How to make cost of living pay rises more ethical

There has been much in the press over the past few months about the richer getting richer and the poor not feeling the benefit of the improving state of the UK economy. I can’t say it surprises me. When the whole world appears to give pay rises in percentage terms, then that’s exactly what will happen. After all, as a friend of mine succinctly put it eons ago “x% of a decent salary is worth something, x% of a very low salary is worth nuts” (no, I’m not quoting verbatim, as it would probably bounce off your firewall anyway). Possibly overstressing the point, but if you compare £100 000 a year to £10 000 a year with a 5% pay rise, that would look like:

£100 000 – £10 000 = £90 000
£105 000 – £10 500 = £94 500

See? Further apart than ever. It’s hardly rocket science, is it? Perhaps I’m naïve, but I have felt for a very long time that there is a pretty straightforward way to handle this. The cost of living rise (performance-based pay rises are a whole different game, subject to its own rules and these could be percentage increases, though there is no real reason they should be that I can see) should be converted to an absolute sum, so everyone can be clearly seen to be getting the same. Even if this sum is only about £500, it would mean those at the bottom of the scale in the above scenario are no worse off by this method. What their bosses have to say about it is, of course, quite another matter and they are the ones making the decision…but that’s why it’s a matter of ethics.

Who would like to give me the case for the opposition?

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Leading the Field, or Keeping Up with the Joneses (or their Chinese equivalent)?

Is the grass really always greener overseas educationally? I sometimes marvel at how, in the space of a couple of generations, we have gone from being chauvinistically “British is Best” to being totally convinced that the whole world is doing something right and we are doing it wrong. The latest example of this is the hoo-hah about our standing in the PISA education rankings, following which was the announcement of “Tougher GCSEs pegged to China Scores” in the Guardian last week. Leaving aside for now the idea of using yet another set of measures when they proliferate in our education system already, the relatively dubious track record of importing the American system of assessment and even the number of studies discrediting them as not easily comparable, I would like to examine how value management could be introduced in formulating a more humane, yet more ambitious, system.

Consider the right question to ask

Value management says you should consider the functionality you need before developing solutions. Currently, education is seen as the cure for everything that’s wrong in this country. Whatever your views on that, it shouldn’t mean that everything has to happen before children leave school: that would deny them the right to be children whilst they still are. Whilst performance in China for maths is undeniably high for those children with access to good schools (by no means evenly available there), the record in Asia for suicide among schoolchildren is also high. Do we want to import that too?

Involve all stakeholders in developing solutions

The rising incidence of self-harming and mental illness in schools here, now running at about 10% of each class versus 30% in China, makes it evident that the concerns of parents, teachers and children alike about the stresses placed on education should be heeded.   Obviously we need also to include employers as they must clearly express what they believe they will need. The impact on the next generation is huge – not just in terms of their marketability, but in their mental resilience. That same mental resilience combined with entrepreneurship is what will create more opportunities for our young people than mere exam passes alone will in any case.

This argues the need for a means to train and measure mental resilience. If measures of teacher effectiveness are deemed essential, then some of those measures at least ought to be directed here. Some further thoughts on this can be found here.

Establish the functions of such a performance model

Using the term “performance model” rather than “examination structure” opens up the range of solutions. Whilst neither keen on anything that increases the number of tests nor a great fan of controlled assessment, there is no doubt that the “sudden death” exam structure is not conducive to all children in all subjects. Some subjects are inevitably better-suited to course work, eg Art or perhaps Design Technology. In neither field is it likely that you would have such a limited time to produce your output in real life, so it makes sense to find a more suitable assessment method.

5 ways your processes tell your customers what you think of them

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Most customer service policies will talk about courtesy of contact and the maximum number of times the telephone can be allowed to ring before picking up, but that isn’t what this post is about. We’ve all had conversations with people we buy things from and we know when their care goes all the way through their systems – or not, as the case may be.  How do we know?  It doesn’t matter if you are a Finance department, or a factory production line, the following will still apply:

Is there an answer for every issue?

  • I had an experience recently where it was clear that the customer service representative had a list of things they knew how to deal with and those they didn’t.  It’s worth walking through the process in theory, asking yourself what could go wrong for your customers, so that you and your people know how to handle it in the most effective way, quickly and at minimum cost.  Remember to build in a protocol for handling problems you haven’t thought of – like the representative that spoke to me, a short delay while they find out the best answer for you is invariably acceptable if the customer agrees that the issue is a bit unusual.
  • The whole team has to take collective responsibility for their outputs.  The customer doesn’t care if delivery is shared or not, so you can’t either.  This means you may have to pass feedback up the line and help improve processes you don’t own, which can ruffle some feathers, so try to do it nicely!
  • You can build up from the initial list of ideas you had by journey mapping – using a specific example of a customer experience to develop an appropriate response.

