It was last November just before the election and the assembled dinner guests were about to sit down. The hostess had been working for the re-election of her local National MP. What would be Jenny Shipley’s fate? they wondered. “Well,” said the hostess, “unemployment has come down and we’re set for strong economic growth next year. That should be good for National.” But, her husband, the chief executive of a large enterprise, interrupted: “Business does not want low unemployment. Business wants high unemployment. That way, we can keep the wages down.” He was known affectionately by his dwindling members of staff as “The Young Master”. Imagine the arrogant family heir astride a sturdy black stallion, long leather whip in hand, ready to beat an unruly slave in the South Carolina cotton fields and you get the picture. “Young Master. He be ever so clever, he be,” joked the office wag. As commentators look for reasons behind New Zealand’s poor economic performance, the quality of the country’s management has come under focus. And in my experience, it is often far from clever. I have worked for a variety of employers, both good and bad, and have myself been a manager, adopting a variety of styles to suit the moment and my beliefs at the time. When I arrived back in New Zealand three years ago, my first job was at a small provincial start-up. It was set up by two women who had no money and no previous experience of the type of business they were setting up. One day, getting into one of their cars, I noticed the registration and warrant of fitness was somewhat out of date. “We can’t go in this, it’s illegal to have no current WOF and reggo,” I said. “I’ll get it sorted when I have some money. You have to put food on the table first,” came the reply. The penny dropped. Here was a woman who was employing people, starting a business, buying equipment, and she hasn’t a bean. Her house was rented and even the car was bought on loan. A few days later came confirmation. On her first day, the accounts clerk discovered the business was already trading insolvent. Fortunately, investors came on board and the business staggered on week to week for a further six months before final closure. Not long after, I worked for a family firm. They had sold their shareholding in their main family business to overseas interests, yet they still liked to "dabble" in the trade. They employed me in another part of rural New Zealand and ordered me to modify their product to make it match what they offered in the city. But the people did not want their product, neither in the city nor the country. The city business closed after losing much, much money, and after pressure from myself and other staff, the country business cut its losses by reverting to pretty much to as it was before. The Young Master, who was part of the firm, also had plans to expand the rural business into other areas. But this new area was so different to the existing one. They had nothing in common and the expansion seemed doomed to fail. I warned Young Master, advising him to change his business plan and "localise" the product more, but he did not listen. Thus, like soldiers in "the Great War", we marched forward into the trenches, only to be mown down by sniper fire. I left that company, and not long after, the expansion was reversed. All it did was double outgoings for no extra return. The original, rural business narrowly escaped closure and is now but a shadow of its former self. What can we learn from this? Essentially, management is not infallible. One of the weekend papers last week spoke of the problems facing companies if they operate in a "reign of terror". If workers are too scared to speak out and say what might be improved, the business is inevitably doomed. Had Young Master taken note of what people told him, his expansion might have worked, or he might have saved a few dollars by aborting it in the first place. He had already been proven wrong on one score but only the brave or foolish would say as much. It also helps to have money – and appropriate experience - before starting a business. The two women had neither and thought they knew it all. Funding is vital. I’ve since been told that back-up of six months' outgoings is needed to help a start-up survive. If you don’t have it, you are probably already doomed. Relevant experience is also essential - and you certainly do not get it through a simple accident of birth. If you don’t have the right skills, yes, you can go on courses, but there is no substitute for experience. And certainly listen to your own staff. Do not be afraid to accept they may know more than you. I wasn’t. There are certainly more tips that staff can offer bosses, but my space is limited. And, yes, this may seem like teaching Kiwi bosses to suck eggs, but sometimes you have to at least show them the carton.
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