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Lessons in leadership from one of the greats - Nelson Mandela.

The 5th of December was the one-year anniversary of Nelson Mandela’s passing, a time to reflect on the timeless lessons in leadership that we can all learn from.

Mandela was a gifted visionary. He exercised a full range of cognitive, emotional and behavioural skills to bring about profound change in South Africa and to give hope to millions around the world. All leaders who aspire to be more strategic can learn from Mandela’s six key behaviors that distinguish him as a true strategic leader.

He anticipated - Mandela looked ahead and could see that South Africa’s system of apartheid would not survive. From his prison cell, he strategically assessed his moves and anticipated reactions. When offered freedom in exchange for renouncing opposition to the government, Mandela rebuked President Botha: “What freedom am I being offered while the organization of the people remains banned? … What freedom am I being offered if I must ask permission to live in an urban area?” Mandela decided to serve out his sentence rather than exchange it for the political prison of apartheid. His vision was right.

He challenged - Mandela stood out among prisoners and guards as a man of principle and dignity, willing to sacrifice his life for his beliefs. Despite harsh prison life, Mandela mustered energy to challenge his keepers. He was unwilling to accept the status quo and his presence on Robben Island held a mirror up to the face of apartheid’s leaders. Through word, deed and symbol, he challenged the system that denied him liberty.

Eventually, Botha’s successor F.W. de Klerk called for democratic elections and in 1994, Mandela became president of South Africa in a very rare, peaceful and orderly transition from white minority to black-majority rule. Mandela and de Klerk shared the Nobel Peace Prize in 1993 “for their work for the peaceful termination of the apartheid regime, and for laying the foundations for a new democratic South Africa.”

He interpreted - Mandela studied the errors of Robert Mugabe whose brutal dictatorship resulted in the country’s demise. He recognized that South Africa could follow in Zimbabwe’s footsteps, unless he practiced racial harmony. That meant forgiving without forgetting and sharing power. “We have to surprise [the white minority] with restraints and generosity,” he said. A master of symbolism, Mandela invited his prison guards to the presidential swearing-in ceremony.

He Acted -  In 1993, a white man assassinated Chris Hani, a leader of the South African Communist Party, triggering a widespread demonstration against the de Klerk government. Mandela, recently out of prison, had the courage to call for peace when people wanted revenge.

He also made a courageous decision to use sports as a means of healing, believing, “Sport…has the power to unite people in a way that little else does.” When the ban was lifted on South Africa’s participation in the 1992 Olympics, Mandela at first opposed but ultimately decided to support the mostly white athletes. “There is no doubt in my mind this is the correct decision, Mandela said. Of the 95-person delegation, only eight were black. “I would have liked [the team] to be a reflection of our population, but there has to be a starting point.”

He aligned - After being elected South Africa’s first black president, Mandela announced he would serve only one term, though two were permissible. He understood rallying the country and bridging diverse interests meant making room for others. Black supremacy was as depraved as white supremacy, in his view. Mandela knew that over a billion people would watch his inaugural presidential address and used this speech—and key plural pronouns we, us, and our—to align a deeply divided nation around a common vision: “We understand it still that there is no easy road to freedom…none of us acting alone can achieve success. We must therefore act together as a united people, for national reconciliation, for nation building, for the birth of a new world.

He learned - Mandela faced big questions after his release from prison: What to do with the faltering economy? For most of his life, Mandela was a socialist and even a Marxist. He was suspicious of free markets and private ownership, given the abuses he witnessed. He said, “The nationalization of the mines, banks and monopoly industries is the policy of the ANC [African National Congress], and a change or modification of our views in this regard is inconceivable.”
But then he came to learn what decades of socialism had done to the states of the former Soviet Union. His thinking took a sharp turn when he met leaders of the Communist Parties of China and Vietnam who were striving to privatize state enterprises. “They changed my views altogether,” Mandela told his biographer.

Mandela exemplifies how a strategic leader adjusts strategy and execution amid complex social, political, legal and economic forces without compromising deeply held values. Leadership is not just about motivating people and creating political support for a strategy, but also about maintaining broad support through successive adjustments to the plan.

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Capitalism  -  Saviour or Destroyer

Capitalism and globalisation have the potential to lift every man, women and child out of poverty, it has the potential to provide education for all who aspire to gain knowledge and provide a decent standard of living for those who are prepared to work and manage their finances responsibly.  This can be achieved whilst tackling climate change and moving towards an environmentally sustainable global economy. 

We can rid the world of the scourge of terrorism, racism, sexism and despot leaders who murder their people in the tens of thousands or we can take the path of uncontrolled capitalism and plunge the world into a great depression and make much of our planet uninhabitable.

We are at a crossroads and it is our collective decision that will determine which scenario will play out.

All the mechanisms are in place to make it either scenario happen.  I hope for humanities sake that common sense and self preservation prevails and we use capitalism and globalization as the engine to drive prosperity for all. Terrorism, racism and sexism are only possible where there is extreme income inequality and ignorance.

As Malala so eloquently stated in her speech to the United Nations “extremists are afraid of the power of education, the power of women, the power of the voice of women frightens them. They are afraid of change and equality in society”.

We have a 273 trillion dollar global economy and the knowledge to rid the world of the scourge of poverty, terrorism, racism, sexism and ignorance. We can make it happen.  

If we can launch a spacecraft “Rosetta” and land it on a comet after travelling for ten years and 6.5 billion miles through space, if we can trace our genome back to a single mother in Africa and if we can recreate what the universe looked like a billionth of a second before the Big Bang then what I propose is not such an outlandish pipe dream.

I am certain that if our global leaders where to set out such a vision collectively and work together with the same drive and determination that the worlds scientists have shown then the objective could be achieved within ten years.

The biggest obstacle is not technical; the biggest obstacle is humanity itself, the human personality traits of greed, power and envy have not changed since our cave man days.

People like to blame politicians, bankers and the wealthy for the way things are yet the same personality traits are in most of us. Most people will follow which ever snake oil salesman offers them the most. Greed, power envy is what drives marketing, buying behaviour and the capitalist system.

If we want to leave a world for our children and grand children free of poverty, terrorism and a sustainable environment we collectively have to pause and take stock of which path capitalism and globalization takes. If we choose an equitable, sustainable future we need to support those leaders in both the public and private sector who want to take us down that path and reject those who only see short term gain.

