Save HR


HR has been much maligned and talked about for years.  There is a constant debate regarding whether the HR function should even exist.. or as others call it the Human Remains Department.  This blog is dedicated to helping Save HR so that employees, executives, shareholders and others can increase their awareness of the importance of HR to the success of the business.  And my definition of HR is everything that is under a CHRO - from "hiring to retiring" including the processes and technologies.  So what is between the flags that will help to Save HR?




The Disruption or Demise of Management Consulting?


 

My career was shaped by the collapse of ENRON in 2001.  For those that do not remember ENRON was the largest bankruptcy ever losing $74b with the primary cause being a massive fraudulent accounting scheme that was not reported by the auditors.  With the collapse of ENRON came the downfall of Arthur Andersen LLP, after admitting that its employees had destroyed company documents.  Then the regulators and others got involved and set guidelines on how much advisory work the audit partnership could do for a company that they performed the financial audit.  This created significant strategic challenges to the “Big 5” (PwC, Ernest & Young, KPMG, Arthur Andersen and Deloitte) regarding the conflicts between audit and consultancy services.  And in 2002 Deloitte & Touche became the last of the “Big 5” to announce they were going to break consultancy from audit.  In less than 12 months the ENRON scandal had caused all of the Big 5 to rethink their strategy of management consultancy.

 

 

I was a partner in PwC Consulting, and we announced in January 2002 that we would spin off the consulting arm.  We were going to IPO, but there was the market crash of 2002 and making it high risk to do an IPO.  In October 2002 IBM announced they were buying the 30,000 PwC partners and staff for $3.5b.  Consulting no longer was part of PwC.

 

 

OK, so what happened?  Each of the Big 5 split off their consulting business and are now the Big 4 (Accenture is a listed company and does not do audits, and Arthur Anderson no longer exists)  Now, more than 15 years later, all of the Big 4 has rebuilt their consulting businesses. For example, PwC in 2016/17 had revenues of $37.7b of which only $17b (circa 45%) were from the audit.  And not to pick on PwC, a second example is EY which had global revenues of $31.1b of which $12b (circa 38%) were from audit.  The Big 4 depends on the non-audit portions of their business for growth, both organic and inorganic.  And the acquisitions are mostly in the non-audit parts of the business such as the acquisition of Booz & Co by PwC and the Towers Watson acquisition by KPMG to name a few.

 

 

And like everything in life, there are cycles, and I am sensing another significant transformation in management consultancy due to both new regulations but also new technologies and other business disrupters.  First, let’s look at the potential for new regulations.  In a recent Economist article, they discussed the reaction to the “Big 4” due to the collapse of Carillion, a British contracting firm.  A report on the failure, overseen by British MPs, released in May, savaged everyone from the firm’s executives to its regulators. But the MPs reserved special bile for the Big Four accounting firms—not just KPMG, which audited Carillion’s accounts for 19 years, but also its peers, Deloitte, EY and PwC, each of which extracted fees from the company, before and after its fall. The MPs have called for a review of the audit market and asked it to say whether the Big Four’s British arms should be broken up. The row is local, but concerns about the industry are global.

 

 

And it is not just the collapse of Carillion, a series of accounting scandals have occurred and there is a call for the Big 4 (at least in the UK) to spin off their audit practices.  The EU is investigating the audit industry and how to help ensure that fraud and the subsequent costs of collapse are reduced.  In addition to removing perceived conflicts of interest, the European legislation would, among other things, require auditing firms to work with a client for a maximum of six years, after which time they would only be able to work for the same client after a four-year “cooling off” period.  Most crucially, auditing firms would be unable to provide non-audit services to clients whom they were auditing.  (from Big4 Blogger).  The last point is deja vu with what happened in 2002. 

 

 

And it is not just Europe.  KPMG has been fined over $6m for accounting failures with respect to reporting the value of an oil and gas company, PwC for failure to notice a $2b fraud by a bank and Deloitte & Touche agreed to pay $149.5m to settle claims arising from its audits of failed mortgage lender Taylor, Bean & Whitaker.  With the size of failures, the cost to taxpayers and the fines involved it does not take too much imagination to see that governments and regulators may step in again to provide a strategic “push” to the Big 4.

 

 

The second force that can disrupt the management consulting industry is technology and business change.  CB Insights published a very insightful article on the factors that can disrupt the industry.  They broke down management consulting into four areas and for each what could cause major disruption. 

 

 

The four functions CB Insight divided management consultancy into are: -

 

 


  •     
  • Information

  •     
  • Expertise

  •     
  • Insight

  •     
  • Execution


  •  

 

 

Different forces could disrupt each of these functions. 

 

 

First Information, being challenged by self-serve analytics from a variety of start-ups that are producing information sliced and diced for a company’s use.  No longer do you need a management consultant to find you the information you need to make a business decision. 

