Posts Tagged ‘accountability’

Great Service Begins At The Top

Tuesday, August 15th, 2017

 

If you aspire to or are a pre-eminent global service business, shouldn’t the CEO’s communication and feedback systems with its’ customers reflect its’ pre-eminence and branding? Here is a recent example of personal response times from constructive customer service letters to European CEOs:

3 days, in person Ewan Venters, CEO of grocer, Fortnum & Mason

14 days, in person Nigel Wilson, CEO of insurer, Legal & General

135+ days, zero response Dame Carolyn McCall, CEO of budget airline, easyJet

645+ days, zero response Keith Gibbs, CEO of insurer, Axa PPP Healthcare

795+ days, zero response Rickard Gustafson, President and CEO of airline, SAS Group

Letter writing might be unfashionable in certain quarters but when a customer today makes the effort to put pen to paper, it is a common sense assessment that they are serious about their intent to point out a superior or underwhelming experience. Based on my anecdotal research, a great experience buying a tin of biscuits will elicit a 4x faster response from the CEO than buying a cumbersome life insurance policy, 45x faster response from the CEO than being stranded late night in a desolate European airport or 219x faster response from the CEO to acknowledgement of proactive service in a healthcare insurer! Why would a CEO’s office operate like that unless it is seriously disorganised, it doesn’t hold itself accountable for the promises it makes to its’ customers or it is simply arrogant?

© James Berkeley 2017. All Rights Reserved.

 

Sleepwalking In Business

Friday, April 28th, 2017

 

My young daughter is going through a period of arriving in our bedroom unannounced in the middle of the night, oblivious to her propensity for sleepwalking or the dangers that lie in her pathway. In almost every high-growth or mid-market business I review for investors, there are instances where the firm is consciously doing things (excessive customer needs analysis), which result in the business “landing” in unfavourable locations (slower client acquisition times), and dramatically increasing the risk for investors (cashflow). Look around your business and ask yourself a simple question, “If it was my money at stake, what would we stop doing tomorrow or do more efficiently?” Then, “why do I not bring this to my direct report and colleagues’ attention?” It is easy to blame others but great businesses are built on high levels of personal accountability at all levels that have zero to do with how much I am paid or my title.

© James Berkeley 2017. All Rights Reserved.

 

Investor Accountability

Friday, December 16th, 2016

“What is the one action I have undertaken today to positively nurture our investment pipeline?”

If you want to continually stay on an upward investment curve, it comes down to simple things: individual accountability within an investment firm. Whether you are a HNW individual, a Family Office direct and co-investing, a private equity or venture capital fund manager or an adviser deploying your own and others money, it doesn’t matter.   Be intellectually honest and answer the question, before you leave your office.

© James Berkeley 2016. All Rights Reserved.

 

RPM I: My Best Laid Plans Are Screwed

Friday, April 1st, 2016

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I recently talked about the organisational dynamics and consequences of Resilient Growth in the value creation process for large and small businesses.

Resilient Growth

Behind resilient organisations lies resilient people. People with the skills, expertise and behaviour at all levels to thrive not just survive on the firm’s profitable growth journey. To maintain and increase the profitable growth momentum in the organisation. Think of this as keeping the “rev” counter high.

Knowing “how” their behaviour accelerates or destroys profitable growth is important but maintaining the right mindset and knowing the right questions to ask is the difference between someone telling you what route to fly and actually co-piloting the plane with you. Huge!

Starting today in a new series, titled Resilient People & Momentum (“RPM”), here are my observations from over 450 clients around the world over the past 25 years in very common situations, where I have had a ringside seat.

Situational Overview: The New Market Entry Strategy Has Gone AWOL – your best laid plans aren’t working in the real world. The assumptions made about the market size, demand, relationships, marketing impact, acquisition costs, ease of delivery and available resources are miles off in reality. Executive management, investors and employees are fretting madly or indeed, clamouring for your blood. Cut and run, retire graciously or come out fighting?

