Banking on nostaligia

With a little nudge from Brussels, the government has decided to break up the state backed mega-banks into smaller retail banks, a bit like the ones we used to have in the olden days. These are going to be Boring Banks, says Alistair Darling. The ones older people will remember and younger people might have read about or seen in old TV programmes. The sort we used to have when everyone knew and respected the bank manager; banks that made sound investments using the savings of thrifty depositors. No casino banking and trading in exotic financial instruments for these chaps. No, this is going back to banking as it should be. As if the underline this message, there is talk of restoring many of the old names to the high street. We’ll have the Trustee Savings Bank again and the staid but prudent Williams and Glyn’s. Who knows, if RBS is split up even further we might even see National Provincial back again.  

Ah, the tinkling of the old pub joanna as I pop in for a light-and-bitter. The shouts of the newspaper sellers, the ring of the bells on the red buses. Bowler-hatted gents walking to the station and and cloth-capped workers cycling away from the factory as the whistle blows.  And isn’t that old Mr Mainwaring locking up the bank after a hard days work? Regular as clockwork; you could set your watch by him.

It’s all bollocks of course. If anything, the finance for the new banks will be even more exotic than that which got their previous owners into so much trouble. Secretive US private equity funds, unknown foreign investors fronted by Richard Branson, Gulf oil barons and, in the greatest irony of all, sovereign wealth funds are among the most likely new owners of these quaint old names. It may be that Steely Neely simply forces a change in ownership from one state to another.

They might be given names from the 1950s but these will be 21st century banks in every way that counts.

Don’t screw around at work

I have long believed that sexual relationships between work colleagues are best avoided. The unholy mess at Aviva, gleefully reported at HR With Balls, only reinforces my view.

Lulu and the Lampshades

This is one of the best things I have ever seen on YouTube.

They’re called Lulu and the Lampshades and, as far as I can tell, they are from London. They are playing at the ICA in London on 6 November, when I shall be in France.  Oh well, maybe next time…..

Hat Tip: John Band

A word of advice for Nick Griffin

There are a number of golden rules to follow when preparing for difficult meetings.

If you are going to say something which will make you really unpopular, make sure you are prepared, know all your facts and can reel them off with confidence.

If your case is not watertight, anticipate where you are vulnerable and rehearse your evasion tactics so that you cover up the fact that you are being evasive.

If your ground is really shaky, your only chance is to make doubly sure that you can deliver your line in bullshit with confidence and aplomb.

In the last case, rehearsing your responses with critical friends is essential. Ask yourself, “What are the questions I really hope they don’t ask?”  Then get your colleagues to ask you those questions as spitefully and aggressively as they can.  Practice your responses so that you get used to delivering them while managing your own fear and anger.

Unfortunately, many people don’t do this. The more senior they are, the more likely they are to surround themselves with people who agree with them and reinforce their views. They are therefore able to kid themselves that they influence people by force of personality and argument rather than by their position power. The result is that when they go into adversarial situations they are too arrogant to prepare for the conflict and end up being unable to deal with the hostility. I’ve seen it happen many times. Under an unexpectedly effective assault, they bluster, sweat, laugh nervously, make inappropriate jokes and comments to hide their anxiety and, eventually, lose it and insult someone.

Which is pretty much what happened to BNP leader Nick Griffin last night. The PR professionals’ verdict is that his performance was disastrous.

A word of advice from the corporate world, Nick. If you are going to spout such ludicrous rubbish,  make sure you are really well prepared and rehearsed before you go on.

Councils lead the way in back-office savings

It’s almost six months since the Treasury’s Operational Efficiency Programme published its recommendations. At the time, I was doubtful about the extent to which public sector organisations would be willing to cut costs by sharing back office functions but there have been some interesting developments since then.

In theory, the sharing of back office functions should be easier to set up in central government than in local government, which is made up of hundreds of stand-alone sovereign organisations but, if anything, recent evidence shows just the opposite.

Not a lot has happened in central government. The Cabinet Office has suggested that other departments might like to use the shared service centres currently operating at HMRC and the DWP and Yvette Cooper has written to ministers telling them to get their fingers out and cut HR, Finance and IT costs, but that’s about it. There has not been a major push to consolidate back-office services across government departments.

In contrast, a number of local authorities are getting together to share services. Initiatives are under way in Lincolnshire, Gloucestershire, south London, Norfolk, Cambridgeshire and Northamptonshire  to combine some HR, Finance, IT and Procurement services. Perhaps this is because local authorities are already feeling the sending squeeze that, for many in central government, still only exists as a topic of conversation.

Of course, a few local authorities banding together to share services does not necessarily indicate the start of a trend and, as Tony Travers said last week, there is still an air of unreality about the looming budget squeeze in many town halls. There is also the possibility that some of these joint initiatives might not deliver the anticipated level of savings. 

