Business Ethics… is it a beachfront eroded by time?

Why Today’s Direction may give rise to Tomorrow’s Dereliction??...

We all love our “hard chargers”, the guys and gals whom cannot seem to fail at anything they do leaving us to wonder, “how do they do it?” Most of us charge ahead in life with an unmistakable sense of ethics and morality but what about the guys and gals we look up to, the ones whom cannot seem to fail… do they hold dear the same values and ethics that we embrace? They maybe kindred spirits of ethical conduct in part, full or not at all???…  A perplexing statement you would agree… which leads us to explore what impact it all may have on us if any at all?  Also, if it does, how to we recognise it and what we can do about it?

‘Business Ethics’ is defined by Investopedia as “The study of proper business policies and practices.” ‘Ethics’ is defined simply by Business Dictionary.com as “the basic concepts and fundamental principles of decent human conduct.” It appears that the concept of proper business practice infused with common decency is nothing new to write about which stands to reason given society’s longevity and apparent ability to change with the times.

However, are darker forces with designs that leave no room for common decency eroding the “beachfront” of ethical behaviour of late? I would say mankind has always struggled with this. As individuals, we should know who really lies to our left and to our right in the workplace. Also, do we associate with a company that satisfies our personal “ethical policy” with “proper business policies and practices” which creates a sustainable future for both the business and the employee?

We have many questions that leave no room for grand assumptions given our need to be happy in life, which is not a right, but an opportunity in the making. People in my observation tend to have intent driving their motives, which drives their decision-making process and over time, it defines who they are as people aswell as professionals. In my view this singular process aggregates into a powerful force impacting business ethics and influencing the ethics of others whom might not embrace certain aspects in better or worse conditions. In appraising your situation, I would focus on the following elements, which I believe to be relevant to good business ethics and a sustainable future.

• ·      Know your “inner self”. Don’t be afraid to self reflect on who you are, your values, your ethical beliefs, your sense of morality noting boundaries and limitations. Also, what are your needs and wants are in life and what kind of work is suited to your personality, your passion and your sense of purpose?
• ·      Contextualise your employment.  Don’t be afraid to investigate your company culture and understand what it actually is versus what it may appear to be initially. Also, a business culture phenomenon known as the giver taker culture should also be understood. Are you a team player giver type or an individualistic taker type? A point to note is the effect ‘takers’ have on ‘givers’. This should be understood before assessing where you would fit into the work environment and its corresponding impact on your life.
• ·      Feel your passion for your job.  If you don’t derive satisfaction from what you do, then you will never to it as well as you could! This denies both employee and employer of potential and thus incurring opportunity cost. Role match is all about the power of employee potential! A business will increase its longevity chances and an employee will increase his or her chances of being happy if passion is felt for his/her work. This is one aspect of sustainable capitalism that applies to all walks of life, not just in business and not just for the lucky few.
• ·      Know the landscape. Business ethics are about doing the job right, but what if the operating environment is making good business ethics ‘restrictive’ or impossible. Big decisions that save the day don’t always get made and the results can inadvertently strangle industries as much as companies. Unethical behaviour and the lack of effective regulation in financial markets gave rise in 2007/08 to a globally impacting shock wave, which hit multiple industries and societies at large. The serious lack of ethics in some quarters had a huge impact on the financial services industry with lower levels of high-level talent entering the industry afterwards and serious questions remain over regulatory approaches to try and make sure it does not happen again.  In the energy industry, oil rig and refinery disasters have raised serious regulatory and safety issues, which are not for the faint of heart.  What if good business ethics drove the big decision in the right direction at the right time? Where would we be today?
• ·      If it doesn’t feel right at all, don’t do it. There is nothing worse then being promised the sun, moon and stars and then be asked to do something that you are not comfortable with. You may have a charismatic leader pushing you into it but don’t be fooled, its your ethics, not his/hers that‘s in question if you don’t put the brakes on. In such cases, seek clarification, slow down the process of request to acceptance to allow you to map out the consequences of such a request. If it’s reconcilable with your core values and beliefs, then I would proceed cautiously, if not, then I would decline. “A stitch in time saves nine” and seeing into the consequences of our actions can save us untold misery into the future even if it comes at a price in the present.
• ·      What do others think of your company and its business ethics? When the opportunity arises, I advise folks to build their digital brands, which gives an individual good navigational skill in social media. It’s a great vehicle to see how others perceive your company’s business ethics. Glassdoor is a dedicated site to employee reviews of their employers and one worth visiting even as a current employee to see how others view your company’s good practice and policy conduct. There are many other resources to investigate your companies current ethical standing which I advise all to use including mass media news sites and social media sites like LinkedIn, Google plus, Twitter, Facebook and U-Tube. I would also look up company earnings reports and hear about plans for the future as presented to potential investors. Does it chime to what you know about the company and what kind of picture does all your research present to you?
• ·      Once is never enough. Repeating this exercise at least once every two years is advised to account for the one certainty in life, which is change. It excuses no one from its grasp and leaves nothing else ‘fixed in the sand’.