Can you deliver reliably in a sensible timescale (or faster)?

  • Can you give an accurate prediction of when people will get what they want? People don’t like to be kept waiting. They don’t mind it taking as long as is needed for a good quality product, but need to know when they will get it, so that they can plan around it.
  • How long do you really need anyway? Whilst it’s sensible to allow a little leeway, too much will reduce your value to your customers and their esteem for you will fall accordingly. Not every situation is helped by early delivery, but none are hindered.
  • It’s important to communicate delays as soon as possible.  This manages your customer’s expectations and makes it clear you still control the situation – at least, until you’ve moved the deadline more than a couple of times.

Do you ask them what they think of your service?

  • If you think your service or product should be important to them, you need to know what they do with it. Seeing the service through your customer’s eyes will help pinpoint further improvements.  Understanding their operation almost as much as your own can lead to all sorts of mutual benefit.
  • You can get used to doing things in a certain way and not realise that your customer has new choices and so is comparing you to new things.  Complaints are food for your continuous improvement and must be used for that purpose.  Appreciate the opportunity to improve.

Do you ask them how your great service helped them?

  • The silent majority need to be less silent about how great you are. Just by asking them, you can encourage them to praise (or berate) your service. Many aspects of life these days encourage ratings with good reason.
  • Praise grows your team’s spirit – who doesn’t like it?  It has to be worth asking a question to see if you can get some!
  • The nature of that praise can often also offer useful insights into the customer’s operation and how you fit into it

Do you take corrective action when given negative feedback?

  • Did I say that complaints are food for your continuous improvement?  Well, it is!
  • You’ll very often find that a complaint exposes something that leads to greater benefits all round when it’s fixed
  • One of the cheapest and most effective forms of staff development is to fix things that aren’t right.  It means they get a clearer understanding of what they are trying to achieve and this can help the whole team to do better in the future.

6 Actions After a New Systems Implementation

You should do some of these before choosing the system, never mind after implementation – but better late than never.  They will still help staff get over that sense of helplessness that comes when the way you did things no longer really works.

1  Set up a User Group

This is the best means to coordinate the mountain of change requests that IT would otherwise get and mostly be confused by.  Since a lot of the requests will conflict with others, you could hardly blame them for taking their time and hoping it all goes away

2 Identify problems clearly

Get your team(s) to list problems, then tackle them individually.  Not everything will be down to the new system.  It’s useful to see what is and what isn’t and helps them see they do still have some control

3 Weed out “homegrown” reporting

Look for “supplementary” Excel-based reports.  These need discouraging, as they can waste vast amounts of time and are often inaccurate.  However, they often contain good ideas for the User Group and commending perpetrators for bringing them to this channel is a positive way to stop it.

4 Map processes: the ones that really happen

IT-based process maps tend to ignore the information transfers between people.  Taking the focus away from the system means focusing on finding new ways to work with each other, ideally using the new system’s capabilities to help.  As it’s meant to.

5 Review pre-existing problems

Whilst some of these may have generated the desire for the new system in the first place, others will probably still be lurking.  If you do both Actions 2 and 4, you might not need to do this – but it’s worth checking.

6 Focus team(s) on quality of information

The system is only a tool.  It can’t interpret anything.  That’s why you still have people in your Finance department!  It’s a bit of a cop-out if your people really believe they get all their information from the system.  Of course, the User Group can and should tailor the system to make life easier for them (assuming you took Action 1) but the main source of interpretation comes from knowing the business and their managers.

Did I miss anything?  I’d really like to know!

Why change things in business?

OK, sales are down and your costs aren’t any lower.  So, do you go for slash ‘n’ burn to cut costs and hope you can get new resources when sales move up?  Or cut prices to the bone in the hope of increasing sales? Or do you use value engineering?  Let’s see if I can sell you on the last one:

SLASH ‘N’ BURN

It has the virtue of being easy to understand, but it takes no account at all of why you have any customers.  If you sell widgets and have no competitors for widgets, then your customers will buy from you at any price if they need widgets.  Once you have competition, then they’ll still buy your widgets if they think they’re the best widgets for their purposes.  If you don’t have the best widgets, or you charge more than your competitors for what appear to be the same widgets, you lose custom.  It’s a
no-brainer really.  Cost problems generally are rooted in sales sooner than cost, leaving this the right approach only when your costs are higher for no apparent benefit.  This happens.

