It’s Halloween but twice last week I came across a gory story that sent a shiver down my back. They were both business teams that were failing because the leaders of the team had recruited people without establishing or following procedures.

I won’t go into the blood curdling details of each story, just to say that they were messy, very messy. The results were taking up more management time than would have been needed had the leader made correct employment checks, developed need assessments and written work briefs and so on.

Is it laziness, desire to save money or a feeling that “It’ll probably be OK”?.
I don’t know the answer, except that team leaders with such problems are often surprised when they’re told that that it’s their fault the problem exists!

The costs?
Classically between 10 to 25 times the salary of the failed individual or the whole team if that fails.
So a salary of £40,000 can cost up to a whopping £1,000,000.
Now if that’s not an incentive for CEO’s and company recruiters to get it right first time then nothing will be

CNN reported that HSBC has announced that 3,000 people – roughly 10% of its
workforce – will be out of a job by 2013 and are part of the bank’s plans to eliminate 30,000 positions worldwide.

Other banks making huge numbers redundant include Bank of
America, the largest bank in the U.S., plans to shed between 25,000 and 30,000 jobs as reported in the Charlotte Observer . In Stockholm, Nordea, the largest bank in the Nordic region is to cut 2,000 workers. The Dutch bank ABN Amro has announced that it will cut 2,350 jobs. The Daily Telegraph has reported that Lloyds TSB will be cutting 15,000 jobs, Barclays 3000 and Goldman Sachs 1000.

A payroll cut is instant money
Banks are looking for ways to boost their
bottom lines – and as employees
represent around 60% of a bank’s expenses a payroll cut is instant
money.

Another reason is that as banks increase salaries and reduce bonuses they find that whilst bonuses could be easily adjusted to reflect the bank’s financial performance, salaries are a fixed cost. So rather than axe bonuses, banks are axing bankers.

A future problem
In my experience when team personnel are restructured there is the need to restructure work processes and determine new targets and work outcomes. In effect there is a NEW TEAM and new teams are likely to achieve their anticipated results only 60% of the time.

This failure rate (40%) can cause huge losses on the bottom line and delay mission critical outcomes unless clear management of the transition situation is carefully implemented. In my experience the more team change that’s implemented at the same time the more likely there is to be a failure. 

In the past few days I’ve heard of a sales team that’s finding things difficult after a restructure. The restructure slimmed the team, redistributed clients and rationalised the workload but they seem to be failing.

HOW *!* MUCH
Actually, that’s not unusual because my research and other statistics show that 42% of all restructured teams fail to deliver the anticipated results. The problem for the company is the cost in lost opportunities. Brad Smart in his book Topgrading estimated that failed teams cost between 8 and 24 times the salary.

Change needed for success can be very small
The change required to move from failure to success is, in my opinion, very small and a slight adjustment in in team actions could well change things around. But then that’s so often the case. As most of the team play golf they will understand that a slight adjustment in club face can be the difference to a great round and playing like a crab! Perhaps this clip of Tony Robbins explaining why he plays golf, badly, might help!

Tony Robbins – Tiny Changes Mean Huge Results

Ten days ago I was talking to Carl, a good friend of mine, who’s “Ticked off” with the co-operation he’s getting from superiors and colleagues. Now those very people may have to work that bit harder! 

A trail-blazing project
Carl, together with his management team and staff of two hundred, have spent the past year leading a trailblazing project that saves huge amounts of money and delivers enhanced service to the local community. People have said to him “What would we do without you?” and “What you’ve achieved is brilliant”. To achieve these plaudits he’s had to work long hours, hiring a large team and creating process, systems and culture and often without a “model” to follow.

As is usual there has been criticism from other areas of the business that feels overshadowed and exposed. As a result Carl’s team have felt pressured and unappreciated by the very people they are helping to do a better job.

A well earned holiday
A few weeks ago he went on holiday with various senior people and colleagues promising to deliver work whilst he was away ringing in his ears
…was it done when he got back?…daft question…because out of sight was definitely out of mind!

The result is that he’s even more tired than he was before his holiday. Now he’s updated his CV (Resume), bought a new interview suit and is looking for a job and has some interviews even before he’s formally applied for a position. I wonder how the people who’ve said “What would we do without you” will cope when he’s gone!

Cost of replacement and restructure…could be huge!

In announcing that Lloyds TSB are to shed 15,000 jobs over the next three years probably contained little surprise to most people. Indeed there will be many that will be quite pleased that some bankers are reaping what they sowed without realising that the middle management and back-room boys losing their jobs are not those who will be receiving big bonuses over the next three years.

Restructured teams have an increased chance of failure
My real concern is that five thousand job losses each year, for three years, will mean a vast number of teams being restructured. The problem with team restructure is that only 60% tend to deliver targets. That means that 40% of teams fail to deliver on expectations. That’s one big storm of disruption for Lloyds TSB to navigate.

