bozo's return

Management Matters (still)

Regular Bozo readers will know he is a baseball fan.

They will also know he is a great admirer of the management skills of Joe Maddon - the manager of the Tampa Bay Rays - and has quoted him and his wisdom on this blog in the past. Well I have no quote from Joe today but it is time to give him another accolade.

Last year everyone said was the Rays last big chance to win something. Many of their stars had contracts expiring and they would all walk off into the sunset to get big contracts that Tampa could not afford to give them. That the team would be broken up, that it was back to square one for Maddon and Tampa, if not square zero.

The first nine games seemed to prove that was true. The team did indeed lose almost all of its best position players. Most of its relievers and was 1-8. Bottom of the division after nine games on April 10th.

Since then...poor denuded undermanned Tampa has won 22 and lost only 8.

They are now 23-16.

They are now top of their division ahead of the biggest salaried teams in Baseball (The Yankees are second, two winw behind, and the big spending Red Sox remain under .500 and still flirt with bottom of the division).

To my mind this is all about Joe Maddon's knowledge. Both of the game, and of management.

There are some big similarities between sport and business. Key people get paid a lot, sometimes they get paid so much that managing them becomes hard.

When i was trading it was always the case that managers in a trading room had to be great traders or no one would respect them.

It's kind of understandable.

it;s also utter cods.

If you look at great sporting managers and ask them to show their player's medals, you can be disappointed.

Alex Ferguson, Arsene Wenger, Jose Mourinho... no great success as players

Joe Maddon, no great success as a player.

But they can manage, They understand their jobs intellectually.

And they know how to create a winning team.

And guess what... unlike the other names I mentioned, Joe Maddon's winning team isn't the highest paid team in their sport.

This makes Maddon superior (in my mind) to Fergsuon and Mourinho by far.

The question for you folks in business is this.

What sort of manager are you?

A cheque book manager?

Or a good manager?

 

Shareholder Value

I read a fab article written by Andrew Hill in the FT online yesterday:

Find it here.

Then let me quote the key phrase:

The blinkered drive for shareholder value and the rewards it can generate for those who lead it have turned CEOs into excellent managers of expectations rather than tangible corporate performance. One study suggests a majority of managers would avoid starting a project that would create positive net present value – in other words, one that should improve shareholder value in the long-term – if it meant missing their next quarterly earnings targets.

Wow.

So that's good isn't it?

One hardly knows what to say... and Mr Hill says a lot of it well enough, so rather than plagiarise him I reccommend going to have a read.

But I do have a question.

Is it really investors who drive this behaviour? Or is it the investor's representatives??

If I invest in a fund, the fund manager will tell me that the value of that fund can go up and down; that past perfromance...yada yada... you know how the spiel goes! The fund manager wants his clients to have a long term view. The fund manager wants his client's to believe in their ability to beat the market over a time horizon that isn't measured in quarters but in years.

Cool.

So who is it who is telling the senior management of a business that they are history if they don't meet a quarterly target? Well its the fund managers, via analysts.

The longer I stay away from the market, the more nonsensical it all looks.

 

My word is my bond

Back in the day when Bozo was a trader he was really proud of the fact that the whole world of financial markets traded without doubt or hesitation on your word.

If Bozo said to a client "250 million done!" Then the trade for 250 million was done. There was no doubt of it. Actually in 22 years Bozo only did a trade of 250 million once, so donit get the idea he was anything like a big fish! Which makes it even more incredible. Even a small fish could commit his ban to an enormous trade. Acually Bozo did once say "2 Billion done", but it was a one day trade in old fashioned French Francs which doesn't really count. During Bozo's career banks instituted the taping of trading floor phones. But I truly believe these were, at the time, not meant to prevent cheating but to clear up misunderstandings. Basically, back in the day, your word was meant to count for something.

