In today’s world, business leaders are increasingly recognising that collaborative work with third parties will deliver breakthrough innovation.”

Show your appreciation

Rewards and recognition are significant motivators. Jane comments: “We have a system of reward in the company called ‘Global Standards of Leadership Awards’, which reward good behaviour within our Credo, and innovation is one of these.

“But one of the principles I ensure happens is publicly recognising people – even if it’s only on email, or a formal memo to somebody that copies in their boss or their colleagues, that says: ‘What you’ve done is fantastic’. I think recognition is very important… the ultimate recognition of someone who is consistently innovative and contributing a lot to business is that their career advances.”

Whether it’s inhibiting corporate processes, external regulations, fear of cannibalisation or a question of talent, the barriers to innovation are high. Nonetheless, it’s vital that the senior leadership team does whatever it can to allow for progressive disruption of the status quo so the necessary breakthroughs are made.

Martin Hess explains: “I don’t think companies can succeed… without constantly looking to change and innovate. You might become a leader in one technology wave, but you won’t be able to succeed in being a leader in successive waves.

“It’s one of the few things that an organisation has to be extremely good at and to encourage if it’s to prosper.”

Martin Grieve comments: “Innovation is the lifeblood of what we do. It is what fuels the growth of the business; it’s about keeping our brands relevant to consumers, continually improving performance and consumer benefits.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk 

Why Business Strategy is Changing

Comm update_2 MayA shift in strategic thinking is underway as boards come to realise that they must respond faster to the changes shaping the global marketplace. The old notion of a set five-year plan has been transformed by the use of more emergent strategies, where assumptions about the future are tested more frequently and, if a new direction is needed, the business is fluid enough to be able to adapt quickly.

“I am seeing a change taking place where the top-down, long-term view needs to be supplemented by more focus and agility in recognition of how you are going to achieve it, so the building blocks within corporate strategy are definitely becoming more dynamic,” says Ruth Cairnie, Non-executive Director of the FTSE 250 engineering firm, Keller Group, and former Executive Vice-President for Strategy & Planning at Shell.

Rebecca Lythe, Chief Compliance Officer at retailer Asda, comments: “Technology is moving so quickly and the landscape has changed in terms of how easy it is to do something quite disruptive, so mature businesses have to learn to be a lot more agile. It is still important to set a strategic direction looking some years ahead, but it’s how you get there, the time horizons within it and how you keep your strategy up-to-date which have all accelerated.”

The pace of change knows no bounds. Kevin Craven, CEO of the Services division at infrastructure provider Balfour Beatty, says: “You only have to look at what’s happened in the telecoms industry, where miles and miles of cables and wires in the ground have been replaced by mobile phones and masts. The entire economic model just shifted dramatically…

“No market is free from disruptive influences, so you clearly have to be monitoring your world and your customers and think about how you might respond to those shifts.”

Clearly, leadership teams must be better prepared when a disruptive shift does occur. “You should have at least envisaged the tough questions and how you might answer them, otherwise you’re not providing genuine value to your shareholders,” says Kevin. “One of the answers might be to say: ‘We need to close our doors.’ Another could be to sell to the innovator that’s tearing up your marketplace… [and] if you don’t want to go to those lengths then at least be prepared to be radical.

“For example, last year, because of a divergence with the group strategy, we decided to dispose of a business unit. It was one of the most profitable businesses in the group but it became clear that we were no longer the right parent for that business to achieve its potential.”

Big decisions

If CEOs delude themselves about the need to adapt, strategies will fail. Roger Martin, Criticaleye Thought Leader and Academic Director of the Martin Prosperity Institute at Rotman School of Management, comments: “The most common thing to do in the world of strategy in business these days is to complain about the V.U.C.A. world we live in – so everything is volatile, uncertain, complex and ambiguous – and then say that because of this it’s impossible to do strategy.

“But if an organisation doesn’t understand it has to make choices about where to play and how to win, it might as well not do strategy. That’s why more than eighty per cent of all strategic plans are pretty much useless.”

Peter Shore, Chairman of Arqiva, the UK’s national provider of TV and radio broadcast infrastructure, says: “Once a year we go offline for two days… to look at our individual industry segments from the bottom up. We look at where we are, assess our strengths and weaknesses, then from the top-down we try and assess where the big technical shifts or the big industry or customer shifts are going to be in our markets, and therefore where the big opportunities are for us to push our next investments.”

The board-level strategy has to be clear but the roll-out for a global business will not necessarily be homogenous, which does present some risks. Simon Dawson, Associate at leadership and organisational change consultancy Transcend, comments: “Emergent strategies are fine so long as there is connection across the organisation and rules to operate by. The danger is that people fall into a state of ‘self assembly’, whereby they go off and do their own thing believing they’re contributing to the whole strategy but, in reality, different parts of the organisation are moving in different directions.