 

 

Second Expertise, you can now find expertise on YouTube videos, through MOOC (massive online learning course) or “pay as you go” knowledge on a wide variety of topics. 

 

 

Next Insight, small boutique groups are being engaged to provide much-focused insight that companies internal teams can use to help facilitate a recommendation, especially with it comes to targeted acquisitions. 

 

 

And finally Execution, with the army of gig works and other experts who no longer want to work for McKinsey or PwC and hire out to help companies execute their chosen strategy.

 

 

Whether it is regulators, governments, technology or a team of gig workers, it feels that we are on the cusp of transformation for management consultancy.  And who is going to consult the consultants?

 

 

Article by Mary Sue Rogers

 

 

References

 

 

ENRON Time Line - CNN

 

 

ENRON impact on the Big 5

 

 

IBM announces the acquisition of PwC Consulting

 

 

Big 4 Figures


 

 

More » Posted on : 2018/09/06





GDPR Post the 25th of May


 

I don’t know about the rest of you, but I was very tired of getting emails that asked me either to read the new privacy policies OR to click a button to “opt-in” so that I could continue to receive material from an organisation post the 25th of May.  And there are websites that I now no longer can get into as I guess the organisation has deemed that sorting out GDPR rules was too challenging so they just blocked non-USA (in the case of the company that has blocked their website) customer access. 

 

 

Now that we are past the date when all organisations that have GDPR obligations should be compliant the legal challenges have started.  First, as you would suspect, Google, Facebook, WhatsApp and Instagram have been targeted.  European consumer rights organisation Noyb argues that the companies have forced users into agreeing to new terms of service, in breach of the requirement in the law that such consent should be freely given.  They argue that your only choice was to delete the account or hit the agree button – that’s not a free choice.

 

 

While GDPR may not be perfect and some individuals and organisations believe that should have the right to keep their Facebook account and have all the benefits of GDPR in whatever configuration they want the legislation is significantly better in respect to protecting personal data than in most other parts of the world.   Noyb’s main argument is about money.  The issue at stake is whether the processing of data for targeted advertising can be argued to be necessary for the fulfilment of a contract to provide services such as social networking or instant messaging.  Noyb is arguing that organisations like Facebook should seek separate consent to use your data to target advertisements.   

 

 

While I have sympathy with the argument, I am also a commercial person.  Why should Facebook or anyone else maintain a social platform with a limited ability to make money?  And the very smart algorithms and analytics in platforms like Facebook are not giving your private data away – they are using it to market and sell to you a product that they think you would be interested in based on your behaviour, profile and website usage. 

 

 

Different organisations have taken different approaches to meet the GDPR requirements.  These range from: -

 

 


  1.     
  2. Informing you that they changed their privacy policy and you can opt out if you want from receiving their newsletter or whatever

  3.     
  4. Forcing you to re-opt into a newsletter or other service

  5.     
  6. Blocking people from the EU altogether from a site – I got this message “you are not in a location that can access this site.”

  7.     
  8. The US media network NPR to users that they could either agree to the new terms, or decline and be taken to a plain-text version of the site, looking for all the world like it had last been updated in 1996.


  9.  

 

 

It almost felt like we were in the year 2000 transition process on Friday – in fact, it feels to me like more things stopped working globally due to GDPR than the year 2000 technology challenge.  (NOTE – for those too young to remember – the year 2000 issues was many older systems were not written with four-digit year formats and so when it went from 1999 to 2000 the year coding would cause many problems and had to be changed in many different applications creating work for lots of COBOL programmers).

 

 

Whichever techniques your company opted to use there is a need to have a “post 25th of May” process to make sure that all of the future changes you make to technologies and processes continue to conform to GDPR. 

 

 

Article by Mary Sue Rogers

 

 

References used: -

 

 

Guardian – Facebook and Google Targeted First

 

 

Guardian – Sites are Blocked as GDPR becomes Law


 

 

More » Posted on : 2018/09/06





Inspiring Women


 

I had the opportunity to attend several seminars with some very inspiring women speakers ranging from Senator Penny Wong to Hillary Clinton (no bio needed) to Nicole Seebacher the 20117 NSW Young Women of the Year, and many more.  While the agendas were different and the audience varied the themes were the same.  How far women have come and how far there still is to go concerning “making it to the C-Suite” and being treated equally to men.  The events had some great takeaways which I thought I would share.  First Senator Wong’s top advice: -

 

 

Value differences – decision making does not improve if everyone in the room is the same and parts of the population are excluded, from women to those with disabilities to different cultures and backgrounds.

 

 

Support and champion other women – women need to support each other and proactively use our experiences to help other women succeed and achieve.

