The Office for National Statistics as reported on the BBC have reported today that the UK saw its service sector sales have the biggest fall in fifteen months April. Blame was allocated to the Royal Wedding, an extra bank holiday and the hot weather which seems to me to be a similar excuses as trains running late due to leaves on the line.

Is it sensible to expect that every month and every year things will always improve?
A few years ago a friend of mine went to his doctor and said that he felt depressed. He described how some days he felt great whilst on others he felt “tired and down”. His Doctor explained that this was normal and indeed it actually has a medical name.

Isn’t business the same? One month will be great and often another poor and it’s actually destructive to expect that growth must always be the norm. Reviewing things as they become quiet and business situations change is healthy. The best time for such reviews is when things are quiet.

You would think that the topics of talent shortage and managing employees productivity were two business issues. I’ve had a few conversations with senior Directors bemoaning the shortage of talent, particularly in IT, banking and technology and both have been linked to how to manage employee productivity.

The Talent Crunch
Most people would think that with the financial crisis that finding good talent would be easy, but in fact this isn’t the case for many specialist areas. Indeed the Manpower Group report that a third of companies report difficulties in finding good talent. There is a talent crunch in India, where it’s reported that sixty seven percent of companies are unable to find the people they need. In Brazil the figure is thirty four percent and the shortage is pushing up wages and inflation.

The skills shortages in these countries is likely to have an affect on our own talent pool and attract our own talent towards high salaries and a better style of living than can be gained within Europe or the USA. This will be true even of bankers who see career progression in terms of London and New York.

Managing Employee productivity
If most businesses can’t find all the talent that it requires, or afford it when it can, then it needs to invest some time and money to improve the productivity of its existing talent. That’s the reason that people have been asking me how to measure, manage and improve their people’s performance and productivity.

It’s been interesting that in the mind of the Directors I’ve spoken to that they seem to have a vision of a “One size fits all” solution. The problem is that there isn’t a one size fits all nor is there an immediate solution to making internal talent more productive. Different strategies need to be employed for salespeople as opposed to IT,  Senior staff as opposed to Non-Executive Directors and so on. In the long-run, however, it might be the only viable and affordable solution. 

In the past few weeks I’ve been reminding people how time is often the enemy of change. Reading the business papers I’ve been struck by how many businesses and even Government accepts the “need to change” to reduce costs, increase productivity and remain competitive but seem to ignore the time trap.

The alcohol “responsibility deal” brokered by the UK Government and supported by Asda, Heineken but only signed up to by Tesco, Marks & Spenceer and others is just one example. 

Managing change creates frustration
Managing change creates frustration for those implementing it and those that have to work with the consequences. This frustration often creates delays, huge additional costs, lower productivity and result in poor staff morale as organizations take account of the economic cycle, merge and seek to become more competitive.

The time trap factor
One of the crucial factors for those designing change within organizations is the time factor. Yet time is the one part of the equation that is ignored, often with disastrous consequences

To understand the time trap factor let’s remind ourselves how change is planned and implemented. For some months plans will be made to improve systems or organizations. The people that work on these plans consider future benefits, implementation plans, risk analysis flow charts etc. Once all the plans have been finalized and an implementation process agreed, the time frame for these people has moved to the present and their outlook is to the future.

Different time frames
On the day that the wider world, generally those people that are affected by the changes, are informed, the managing group or government minister are full of confidence and optimism for the improvements that the future will bring. The group being affected, however, are in a different time frame. Their experience is based upon the past and, even if that experience was understood to be inefficient, there is comfort in what people know and understand.

All change produces winners and losers. The winners will move their time frame to the future and the losers will move further into the past. In addition each group will be seeing the change from the perception of not “Is this change good for the organization” but from the personal standpoint of “Is this good for me”

The trick is to move as many people to the future time frame as possible, right from the start. The more people that talk about the future change in positive terms the greater the chance of success. Errors, however, revolve around poor communication, hurried change, poor planning and implementation.

The result is the creation of two camps.
Those viewed as being supportive of the change and those that are seen as being unsupportive. When this happens it’s interesting to observe that once people are viewed as being in the unsupportive group by the change leaders it’s very difficult for the individuals to move themselves out of this group in the minds of others. In a company situation such staff will often feel forced to leave.

Ignoring the time factor may not reduce the need for change, it may, however, increase the frustration and management effort needed to implement it.

There can be few business events that have the potential to create chaos, lose key people and adversely affect morale than a merger and acquisition. Last week I became aware of a number of businesses as well as a couple of charities that are merging in order to reduce costs and create a better platform for survival.

Process of an M&A
The process can be viewed as a pre acquisition and post acquisition. Pre acquisition establishes a good business fit. Post acquistion comprises of making it work. The businesses seem to be on the right track whilst the charities, having argued for over twelve months, are likely to find the process depressingly difficult and expensive.

Key People will leave during the second phase
During the pre acquistion phase both organisations will have established where savings can be made and implementation starts post acquisition. Whilst some leavers will have been identified by the new company and be made redundant there will be a significant portion of the top talent that will decide to leave because they don’t like the new culture or management style.

My research shows that acquired companies lose almost 50% of their key people within twelve months. One insurance company that I know of lost 80% of the staff over a two year period. Those staff that leave first tend to be those described as “Key people”

Who’s in charge?
Many M&A’s start by trying to adopt the best practice from both companies in terms of culture and management style. This invariably results in a three humped camel with people being confused as to the “norms” expected of them. It’s better to adopt one set of rules and thus establish clear anticipated results.