“For example, when I worked in a telecoms business that was supposed to use emergent strategies, things were fine until the board got rid of the CEO as a result of the business underperforming. Then it quickly became clear that [the business] was just formed of little silos of people doing their own thing, none of which really connected.”

Communication must be frequent so that the vision remains relevant. Roger says: “As a business grows larger, the delusion of believing you can have uni-directional strategy set from the top just becomes more and more far-fetched.

“What you have to do is lay out a strategy direction from the top then say to the business units: ‘Here’s what we’re trying to accomplish as an organisation, please try and make something consistent with that.’ It’s then a process of going back and forth between the top and the bottom, which hones, refines, tightens and aligns your strategy.”

Ruth comments: “You need constant communication so that the view from the HQ about what the world is like, and whether the strategy can be implemented, is constantly up to date. You mustn’t be in the position where your assumptions are out of date, so it’s about constantly testing whether your assumptions are still valid and whether you are delivering on the strategy you set out; if not, an adjustment may be needed.”

For Rebecca, it’s about senior management being as candid as possible: “Strategy execution today means… having open and honest conversations within the leadership team about whether something has moved faster than you thought and, therefore, what the new implications are for the business.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Going Beyond Boardroom Diversity

ImageThe spotlight on gender inequality in the boardroom is important as such glaring imbalances need to be addressed, but in no way should the focus on diversity end there. To perform to the highest level, businesses require a rich mix of people so that insight is coming from those whose age, race, social background, gender and range of skills and experience are different.

Put another way, if your leadership team is resolutely male, pale and stale, you’re going to struggle. Criticaleye spoke to a range of successful female executives and non-executive directors to get their views on the gender debate, diversity, and where they believe the real, systemic problems lie.

Vanda Murray, Criticaleye Board Mentor and Non-executive Director at construction and support services company Carillion, comments: “The issue of gender absolutely needs to be addressed. We’ve got more female graduates coming through the education system and yet… they just drop off as they go up the management ladder for all kinds of reasons… But I think many men, who are leaders in organisations, believe they’re going because of children… Exit polls show that this is not always the case.”

A lack of flexibility or perceived lack of opportunity, continues Vanda, are other reasons for women to leave. Unconscious bias in organisations was also identified by those speaking to Criticaleye as an issue when it came to interviewing, promoting and simply communicating on a day-to-day basis.

Anne Stevens, Vice President for People & Organisation at Rio Tinto Copper, says: “There is still a huge amount of unconscious bias in respect to female leaders in many businesses. Leaders typically recruit in their own image… so, if a leader’s got a certain style they often let their own unconscious bias come to the fore and end up recruiting somebody just like themselves…

“Furthermore, some of the attributes that we often associate with potential, so, for example, aggression, assertion… delivering the bottom line at all costs, are typically male traits and, quite frankly, if we believe that this is what makes a good board, then we are never going to get a good balance in the boardroom or anywhere else for that matter.”

It means being brave enough to tackle entrenched attitudes and stereotypes. Alison Carnwath, Chairman of commercial property and investment company Land Securities Group, says: “I think the key barrier is whether women want to get to the top of the sort of organisations that have been mostly run by men in the past, where they’ve been run along male lines, male cultures. A lot of women self-select out of this because they just don’t particularly like that work environment.”

Jane Furniss, Criticaleye Board Mentor and Deputy Chair of homeless charity Crisis, says: “The really important thing is that we invest more in helping women lower down the organisation to overcome the barriers that are undoubtedly there, give them lots of opportunities to learn about situations that they are not familiar with and take some risks. As a leader you really need to encourage people to put themselves in those situations and provide a safety net where they can make mistakes and learn from them.”

Pride and prejudice

The context for discussing diversity has to be broader than gender alone. Therese Procter, Project Manager for Personnel at TESCO Bank, says: “Diverse teams are more creative, they see potential problems and opportunities much more quickly, and they make the robust internal challenges which avoid some of the self-sustaining negative behaviours we witnessed in the banking crisis.”

Tea Colaianni, Group HR Director at Merlin Entertainments Group and a Non-executive Director at discount retailer Poundland, says: “Every organisation needs somebody who takes responsibility and is accountable for promoting the gender or broader diversity agenda.

“You need to have an individual who challenges the assumptions, biases or old ways of thinking. And without someone taking ownership for that, little progress will be made. There are always people in an organisation that might feel very strongly about these things and you just need to identify and empower them.”

Hayley Tatum, Executive People Director at retailer Asda, says: “We use talent ambassadors across the business to assist and guide business leaders around how they recruit, select, develop, coach and mentor future leaders. We focus on developing women and other under-represented groups throughout the organisation in order to strengthen and develop our executive pipeline, which means that at the point when jobs become available, the pool from which we are able to select is richer and more diverse than it would have been.”

Mentors and coaches were identified as crucial for helping to develop and nurture people. Vanda comments: “If you really want to drive diversity, both in terms of gender and ethnicity, then you’ve got to identify role models in the company. You’ve got to give them some publicity, particularly in operational and management roles – not just in HR because that’s just the same old, same old. I think you’ve got to put talent programmes and diversity programmes in place to drive the change.”