I wonder when exactly it changed. Obviously the dudes at Enron were just plain lying through their teeth, but they weren't bankers. Bankers, especially traders were different. We'd rather lose money than lose our reputation for being true to our word. And now? Well obviously there was a phase in the sub-prime meltdown when bankers and traders were willing to tell barefaced lies to get all those toxic instruments sold. Because frankly, I worked in this world for 22 years and I will never believe the ignorance and stupidity defence. You haven't got that job because you're stupid dude!

And today on my Reuters there popped up the following headline:

Libor fixing probe

Click and have a read.

It probably doesn't gob-smack an outsider the way it smacks Bozo's gob. The formerly unthinkable now requires a probe covering a few (not one but a few) of the biggest banks in the world. And banks who set your mortgage rate by the way!

Bozo still has a few friends in investment banking (the number probably shrinks every day I post a new blog!). And Bozo still thinks most of them are decent, honest, hard-working trustworthy and talented individuals who earn their cash the hard way (even if they don't give enough of it to the poor ~ see yesterday's Bozo Polemic!).

Last year Bozo was turned down for a social drink by someone he felt was an old friend. Certainly someone Bozo owes an awful lot to from the old days. Yet this person thought meeting Bozo was dangerous! "You are a blogger, I don't want to be ambushed!" Since this was last year you can tell that it still hurts the feelings of thick skinned old Bozo!

Someone once said (and my google research skills have failed me in identifying who...): that it is the fate of the unscrupulous man never to trust anyone else.

Dude ~ it was just a beer! And my word is STILL my bond.

 

You won't believe this but...

... I was at a meeting recently where an executive of one of the biggest companies in the world outlined the strategic vision for me...

 

She said, whilst scribbling on a whiteboard...

"This is meant to be a boat, because we have embarked on a quest, but, we don;t know the destination..."

 

Seriously?

I said:

"So here's an idea, build a huge great cruise ship, and advertise a cruise which costs you your career, your reputation, your ability to pay the mortgage (which is sort of the risk we take as employees)... then go out in the street and try and sell tickets to a cruise with no destination..."

They all looked at me blankly

 

sigh

 

Bonus and Behaviour

A quick post inspired by some long chats with the clever Mrs Bozo who is, as you may know a guru about all matters "reward".

Of course it make sense to have a portion (there are arguments about how big a portion - which tends to vary accorind to the seniority of people and the magnitude of their total reward) of everyone's package being incentive based.

But there is one obvious fact.

Cash NOW as a reward for results NOW is flawed. It creates bad behaviour NOW!

Let me give you the example of the car manufacturer or the electronics manufacturer.

Sales are huge! Bonuses are huge. People leave and go backpacking for three years with their massive cash rewards.

Next year, returns of faulty goods are huge! Losses are huge! None of the people responsible are even still employed by the company.

Ah well. Its only the shareholders and the customers who got screwed!

I specifically avoided the investment banking example.

But NPV and mark-to-market have been shot to pieces (surely?) by the bonuses paid to our friend Joe at AIG who got paid for making short term profits on the assets that brought the entire company down. AIG dead, Joe a multi-millionaire. Flawed. We surely don't need to mention that 'mark-to-market' was the beginning of the end for Enron!

Incentives = good ~ cash now = bad

Future vesting equity = unpopular with high earners.

But surely unpopular = tough titty?

Can we try, just a little bit, to engage employees with our vision for the company? Engage them with the idea that our company does something special and has a long term plan? Engage them with values that are not just money?

because if we can we can incentivise hem in creative ways that will drive better behaviour and better behaviour will drive better long term corporate performance. Honest!

The English Manager

Stating today that the next manager of England will be English is, in itself, poor management. Pulling the rug from under poor Fabio's feet.

The debate this morning has been about Fabio's English and its lack of improvement. Because it has led to shoddy management processes in the past (most obviously the Paul Scholes incident and the Beckham incident) this is a valid issue. But making statements today about Fabio's successor is every bit as bad as management processes go.

