Gabriel’s scarcity rent - it’s management stupid!

I’ve just arrived from Delhi. In fact it has been 24 hours but, in the meantime, my mind kept wandering inbetween all kinds of different landscapes, smells and tastes until it settled back again. So many different faces, so many different paces: our hectic effort of preparing a presentation on the club lounge of a five-star hotel, the five-year-old child making his frenzied small monkey shout and dance to attract our attention and a few coins, the slow-moving cow trying to take a nap in the middle of the street and the agitated drivers trying to pass as close as possible. Definitely distances are measured differently in this huge place.

The billion cattle estimated to be alive today are more less one sixth of the estimated human population on Earth. The lucky ones live here, where they are revered and spoiled, where they can live tranquil and blissful lives, where they can thrive and be loved. It’s a wonder that there is no cow immigration process to this beautifully colored lands. If the other cows knew!

Humanity. This word takes new meaning here. So many people. We Europeans have tended to grow aseptic, almost inhumans. We hide within huge buildings of concrete, glass and steel, like the new terminal I’ve nurtured along with my peers, and we become insignificant below our not-so-functional monuments. We want them to serve as a rule to measure our cities and civilisation, instead of ourselves, our little selves.

In India you see so many people, so many happy -and not so happy- faces. The wonder is that it’s not easy to infer which faces will be happy and which won’t. Usually you won’t see that in the colours -or cost- of the robes. Humans… sometimes so happy owning nothing but conceiving nice thoughts… you never know.

This column, blog, page -whatever this is- wouldn’t be complete without the management reflection. And today it comes from Professor Geert Hofstede, of Maastricht University: “Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster.”

Are they? I’m personally a cock-eyed optimist and I tend to see the positive side to it. If we kept narrow mindedly to our own culture and background, the learning process would surely be impaired. Nonetheless cultural divergences must be managed.

As a reference, it is very interesting to examine Hofstede’s cultural dimensions, built from a handful of parameters:

• Power distance or the degree of acceptance of the less favoured members of one society of the inequalities they are subjected to.
• Individualism versus collectivism, or the degree to which the members of a society are integrated into groups.
• Masculinity versus femininity, or the degree of distribution of roles between genders.
• Uncertainty avoidance or degree of tolerance to uncertainty or ambiguity.
• Long-term orientation versus short-termism.

As an example, the former dimensions applied to the Indian, Spanish and British cultural dimensions, according to the available data by Hofstede. Of course generalisations are unfair, and the Spanish profile was never actually completed, but the exercise is still interesting.

Some weeks are so hectic that you simply don’t have time to write. And if you do, it’s not because you’ve had the chance to sit back and reflect about something, but because you have some free time in-between things to be done. That’s the case for today: a few free minutes.

The day began in Madrid, in the Indian embassy, queuing for such a simple and stupid thing as a visa. It’s incredible how certain processes are still done as the last century, or even the previous one. The fact is that if you want to travel to India from Barcelona, first you must go to Madrid to get your visa. The alternative is waiting around three or four weeks to have it.

And if you went there without a warning, you’d be astonished to know that they only issue a limited number of visas, clearly outnumbered by the people that need them. So the queue starts around two hours before they open. By the time they unlock the doors, there’s enough people waiting to fill the entire waiting room. If you arrive at ten, just forget the visa. Come back tomorrow (in Spanish “vuelva usted mañana” although the Indians speak more English than Spanish). And that’s the only way for the 46 million inhabitants of Spain to visit the 1,100-million-people country.

Well. I finally made it. I was sixth on the line. Then, to the airport to take a plane back to Barcelona. And from the airport to one of Barcelona’s marinas: the Olympic port, built for Barcelona’s Olympics 15 years ago.

From air planes to boats: time to sail. That’s why I am here for. I am to renew my sailing licenses and, following legal requirements, I need several navigation hours with a captain instructor. A good way to ensure that people actually know about boats before granting them the right to sail them. That’s what I am here for.