The net result of your research is the positioning of the company on business ethics to your personal ethics, values and beliefs. Is it closer or further way then it was the last time you researched it? Do you see the latest result laying out a future path that will make you happy, content, sad our outright miserable? Can you adjust making any negative effects temporary? Do you want to adjust? Companies are like people, if the ethics are good, the person is good… if they are bad or just incompatible, the only real solution is for you to change, or they/it to change. Practicality has to determine your next steps, which should be carefully considered.

When you know, then you are then in a position to think “beachfront” at your current company or a new company where your company’s business ethics are good enough to have an operating space where you can work with the sun shining warmly in your face and fair winds guiding you forward through your career in life.

Trading Internationally, are tomorrow's risks today's opportunities?

True North? Are we sailing in the right direction?

We love the world we live in! With tea from India, chocolate from Belgium and computers from the United States delighting us as consumers, what is not to love about our world? What is easy to overlook however is the incremental cost of such delights. Is the framework of globalisation as its delivery vehicle a viable true north for us to sail towards in business and indeed as a society? Whilst the benefits of globalisation has transformed the world we live in which is felt nearly everywhere we go, this does not answer the kernel question for the longer term; is our developed model of globalisation a true north to continuous and positive development in mankind’s march through time? If so, how do we wrestle with the enormity of trading internationally and what can we do to better reap the rewards for trading across international borders?

One thing is for sure, its not the first time we have tried it! John Maynard Keynes talked of globalisation when he lamented of how a gentleman in London could be sipping tea from India before August 1914. Keynes in the 1920’s went onto talk of internationalisation and how it did not prevent war complicating the ability of nations to be self-sufficient. After the Bretton Woods agreement (1944), of which Keynes was instrumental in its draft, the transformation from colonial globalism to modern economic globalism, as we know it was complete.

John Maynard Keynes
Source: Biographyonline.net

Globalisation 101 defines globalisation as “a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology.” The more recent addition of highly impacting information technology has seeded a disruptor wave that is transforming the landscape, as we know it. For any person, small business or multinational, this brings great opportunities but only if one is astutely reading the global landscape and exercising information driven decision-making skills before venturing into international trade.

Thinking international trade, we often think big business, but if we are pursuing information and understanding, the resulting decision-making at any size or level will have increased efficacy leaving sustainable success as the likely outcome. In thinking about our “true north” in international trade, I believe we should consider the following elements as key in our organisational approach and management of our business in international trade.

Risk Management is key in gathering, quantifying, assessing, ranking and addressing risks, both positive and negative in relation to international trade. The focus on internal risk areas like company preparedness, supply chain length, financial risk, and organisational set up are as important as territory culture mapping, market demand analysis and risk assessments of any strategic entry into an international market. A business will never be successful if it cannot keep its promises to its customers and run its business in a solvent manner.