 

It's time for a radical re-think, before we all disappear up our own backsides...

People will never align with bad aims. Executive greed, exploitation, environmental damage, inequality, betrayal, false promises are transparent for all to see. Employees and consumers are not that stupid. Warren Buffet quite rightly points out that he pays less per dollar in tax then his secretary. To give him credit he is proactively trying to address the issue and imploring others to do the same.

"Oh you want me to do this training, and adjust to your changes, so I can make more money for you and the parasites who feed off this corporation? Sorry, no can do. I've got my own life to lead thanks very much."

And that's if you are lucky. Most staff will simply nod and smile demurely as if in servile acceptance. If they still wore caps they'd doff them.

And then nothing happens. Of course nothing happens. The people can't be bothered. The same for consumers

“You want me to buy from you when you give lousy service have been ripping us for years, and now when we can buy through the internet, you want us to believe it’s bad for the country, we should buy local. Get real”.

"... if the directors are too arrogant and stupid to understand why, then why should we tell them?.."

Re-assess and re-align your organisation's aims, beliefs, integrity - all of it - with your people's and the consumers. Then they might begin to be interested in helping with new skills and positive change.

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Modern Capitalism is “rotten at its core”

The leaking of over thirty pages of documents reveals just how rotten at the core modern capitalism is and the political systems that support it. The documents reveal tax avoidance on a grand scale by major corporations and the big four accounting firms.

The excuses companies offer for pursuing aggressive tax-avoidance activity always includes claims that they are acting in the interests of their shareholders.

But the law makes it clear that the duty of the directors is to the company itself. And since there is nothing in law that says a company’s duty is to minimise its tax or maximise profit, the claims justifying companies’ tax abuse are simply not true. They spread a myth that is without foundation.

It’s a dangerous myth too, that positively harms the company and all its stakeholders. It is very doubtful that any company will ever benefit from the type of exposure that household name companies are receiving all be it not in the mainstream media. That’s a failure by the directors.

But more specifically, this abuse can also specifically harm the shareholders, most of whom will be almost wholly unaware of the risks the companies in which they invest are taking: for example, the company earnings may be misstated, which will mean that the share price is overstated.

There are, though, three clear groups who do benefit. The first are company executives: tax avoidance inflates net profits after tax, and hence share prices that then boost their bonus payments.

Second, the professional firms creating and selling these arrangements clearly think they benefit from the considerable fees involved. But the credibility of these firms – who are the effective and sole policing agency of capitalism worldwide – risks being corrupted in the process. This would mean there would be no agent we can rely on to provide an objective assessment of what happens in major corporations.

Thirdly, the tax havens who facilitate these structures also think they gain, but here the logic is yet again warped. Luxembourg gains little tax from these practices and so the gain goes largely to the financial professionals within the duchy who effectively dominate its government. The result is that we have states effectively captured by finance that threaten the very essence of democracy as they serve plutocratic goals.

What can be done about all this? First, we need vastly better country-by-country reporting of where and how companies operate their accounts.

Second, the cosy arrangement that lets the International Accounting Standards Board, dominated by the big accountant firms, set the standards that allow these transactions to be hidden from view has to end. We need government-set, internationally agreed tax-reporting standards that ensure all stakeholders get all the information they need to appraise tax risk in companies, large and small.
Third, the OECD crackdown on tax havens as part of the G20 process must continue, its member countries that seek to undermine open markets by promoting tax abuse.

And finally, the tax profession has to drum out those people and firms who promote such schemes, nationally or internationally, if it is to retain any shred of ethical credibility.

 

We have got the ball rolling – now we need to keep the pressure on


The Tax Office has confirmed it will begin using its extraordinary powers to pursue multinationals over liabilities stemming from deals it claims are structured to avoid tax.

But the back lash from predicable sources has already begun. Tax experts are warning that if the powers are applied, disputes will increase and will either result in more large companies battling the agency in court, or moving offshore.

What rubbish these tired arguments are from the same people who set up the avoidance strategies in Luxemburg the double Irish an “Apple” favourite and other schemes.

Under laws enacted under the previous Labour government and retained under the Coalition, Tax Commissioner Chris Jordan was given powers to re­construct company transactions, and thereby increase tax bills.

But under a new ruling issued on Wednesday the Tax Office confirmed the power would be used against multinationals, especially ones with significant or complex debt arrangements.
The ruling comes just days before G20 leaders meet in Brisbane to target tax avoidance by multinationals among other issues.

We have got the ball rolling but continual pressure will need to be allied to counter inevitable media back lash from these companies and the big four accounting firms.

 

Its’ not how much time you spend in the “office” it how effective you are when you are there.

Sir Richard Branson has always been a pioneer in business strategy, and has recently initiated unlimited vacation time for his employees. This essentially means that the employee may decide for him or herself just how much time off he or she should take, empowering staff by giving them the responsibility of scheduling leave but only when they feel it will not harm the business.

He is smart enough to know that it is not the amount of time you spend in the “office” but how effective you are when you are there. Branson got the idea after reading an article about the Netflix business model, and how they do not track vacation time.

“I have a friend whose company has done the same thing and they've apparently experienced a marked upward spike in everything - morale, creativity and productivity have all gone through the roof,” Mr. Branson said.

A wise man, my boss at the time told me the same thing nearly thirty years ago. It is just one of the lessons he taught me. Another was “Ben work smarter not harder” lessons that I have never forgotten.

It stands to reason that a happy employee is a more productive employee - in fact productivity experts estimate that a worker who feels affection toward an employer will have a 75 per cent greater output than a worker who loathes an employer, and this figure hardly decreases even when the worker is absent for 300 days a year.

Because there is almost no limit to what an individual can achieve when a large part of their energy and brainpower isn't taken up by plotting elaborate revenge strategies against the organisation.
Unfortunately common sense and reason is sadly lacking in the business world.

MILLIONS of Australian workers face a STEALTH tax trap that will increase income taxes by $25 billion over the next four years.

New research has confirmed the devastating impact of bracket creep, which forces workers into higher tax brackets as a result of rising wages and inflation and hits low income earners the hardest.

The National Centre for Social and Economic Modeling has confirmed that 1.8 million Australians will be forced into higher tax brackets over the next four years as a result of bracket creep.

