Simon Cowell – Saviour of Performance Management in the UK

Now I’m not a big fan of constructing a blog around a national stereotype, but.... when it comes to giving direct, straight, unequivocal performance feedback the Brits are, on the whole rubbish.  We have historically been the masters of understatement – happy to describe a shockingly poor performer at work as “slightly below average” and an excellent performer as “not bad”.  We were happy with our understatement and have prided ourselves on our ability to interpret nuance and place greater value on what wasn’t said rather than what was.

That was, of course, before Simon Cowell exploded onto our TV screens and into our National consciousness.   Now unless you have been living under a rock in the Kalahari desert for the last 10 years you are sure to have heard of Simon Cowell – the Svengali of the talent show and now one of the UKs most globally recognised faces (in a recent survey, vastly more people in the US and the Far East recognised him than recognised David Cameron) – and, whether you love him or hate him (he does have that Marmite effect) you can’t help but be impressed with his business acumen and ability to understand what the viewing public want.

But what this blog seeks to explore is the subtle effect his “say it as you see it” feedback may be having on the Brits attitude to Performance Management.  For the first time in our recent history we have a very visible role model who makes his fortune by giving “honest” feedback.  Almost every week for the past 10 years (since Pop Idol in 2002) we have seen Simon and his fellow judges heaping vitriol and/or praise on our fellow countrymen and we have loved it (just check the viewing figures for confirmation).   The funny thing is it’s not what Simon Cowell says, although he does seem to be pretty accurate most of the time, it’s the manner in which he says it that is having a funny effect.

He just says it, no stammering, no obfuscation, no rambling, no embarrassed ums and ers, no blushing, no wringing of hands – just straight, clear feedback (and no, he isn’t Dutch).  Wow, a whole new role model for the people of Britain and I think it may just be starting to have an effect.  Granted, the “Cowell” model has only been around for 10 years and the Nation has been a model of tongue-tied reticence since before the era of Jane Eyre et al but I do believe I’m beginning to see a change in attitude towards performance management.

From my experience of working with businesses over the last 25 years I think I can relatively accurately say that over the last 10 years we do seem to have been getting better at giving and receiving feedback.  Now it may be because we have much more effective performance management systems in place (perhaps), or it may be because we have much better training programmes on giving feedback (possibly), or it may be because we are required by the HR compliance teams in our businesses to actively participate twice a year (maybe) – or it may just be because of the mental picture we can conjure up in our minds of Simon Cowell giving life changing feedback on a week in week out basis.

So for those who are looking to deliver an uplift in their organisations ability to give and receive feedback you have two options a) send a 10 minute video montage of Simon Cowell in action to those staff just about to carry out performance reviews or b) inspire yourself and your leadership team to role model the fine art of giving feedback yourself (scary I know) – now either solution may not make your staff instantly brilliant at giving feedback but it might just help and with solution b) they will at least have another high profile  role model or two to inspire them to be a bit more like the Dutch when appraising their fellow employees performance.

Let me know how it goes.

No rest for Financial Services as the FSA ups the ante with new Conduct Risk guidance

Following in the much appreciated grand tradition of Guest Blogs, this blog is courtesy of Sandra Quinn - Associate Director of Conduct Risk at Capgemini.  Sandra has a very insightful view on Conduct Risk having worked both for the FSA and a major UK Retail Bank as a Risk Director.   

Now, if you are an FS industry watcher you are going to love this.  For everyone else, take note, other regulators are watching with interest how a revamped FSA takes on its responsibilities. This blog focuses on the implications for FS firms following the recent publication of the latest set of guidance from the FSA

With the publication of its second Retail Conduct Risk Outlook, the FSA has set out the priority consumer risks for its attention in 2012/13.

http://www.fsa.gov.uk/static/pubs/other/rcro12.pdf

Conduct Risk – the risk that a financial services firm’s behaviour leads to poor customer outcomes – is high on the FSA’s agenda. And will be higher on the Financial Conduct Authority’s agenda. The clue being in the name.