Costs can be huge
The cost of such failure in lost opportunity terms can often amount to ten times the salary of the team and in banking circles that can be  huge! ( a team salary of £1million could produce a potential lost opportunity cost of £10m) However, when one’s focus on savings will be judged on salaries saved the actual costs of the restructure often get ignored.

That is until financial statistics reveal that further jobs have to be cut because the anticipated results haven’t been met!

Some months ago I was contacted by someone saying that a friend had given them my name and contact details and, after hearing all the positive things said about me, would love to meet me. Well what would you have done… Delighted, I said “of course”.

“Something’s come up…”
Meeting was a bit difficult as we lived over a three hour journey from each other and so a one hour SKYPE call was arranged. On the day scheduled for the call I received an email saying that “something had come up” and could we rearrange. Something coming up happens to the best people and naturally I agreed.

Second appointment
After I had juggled my diary a little bit we diarised a time for the second SKYPE appointment and another hour was set aside . Now, let’s agree that video conference meetings are appointments. Just that they are over the computer screen. Then a few hours before the time I received another email, “Sorry, I’m up to my eyes, can we reappoint. I’ll call you”

Would I be desperate to try to meet for a third time?
I was staggered by the arrogance that not once, but twice my time was seen as being unimportant, that her obvious inability to manage her time should inconvenience me and that I would be desperate to try a third time to meet with her! Since then I’ve received newsletters and various other updates about her business with offers to purchase products but no aplogy.

It ended very expensively
Yesterday I had a meeting in The City of London and her name came up in conversation. I related the story of the failed SKYPE Calls and within a flash, that even surprised me, her involvement in any future projects was rejected. It just shows that arrogant rudeness can end up being very expensive!

It never ceases to amaze me how often business change fails and how many change initiatives end up costing huge amounts on money in lost opportunities.

BETFAIR parts with Chief Executive
For intance yesterday’s Sunday Telegraph business section reported that BETFAIR has parted company with their Chief Executive just three months after the online trading platform had been launched. “In recent months analysts have questioned how successful the roll-out has been” of the LMAX platform and the shares have fallen 25% in less than six months.

Another example I observed last weeek was a sales team that had restructured to allow the team to concentrate on “High net worth clients”. Those clients not lucky enough to be categorised in the high net worth category would, in future, be dealt with from a call centre. Sales have subsequently fallen dramatically as the majority of sales came from small purchases. Now categorised as “insignificant” these customers reacted badly to being advised by people who did not have the experience to advise them properly. Result reduced sales and lost clients.

Executive Paralysis
Too often a contributory mistake is “Executive Paralysis” in identifying and accepting that initial thinking and planning could be flawed and to have a back-up plan. This rejection of potential failure creates a position that when fallback options are needed they are introduced with a sense of panic, adding more to the “costs of lost opportunity”

A few days ago I answered a question on delegation on LinkedIn and then on Friday was having a robust discussion on delegation with a friend in my network and thought I would share the discussion with you.

“Delegating could harm a career and promotion prospects”
Was the statement made by the senior manager in my network. He reasoned that obvious errors cost the business money and impacted on mission critical outcomes. Then with the time taken to recover from from errors delegating tasks took up valuable management time and could “harm his career and promotion prospects”.

“Management style didn’t encourage mistakes”
It seemed that his “management style”, and that of the business, didn’t tollerate mistakes. I pointed out that if the management don’t tollerate mistakes then there will be little room for experimentation. If people can’t experiment then, those that use experimentation to learn, will become frustrated and tend to leave to businesses that will allow it.

Experimentation is healthy. It’s how we learn to improve at any hobby, computer programme and game, even how to socialise and make friends. But, it seems that when people become managers they often have to be trained in how to encourage and manage it.

In any event lack of experimentation, from my experience, only helps competitors forge ahead with more efficient processes, products and customer focussed thinking.

The process
I explained the process my mentors showed me and which I’ve have adopted and train:

a) Discuss the subordinate’s idea with them. Be open minded, highlight potential problems as you see them, business issues and consequences of success and failure.

b) If the subordinate still wants to proceed then discuss the process they will be using and then provide support (physical as well as verbal) and have a plan to pick up the pieces.

c) If the subordinate is successful. congratulate and say how delighted you are and tell everyoneone else what a success it’s been. If it’s not a success then discuss the reasons with the person, then ask how they intend to recover the situation. Again provide increased support but don’t blame, chastise or bad mouth to others – (after all you made the decision to allow the experimentation and would have looked good if it had succeeded).

d) Turn the entire process, success or failure, into a learning situation by analysing what went right / wrong with the subordinate and what could be done differently next time. Either way make the subordinate “feel good” about the process and your support.

I’m not sure my friend was convinced by my arguments. Then I must admit he’s been secure in his current job for the past twelve years, despite higher than average team turnover and mediocre company results and doubtless will be there for a good while longer!