Time for the final comment. Where is management in all this? Well. Ask it to Captain Marcos Rivera. In a ship, there’s only one captain. Such affirmation is something that we tend to forget. Authority is not a very popular value these days. It is still necessary nonetheless. Someone has to decide. There must be someone in charge, asessing the risks, analysing and drawing conclusions, and then, finally, deciding.

That doesn’t mean that he (or she) is the only one to think. That would be a great loss of value, rationality, thinking capacity, a loss of options. Empowerment is still essential (and compatible), as it is dissent. But there’s a limit to it. And when the captain decides, the others must follow.

Have you ever felt that, in a project or a workgroup, the problem was that the decisions were not actually being made? Or being enforced? Have you ever felt that authority was missing? That indecision and ambiguity was undermining the whole execution? That’s when a good methodology for making decisions is needed.

There’s a time when every task becomes critical: just give it enough wandering time and you’ll see. IT comes a time when further procrastination is no longer possible. That’s when a chieftain is needed.

The exam was really stressful. More than three hours writing like crazy. At the end I was rather confused, not really sure of what to expect. Fortunately, it was over.

I sat the exam at Barcelona’s British Council. I thought it would be a better experience than taking a plane and driving to Henley. It was a good idea. The place is just ten minutes from home.

On the other hand it was rather weird to be the only one taking the exam. The invigilator was there only for me. At least he was nice and had a thick book to read so he didn’t spend three hours glancing at me in suspicion. That would have been awkward.

Half full or half empty, who knows. I hope I pass. In the meantime I just need some time to relax. And that’s what I did on the weekend. The garden needed my attention so I just focused on trimming the bushes and getting tired. Oh my, my arms got so bruised!

The view from home is rather relaxing. The weather wasn’t perfect. It was the fourth rainy weekend after the most severe draught that I can recall. From scarcity to the most rainy May in 25 years. Our water reserves have tripled and reservoirs have reached 60% capacity. It looks like we’ll have enough water for the time being.

I like it when the beach is almost empty, and the showers scare the tourists. The calm seems to envelope everything, the air is fresher, the plants greener. This spring the plants are blooming like never before. Let’s forget about the price of oil, the high interest rates, the lack of liquidity and the forthcoming stagflation. It’s time to enjoy… at least for a while…

The garden this year is full of Mediterranean roses. The plants grow by the hour. A good omen? I hope so.

As the average reader of this blog knows, and wordpress knows such individuals exist to my amazement (THANK-YOU), I do several things in my job, one of them is the integration of the baggagge system in the Terminal South (or Terminal D) in Barcelona’s airport.

Well, it used to be one of them… but it has been growing and growing, absorbing my time and effort, sometimes with complex things, of course, but very often with little and silly things, sometimes simply to overcome the lack of communications between parts in a huge project, sometimes just repeating the same things again and again.

Organisations prepare themselves to manage projects. They start shyly with one and, if they are able to envisage an strategy, they include project management into their capabilities. There are models to describe how project management competencies are integrated into organisational capabilities. Different organisations are at different levels, and thus are able not only to manage projects but also to increasingly learn from them.

But, at the end of the day, panic happens. That’s when they forget everything and start to triple-check everything based on the gut feelings of people, high enough in the ladder, that don’t really know about the systems to be implemented. Trivial things get inflated and strategic things suddenly obviated.

That’s what has happened to me with the Terminal 5 syndrome (to know more about Heathrow’s Terminal 5 click here). It will take some time to settle. In the meantime some issues have been enshrined as the most relevant by the organisation and are draining a lot of resources. Yes, organisations are able to learn a lot about project management but, when panic starts, they sort of regress to a previous state, top level managers want to micromanage what they still don’t know anything about, and reality gets distorted to adapt to the top management expectations.

