Time to boost morale

Whilst carrying out assignments for companies ranging from SME’s to publicly listed corporations, I am struck by the poor attitude of many senior managers towards the Company’s most important asset namely its Staff.

Presently we are being bombarded with negative news- failing economies, the squeeze on domestic budgets, the spectre of unemployment as evidenced by latest figures from the ONC showing UK unemployment standing at 7.8%.

This constant drip feed of bad news is having a very negative impact. Morale in the workplace at present is generally at a very low point and yet this seems not to have percolated into the mainstream of management thinking.

All too often the attitude of the management seems to be that the current backdrop will of itself be the motivating factor.

Obviously as companies struggle with their profitability, it is not a question of throwing money at the workforce but what is required is more of an attitudinal change.

Bringing the staff on board may well be as simple as communicating the company’s situation in a clear and concise manner rather than the heavy handed “if you don’t like it there are plenty of others ready to take the job”.

It is no coincidence that the companies who emerge stronger from challenging times have been able to do so largely as a result of the efforts of a committed and diligent workforce.

People are the main asset and as such should be valued accordingly.

 

Do you want to jump start your business?

Pressures on the business sector continue to mount and this is especially true for those running SME’s.

The latest instruction from the Bank of England that banks must increase their own capital reserves will once again add to the pressures of those businesses trying to fund their own expansion.

The need to achieve operating efficiencies has never been more acute. This is a time when a fresh appraisal of your business could return significant dividends.

As an independent business consultant I am confident that I can assist you to ride out these difficult times and build a strong base from which to expand.

Why not drop me an email at gordon.blackburn1@btinternet.com or alternatively check out my video link which will give an insight into my experience:

http://www.youtube.com/watch?v=qvIHWrB5BWI

 

Model driven Risk analysis - not a guaranteed fail safe

The recent Senate Committee hearing into losses at J.P.Morgan concluded that the Bank ignored risk and misled investors. The bank lost $6.2bn (£4.1bn) in what was dubbed the London Whale trades.

Ina Drew, a former JP Morgan bank executive, whose department suffered multi-billion-dollar losses, has said she was not to blame for them.

Drew, who was chief investment officer, said the bank's risk models were flawed and that some London-based staff hid information from her.

Bruno Iksil, the trader at the heart of the incident, was dubbed the London Whale because the positions taken were big enough to move markets.

Ms Drew said that she believed her oversight of the department was "reasonable and diligent". She said she had no knowledge that some trades were inflated or "not reported in good faith".

The Senate subcommittee issued a report which said that JP Morgan had ignored risks, misled investors and fought with financial regulators.

"We found a trading operation that piled on risk, ignored limits on risk-taking, hid losses, dodged oversight and misinformed the public," said Carl Levin, the subcommittee's chairman.

This is yet another example of the reckless and short-termism so prevalent throughout  the Banking system.

Notwithstanding the most sophisticated computer modelling of risk analysis and reporting procedures the only real fail safe in a trading environment is the integrity of the traders and the competence of those to whom they report.

All too often the reality of the situation is obscured by the attraction of the “profits” being generated.

Few people ever want to challenge a situation where they benefit from turning a blind eye.

Until and unless there is a seismic change in “culture” and operating practices then we will continue to see other banks and corporations following in the wake of Barings, RBS, J.P.Morgan, UBS et al.

 

 

Unserviceable debt – who carries the can?

“If you owe the bank $100 that's your problem.  If you owe the bank $100 million, that's the bank's problem” the famous quotation from JP Getty neatly sums up the dilemma faced by the international community in dealing with the Eurozone debt problem.

Last year the “Greek problems” took centre stage whereas over the past week or so Cyprus has been the focus. Eurozone finance ministers have now agreed a 10bn-euro bailout deal for Cyprus to prevent its banking system collapsing and keep the country in the Eurozone.

In the interim the problems in Southern European States such as Italy and Spain have still to be resolved.

The fact is the international community will have to learn to accommodate the spectre of countries failing to grapple effectively with their debt burdens. In turn this will inhibit growth and limit the speed and strength of global economic recovery.

It continues to be an uncertain time but one undisputable outcome of the above will be the hard ball attitude of the Banks towards companies seeking funding.

Now more than ever it will be necessary to demonstrate effective control over all areas of cost and exposure as the banks will undoubtedly remain reluctant lenders.

 

Time for a reality check

In the UK food industry the effects of the horsemeat scandal are dramatic. Over the past two months total ready meal sales were down 5% year-on-year, frozen food sales dropped 13% and there was a fall of 3% in chilled ready meal value sales. The reaction of consumers to this issue is not surprising.

However the latest report from the Chartered Institute of Purchase and Supply states that almost half of supply chain managers “do not have a means of monitoring their entire supply chain”.

Even more damaging is their comment that “how few chief executives and boards take supply chain issues seriously”.

One of today’s buzzwords is “traceability” – it is incumbent on companies to monitor all aspects of their supplier’s performance and failure to do so can have far reaching and damaging consequences.

The days of a “cosy” relationship between Buyer and Supplier, the archetypal nod and a wink have long since passed.

These scares and alarms are part and parcel of today’s trading environments and there is no excuse for being unprepared.

 

 

Caveat emptor

The Serious Fraud Office and US department of justice have opened investigations into the accusations of suspect accounting at the British technology firm Automony before its 2011 acquisition by Hewlett-Packard.

In a regulatory filing with the US Securities and Exchange Commission (SEC), HP said it had been told that investigations were under way by the US and UK authorities on 21 November and 6 February respectively.

Ironically, the SFO is itself an Autonomy user – in order to work through voice calls and emails for relevant information.

HP announced last November that it was writing down the value of Autonomy by $8.8bn (£5.9bn), having bought it for more than $10bn in summer 2011.

Meg Whitman, the chief executive who took over as the acquisition was being completed, blamed a "wilful effort" to inflate the company's figures, and that they "severely impacted HP management's ability to fairly value Autonomy at the time of the deal".

The numbers are truly eye watering and begs the question that during the due diligence process how many Auditors examined the validity of the reported accounts?

This is not an isolated event, think of the Japanese camera giant Olympus, the company admitted to hiding losses on securities investments for decades.

To conduct this $1.7 billion fraud Olympus executives secretly liquidated hundreds of millions of dollars of Olympus investments,then lied to auditors by certifying that the investments still existed.

Ultimately the validity of a company’s accounts reflects the integrity of the company which is being audited.

If the company’s results are misrepresented through fraud, deviousness or sheer incompetence then the fall-out will be disastrous.

 

 

Squeezing till the pips squeak

Against the current economic backdrop companies are constantly looking for ways to boost their bottom line.

Particularly over the past year we have seen companies trying to extend their payment terms by all manner of means – some fair,some foul.

In addition to this many are looking into the question of obtaining “rebates” from their suppliers.

John Lewis has announced that they will be introducing a rebate scheme with effect from next year. Suppliers would be asked for a 0.75% rebate if their sales grew by 10%.

Earlier reports have suggested said the rebate would rise to 5.25% if sales grew by more than 50%.

Amongst suppliers there is always a battle to secure sales but there also has to been a commercial realism.

If by securing so-called “prestige” business the overall operating margin carries a disproportionate return then it becomes a question of commercial realism.

In such situations it may well be argued that such business is best left to others.