Tipping point

A lot of lip-service to diversity continues to be played by many executives and NEDs (certain sectors are far more progressive than others). It’s why the context for the discussion has to be absolutely right. In recent times, there has been a tendency to emphasise the need for diversity of skills and experience in businesses, without giving due consideration to addressing inequalities around sex, race, class and so on – as if they are somehow mutually exclusive.

Again, the central point to bear in mind is that if you have a culture which can attract people from the widest possible talent pool, and that has a structure which allows them to develop skills and reach their full potential, this will be of direct benefit to a business and its long-term performance.

In the UK, the report spearheaded by Lord Davies, Women on Boards, which was launched in 2011, has done a great deal of good in raising awareness around gender inequality. Over the last three years, female representation on FTSE 100 boards has gone from 12.5 to 20.7 per cent with the aim of hitting 25 per cent by 2015.

More now needs to be done to widen the terms of debate. Samantha Barber, Non-executive Director at electricity company Iberdrola, says: “We could achieve some targets and yet miss the point completely because, actually, it’s about bringing on more women and more people from diverse professional backgrounds in different positions within business. And that’s a different challenge from the gender boardroom target.”

Alison comments: “It is the broader diversity issue that’s important, which means not just focusing on gender inequality. Effectively, Davies has focused on something where there was inequality before and boards were blind to the necessity to incorporate a business model that would allow females to thrive.”

It’s up to companies themselves to keep track of progress. Melanie Richards, Partner an‎d Member of the UK Board at KPMG, comments: “The single biggest thing that the Davies Report has shown is that what you measure gets done. The more businesses create targets and measure themselves on their achievements, the more they are likely to see real results coming through.”

The great thing is that companies have it within their power to make the changes necessary to create a level-playing field.

All it needs is commitment and a little vision.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Making Your First NED Role Count

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Taking on a NED role while still an executive is increasingly encouraged as it becomes more widely recognised that broader business experience will have a positive impact on performance. If the move is to be successful, you will need to do your homework – it’s easy to underestimate the extra time involved and the risk to your personal reputation if you end up on the wrong board.

For those executives wishing to gain NED experience, the key points to remember are:

  • Get buy-in from your company
  • Be honest about the contribution you can make as a NED
  • Use your network to create opportunities
  • Don’t underestimate the commitment now required to be an effective NED
  • Undertake thorough due diligence before accepting a role

Ruth Cairnie, Executive Vice President for Strategy and Planning at Shell International and Non-executive Director of engineering specialist Keller Group plc, made a concerted effort to get full support and buy-in before accepting a position. “It’s one thing to have your line manager on board and supporting you, but if they’re not the ultimate decision maker, it’s essential you know who is and how that would work.”

It’s a case of finding the appropriate person to meet with and ensure expectations are managed. Cheryl Black, NED at Skipton Building Society and former Customer Service Director / COO at Scottish Water, comments: “The key thing is, if you have got the opportunity, discuss it before you sign a contract. If not, there would need to be a conversation with the chief executive.”

The clear advantages of having a NED role need to be articulated should there be resistance. James Crosby, Criticaleye Board Mentor and Chairman of car finance concern moneybarn, says: “The one thing a company has to buy into is that they are the winners out of this because the experience you get sitting round the board table enables you to look at the company through the eyes of a chief executive in a way that you can’t [otherwise do]…

“That on-the-job-training is very valuable to your current employer and so either they’ve got the policy that they’re in favour of it or you make the case – and it is a strong case that you can make.”

All in good time 

Once the green light has been given by your company, the next stage is to use your network to find a suitable position. Uniformly, those speaking to Criticaleye said the biggest danger here is to accept the first offer that comes along.

Patience and self-discipline are required. “When you’re taking your first NED position, you tend to feel a little bit flattered when that offer comes through from a particular board,” says Andrew Tallents, Director at executive search firm Warren Partners, who goes on to add that it is essential to do proper due diligence around the company, its numbers and the other non-executives too.
James says: “If you’re starting out in your non-executive career, it will be important to you to be a non-executive director of a successful company. You can’t get it right all the time, but if you were to end up being a non-executive director in a series of companies that were unsuccessful, ultimately that would be very unhelpful in terms of your reputation and ability to do the job.”

It’s a case of being thorough to minimise the risks. For example, when Ruth was evaluating opportunities, she spoke to the external auditors and brokers as well as meeting the chief executive and other board members. Crucially, she wanted to get a sense of the practicalities of the board meetings too, from the size of the packs to how meetings were run and where they would take place.

Martin Towers, Senior Independent Director at plastics manufacturer RPC Group, says: “The NED role nowadays is much more widely drawn – you do tend to get more involved. It is more time consuming and you have to be able to put the appropriate amount of effort into it, particularly if you’re running one of the committees…

“If you’re [running] one of those, then there is more of a time constraint on you so you do have to juggle it. Now people say, ‘Well, I do it all at the weekend’, or: ‘This is my Saturday job.’ While that has a nice ring to it, in practice it doesn’t quite work out like that because you get caught up in things between Monday and Friday.”