 

 

Value your skills, expertise and experience – women do not put themselves forward or raise their hand to say “I can do that” we need to recognise the skills and expertise we have and take a risk to take on new challenges and responsibilities.

 

 

Institutional and structural barriers – the behaviour and attitude of men (and women) concerning women still is an issue.  If a woman shows emotion, she lacks mental toughness. You only have to read the media regarding the latest challenges with the AMP chairperson who happened to be female.  The comparisons and articles in the press regarding her makeup, clothes, shoes and children would never happen if the chairperson had been male.  Structural barriers remain concerning child care and taking time out of the workplace.

 

 

Fairness – treating everyone equally and fairly from pay to equal benefits.

 

 

Stay the course – we have to keep pushing the issue and making the changes as history has shown the equality does not come easily.

 

 

The challenge for women to get to the C-Suite (or the head of a hospital surgery or a senior member of the government, or a non-executive on a board) is still real.  In Australia, one person in five believes that children suffer if their mother goes to work, that is 20% of the population.  There are 176 women on the ASX200 boards, less now that all three women on the AMP board have resigned.  There are ASX200 boards that have zero women.

 

 

The event also included a panel discussion on the topic of “who did your job 50 years ago?”  Participating in the panel were Nicole (referenced above) Hon Susan Ryan AO; AICD Chairman Elizabeth Proust AO; and Lee de Winton, CEO Sydney Metro Airports and former RAAF Commanding Officer.  Each member of the panel answered the same; a man was doing their job 50 years ago.  And what was more striking was the treatment of professional women less than 30 years ago.  If you were in government (in the case of Susan) or the military (as Lee was) the rules were if you got married or got pregnant you quit.  Amazing stories both of then and now regarding the treatment of women.  For me, the more revealing on the lack of change was Nicole’s story regarding how hard it was for a woman to become a surgeon.  In 2015 less than 10% of surgical fellows were women.

 

 

Hillary Clinton gave similar messages when she presented at the International Convention Centre in Sydney, followed by an interview with Julia Gillard the 27th Prime Minister of Australia.  Ms Clinton’s comments echoed Senator Wong’s: -

 

 


  •     
  • Everyone gets knocked down in life – you have to get up and move onward

  •     
  • The only way to get sexism out of politics is to get more women into politics

  •     
  • The more professionally successful women are, the less they are liked

  •     
  • There is no such thing as an “alternative fact”.


  •  

 

 

The stories she told about her life from Yale Law School, to First Lady, Senator, Secretary of State and being the first women to be nominated by a major party in America to run for President of the United States were amazing.  The stories show a journey of challenges, firsts, successes and misses.  She spoke without a single “um” for over 30 minutes on her life as a law student, a lawyer fighting for children's rights, first women partner in her law firm, moving to Arkansas to marry Bill Clinton and the rest is history.  Many first but never any regrets. 

 

 

There were three quotes from the events that I loved: -

 

 

“Always aim high, work hard, and care deeply about what you believe in.  And, when you stumble, keep faith.  And, when you’re knocked down, get right back up and never listen to anyone who says you can’t or shouldn’t go on.” – Hillary Clinton

 

 

 

 

 

“Homogeneous teams don’t make better decisions – they just think they do”. – Senator Penny Wong

 

 

 

 

 

“I should have watched the Apprentice” – Hillary Clinton

 

 

 

 

 

Article and Picture by Mary Sue Rogers


 

 

More » Posted on : 2018/09/06





Leadership Characteristics that CEOs are Looking For


 

I get a lot of newsletters and I am pretty good at sifting and sorting through them to find the ones that add value versus take up space in my inbox and are boring, badly written or ramble and not get to the point of why I should read the article.

 

 

This email (which only comes as a mail and not on a website, therefore, I could not put it with my "what am I reading" section) meets all the criteria for a good email.

 

 

Effective leadership is one of the single most important drivers behind the performance. Successful companies employ skilled leaders in every key position. CEOs know this and are in constant search of people who embody great leadership qualities and character. 



But just what are the qualities of a good leader? What characteristics do CEOs look for in their leaders? Many studies have been done to decode the nature of leadership, and in these studies, several recurrent findings emerge. Here are the top five leadership characteristics CEOs value most highly.

 

 

1.  Effective Problem Solving

 

 

Leaders are constantly faced with the challenge of making decisions and solving problems. Good leaders can ask the right questions, compile information, process options, and apply analytical rigour to address the problems they face. Demonstrating your ability to make sound decisions, while working under pressure, will speak volumes in the eyes of a CEO.

 

 

2.  Results Driven

 

 

Good leaders develop a vision. Great leaders, on the other hand, take this vision, bring it to life, and follow through on it - leading to real results and outcomes. It's one thing to be visionary, it's another thing to turn vision into results. Staying focused on outcomes, taking time to engage in priority setting, and getting to the roots of efficiency are all qualities of a leader that CEOs look for.

