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Month: July 2010

How much does it cost to create a single job in the UK?

Money by Lee J Hayward via FlickrUnderstanding the economy in basic terms

I am just a lowly psychologist and I don’t have any formal economics education. So, I look out for rules-of-thumb that I can remember. And I also try to remember what it ‘felt’ like when the economy was in a particular state. Knowing what a 3% downturn feels like and what a 7% downturn feels like helped me anticipate what a 5-6% downturn in UK would feel like.

I am puzzled though, that in an economy as advanced as UK, the middle classes aren’t more economically literate.

We hear a lot, for example, of how the government will save 3000 pounds or so in Benefits by packing people off to a job. These statements alone make me cock my head in puzzlement. We are in very deep recession. People are on Benefits because they have lost their job.

What is even more puzzling is that people who claim to know, don’t know what it costs to create a job. Where I have lived before, people knew these numbers.  They had them at their fingertips.

Using US investments to estimate the cost of a job

Let’s record some figures  to show you what I mean.

Obama has just announced a USD2bn subsidy to two solar powered firms. One will create 1500 jobs and the other 1600 permanent jobs and 400 temporary jobs.

Let’s keep this simple because we are talking rules-of-thumb.

3000 into 2bn makes 66 000 660 000 . And that is just the Federal subsidy.

Putting that into British money, 660K is more than 500K pounds, but lets keep it simple. Now we have taken a powerful vacuum cleaner to our economy, we will need 500K to make a job (and this is probably an entry level, repetitive job).

500K is 16 to 17 years of benefits. Governments use benefits to bail out an economy precisely because it is cheaper than making jobs.  Jobs cost money and we should know how much.  These numbers should be at our finger-tips.

Where can we make jobs?

And of course, we can’t make jobs if we don’t even know which industries are viable. I suspect this is the greater problem. Our leaders don’t know enough about what will be the future of our economy so they don’t know where to invest.

But let’s not get off the point. For the moment, until I get better numbers, I’ll use a rule-of-thumb as GBP500K  of investment to create one job.


Talking cuts? Don’t. Talk service.

planning poker warm up by fsse8info via flickrWhat will happen if we cut by 25%

Yesterday on Twitter, there was a lot of chatter about impending cuts. If we cut this, then this bad thing will happen. Today, we heard that if we reduce a budget by 25%, we will get more terrorism. All of this may be true, but it illustrates a fundamental error in managing public services (and public servants).

Lead by substance not by budget

Don’t conflate the service and the budget! Simply don’t allow the conversation.

Ask only this – what do you want to do?

Never allow a public servant to talk about the budget. Their job is to deliver a service.  Talk about the service.  The budget is your responsibility.

Overcoming objections

If you try this, st first you will get a lot of reverting to type. These will be the typical excuses/worries/concerns.

  • It is important to do X, but that person over there won’t do Y, so I can’t do X (and I can throw a wobbly). Persist in keeping the conversation about X.   What do you want to do?  And why?  Understand fully what the person believes is important.  Pay attention and let people see you pay attention.
  • It is important to do X but I cannot do it without an assistant Y.   Keep the conversation about X.  Y is budget.  Understand X fully.  If X is important and well thought out,  you’ll find budget.  But X will fail anyway if it is poorly thought out and more to do with assistants than goals.  Don’t say the last two sentences aloud.   Just keep the conversation about X and about what the person believes to be important.  Pay attention! They know what they are talking about and after all they are going to do the work!
  • I won’t talk about this at all.  Unspoken here are two thoughts.  If I suggest something, you will make me do double work with half the budget.  Or, I might suggest a lesser project than my colleagues and lose out in the status stakes.  Simply state that you want to know what is important to the person and to make sure their projects are on the table because everyone else is making their bids.  Sadly, if you have a reputation for stabbing your staff in the back, you might take some time to develop trust.  Leave you knives at home from now on!  You have to be sure that you will too.  Stab anyone now and no one will trust you ever again.