As for the question of risk, naturally no organisation is completely ‘safe’. “I’ve always thought that I’ve been very diligent and yet I’ve been surprised,” says Andrew Allner, who has had a variety of roles and currently serves as Non-executive Chairman of public transport concern Go-Ahead Group.

“Clearly, you meet everyone on the board; I always believe it’s helpful to talk to a company’s auditors and lawyers… I do think that you need to have a pretty good gut-instinct when you meet people, [to decide] whether you think that you will be able to work with them or not.”

When accepting and then managing a NED role while still an executive, the two most important things to bear in mind are that you should not be taking on more than you can handle, and that you feel you can make a meaningful contribution to the business.

“Ultimately, I think one gets satisfaction from the role by feeling that you can make a difference,” says Andrew Allner.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Is Your Digital Strategy on the Money?

Comm update_11 FebrSo you’ve gone through the headaches and heartbreak of constructing a digital offering. You’ve evolved from multichannel to omnichannel, striving to provide a consistent – seamless may be a stretch too far – level of service via stores, the web and mobile. Now the real hard work begins as it’s time to make full use of data and analytics to establish a clear return on investment.

Charlie Johnstone, Origination Partner at private equity firm ECI, says: “Customers increasingly shop across channels which makes it hard to attribute revenue to one particular area of spend. For example, a straight measure of PPC [pay-per-click] may suggest it is unprofitable, but this could ignore customers who are originally attracted through PPC and subsequently come to the site organically to shop, or indeed transact through another channel.

“Successful businesses are those which not only take a holistic view of the customer but are also able to understand shopping habits through analytics and behavioural insight rather than seeing each channel in isolation.”

By investing in data companies will start to see a difference. Jonathan Elliott, Europe Head of Business Transformation and of Digital Enterprise for Tata Consultancy Services, says: “Smarter businesses use analytics to micro-segment their customers, to better profile their products and also to look at how to use technology to spot bottlenecks in their operations.”

Steve Muylle, Professor and Partner at Vlerick Business School, and a Criticaleye Thought Leader, provides the example of DBS Bank, one of the largest in South-East Asia: “[It] has done a great job by enriching customer service through digital… In terms of cash allocation in ATMs, where Singaporean customers use them a lot more than in Europe, they’ve invested in data and analytics to understand everything from amounts of cash withdrawn, speed of dispensing it and where it’s being withdrawn the most…

“It took six months to develop an algorithm which they then tested for a year, but the net result was a massive improvement in cash allocation across the country and customer satisfaction went through the roof.”

At the end of last year, Gary Favell, CEO of retail concern Bathstore, launched a new e-commerce platform. He explains: “If you truly have an omnichannel strategy, the first thing you need to be able to do is track the return on investment on what you’re spending. If you haven’t got software that can track your customers and a data management system that isn’t totally integrated, you can’t tell that.”

Heather Savory, who chairs the Open Data User Group, which provides independent advice to the UK Government’s Data Strategy Board, comments: “Any business that doesn’t have a digital strategy at its heart will find it difficult to continue to do business in the medium term.  For example, the use of both demographic and geospatial data allows large supermarkets and other retail outlets to work with local government to plan where they should locate their new stores.”

Taking the lead

The use of data as a way to inform and shape strategy is only going to increase, whether that’s from pricing – Amazon reportedly makes 2.5 million price changes a day – to gathering intelligence on purchasing habits.

For those companies struggling to identify an ROI, a change in thinking is required. Jay Patel, CEO of mobile data provider IMImobile, says: “A lot of the return on investment hasn’t occurred because multichannel strategies are being applied to situations where companies are trying to win new customers.

“The acquisition of customers is difficult and competitive and just because you can do multichannel doesn’t mean you are going to [be successful].”

Martyn Phillips, former CEO for the UK & Ireland at DIY retailer B&Q, which in 2011 spent £35 million improving its online business, says: “You make certain decisions and review them quarterly, determine what success looks like, plan your investments for that quarter, and then stick with it.

“It changes so quickly and you can just get lost very quickly… [so] you’ll need to be prepared to change your view and rebalance your investments for the next quarter.”

Helen Murray, Chief Customer Solutions Officer at outsourced contact centre company Webhelp TSC, says: “Most of our customers have a multichannel approach to some extent but the crucial bit is developing some clarity around why you need to be in the digital space, how it’s going to benefit your customers and how your organisation is going to use it.

“There are often different silos within the business that have different objectives… but if channels aren’t connected and you can’t start a conversation in one that can be continued in another, then it’s not only disappointing for the customer but ultimately expensive for you as an organisation.”

