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Author Alasdair White
I actually heard a politician say something sensible this weekend! It was Alistair Darling, the UK Chancellor, and he was echoing something President Obama said last week. What caught my attention was the statement “there is nothing wrong with rewarding success, but there has to be a penalty for failure”. I’m afraid that, after that, the standard dropped again.
Like most western and developed nations, both the administrations in the UK and the US have stimulus packages in place (if not yet delivering) and both have found their proposals under fire from the opposition politicians (how unsurprising is that!). The issue that seems to enrage the opposition and the populace equally is the idea of bonuses for top bankers – especially those in the banks that have had to take government (tax payer’s) money in the current crisis. On the one hand, there are the free-marketeers who are saying that top bankers should get their bonuses and then there are the socialist reactionaries that say they shouldn’t.
Let’s take a closer look at the issue. Read the rest of this entry »
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Author Alasdair White
Given that the majority of companies are currently run by those in their forties and fifties and that most middle managers are younger than that, it is no surprise that few in business today remember the last really major global recession, which took place nearly 28 years ago in 1980-82. There have been other economic ‘corrections’ of course, but in the 1980-82 recession 55% of developed countries experienced an extended period of flat or negative growth. Even the 1987 financial crisis and stock market ‘correction’ is outside the memories of most managers and so it comes as no surprise that they are very ill-equipped to deal with the current recession (which borders on a depression) and are panicking.
The extraordinary thing is that the current response to the economic turmoil is very similar to the failed responses to earlier recessions. Many companies are simply cutting the work force, cutting production, and cutting overheads in general – although in some sectors it is particularly noticeable that these cuts are falling disproportionately on the front line workers rather than across the business as a whole: there is little evidence that there is a thinning of management ranks as yet.
It is probably true to say that in the good times many businesses try hard to retain those workers whose performance is deemed to be below the required standard (which begs the question whether the ‘required standard’ has been realistically ascertained or whether performance figures and criteria have simply been plucked from the air) and that when times get hard these ‘poor performers’ are made redundant. In theory, this makes the company ‘leaner and meaner’ as it gets rid of those making the least contribution to the business – but in reality, responsibility for the performance of these people rests with the managers and it is these people that should be looked at very carefully.
The other failed approach to redundancy is the ‘last in, first out’ strategy. Read the rest of this entry »
Author Alasdair White
It must have been totally irresistible for both the Premier of China, Wen Jiabao, and the Prime Minister of Russia, Vladimir Putin: both were speaking at the opening of the World Economic Forum in Davos and both had the opportunity to slam US policies and the system of laissez-faire capitalism and they took the opportunity and worked it for all it was worth. But, of course, being politicians they both targetted the wrong thing.
The current economic problems are not caused by laissez-faire capitalism nor poor US regulatory policies but, rather, the underlying problem is human behaviour and, in particular, greed and neither Russia nor China is free of human behaviour nor of greed.
Only recently Russia’s oligarchs flexed their muscles in pursuit of greater financial control over gas supplies to Europe so that they could make even great financial gain for themselves – and if that analysis is wrong, then the alternative is that the Russian government orchestrated the disruption of the gas supplies to put economic pressure on Europe. Read the rest of this entry »