Geo-Political Risk should always be explored assessing impacting risks like the upheavals we have seen of late in many territories altering the trading landscape. The US/EU sanctions on Russia for its part in the chaos in the Ukraine is a good example why we should as international traders monitor geo-political risk and open up options in timely manner for remediation of identified risks.

Economic Risk is a reality for all businesses trading either directly or indirectly in the market place. After all, if your end customer cannot afford to buy your product, your business will not be successful. The macro economic indicators like GNP, GDP and Jobs Data are some good indicators of overall macro economic management of a country or territory. However, it's always advisable to dig a little deeper with activities like monitoring news outlets local to the territory to see what is ‘big news’ such as layoffs, potential strikes, new investments in business and local government infrastructure investments.

Currency/FX Risk is certainly an issue to consider if you are billing in local currency or have a treasury strategy that bill’s in a regional currency. Your investment in currency into your books through billing, FX purchases or complex financial products like forward contracts will bring loss and gain risks that your business needs to understand and integrate into its wider strategic plans for entry to the market place. For example, as the European Central Bank (ECB) is now considering minus interest rates on the already low ECB base rate, banks would be wise to reconsider their strategic plans and how they trade in the Eurozone given they could be subject to interest charges, not payments on the cash they bank on deposit. Another good example is the strict and sometimes volatile FX controls placed on foreign currency in China. Its impact merits consideration in any planning session involving the country.

Country/Trading Risk is another area to think about. How do you want to enter the market place? Are you sure of your demand side analysis? What are the pricing strategies for this market? Is it compatible with your supply chain and distribution model? Is indirect sales preference a temporary or permanent feature to be reviewed into the future? How will your branding be exposed and developed especially in an indirect sales model? What security will be required on the high-risk territories such as letters of credit, 3^rd party guarantees or more complex forms of security on trade? Will lengthening supply chains be an issue in the territory given its security and governance levels? Have you developed management plans addressing the identified risks from these posed questions?

Thinking about the main areas, the best way for entities big and small to start the process of collection, evaluation, ranking and output is to develop a risk register. Even on an excel spreadsheet, a risk register can be highly effective with the focus on risk classification (individual/group/aggregate risk), risk type (country/fx/internal/political/etc), risk grouping (link similar risks), risk weighting (what is the likelihood of it happening?), risk impact (the impact it will have on your business, financial and non financial). The other side of the risk register is the evaluated risk management response which should be acceptance (deal with it when it arises/reserve funds or resources for the eventually), mitigation (take steps to reduce the impact and/or risk weighting to acceptable levels), sharing (involve 3^rd parties whom can lower the level of risk you are exposed to) or rejection (risk is too high therefore you cannot proceed to exposure the company to that element/point).

This type of information driven approach will inform us of our ‘true north’ in trading internationally. The resulting outcomes will be based on a higher level of awareness and understanding, which can only herald greater success probability. So when trading internationally, I submit that if we all take greater care with our risk management approach, less will get trapped in the pitfalls and more success will befall those whom embrace information driven decision making and in enough numbers can alter the course and trajectory of our societies true north in international trade making it safer, more informed and less subject to humanities dark side that is as clandestine as it is plentiful for the international trader.

Asset or Liability? The power of employee potential!

At the helm or out to sea??... How companies value and utilise their employees..

We have all heard the horror stories, the angry elves complaining about the boss and the company, which are the lead weight on their very souls! We cannot say all complaining is whining but when one complains incessantly, we often think of the quote from William Arthur Ward when he said, "The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails." So we tend to discount the content of the complaint by the employee and move on with a lower opinion of the employee in reality and maybe an undiscovered source of discontent.

It’s all well and dandy if there is no substance to the complaint or a real will to get the best out of one’s team members. However, as leaders, we are obliged to achieve performance levels with our team(s), which is no easy feat if the winds of discontent and subsequent disengagement sweep silently through our team(s). Not only should we address such issues in private with our team members, we should be mindful for such discontent in our teams through close relationship ties with our people whom often offer up information on such issues that we might not otherwise have known about.