Over time, the Prime Minister concedes that average workers will pay the equivalent of $3,800 more tax every year as a result of bracket creep.

NATSEM’s Ben Phillips said the figures confirmed that bracket creep was a far bigger tax hit to families than the petrol tax increases or other budget nasties. While the introduction of the petrol tax by stealth will increase fuel costs by $2 billion, bracket creep will increase taxes by $25 billion over the same time period.

There are implications for workforce participation, other family payments and childcare as well, that leads to higher effective marginal tax rates. That’s the combination of your personal income tax increasing and losing government benefits. So you get a double whammy of increased taxes and lower government payments. Bracket creep will gouge an extra $2.4 billion in income taxes from workers this year alone according to NATSEM. The Abbott Government is expected to raise $183 billion in income taxes this year.

Without formally increasing taxes, the Treasurer will gouge workers by an extra $5 billion a year in 2015 purely as a result of bracket creep. Without urgent tax reform, workers will be slugged an extra $10 billion-a-year by 2018 according to NATSEM.

Currently, a tax-free threshold applies to earnings up to $18,200. Workers earning up to $37,000 lose 19 cents in the dollar. Workers earning between $37,000 and $80,000 lose 32.5 cents in the dollar to the taxman. Workers earning over $80,000 lose 37 cents in dollar.

NATSEM’s research assumes a conservative 2.75 per cent a year wages growth this year and 3 per cent beyond, as is assumed in the federal budget. If wages rise faster than forecast the impact of bracket creep would be even greater.

Whilst governments around the world have a revenue problem it’s is those that can least afford it that are hit the hardest. When it comes to closing tax loop holes for corporations that enable them to avoid paying at all tax let alone a fair proportion of tax they are slow to react even though just by closing the loop holes would raise Billions in tax revenue. It has been estimated by the International Monetary Fund (IMF) that 1 Trillion Dollars of corporate profits escape tax anywhere in the world.  To put it into perspective – if you spent 1 million a day since Jesus was born you will still not have spent all your 1 Trillion dollars by today.

Global tax avoidance can take different forms. It includes:

Profit shifting – where the prices paid between related parties for goods, services or use of assets are inflated above their true economic value so that profits are artificially moved between different jurisdictions;

Treaty shopping – where transactions are organized through intermediaries located in particular jurisdictions in order to obtain different treaty benefits without those intermediaries materially contributing to the transaction; and

Residency manipulation – where individuals and legal entities attempt to present themselves as residents of a low tax jurisdiction, or of nowhere;

Global tax evasion can also occur through the use of secrecy jurisdictions to hide or wash money or other assets. While other countries are closing their tax minimization loopholes, the Abbott government has spent the past year opening them up.

One of Treasurer Joe Hockey's first acts in office was to roll back measures to tackle profit shifting and improving tax transparency - effectively handing back $1.1 billion to big global firms. That's money that could have gone to helping struggling families with cost of living pressures, or improving our schools and hospitals.

But Mr Hockey wasn't finished. He then pushed back the start date for Australia's implementation of key global tax transparency measures that were recently negotiated through the G20. If that wasn't enough the Treasurer has slashed nearly $200 million from the Australian Tax Office's budget - sacking thousands of people who are on the frontline in making sure wealthy individuals and companies are pulling their weight when it comes to tax.

That our government and governments around the world have been running protection rackets for corporate tax avoider's is bad enough, but it's particularly galling at a time when average Australians are being slugged with higher taxes – by stealth through bracket creep, petrol tax, new proposed GP co contribution tax and cuts to welfare for the aged and the disabled.

These measures impact directly on my client’s - ordinary hard working Australians who are struggling to make ends meet.

Joe Hockey the treasurer has stated repeatedly “we are the party for lower taxes” -  Yes Joe but for what group in society.

Help me to fight against the injustice of wealth inequality by sharing this information.

The “Flat Earth Society” is still alive and well.

Warren Buffet one of the worlds if not the world’s most successful investor has achieved his success through a relatively simple strategy.  He invests in good companies with good management and he invests for the long term.

This is a strategy that all businesses and governments can learn from. Warren Buffet has the vision to see past the daily fluctuations in share prices and short term profits. In May 1984, Warren Buffet laid out everything that you need to know about his investing philosophy. When asked why he was giving away his secret he replied:

“I can only tell you that the secret has been out for 50 years,” Buffet writes, “…yet I have seen no trend toward value investing in the 35 years I’ve practiced it. There seems to be some perverse human characteristic that likes to make easy things difficult. The academic world, if anything, has actually backed away from the teaching of value investing over the last 30 years. It’s likely to stay that way. Ships will sail around the world but the Flat Earth Society will flourish”.

His observations are valid not just in investing but in all areas of business. A survey by American Express Global Customer Service Barometer shows that Australians would happily spend, on average, an extra 12 per cent if it meant they received better service. Yet excellent customer service is still the exception not the norm.

In a recent article I mention three young ladies who have given me excellence in customer service; I wanted to write the article to provide recognition to these ladies and their organisations to show that their efforts were not in vain.

Another survey conducted by Gallop commissioned by SixSeconds, shows that only 9% of employees are “engaged at work”  91% of employees are either at best neutral (just do enough to keep their jobs) or are actively sabotaging their organisations due to poor management practices.

Maslow, Hertzberg, Vroom, McGregor, the Hawthorne studies to name but a few have been around since the 1950’s - 1960’s yet management today still wants to believe in “I pay you therefore I expect  you to work”. It does not work it never has; it just gets people to work on Monday. It does nothing to create a culture that values excellence, a culture that harnesses the vast potential locked up in their employees.

I could go on but the “ The Flat Earth Society” will continue to live in denial no matter what I say or the evidence that is put in front of them.

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The customer experience is where you gain the advantage over your competition.

Over the past six months I have had the good fortune to have dealt with three young ladies all in their mid twenties who have given me hope for the future and in their generation.

This article is intended to give them the recognition that they deserve for having enriched my life and enhanced the reputation of their organisations by making me feel respected, appreciated and valued.