But it made me think about Language and Management. Because it clearly matters, because communication is crucial and language is a key part of communication. Obviously.

There are some historic facts about footballers that are worth noting. Some Brits have done very well abroad. Keegan, Platt and Lineker all learned to speak the local language. The English are famous of course for not learning the language. Gascoigne of course didnt.

My friend Marina has always had a theory that people who speak more than one language have a broader mind, think more laterally and are more able to problem solve.

Bozo lived in the Arab speaking world for 9 years and managed to learn about a dozen words - which may be shameful. However after three years in Germany my German was fluid if not fluent. So maybe it says Arabic is too hard, or not globally useful enough rather than Bozo is too lazy (which Bozo-cognoscenti will know cannot be ruled out!) Actually Bozo's German is still nicht schelcht despite not having lived there since 1988!

So what is the point?

I am not sure... but there are a lot of management mistakes here that we can learn from.

At the pinnacle is fabio's English skills. The thing is - in that job he needed to improve them and didn't. Having an assistant call Paul Scholes was worse than not calling him at all - and giving fab the benefit of the doubt he chose to do it that way because he felt he needed a better English speaker to sell Scholes on the idea of a comeback. Communication of course, as we have said so often, is what the audience hear, not what you say. Paul Scholes got the message that it wasn't important enough for the manager to call him personally. Maybe the same thing goes for letting Beckham find out in the newspapers he was dropped. But whatever the reason, the results are bad and bad results mean bad management.

None of which makes the FA's announcement good management.

One of the Sunday's football gurus (sorry I would give credit if i remembered who!) pointed out that the English teams performance in South Africa was not caused and would not have been improved by the nationality of the manager.

Agreed - but by the skill of the manager yes.

Fabio had a great track record. The next senior manager your business hires will have a great track record too. That's what you hire isn't it? Great track records.

Track records of management are the same as the track records of investment trusts.

Rewarding Failure

We do this all the time don't we?

We have obvious examples like Fred at RBS.

To which we can add all those investment bank bonuses that got paid by institutions that would have ceased to exist if they hadn't been bailed out - or their counterparties hadn't been bailed out.

And to which we can add Capello who got a new £11 million 2-year deal just before he managed the most gutless English world cup failure in modern memory.

We can add all the players to the list too. Not just the John Terry's. (How i despise him!) But all those millionaires who have never won a single trophy. Ever. Micah Richards leaps to mind.

Everyone will shout at me. It's the marketplace that drives those deals, not the recipients.

And I shout back:

"I KNOW!"

My question is why? How?

As a former football fan (honestly I cannot stomach it any more) I understand that as money comes into the game the people on the pitch want and have the power to gain the lion's share of that money. And all of us who pay to watch foootball (live or through tv subscription) are guilty of rewarding the failure of most players.

I see one huge problem.

Reward without Risk

Goldman Sachs sub prime debt cowboys had no downside, still have no downside. If it goes well they get paid gazillions. If it goes badly they get paid, er gazillions.

Frank Lampard gets paid the same no matter what Chelsea win, and no matter how much his country gets humiliated at the world cup.

You cannot tell me that reward truly motivates people if their is no real difference between success and falure.

If you people don't start to realise that recruiting and retaining is not about money you will contrinue to throw large sums of it away recruiting and retaining the wrong people.

The proof of this is not a less well-paid and less well-known German team showing enormous and understandable hunger to prove themselves. The proof of this is an equally well-paid, equally well-known Spain showing pride integrity, commitment, desire and excellence.

Yes it is about management. No it is now about "the manager". Because management is also about the system that creates the team. And the same goes for your team that succeeds or fails in your business.

Read back a few weeks to my piece on "the employee value proposition".

It wasn't just that Winston Churchill was a great manager, a world class motivator, it's that Britain, at that point in time, no matter how unequal and flaed it was, still had a value proposition that the British valued and would fight for.

Don't ask yourself if you pay your rising stars enough money to stop them getting poached. Ask yourself if you have created a company that they'd fight for.