Being patient

  • This exercise will take time and a lot of one-on-one’s. But if you have the patience, your patience alone will communicate that you are dependable.  You will find out what is important and everyone will understand they are responsible for conceiving a quality service that is needed, doable and credit to the service providers and the organization at a whole.  They have it all in their head.  Everyone does.  We all know what we want to do and we all have our pride.

Being prepared

Now for the hard work.  You must have done your homework.  You must have gathered together and fully analysed three sets of data.

  • The general regulations, law and physical constraints of your work unit.  You need to model the work of your unit on a spreadsheet.  It’s likely that you will have outputs in rows and inputs in columns and have sets of calculations at the top, bottom and side of your table.   You must know what is generally required of your unit and be able to slot in numbers quickly so that you can assess the impact of any one plan on all other plans at the touch of refresh button.  You will be assessing a lot of scenarios before you are done.
  • You must know the past performance of your unit and what is likely to happen if you carried on without changing anything.  Do the analyzes yourself.  The accountants in your organization might have strange ideas about how your unit works.
  • You must know your costs.  Forget managing your budget if you don’t know your costs down to the last penny.

Now to work!

When you have all this information on hand, you can honor your promise.  You tell your staff to work out what should be done and you will look after the budget.

If their ideas are not economically (financially) viable, then you will tell them and they will have to think again.

But they don’t have to worry about money.  That’s your job.

And whatever you do, don’t allow the agenda to be driven by the budget.

First define the service.  Then ask if it is economically possible.

Don’t conflate service and budget.  Don’t allow the conversation.

You will be surprised how much can be done with less money.  And if you have to tell your political masters that less  will be done, at least you will have all the numbers to hand.

But if you can’t deliver a good service on less money in a way that is far more enjoyable for your staff, I will eat my hat.

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What are management consultants for?

Zoom Ahead by Vikram Vetrivel via FlickrShould we hire management consultants?

I’ve worked as a management consultant all my life. Maybe that qualifies me to write this post. Maybe my experience disqualifies me.  This is what I think.  Much as I welcome the business and interesting assignments, hiring consultants can be a bad sign.

Think of it like this. When I go to see my GP (family physician), I expect them to refer me to ‘consultants’ or specialists for rare conditions. It makes sense to see someone who works all day and everyday in one field.

But think of the reverse. Imagine going to a specialist hospital and having the leading specialist refer you to a GP. Now that is back to front.

Sadly, often management consultants are not specialists. They are often young, inexperienced and unqualified. Why then are they used to advise experienced managers?

Why do we hire management consultants?

There can be many reasons. But one of the obvious, of course, is that managers don’t know what to do. Not knowing what to do is not a crime. We all read. We all go on courses. We are learning all the time.

But when consultants aren’t specialists being hired to do specialist tasks, there is often a very specific malaise in the organization. And the malaise may be this.  The managers are doing work one level below their appointment.

The senior managers, for example, are planning budgets and developing working procedures and checking efficiencies. They are supposed to be looking ahead and anticipating the obstacles of 5 years time that we need to start solving now.  The middle managers will plan the actual work and review its efficiency.  The junior managers will make sure the work is done and tweak procedures to fit the specifics of the moment.

In military terms, senior managers don’t go to war; they don’t necessarily plan this war. They plan the next war.

In turn, the top managers  might be solving the problems of tomorrow when they should be deciding what business to be in and what kind of organizational structure and business model is required to succeed in that business.

In military terms, they assess which of our allies of today will be our enemies of tomorrow.  They anticipate innovation in weaponry and have the right research and development going on at military universities.  They look into the future that we cannot see.

Of course, senior managers should understand how middle managers draw up budgets just as generals must know what is happening to colonels and troops on the ground.  They should know how well things are going. When they walk into a work site, they should understand what is happening as a general should be able to comfortably go out on patrol.   They need to understand the organization from bottom to top, but they must do their own jobs not someone elses.  If no one is steering the ship of the organization, we will go to sea without maps, food, fuel and skills.

The sad reality of consulting

When we hire consultants, the excuse that we often give is that our subordinates are not up to their jobs. Let’s do some thought experiments.