Two of the young ladies I have not met in person only by phone and email. The three ladies and their organisations are:

Rebekah - Pattersons Insurerbuild

Over a period of nearly six months Rebekah has been my main point of contact with her organisation Insurerbuild - the main contractors for an insurance claim after a relatively small fire. Rebekah, always delivered as promised on time and kept me constantly informed on the progress of the repairs and on a regular basis phoned or emailed to make sure that I was satisfied with the work carried out. On the one occasion when I was not, although not her fault or that of her organisations she made sure that it was rectified speedily and without fuss.

Anne - The Wish Gallery

I initially purchased a limited edition framed photograph “Fire and Ice” by Rochelle O’Neill at an exhibition in a shopping centre. At first I was reluctant coming from a generation that still likes to purchase it and take it home. In this case it was explained that it would take between 15 to 20 working days as each work was individually produced and signed. I agreed and to my pleasant surprise some 15 days latter I received a call from Anne on a Saturday morning saying my picture was ready and when would it be convenient to have it delivered. It arrived on time and exceeded my expectations.

I phoned Anne to thank her and we got to talking and I decided to purchase another work; one from Ian Taylor: “Black and White”. Anne advised me that before making a decision to send her a photo of where I intended to hang the work in order to work out the best combination of frame and background for the location.

Knowing something about working with colour on computers, each computer displays colour differently I left the final choice to Anne. When it arrived on time as promised it again exceeded my expectations.

Not only have the works enhanced my life but the positive experience has added immeasurable pleasure and value every time I look at them.

Leanne  - Bank of Queensland

I initially met Leanne as a customer where I was impressed by her attitude and customer service. And latter, as a client where I was able in a small way, to help her to pursue her dream of designing fashion jewellery.

Since starting her business, the business has gone from strength to strength due to her talent, enthusiasm, and interpersonal skills.

These three ladies all I suspect reflect the cultures within their organisations. It has been my experience as both as consultant with over thirty years experience and as a consumer that:

Leadership Determines Culture Determines Attitudes Determines Productivity

It is a sad reality that the potential locked up in our young people is often destroyed by organisations and an economic system that cares more about short term profits then investing in their real wealth - their people.

It is our responsibility as individuals to leave this world in a better place then when we entered. Collectively my generation has failed miserably in this respect due in large part to the excess greed, exploitation and the distortion of market forces by wealthy individuals and corporations whose greed knows no bounds and collectively for allowing it to happen. We owe it to this generation and the next to do whatever we can to correct our mistakes.

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The Disease of Income Inequality #Inequality

In a recent speech to the United Nations President Obama said “that climate change was the biggest threat that the world faced, bigger than terrorism”.  I beg to differ climate change and terrorism are symptoms of a far bigger threat the disease of income inequality.

Over the past 200 years the gap between the rich and poor has not being narrowing as some in the media would have us believe but in fact has been accelerating at an ever increasing pace. Two hundred years ago wealthy countries where approximately 3 times wealthier than poor countries by the 1960’s this gap had widened to 35 times wealthier and today that figure has increased to 80 times wealthier. But this does not tell the whole story, out of the worlds approximately $223 trillion dollar economy just 1% of the population owns 43% of the wealth. There is something wrong and obscene when 300 of the wealthiest individuals have a greater combined wealth than 3.5 billion people.

This income inequality is not just between rich and poor countries it also reflects a decline in middle class incomes and a concentration of wealth within the so called developed nations.

Economists assure us that rising worker productivity is the key to better living standards for everyone.  When workers produce more per hour of work, their earnings should go up correspondingly.
Since 1973, that hasn’t happened. Productivity has risen substantially, but the pay of the average worker has stagnated in real terms. Adjusted for inflation median incomes grew just 11 percent from 1973 through to 2011, while productivity grew 80 percent.

This simple fact explains why workers today aren’t doing any better than their parents’ generation, and in many cases are worse off.  

In our parents generation one income families were the norm. On one income they could buy a house and pay it off over twenty five years, drive a car and go on holidays once a year.  Now it takes two incomes to do the same and increasingly two incomes are not enough. This  causes social problems with raising children, who in some cases are now in 12 hour a day care, teenage suicides, marriage breakdowns, depression which is  at epidemic proportions to name but a few of the problems that are conveniently kept out of the mainstream media. 

We have allowed those with the most economic power to set the rules of the economy. The average workers share of the economic pie is the lowest in almost 50 years whilst corporate profits and executive salaries are the highest on record and according to the economic elite we should thankful that we are so well off.

President Clinton coined the phrase “the working poor”. I agree I see it in my work every day. Working families who struggle to make ends meet. These people don’t have the energy to think about the larger issues like climate change they are too busy trying to financially survive and raise a family.

Some 40 years ago I read a book called Regulating the Poor by Frances Fox Piven – How the capitalist system works and I have never forgotten it.  Basically it outlined how 20 percent of the population regulate the 80 percent by giving them just enough money that they are not rioting in the streets but not enough that they don’t turn up for work on Monday.

In the ensuring forty years nothing much has changed in fact it has got worse. I am not anti capitalism, anti market forces; anti globalisation what I am anti - is excess greed, exploitation and the distortion of market forces by individuals and corporations whose greed knows no bounds.

We can't afford to let the market system or the political conversation be undermined by the greed of a wildly irresponsible few. The power to bring about positive change and address the problems of inequality rests not with governments, and certainly not with corporations, the power to bring about change rests with the individual.  If enough individuals boycott those companies that engage in unethical behaviour, tax avoidance, provide excessive remuneration to directors then we can change the disease of income inequality and the symptoms of the disease like terrorism.

The current crop of terrorists have nothing to do with Muslims or the Muslim faith they are a minority of warped individuals who entice people and in particular young people to their cause because they don’t have a vested interest in their society and when you think about it why should they – when they live in a region of the world where in income inequality is one of the highest. Indonesia, Malaysia, UAE, Dubai, Jordon, Qatar are all predominately Muslim countries but are not hot beds for terrorism. Why? - Because they have a more equal income distribution.


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How many people have bad jobs?  

How many endure low wages, poor benefits, schedules that change with little notice and few opportunities for advancement. The ABS revealed last month that one out of five Australian workers – or 2.2 million people – relied on casual or part time work. These people have no job security they can’t plan ahead, have difficulty in getting finance and retailers wonder why people are not spending, when in fact they are the second largest employers of casual and part time staff.