What the Risk Outlook means for firms is that those looking to stay out of the FSA’s Enforcement Division will need to treat this as their marching orders on conduct and customer risk for the next year and demonstrably get onto seriously examining the risks in their firms and unequivically doing something about them.

The problem for them is that the report highlights 48 risks, with 16 risks new since 2011, covering just about all financial services firms and businesses. Only 3 risks from last year have been relegated, but the FSA says that does not mean they are no longer concerned about them or that firms can now ignore them.

So firms who thought they might look at the list and decide it didn’t apply to them should be disappointed.

And the content and the message is clear - FSA expects all financial services firms to get serious about ensuring they are not creating poor customer results through how they behave.

The RCRO focuses on risks extending from the complexity of products such as structured investment products, through reward and business models, via how firms are responding to regulatory and legal change such as RDR and Solvency II, to cost cutting and how the firms search for business in wealth management and private banking. Packaged accounts and PPI feature, much as expected, with investment risk profiling, investor compensation, general insurance concerns (add ons, PPI, limited value products, initial premia) , governance in life offices, projections and systems weaknesses in network models. 

 It’s a heavy duty list. And as if the list of 48 issues isn’t enough, the RCRO implicitly presents three strategic challenges for firms:

The regulator is increasingly focusing on business models.  This is largely about getting conduct risk prevention embedded in firms. But what the FSA and the RCRO do not sufficiently acknowledge is that a top risk for a firm is now how, in a market of shrinking margins, they make the kind of returns they have built their budgets, business models and shareholder expectations on, in a way which is fair to customers. Or put another way, the risk that firms want to offer the products in the first place.

Some firms are trying to address this by improving efficiency and customer reach through digital transformation. But they need to build management of conduct risk into any proposition to avoid transforming themselves into just being more efficient at making old mistakes – at least from the regulator’s point of view.

And most fundamentally, the FSA’s definition of ‘conduct risk’ means a risk to the FSA’s statutory objective of consumer protection. That’s not the same as a risk for a firm which traditionally focuses on commercial risk and risks arising from the effectiveness of policies and controls. So, firms have to figure out how to align their approach with the FSA’s more strategic and consumer centric approach.

That’s why any firm tackling conduct risk has to bring together compliance, policy, control framework, product and process development, risk identification and regulatory relationship management with self challenging governance, insightful management information, conduct risk informed reward and HR and a more strategic and outward looking risk and customer management capability.

The sooner a firm actions these together, the sooner they will make real inroads on the conduct risks that the FSA is highlighting in firms and for customers and on which it has thrown down the gauntlet.

Why won’t we talk about what the UK should be good at?

It is a sad but true fact, that, at an occasional dinner party or two, I have been known to ask the question, “So, by comparison to global standards what is Britain actually good at?” 

(Note to Readers:  I know, I know, there are quite probably more interesting topics to discuss at dinner parties than this one, but I like it, so please humour me and don’t stop inviting me to dinner parties.)

However, once the question is posed the optimists nonchalantly wade in to open the debate with a “Well of course we’re brilliant at ... (slight frown, embarrassed pause) ....er.... lots of stuff”.  “Such as?” and after much toing and froing, a list of what the UK is truly world class at slowly begins to emerge.  The list is usually made up as follows:

1.     Musicals

2.     Education (only arises at the intellectual dinner parties)

3.     Monarchy

4.     Queuing

5.     Ideation

6.     Eccentricity

7.     Exploring

8.     Add your own

Now the point of this blog is not to actually determine what we are good at, although that would be fabulous, but rather to ask the question, “Why do we never seem to have this conversation anywhere other than dinner parties?”  Surely being clear as to what we are about is a good thing?  Is it because we are actually all too afraid of the answer? 

For instance, if we think we ought to be world class at high end manufacturing we should be aligning our education system, tax system and political system to support that end.  Likewise, but substantially more controversially, if we think we want to be world class at Financial Services we should also align the systems to support that end.  Of course the implication is that by actually deciding what we should be good at we will instantly marginalise a large number of constituents whose interests are not favoured by the answer, never a popular option for any politician.