 

 

3.  Supportive of Others

 

 

In the eyes of a CEO, an exemplary leader is one who is supports and cares about others. While this may seem simple, it is critical to the success of a company. A supportive leader will ensure that staff is engaged, happy, productive, and focused on achieving good results rather than preoccupied with worries, fears, or negative emotions. 

 

 

4.  Encourages a variety of perspectives

 

 

If you can put aside your ego and genuinely listen to the perspectives and opinions of others, chances are you embody great leadership qualities. While leaders have to weed out the good ideas from bad, and ultimately make the final call, this decision-making process should include an honest assessment of a variety of paths and options. You never know who will come up with the next revolutionary idea.

 

 

5.  Champions Change

 

 

Finally, you've no doubt heard the expression 'walk the talk'. This is critical for a good leader. To make an impression on a CEO, you need to genuinely believe in your work and carry the vision with you everywhere you go. It's fine to disagree and present divergent opinions, but unless you are truly excited about your company, chances are you're not the right fit for its next leader.

 

 

A skilled CEO always has their eyes and ears open when it comes to seeking out leaders. If you embody these five characteristics of a great leader, chances are you'll be noticed.

 

 

From SmartDraw

 

 

 


 

 

More » Posted on : 2018/09/06





Cyber Security – the New ‘Top Risk’ for your Shared Services?


 

The Cyber threat is alive and well for those not paying attention

 

 

Over the last few weeks, I have had the opportunity to attend and speak at several academic and executive leadership events.  The one agenda item that all of them had in common was cyber security.  And while I would consider myself pretty aware of the impact on business as a result of a cyber attack, some of the case studies and statistics provided were very scary.  Here are a few that came out during the events I attended.

 

 

The World Economic Forum (WEF) Global Risk Report – Every year the AICD (Australian Institute of Company Directors) holds a session around this report with the target audience being primarily senior executives and board members of Australian companies.  As part of the WEF report, there is a section on the top five global risks ranked by impact and the likelihood of happening.  This year cyber attack was listed as number three, just below extreme weather events and natural disasters.  And putting aside individual beliefs on climate change, the first two risks are tough for a business to do anything about while cyber attacks are 100% manmade and therefore we have the power to create the right risk mitigation strategies. The WEF estimates that cyber attacks will cost between $1.5T to $4T US dollars for the world in 2018. That is around $500 per person for everyone in the whole world. And considering there are large parts of the world where $2 a day is an average wage we are talking about serious money that could be put to much better use.

 

 

Types of hackers – Mikko Niemela president of Silverskin Security presented to a group of INSEAD alumni, and his talk had several interesting points.  First was the type of hackers.  He called out four: -

 

 


  •     
  • Hacktivist – an individual or a group that are against something and make an opportunistic attack against a company, individual or network to raise awareness of their cause.  Denial of Service Attacks (DNS) is one of their favourite tools.

  •     
  • Organised Crime – no real explanation needed.  They are looking for money, credit cards, crypto miners.

  •     
  • Cyber Terrorist – their target is governments and political entities, and they usually don’t care if they get caught.

  •     
  • Nation States – basically one country spying on another trying to get secrets, IP or other assets that would allow their nation to be better.


  •  

 

 

Most businesses focus on building out risk mitigation plans around the first two types of hackers, but some organisations need to think broader. Mikko shared a story about an airline based in a part of the world where most customers don’t have a credit card.  To facilitate the online booking, they offer a “book now and then go to your local X location and pay in the next 48 hours to confirm your seat” strategy.  This airline was hacked by someone who appeared to be hired by a competitor, and who managed to make it look like all flights were always 100% sold out, causing the organisations to lose millions in revenue.  Because they picked only a few selected routes and flights to hack, it took a while to figure out what was happening. Did the online booking system have a bug or was something else causing the problems?  Unfortunately, it was something else: a hacker.

 

 

 

"You could hire a hacker for about $5k and they could typically generate $50k to $1.0m of ransom money."

 

 

The other interesting statement made in this presentation was, “It’s not hacking if someone uses your password to get into something when your password was leaked”.  This made me want to get the companies whose boards I sit on to read the fine print on any cyber security insurance we might have.  When is a hack a hack?

 

 

ROI for Hackers. The most frightening statistic that I heard at one of the events was the ROI for a hacker.  The data point used was that you could hire a hacker for about $5k and they could typically generate $50k to $1.0m of ransom money.  Now, this is illegal so no-one should get excited about a shortcut to paying off their mortgage!  But you can see, with this kind of return, why people are attracted to giving it a go.  And the role of the leaders and the boards of companies is to ensure that their organisation is not an easy target.  If you are too hard to attack a would-be hacker will go to the next company, just like someone burgling your neighbourhood.  You don’t have to be 100% secure; you just need to be better than the other guy.  Hackers have “productivity targets” they want to achieve.