That said, in the battle to cut public sector overheads, the evidence seems to show that some councils are ahead of the game. So far, local initiatives appear to be working more effectively than directives and exhortations from the Treasury.

Do politicians really have the stomach for localism?

A few years ago I was doing some coaching on performance management for chief executives of NHS trusts. When I put the question ‘Who is your boss?’ to the group it provoked a long discussion. The CEOs were unsure whether their bosses were the chairs of their trusts, or the CEOs of their strategic health authorities. Their dilemma was not just the result of unclear leadership. At its heart was the UK’s ambiguous and contradictory attitude to whether public services should be locally or centrally controlled; a debate that has resurfaced now that localism is the Tories’ new buzz-word.  

Since the early 1990s, the day-to-day management of the NHS has, in theory, been devolved to local trusts. However, the structure of the old centralised NHS, with its regional health authorities, remains in place. Even those who work in the NHS are unclear about the role of strategic health authorities and the extent of their power. The introduction of the supposedly autonomous foundation trusts has, if anything, added to the confusion. Some critics have argued that  “accountability still runs upwards rather than downwards”.

The same dilemma exists in local government. Local authorities are local in mame only. Their tax raising powers were curtailed by Margaret Thatcher and around 75% of their funding now comes from central government. The tension between central and local control is most obvious in children’s services. The contradictions were highlighted during the Baby P case; children’s services director Sharon Shoesmith was removed from her post by Ed Balls but it was left to the local authority to formally terminate her employment.

The Baby P case gives a clue as to why the British state struggles with localism. Devolving control and accountability to local organisations is fine when things are going well but as soon as there is any populist outrage about something that a local authority or NHS trust has done, government ministers start backpedalling like mad. Local control is great until a newspaper headline screams ’postcode lottery’. Ministers will champion the right of schools and hospitals to manage their own affairs, free from Whitehall control, until they do something that leads to a public outcry. The minute the tabloids start throwing stones, localism goes out of the window and ministers intervene.

The case of Rose Gibb is a classic example. Her employer, the theoretically locally managed and locally accountable NHS trust, offered her £250,000 to resign from her job as chief executive without a fuss. Amid public outrage about the huge sum, Alan Johnson, the health secretary, intervened to force the trust to withhold the payment. In the event, there was a lot of fuss and a court case which is probably not over yet. Regardless of the rights and wrongs of paying disgraced executives large sums of money to resign, this case showed the limited power of the trust’s managers. As in the Baby P case, as soon as the media outcry started central control was reasserted.

The Conservatives insist that things will be different when they get into power. They really will devolve power and make the delivery of public services more locally accountable. Or so they say. James Bartlett of think-tank Demos seems to believe that David Cameron will be the leader to decentralise power. The early signs, though, are not encouraging. David Cameron has started back-pedalling even before he has been elected.

The proposal to put all public sector salaries higher than the prime minister’s £198,000 to the chancellor for approval is surely just the sort of Whitehall meddling that the Tories say they want to eliminate. At the same time as they are saying that public services should be locally managed they are proposing to centralise the control of pay and incentives, one of the most important management controls.

This measure is, of course, driven by the uproar from the Taxpayers’ Alliance and others over the high salaries of senior public sector executives but it gives a clear indication of how far Tory localism will go. Like Labour, they will devolve power until there is a row about something that a public sector body has done, at which point the ministers will intervene  and overrule the decisions of local managers. The ambiguity around Britain’s not quite centralised but not quite localised public services will continue under the next government and, in all likelihood, the government after that. No politician has the nerve to devolve power and then face down the criticism when things go wrong.

The government – no more profligate than your average family

‘Household economics’ is a term I’ve heard used a few times recently in the debate over government debt and public spending. It’s usually used by those who argue that government debt isn’t as big a deal as some are making it out to beand that the rules that apply to governments are different from those that apply to households. Household economics might focus on paying off debt as early as possible but governments don’t need to do that – or so the argument goes.

In this context, the use of the word ‘household’ is, presumably, meant to imply prudence and sound money management.

Looking at the UK figures, though, I’m not sure that our households stack up that well. The government’s debt of  £796.9 billion is around 160% of its £496 billion annual revenue. That doesn’t look too bad when compared to the 170% debt to income ratio of the average British household.

It might be fun to have a go at the government for its wild spending but it’s really no worse than the rest of us.

If HR is so crap, why does it continue to exist?

One of the tricks of being a successful journalist is being able to write confidently and with the impression of authority on subjects about which you know next to nothing. Sathnam Sanghera admits that he has never dealt with anyone in an HR function but that didn’t stop him from writing an article attacking the HR profession in today’s Times. his piece is rather like some of  those articles which appeared a month or so ago attacking the NHS; light on evidence but with enough dog-whistle assertions to ensure a comments box full of foaming rants against its intended target.