The conventional wisdom is that many companies have no choice but to offer bad jobs – especially retailers whose business models entail competing on low prices. If retailers invest more in employees, customers will have to pay more, the assumption goes.

A bit of research will show how false this presumption is. The presumed trade-off between investment in employees and low prices can be broken. Highly successful retail chains in the United States – such as QuikTrip convenience stores, Mercadona, Trader Joe’s supermarkets, and Costco wholesale clubs, Bunning’s Australia – not only invest heavily in store employees but also have the lowest prices in their industries, solid financial performance and better customer service than their competitors.

Why do businesses under invest in labour?

If investing in labour is such a good idea, why isn’t everybody doing it? The main reason is that labour is often a business’s largest controllable expense and can account for more than 10% of revenues – a considerable level in industries with low profit margins. In addition, many businesses see labour as a cost driver rather than a sales driver and therefore focus on minimising its costs.
Extensive research in operations management links employee turnover and poor training to poor performance; this applies to all industries, manufacturing, retailing and service. That is not surprising. Operational execution requires people. So businesses with a gap in people – too few employees or unmotivated employees – will have a gap in operational execution.
In an address to the Prime Minister’s Economic Forum (Brisbane) on the 13/6/2012 the Reserve Bank Governor, Glenn Stevens  told business to “Stop complaining about the economy, start adapting to it - and adapt to it by raising productivity”. Adapt or die is the simple message.

It is a leader's responsibility to get discretionary effort out of people. It is not that hard to get an extra five good hours out of people. I'm not talking about going from 40 to 45 hours. I'm talking about getting five quality hours into 40 hours.
If you have high staff turnover, as a leader, you apologise. If your people aren't engaged, you apologise. If you don't get the maximum productivity, you either apologise or give somebody else a turn.
Imagine the increase in productivity you could achieve if you change the culture of the organisation from one where people have to go to work to one where people want to go to work.

Dispelling the Myth of Neoclassical, ''trickle-down'' Economics

Thomas Piketty, the French economist and author of the best-selling book Capital in the Twenty-First Century shows that capitalism or more correctly Supply Side Economics inevitably and remorselessly leads to increased inequality.

His research dispels the myth of neoclassical, ''trickle-down'' economics: that inequality will decrease as nations' incomes continue to rise.

You don’t have to do years of research and write a 685 page book to know that, you only have to look around you the evidence is there for all to see. Unfortunately most people still fall for the ultra conservative’s promises of lower taxes, lower deficits and unchanged spending.

If deficits do not in fact disappear, they can always fall back on create a “fiscal crises” that would force the government to cut spending and even destroy the hated welfare state.

George Bush once famously called "supply side" economics “voodoo economics.” And he was right.  Supply-side theory is nothing more than a rationale for unchecked greed, propaganda of the law of the jungle in pseudoscientific packaging. But it's much worse than that it amounts to generational theft.

The best description of supply side or “trickle down” economics I have ever read was by the renowned economist JK Galbraith:


“trickle down economics is the idea if you feed the horse enough oats eventually
some will pass through to the road for the sparrows below”.

These are views shared not by some left wing anti capitalist properganderists, these views are now main stream. They are views shared by the International Monetary Fund who states that income inequality is undermining world economic growth and social stability and earlier this year the World Economic Forum – a gathering of some of the largest corporations in the world ranked income inequality as chief among 31 risks “threatening social and political stability as well as economic development” in the next decade.

As the debate continues in Australia over the current government’s budget cuts to welfare, health and education we are lead to believe that it is because debt is out of control and future generations will be burdened with paying it off. What utter rubbish. The Commonwealths debt is just 11.7 per cent of Gross Domestic Product according to the International Monetary Fund. That’s a bit more than in the 1980s and less than in the 1990s, even after the worst global recession since the great depression both of which by the way, were caused by guess what, supply side economics.

What gives me some cause for optimism is that even commentators from the conservative side of politics are raising concerns including  businessmen such as Geoffrey Cousins - a former adviser to Prime Minister John Howard - and former Liberal Party leader John Hewson who recently cautioned ''our land of 'the fair go' is disappearing''.  It is not just disappearing John it has long gone.

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Mere words are not enough. Action and consistent action is required if companies and organisations want to survive and thrive in the 21 first century.

It never ceases to amaze me the number of companies that espouse the values of excellence in customer service, employees are our most important asset, we care about the community and the environment, yet fail dismally in putting it into practice.

The banks are classic examples. The number of mixed messages and broken promises by banks  almost beggar belief. Customers are important to us, but don’t go into our branches.  Use electronic banking so that we don’t have to see you. We maintain the highest standards of integrity, whilst we launder money for drug cartels (HSBC), manipulate the interbank exchange rate, (Barclays) and the list goes on.

Recently I was talking to a friend who works for Orica Mining Services one of the world’s largest commercial explosives and blasting systems supplier to the mining industry. She was absolutely devastated and disillusioned by the way that she was being treated after thirteen years of dedicated service.

This is what the organisations core values are according to their website.

“Our people value the Power of Partnership – with our Customers, with each other, our stakeholders and the community.

In particular, our people aim to listen and understand the viewpoint of the customer, in order to develop and provide total solutions specific to their needs.

Orica recruits and trains only the very best people in the field, ensuring in-depth technical knowledge, skills and expertise for our customers.

Our reputation for innovation, dependability and integrity is centred on the quality of the people we attract and the Orica Culture of which they are a part.” And this is what is expected of their employees; “Deliver the Promise” by:

1. Ensuring our future, no injuries to anyone ever, value people and the environment
2. Working Together – Success as a team, success as an individual
3. Commercial Ownership – Run the business as if it’s your own
4. Creative Customer Solutions – Think differently, deliver swiftly and capture the value

Just don’t try and put into practice because if you do you will be stone walled by your superiors and shunned by your peers.

This is what has happened to my friend.  When I asked her if it has always been this way? No she replied. “When I first started with the company it was a great place to work. Your efforts were recognised through “Mission Awards” we would have pizza days, corporate sport days, team members would support each other, and superiors would listen to suggestions and act upon them. But over the course of time this has all but disappeared”.

There are three types of organisations: One who talk the talk but do not walk the walk. The corporate culture is such that they never believed in the values in the first place.

The second group senior management believe in the values that they articulate but fail in ensuring that standards are maintained throughout the organisation from senior management to the factory floor.