 

 

 

"Some areas of the business that have more influence than others. The obvious one is IT, but HR plays a critical role."

 

 

While it is crucial that everyone in the leadership team is focused on potential areas of cyber attacks, there are some areas of the business that have more influence than others. The obvious one is IT, but HR plays a critical role in ensuring that the onboarding and exiting of employees are done in a manner that protects company data and educates the new joiner on what they need to do to help secure the company’s assets. If you are working in a shared services environment, it is even more critical that all service centre employees fully understand the risks and actions they need to take to protect against cyber attacks of all types.

 

 

Unfortunately, we live in a world where some smart people are exploiting security holes that exist in all companies.  Similar to your house, when you leave a window open and it makes it easier for a burglar to get in, we all have a role to play to ensure that every day our data, systems and networks have all the “windows” closed and no one accidentally leaves the keys in the door. 

 

 

Article by Mary Sue Rogers

 

 

First Published in SSON


 

 

More » Posted on : 2018/09/06





What Have We Learned? UK Gender Equity Reporting


 

Any organisation that has 250 or more employees were required to file the UK government pay gap report.  With more than 10,000 firms publishing data and over 1,000 firms reporting on the last day, the results are in.  More than three-quarters of UK companies pay men more on average than women, with a median pay gap among those companies was 9.7%.  The BBC published the four things we have learned

 

 


  1.     
  2. The UK has a national median pay gap of 18.4%

  3.     
  4. The size of the gap varies between sectors

  5.     
  6. Finance is worst affected

  7.     
  8. The UK is worse than the OECD average


  9.  

 

 

The BBC article also has an interactive section where you can put in the name of an organisation, and it will give you the results.  I decided to look at the management consultancies to see how they fared.  Here are the results

 

 

PwC Services Ltd - The average woman at this company is paid 13.1% less than the average man. Women make up 37.8% of higher-paid jobs and 49.9% of lower-paid jobs

 

 

Deloitte MCS Ltd -The average woman at this company is paid 17.8% less than the average man. Women make up 24% of higher-paid jobs and 45% of lower-paid jobs  

 

 

EY - The average woman at this company is paid 14.8% less than the average man. Women make up 35.5% of higher-paid jobs and 51.4% of lower-paid jobs

 

 

KPMG - The average woman at this company is paid 22.1% less than the average man.  Women make up 33.2% of higher-paid jobs and 56.1% of lower-paid jobs

 

 

Accenture - The average woman at this company is paid 10.2% less than the average man. Women make up 27.9% of higher-paid jobs and 45.3% of lower-paid jobs

 

 

What does this information potentially tell us?  If I was a new graduate how might I use this data to help me decide which management consultancy firm I might like to join?

 

 

In many ways the gap appears to be pretty much the same for all five organisations, the gap is most significant with KPMG and the least with Accenture.  To me, one of the interesting statistics was the number of women in higher paid jobs.  Deloitte and Accenture both have women in less than 30% of the high paid positions (in most cases these would be partners or similar).  You could interpret from this, especially for Accenture, that they have a little to no pay gap between middle managers. Otherwise, their average gap would be higher due to the reduced number of women in higher paid jobs.  You can make your comparison of your favourite sector in the BBC article

 

 

If I were looking for a role in management consulting, I would consider these statistics and more importantly the company response.  For example, PwC published their response to the pay results.  Their main reaction was: -

 

 

“When looking at our bonus gap, it is predominantly driven by two key factors, the first being that there are more men in senior roles and secondly the number of part-time opportunities across our business, which are mainly filled by women. At PwC we are confident that men and women are paid equally for doing equivalent jobs across our business.”

 

 

The combination of the results reported and the company’s response should provide a potential employee with some interesting insights into the company culture so they can form their own opinion if this is a management consultancy firm that they want to work.

 

 

The UK government is not telling companies they have to close the pay gap.  With increased transparency employees and shareholders can make informed decisions on who they wish to be associated.  Good companies will rise to the challenge, and those that are dinosaurs will most likely see the same fate as the giants of the past that could not change.

 

 

Article by Mary Sue Rogers

 

 

Picture by BBC

 

 

Additional Articles

 

 

BBC Reports that 1,500 Fail to Report 

 

 

Britain Aims to Close Gender Pay Gap with Transparency and Shame- NYT


 

 

More » Posted on : 2018/09/06





Gender Pay Gap Reporting UK – Has Your Company Completed the Process?