CUT PRICES TO THE BONE

If you make just enough to survive, it is inevitable you’ll fold eventually.  Technology will advance, making production cheaper for those with enough profit to invest in
that technology.  You won’t have that if you’re only covering your costs.  Worse still, if you get a lot of sales, you may find you’re overtrading, ie you’re selling more than you can make.  While your customers wait for their widgets, you can bet your life your competitors will either give them a sweeter price or a better widget, so you’ll lose them for all time.  In any case, do you really want to be the lowest-price provider of widgets?  Is that likely to inspire anyone good to come and work for you?  Is price all your customers want?  Sometimes it is.

VALUE ENGINEERING

As Warren Buffett once said “price is what you pay, value is what you get”.  All customers want is for your widget (which can be a product or a service, it doesn’t matter) to meet what they want most effectively.  Value engineering describes value as benefit to the customer versus how much it takes for them to get it.  If you can think of a way to make your widget hot fashion, reach them quicker, save their lives, etc, you increase value.  If you can make them cheaper and just as good, you increase value.  If you make them cheaper and not as good, you decrease value and sign your own death certificate.

There is any number of ways to increase value – what are you going to do?

How you make things work better

Process improvement isn’t rocket science: it’s just a question of being methodical and understanding the human condition and that will help get it sorted.  When thinking about improving processes, you need to know the following:

•             Why are you doing this? 

It may seem like a no-brainer, but you need to have a clearly-stated reason, or the change won’t stick.  And the reason needs to be better than “we need to signal a change around here”, even if that is the most obvious driver (and it often is).  People don’t like changing unless they can see what’s in it for them.  If you’re honest, you’re probably the same, so accept that you need to be able to sell it to them on the basis of the benefits it undoubtedly brings.  In any case, it brings you to the next question.

•             How important is it to you? 

Big changes need significant effort, or they won’t stick.  How badly do you need to change?  Some drivers are stronger than others, like you’re losing money hand over fist and need to stop that loss in its tracks.  More commonly, your people are getting in each other’s way, which automatically means waste for both you and your
customers.  You need to understand as well why things are done in that particular way at the moment, so that you identify what habits to change first.

•             How will you know when you’ve done it? 

How you measure things can be as important as the thing itself.  You have to be sure that a) the tail won’t wag the dog (the measurement process is too onerous to have any value) and b) that the measure means something in terms your people understand.   You need to be able to visualise clearly how conditions would improve as a result of this change.  What exactly changes?  If you can see it, you know
where your measures lie.

•             How will you know whether it’s had the effect you needed it to have?

That’s why the measurement is important!  If everyone can see that change you
identified, then they should still be able to see it in short-term, medium-term
and long-term measures.

And that’s all there is to it!  Obviously, this is a very brief overview and
it’s my plan to bring a regular set of tips to this blog.  What did you think of this one?

I have a number of updates in the pipeline, but I’m always interested to hear what concerns you most and will be happy to write something about that (no names, no pack drill, so you can be quite open), so please let me know.

The Value of Value

Back in 1997, an enterprising project manager at London Underground put out an advert for people to be trained in value management.  He wanted a pool of trained facilitators to work on all projects and programmes at LU, so that best value could be achieved for the investment money available.  I can’t remember the advert exactly but it said something like

“Do you want to learn how to get better returns for your money?”

Well, doh, yes!

Who wouldn’t?  Since I’m also a qualified accountant, I like the idea that, not only could I tell people how much they’ll save by a given action, but I’d also be able to help them get the ideas.  I also have the possibly grandiose view that Britain always used to be famed for its quality and just rolled over when it lost trade on price; this could be a way to reverse that trend.

The training gave me a way to structure a problem so that you can come up with more alternative ideas to solve it.  I  eventually qualified as a PVM (professional in value management) and all was well for a time.  Then I found that people didn’t seem interested anymore.  All they wanted was to find ways to deliver the solution they thought would work best as cheaply as possible.  Whilst value management can be used like that, you don’t get half as much from it, so it’s not surprising that it became regarded as little more than a bolt-on to a brainstorming exercise.

But value is too important to leave to chance, especially any public money is involved.  People have learned to accept that you don’t leave risk to chance (hence the proliferation of risk management jobs) and nobody ever felt you could leave finance to chance, so why is nobody bothered about whether what they do is of significant value?  Surely neither of the other two feature until you have a customer?  What’s your value to your customer?  If you don’t know that, you have a serious risk of losing them (or not gaining them) and therefore no finance to manage! Value management offers plenty of ways to help people define value, so it can’t simply be because it’s hard – though there can be no doubt that it is.

Why do you think it is hard to get people to focus on this part of management?