Note: some of the linked articles below require an FT subscription to read
WannaCry havoc and let slip a cyber war
An estimated 1.3m systems remain vulnerable to the recent WannaCry ransomware attack, though the dangers may be receding for now. The world’s most powerful governments, intelligence services and some smart cyber freelancers are on the case of what is probably an organised crime group. Its ransom demands have so far netted a mere $40,000-worth of bitcoins --so perhaps not the most impressive risk-return KPI -- though that could yet change. Future attacks may be more discrete and targeted, and equally dangerous, and leave companies to fend for themselves.
Indeed, there were almost 200 high-level cyber attacks in the UK in the last quarter of 2016 alone, and many more in the US and EU, most of which did not hit news headlines. In some cases, organisations are known to have quietly paid large ransom sums to recover their files. They could have reduced the risks with some basic precautions. In an FT opinion piece, Keren Elezari, of Tel Aviv University Interdisciplinary Cyber Research Center, advises companies to update legacy software, install end-point security measures, and, crucially, educate users about the risk of opening email attachments, clicking links or running unauthorised applications.
FT|IE Corporate Learning Alliance’s Cyber security programmes have also strongly warned about employee carelessness. ‘Cybersecurity is not about making machines work better. It is about preventing people…doing mindless things with computers, wittingly or otherwise.’ That means viewing staff as a ‘first line of defence’ rather than ‘the weakest link.’ Companies that remain complacent may soon find it harder to get insurance, and could suffer significant legal and reputational damage. At least they will have Maija Palmer’s cybercrime survival guide to help them through the worst of it.
France’s last-chance Salon
The election of independent centrist Emmanuel Macron as President of France will have come as a relief to companies across Europe. But ominous clouds remain on investor horizons. Gideon Rachman, the FT’s chief foreign affairs commentator, reports that the new president faces a monumental challenge: re-invigorating both the French economy and the European project. At home, he must deal with unaffordable public sector spending (at 56% of GDP) and an over-regulated private sector, including the 35-hour working week. Strikes and street protests are sure to follow any serious reform attempts. Moreover, his new, ‘En Marche!’ party is unlikely to get the parliamentary majority he will need to push through serious change and face down demonstrators, forcing him to assemble a broad coalition, possibly headed by a centre-right prime minister.
Success in domestic economic reform would help President Macron persuade Germany’s Chancellor Angela Merkel to loosen austerity and relieve some of Europe’s populist tensions. But failure could have severe consequences for business and wider European economies. Macron’s election could represent the European establishment’s last stand against resurgent nationalism, populism and protectionism.
Rachman is right to see profound risks to free-market democracy. As the FT’s election analysis reveals (in some very useful charts), Le Pen’s second round boost came mainly from conservative Fillon supporters (effectively allowing Le Pen to break through into the political mainstream), and from ‘far left’ supporters of socialist Mélenchon. Thus a staggering 43% of French voters have supported the political extremes, and more than one third rallied to the far right.
The French vote is no anomaly. A breakdown of voters by education (a proxy for a range of beliefs and circumstances) reveals that Macron attracted 84% of most educated voters, with similar support among those with higher income and social class. This mirrors the breakdown of voting patterns in the recent UK Brexit vote, the Netherlands’ referendum and the US presidential election, suggesting that the same anti-establishment, anti-globalisation sentiment is spreading across western economies.
More fascinating insights into how globalisation is dividing France can be found in this this review of geographer Christophe Guilluy's new book The Twilight of the French Elite (untranslated).
Is it time to invest in labour-saving technology?
Labour shortages, technology and government policy intersect in these FT articles on the post-Brexit demand for skilled workers. The FT’s employment correspondent, Sarah O’ Conner, writes that (despite the hopes of many Brexiters) expected staff shortages may not raise wages, as employers look to labour-saving technology where possible to fill the gap.
The FT reports here how a Lincolnshire farm in the UK is using a new generation of robots for rudimentary tasks such as transporting strawberries and weeding. Though it may take a decade or two before robots can pick strawberries faster than a skilled human picker, the cost-benefit calculation appears to be moving in favour of the machines. The question for companies is whether post-Brexit, there will be a fundamental change in the wage structure of their industry before deciding to undertake major strategic investments in technology.
There is precedent. In the 1960's, when the U.S. government sought to placate American workers by restricting immigrant labour from Mexico, farmers changed production techniques and invested in machines, thereby keeping wages low. The technology they adopted already existed, but it was the labour restrictions that had helped make the investment cost-effective. In Japan, where jobs outnumber applicants in many sectors, wage growth remains weak as companies turn increasingly to robots.