However, and here’s the rub, the longer we as a nation stick our head in the sand on this issue and fail to have the debate, the less likely we are to be able to choose our own destiny and the more likely we are to genuinely end up being no more than mediocre at anything but the list above.

Of course there are other schools of thought on the necessity of having the debate.  The “Jingoistic” school holds the view that the debate is pointless as anything produced or conceived of in the UK is de facto world class so why do we need a debate we’ll just get on with being British.  There is also the “Ex-Pat” school which holds that it’s too late to have the debate anyway as India and China are already doing everything better so why bother having the debate, let’s just move to Singapore and learn Cantonese.

Whilst these schools do have validity I can’t help feeling that in the year of the Diamond Jubilee and the Olympics we really ought to be able to have the debate.

Looking forward to the opening salvos and an occassional dinner party invite

The Rise and Inevitable fall of the role of the COO

Back at the start of the 1980’s one of the least glamorous and under rated executive roles was that of the Chief Operating Officer.   The COOs of the 60’s and ‘70’s were the typically hard-nosed ex-engineers (almost always men) who were tasked with keeping the production lines running and the Unions in check.   Then along comes the computer and the world of work changes and the role of the COO is transformed – the rise has begun.

During the ‘80’s, at the dawn of “Thatcher’s Britain”, as the most technical of the Board functions, the COO is given the task of “overseeing” what this new technology (under the care of the newly emerging CIO function) is capable of doing.  In many cases IT and Ops merge and the COO finds themselves responsible for a growing empire as the newly unleashed computing power enables organisations to centralise, computerise and rationalise previously siloed functions.    Interestingly it is usually the “neutral” operations division that ends up managing the slimmed down entity as a central function providing service back to the divisions.

During the ‘90’s, as the breadth and depth of the “shared services” delivered by the COO functions grows, so too does the COOs power at Board level.   Now a major “owner” of resources the COO has the power to drastically influence the cost base and the overall P&L.  He (yes he is still a man) has become important.

During the ‘00’s, the ever increasing capabilities of web based technology opens up a yet greater world of possibilities for the COO.  Global sourcing is on the agenda and by the end of the decade the typical COO is poised magnificently over a global empire of efficient shared services providing support to the now very slim-line and somewhat denuded divisions.  No-one is now surprised when a COO is appointed CEO and even the CFO believes they have a powerful rival for the top spot.

However, if I may make a prediction, I suspect history will dictate that this current decade is the zenith for the power of the COO.  For whilst it has been technology that has been responsible for creating their empire it is inevitably the new digital technologies that will take it apart too.  Ironically just as the first wave of computing muscle bought the direct control of resources into the COO function the new digital wave will take them away again.  The availability of services from the cloud, the availability of “utility like” capabilities from outsourced providers and the ever present requirement to find lower cost alternatives will inevitably lead to a radical shrinking of the COO functions as the role of the COO changes from being that of master controller to that of master co-ordinator.

The “teens” will see the rise of COO’s who are capable of dismantling their own empires – focussing on the ability to scope, procure and manage the necessary operational services from outside the four walls of their own businesses and capable of coping with the subsequent reduction in their own power base.

Of course I could be wrong, and as of now the COO’s are more powerful than they have ever been and are still hoovering up organisational functions and responsibilities – but it won’t do us any harm to remind ourselves that what goes up will inevitably come down.

Is there a future for consultancy as we know it? - Re engineering the Advice Giving Industry – 1

In my blog of Tuesday, 31 May 2011 (see archive for details) I shared my personal conviction that the management consulting business model will be radically changed by “digitisation”.  Since then I have been keeping tabs on a number of “digital consulting solutions” in an attempt to spot trends and understand the developing market.  What I am learning is challenging me to deconstruct and rethink the processes for requesting and providing advice.   This short blog is the first in a series that will examine the future for the advice giving industry.

So first up, the big question is, should all consultants sleep safely in their beds and ignore the impact of the new digital capabilities?  Absolutely not.  Why?  Because of the growing wave of new digital service providers who are looking to link up those in need of advice or support with those capable of providing it.  These new providers are developing some unique and compelling propositions that could spell the beginning of the end for some of the traditional cosy consulting models by offering a potentially better quality of advice at a better price point than can be gained through the standard "request for proposal" avenues.  