 

By Friday the 30th of March all public sector companies with 250 or more employees had to have completed their filing on gender pay gap as part of the Equity Act 2010 (if you want more information on the act and what it requires read my previous blog article here).  Private companies and charities have until the 4th of April, and then all organisations that have 250 employees or more should have filed.  Guess what; on Thursday the 29th of March about 7000 of the 9000 have completed the process, 77%.  And I would be willing to bet that the percentage complete will not materially change between now and the 4th of April.

 

 

For those readers who don’t know what Gender Pay Gap Reporting is the Guardian has done an excellent summary.

 

 

Gender pay gap reporting

 

 

What is being published?

 

 

All companies and some public sector bodies in Great Britain, except Northern Ireland, with more than 250 employees are reporting their gender pay gap to the Government Equalities Office. All companies are due to report by 4 April 2018.

 

 

What is the gender pay gap?

 

 

The gender pay gap is the difference between the average hourly earnings of men and women. The figure is expressed as a proportion of men’s earnings. According to the ONS, the gap between what UK male and female workers earn – based on median hourly earnings for all workers in 2017 – stood at 18.4%, up 18.2% from a year earlier. The mean gender pay gap is 17.4%.

 

 

What’s the difference between the mean and the median figures?

 

 

Commonly known as the average, the mean is calculated by adding up the wages of all employees and dividing that figure by the number of employees. The mean gender pay gap is the difference between mean male pay and mean female pay.

 

 

The median gap is the difference between the employee in the middle of the range of male wages and the employee in the middle of the range of female wages. Typically the median is the more representative figure because the mean can be skewed by a handful of highly paid employees.

 

 

No legislation states companies must make changes to narrow the gender pay gap – they just have to report it.  There has been some interesting behaviour from companies who have reported.  Here are a few examples: -

 

 

Companies have filed inaccurate data – an example in the Guardian, companies have submitted mathematically impossible figures.  At least 17 companies have reported a pay gap on bonuses of greater than 100%.  This would be that if a man eared £100, then the women would have to PAY BACK to the company whatever amount greater than 100%.  For example, if the reported pay gap were 105%, then the women would have to write a cheque out for £5 for every £100 a man got as a bonus.  Most likely this is not correct.  Other companies have filed a zero pay gap, which again cannot mathematically be correct.

 

 

Companies have filed revisions when they have been “called out” – after their initial filings were called out as not looking accurate, PwC, Deloitte and EY revised their filings to include partners.  This was also true of law firms, except for Clifford Chance who still has not included partners in their figures.

 

 

Companies have made statements I think they will regret – “Slaughter & May reported a gender pay gap of 39% in its services division. However, in a press release, it noted that gap was greatly reduced if it excluded the secretaries, all of whom are women, from its figures.”  Now, why would any organisation issue a press release that said that?

 

 

We don’t have the data – This is a very sad statement in respect to the HR profession as the data required to complete the on-line government form is something that all organisations should easily be able to pull out.

 

 

If I wait until the last minute to file no one will notice my data – This is a little like playing ostrich.  The theory being that if my companies files at the last minute, along with a whole bunch of other companies, no one will notice that my data is not as good as it should be.  Maybe if you are on the smaller end of the scale regarding the number of employees, this might work as long as you are not a venture capitalist, investment banker, law firm, consultancy or other higher paid service organisation.

 

 

The deadline is coming, and the data is extremely newsworthy.  Headlines such as: 

 

 


  •     
  • The gender pay gap nationally stands at 18.4 percent for full-time and part-time workers, according to the UK’s Office for National Statistics.

  •     
  • The sectors with the most significant gap are construction, financial and insurance services and education.

  •     
  • The UK has a smaller gender pay gap than the USA but bigger than Australia


  •  

 

 

It will be interesting to watch what happens past the deadline.  Will the government fine organisations that do not report at all?  Will they go after companies that apparently have the wrong data?  Will they create a league table of best or worse?  This will be a space I will continue to watch.

 

 

Article by Mary Sue Rogers

 

 

More reading

 

 

Financial Times – Gender Pay Gap UK

 

 

Guardian – Gender Pay Gap Multiple Firms Submit Questionable Data

 

 

Check the stats on your favourite company

 

 

 


 

 

More » Posted on : 2018/09/06





What Every Director Should Be Thinking About


 

I like being an alumnus of PwC, as a retired partner (partners always retire they never resign or get sold to IBM or any of the other things that could happen) I get invited to some interesting sessions.  PwC Australia recently had a half-day workshop focused on the top things that directors (executives and non-executive members of a board) should be aware.  It was a little like speed dating as there were many topics to select; each participant was able to attend three at 20 minutes per session.  But there was an excellent summary at the end of the day highlighting the critical points made in all the sessions.   I am sure from a PwC perspective it is a very good use of time as they were exposing over 100 executives to a wide variety of topics that PwC could assist the organisation in case they needed help.  A win/win on both sides.  

