10 issues that matter

(Conclusion)

5. Filthy business

Blame Gordon Gekko. Or the business leaders who behaved like reptiles.

With around seven percent of the global workforce unemployed, employers should be fishing in a deeper pool of talent. Yet more than 50 percent of global corporations surveyed by finance recruitment specialists Robert Half said finding good staff has got harder after the credit crunch.

Demographics aren’t helping. Firms that pay lip service to diversity may struggle as African- American, Asian and Hispanic communities account for 65 percent of US population growth – but former General Electric chief Jack Welch believes the real problem is the scandals that have dented business’s image: “

Many people have come to the conclusion they just don’t want to work for ‘the man’ anymore.” Many laid-off staff are reluctant to return to the corporate treadmill, while those in work may be discontented – the UK’s Voluntary Service Overseas says 14 percent of British workers are considering a career break – and Welch says wooing recruits with better benefits and a more serious commitment to employee engagement will be key.

6. Software management

Do you know if all your software licenses are up to date – or whether they are being used? The cost of ignorance can be high. One US firm was fined a six-figure sum after licenses lapsed on its design software, but surveys suggest that 72 percent of American businesses either track their software licenses manually or not at all.

With licenses, upgrades and vendor support accounting for up to 25-35 percent of total IT spend, many companies are asking third parties to conduct software audits or manage licenses.

Edge Zarrella, head of KPMG’s IT Advisory practice, says vendors are getting tough on non- compliance: “For companies with 20,000-100,000 seats, software management is a massive issue. Breach of license can be very serious.”

Zarrella says auditing is the solution and, even if it is outsourced, should be the responsibility of a specific department or person.

7. Changing habits

Lord Melbourne, Queen Victoria’s favorite prime minister, once noted that: “When it is not necessary to change, it is necessary not to change.” In a world where leaders and companies are valued for sheer dynamism, this message is often lost. Fiona McLeod, who has led change management programs within BP for 20 years, asks: “How do we cure ourselves of our addiction to episodic change and move to a much more healthy culture of business improvement?”

One Economist Intelligence Unit survey found that 70 percent of managers didn’t know how to measure if changes had succeeded. Some are so excited by the dramatic ‘big splash’ they lose interest in the follow-through. A credulous few go ‘fad surfing’ – applying fashionable theories rather than focusing on real issues.

It is useful to have a powerful symbol of change. When Gordon Bethune took over as CEO of Continental Airlines in 1994, managers feared that employees wanted to kill them. He broke the distrust with a pledge: for each month Continental was in the top three US airlines for punctuality, he would pay a bonus. In ten years, the share price soared by 2,500 percent.

8. Virtual managers

You have the technology to manage a mobile workforce, but do you have the mindset? Mark Smith, a partner in KPMG’s People & Change practice, says: “A mobile workforce demands a new management structure. You can’t run things the same way as you do in an office.”

Yet the rewards are great. A 2009 survey of 502 US businesses by Cisco found that 62 percent of those whose staff use remote access said it had boosted productivity and 42 percent said it had cut overheads.

Smith says it is easy to overlook the HR issues: “With virtual teams, you need a good formation meeting as you establish the workforce to set the tone, define processes and be clear about accountability.

“You need new roles – for example, a technical specialist – and to build ways to recognize achievement.” The technology, Smith says, needn’t be expensive: “Many clients told us they used webcams, not videoconferencing, to see facial expressions and communicate more clearly.”

Executives steeped in ‘presentism’ can find it hard to coordinate without controlling and manage by results. But being a virtual manager is fast becoming an indispensable skill.

9. Transparent leaders

How many execs blog about laying people off? Glenn Kelman, the CEO of major US real estate firm Redfin, did. His company’s blog has also told the world about its website crashing and about finding a torture chamber in the basement of a mansion it was selling.

Thanks to social networking, transparency is in vogue and although Kelman’s cult blog is more forthright than most, he’s not alone. Microsoft encourages engineers to blog about their work, online retailer Zappos tells suppliers how much profit it makes on a particular line and Southwest Airlines has set up an online ‘water cooler’ where staff can post about any issue that vexes them. Even Washington DC is becoming more transparent after the non-profit Sunlight Foundation began posting millions of public documents in a searchable archive.

Kelman believes transparency is an essential skill for the new generation of leaders he calls CEO 2.0. Venture capitalists have begun asking CEOs how savvy they are at blogging and tweeting. But too much candor leaves you open to web critics and can send any slip-ups viral. Leaders should retain control of their brand, personal and corporate.

10. Just ask

When physicist Isidor Isaac Rabi won a Nobel Prize in the 1930s, he attributed it to the fact that when he came home from school his mother would say: “Did you ask any good questions today?”

She had a point. Business writer Gary Cohen suggests questioning is an essential skill for executives. He calls it ‘Just Ask Leadership’. But interrogating in the style of a prosecution lawyer – determined to prove your version of events – won’t bring genuine insight. Cohen argues that learning to ask open questions can improve vision, ensure accountability and create better decisions.

When Darwin Smith became CEO of Kimberly- Clark in 1971, he asked colleagues: “What could we be best at? What could we be passionate about? How could we improve our economic performance?” The answers led Smith to sell the core business – paper mills – for tying up too much capital. The stock plummeted, but by the 1980s, with Huggies nappies accounting for 23 percent of Kimberly-Clark’s $7 billion (4.7 billion euro) annual sales, Smith’s questions seemed astute.

As business guru Peter Drucker put it: “The leader of the past was the person who knew how to tell. The leader of the future will be the person who knew how to ask.”

(Roberto G. Manabat is the Chairman and Chief Executive Officer of Manabat Sanagustin & Co., CPAs, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG in the Philippines. For comments or inquiries, please email [email protected] or [email protected])