Resilient People & Momentum Mindset: You are a prudent risk taker. You have a track record of past success honed by past wins and losses. You live for ambiguity. This is your time to shine. Failure is not about you personally. No one is firing at you. You have tremendous value and results to provide to others in future. You can work it out with others help given their support, time and resource.

Resilient People & Momentum Questions: Your first and most important assessment is with yourself 

  1. Is there a visible outcome (result and value) that is good for my key constituents?
  2. Is there an alternative allowing for speed and the quality of the outcome that I can immediately call on or develop (good news: unless the car has crashed there is always an option)?
  3. What are the attendant benefits and risks (after preventative and contingent actions are put in place)?
  4. What is the best course of action for all parties (accepting that you are looking for a compromise that preserves everyone’s critical and highly prized issues but dispenses with the moderate and low-level stuff)?

Liked this? Daily bursts of resilience advice to follow on this blog. Please come and read, share your experiences and comment. If you prefer, a quick confidential “free” debrief, write to me at james@elliceconsulting.com

© James Berkeley 2015. All Rights Reserved.

Idiotic Management: Britanic Industries, Newquay Town Council & Fistral Beach

Monday, February 15th, 2016

Fistral Beach in Newquay, Cornwall is a world famous magnet for surfers. Yet a hidden danger with a shark’s bite lurks on arrival for the unsuspecting visitor, particularly foreigners. The car park is run by a ruthless management, Britanic Industries and its’ operator, Smart Parking, with zero interest for the visitor experience and for the express purpose of making hundreds of thousands in car parking penalties. In the height of season the local Town Council receives 40 complaints for unfair practices and doubtless 100s of people are ripped off daily. Visit Britain, the UK’s marketing arm has invested millions behind its’ “GREAT BRITAIN” campaign, yet the experience at Fistral Beach is designed to encourage a “HATE BRITAIN” thought in the mind of visitors.

The management of the large car park, Smart Parking, provide a perfect experience where the use of high technology enables a low touch customer experience. Reliant on camera sensors and nothing else, they keep electronic records of entry and exit to the car park. They daily fine innocent families, who are unable to find a car parking space in this half mile square beach, gather their beach equipment, walk 800 yards to the sole parking meter and have the right payment within 10 minutes. They rely on signs that don’t make clear payment is due from the time your car passed the entry sensor to the time you return to the car, pack up and physically pass the exit sensor, which can be half a mile from the place you are parked. They then issue penalty charge notices upto 16 days after the event, by which time you have no doubt destroyed the parking ticket if you have paid by cash. If you seek to Appeal, wait you are in for a 6 month determination of whether your claim is legitimate. You will receive the plaintiff, Smart Parking’s boilerplate template 24 page document, usually copied and pasted with hundreds of factual errors. It is death by a hundred shark bites.

If you think that this is a great way to encourage first time visitors, build tourism revenues and attract investment into a town, which outside of the holiday season has a number of severe social and economic issues, you are deluded. However that is precisely what the idiotic management of Britanic Industries, the leaseholder, think makes sense. Their decision-making process is flawed. The Newquay Town Council are impotent. Indeed the Mayor won’t even respond to written offers of help with smarter parking ideas.

Technology is a powerful enabler when it is used effectively to enable a higher touch customer experience (Uber, Amazon and Spotify). Equally, when it is used poorly it can have serious and catastrophic consequences.

Does your organisation’s decision-making process give sufficient thought to the desired outcomes, the benefits and risks of technology and the appropriate course of action? Does it solely look from your firm’s perspective or that of its’ customers? Fistral Beach has shown what happens when the sharks are left to run riot with technology and the lifeguard is asleep.

© James Berkeley 2015. All Rights Reserved.

Agile Management

Wednesday, December 9th, 2015

So the CEO of Swiss Reinsurance Company faced with increasing amounts of uncertainty and rising competitive threat levels in 2016 trumpets this week an “agile capital” strategy. In simple terms, capital allocation will seek to keep pace with foreseen and unforeseen business opportunities. I make no value judgement about his firm’s future but shouldn’t that be something everyone should be doing already in his organisation?