Incentives will need to be aligned across platforms, a decision which may cause unrest among employees but one that is necessary if an organisation is to mature and move beyond the outdated dichotomy of digital versus physical. Training, development and new hires will also need to be undertaken if a company is going to succeed in building its brand and, in the process, winning and retaining customers.

John Allan, Chairman at electrical goods chain Dixons, which recently created a new Chief Marketing Officer position in order to bolster its multichannel capability, says: “Every management team benefits from having a blend of experienced people who understand the business and people with expertise from outside it, perhaps from other industry sectors… We have to keep moving forward as a business, particularly in terms of digital marketing, and having a new CMO will certainly help us to do this.”

When it comes to best practice, the airline and leisure sectors, plus elements of retail, are often heralded for executing digital strategies to a high level. However, far too many board-level executives continue to be tentative about reshaping business models in order to create that single-view of the customer.

Steve says: “You need to have a five or ten year vision for the digital side of the business and obviously the companies that succeed big time are the ones that double their revenues. They have this big ambition rather than settling for a couple of per cent of online sales in the first year and thinking that’s ok.

“What we see is that a lot of executives are afraid of engaging in digital because of fear of cannibalisation… that’s why you must have top management commitment from the start and make sure that the business is crystal clear on its online positioning to the customer.”

Be concerned if doubts and uncertainty continue to hold back progress in your company. The debate over whether or not to invest in digital moved on long ago, as the main focus for companies today is how to extract, understand and act on data to drive the best service for customers and the highest value for the business across each channel.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

5 Ways to Cement a Leader’s Legacy

Comm update_4 Febr1

The decisions made by CEOs will ultimately define the legacy they leave behind. Richard Branson is the inspired entrepreneur. Steve Jobs the genius who changed our relationship with technology, while Jack Welch is famed for his no-nonsense management style. So what plans should a business leader be putting in place to ensure their long-term reputation is synonymous with a company’s success?

Firstly, it’s a case of accepting that the average CEO doesn’t have the time in charge afforded to the likes of Branson, Jobs and Welch. Kai Peters, CEO of Ashridge Business School and a Criticaleye Thought Leader, says: “A lot of CEOs aren’t in the job long enough to leave much of a legacy. Tenure is less than five years on average and declining… and research indicates that to make a significant change in an organisation it takes a little bit longer than that.”

So, from day one, you’ll be under pressure, balancing short-term priorities with long-term strategic goals. Criticaleye spoke to a range of business leaders to find out the five steps that need to be taken in order to make the right kind of impression as a CEO.

1)  Know Your Purpose

A leader who fails to articulate a compelling vision for a business will not last long. Andrew Heath, President of Energy at engine maker Rolls-Royce, says: “It’s about focusing on what really matters and finding that in the business that you’re running. You’ve got a responsibility to be the architect for the future of the business… [so] it’s a matter of focusing on that sense of higher purpose, the direction you’re trying to take it in and it’s about getting strategic coherence across the organisation.”

Colin Hatfield, Senior Partner and Founder of Visible Leaders, a consultancy that specialises in leadership communication, says: “I always get a little worried when I hear leaders saying that their ‘going in’ position is to build a legacy. I think they should start by saying: ‘I’ve got to do what I think is the right thing for this organisation’… Leadership generally is about making change happen and the CEO is the epitome of that.”

2) Be Realistic

Only so much can be achieved by a CEO at any given moment in time, particularly in the early days. Matthew Wright, Chief Executive of Southern Water, comments: “Whether it’s a cultural legacy; a [track record] of under-spending on asset maintenance or whatever, there is often a period where you’re trying to dig yourself out from under a legacy that isn’t entirely positive.”

Howard Kerr, Chief Executive at standards and training provider BSI, says: “As an incoming CEO, you’re always very conscious of what your predecessor leaves you. When I leave there will be something that my successor will have to work on that I haven’t necessarily addressed effectively. You’ve got to be very honest about what… you are leaving behind and recognise that no CEO or organisation is perfect.”

3) Get the Team Behind You

Teams will perform to a much higher level if they believe in what they’re doing. Peter Horrocks, Director of BBC Global News and World Service, comments: “The key is to convince people that the changes you want to make during your period in charge are not contrary to the central values of the organisation, but that they will help to sustain it and to make it more successful in the future… You can get into a situation where people see that someone is changing things in such a way or to such an extent that they react against it.”

Matthew comments: “We go on the road, meet all our employees and talk about how they can start to influence the direction of the company… [we’re] very clear about why we’re here, what our vision and mission are and what roles people have within that so that they can connect with the organisation and its objectives.”

4) Cast a Shadow

“If they don’t notice when you arrive, they’re unlikely to notice when you leave,” says Lucy Dimes, Non-executive Director at textile services company Berendsen and former UK & Ireland CEO of telecoms concern Alcatel-Lucent.

Andrew comments: “I try and put my personal mark on things, so I do a weekly blog in which I talk about the key strategic themes and priorities, such as health and safety, and the values we have around ethics and compliance. I talk about what I see is going well and where I see things not going so well, reinforcing positive behaviour and recognising individuals who portray the right values and who are being highly supportive of executing the strategy.”