  • In a well-run organization, when the boss is away, (when we are away) can somebody sit in our chair and makes the decisions we would ordinarily make.  If not, its not surprising we think our subordinates are incompetent.  We don’t let them see the world from where we see it.
  • When we are away, are our subordinates able to do more work and make better decisions than when we are around?
  • When our  incompetent subordinate is away, do things run better or worse?
  • When our incompetent subordinate is away, is one of his or her subordinates automatically taking over his or her responsibilities?  And if not, why not?

Specialist work that occurs rarely is legitimate work for a consultant.  Doing a senior managers job is not.  And the test is whether the senior manager can state whether they have assessed the obstacles the organization will face over the next five years and what they are doing to ameliorate the difficulties.

They may be more comfortable doing month-to-month management, or even day-to-day management, but while they are doing their juniors work for them, the work of leadership is not happening.  A simple solution is to move the senior managers to another building where they cannot interfere quite so readily.  Limit the email and telephone contact upwards with daily meetings at a set time.

Very soon they won’t need  a consultant at all.

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What happens when we make savage cuts to an organization?

A window on the Cliffs by tostao_meravigliao via FlickrWhat happens when a boss walks into a room and says, we have to make cuts?

Our obvious response is emotional. We are angry. We are scared. We are threatened. We are determined not to get hurt.

But what happens to the organization?

Yesterday, Patrick Butler blogged on the Guardian’s Joe Public blog about the chances that the budget cuts would lead to innovation and creativity. I responded there and have edited my comments below.

My comments about the impact on the organization itself are based on experience and interpreted through lens of the principles of organizational design.  My conclusions are counter-intuitive.  That is, they are not the most obvious things we might think of.  There are good reasons for us expecting organizations to behave differently to what they do but I  won’t go into those reasons here. For the curious, they are to do with hegemony, reification and other similar concepts.  Let me say here that I am not making a prediction about what will happen in the public service in the UK.  I am simply describing what I have seen elsewhere and what might be worth thinking about.

My observations are three fold which may seem contradictory but are not.

  • There are unlimited depths to our creativity
  • The organization will be turned inside out but the leadership won’t acknowledge what they have done and will spend considerable resources covering up what they have done
  • Employees will put their efforts into developing autonomous careers and ‘business units’.

These outcome can be avoided but simply choosing the route of cuts suggests we may see these or similarly dysfunctional effects.  The superiors in an organization are responsible for resourcing an organization.  When they duck this responsibility, the game has begun

We have unlimited depths to our creativity

It is true that the individuals in any job know a multitude of better ways of doing a job.  I could find solid research evidence but let’s just say for now that tt is more than our ‘jobsworth’ to tell anyone.  Bosses don’t take kindly to being out shone. A wise employee does the boss’ way; even if that way is expensive, silly and possibly stupid.

The organization will be turned inside out

In my experience, when cut kick in, people do generate alternative ways of working, because they can.  They know what they are doing.

The difficult that arises is that the boss has now done him (or her) self out of a job.  In a hierarchical organization, it is the boss’ job, to find resources and to supply greater know-how.

When the know-how and resources come from below, the difference between ranks becomes redundant and the chain of command has to acknowledge that leadership is also bottom-up.

This challenge is not often acknowledged and this will be sad consequence. ‘Bosses’ will spend more and more resources having conferences to ‘problem solve’, meeting stakeholders to try to re-assert legitimacy,  and staging confrontations with employees over perceived ‘insubordination’ (by which they mean their sense of inadequacy because the leadership is coming from below), etc.  They will swell their ranks with more managers, experts and consultants (that has already happened in some parts of the public service.)

Ultimately the leadership begins to live in the Pink Floyd or was it U2 world where they watch themselves on closed circuit TV and they are genuinely surprised by reality on the odd occasion they encounter it.

Employees will put their efforts into autonomous careers

At the bottom levels, innovation is now at the discretion of the members of the organization and the key is in the word discretion.

Ordinary employees may be carrying the organization and its mission even to the point of paying their own salaries and part of the organization’s overheads. This may be seem extreme but I’ve seen it more than once and I’ve seen it in the UK.

Employees may also decide to match the effort they put in with their pay. A consultant coined a saying about salaries in Africa. The annual salary may vary a lot. The hourly salary does not.