Here is four outcomes that the Board and management in my very best clients rigorously apply, hold each other accountable for and align rewards around:

1. Performance in allocating capital.

2. Performance in people decision-making.

3. Performance in innovation.

4. Performance in implementing strategy.

It reminds me of those classic boxing fights of the 70s and 80s, when fighters such as Ali, Sugar Ray Leonard and so on prided themselves on their agility and their ability to outsmart a more fearsome opponent by constantly dancing around the ring. Some commentators hated the tactics, suggesting it lessened a great contest but the point was those fighters ended up winning the fight, not because they had more power but because they were smarter. Agility was but one of their strengths. Perhaps many insurance and financial services CEOs are waking up to the fact that standing flat footed in the ring is a bum idea in a tough fight, hooray.

© James Berkeley 2015. All Rights Reserved.

 

The Big Myth About Long Term Incentives and A Cultural Change In The Boardroom

Wednesday, August 13th, 2014

I admire risk takers. They perform an essential service for those in the business of transferring risk. Whether it is insurers assuming risk from their customers, reinsurers assuming risks from insurers, investment banks and institutional investors assuming risk from publicly traded businesses or bookmakers accepting risk from their customers. I think those that work in that arena are mostly following their passion.

What I detest are those that call themselves “risk takers” and who are running a business but actually don’t take any risk. In effect they are traders with no discernible “skin in the game”. They are asking for the respect that is accorded to someone, who puts their balance sheet at risk but are in fact quietly skimming a dollar, a pound, a euro or a yen off other parties who have the cojones to price and assume risk. All that I ask is that people are honest about their own “worth” and the value they provide (or dramatically) create for others.

The same applies with people in corporate organisations with over bloated egos, who demand the perks of entrepreneurs and shareholders with ACTUAL money at risk.  I am reminded of this when I see demands made of shareholders by top management  to support inflated long term incentive rewards, where there is visibly little or no personal risk (downside). So many of these arrangements set “targets”, which hardly stretch the executive to achieve a generous award. Complicit advisers happily create a pretext for toothless remuneration committees about the “need to attract world class talent that can produce results” and earn inflated fees, largely based on hourly billing. In other words, the longer they take to design, facilitate and implement a LTI arrangement the better off they are, in total conflict with shareholders’ interests, which best served by a quick solution. If the time, energy and effort was re-directed towards how top managers intend to produce results rather than reward results, shareholders would be exponentially better off. My point here is where is the accountability for top managers, Remuneration Committees, the plans they promote and the advisers they hire.

Yes, there are the headline cases where institutional investors “push back” but they resemble a fisherman casting a rod, not a fishing net to eliminate the abuse. My suggestion? Any LTI plan and those engaged to advise or approve the arrangement must meet these criteria:

  1. No plan pays out any benefit for “performance in line with target expectations”. The Manager get his salary and benefits, nothing more.
  2. Where “performance is below expectations”, the Plan has a clawback provision against any other accrued executive pay or benefits  upto 20% of the total amount received, which is “at risk” for upto 36 months after leaving service with the firm or a date to be agreed
  3. Benefits paid out for “out-performance” are only paid to those achieving top quartile results and behaviours. Objectives, measures of success or progress and the value created in meeting or exceeding those expectations are conceptually agreed in advance with shareholders . They are transparent for all shareholders.
  4. No Adviser is allowed to bill hourly fees. Their remuneration is in the form of a value-based fixed fee providing a dramatic return for the organisation and fair and equitable compensation for the practitioner.
  5. No Remuneration Committee Chair or Board Member is allowed to serve more than one term. They can only sit on one Company committee, at any one time. They are only electable based on a combination  of expertise and experience directly linked to the existing and anticipated market needs of the business and their ability to attract managers with the requisite skills and behaviour. No jobs for the boys!

I confidently predict a dramatic improvement in business results with the application of greater focus and discipline and shareholder resolve to see their interests best served by these arrangements.