To maintain productivity keep people informed
One of the charities I’m observing is telling its people that there will be no change to their work, benefits and prospects. In reality it’s aware that the senior partner in the merger is planning to reduce staffing levels and set different results criteria and because the staff don’t believe what they are being told productivity has all but ground to a halt.

It’s estimated that at least 360,000 hours of productivity can be lost during an acquisition of a company with just 1000 people*. They stop becasue they are establishing the new political agenda and determining influence groups and listening to the rumour factory working overtime.

During 2011 there is likely to be an increase in M&A’s and it’s worth considering that effort and planning has to be made to retain the key people that are needed to make the post M&A a success.

* The complete guide to M&A’s by Timothy Galpin and Mark Hendon 

Now that christmas is over and the snow’s melted many retailers are counting the costs of a poor trading season. Next, Waterstones and HMV have all announced fewer sales compared to the same time last year and store closures are expected. With families feeling the VAT rises and inflationary pressures sales are unlikely to improve quickly.

Many companies have been telling me that 2011 will be the year where sales will be vital to survival. The tactic to improve sales team results seems to be to increase targets and take the sales team on an away day to “align sales with core functions and client needs for the next twelve months”.

In my experience, away days where management sweeten a bitter pill of increased sales targets and restructured sales territories with “improved and innovative marketing initiatives” don’t increase motivation nor improve the way sales people approach potential customer’s needs and certainly don’t last more than a week, far less twelve months.

If one must have an away day then it needs to be linked with a measured programme of change that covers a long period and where changes in direction can be identified and implemented more easily.

My electricity and telephone/broadband contacts are up for renewal and in the run-up to the festive season I was receiving three or four phone calls a day from salespeople who expected to be able to “move my account” after a brief and cursory quote promising to save me money.

However, I’m a buyer who takes the attitude that if it’s going to cost less then what am I going to have to “give up”. The salesperson phoning me often seemed aghast when I asked for more details such as proof of their after-sales service claims, websites so that I could check their boasts and a confused silence on the other end of the line when asked to email me details of the contract so that I could study them at my leisure.

I’m much more used to dealing with sophisticated sales-teams selling Banking, Financial Services and large ticket products and I’ve been thinking how these salesteams are changing. The coming year is going to be hard and will result in agreement times between sales proposal and acceptance or rejection being extended by twenty percent or more. This could mean that some sales may take many more months to complete than before.

Already I’ve observed Sales Directors being instructed by their Boards to reduce “Toxic costs” even more vigorously than before. These “Toxic costs”  include travel (car costs), telephone charges, training budgets, sales offices and even admin back-up. I know of three well known companies who are gearing up their HR Departments to advise them on processes for removing future “non-fertile salespeople”. (A description that’s likley to casue confusion at some futue occasion, I think!)

It’s wrong to suggest that all people believe that the less a product costs the more attractive it is. People want to buy reliability, after care service, consistency and results as promised as part of their purchase.

If a company is really planning to grow sales it’s hard to understand why it needs to reduce product quality.   

In this current economic situation a huge number of teams are being restructured. This either means that the team will take on additional work, team membership will be changed or there may even be new leadership.

Each of these brings with it a risk of failure and after speaking to so many senior executives this last month I thought I would share some of the advice that I’ve been giving them.

How to avoid team failure

The UK Government announces it’s long awaited budget cuts next week. The result is that over the next few years thousands of civil service teams will be restructured. This will inevitably be felt by private sector companies that supply the Civil Service and companies that supply them. The domino effect of the budget cuts is likely to mean that most business teams in the UK will need restructuring over the next two years.

The problem is that every time a team is restructures three scarce business resources are put at risk. There are time, money and opportunities. Put at risk because statistics show that 40% of restructured teams fail to deliver what is expected.

Risks of Team Restrucure

Increasing team productivity will be the mission critical task of most businesses over the next two years. See Here for more details on an event that you need to be attending.

Over this past month I’ve been researching how small business teams will work in the future.

This research has led me to attend a number of conferences where I’ve listened to highly successful “web-gurus” talk about how they are making $000s through on-line selling and affiliate marketing and using virtual teams.

There seems to be a number of common threads to all the talks:

• Small teams can provide exceptional products that are often better than equivalent and expensive products from larger businesses.
  This is true and I’ve even invested in two CD’s packed with useful information for under $10, including postage.

• Work such as marketing, web design, product production and delivery, customer contact and much more can be outsourced at a fraction of the current cost.
  Again very true and if there is one aspect to the future of business that will impact even large teams in multinational companies.
  

The final message that I heard from all of them is that individuals and small teams can make $000s without much effort. All you have to do is to buy the product package the “Guru” has developed for $000s and your journey to riches begins…100% money back if not satisfied…guaranteed!

I guess I shouldn’t be surprised that people still find the “instant riches” message so attractive. The Lottery, advertisers and TV game shows all contribute to this perception.

Having spoken to and observed some of the “Gurus” telling everyone how easy it is to make money on the web and that it only takes an hour a day it’s interesting that they themselves seem to work very very very hard and very long hours.

Perhaps the learning point is that: Technology makes life easier but the effort that needs to be directed towards producing and maintaining a successful and sustainable outcome for clients changes.
Those that get rich will only do so through hard work, the rest continue to delude themselves.