Welcome
This month we are delighted to have Jonathan Ledwidge, celebrated writer of "The Human Asset Manifesto" as our featured author.
Jonathan Ledwidge worked in the City of London for 18 years during which time he was employed by a number global investment banks, including Continental, CIBC Capital Markets, and ABN AMRO. His roles included developing and implementing business strategies for capital markets products and services. Towards the end of his investment-banking career, Jonathan focused on learning, knowledge development and cultural change, and devised strategies and approaches for improving output and productivity, particularly in respect of product origination, distribution and sales teams.
Jonathan has combined his extensive knowledge and experience in business, with a lifelong passion for history, politics, and culture and has read and traveled extensively in pursuit of these interests. It is his recognition of the wider human and social issues in business that led him to research and write The Human Asset Manifesto (www.thamanifesto.com) and develop THAEvaluator©, a product that evaluates and assesses the performance of human assets.
Jonathan is currently Managing Partner at THAPartners (www.thapartners.com). He is a Chartered Accountant and holds an MBA from Cass Business School, London.
click here for previous issues of the newsletter
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FSA NEWS & SPEECHES
Principles-based regulation - what does it mean for the industry?, by Callum McCarthy, Chairman, FSA, 31 October 2006
Financial Crime Newsletter - Issue 6, October 2006
The UK FSA: Nobody does it better? by Margaret Cole, Director of Enforcement, FSA, 17 October 2006
Fit & Proper by Alexandra Kelly, Compliance Monitor, pg 22, October 2006
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Upcoming Conferences and Events
Bullying & Harassement at Work, 08 November, 2006, London
Employing Non-UK Nationals Training Day, 09 November 2006, London
Annual Employment Seminar 2006, 16 November 2006, London
Third Annual Conference, Operational Risk 2006, Securities & Investment Institute, 29 November, 2006, London
BBA's 4th Annual Financial Crime Conference, 05 December 2006, London
Professional Development Training Courses, Securities & Investment Institute, July-December 2006
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Articles of Interest
New Powers Against Organised and Financial Crime, I&P Serious Organised Subgroup, October 2006
Employers await rush of age claims, Personnel Today, 24 October 2006
Weekly dilemma...Staff monitoring, Personnel Today, 17 October 2006
Fight Internal Fraud
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Would your organisation have hired Bill Gates or Steve Jobs?
by Jonathan Ledwidge of THAPartners
It has always been the tendency of organisations to recruit graduates with the best grades from the best universities.
On that basis, people such as Bill Gates and Steve Jobs, a couple of college dropouts who have transformed our world, would not have been given the time of day by most corporate recruiters. The same could be said of Richard Branson – he dropped out of high school at the age of 15.
There is no question that vetting of staff and managing the risks inherent in hiring is important. Criminal syndicates and unscrupulous individuals make it an absolute necessity. Yet, organisations have become so obsessed with reducing risk that they no longer hire actual people – they recruit qualifications, certificates, and institutions. The annual hiring of graduates has become little more than a search for androids – devoid of the human bits that makes people innovative, creative and value adding.
The hiring of staff lower down the food chain is no less bound by convention and the paramount need for safety.
How often do you see job ads that want people who can “hit the ground running”? What in effect this means is that the only requirement for the advertised role is that the candidate has done exactly the same job somewhere else and that essentially should now be able to perform said task fast asleep on one leg (I mean no offence to the physically challenged).
In such instances, the job ad might just as well have been entitled “Widget Wanted”.
As a consequence of hiring androids and widgets, people that do exactly as they were programmed to do from the outset, and there is not much room for anything else.
As a writer once remarked, a ship in a harbour is safe, but that is not what ships were built for. In a similar vein, human beings were never built to be androids and widgets.
If you believe that any deviation from current practices would make matters difficult for all but the most equipped of organisations, then what I am about to tell you next will dismay you even more.
A study by the Corporate Executive Board shows that if you are looking for employees that will perform at a higher level in the future, only 29% of today’s high performers will be the high performers of the future. The study emphasises that high performers require three things – desire, engagement, and ability. None of these three factors is sufficient on their own, and the absence of any single one of them negatively influences overall performance.
In short, from a performance perspective, not only is recruitment less than reliable, so too is any attempt to predict the career paths of existing employees based on traditional methods of appraisal and evaluation.
So what do we do?
The first and most obvious thing is to start recruiting people who really have a desire to engage with and share an organisation’s objectives. The problem here is that very few organisations define themselves or intended roles in a way that makes this task easy for the prospective employee. I suspect that very few job candidates find themselves salivating when the job requirements are sound analytical skills and the ability to work to tight deadlines.
Secondly, organisations can certainly train and develop people’s capabilities. Yet, many get this wrong and much of the annual training budget goes down the drain. The only way to avoid this waste is to focus on desire and engagement – or what I refer to as the human and social factors.