© James Berkeley 2014. All Rights Reserved.

Cleansing Europe’s Unhealthy Cash Culture

Thursday, July 31st, 2014

I predict economic hardship in Europe will not truly be over in the worst hit countries (Spain, Portugal, Italy, Greece)  until governments and banks can change the beliefs governing the behaviours and attitudes of small and medium sized businesses and consumers about paying by credit or debit cards rather than cash. In 2014, my circumstantial evidence on trips to these countries is that local banks, hotels, restaurants, transportation, retail, real estate agencies, professional services and so on are turning these societies into a more cash-driven, less transparent and more secretive places to live, work and visit. More, not less income is being obscured from tax authorities today than in 2004, at precisely the point these countries need to broaden and increase their tax bases. Indeed banks in one recent example in Barcelona (Santander, Caixa)  are gouging customers (particularly foreigners) with 3.5% supplementary fees on additional credit card fees, are doing their level best to dis-incentivise a behavioural change . Hoteliers this Summer in many of the smaller independent hotels are actively encouraging cash payments, refusing to offer invoices and I would guess, increasingly hiring employees on a “cash only” paid basis. What we are seeing is the point at which people’s trust and confidence in politicians and banks has reached a nadir.

What is required? Successive governments have tried enforcement tactics but they are not visibly working. Governments, banks and other key constituents need to appeal to the SME business owners and managers’ self-interest and that of their customers. Make it easier and more attractive to pay by credit or debit card (embrace high tech, simple VAT reimbursement process), remove frictional banking costs (excess charges), incentivise transparent billing (corporate tax system, faster settlement with suppliers), offers of increased state investment in local health, education and welfare linked to increased declared income receipts from SME business owners and so forth.  This is a long way from the “macro” political shenanigans in Brussels but until the unhealthy cash culture is changed, economic re-emergence in these countries is going to be painfully slow. After all it is the SME sector that these countries must heavily rely upon to generate revenue, jobs and taxes if they are to emerge from intensive care and stand on their own two feet.

© James Berkeley 2014. All Rights Reserved.

The Real Repercussions of CEO Indiscretions

Wednesday, April 30th, 2014

Why do the revelations of a CEO’s affair with one of his subordinates tell us more about his lack of respect and good judgement than the titillating events themselves? If the CEO is hired to profitably grow the business, then his first priority is to increase the probabilities that his key constituents (customers, shareholders, employees and others) will see their best interests served by his actions and his beliefs. I have assumed a “he” here because the overriding number of transgressions are from male CEO’s.

Some will argue that in this decade, the personal and professional lives of CEO’s are “separate”. Does that point of view have merit particularly where the CEO’s actions directly impact one or more key constituents?

The CEO position in mid to large-sized organisations has over the past 40 years become a powerful brand in its’ own right. That brand is built  on trust, fairness and equity.

  1. “Trust” in the form of putting the organisation’s  interests ahead of their own (corporate vs. personal risk and rewards).
  2. “Fairness” in the form of showing respect to their peers, subordinates, customers, shareholders and others they serve (leadership decisions consistent with the organisation’s core values and beliefs).
  3. “Equity” in the form of displaying good judgement commensurate with others and the position they are entrusted with (reward, recognition, ownership and so on).

When association with the CEO’s indiscretions has a negative impact on the organisation’s brand, all individuals concerned must be held accountable by the Board. When the Board elect to turn a blind eye, they are in fact diluting by proxy their own power and influence, not just the CEO’s, and their ability to positively impact the organisation’s future (results). That outcome is NEVER positive for any of the key constituents.

© James Berkeley 2014. All Rights Reserved.

Attracting and Retaining and Nurturing Talent

Thursday, January 23rd, 2014

Ellice-Consulting5-150

Creating an appealing workplace that attracts the brightest and best people doesn’t have to involve HR policies and lavish pay. Listen to three lessons from James’s best clients, who have got it right through setting clear accountabilities, making intelligent use of managers’ time, and incentivising the right behaviours in their frontline people.