When thinking about our team issues, we should widen our thought process and honestly self reflect; thinking about our leadership impact, corporate leadership styles and guidelines (formal/informal), the department workloads and process requirements, company culture and most importantly, how all this merges with how employees are perceived by the company… are they treated as an asset or a liability?

Business case studies.co.uk have a posted article that suggests employees consider their leaders/manager to have a style that is not engaging. A survey analysis concluded that 21% of managers are perceived as autocratic by their employees, 16% are bureaucratic, 7% are innovative, 9% are trusting, and 7% are empowering. These numbers in my opinion contextualise the low level of leadership efficacy out there in the marketplace in terms of employee engagement, which brings us back to the kernel question, does our company value employees as an asset or a liability?

To answer this question, we must think of what role the employee is in the organisation. Is it a value creator role or a fulfilment role? This is a start in assessing what kind of organisation we are leading in and if it’s the right one for us. Referring to my prior article on company culture, we should not underestimate it in determining our leadership efficacy and how we can adjust to increase it whilst retaining our ‘core inner selves’. Bearing the above in mind, we should then ask the following questions:

• ü  What kind of company culture does our organisation have, does it support our leadership style and how does it treat employees (value creator or fulfilment role)?
• ü  Does the company have a prescribed leadership style? If so, are all leaders above and below us practising it or has a sub culture(s) evolved where different leadership styles prevail altering the company culture and operating environment?
• ü  What kind of prevailing practises are affecting one’s leadership ability and are they predominantly positive or negative? Can they be adjusted to allow one room to operate more effectively in engaging with one’s team(s)?
• ü  What actual company culture exists, leadership practice predominates and business practice runs our life as a leader? Is it consistent and does it help engage or disengage our team members with the organisation and with us as their leader?
• ü  What kind of improvements in employee engagement could one make if we altered our approach? Would we compromise core values to be “more effective”?

When thinking about this, one arrives at a picture that defines the organisation and contextualises the value proposition the organisation places on its employees.

In general, one should note that companies, whom are more autocratic by nature and hierarchical in structure, tend to value employees in terms of “doers” and “fulfillers” of roles.  This ‘command and control’ structure leaves little room for two-way communication and other leadership attributes that engages and empowers employees. Successful leaders in such companies inadvertently devalue employees whom are not peers, superiors or revenue generating in sales seeing them as “cost centers” especially at budget time. This “liability” view of employees empowers the few and dis empowers the many especially in large organisation’s where the cumulative effect of employee potential is material when one considers the disengagement of employees from companies whom by design tend to devalue their perceived inputs to that of prescribed service providers.  

Companies with strong hierarchical structures don’t have to be like that. With a little focus and allot of commitment from the top down on cultural and leadership change, autocratic leadership can be augmented with more consultative leadership traits such as mentorship, approachability and controlled two way communication where the rules of upwards communication are seamlessly sewn into a changing company culture and a leadership change management plan. One could with the right plan, support and commitment tap into the unexplored employee potential that is within one’s walls reaping untold rewards for successfully engaging a wider segment of employees whom feed into the operations strategy and direction of the company.

Companies whom value their employees as “assets” by design tend to have thought long and hard about areas like company culture, leadership and business practice as their business is very dependant on engaged and empowered employees thinking like owners in their daily work lives adding value in service quality, new ideas and commitment to the companies vision, work practices and inherent company culture solidifying the company’s sustainable future. The rewards at times can be hard to quantify but are evident in many successful companies in the technology, social media and aviation industries.

Determining a position on what role the employee takes in one’s company is a chance to build something great in a company whom becomes great by the people within its walls each and every day working to a common goal that can be as sustainable as the company wishes it to be. I return to Lao Tzu’s quote where “a journey of a 1000 miles begins with a single step”. If everybody takes that first step together, a new journey of creation begins arriving at great stations of success along a long and sustainable path a company can proudly call its history.

A Case for Sustainable Capitalism...