New Models include:

1.       Ask your own digital network – (facebook, twitter, linkedin, google+ etc) – cheap as chips and can provide some good answers if the question is simple enough and straight forward enough e.g. – “Does anyone know of a good tool for doing process mapping?” – if your network is big enough the “wisdom of crowds” concept can come into play.  The challenge is being able to articulate a simple enough question - not as easy as it seems.

2.       Ask a specialist advice giving site – these come in a wide variety of shapes and sizes from the brilliant and addictive fivesquids http://www.fivesquids.co.uk/ where people will provide you with all manner of advice and services for just £5 to the much more sensible Know How Mart http://www.knowhowmart.com/ which hooks up business executives who want to chat through a challenge with a relevant global expert.  It’s a kind of cross between ebay and match.com. Sites such as Know How Mart are generally better able to provide better advice when the problem is ill defined and in need of refinement.   The big advantage of these sites is that they can make use of global experts who are keen to work on a portfolio basis rather than full-time.

Now the intriguing thing about these models is that through the use of digital media clients can now  access truly global experts and purchase their “expertise” in micro packets of time.  I can’t believe that this won’t become an increasingly popular way of purchasing advice giving services over the next 5 austere years.  So, going back to the big question, "how will the traditional consulting companies (who run the risk of being disintermediated by these new sites) respond?"  Watch this space

More in the next blog

Alex Matthews – Delivering an exceptional customer experience - 10 Reflections from 35 years of listening to customers.

      Just before Christmas, Alex Matthews (customer experience guru for HSBC, M&S and many others) decided to change the pace of his working life and stepped down from HSBC to pursue a portfolio of consulting projects.  Having spent the last 3 years getting to know Alex really well I can say without doubt that when he talks on the topic of “the customer” it’s time to sit up and take notes.  I am therefore delighted that Alex has been good enough to share with me his collected wisdom from 35 years of listening to customers and working to deliver an exceptional customer experience.  Collated below are his top 10 reflections for business leaders looking to get the customer experience spot on.

1.  Know Thy Customer – And I mean KNOW

A recent study showed that on any given day the front line were aware of 100% of the customers’ issues... the average UK CEO at the time could name only 4% of them.   The smart CEOs seek out real (as opposed to stage managed) opportunities to get in their stores, branches, call centres etc and actually talk to and serve their customers.  There is no substitute for this.

2. Know the difference between what the Customer Wants and what the Customer Expects

There are always elements of any product or service that customers just expect and there are some that can absolutely delight them.  Being able to distinguish between the “everyday” elements that tend to drive “satisfaction” and the handful of “wow” elements that enable a business to truly differentiate itself is essential. It enables the business to put its energy and resources into being better only where the customer needs it to be great. Don’t try and beat the competition on the everyday stuff.  It’s OK to be as good as the best of the rest on the everyday stuff.

3. Understand exactly how the customer makes you money

Understanding that whilst the overall interaction and impression the customer has of the organisation is important it is often how the customer is dealt with at one or two “moments of truth” that will determine the customers’ loyalty and advocacy.  Being able to identify what parts of the interaction you have with your customer are truly the “moments of truth” and then aligning your resources to deliver a phenomenal customer experience is essential to maintaining a profitable relationship with your customers

4. The BIG things are often the little things

The “wow” aspects of the customer experience, whilst not always easy to identify are often the easiest to implement by the individual e.g. acknowledging a customer by name, smiling at a customer and saying thank you to a customer in their own words; little things yes but the hardest things for the organisation to implement.  It requires a lot of effort to be expended on developing the culture of the organisation to the point where the “little things” are natural.

5. Talk about customers.  About what they would think, not what we think of them

Does the leadership at all levels, but especially the top, have conversations about customers?  Not high level strategic presentations about customer segment migration (important though these are) but just plain simple conversations. They might be about last week’s complaints or about last week’s store visits (M&S ‘s board would all be in stores at the weekend and those comments would form the early part of the Monday board meeting. Tesco used to have an empty chair at its trading meetings to represent the customer and what she, yes she, might think about what ever was being talked about).

