Categories
finance philosophy

Looking forward

It’s been such a crazy year. Changing jobs to a job that wasn’t. Starting a new business with R. Then getting sick and coming close to liver failure, which I thankfully avoided. Almost 3 months out of the office. Now back in work but waiting for an eye operation to correct intermittent diplopia.

Not in any way what I had planned or expected.  Life eh?

It’s funny but when someone says that I’m lucky to be alive I feel some gratitude, of course,  but the real change has been a sense that I lost sight of what life was about for a few years. Life shouldn’t be about negativity. It’s not ok to regularly feel professionally or personally undermined. It’s not ok to dread work days and it’s not ok to put up with festering discontent in yourself or others. Decisions that distance yourself from negativity are good decisions. They preserve the most valuable thing we have in life, our health. Everything else is secondary.

My experience as a workplace mediator is that the most productive workplaces are those where staff feel the management care and that there’s a sense of community and shared responsibility. When employees go on sick leave because of “stress” it’s rarely simply too much work. The best tool managers have at their disposal to resolve conflict in the workplace is listening. Listening is a really difficult skill to master because what we hear may be an affront to our egos. It may challenge our view of the world and what people say may even be insulting.

However, the reason why we listen is to learn and managers need to learn how staff actually feel about their work in order to run a productive workplace. It’s not possible to separate the output of a company from the people in it. A bad corporate culture will produce bad results over a long enough time. Managers interested in creating VALUE care about the corporate culture. Those that are content to make a quick buck may rely on mercenaries and inflation. Thanks to the increasing velocity of money, you can be a short term success with a bad culture but it’s not maintainable over a boom/bust cycle.  A great example is the UK automotive industry which collapsed in the 70s and 80s due to the divisions between management and unions. A recent BBC documentary contrasted that with the success of Works Councils in the German Automotive industry. Unions and works councils are similar ideas but they produced very different results based on different perspectives on management culture.

Workplace disputes are inevitable but long term disputes tend to suggest a problematic management culture. Resolving disputes is important in restoring workplace productivity as employees in dispute cannot be delivering their all for the company and they’re also more likely to leave. R and I formulated a few simple rules for managers to assess whether they have a morale problem that is affecting productivity.

These can be broken down into metrics and feedback. I’ll describe the metrics first.

  1. More than 1% of staff on stress leave of greater than a month in a given year.
  2. Annual employee turnover of full-time staff exceeding ~4%. (Employees are expensive to replace)
  3. Dramatic voluntary staff turnover in response to pay cuts and/or reduces financial performance of the company.  This is indicative of a workforce that’s lost faith in management.  Poor financial performance of the company may be a lagging indicator of poor morale.
  4. Sharp dips  in output (closely matching revenue in service industries) that are not readily explicable based on economic contraction or sector-based comparison. i.e. is your company suddenly performing worse than competitors.
  5. Spikes in the number of constructive/unfair dismissals cases taken against the company.
  6. Spikes in the number of sick leave days taken / quarter and/or a trend for staff to take longer holidays. Obviously, you’d need to compare seasonal averages.
  7. Increase in the number of complaints made to HR about bullying, harassment or stress.

Your HR personnel should be able to calculate at least half of these metrics relatively quickly. If they can’t, then you have a problem as nobody is checking to see that you have a healthy and productive workforce.  Next I’ll describe feedback to HR or managers that indicate morale problems that are affecting productivity.

  1. Multiple bullying or harassment complaints to HR about the same employee.
  2. Multiple complaints about a policy or procedure to managers or HR.
  3. Complaints to managers or HR about poor communications between management and staff.
  4. Managers having regular conversations about staff not pulling their weight.
  5. “Covert” staff meetings that are not either related to specific work tasks or a planned social activity.  The problem isn’t that the meetings are happening but they are indicative of a problem and the challenge is to tackle the problem!
  6. A belief by managers that a workforce is “too unionised” or “militant”. The vast majority of workers just want to get on with their professional lives and have little enthusiasm for industrial action. If it seems like your employees are eager to strike, management need to ask themselves the question why this is and resolve the problem before polarisation of management and workforce develops.

Conflict is not the “steady state” for most workers. (Nor do most businesses need many employees for which conflict is a steady state). They do not enjoy it and would prefer issues to be resolved. Resolving a conflict involves a) Listening to the staff to find out what they think the problem is b) Acknowledging any problems that do exist and explaining why some solutions will require staff compromise, c) outlining a plan to fix them (ideally with support from the employees who raised the issue) and d) implementing that plan over a fixed and realistic timeframe.

It sounds so simple and it is. Sometimes organisations think they’re following this process but the plan in c) has become disconnected from the problems in a). This will only make conflict worse. The only thing that impedes these simple steps from being put in place is ego. It can be the ego of managers who cannot admit failings or surrender any power, or the ego of staff representatives who may  be concerned about the impact of backing down on future negotiations or sometimes appear to have an agenda divergent from staff interests.

Categories
economics finance politics

The Joy of Self-Employment in Ireland

An ironic title as such joy is largely confined to the freedom to pick your work hours that exists in a quite limited sense if you’re providing services to people and you have to fit around their schedules.
Let’s look at the positive side:

  1. You’re the boss. Customers or clients may harass or harangue you but at least the boss won’t bully you.
  2. You have some flexibility regarding place and time of work that you may otherwise not be afforded as a PAYE worker.
  3. Expenses. You get to factor in some expenses associated with a home office into your tax bill. More on this later.
  4. Job security in the sense that you are ultimately responsible for whether you have it rather than a VP or SVP with no personal stake in your life deciding you need to be downsized because your division doesn’t look good on his spreadsheet or you’re at a grade where his costings suggest he could bring in someone younger to bugger up your job.
  5. The sense of achievement that comes with making it on your own.
Categories
economics finance

Skin in the game – why banks are blowing up

King of the Quants, Paul Wilmott, has a great blog post on his very popular site about the current financial crisis. If you’re wondering how popular a site about quantitative finance can be then consider there’s about a 65,000 subscribers engaging in debate (some heated, some light-hearted & some perhaps ridiculous) on his forum.

Wilmott is the author of the authoritative textbooks on the subjects relating to financial modelling of derivatives. So you’d be thinking “it’s all his fault” and you’d be wrong. In his writings and courses you’d be hard pressed to find a “rocket scientist” more skeptical of the limitations of risk management using financial models. Unless you happened to be Naseem Taleb but that’s another story.

Categories
economics finance

Definitions for the novice investor

I’ve been reading Liar’s Poker recently and it’s given me a better understanding of how market’s don’t work. To save time for novice investors I’ve created a few helpful definitions to guide them in their investment choices. In no particular order:

Bank – the generic term for an organisation that seeks to profit by controlling the flow of money.

Market – a mechanism to exploit the foolishness gap (often slim) between someone who has the means and desire to buy something and someone who knows what it’s worth. Innovations in the market have effectively rendered the “means to purchase” an outdated concept. Markets have the trappings of formality and the veneer of structure.

Risk Management – The process of substituting a relatively reputable product like insurance for bonds of indeterminate risk with the objective to save money over a specified term.