Then there are the true world leaders of the 21 Century. Research shows that these companies are outperforming others by a factor of 10.5 to one in terms of cumulative shareholder value, when compared against benchmark indices.

Who are these remarkable performers? Companies such as Ikea, Johnson & Johnson, Caterpillar and WholeFoods are among those that have been studied in detail.

Leaders of these companies have a different way of doing things. They are less command and control, they are modestly paid, they are committed to the purpose of the company, and grew up in the company. They are committed to mentoring and motivation, not into the carrot and stick.

These companies care about their shareholders, but they care as much about their suppliers, customers, employees, society and the environment. Companies create and destroy many kinds of value, including social, cultural, emotional, spiritual and intellectual values.

In today’s competitive environment companies have two choices. Compete on price and engage in trench warfare reminiscent of World War 1, slugging it out with their competitors or compete on product quality, product service and social, cultural, emotional, spiritual and intellectual values. If you decided on the latter you need to have and maintain a happy, motivated workforce. You can’t consistently deliver product quality and product service with a disgruntled workforce.

But to maintain this culture of excellence requires constant effort on the part of the organisation to ensure that standards and values are maintained. It can’t be achieved through set and forget.

Leadership Determines Culture Determines Attitudes Determines Productivity

 

Vision is the key to understanding leadership.

There is nothing that excites and motivates people like a vision to accomplish something special. People like me, Marcella Bremer, 21 Century Positive Change, Pete Ashby asaleader.com, and thousands of other like minded people have a vision. That vision is for business and organisations to practice values like integrity, respect, inclusiveness and support to their employee’s, clients and their community.

If we can change leadership thinking to reflect these values then the culture of the organisation would change, attitudes within the organisation would change, productivity would increase and ultimately the world would be a better place.

Vision is the blazing campfire around which other people gather. It provides, light, energy, warmth and unity. Vision starts very much with attitude. Forget the cynics and the pessimists. Those who can’t see beyond the first obstacle will always be around in abundance. But people of vision are not afraid to fail. They are not threatened by those around them but welcome the opinions and talents of those that they lead.

Vision grabs. Initially it grabs the leader, but through their enthusiasm, followers start to pay attention. Knowing what you want and being able to influence others to buy into your vision, is a developed skill that separates exceptional leadership from average. It generates in teams the belief that they’re capable of whatever it takes to make the vision a reality.

It took Nelson Mandela who I believe to be one of the exceptional leaders of our time, over 30 years to turn what appeared to him and most others as self evident, that all “men” are created equal and turn his vision of a South Africa free of apartheid into reality.

Since the global financial crises more and more businesses are realising that the way that most businesses operate is unstainable we need positive change.

We need leaders who have the vision to see past the daily share market, past short term profit maximisation and instead have a vision for long term profitability that provides benefits to all stakeholders including customers, employees, investors, suppliers, and the larger communities in which the business operates.

Just as it took Nelson Mandela thirty years to accomplish what to most people was self evident, it will take time to convert business and organisations to this new way of thinking.

A way of thinking which based upon any rational analysis is self evident.

"I have walked that long road to freedom. I have tried not to falter; I have made missteps along the way. But I have discovered the secret that after climbing a great hill, one only finds that there are more hills to climb. I have taken a moment here to rest, to steal a view of the glorious vista that surrounds me, to look back on the distance I have come. But I can rest only for a moment, for with freedom come responsibilities, and I dare not linger, for my long walk is not yet ended."

Nelson Mandela

Leadership Determines Culture Determines Attitudes Determines Productivity

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Corporations are probably the most influential institutions in the world today and yet many people do not believe that they can be trusted.

Why should they? When you have News Corporation executives facing court for phone hacking, unscrupulous lending and unconscionable conduct by the banks,  HSBC has been fined $700 million dollars for money laundering  and other major banks have been accused and are being prosecuted for helping launder money for drug cartels. Barclays Bank has been fined £300 million for manipulating the inter bank loan rate in the years leading up to the 2008 financial crisis.

When the airline industry took a nose dive a decade ago, executives at global carriers scrambled to find a quick fix to avoid financial ruin. What they came up with, according to federal prosecutors, was a massive price-fixing scheme among airlines that artificially inflated passenger and cargo fuel surcharges between 2000 and 2006 to make up for lost profits. The airlines' crimes cost U.S. consumers and businesses — mostly international passengers and cargo shippers — hundreds of millions of dollars, prosecutors say.

To date, 19 executives have been charged with wrongdoing — four have gone to prison — and 21 airlines have coughed up more than $1.7 billion in fines in one of the largest criminal antitrust investigations in U.S. history. Convicted airlines include British Airways, Korean Air, and Air France-KLM.

When I was involved in global exports in oil, grain and other bulk commodities I experienced firsthand the unethical behavior of major international corporations. One deal in particular comes to mind, selling wheat to Iraqi. In order to do business you had to pay kickbacks to various officials and organizations controlled by Saddam Hussein  in contravention of the United Nations Oil-for-Food Humanitarian Program. I refused, but the Australian Wheat Board accepted and paid the ultimate price with criminal prosecutions against former AWB executives and a civil case bought by shareholders, that was settled out of court for $39.5 million in February 2010.

Greed triumphed over diligence when investors were promised unachievable returns by the now collapsed agribusiness group Great Southern. One of Australia’s largest ever class actions has begun over the billion dollar Great Southern collapse, with more than 22,000 group members and individual plaintiffs part of the proceeding.

Dr Raj Sisodia is one of the thought leaders of the Conscious Capitalism moment. In his book Firms of Endowment How World Class Companies Profit from Passion and Purpose, he explains the business case for Conscious Capitalism and the growing concerns at the excesses and the unethical behavior of free market capitalism and its adverse effects on middle class incomes that have steadily been declining.

Conscious Capitalism is a philosophy based on the belief that a more complex form of capitalism is emerging that holds the potential for enhancing corporate performance while simultaneously continuing to advance the quality of life for billions of people. The Conscious Capitalism movement challenges business leaders to re-think why their organizations exist and to acknowledge their companies' roles in the interdependent global marketplace. This movement has now spread to Europe and Australia Conscious Capitalism.