6. It’s about people!

The most important cog in the machine is the person you speak to. I know, I know we can all have wonderful digital lives now but businesses that treat their employees as real human beings tend to find those human beings transferring that feeling to customers.  Are staff required to use a script or are they trusted to use their judgement? Are they empowered to make a decision on your behalf or does it have to go to a higher authority? Does the employee look like they enjoy being there??? Old fashioned stuff I know but amazing how often that really is all you need to know!!

7. Look after the middle managers

And of course there is now oodles of research to prove that happy employees deliver a better customer experience and the biggest factor in the creation of happy employees is the quality of their middle managers. They are the biggest influence on how those who serve customers feel about their life at work. How are branch managers, team leaders, etc assessed? Are those who get promoted the best examples of the brand values and are they rewarded on their ability to performance manage?  In Disney 50% of a leaders’ performance rating is generated by how they bring the Disney values to life... as judged by their direct reports!!

8. Make it easy

Customers don’t want complicated.  Life’s too busy for that already.  Numerous channels, numerous products, loads of small print…  Over the years, we’ve managed to make it all so complicated.  Customers just want it to work.  There has to be a cost and profit component to what we do, but we also need to ensure that it’s easy to use and easy to buy.  Metro and other new entrants are picking up on that, and building simplicity into their business.  The chef Gordon Ramsay is a stickler for a trimmed back menu at all his establishments – learn to think like Gordon

9. Bring the customer in – live transparently

The beauty (and horror) of our digital age is that the customers will be inside our organisations whether we like it or not – the smarter businesses have learnt that trying to keep them at arms’ length is pointless and have thrown wide the doors to invite them into improve all manner of processes including sales and service, product design, ethics and compliance, complaints handling and organisational governance.

10. Now and again, let people err on behalf of the customer

The people who interact with your customers, for all intents and purposes, tend to be the most junior in the business.  Yet it is what they do that wins or loses those customers.  You need to give clear guidelines and support for what decisions they can make – but in the end it’s their decision and they won’t always get it right.  Accept it.

What Derren Brown, the Nuremburg trials and Waco have to teach us about Risk Management

OK, so Derren Brown is a bit weird, but, I do find the “psychological illusions” he creates absolutely compelling, particularly when “ordinary people” are persuaded to behave in extraordinary ways.  For those not familiar with the work of Derren Brown (where have you been for the last 5 years) this includes such must see TV as “The Heist”.  In The Heist Derren works with a group of people who he appears to psychologically “re-programme” to such a level that they are actually prepared to hold-up a security van that they believe to be real.  Now to what extent the “re-programming” is real or illusory we will never know, however, what all of us are prepared to accept and what was illustrated time and time again (whether it be evidence from the Nuremburg trials, or the cults at Jonestown or Waco) is that ordinary people, under the right conditions, are prepared to do crazy and immoral things.

Given that this is a well known psychological contention what I find fascinating is how little, given the recent spate of disasters (economic and otherwise) we are being faced with, is being written about the cultures of our organisations.  We seem to be happy to believe that a few “rogue traders” or “maverick operators” are responsible for the economic and environmental woes we face, not the prevailing cultures.   Of course, it was a shock to the UK public that the evil monsters of Nuremburg actually turned out, more often than not, to be relatively sane (if desensitized), middle class people who were simply following orders.  In other words we need to be far more aware of the capability of the organisational culture to desensitize normal people.

So, as the politicians and industry regulators (on our behalf) attempt to ensure that our organisations are behaving in a probate manner my suggestion is that they concentrate less on trying to prevent the actions of mavericks and more on trying to ensure that the prevailing organisational cultures are not desensitizing “ordinary” people to the point where taking immoral actions seems normal.    This is certainly the approach our people and conduct risk teams are taking at Capgemini and it seems to be paying off.  So, if you’d like to know more about our innovative approach please do get in touch.