Saturday, 25 June 2016

Are your investors the problem?

Over the last 5 years - in fact since the great recession hit - many companies seem to have concentrated on short term gains - and have rewarded their CEOs with generous bonuses  for producing them.   This is in response to a real or imagined investor need for quick results and dividends - to offset money they might previously have received in interest payments on part of their capital.

So, the CEO gets his/her bonus; the company makes profits; the investor receives dividends.  What's not to like?

Well, this is a recipe for declining productivity - or at least non-rising productivity.  Money is going out in these term payments instead of being invested in infrastructure, new capital equipment and new technologies.  It is those kinds of investment that replace labour with capital and drive up labour productivity.  It is those kinds of investment that have not been made in recent years.

Now, does this apply to your company.  Are you under pressure for short-term results?  Is that pressure real or imagined?

Perhaps you should find out.  If your investors would accept a longer-term view, you could start to make those transformational investments and all would gain in that longer term.  

Saturday, 18 June 2016

What kind of boss are you?

Do you - as a boss - enhance, or detract from, your employees' productivity?

If you ask this question of your employees, you might expect them to answer 'enhance' - but they probably won't.

Too many of them will see you as 'interfering' or 'meddling', confusing rather than directing them.

Does this say something about thosee employees - and their perceptions versus expectations - or about you?

This is not clear.  Probably a bit of both.  It certainly means that you need to think about how you relate to, and engage with, your employees.  If employees feel their productivity is lowered, it probably is .. indirectly rather than directly, perhaps, but lowered nevertheless.

Saturday, 11 June 2016

New normal(s)?

I 've written quite a few times in the last year about low productivity figures - across all developed nations.  I've even offered advice on occasions about what might be done to improve the figures - as have better men - and certainly better thinkers - than me.

But the figures stubbornly refuse to rise.

I've also tried to explain this - by suggesting amongst other things that we fail to capture the economic benefit of much i-activity.  If someone writes an app and gives it away for free , does it contribute to economic activity - directly or indirectly?

Perhaps we have to get used to lower productivity growth - and accept it as the new normal. Perhaps we can then start to havre intelligent conversations about employment, about wages, about interest rates and so forth.  Or do we just keep on hoping and praying for a recovery - retaining our old thinking in the face of the overwhelming evidence that things have changed?

Similarly, in your business, what has changed - and changed for ever?  Your competition? External scrutiny? Labour supply? Skills needed?

You need to identify - and work within - your own set of 'new normal' factors, instead of waiting for the world to get back to where it was when you understood it.

Saturday, 4 June 2016

Just Cause?

2 recent sets of figures from the USA raise a question of 'connectivity'/  Labour productivity refuses to rise - and investment in plant and equipment has declined over the last 10 years.  These can probably be correlated but is there a causal relationship?

Well, I can't prove anything but let's just say that labour productivity rises most quickly when capital is substituted for labour.

How do you compare to the US?  Still investing?  Productivity rising?