“The doctrine of Conscious Capitalism holds that business bears moral and ethical responsibilities beyond short-term profit and maximum shareholder return. Equally important, it lifts the frequency of the free enterprise from self-interest to the higher octave of enlightened self-interest.”

Today's best companies get it. From large multinational companies like EDI Downer,  Whole Foods, the Container Store and Goggle to small businesses wishing to grow and develop; they're generating every form of value that matters: emotional, social, and financial. And they're doing it for all their stakeholders. Not because it's "politically correct"; because it's the ultimate path to long-term competitive advantage.

People like me are not anti capitalism in fact we are strong supporters of globalization, entrepreneurship, competition, free trade, property rights, and the rule of law.  We recognize that these are essential for a healthy, functioning economy. But we are also strong advocates for business to be based upon trust, compassion, collaboration, and value-creation. Essential elements that too many businesses have forgotten or have ignored in pursuit of profit maximization.

As Conscious Leaders we know that profit is essential to business survival, but it is not our sole purpose. Instead we look for a higher purpose one that provides a win win outcome to all stakeholders including customers, employees, investors, suppliers, and the larger communities in which the business operates. Creating value for all of the stakeholders in multiple ways is what will drive business success in the 21 Century.

In a recent article Pete Ashby of asleader wrote “ Just imagine Boards and Executive teams seeing regulation not as a threat but as an opportunity.

Imagine them undertaking to hold themselves accountable for higher levels of standard setting than any external regulator could ever reasonably ask of them.

And imagine them setting up really tough systems for random spot checks and quality control to do the job, and constantly reviewing their internal systems to whether they could reasonably set standards that are higher still.

Think how this would all make them that much more focused on driving their product and service standards and levels of customer care to position themselves among the very, very best”.

I whole heartedly support this view. It is the essence of what Conscious Leadership and Conscious Capitalism is all about and what I have practiced my entire life.

Leadership Determines Culture Determines Attitudes Determines Productivity

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A new leadership movement is gathering momentum around the world. It is based on a simple principle: companies that operate to a higher purpose than making money, make more money.

It’s not a new idea – in fact it is an idea that was more prevalent among businesses 100 years ago, according to its main proponent, the professor of marketing at Bentley University in Masschusetts, Raj Sisodia.

Sisodia’s research over the past 15 years reveals a group of companies that are outperforming others by a factor of 10.5 to one in terms of cumulative shareholder value, when compared against benchmark indices.

Who are these remarkable performers? Companies such as Google, Ikea, Johnson & Johnson, Starbucks, Caterpillar and WholeFoods are among those that Sisodia studied in detail.

Sisodia found leaders of these companies had a different way of doing things. “They are less command and control, they are more modestly paid, they are committed to the purpose of the company, and grew up in the company,” he says. “They are into mentoring and motivation, not into the carrot and stick. We call them conscious leaders; it is also called fervent leadership, or Lead and Empower.”

These companies care about their shareholders, but they care as much about their suppliers, customers, employees, society and the environment. “Companies create and destroy many kinds of value, including social, cultural, emotional, spiritual and intellectual values,” Sisodia says.

Law firms are particularly vulnerable to becoming dominated by the profit motive, says lawyer Michael Bradley, the managing partner of Marque Lawyers, which he co-founded in 2008. “We [the founders] all came out of big law firms, which are money driven,” he says.

The founding partners of Marque put personal happiness as their motivating goal. He says: “We wanted to practice law and be happy, and relegated maximising our personal incomes to a consequence, rather than a direct goal. That drives everything we do in terms of how we structure our business and growth.”

Timesheets – the most hated element of traditional practices – have been bannished, and so are time-based charge out rates. “Time based charging doesn’t work for client. It is insanely stupid and bears no relationship to value and it is antithetical to building good relationships with clients.” Instead, the company charges a retainer or a fixed fee.

Bradley says his experience of leadership has been transformed by the company’s sense of purpose. “It is satisfying to be able to be authentic, to genuinely believe everything you are saying, and not to have to spin anything. That means your relationships with customers, and with staff, are on a much sounder footing. It is infinitely more rewarding because it takes all the cynicism out of leadership.”

Marketing may just waste money

Sisodia’s theories arose from his research into why the amounts that companies spend on marketing were going up, and the returns from that marketing kept going down.

“I have done a lot of research on marketing performance and productivity in my 27 years as a marketing professor. I look at the outcomes in terms of customer loyalty and trust for the amount companies spend.”

Marketing faced a productivity problem. The spend was increasing and the outcome going down. Also, Sisodia found the image of marketing was negative: about 85% of people in and out of the profession had a negative view of it.

Sisodia started looking for companies that spent very little on marketing compared to others in their industry but which still had high levels of loyalty and trust among customers, suppliers and employees. He found about 500, and narrowed them down that list to about 30 after deeper research eliminated any company where there was a whiff of trouble in any aspect of their operations.

“There was something distinctive about the reasons why these companies were in business. It was not a profit-maximising mindset – it was more of a higher purpose. They were not just another retailer, or internet company.“They treated everyone as important, including society and the planet, in their own right, not just a way of making money.”

He found a different style of leadership among these companies, based on mentoring and motivation.

Such leadership and purpose are not the sole domain of consumer focused businesses, Sisodia says. He concedes that a tobacco company, in the face of today’s scientific evidence, could not find an authentic higher purpose.

However, miners and other industrial companies can apply the higher purpose test, he says. “Posco, in South Korea, is the most admired steel maker in the world. They do a number of things that make them unique. They have a tremendous record of making a positive environmental contribution wherever they work.” He cites other industrial companies including a power management company called Eaton, WL Gore and Assoc, the makers of Gore-Tex fabrics, and the Indian conglomerate, TaTa Group.

So how has businesses come to be so much at odds with society?

The narrative about capitalism has been hijacked by a narrow view that if companies harness the forces of selfishness and greed, something good will come of it, Sisodia says.

“There is a richer narrative. In the past 200 years, the era of capitalism, we have gone from 85% of people being abjectly poor to only 15% living on less than one dollar a day.
“Capitalism is about harnessing human creativity and potential to create value for each other over time.”consciouscapitalism

In the decades ahead it will be the organisations that embrace the three P’s that will ultimately prosper and survive.

PROFIT - PEOPLE - PLANET

 

Business is warfare make no mistake. Just as in war there are casualties, some die or cease to exist, others become seriously wounded.