 

 

The workshop started with a presentation by a USA PwC Partner whose focus was corporate governance and boards.  She gave an overview of some of the key trends in boards of USA listed companies.  PwC USA does an annual survey of directors, and you can see the full 2017 results here.  The structure there is very different than the UK or Australia starting with the obvious that the CEO is typically the Chairman of the board, something that does not frequently happen in Europe or Asia.  The other comparison is that the average tenure of a board member in Australia and Europe is about six years, while in the USA they get voted on every year.  The shareholder “behaviour” is also different ranging from the influence that institutional investors can have through to hedge fund activities to individual shareholder activities.  All you need is $2,000 of stock, and you can put forward a proposal to the board to consider.  An interesting plenary session that made me appreciate the UK and Australia’s longer-term focus versus the quarterly results driven dynamics in the USA.

 

 

After the plenary session, there was a wide variety of short breakout session that could be attended.  Here is a summary of a few of the topics that were available as part of the breakout sessions: -

 

 

Leveraging Data – what data assets do you have inside the company that can be leveraged either internally or externally? The recommended place to start was standardising the language inside the company around data.  Is a sale the same definition in all parts of the company?  How about an employee?

 

 

Crisis Management – as an executive you never know when a genuine crisis will hit whether it is an environmental one such as extreme weather or #MeToo type of event.  As an executive team, you need to know how you are going to respond.  Two points out of this session for me were “how do you know when you are in a crisis – as sometimes it is not obvious until it is too late” and the other was “conduct simulations on how the company and members of the leadership team will respond”. 

 

 

Cyber Security – as a member of the board if you are not asking questions about the preparedness for a cyber-attack or ransom request then you are not performing your role.  Again, for me, there were two key points; cyber-security is as much about people as it is technology and the market will judge you in how you respond.  The communication and the need to re-establish trust if something happens is almost more critical then stopping the attack.

 

 

Diversity – the focus of this session was the need to be more inclusive and consider all the different aspects of diversity.  Especially in Australia where there is a need to focus on cultural and linguistically different diversity.

 

 

Marketing – The role of a CMO has radically changed over the last five years.  As a member of the board, how do you know that the marketing activities and the focus of the CMO are going to drive sales and protect the brand?  Metrics reported to the board was my takeaway from this session.  Do you have metrics at the board level that give insight on marketing’s contribution to brand awareness and overall business performance (demand generation and sales)?

 

 

The workshop was valuable and the networking with other directors very useful to get their experiences and lessons learned. 

 

 

Article by Mary Sue Rogers


 

 

More » Posted on : 2018/09/06





Culture Due Diligence in M&A


The cookbook for due diligence during an M&A transaction is pretty well known.  The seller is checking facts that the target provided in the sale memorandum document, checking to see if the data points hold true on financials, customers, market and talent.  And then, based on this due diligence, the price could go up or down, and the synergy case associated with the acquisition could get better or worse.  KPMG completed a study last year that estimated that over 80% of mergers fail.  And if this is true then what is going wrong with the due diligence process?

I think that the lack of strong HR leadership and involvement in the M&A transactions could be one of the reasons.  This is not true for all organisations and all deals, but my experience has shown that HR tends to get involved in areas such as the ease (or difficulty) of changing employment contracts, how easy (or not) is it to make people redundant and potentially pay and reward schemes.  For some transactions, they might be involved in talent assessment or even creating “golden handcuff” schemes to retain the critical staff within the acquired company.  But the role of HR in M&A is pretty much around operational areas.  I don’t know of any HR leader that has been asked: “based on the human capital, talent, the culture of this company do you think we should buy?” Or even “if we do buy this company what needs to be done from a people and talent perspective to help ensure a successful acquisition”?

The HR leader on the “buy side” of the deal I believe needs to own the due diligence around cultural fit.  Basically creating a point of view in areas such as: -

How aligned are the mission, vision and values?
 What is the delegation and authority style in the organisation – command and control?  Delegate with authority? Every decision goes to the boss?
 Data drive or gut driven decision making?
How innovative, emotional, due date driven is the culture?

And one of the most critical questions to answer: -

If we buy them what work has to be done to get to the level of cultural alignment we want to achieve out of the acquisition?”  

Not every acquisition needs to be fully culturally integrated into the parent company.  The best strategy could be to keep the acquired company wholly independent of the parent and therefore there is no need for cultural integration. But if the plan is to integrate the acquired organisation what is the strategy for cultural?  There are choices: -

The “parent” strategically wants the new company to align with their culture
    The buyer intends to use the culture of the company acquired as a catalyst for change inside the company – sort of a reverse cultural takeover
    There is a desire to take the best parts of both cultures and to create a new merged culture
 

It is crucial that the leadership of the company doing the buying knows what strategy they want to have regarding culture.  And the role of HR is to articulate how that strategy could be accomplished and what that means to the overall business case for the acquisition.