Am looking forward to the Germans now....

Lessons in management from Fabio (not!)

Srcond update today - i didn't think we could mix this with the Wayne Rooney, because this is about real management. Not immature overpaid boys.

Back in the world of real management we see another great how-not-to lesson from the world of football. It was every bit as telling as the lessons of the French farce.

When Fabio Capello dropped Robert Green he sent a message to his team. I don't think he meant to, but he did. Because as we know communication is what the audience receives NOT what you think you said.

The message he sent was:

"One mistake and you are OUT!"

If you think (as I do) that England played with fear and trepidation and not fun and confidence, then you have to give consideration to the idea that this fear came from Fabio's approach to Rob Green's mistake.

I know Rob Green is West Ham, but then so was David James once, but I am NOT trying to Defend Green i am trying to tell you that how you treat people who make mistakes is noticed by the people who don't!

You cannot innovate without risking making a mistake. You cannot create a new product that will sell billions without risking making a product that will sell hundreds.

This part of your management style is crucial. How do you react when someone makes a mistake? Do your staff feel that it's "One mistake and you're out?" Because if they do your team, your department and your company will stagnate.

And it isn't just about being sacked. it;s about being punished. It;s the b*ll*cking, the tutting, the sighing.

Of course not all mistakes are created equal. And some rules, regulations and limits are set so that staff know the parameters within which mistakes are allowed and not allowed. It may be that Fabio feels that Rob Green's mistake comes into that category. But his team played with fear, and if nothing else his selection decision message was badly communicated. Would Wayne Rooney get sacked for missing a penalty? or a tap in?

BUT the reality is YOUR company needs to be empowered to make some mistakes, and how you react to mistakes is crucial both in reality and in perception. Your team's perception of how YOU react to mistakes is more important than what you think your reaction is.

Don't learn from Fabio,

Please

Talent, Reward and the soft skills of management

Yes, we are still talking about the World Cup!

Did we all see the French debacle last night. It was right up there with Trafalgar and Waterloo. For Bozo, the overiding image was that of the French coach/manager leaning disinterestedly on the wall of the dugout. Or was it all the French substitutes hiding behind the goal so they couldn't be called upon to join in the farce?

It dawned on me overnight that the decline and fall of the once mighty French football juggernaut has lessons in management for everyone of us. Top firms will have a Head of Talent whose job it is to make sure the best and brightest and recruited. The same top firm will have a Head of Reward whose job it is to make sure the best and brightest are properly paid, properly incentivised and that the structures are designed to retain the talent long-term.

Well no one can doubt the talent of the French team can they?
Let's look at the credentials:
Evra (Man U - they seem to be a good team that has won some stuff)
Abidal (Barcelona - ditto)
Diabi, Gallas and Sagna (Arsenal)
Ribery (Champions league finalists - Bayern Munich)
Malouda and Anelka (double winners Chelsea)

I won't mention Thierry Henry because Domenech didn't mention him either.
So the talent is not at issue.

What about Reward, well do i really need to prove a point there? Nicolas Anelka has reputedly got a new contract that will pay him over £4.5 million a year.

The average salary of the particpants in blue last night was definitely into 7 figures. The reward - in cash terms - is clearly pretty good. Now the clever Mrs Bozo, who is a leading world expert on the subject will explain to you that a good reward structure is not just about large wads of cash component.

Regular readers will recall we posted on the subject of the Employee Value Proposition not long ago...

So we are pretty clear (are we not?) that success is not just the talent and the reward. It's what the talented actually DO to earn the reward.

But it's also the influence of management on their performance. The level of management failure is high in pretty much all industries. It falls into two camps.