From a business perspective we are in World WAR III. Business is a daily battle with global competitors, the economy, changes in technology and changes in social attitudes.

Every day hundreds of businesses die all over the country from small business to large corporations because most businesses are still competing with World War 1 strategies slugging it out in the trenches competing on price.

Management mind sets and organizational structures are still in the nineteenth century based upon a military model of the past.

The military is well aware that today they are fighting in the 21 Century, not only have the weapons changed but they are radically rethinking their management practices and organizational structures.

They employ people like me, Marcella Bremer in the Netherlands, Pete Ashby in the UK to change culture and management thinking. In the United States the Marines and the US Navy are employing SixSeconds to change management thinking. The military get it. They know that today’s war requires a different way of thinking.

Business largely does not. Every business is now facing global competition either directly or indirectly from competitors who have strategic advantages that we can’t overcome using conventional methods and thinking.

Sun Tzu's Art of War is a classical work on military affairs written approximately twenty - four hundred years ago. His principles on strategy are as applicable today as they were then.

Superior Strategy and Motivated People is what Wins Battles both in War and in Business. In today’s 21 Century War this requires:

    • Leaders who are willing to change their mind sets and behaviors
    • Bottom up design and decision making in collaboration with senior management
    • Inclusive change, including all organizational members
    • Employees who take ownership for the changes that need to be made
    • Focused teams and individuals who support each other rather than compete with each other
    • Knowing that small key changes can have huge effects
    • Searching for those strategic points of difference that change the battle ground
    • Instead of focusing on cutting cuts, focus on improving revenue, service and how to engage with customers and staff.
    • To make a strategy work, is all about communication you have to convince your staff that what you are doing will benefit everyone in the organisation not just executives and shareholders.
    • We need to develop the emotional intelligence of our employees. People who have energy, passion, and a can do attitude.
    • Asking the question WHY? Why are we we doing things the way we are. Is is because it is the best way or is it because we have always done it this way.
    • A culture based on the belief: no-one knows what’s best because reality is far too complex
    • We don’t have time to dig through all the details - so let’s change together now.

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Recently Glenn Stevens the Governor of the Reserve Bank told a business forum “ it’s time that business stopped whining about the exchange rate, the economy and the carbon tax - the world has changed and start focusing on improving productivity”.

This view was echo by Mr Swiegers the chief executive of Deloitte in Australia who told a Committee for Economic Development of Australia (CEDA) luncheon on Tuesday. 4/10/2011 that from their research productivity was often a reflection of leadership. "It is a leader's responsibility to get discretionary effort out of people. Our view is that it is not that hard to get an extra five good hours out of people," he said.

"I'm not talking about going from 40 to 45 hours. I'm talking about getting five quality hours into 40 hours.

How many business leaders can say in all honesty that there staff look forward to going to work every day? From my experience very few. In working with employees seeking to change jobs 95% want to change jobs because of the culture of the organisation. Change the culture and you change attitudes, change attitudes and you dramatically increase productivity.

Every business every manager can do this it does not cost lots of money. It just requires a change in thinking.

When your organisation or team feels like a loose network, held together by its structure and procedures and control mechanisms you have work to do. You have to build a community first. Turn your organisation into a tribe with a shared goal that provides a flexible, invisible but strong collective glue that gives, focus, direction, meaning and norms about what not to do.

I work in conjunction with Joshua Freedman CEO, Six Seconds - The Emotional Intelligence Network a global leader in Emotional Intelligence and Marcella Bremer 21C Positive Change. Marcella Bremer MScBA is a change consultant and author in the field of organizational culture, change and leadership with Marcel Lamers she founded OCAI Online providing the validated Organizational Culture Assessment Instrument by Cameron & Quinn online. Individuals take the test for FREE! Find out how this instrument works and get your free personal profile with a short explanation.OCAI One

Together we can change culture and create happier more productive workplaces where people look forward to going to work every day and the organisation is more profitable as a result.

For business and organisations the equation is simple:
Change or Perish

Colin Powell the highly respected former General, National Security Adviser and Secretary of State recently stated "the basic principles of leadership and management are the same: Have a common purpose, get everybody aligned in that purpose, treat your people well, give them the equipment and the support they need to get the job done. Recognize those who do well, deal with those that are not doing well. And above all, keep inspiring the people who work for you. And if you do that and take care of them, they'll take care of you".

Good leaders are an enabling force, helping people and organisations to perform and develop, which requires that an alignment be achieved between employees needs, customers needs and the needs of the organization.

The traditional concept of a leader being the directing force at the top of a hierarchy is today obsolete.
Good leadership in the 21 century requires attitudes and behaviors which characterise and relate to humanity.

The concept of serving is fundamental to the leadership role. Good leadership involves serving the organisation and the people within it. Ineffective leaders tend to invert this principle and consider merely that the leader must be served by the people.

This self centered, self serving idea fosters the notion that leadership is an opportunity to take: to acquire personal status, advantage, gain, etc., at the expense of others, is both morally and economically wrong. The global financial crises and the mentality of self serving greed is powerful evidence on how wrong it is. Leadership is instead an opportunity to give; to serve the organisation, and crucially its employees and its clients.

The modern notions of 'servant leader' and 'servant leadership' are attributed to Robert K Greenleaf (in his 1970 essay The Servant as Leader) however the philosophy and concept of leadership being a serving function rather than one that is served, is not new it has been around for a long time.  Andrew Carnegie the most successful industrialist in the 1920's called it the Master Mind Principle “ When the minds of people are coordinated in a Spirit of Harmony the energy of each mind form an affinity  which translates into financial success”. The Carnegie Foundation is still making a positive contribution to society to this day through “promoting the advancement and diffusion of knowledge and understanding.”

Leadership is centrally concerned with people. Nothing of significance can be accomplished except with and through other people. It is only through harnessing the collective abilities of employees and channeling those abilities in a mutually beneficial direction that great things can be achieved.

Another faulty concept is that leadership is reserved for senior management, everyone in the organisation can take a leadership role by taking ownership for their work and the changes that need to be made to great a happier workplace because happiness, a common purpose and direction are the most the most important things in terms of creating a productive workplace.

Leadership Determines Culture Determines Attitudes Determines Productivity

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