Sangera demonstrates his lack of understanding when he jumps on the statistics from a recent report on the HR function by Deloittes:

The truth is that HR is shrinking and we should embrace its demise………HR is already shrinking: last week a report by Deloitte, the advisory firm, found that companies had recently got rid of 30 per cent of their HR people and argued that unless HR departments adapted to a new role, they could become defunct.

The reason 30% of HR people have disappeared is because HR functions have spent the past few years streamlining their processes and outsourcing their administrative functions. The CIPD report referred to by Deloitte shows a trend towards smaller HR functions with higher numbers of professional staff. Far from being a sign of HR’s decline, the reduction in its manpower is an indication that the profession is making some headway.

Despite having worked on newspapers for most of his short life, Sanghera tells us with conviction that “a few decades ago” HR functions worked just fine. Ah, another feature of pop-journalism; the mythical golden age. Just like when Matron ran the hospitals eh?

He concludes:

Get rid of 90 per cent of HR policies, 90 per cent of HR people and then wash your hands of it.

Now that would have been a really interesting place from which to start. If so much of what HR functions do is superfluous, why do so many organisations still have them? Why can’t you just get rid of 90 per cent of HR policies and people?

The answer is simple. HR functions don’t exist in isolation; they are part of a wider organisation and they almost always reflect the way that organisation is run. If a firm has a short-term focus, so will its HR department. If its managers are risk-averse its HR people will be too. It works the other way round. You can tell a lot about a company from looking at its HR function. If it is slow and bureaucratic, the chances are that the rest of the organisation will be similar. If HR is over-staffed and inefficient it is very unlikely that it will be part of an otherwise lean and streamlined operation.

It is always interesting to see what happens when the HR function is re-organised and reduced in size. Managers who have been slagging off HR for years soon change their tunes when they realise that there will be no-one there to wipe their backsides for them. They have to confront the poor performers, call people when they’ve been off sick for a few weeks, remember when the fixed-term contracts are coming up for renewal and talk to the police about the drunken after-work brawl in the pub next to the office. All things, you might argue, that a manager should do anyway but which, without the support of an HR professional, suddenly seem more daunting. When faced with the reality of life without their local HR manager in the next office, managers often become less gung-ho about getting rid of them.

The other useful function that HR serves is as a convenient scapegoat to deflect attention from other managers’ shortcomings. If you think you are about to get challenged on your department’s own inefficiency, try attacking HR. You can usually get some other people to gang up with you. Of course, this doesn’t work when you get an efficient pared-down HR function with a strong HR director.

The truth is, inefficient HR functions exist because they cover up the deficiencies of inefficient organisations. To any CEOs and directors who think that their HR function is useless and over-staffed I would ask this simple question, “If they are that crap, why haven’t you sacked them all?”

I’d go even further than that. If directors allow the continued existence of large departments which do not add any value to the business, are they not in breach of their fiduciary duties?

Sathnam Sanghera’s article is typical of many journalistic attacks on HR. It is written as if the HR function somehow exists in isolation from the organisation, as if it is an act of God, a force of nature or an unfortunate disease that attacks companies at random. In fact, HR functions grow up within organisations and, for the most part, reflect the culture and behaviours of the wider organisation. HR departments exist because, despite what they say, most directors and managers want them to. They have been a feature of organisations for the past fifty years or so and will continue to be, in one form or another, for the next fifty.

Psst! Anyone want to buy an HR department?

According to the Daily Mail:

Huge swathes of the Civil Service would be privatised under radical plans being considered inside the Treasury.

Administrative functions across Whitehall, such as pay and human resources, would be hived off into new ‘public service companies’ that would then be floated in popular mass share sales.

An estimated 30,000 jobs would be shifted into these specially created corporate entities.

There is some logic in consolidating government back office services, as recommended by the Treasury’s Operational Efficiency Programme. An outsourcing deal with a private sector partner, in which any savings would be split with the government, might also work.

But a Tell Sid style privatisation?

Would you buy shares in a government HR department?

Shoesmith v Balls starts next week

Explaining his decision to force Haringey council’s summary dismissal of Sharon Shoesmith, Ed Balls said:

I had to make a grand gesture to appease a rabid tabloid campaign. Faced with the same circumstances, I would take the same decisions again.

Well, OK, that’s not quite what he said. His justification for sacking the children’s services director was:

to restore public confidence and to strengthen front-line practice.

I don’t know about the first of those objectives but he certainly failed in the second.

Next week, in the sober atmosphere of the courtroom, we will start to see the facts of this case laid bare. It would, of course, be immoral to bet on the outcome of  a court case, even if the bookies were willing to take the bet, but I reckon Sharon Shoesmith is in with a good chance. Of her four legal claims, at the very least, I would expect her to win the one for unfair dismissal.

In the process, no doubt, the state of children’s social services around the country, the scale of the problems they are up against and the impact of the government’s ‘innovations’ since the Victoria Climbie case will also be exposed to public scrutiny. It won’t be a pretty sight.