For Lucy, a leader must be capable of engaging. “Did people remember it as a good era, a time when things changed and when the leader touched their lives rather than just operating aloofly over the organisation?’

“The leader sets a tone and casts a long shadow on the organisation, so you’ve got to make a personal impact. At the same time you want to create things that everybody agrees are right for the organisation and not just the way that [you] do things, so that when you leave they are seen as changes that everybody has played a part in creating.”

5) Build Long-Term Value

Sam Ferguson, Group CEO and President of EDM, an information management provider, says: “There is a short-termism in business… which means, instead of investing to create the right business for the future, many people end up maximising profits now so that the chief exec can get his bonus… I think there’s a bit of that in the UK that needs to be rectified, so that [CEOs] are more focused on building businesses with the long-term future in mind.”

When it comes to creating value, a CEO will make a lasting impression by getting good financial results and by leaving behind a capable team. Kai comments: “You should be investing for the long term. You bring talent in and you make sure you facilitate the capacity for people to talk to each other without you having to be the omniscient one in the middle. Between bringing in some new faces and getting people to talk to each other, hopefully you generate some intellectual property.”

***

In the final analysis, a CEO should realise that their role requires them to be a steward, serving the company to the best of their ability before moving on. “No one individual is bigger than any organisation, whether they’re the chief executive or in any other position,” says Howard. “The company’s interests always trump those of the CEO.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

 

Mastering the Generation Game

Comm update_28 JanTapping into the changing needs and desires of five generations of consumers is only part of the challenge facing today’s business leaders. Just as taxing is the question of how to manage a multigenerational workforce. How exactly do you ensure that your incentives, ways of working and corporate ethos are going to appeal to both your younger and older employees?

Mark Purdy, Managing Director (Economic Research) and Chief Economist at Accenture, comments: “There’s a clear need for a multigenerational organisation. We’ve recognised that there’s a major trend around ageing and increasingly organisations are thinking about this, but maybe what we haven’t recognised is that we have a lot of millennials in the workforce too, and increasingly the successful organisations are going to be defined by their ability to bridge the gap between the ages and capitalise on the inherent strengths of both young and old.”

It’s a leadership and talent management issue. Naomi Wells, Head of Future Planning and Sustainable Development at Waitrose, part of the John Lewis Partnership, says: “We want to be able to offer a benefits package which appeals to people at the end of their career and the beginning of their career. Having choices is really important, whether that’s buying an extra week’s holiday, investing more in your pension or taking childcare vouchers, and a benefits package that covers the full spectrum of your workforce will also help you to attract talent, both young and old.”

Few of those in leadership roles will have experienced this before, especially as it is intricately linked with how technology is changing the workplace. Vanda Murray, Board Mentor and Non-executive Director at construction and support services company Carillion, says: “Businesses need to invest in IT to enable flexible working, which may be from home or any remote location, as it is now expected that we are all ‘connected’ wherever we are.

“There are huge benefits to businesses that embrace more flexible working patterns and practices. It helps recruitment and retention – in particular those workers with family commitments – be it younger children or elderly parents. Young mothers often find they cannot balance work and home life without this flexibility for example.”

Experience matters

According to research by Accenture, the fact that people are staying in employment for longer should be seen as a good thing for the economy as increasing time in the workforce by one year per person in the UK would boost the level of real GDP by one per cent. Mark says: “The fact that we’re going to have more people in their mid-sixties who still have valid skills, plenty to contribute and who also have time, is a tremendous opportunity for organisations that can harness it in the right way.”

In many cases, it’s about thinking how the older generation’s experience can be used in more imaginative ways. At Tullow Oil, for example, older workers who aren’t yet ready to retire are proving to be extremely useful when applying their experience overseas. Gordon Headley, Chief HR Officer at Tullow, explains: “In Ghana, Uganda and Kenya where our main operations are, there is an expectation from local governments that we train local workers,” he says. “By having older workers available to go and work overseas we can send seasoned and highly experienced oil-field professionals to train local workers… which [makes our older workers feel valued and] gains us great favour with those governments.”

Tim Smart, Chief Executive of the Kings College Hospital NHS Foundation Trust, has seen a similar benefit of shared knowledge: “We are doing quite a lot of work with health care systems providers in the Middle East. They really value and respect age and experience so we are able to offer people opportunities beyond their normal retirement age, working in our more commercial developments which are principally overseas.”

It’s a case of applying some imagination and creative thinking to the world of work. Anne Jaeger, Chief Risk and Compliance Officer at insurance firm RSA Scandinavia, says: “We have been able to attract people who would otherwise have retired to some senior schemes by finding ways to suit their needs, such as where they only work three days a week or part time.”