An appropriate focus on human and social factors is perhaps the most important aspect of an organisation’s existence. It should define how an organisation recruits, how it attracts, trains, and retains people, and ultimately how it leverages its human assets to achieve excellence and competitive advantage.
The extent to which organisations have failed in this regard has resulted in them becoming socially dysfunctional – a divergence between the objectives of individuals, and the organisations that employee them. This is a big drag on productivity and performance.
I have spent a considerable period of time researching and assessing human and social factors and how they have been the primary source of excellence and competitive advantage from the time of the Industrial Revolution all the way through to the current IT Revolution.
The Industrial Revolution came about when ordinary people, motivated by the possibility of personal gain took advantage of the patent, copyright and ownership laws to make their fortunes. As noted by Peter Landry;
“George Stephenson [the inventor of the steam locomotive] began as a cowherd; Telford, a shepherd's son, as a stonemason. Alexander Naysmith started as an apprentice coach painter. ...Joseph Bramah, the machine-tool inventor, creator of the first patent lock, the hydraulic press, the beer pump, the modern fire engine, the fountain pen, and the first modern water closet, started as a carpenter's apprentice and got his essential learning, and experience from the local blacksmith’s forge.
The IT Revolution was no different. Gates and Jobs made things happen not just by their entrepreneurial spirit, but also by invoking major changes in the human and social aspects of work – its environment, engagement, practices, rewards, and incentives. We should therefore not be surprised that Google, the company that is leading a second wave in the IT Revolution, has a policy of not hiring people more than a year or two out of university – they fear that today’s organisations adversely affect mindsets, attitudes, and creativity.
It is an indictment of everyone else around them.
The Industrial Revolution and the IT Revolution are perhaps the most significant economic events of the modern era (barring major wars and conflicts) and both represent a triumph of human and social factors.
What can organisations learn from this? First, an example of one organisation that failed to comprehend the importance of these factors.
In the early 1980s, AT&T licensed wireless technology to other organisations after McKinsey had persuaded them that it would never be commercially viable. Today, we cannot envisage our lives without our mobile phones – back then, AT&T could not envisage our lives with one. AT&T had the technology but lacked the human and social vision. Eventually they paid the ultimate price – a company they had previously spun off purchased them.
Lean Production, the methodology that Toyota and Honda have used to wipe the floor with Ford and GM is a great example of how human and social factors provide the basis for excellence and competitive advantage.
The two most important of these factors were respectively utilised and established at the very outset of the Lean Revolution by Toyota. The first was that post-war Japanese legislation outlawing any distinction between blue-collar and white-collar workers. The second was the social contract established Toyota established with its remaining employees, after 25% of their colleagues were laid-off – it linked job security, trust, empowerment, learning, individual development, team development, performance, promotion, and rewards.
In order to comprehend just how powerful these factors were, we only have to look at what has happened in the UK and the US auto industries. The British experience of class warfare on the shop floor eventually destroyed British owned and operated auto production. In the US, GM and Ford continue to be plagued by union problems.
In his book The Toyota Way, Jeffrey Liker describes the Toyota Production System (TPS), what we commonly refer to as Lean Production thus:
The more I have studied TPS and the Toyota Way, the more I understand that it is a system designed to provide the tools for people to continually improve their work. The Toyota system means more dependence on people not less. It is a culture, even more than a set of efficiency and improvement techniques…On a daily basis, engineers, skilled workers, quality specialists, vendors, team leaders, and – most importantly – operators are all involved in continuous problem solving and improvement, which in time, trains everyone to become better solvers.
Note how many western manufacturers have employed Six-Sigma and JIT techniques but without understanding the human and social concepts that underpin them. Their results reflect precisely what happens when process and technology are placed before people.
This conveniently brings us back to the topic of risk and taking the safe option. Employees can only be fully engaged if they are provided with the right environment – the very factors that Toyota decided was essential for its success. By definition, this implies a significant degree of freedom in order to self learn, to experiment, to express, to innovate and to develop.
Androids and widgets rarely find themselves in such a position. So what price freedom? What’s the risk? In an environment where the management of risk has taken precedence over almost anything else, how do we provide employees the freedom to achieve excellence and add value?
In the search for your answer, I sincerely recommend that you consider the following; at Toyota, where all employees operate with great freedom and any one of them can stop the production line, the line never stops. In Detroit, where only senior managers can stop the production line, there are stoppages.
Freedom, when applied in the right environment can make a spectacular difference.
Which of course then begs the question; what price do organisations pay when they have not established an environment within which freedom can flourish?
Jonathan Ledwidge is the author of the recently published book, The Human Asset Manifesto, What Happens When Organisations Allow People The Freedom To BE, published by Morgan James of New York, www.thamanifesto.com and is Managing Partner at THAPartners www.thapartners.com - his blog can be accessed at http://thamanifesto.typepad.com/
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