Many people develop second careers (it seems that has already begun among British police). Businesses are run from work. Businesses are run outside work.  Second houses are another career. Living abroad and arbitraging costs is another version.

In the UK, I’ve seen some online sites and plenty of workplace business models where work is sub-contracted indicating huge rents in the price charged to the customer. Employees don’t take long to work that out the system of rents for themselves and to find ways of owning the outfit which supplies the contractors.

Is the breakdown of organizational legitimacy inevitable?

Depressing? Possibly corrupt?

The key (and the game) is the legitimacy of the organization. In hierarchical organizations, the raison d’etre of rank is to manage and dispense resources and know-how.

When the ‘bosses’ make the statement that they do not have resources to run the organization, both the organization and the managers lose legitimacy.

The organization could, of course, reorganize both its purpose and the way it organizes to execute its purpose.   This is rare though.  After all, if this re-direction was on the cards, it would have taken place to prempt the cuts and the challenge to the managers’ legitimacy.  A much more likely out come is the expenditure of vast sums shoring up the appearance of  managerial legitimacy while the operational business develops a like and mind (many minds) of its own.

It will be good to see leadership that rejuvenates organizations and in the end, what happens is what happens.  This is not science. This is life. What happens is what we decide to do together. And we make our decisions iteratively.  You decide.  I decide.  You revise.  and so on.

Right now, everyone is waiting for the bosses to make the first move. I hope this move is not “tell us what to do”.  I hope even more it is not “do the same work with less resources”.  Either of these moves  is game-over – at least for the hierarchy.

Then a new game begins of what will replace what we once had.  That is another story.

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What other people have learned about the cuts business

Join the QuEuE by Maldita la hora via FlickrBosses set the agenda

George Osborne has achieved something important.  He has got us talking about the cuts.  What cuts are we going to make?

What is the point of consultation?

We all have an opinion and inevitably, so do I.  But mine is somewhat different and borne out of living through dramatic economic change, not once, but several times elsewhere in the world.  To boot, I was working as a both as a management consultant and a line manager, so I learned a far bit about the “cuts business”.

What is the point of writing blog posts?

I pondered today the point of writing out what I learned.  No one is going to listen. Believe me, that is the first lesson.  We are going to talk a lot and listen little.  I am already doing that as I tune out of the “101 complaints” that are drowning the air waves and Twitter streams.

Then I decided to write after all.  Not because anyone will listen or even that I have anything very important to say.

But simply because I write.  That’s what I do.  I write to organize ideas that swirl around my head as I respond to what I hear in conversation and simultaneously work on other big projects that won’t see the light of day for a while.

What other people have learned about the “cuts business”

So these are the three issues that I will probably write about today:

  • Our general response to being asked to “cut”: bosses who don’t have cheque books big enough to run the organizations they run
  • Using consultants in organizations: managing up-skilling
  • Negotiating with public servants: talk service not money

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If I am going to waste time, I may as well do it in whole sentences.

Board Walk Sneak by zayzayem via FlickrSome of us count; some of us write

I’ve always been better with numbers than words, far better.  I like organizing things. I like getting answers.  But here’s an interesting thing.

But counting is evidently not enough

When I work on long number-crunching projects, I doodle.  I cover pages and pages of scrap paper with odd words effectively just practising my hand-writing.

And I write with both hands.  My left hand is almost as good as my right.

I don’t do this when I am writing a lot.  Perhaps I worry then that I am reading too much, but I don’t doodle.

Counting cuts us off from the conversation

Another dreary thing is that when I am number-crunching, I have nothing to write about.  In so far as writing is a conversation, at least with a fictitious other, we have nothing to say when we are crunching numbers on confidential data on a project that will take weeks.

So I doodle.

Talk I must.  It’s human.

And now I write. Because if I am going to waste time, I may as well do it in whole sentences.

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First test of

This is a simple test of Small Rivers.  .   . it  should create a community newspaper.  I don’t get it though. I’ll try again later.