Great expectations

The under 30s generation, or so-called ‘millennials’, also want different things from an employer. “Our younger workers aren’t driven just by money,” claims Don Elgie, CEO of PR and communications concern Creston. “They’re also interested in being able to advance themselves through learning… [that’s why] we have various graduate [and] innovation schemes where we encourage people from across the group to, for example, pitch for a hypothetical client or submit an innovative idea. Actually, we’ve found they’re motivated by a whole host of non-financial incentives.”

Mark comments: “We find that a lot of the people we recruit [at Accenture] are incredibly interested in, for example, our Corporate Citizenship programme, Skills to Succeed, or the work we do for the World Economic Forum. There’s this sense that they’re interested not just in the business itself, but in its place in the wider world and the contribution that it can make to society.”

Unlocking the power of a multigenerational workforce involves encouraging the exchange of knowledge and experience between the young and old in an organisation. Jane Furniss, NED at the National Crime Agency and former CEO of the Independent Police Complaints Commission, comments: “Certainly, at the IPCC, use of social media, technology, understanding of networks and ways of operating among young people and understanding of the world, meant that many of the people that [we recruited] and the police officers who operated with us, found that shared learning was really valuable…

“The experience of one and the knowledge and understanding of the other really improved how we did our business. And it was better for the public, making sure our services were changing to the public demands.”

Rudi Kindts, Non-executive Director for technical recruiter Matchtech and former HR Director for British American Tobacco, says: “The nature of what constitutes work is changing and I see some organisations that really haven’t thought it through or are still arguing against the benefits of flexible working… [while others] are making their sales force as flexible as possible, providing them with the technology so they can be on the road, working from home or wherever.”

Increasingly, successful organisations are going to be defined by their ability to harness productivity across the workforce, combining the wisdom of age with the exuberance of youth.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

The Outlook for Business in 2014

Comm update_17 Dec

If the winds of change haven’t been felt already, business leaders should be tacking hard and plotting a course for growth. Boards that have learned valuable lessons over the last five years around managing budgets, investing in technology and growing talent, and who have made the necessary strategic and operational recalibrations to take advantage of new opportunities, will be the ones who prosper.

Criticaleye spoke to a number of Members from around the globe, operating in a variety of areas, from consumer goods and construction to private equity and investment banking, to examine what their expectations are for 2014 and how they are planning to take advantage of resurgent growth.

According to Mark Spelman, Global Managing Director at Accenture, the broader picture is certainly optimistic: “My bottom-line message is that I think 2014 will be better than 2013 in terms of macroeconomic growth rates… because, if you look at the three major trading blocs, the US, the European Union and China, I think they’re all going to see some positive upturn in 2014 relative to 2013.”

The US remains the world’s largest economy, with upwards of $16.5 trillion in GDP, and the Bureau of Economic Analysis’s second estimate for GDP in Q3 of 2013 saw figures revised upwards from an annualised rate of 2.8 per cent to 3.6 per cent. That said there are still considerable issues to sort though.

Paul Danos, Criticaleye Thought Leader and Dean of Tuck School of Business at Dartmouth College in the US, comments: “You have all those drags like the tremendous public debt. In the US alone, they’re projecting $20 trillion by 2020, and that’s going to have to be brought down… so we can expect periodic clashes in Congress on the debt ceiling, which will create uncertainty, not to mention the question around whether the Federal Reserve will scale back its programme of quantitative easing.”

Likewise in Europe, there will be plenty of bumps along the way. “The European elections in May are going to be very important,” says Mark. “Mainstream parties are going to struggle… and the more fragmented the European Parliament becomes, the more difficult it’s going to be to drive a reform agenda in Europe.”

Those seeking to expand into Asia’s high growth markets must be fully committed to their strategy. Hellmut Schutte, Vice-President and Dean at China Europe International Business School in Shanghai, comments: “Growth [in China] will continue and markets will become more transparent due to the continuing fight against corruption. This means more of an equal chance for foreign firms… [and] business will be better for multinational companies than before.

“But running operations in China will also become more demanding. Constant upgrading of technology and improving management skill in Chinese companies erode the competitive advantages of many foreign firms. In many industries, standards in China have reached international [levels]; so, depending on the size of a particular market, the outcome of competition in China will determine the success or failure of firms in global markets. This means half-hearted engagements in China have little chance of success.”

Andy Dunkley, CEO of jeans brand Lee Cooper, who completed a $72 million (£47 million) trade sale to US company Iconix earlier this year, says: “With a business such as ours, which is 95 per cent outside of the UK, we see lots of opportunities in global growth for 2014… We have an excellent base in the Middle East, India, China and South Asia [and] we have foundations that can grow at double digits in these markets.”

The key pressure points for 2014 will be, in Andy’s view, unexpected changes in the patterns of growth: “A discussion of the reduction of tapering relief in the US [in 2013] has had a dramatic impact on currency movements and values in India and across markets that are seemingly unrelated. [Therefore, as we grow] we continue to seek a balance which means we are not over exposed in any one market.”