There is the management doesn't matter camp. I lived in that world for a long while. When i worked in the financial markets the route to management was making a lot of profit. Making profit in financial markets is an ego centric and blinkered process. This is the antithesis of successanagement, and, consequently most of my bosses were dicks when it came to managing. Of course they earned loads of cash through trading, so their bosses let it go, there being no method for analyyzing the negative effects on that persons direct reports. In other words HE made £2-3 million, so we love him. There was no way of assessing that HIS bad managament lessened the earnings of his seven man team by £4 million so senior bankers just assumed he wasn't.

Then there is the management skills are easy, common sense and we all have them school. That's the school where the boss says "I am a great manager!" Or the school where the boss says "Anyone can be a great manager, we don't need to educate anyone!"

The conventional wisdom (based on the spin of the Thatcher years along with the ridiculous media unfriendly nonsense of the Union leaders of the time) is that the Unions killed UK manufacturing in the 1970s and 1980s. The truth is that it was bad management. UK managers even today have less management education than their European, American or Japanese counterparts. Even today! It was even worse back then.

Now despite my management education I too belong to the camp that says it makes no sense to have an MBA before you even had a job. I do however feel that good management needs both education and experience. I think too that both education and experience apply to the soft skills of management. Empathy, communication, analysis, motivation etc, etc are driven by experience, but bettered by education. people are employed to do stuff, being good at doing that stuff puts them in line for promotion to management. But managing is DIFFERENT stuff!

Now the football world is actually a much better analogy for the world of business management than you might like to think.

Why? Because many people say "when they go out on the pitch it is only the players that matter." Which is true.

But if its so true then why do some managers, week after week, year after year, get better results than others? Ferguson, Mourinho, Wenger, Lippi, Ancelotti.

You cannot win a major trophy with rubbish players, (although evidence shows that you can avoid relegation.)

The reality is that groups of great players don't win major trophies. Teams do.

We have dealt with the talent and reward of the French team. A collection of individuals which were capable (on talent) of reaching the last eight. If not the last four. Yet they put on the most awful performance. So Bozo, and the French press point the finger at Domenech.

The French team were badly managed and management matters. They qualified despite him, a good team can deliver with a bad manager, to a certain extent.
Bozo works with senior management teams all the time. In the main there are few idiots. Very few. But they doesn't mean they are equally good at managing. But I have to say that spending quality time with the senior management team is the best single way of analysing the prospects of a company.

So look at yourself. Would you relish letting analysts into your world? or dread it?

Sadly not all those that should dread it actually do!!!!

Enjoy tonight's installment of "Grow old fast watching England"

...

The flawed assumption

In communications there is one basic flawed assumption which is both very common and very fatal. (Fatal of course is a binomial - so you cannot have very fatal) But let us bypass the pedantry and get down to business.

We all tend to assume that when we say something, or write something, that the person we are communicating with will interpret what we say exactly as we mean it.

And while it is true that they often do. it is also true that they sometimes do not.

In all communications it is potentially disastrous when our audience get a different message to that which we intended to send. For a business to get this wrong with customers is definitely fatal. But actually businesses tend to be pretty good at that aspect of communicating. Sales and marketing are professional departments with sound education and a mountain of academic work lying behind the way they work.

Companies are either good at communicating with customers or they are dead.

The problem is that companies are mostly poor at communicating with their staff.
Companies that are bad at communicating with their staff are likely to be dying, often slowly enough for alarm bells not to ring.

In the world of change management the biggest enemy of effective change are the flawed assumptions made over and over again by senior management.

- I emailed them and told them so they will do it
- They know their jobs are safe, I don't need to tell them
- I told them what i meant, of course they understand
- i am in charge, what i say goes.

Internal communications departments do a lot of good. Truly they do. They have one basic weakness. It is career limiting for the internal comms manager to tell the CEO he/she is getting it all wrong.

Externals have a lot of the same problem - it is business limiting to tell the person who authorises your invoice that he/she is getting it wrong.

So the CEO is actually the only one who can get this right!

So CEOs of the world here is my advice

Get better at it
or
Get help doing it

Of course this doesnt apply to those CEOs who already know everything.