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Crowd-sourcing develops wisdom. It doesn’t find answers

I dream of sunrise by Indy Kethdy via Flickr
I dream of sunrise by Indy Kethdy via Flickr

Zeitgeist of our age

As I dillied-dallied this morning, putting off the moment when I bury myself in an Excel spreadsheet, I pondered the bizarre experience of academics, like myself, teaching management in a classroom, and checked out the twitter chatter on the new crowd sourcing website being offered by government.

Crowd-sourcing is here

People seem willing to consult the populace online but don’t know what to make of the responses they get back.  There was even a spirited interchanged between a Gen Y blogger, whom I follow, and a Gen X geek, whom I also follow.  The Gen Yer was telling the Gen X to take down all his comments and get behind her drum. Hmm . . .

Someone even challenged Nick Clegg on the workability of crowd-sourced consultation. Hat-tip to @DT for this audioboo from Mark Hilary.

We want answers so that we don’t have to engage

I couldn’t quite hear Nick Clegg’s answer but the dilemma seems clear.

People are looking for answers so they can say that’s done – don’t have to talk (to you) any more.

Engagement is ongoing, messy and never ending

Engagement is ongoing – more people, more complexity, rising understanding, defined initiatives in context of a conversation.

Social psychologist, Karl E Weick provides the basic framework for understanding engagement & leadership

I don’t want to turn this into an advert for my own work but by chance, or rather because, I tried to write a plain English a few days ago, I can point you to what Weick wrote in the aftermath of 9/11 – what constitutes leadership when the world shifts abruptly beneath our feet?

What does it take to lead a community when the issues are so widespread that we must get everyone involved to be able to move forward together?

Karl E Weick is a a notoriously difficult read and I am not sure that I simplified his work sufficiently.  So let me have another go here.

  • Basically, the country has moved from the flight-fight reaction to the financial crisis, the initial startle and anger response.
  • We can give this coalition government its due in that they have moved us through the bargaining stage and to a thinking-it out stage (hopefully by-passing depression).

We are in the over-complicating stage of collectively re-thinking our world views

Weick points out that in this stage, our discussion becomes more complicated.  Indeed it becomes overly-complicated.

Over-complication is a process of looking at a problem from many perspectives

But this process of over-complication helps us understand the social context in which we frame initiatives and make small experiments in our own lives.

We gain a deep and wide appreciation of the context, or in other words, the issues as the appear from the perspectives of many people who are different to us.

Wide consultation provides the backdrop for wisdom and judgment

The context provides the backdrop for wisdom and judgment.

With this backdrop, we can take tentative steps in our own lives and in areas of our own responsibility to move forward.

The principle of self-organization and emergence apply

The leaders won’t decide for us.  We will decide just as a flock of birds decides.

  • We fly in roughly the same direction as everyone else.
  • We fly at roughly the same speed as everyone else.
  • We keep a respectable “stopping distance” so we don’t bash into each other.
  • And when the bird “on point” (the leader in human-speak), gets tired, it falls back and someone else flies point.

And note, to know where to go, the bird on point is using an exquisite sense of where the birds behind it are going.  Like all good leaders, it finds out where its followers are going so it can follow them.

So how will crowd-sourcing online help us?

  • We will not get behind one leader and follow them through predefined cause.
  • It will be messy.
  • We will use some technology to vote issues up and down and to cluster through tags.
  • some of us with an academic/journalistic bent will trawl through the data and look for themese.

But it will be messy and the gains go to anyone who is bothered to listen.

The Special Advisors are going to earn their keep reading all the threads and summarizing them. That is their traditional role isn’t it?  That’s what they are taught at uni, isn’t it?

To discern the common threads and brief their principals.

People who have rallied behind one particular cause, like the legitimate marijuana crowd in the States, will be noted.  They will stand out.  But that is not what this is about. This is a listening exercise. This is a develop nuances exercise.  This is involve people who normally would stay quiet exercise.

The essence of crowd-sourcing

This is a an exercise in developing a common appreciation of where we are going together, so we can fly like a flock of birds to where we need to go without bashing into each other, and without assuming any one of us has super-human powers to understand where we are going.

Leaders get people involved.  Leaders get people to listen.  Our common sense of who and what we are will emerge from that process – special interests and all.

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