Tomorrow’s direction today…

Capitalism! It’s a term that strikes a note, both positive and negative in us all. Does capitalism have to be bad? Can it be good? Should we care? Given the amount of layoff’s, cut backs and insolvencies through one of the worst recessions on record, I’m quite sure I am not alone in pondering such thoughts. Capitalism is defined by the Oxford English dictionary as “An economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state”. Whilst a broad and encompassing definition, we can say for sure that free market forces have being playing a part in our lives for as long as merchants have existed to barter goods, services and ideas.

Economic Lifecycle Graph

http://www.tutor2u.net/business/strategy/economy-business-cycle.jpg  

The organisational element of capitalism has made it a key driver of success and failure in the economic cycle, which can be represented graphically showing cyclical 'boom to bust' and back to "boom" again.

Capitalism’s drive forward as impressive as it is, has to evolve in my view with the changing world. It must deliver a state of balance in its operation if it’s to continue its epic fellowship alongside mankind whom by our existence are embarked on a long and often testing journey of discovery and growth. It’s my view that this has given many (including myself) a whole new awareness of capitalism and thus we all can see the rebirth of a longer-term stakeholder approach to life and business we call “sustainable capitalism”. In the business section of the Huffington Post, Al Gore defines Sustainable Capitalism “as a framework that seeks to maximize long-term economic value creation by reforming markets to address the real needs of all stakeholders while considering all costs”.  When we think of capitalism in it’s dominant form of today, we think of companies living quarter to quarter who often disregard the longer term view thus destroying long term value in sometimes a direct manner but always compromising value creation in opportunity cost where a longer term view on investment of resources may yield a more sustainable return that is overlooked due to a more commonly held shorter term outlook. This should be considered not only in financial terms, but also non-financial terms such as our investment in people, processes, new product innovation and business culture.

Six Sigma professionals will tell you that lean processes structures only work in a business that embraces it fully, the returns manifest in a complete company wide adoption of the concepts. I believe sustainable capitalism works in the same manner. The journey in my view begins with beliefs, attitude, angle of approach to our business and what we gain from our efforts in the management of our business. If we want to engage our business for the longer term (5+ years), we must believe in our business and our ability to manage it for the long haul. If we don’t, then our chances of sustainable success diminish accordingly as our belief influences our attitude, which in turn influences our approach to our business. This “approach” we take influences company culture over time and the environment that can engage employees in the same belief or disengage them at an opportunity cost. When we think our business approach in terms of the above in said order, then we can think about how we (versus ‘I’) can create a better future together. Suddenly one mind becomes many and the positive power of employees, peers and associates thinking and acting as one unit shines through showing a way forward we all can buy into and travel together. This is the birth of one’s journey away from short-term focus to sustainable capitalism and the opportunities a good team could gain through:

Structural review of internal process and controls review and upgrade creating value through productivity gains. Lean Six Sigma is a good review tool for this exercise.

Strategic Planning redefinition of all business activities out to 10 years with certain elements like product, procurement and business development ranging up-to 30 years

Product Range Development - Lean development approach to continuous new product development along with consistent research into emerging markets and technologies that could aid product development and/or act as a product disrupter

Continuous risk management structures designed to gather, map, interpret and analyze internal and external risk elements with a clear impact rating system comparing risk probability and impact at agreed time lines with appropriate risk actions to be taken.

Business Culture built around employees but tailored to retain a lean approach to new business development and organizational efficiency. Its my long held opinion that one of the biggest long-term returns on ‘investment of resources’ a company will get is from being able to build a culture of collaboration and recognition of the it’s most valuable resource, which are its direct employees.

I’m sure you could add more and quite rightly so, but for now, I would ask that you consider the impact of Capitalism which has moved into a short term focus lens organically and increasingly needs a tonic for the overheads its creating as a result. Sustainable Capitalism is that longer-term tonic that rejuvenates the business recognizing the variable that can make it great in a sustainable manner, which is it’s people.