O’Connor notes an alarming statistic that employers might bear in mind as they calculate their future wage bill: ‘the average worker in Britain will earn no more in 2021 than he or she did in 2008.’ adding that this is ‘the worst period for pay in more than 70 years and forecasts say the end is barely in sight.’
It’s harder to imagine robots taking over in service sectors. In this case, government policy matters more. Michael Skapinker, FT columnist and executive editor at the FT-IE Corporate Learning Alliance, writes, that issuing so-called barista visas—a two-year post-Brexit visa for young non-UK EU workers—is an ‘astonishingly complacent idea’ which will not solve the imminent staffing and skills crisis facing Britain’s hotels and restaurants.
Predictive text: do CEO letters glimpse the writer's fate?
HR analytics may be a relatively new field, but data-crunching software in the quest to predict, for example, CEO longevity has made some headway, as this FT article by FT technology writer Jonathan Margolis reveals.
Dr Qingan Huang of University of East London’s School of Business and Law claims a 73% success rate in predicting CEO departures, based on his analysis of shareholder letters in some 600 FTSE listed companies in 2002-08. Using Linguistic Inquiry Word Count software, he matches the use of future-focussed and negative words and phrases to eventual outcomes, such as dismissal or voluntary departures Whether or not the methodology is sufficiently robust, one cannot ignore the trend for using ‘scientific method to assess, exploit and perhaps ultimately engineer emotion for commercial benefit’, Margolis writes.
This extends to emotion-tracking technologies, voice analysis and bio-sensors. Just as retailers map out customer lifestyles from their purchases, HR departments are now trying to determine when an employee might quit from observing patterns of sick days. But as FT|IE corporate learning alliance recently argued: ‘Assuming it was possible to predict when a key employee might leave… why would such information be so useful? Wouldn’t resources be better spent reducing the organisation’s dependence on specific individuals?’
The backroom Svengalis of Brexit negotiations
Who really matters in the Brexit negotiations, what do they believe in, and how effective are they? These are vital question to consider when advising corporate clients on potential Brexit outcomes. And there are few better insight than this in-depth FT profile of two éminence grises, Martin Selmayr, Chief of Staff to European Commission President Jean-Claude Juncker, and Nick Timothy, principal adviser to British Prime Minister, Theresa May. Both are seen as political insiders who don’t quite fit in to their respective establishments, and share a fearsome reputation for political intelligence and ruthlessness.
Selmayr says that it would be ‘foolish’ to view Brexit as a good thing for Europe, but sees the ‘tragedy’ as a ‘jolt that will re-energise his cherished European project’. A ‘master of detail’ who ‘pays no attention to rank or protocol’ and with a prodigious work rate, he ‘is confident Britain will pay a price for leaving,’writes the FT.
But while Selmayr may be seen as a political ‘dark force’ possessing ‘mystical powers’ he may soon meet his match. Timothy despises Brussels ‘remote elitism that has failed to deliver for the people.’ Although he sees Brexit as a ‘chance to grab back sovereignty and remodel his country in favour of working people,’ he is no classic ‘Little Englander’. If Selmayr wants to use Brexit to push on with the European project, Timothy sees it as accelerating the need to make Britain globally competitive. Yet Timothy is not ‘remotely attracted by the idea of Britain crashing out of the EU without a deal’ in pursuit of some ‘kind of libertarian paradise’. Indeed, he may turn out to be surprisingly pragmatic, the FT argues. Perhaps they have more in common than they think.
Brexit advice to companies: don’t panic!
FT business writer Emma Jacob identifies staff anxieties around Brexit uncertainty. This is particularly pertinent to highly-qualified EU professionals, many of whom are now asking whether they will eventually have to leave the UK, or if they will be first in line for redundancy. Many UK citizens, especially those in the finance sector and with young families, worry that their jobs might move onshore. One organisational psychologist notes how rumours ‘can stoke fears about relocation and restructuring, impact employee commitment and engagement at work and reduce productivity.’ It can also create unhealthy competition within a company.
Unfortunately, too few companies are prepared when it comes to helping and reassuring their unsettled staff. Echoing FT|IE Corporate Learning Alliance’s advice to its clients, the article notes how companies can do a lot to re-assure their EU27 staff. Most importantly, communication ‘is a business imperative’. Even if the outcome of Brexit negotiations is unpredictable, companies can at the very least show willing and help affected staff with the UK’s 85-page residency application form, for example.
Communication is a two-way street: it’s equally vital that employees are encouraged to ask questions. Many will follow the news and react poorly or misinterpret the twists and turns of negotiations, without bringing up the issues with their bosses. Managers need to know what's on their staff's minds. ‘People panic when managers act like they don’t understand’ so the company message, from the CEO to HR directors and line managers, must be consistent and comprehensive.
Clashing cultures in cross-border business
In this FT article, How to bring cross cultural teams together, FT writer Alica Clegg considers how companies attempt to integrate staff following a foreign acquisition. Studies show that up to 70 per cent of merger deals fail, a third of these failures can be attributed to culture clashes. She notes that ‘for deals that mix businesses from advanced and emerging markets, the statistics may be worse.’
Cultural misunderstandings encompass a vast array of issues, for example: the pace at which business is conducted; attitudes to performance related pay; how explicit one can be when giving (or disagreeing with) instructions; feelings about disability, gender and LGBT rights, and much more. The acquired staff will inevitably worry about job security or if they are safe, then whether the new owner properly understands its acquired customers. Some companies sensibly retain and build on the local leadership. Others deploy staff who have lived and worked in both countries and speak the local language as link points between headquarters and local management (though such executives can misunderstand both host and home cultures).
‘Culture clashes involving French companies have scuppered, at least in part, high-profile mergers,’ writes the FT’s Harriet Agnew in a book review looking at perceptions of cultural insularity at the top of France’s leading companies. The book offers lessons in ‘what happens when corporate cultures collide.’ More than three-quarters of CAC40 chiefs attended four French schools ‘–the elite training institutions that groom the country’s business leaders and civil servants’ while executives outside the 'network' castigate French management for being centralised, hierarchical and rigid.
‘We won, you lost’: FT impressions of Donald Trump
As corporate learning experts often insist, there’s always something more to be learned from a face-to-face meeting. And following his interview with US President Donald Trump, FT editor Lionel Barber gives his impressions of the US leader and his team, and what clues to his personality might help us understand his policy outlook. A twitter addict, Mr Trump nevertheless sees the FT as an important channel to the international business community. He was ‘alert, attentive and far removed from the cartoon character depicted on social media and television,’ reports Mr Barber. The President’s gruff manner and outrageous statements may be opening gambits in negotiations -- part of a ‘price discovery’ process. Indeed, there are ‘tentative signs that there is more method in the madness than critics suspect.’
Mr Trump’s White House resembles a medieval court as factions and family vie for influence over an irascible Emperor. As FT’s US Washington columnist Ed Luce notes here, many so-called Third World diplomats say ‘how familiar they find Mr Trump’s Washington. Access to the president’s bloodline is the priority.’
Mr Trump sees himself as a populist in the mould of Andrew Jackson, despite being the first president with no government experience, and aides present him as the fearless outsider who crushed two political dynasties. But it remains to be seen whether personal charisma and a surging stock market will be enough to succeed in the face of a system of checks and balances and conflicts of interests allegations.
Brexit Britain and the Dunkirk spirit
Article 50 has been triggered. Britain is leaving the EU. Companies in the UK, Europe and beyond, will now be poring over every twist and turn of negotiations and every shift of political opinion to determine the likely impact on their processes and strategy. The FT’s chief economics commentator, Martin Wolf, brilliantly sets the scene for what might lie in store for Britain. ‘Economically, it will lose favourable access to by far its biggest market. Politically, it will create great stresses inside the UK and Ireland. Strategically, it will eject the UK from its role in EU councils. The UK will be poorer, more divided and less influential.’ Injecting a dose of economic reality, he adds: ‘The evidence on modern trade is clear: distance is of enormous importance. The supply chains that link physical goods and services together work best over short distances.’
Now that the Rubicon has been crossed, how will companies cope, especially regarding the movement of EU labour? FT | IE Corporate Learning Alliance will offer tailored programmes of operational and strategic guidance to clients, using a unique, news-based perspective to help companies frame the challenges, interpret fast-changing developments and ask the right questions. During the next two years, companies will have to decide when to act, when to prepare to act later, and when just to 'wait and see'. They will have to discern what is credible news and what might be happening behind the scenes. And they will have to view Brexit through the particular prism of their own sector, as they lobby for preferential treatment. Brexit is unique. There are no ready-made answers.
Are we more stoic than we admit?
This FT book review of Svend Brinkmann’s Stand Firm: Resisting the Self-Improvement Craze, is a welcome antidote to the promise of positive thinking. It will certainly prompt executives to reflect on, and refine, their work and career expectations. According to this ‘refreshingly gloomy Dane,’ says the FT’s Miranda Green, we are ‘addicted to quick-fix career solutions which give us the illusion of control.’ The author rails against ‘enfeebling pop psychology’ at a time when executives need to ‘build an inner core of resistance and integrity.’ He adds: ‘Being yourself has no intrinsic value whatsoever.’ Far better ‘to cultivate mental toughness to prepare for our economically unpredictable future.’ As FT columnist Lucy Kellaway recently wrote, ‘the biggest reason for unhappiness is that we expect too much….The corporate obsession with happiness is part of the cause of our unhappiness.’ ...