At a recent INSEAD event, one of the partners from EurAsia Competence AG presented their research on cultural due diligence, and how to build a post-acquisition culture integration programme.  While the steps are not that unique from any other transformation program what was unique was the concept of thinking about what has to get done, in respect to culture, before the transaction is completed.  This way the organisation knows the cost and effort required to achieve the desired outcome.  The steps outlined were: -

Identify individual cultures
  Identify the similarities and difference.  How significant are the gaps?
    Create awareness of the differences and gaps
  Design a roadmap to bridge the gaps
   Align teams to common goals and implementations
    Measure progress
 

Not unique but not that often thought through during an M&A transaction.  HR should take the lead in this area to first drive the strategy on what level of cultural integration the organisation wishes to achieve and then what is the programme to meet the agreed integration.  
 

More » Posted on : 2018/09/06





Shared Services in the Not for Profit (NFP) Sector – a Missed Opportunity?


Shared Services (and outsourcing) in the NFP sector (NGO’s, Charities, and similar institutions) is a huge potential market as very few NFP’s have transformed their processes and services taking into account the concept of shared operations.  Even with larger charities such as United Way, Save the Children, or World Vision there has not been a tendency to embark on process improvement changes that include shared services centres (SSC).  What makes this sector different than other industries which have embraced SSC and outsourcing?

Having done work with the NFP sector for many years and have encouraged the larger organisations to consider the use of a shared service operation I can see the unique challenges to this sector. 

The first challenge is the continuity of funding year on year.  Most charities have limited funds that are guaranteed each year, and if they do have these types of resources, they are almost always tied to a programme that is focused on delivering the charitable results.  For example, if you are Save the Children and you are running a pre-school education programme for a community the funding most likely is for multiple years, but it can only be used for that purpose.  It is known as “tied funding” since the money is linked to a particular outcome or deliverable.  Therefore setting up a shared service operation which has to have the bills paid each year could prove challenging for one or all members of the same charity that are utilising the shared service.

The second challenge is governance.  Even for well-known global charities like the Red Cross or YMCA, there is not a corporate HQ that dictates what each country does for areas such as back office operation (HR, Finance, IT).  And even if they do encourage a standard in areas such as IT if the local country is funding it out of grants and donations from the local community it is tough to force them to conform to a global set of procedures, processes or infrastructure.  Without the ability to have a governance structure that can instil consistency and standards a shared service operation will fail.

The third area is funding the change.  If you have done an SSC programme, you know that there is a funding curve required to achieve the savings.  Even with the best ROI in the world for moving HR or finance into an SSC there is a cost associated with making the change.  It is extremely challenging for NFP to get sufficient untied funding in a single year to make the type of investment required to save money in the longer term.

And finally, there are thousands of smaller NFP that would find it hard to create a business case for shared services or to outsource, similar to an SME in the commercial world.  For example in Australia there are over 54,000 economically active (e.g. they have paid staff and didn't just rely on volunteers) registered charities.  That is one for every 450 citizens of the country, and a significant number of them have < 50 employees.  There could be an argument that there are too many NFP, but that is a subject of a different debate.  With this size of an organisation, SSC does not provide an economic return.

The one exception to the above is IT such as website development and maintenance, SEO, office systems and networks.  Many NFP’s have outsourced these activities as they cannot economically maintain staff with the right mix of skills and experience to keep their core IT operating, compliant and attractive to the volunteers and donors.

With the need to continually address the cost of operations and the percentage of donations that go to the “cause” versus paying staff and running the back office there is pressure on NFP’s to look at how they can save money.  There are some potentially creative solutions available and some white space in the markets to establish an SSC/Outsourced operation that is focused on the NFP space.

One example of an innovative solution, again from Australia, is the establishment of a Social Enterprise that provides services to NFP (if you want a definition of Social Enterprise there is a good one here).  The Salvation Army has done this for legal services.  They have set up Salvo Legal that is a for-profit organisation, that does legal work at “good rates” for charities and other organisations, and then the profits generated go back to the Salvation Army to support their chosen cause. 

A market opportunity exists for an organisation to set up a Social Enterprise that is a shared service operation for HR, Finance, IT, Procurement or even broader.  There would be many challenges, but the rewards of helping to reduce operational costs in “for purpose” organisations would be more than just financial.

If you are an NFP and want some additional resources this might be interesting, Collaboration 101 in the NFP sector. 

Article by Mary Sue Rogers

More » Posted on : 2018/03/03






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