For Giles Derry, Partner at mid-market private equity firm Dunedin, business leaders need to bold without being foolish: “I think there’s a tightrope to walk in terms of making sure you’re investing for expansion, but without betting the farm on certain assumptions having a specific outcome… how brave you’re feeling probably depends on your end markets and which areas of the global economy you’re exporting to.”

Appetite for deals

In terms of M&A, research from Big Four firm EY suggests an uptick in deal activity after a five-year period of declining transactions globally. A survey of 1,600 senior executives in more than 70 countries conducted by EY finds that 69 per cent expect deal volumes and deal sizes to improve over the next 12 months.

David Barker, Head of Transaction Advisory Services for EY’s Financial Services division, says: “Banks continue to search for yield and therefore remain enthusiastic financiers of good deals which we think will continue to drive positive trends in M&A…

“In particular, M&A activity among banks will increase significantly following the ECB-led Asset Quality Review programme and the associated balance sheet stress tests, a process which begins in April and continues on through the summer. We’d certainly expect M&A activity to grow off the back of that… particularly around central and southern Europe, as banks choose to reposition which countries they want to operate in as core and in which they will consider reducing their levels of activity.”

Steve Pateman, Head of UK Banking at Santander, comments: “For the banking industry in its broadest context, there’s this massive regulatory agenda in 2014 because it’s the year when mortgage regulations change fundamentally, and all banks will have to adapt to a new system called MMR [Mortgage Market Review]. So, as they head into Christmas, most are probably thinking about whether they going to be ready for MMR on the 26th April.”

Reconnecting with customers is also vitally important for Steve: “[This] will hopefully be the year when banks start to rebuild trust and perform the role we’re supposed to perform in supporting the economy. If it continues to grow and recover from some of the lows of the last few years, it will be easier for the industry to do that.”

Funds for growth

On the public markets, the IPO renaissance over the last six months looks set to continue. Alastair Walmsley, Head of Primary Markets at the London Stock Exchange, says: “Q4 of 2013 is going to be the best quarter for overall capital-raising in the UK market for more than four years… [and] we are expecting the level of activity to continue, potentially even accelerate, into the New Year.

“Investor risk appetite has increased significantly which is being recognised by international companies… so cross-border IPOs, which have been pretty muted around the world this year, are looking likely to pick up going into 2014.”

Proper access to finance combined with a healthy set of accounts will certainly help most businesses that are looking to grow, not least in the property sector.Alison Carnwath, Chairman of Land Securities, says: “Because we have a strong balance sheet and are able to build into a development cycle, and because London, in particular, is under-supplied with first-rate property for occupiers, we see 2014 as being a good year for the property industry. It won’t be so easy, of course, if you’re not well-financed, because accessing funds from banks and alternative sources still remains a problem.

“Another trend we see is that, if interest rates start to rise, retailers will find it increasingly difficult because they haven’t enjoyed a particularly buoyant period. Furthermore it’s going to be testing for consumers who’ve got big mortgages to decide where they’re going to restrict their expenditure. And we expect quite a lot of it to come from them spending less in retail.”

Steve Cooper, Head of Personal and Business Banking for the UK Retail & Business Bank at Barclays, comments: “The housing market is definitely improving, albeit it is largely driven by London and the southeast. But there is improvement elsewhere as well. If I look at business turnover, what they are generating in terms of cash and sales, that’s now gone back to above where it was pre-downturn. It takes a long time to get there, but businesses are definitely generating more sales.

“What I’m not yet seeing is enough businesses investing cash for growth. I’m still seeing [them] generate and hoard cash. It’s not that they’re fearful about the future, just that they… can’t see sufficient opportunity to invest for growth.”

All change

As ever, talent and skills will be a pervasive issue for CEOs in 2014. David Stokes, Chief Executive for IBM in the UK and Ireland, says: “A key issue facing business leaders today is skills. Press coverage over the last few weeks indicates that the UK is lagging behind foreign counterparts in building core skills and estimates predict an annual shortfall of 40,000 science, technology, engineering and maths graduates causing significant problems for business if not addressed now.

“Investment in initiatives which enable young people to build the skills that are valued by the market – thinking particularly about skills that will enable the digital world – will help businesses safeguard their own future as well as the future of our economy.”

Martin Balaam, CEO at IT services concern Jigsaw24, comments: “Talent will be an issue because… anybody that’s come up through the ranks in the last five years or so will have never really been in a period of growth…

“We’re just in the throes of recruiting a new graduate intake and, also, we’re actively working with the local authority in terms of apprentices. There’s been a bit of a lull in terms of investing in the next generation, and we’re certainly turning that tap back on… so we’re bringing on people who, in addition to our existing workforce, can learn on the job and ultimately fill those roles that we believe are going to become available as we grow next year.”

***

Just from these snapshots of business sentiment it’s clear that as we go into 2014 the mood among the Criticaleye Community is markedly sunnier than at the same point last year. There will be some real areas of growth to capitalise on over the next 12 months, just so long as leaders are prepared to take a punt and have the gumption to make it happen.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk