Note: some of the linked articles below require an FT subscription to read
How CEOs become isolated
Asked what ‘keeps them up at night’, few senior executives would answer honestly: 'how I can get my boss’s job' or, more likely, 'how I can stop rivals stealing my job'. But if this sounds familiar, Margaret Heffernan’s FT article Fear of losing top spot at work will hinder you holds valuable insights for HR and L&D professionals as well as top executives. She speaks to social psychologist Carol Dweck, author of Mindset, about how ‘people with a fixed mindset who find themselves at the top of an organisation prize their elite status so much they are consumed by the fear of losing it.’
‘Their immense achievements created celebrity and wealth but instilled fear and isolation,’ Heffernan writes. ‘These leaders knew that they were surrounded by others who were very capable. They acknowledged privately that their gifts were not unique. And so they withdrew, becoming isolated, unable to connect with clever people all around them who now appeared as threats.’
Nor is this a problem for just CEOs. The article refers to GE’s infamous, now abandoned, annual ranking of executives and its firing of the bottom tenth. But milder versions of this practice persist in many organisations. Professor Dweck notes that it ‘stops colleagues from sharing insights or contacts and helpful information. Instead of becoming more dynamic, companies can become sclerotic and defensive.’ For HR readers, the solution may well depend on far-reaching cultural change within the organisation. But by just recognising the existence of such a trait is an important step.
The growing shareholder revolt over executive pay
The battle against egregious executive pay packages is heating up again following last year’s ‘shareholder spring’. Much of the anger is inspired by the new populist mood in the US and the UK. The FT reports that Barclays ‘is proposing to freeze its chief executive Jes Staley’s maximum pay package for the next three years, which amounts to about £8m a year.’ A third of shareholders at travel company Thomas Cook last week refused to support pay plans. Cigarette maker Imperial Brands had to amend remuneration plans in the face of shareholder anger. More pressure is expected from major institutions such as BlackRock, Fidelity International, Aberdeen Asset Management, Standard Life Investments and the Norwegian oil fund. Long term incentive plans are no longer deemed fit for purpose. But while most people would agree there should be no reward for failure, should CEOs also be awarded big bonuses for success that they are paid to achieve anyway? The executive pay debate holds many lessons for corporate leaders. Most importantly, they should consider carefully on what grounds they deserve their packages. Getting this right is not just a PR or governance issue. It goes to the heart of fairness in business.
Computer says ‘maybe’
A question that will increasingly dominate C-Suite conversations is how far machines can replace humans. A Japanese restaurant recently tested out a robot chef to much customer amusement. But is this the answer to staff shortages in the hospitality industry? Aside from concerns about human redundancy, the experiment raises questions around technology, HR, customer service, marketing and more. Although the restaurant customers found the robots’ clumsy movements to be fun, there are more serious psychological barrier to overcome especially in sectors that value personal interaction. The FT reports that ‘respondents were almost evenly divided over whether they would use hotels where the receptionist was a robot,’ though 40 per cent did not mind robots carrying out cleaning and other non-customer facing tasks. That distinction may prove key for San Francisco-based start-up Momentum Machines whose robot can autonomously produce 400 burgers in an hour, equivalent to three human flippers. L&D executives might now consider in which business areas their own customers would welcome or reject automation.
Trump as natural disaster
Managing government relations in the US is now like “dealing with a natural disaster” says one corporate leader. No-one is sure where the President might strike next and its impact on the share price. It’s forcing senior executives to rewrite rules on government relations and PR at the highest level.
Getting on the right side of the administration is complicated when parts of your international workforce and company brand values stand in stark opposition. Gillian Tett, the FT’s US managing editor, urges CEOs to make their voices heared. But how? Some executives are accused of ‘acting like a collaborator’; others insist that ‘We don’t know what Trump will do, but we need to get involved!’ John Gapper, the FT’s Chief Business editor, suggest companies ‘fight back, both in the courts if Mr Trump breaks the law and for public support; they must also be willing to suffer his abuse’ he writes.
Some are now taking the latter course. Uber CEO Travis Kalanick quit Trump’s business advisory council in the face of a viral social media campaign urging users to #deleteUber in protest against Mr Trump’s immigration order. But such decisions might prove trickier, for example, for finance chiefs relishing executive orders aimed at dismantling much of Dodd-Frank banking regulations. That said, ‘Mr Trump’s honeymoon with the C-suite extends only so far.’ What happens if the administration targets skilled-worker visas next?
So companies are developing a variety of tactics: repackaging existing plans in line with the Trumpian mood; negotiating their way out the direct line of attack; or simply praising policies wherever possible to make the President look good, and secure political access on the way.
MPs' finger on the Article 50 trigger
Britain's democratic machine moves inexorably towards Brexit as MPs, including ‘Remainers’, vote overwhelmingly for a White Paper on Article 50 that will trigger Brexit. One year ago, or even following the referendum itself, the idea that a pro-EU parliament would vote ‘yes’ to Brexit would have seemed doubtful. The latest development provides a vital lesson for corporate leaders: namely that politics is now moving much faster than traditional risk assumptions anticipate.
As this video interview with FT editor Lionel Barber and FT political columnist Janan Ganesh points out, control of immigration has become a higher priority than protecting the UK economy. That said, Brexit secretary David Davis has hinted that migrant limits may still be some years away, though certain regions and sectors could enjoy specific immigration deals. Mr Davis also confirmed government hopes for an ‘ambitious’ services agreement with the EU, especially in the financial sector, and a resolution mechanism for future trade disputes.
Will parliament continue to support a Brexit deal in two years’ time if the economy slows? Everything hinges on the quality of the deal, says the FT. Brutal negotiations lie ahead.
Supply chain nightmares
This FT must-read for risk managers, Nafta: First shots in a trade war, considers the danger of Nafta breaking up. Described as ‘the most dangerous moment of uncertainty in the [US-Mexico] bilateral relationship in the past 100 years,’ US President Trump’s policy towards Nafta threatens a trading arrangement that supports $1.1trn in commercial flows, $100bn of US FDI, 5m US jobs, and millions of cars produced each year. As the FT reports, ‘A single automotive component may cross the border six or eight times before ending up in a car. Disentangling this supply chain could harm the industry.’ The article is a stark reminder for companies to identify the weak points in their supply chains; consider their response to sudden policy shifts; and assess the potential disruption to their labour costs. How would your company cope in a trade war?
Trump re-affirms his business priorities
The ‘America first’ theme in President Trump’s inauguration speech was unmistakable. If senior executives were hoping that the new US President would backtrack on his anti-trade message and other campaign issues on taking office, they will have to revisit those assumptions.
The FT summarises the 45th US president’s policy first moves. Among key business-related priorities are: withdrawal from the Trans-Pacific Partnership negotiated with Japan and Pacific Rim economies; notifying Canada and Mexico of his intention to renegotiate NAFTA; pro-growth tax reforms favouring US workers and businesses; lower taxes across the board, and a simplified tax code. Moreover, the Trump administration may quickly approval new pipelines as he seeks to ‘take advantage of the estimated $50tn in untapped shale, oil, and natural gas reserves.’
Trump v Human Resources
The fast-moving US immigration furore has placed HR concerns at the heart of international politics. Aside from legal and moral arguments around President Trump’s executive order on immigration, L&D leaders will also have to consider how the US is now viewed by some of the world’s top talent. In the short term, companies have been scrambling to re-assure and support vulnerable staff from targeted Middle Eastern countries. Longer term, all firms—but the tech sector in particular—may have to reconsider how they attract the global talent they need.
There’s also the company brand to consider. Gillian Tett points out that ‘not a single executive expressed any significant criticism of the president and his policies during the quarterly earnings calls…’ Fear, she adds, may explain some of this reluctance—President Trump’s tweets can dramatically affect a company’s fortunes. But failure to speak out could adversely affect the company’s international image and employee loyalty. Howard Schultz, executive chairman of Starbucks, was one of very few outside the tech sector to see this, warning that civility and human rights were “under attack”.
US tech companies have been most vocal. Facebook’s Mark Zuckerberg, Apple CEO Tim Cooke and executives at Google and Microsoft, have all expressed strong opposition. Mr Cooke said: ‘Apple would not exist without immigration.’ Elon Musk, chief executive of Tesla and SpaceX, and Travis Kalanick, Uber CEO who both sit on President Trump’s strategic advisory group, have called for changes to the executive order. Heads of Netflix, Twitter, Airbnb and Lyft have also spoken out, while Google’s co-founder Sergey Brin was seen at a San Francisco international airport demonstration. Other tech leaders are helping to finance legal challenges.
Longer term, Mr Trump’s hardline stance may be undercutting recruitment from overseas. Amit Kumar of software group Trimian told the FT that, “People are thinking what is the right country to base their operations in.” He notes that many start-ups are increasing the size of offices outside the US. This is part of a bigger battle for high skilled immigrants, especially software engineers from India.
Populism v Artificial Intelligence
The new populism, which appeals to the old industrial heartlands of the US and Europe, is not unrelated to two other major strategic business themes: the emergence of job-destroying AI and relentless staff disengagement. Business leaders and thinkers may need to consider their responses to all three together.
Evidence of these broader linkages was apparent at that bastion of the political-business elite, this year’s World Economic Forum in Davos. Indeed, some ideas that were once the domain of the utopian Left—such as a universal income—were discussed. As FT’s Tim Bradshaw reports in this video senior business leaders are taking the job implications of AI far more seriously in the wake of the political backlash in the US. IT leaders are now acknowledging that ‘real people are involved.’ Interestingly, McKinsey research suggests that accountants are most at threat, while manual workers are safest.
Executives hope that AI and robotics, widely deemed vital for future global growth, will augment rather than replace workers. Others, however, fear that tech companies will simply grab all the benefits of this next economic revolution, prompting a popular backlash against silicon valley not dissimilar to the banker bashing of recent years.
Time to act is short. As Infosys CEO Vishal Sikka writes in the FT, artificial intelligence and automation technologies are already starting to affect our work and daily lives. But ‘we are still in the early stages of understanding how intelligent systems can work with people more seamlessly.’ Mr Sikka urges organisations ‘to make life-long learning resources available for employees to enhance skills development’. Infosys is rethinking its training infrastructure with, for example, ‘nanodegrees’ to help employees acquire new skills rapidly at scale.
Meanwhile, Microsoft CEO Satya Nadella is future proofing his staff, creating a 5000-strong AI team of academics and engineers to design the operating system of the future. ‘Even if the learn-it-all starts with less innate capability, they will always do better than the know-it-all.’
No respite for disengaged staff
The rise of the digital assistant and other AI innovations might signal the sunlit uplands of tomorrow’s working world. A life of continual learning in and out of work, supported by AI and robots, and a universal income for those who still just can’t find sufficient reason to work. But would we still be happy? ‘The biggest reason for unhappiness’, according to Lucy Kellaway ‘is that we expect too much. Office jobs may have improved, but our expectations have far outstripped them’ she argues. As FT|IE Corporate Learning Alliance has suggested before, maybe it’s because we work in organisations that are just too big to foster a sense of common goals.
Nowhere is the lack of collegiality more apparent than during leadership succession. Threats to the best-laid succession plans, writes FT’s Andrew Hill include the sudden departure of the heir apparent, internal rivalries, and all-consuming efforts to placate the losers.
Overworked in Japan, sleep deprived in the US
The counterproductive effects, including health dangers, of long working hours was noted in FT | IE Corporate Learning Alliance’s recent article The Long Hours Delusion. Too often excessive hours is viewed, wrongly, as a sign of energy, stamina and productivity in senior executives, who then set a poor example for all staff.
Nowhere is this misplaced work ethic so acute as in Japan, as this FT article explains. It reports that at least 200 victims of karoshi (death by overwork) are recorded annually. Unfortunately, defeating karoshi ‘will require a simultaneous huge shift in Japanese society itself’.
Part of the long hours delusion relates to lack of sleep. The FT also reports sleep deprivation research which claims lack of sleep in the US could be costing companies an estimated $US411bn annually. Fortunately, the article also provides ways to combat the crisis.
Sexism at business school
When it comes to changing deep-seated work attitudes, recognising and acting against gender inequality remains a colossal challenge. One approach, adopted by London Business School students and highlighted by the FT, is the creation of so-called ‘Manbassadors’. Male MBA students take a lead to support female colleagues, pledging to engage fellow students and continue their support after graduation. Manbassadors run skills workshops to help students recognise and avoid sexual bias. These might involve such ‘microsexism’ as unthinkingly interrupting women in meetings. Wharton, Harvard and Columbia business schools have similar initiatives. Business schools are an effective place to start, say participants, because they are likely to be running companies in the future. But there’s no reasons why executives can’t instigate similar projects now.
Notes on a scandal
In this excellent view on the legacies of corporate scandal, the FT’s management editor Andrew Hill considers what German car maker VW might learn from BP’s experience with Deepwater Horizon disaster. In the short term, VW’s scramble to draw a line under its US exposure looks sensible, he writes. But before the heat starts to abate, companies can expect lawsuits, independent reports, official external reports, documentaries, books and even Hollywood movies. Moreover, old cultural failings may resurface long after new managers think they have stamped out former bad habits. ‘The half-life of corporate scandal is long — and largely beyond companies’ control.’
In the FT’s opinion, ‘picking a deceptive strategy and then (if all the allegations are true) doubling down on it as the net closed looks mad.’ The bigger problem, however, is one of regulation, in which ‘poor regulatory incentives met a governance regime that discourages accountability.’ Fiat Chrysler, too, is defending itself against similar emissions-evading accusations by the US Environmental Protection agency, and could face a $US4.6bn fine.
Industrial strategy by tweet
‘Government by tweet’ may be a novel way to communicate industrial policy, but US companies seem to be taking it seriously. Car giant, Ford, appears to have responded to President-elect Trump’s tweeted threat of stiff import taxes on General Motors if it shifts production abroad. Ford has now agreed to scrap plans to build a $US1.6bn plant in Mexico, saying it will invest $US700m in a Michigan factory instead to build new electric and hybrid vehicles, with obvious HR implications.
Reinforcing his US-first message, Mr Trump made his final economic appointment, selecting the protectionist Robert Lighthizer as US trade representative. Meanwhile, the proposed Secretary of State, Rex Tillerson, is to receive a $US180m payout to sever ties with his former employer, Exxon. Presented as a conflict of interest issue, the staggering sum raises more questions than it answers: not least whether there is any upper limits on executive pay, and what such a deal might imply for Mr Trump’s own business interests.
Rethinking reputation risk
The old adage - that it takes 10 years to build a reputation and 10 seconds to lose it - is worth bearing in mind when reading this very useful analysis of reputation risk. It argues that a crisis typically has many causes that remain unrecognised and unmanaged. If corporate leaders think they understand the risks they face, they should think again. One problem is hierarchy, which may deter those who have noticed problems from coming forward, creating a ‘risk glass ceiling’ through which no bad news can penetrate. Groupthink, self-importance and lack of relevant expertise can also play a part. As Warren Buffett once wrote: ‘We can afford to lose money - even a lot of money. But we can’t afford to lose reputation - even a shred of reputation.’
China stemming capital flows
Key investment data from China might help foreign investors frame their investment strategies for 2017. Chinese companies tripled investment in the US to $45.6bn in 2016. But the appointment of several China-hawks in Washington might reverse this trend in 2017. There’s plenty of internal pressure to stop the outflows too. As renminbi and forex reserves fall China is clamping down on outbound M&A with a tighter deal approval process. At the same time, the government is allowing a surge in household debt as rising incomes and banks show more willingness to compromise lending standards.
Trump’s America: what can business learn
What can business learn from US President-elect Donald Trump’s cabinet selection? In this video, FT's Peter Spiegel and Demetri Sevastopulo discuss the significance of the new Treasury and Commerce Secretaries, and considerations over appointing a Secretary of State. Balancing financial expertise with knowledge of Washington is a tricky trade off, given that Mr Trump also wants to be seen to ‘drain the swamp’ of insider Washington politics. His appointments so far appear to lack executive experience which could suggest highly unpredictable policymaking.
However, large scale infrastructure spending, a central feature of the Trump economic plan, was positively received by the OECD, which the FT reports ‘would increase US growth, combat inequality and energise discouraged workers’.
The OECD argues that if low interest rates are used to boost capital investment, advanced economies will become stuck in a low growth trap. Indeed, US policies might even help get the world out of a rut. More active fiscal policy, it says, “should revive expectations for faster and more inclusive growth.” An important caveat is if he carries out his threats to raise trade barriers, or pulls the US out of important trading relationships, such as TPP, in which case the economic gains would disappear.
Ten business implications of a Trump presidency, discussed at an FT|IE Corporate Learning Alliance breakfast briefing event, can be read here.
How to negotiate a Brexit deal
‘The unpredictability of the exit process from the European Union is a major downside risk for the economy,’ writes the OECD. But as a negotiating strategy, the UK government might prefer it that way even though a hard Brexit looks increasingly likely. Brexit negotiations offer the business executive an unparalleled case study in how to (or not to) negotiate. ‘London is confident it has a strong hand,’ reports the FT; the question is how to use it. The LBS provides more negotiating tips here. One issue not mentioned, however, is how the UK government could bolster its position by offering an alternative vision of Europe that other, EU-sceptic countries might support. This could break the EU’s united front against Brexit, alter the balance of power, and press EU negotiators to seek a quick compromise.
While negotiators position themselves, others are seeking to exploit the uncertainty. Paris is trying to woo financial services, while some UK business schools fear they will lose EU students concerned about job prospects—though in both cases, these worries appear somewhat exaggerated.
Perhaps the UK economic future will be determined less by its future relationship with the EU and more by its low productivity. One solution may be to enhance training of its skilled workers, as this video about BAE Systems' new training academy demonstrates.
Why executive pay keeps rising
Despite the annual hullabaloo over executive pay, companies are not always discussing the issues in the right way. The UK government’s new corporate governance proposals continue to miss the key point. Giving shareholders a binding vote on pay, for example, may seem to give them more power to change behaviour. Yet, despite shareholders having an advisory vote remuneration reports are almost always approved. Somehow, CEOs always seem to provide a justification for their own high pay, even while agreeing that others’ salaries are hard to support. Here are seven typical excuses.
Of some relevance is work by 2016 Nobel prize-winning Oliver Hart and Bengt Holmström’s on contract theory which considers those business situations in which individual contributions may be hard to determine, and where incentives may lead to distorted outcomes. Others argue that the problem goes deeper. At its heart is a ‘talent myth’ according to which difficulties in measuring or attributing individual performance allows a CEO to claim that he possesses the rare talent that justifies his stratospheric pay.
New faces: graduate recruits and returning expats
Graduate recruitment season is underway. Here, PwC considers what it wants from potential recruits, and where too many applicants go wrong. Once hired, many candidates view a stint working abroad as an essential career stage. However, as this FT article, explains, following such a posting, companies are not always prepared for their homecoming. The ex-expat’s inevitable disappointment when the promised career trajectory fails to materialise causes serious talent problems, to say nothing of wasting money. But why does this happen, and how might companies ease the transition? Managing expectations and rewards, and sharing experiences might help.
If things still don’t work out, executives may consider a career change. Inspired, perhaps, by FT columnist Lucy Kellaway who recently announced she was leaving to become a teacher, others share their experiences and how to make the career change work out.
Cyber-attacks and how to respond
If executives weren’t sufficiently alarmed by news that a billion Yahoo accounts were hacked, then a more day-to-day threat might galvanise staff action over cyber security. For example, innocuous-looking Word documents carrying malware asking you to ‘Enable Content’ should really read ‘Disable Defences.’ Other threats, and how to respond, are contained in this FT cyber attack survival guide.
Trump presidency: some business talking points
Senior executives are struggling to understand what Donald Trump’s US election victory means for business. It’s difficult to draw firm conclusions during this transition period. In this video interview, The FT’s Martin Wolf explains to Martin Sandbu some of the possible economic repercussions.
Meanwhile, other business talking points arising from recent developments include the following:
An assertive Wall Street: Will the incoming Trump administration help New York become the world’s premier financial centre again? The FT’s Gillian Tett sets out four reasons why this might occur: possible rolling back of some Dodd-Frank financial regulations; healthier US banks; reflationary fiscal policy; and Brexit uncertainty over London.
However, Barclay’s chief executive Jeff Staley tells the FT’s Patrick Jenkins that Trump’s election victory marks an end of the free trade assumptions and US monetary accommodation. According Mr Staley, Dodd Frank, Basel and other cornerstones of financial regulation are unlikely to be reversed, not least because Mr Trump will have other pressing issues to worry about. Other bankers’ opinions were expressed here at the FT Banking summit., including the impact on emerging markets.
Urgency in Asia: Japan’s prime minister Shinzo Abe appeared to jump the diplomat queue to meet the U.S. President elect, and reported a “warm” meeting with “a leader I can trust”. Mr Abe’s deft move suggests a degree of urgency about getting on the right side Mr Trump. As the FT notes: “Mr Trump’s approach to Asia will have huge implications for Japan — shaping Tokyo’s relations with Beijing in particular.”
Security priorities: Mr Trump has many crucial appointments to make and various interests to satisfy. He has asked Michael Flynn, a retired three-star general, to be White House national security adviser. Mr Flynn is believed to be at odds with conservatives on some social issues but as the FT notes, “he has been criticised for accepting money to attend a dinner in Moscow where he sat besides Russian president Vladimir Putin, which further fuelled concerns about Mr Trump’s relationship with Russia.”
Who gets the blame?
When scandals explode, responsible corporate leaders must quickly ascertain whether the cause is the rogue individual or a problem with the entire company or sector. Kweku Adoboli, the former UBS trader whose unauthorised trading led to losses of $US 2.3bn, explains the pressure to generate profit in an increasingly complex, fast-paced, and automated industry. It’s about behavioural change not catching ‘rogue traders’ he says. Things go wrong because of the system.
Another scandal that may require systemic investigation is emissions testing in the automotive sector. The FT investigates a test centre in Coventry, UK, that emulates a variety of real world driving conditions, from icy mountain roads to the Mediterranean coastline. Finally, all companies with an online presence must re-appraise their readiness to deal with cyber-attacks; this special report explains what to do.
Need ideas to appeal to a new generation of shoppers? US cosmetics company Estee Lauder is turning to millennials to help the company survive in the digital age. It notes that millennials will have the greatest purchasing power of any demographic. The company has therefore created “millennial advisory boards” and a formal reverse-mentoring programme, in which young employees were paired with senior Estée Lauder managers.
Why the sky isn’t the limit
As emerging markets go, it doesn’t get more pioneering than this: space. In this FT interview former Nasa astronaut Mike Massimino discusses an ambitious goal of private sector space travel by 2024, and its similarities with an early age of air travel.
Judgement day in China
Investors in Asia might do well to stay abreast of China’s shifting legal environment, following a patent case against Sony. In the past, foreign investors in China insisted on overseas arbitration, or hoped to avoid arbitration altogether given problems with enforcing decisions. Now, however, they may be entering a new era in which Chinese judges wield considerable power and are not afraid to rule against foreign companies, even if that means disrupting their local operations or even their global supply chains.
Eastern Europe’s new generation
Russia may have welcomed the Trump presidency with an eye to wielding more influence in Eastern Europe. But business moves on as a new generation of disrupters and influencers emerges. Who you know is useful, if not essential. Here is the list of New Europe 100 changemakers in central and eastern Europe.
President Trump's new world order
Although too early to know what business can expect from a Trump presidency, several FT commentators give a sense of the key risks, both in the US and globally. According to Lionel Barber, the FT editor, we can expect a profound repudiation of the status quo as the US walks away from the global order it helped create. Gideon Rachman writes that the 'first avowed protectionist to be elected US president since before the Second World War' appears to have forgotten the anti-trade lessons of the 1930s. Trump’s promise to walk away from Trans-Pacific Partnership and EU trade talks, and possibly even NAFTA is not mere electioneering. He has long held isolationist views. US engagement with the world—which has underpinned everything from climate change talks to NATO’s security alliance—is now in question. Trade-dependent emerging markets may be the biggest victim. East European markets are also vulnerable to unchecked Russian ambitions.
'Mr Trump’s economic vision represents a big departure from Republican orthodoxy,” says Edward Luce. Nevertheless, the Republican-controlled Congress is likely to back huge personal and corporate tax cuts and substantial infrastructure spending even though this could add an estimated $10 trillion to US public debt, widen the fiscal deficit and trigger a short-term boom followed by recession. But debt-funded infrastructure investment plans (border walls notwithstanding) 'is something that the country needs', argues Martin Sandbu. 'What is more, unfunded public spending on infrastructure would amount to a fiscal stimulus that could do the US and global economy a lot of good.'
Markets expect higher inflation. But a move to curb the Fed’s independence, or an exit by its chair, Janet Yellen, could create alarm, warns John Authers. She had been expected to raise interest rates in December but market volatility may change these calculations.
Trump will also find Congressional support to overhaul, if not scrap, the Dodd-Frank reforms aimed at curbing Wall Street excess. That will please the banks.
Islamic finance students
One trend in business education is the growing demand for instruction in Islamic finance, according to the FT’s Jonathan Moules. As banking becomes more prominent in Muslim majority countries, knowledge of Islamic finance is proving to be a useful skill for executives in these countries. In fact, the majority of students on many courses are non-Muslim. But some people question whether business schools are the right places to teach a subject that is principally designed to meet religious beliefs on debt and interest.
Engage and improve the world
Can sustainable investing improve the world and make a profit? In this video, John Authers, FT’s senior investment commentator, looks at the reinvention of ethical investing. Investors are asking whether there is an extra return to be made from selecting the most virtuous companies. But from a CSR perspective, the age-old dilemma about whether to boycott or engage with authoritarian regimes is as pertinent as ever. For many, ethical investing is now about improving local standards and practices through greater commercial engagement.
A business message to EU staff: ‘Don’t go’
With Brexit discussions mired in legalities, it is worth reflecting on its impact on EU professionals and manual workers in the UK. Shockingly, some 40% of those surveyed by the FT worry about their jobs in the wake of the Brexit vote. Their insecurity is particularly acute in the construction, retail and hospitality sectors. This FT article presents a stark reminder of the potential impact on towns such as Corby, in the East Midlands of England, that rely on low-wage, low-skilled EU workers to fill jobs that locals shun.
And the worsening mood is not limited to manual workers. There are plenty of worried East European EU professionals, especially in London, whose post-Brexit future is now uncertain. As the FT | IE Corporate Learning Alliance’s recent Brexit HR Foresight event pointed out, many EU professionals are ready to pack up and leave the UK if anti-foreign attitudes harden. So companies need to go out of their way to reassure their EU staff that they are fully supported.
Leaders under pressure
Andrew Hill, FT management editor, interviews four corporate leaders on their different perspectives on pressure and how well they managed it. The ill-fated Dennis Kozlowski, who ran the rapidly expanding US industrial group Tyco in the 1990s, describes his ‘all-consuming, 365, 24/7 job’ before his downfall. Marcela Sapone, co-founder of Hello Alfred, a start-up that offers concierge services for busy professionals, says pressure is based on a perception ‘that you are on a path to greatness and that you have to keep it up’. Pascal Soriot, chief executive of AstraZeneca, barely slept for the first 48 hours of Pfizer’s 2014 hostile bid. And Stephen Hester, who took over collapsing Royal Bank of Scotland during the financial crisis in 2008, recalls that it was ‘impossible to have a starting plan, although you very quickly had to figure one out’.
Pressure at the top does not, however, appear to have deterred high-flyers from wanting to be on company boards. The problem is knowing when to step down. Indeed, according to Andrew Hill more than a third of US board directors believe someone on their board should step down, and describes the types who should probably be removed.
Woman over board
Despite a surfeit of charters, targets and reports, female executives are notable for their absence from the boardroom. This article looks at the difficulties in getting companies to increase the numbers of senior-level women. Part of the difficulty lies in overcoming the belief that targets are incompatible with merit-based hiring.
Cyber-attacks and defence
Ensuring that customers’ personal details are safe couldn’t be more important to business strategy. This is especially true for banks that are experiencing ever more audacious cyber raids. Most recently, UK retail giant Tesco blocked online purchases on all 136,000 debit cards issued by its banking division after 40,000 banking customers were hacked in one of the largest cyber bank robberies in UK history.
Sometimes, cyber criminals just want to prove a (political) point by taking down a website, using DDOS attacks, bombarding a site until it can’t cope with the traffic, as the FT explains here.
But new technologies also alter the means of attack and a company’s ability to defend itself. One question is whether biometrics rather than normal password protection is the best way forward. Martin Arnold and Hugo Greenhalgh assess its merits here but point out that fake fingerprints, selfie masks and voice tapping will keep bankers awake at night. Meanwhile, Claer Barrett interviews cyber experts
Betting on political outcomes
The US presidential elections will have taught investors a lot about the risks of calling the outcome of a two-way political contest. Binary votes can have big impacts but markets are not well equipped to deal with them. Betting around a specific event, especially those based on public voting sentiments, is notoriously hard, as demonstrated by the Brexit vote, and the UK general election the previous year. This FT piece explains why it’s so difficult to make money from playing the political risks.
The 'problem with democracy'
Political risk is now a key factor for investors in western markets, most notably the protectionist implications in the USA of Trumponomics. Meanwhile, in the UK, Brexit continues to baffle as new dilemmas emerge, such as what transitional arrangements might be agreed. Brexit’s business implications are ubiquitous. For example, was the recent supply spat between Tesco and Unilever caused by sterling’s 'Brexit' depreciation. Indeed, UK consumers now look set to face wide-ranging price rises, and firms will have to consider how to handle these new cost, marketing and production pressures.
No country for old men
Emerging market risks have not diminished either, especially in China. If President Xi Jinping waives convention and allows his Politburo allies to avoid early retirement, this will further concentrate political and economic power. The immediate beneficiary would be 69-year old Wang Qishan who leads Mr Xi’s counter-productive anti-corruption campaign. The FT also explains the debt and property risk behind China’s 6.7% third-quarter GDP growth rate, with a video summary here.
Demography and social responsibility
Demographic trends are a reliable long-term economic indicator that support FDI strategy. But as this FT analysis of Nigeria’s demographic outlook explains, population growth must be accompanied by employment, otherwise an economic boon can all-too easily turn into social crisis. Business opportunities can clash with social needs in other ways, for example the recent alcohol prohibition imposed in Bihar, India. The new law will reduce state tax revenues, encourage smuggling, and harm the beverage and retail sectors. Yet the move has eliminated much alcohol-fuelled violence—largely against women—a sign for companies not to forget their corporate social responsibilities that can underpin their brand.
Two FT articles contrast approaches to career stress. The struggle to balance study, work and family during an EMBA (the so-called ‘divorce course’) is described here. Meanwhile, this review of Business for Bohemians quotes advice for dealing with the tough times: "Do as little as possible. Be lazy. Take long walks. Nap. Sleep a lot. Read books.” Alternatively, they could get a tattoo (if the office allows). Millennials may also be adopting a simpler approach to technology. FT’s Jonathan Margolis, explains how Facebook fatigue and Twitter oversharing is driving millennials to more traditional communication devices and channels. How might this affect marketing strategies?
Technological change at the speed of life
Many executives urgently need better cyber security, specifically password protection. Asymmetric information means that an individual may think his password is impossible to guess, but viewed in aggregate by the millions (the hacker’s perspective) reveals ominously predictable patterns.
Pattern recognition techniques threaten more than your bank account; they are revolutionising white collar professions such as the law. The FT’s special report on Innovative Lawyers describes how Artificial Intelligence is automating their services, and forces us all to ask: can a computer do my job too? Equally disruptive may be the impact of smaller batteries and electric cars on the oil and gas industry, as explored in this video though this still appears some years away.
Indeed, technology can only progress at the “speed of life”. Samsung’s struggles with its combustible Note 7, described here, shows the costs of ignoring this premise.
And finally, another video setting out the different business approaches to virtual reality taken by Sony's PlayStation VR, Facebook's Oculus and Google's Daydream.
Corporate decision makers are more focused than ever on global political and economic developments. As the FT’s Chris Giles explains, a faltering global economy may lead to a vicious circle of low growth, popular discontent and a backlash against trade and openness, resulting in more economic weakness. Martin Wolf, the FT’s Chief Economics commentator, argues here that a Trump victory might not only undermine confidence in the US-created trade order by threatening to tear up past agreements, it could mark “the end of a US-led west as the central force in global affairs”.
Business strategists in the UK are digesting the implications of Prime Minister Theresa May’s announcement to start formal Brexit talks by end-March 2017. Companies may now have more clarity, but Brexit is likely to happen sooner than many had hoped. If the UK government prioritises immigration control this would limit its single market access. But by holding out for both, an EU agreement becomes less likely, heralding a quicker but “hard Brexit”. That will particularly affect UK banks’ “passporting” rights, as James Blitz explains here, while Laura Noonan reports that US banks are already seeking more EU-based recruits.
Hard conversations about gender bias
While HR is preoccupied by Brexit, companies continue to fall short when it comes to supporting their female talent. Sarah Gordon, the FT’s Business Editor interviews Dame Helen Alexander about how to increase the number of women on boards, and Nicola Mendelsohn, Facebook’s vice-president, EMEA, about handling difficult conversations and overcoming workplace gender bias.
Present and correct
'Presenteeism'—the tendency for staff to go to work even when ill—impacts employees’ health, engagement, productivity and more. As this FT special report on health at work notes, the issue has many causes and potential solutions, and executives must handle it sensitively. Another delicate talent issue is the apparent disloyalty of millenials always on the lookout for their next job. The FT’s Michael Skapinker argues that employers should be proud to give talented workers their first opportunities and wave them on. In fact, the FT is ready with advice on creating an online CV.
US banking giant Wells Fargo stands accused of creating millions of fake accounts in customers’ names in order to meet sales targets. The scandal holds many lessons for corporate executives at all levels. First and foremost is how much responsibility chief executive John Stumpf should take for such egregious misconduct—U.S. lawmakers say he should be ‘criminally investigated’. The broader lessons, highlighted here by FT’s management writer Andrew Hill, looks at how firms can set sales targets and incentives without corrupting the process.
Three FT stories illustrate the disruptive potential of technology trends. Israeli tech start-ups are already redefining an automotive sector that relies increasingly on computers. Meanwhile, the dangers of artificial intelligence, led by today’s big tech companies and how to regulate it, are explained here. Cyber-security, once the domain of IT departments, are now a top priority in company boardrooms, as this interview at the FT’s recent cyber security summit explains, urging companies to work together.
Protectionist threats to global growth
Is globalisation under threat? It’s a serious concern for corporate leaders trying to assess the world economy’s longer-term trading and growth outlook. This FT article on G-20 discussions identifies issues such as protectionism, taxation and inequality that are dividing countries and fuelling anti-globalisation anger among voters. What might lie ahead? This video provides an entertaining glimpse of the future. Meanwhile, the FT’s chief economics commentator Martin Wolf, argues that we need more political co-operation to deal with stagnating international trade and investment, and keep reaping the benefits of global integration. For the more studious executives, there are also many new books on these subjects.
Slaves to the new
One question has long troubled executives, from HR to R&D: how should staff interact with new technology? Here are some answers. In his new book Overcomplicated author Samuel Arbesman writes that technology has grown so complex it has an unexpected life of its own. FT technology writer Jonathan Margolis notes how we happily use outdated technologies, while investment banking correspondent, Laura Noonan, considers Deutsche Bank’s innovative use of “matchmaking” tests to hire graduates. Requires FT subscription to read.
The EU, Apple and ad blocking
Two articles, on ad-blocking and Apple’s tax dispute, highlight the EU’s central role in shaping business. The issues have huge implications for marketing departments and tax planners. Corporate lobbyists should also take note.
Boss worship and how to avoid it
The narcissistic boss is hardly a new phenomenon - consider the US presidential election. But how should companies recognise the danger signs, and what can be done to avoid idealising managers or craving the worship of underlings? A psychotherapist advises.
London's financial future
This analysis of London’s financial future considers the City’s post-Brexit potential over the next 30 years. L&D professionals might find discussion on the impact of technology and millennials especially relevant.
In a hole?
Policymakers will meet at the US mountain resort of Jackson Hole amid concerns about the limits of central banks’ recession-fighting firepower. This FT analysis will be vital for C-Suite decision makers, especially CFOs, in projecting future global growth prospects. L&D professionals might also watch this video for more on the Fed’s thinking, as well as important discussion among EU leaders about the future shape of a post-Brexit European Union.
In the swim
The FT reports that US swimwear maker, Speedo, and other companies, ended their sponsorship deals with US Olympic swimming champion Ryan Lochte after he allegedly lied to Brazilian police about being robbed at gunpoint. Speedo’s US arm said: “We cannot condone behaviour that is counter to the values this brand has long stood for.” For Learning & Development professionals, the issue raises important questions about how and when to protect the company brand. Tennis champion Maria Sharapova, for example, retained her sponsorship deals despite failing a drugs test. Are such decisions made according to objective criteria, or based more on the strength of public reaction? And how can companies prepare for such eventualities?
Four Brexit scenarios
Risk analysts continue to struggle with the business implications of Brexit. Given that the outlook will remain hazy over the near future, how should company strategists try to assess the risks today? A good starting point would be to consider several possible scenarios. In this article, the FT has helpfully provided four: a hostile divorce, a clean break, an amicable transition or a change of heart. It’s a simple but effective framework that could assist executives in developing a strategic view on such areas as international expansion plans, hiring EU expats or just resourcing the compliance department. Bear in mind that the probability of each scenario will shift as EU negotiations evolve.
Interpreting developments in the world’s most important emerging market has never been so important for foreign investors. A recent FT analysis of what is driving China’s economic policy also provides invaluable learning and development insights. For example, the article looks at who is deciding policy (and which media outlets communicate the ruling view). It raises questions about whether China’s leadership is willing and able to institute key economic reforms—and what kind of reforms. It considers how policy initiatives such as anti-corruption campaigns fit into wider political trends. And it touches on how these developments are affecting consumer demand—a key concern for many investors. (Links require FT.com subscription)
Deutsche Bank whistleblower
FT video: Recent top stories including a Deutsche Bank whistleblower turning down a multimillion-dollar award.
Eric Ben-Artzi, a market risk analyst, hit the headlines after refusing to accept a US Securities and Exchange Commission reward for blowing the whistle on false accounting at Deutsche Bank where he worked. What can learning and development professionals take from this story? Apart from the philosophical question as to whether large financial rewards distort the motivations of the whistleblower—a question that Mr Ben-Artzi appears to have sidestepped by refusing to accept the money—companies might also reflect on whether their own internal compliance systems are designed to achieve the ethical outcomes that they really seek. You can read his own account on FT.com. (Link requires FT.com subscription - video free to view)
How to work when your boss does not care
The most recent annual Edelman Trust Barometer, produced by the public relations company, showed that large numbers of workers no longer trusted the company they worked for. In Japan, only 40 per cent trusted their employers. In France it was 48 per cent and 57 per cent in the UK. In the US, nearly two-thirds of employees trusted their companies but that has to be set against other downbeat US surveys.
FT couminist, Michael Skapinker, argues that employee disenchantment has costs beyond poor customer service: absenteeism, shoddy work and high turnover. Read his article on performance management (requires FT.com subscription).