A hard critique? Fortunately the tide is just a tide and we will be able to focus the existing energies on the real issues… having top management’s attention is very helpful as long you can manage it in the right direction, and to help you instead of interfering.

I was interviewed by Widget Finn for the Times, and she wrote the following article:

The disastrous debut of Heathrow’s Terminal 5 was a nightmare experience for all involved, but for Gabriel Mesquida it has proved a valuable live case study for his MBA dissertation.

Mesquida is a programme manager for Aena, the Spanish equivalent of British Airports Authority, that is in charge of the expansion of Barcelona’s airport. He is responsible for the coordination of projects in the information systems, communications and security programmes. His dissertation for the distance-learning MBA that he is doing at Henley Management College is on managing airports for the future, so he is watching carefully how the Terminal 5 saga unfolds.

He says: “Our terminal is similar in size to Heathrow, which is considered the plane capital of Europe, and I visited T5 several times when it was under construction. I was impressed, at the time, by how much detail they were going into over safety and they were scrupulous about everything.”

But when the terminal opened it became apparent that there would be other useful lessons to be learnt – including how to manage a meltdown. “An MBA has a foundation of theory but it should be practical, so having a live case study means you can watch events as they unfold and draw conclusions from them.”

The conclusions may be different when the case study is current rather than from a textbook comments Dr Richard Barker, director of MBA programmes at Judge Business School. He says: “One of the benefits is that you don’t know the outcome, which simulates the management situation more effectively. With a five-year-old case study there’s a result to the story which is difficult to escape. You can look at different options that management had at the time but knowing what happened influences your ability to assess the case.”

Mesquida is already putting into practice some principles of leadership from his MBA that were highlighted in the Terminal 5 episode. He says: “Resources are important, but people are far more so and leadership is everything when you have a flock of people wandering around a huge new infrastructure. However carefully you prepare, the unexpected can happen, and that is when your staff should have the flexibility to use their initiative. If the company has a blame culture people will be reluctant to take risks or do anything except cover their own backs.”

Durham University Business School uses live case studies in boardroom simulation exercises where students focus on a real company. Dr Julie Hodges, director of MBA programmes, explains: “They look at the strategic data, where the company is now, what challenges and issues it’s facing, then students come up with recommendations based on the information.” But textbook cases also have their value. “These give an historical perspective so that the issues can be put into context. More data is available and we can identify the medium and long-term lessons.”

Textbooks’ case studies are polished, tried and tested so they are easier from a teaching viewpoint. Barker points out that they are also pigeonholed into subject areas. “They may be labelled a strategy or marketing case, which isn’t always obvious when you’ re trying to deal with something in the boardroom.”

He can predict some of the labels that will be put on Terminal 5. “I see it as an operations management case – make sure your operation works before you start overloading it, or a people management case – train your people properly and handle recovery situations effectively.”

Mesquida agrees that more lessons will emerge from Terminal 5 as time goes by, but together with his MBA learning, it is already shaping his decisions for Barcelona airport. He says: “We need performance indicators and a more systemic approach. Stakeholders and users shouldn’t have the impression that you’re out of control or they’ll feel abandoned. They must be kept fully informed of what’s happening and how you plan to remedy the situation.”

Terminal 5’s launch onto the world stage may have been a fiasco but, clearly as a learning resource for business students, it will run and run.

Thank-you Widget

In these days of reviewing information, I came across a classic (yet again) and I thought I could share it with you, albeit in a summarised form. These are Jeffrey Pfeffer’s thirteen practices that any manager should take into account. Of course they express a certain point of view based in a set of assumptions, but even without their context is quite safe to assume that all of them are sound propositions. The following interpretation is, of course, only my interpretation.

Jeffrey Pfeffer is a professor of organisational behaviour at Stanford Graduate School of Business.

1. Employment security because if you want commitment, make sure you’re sending the right signal, otherwise don’t expect people to be loyal to the company while their peers are being laid off. If long-term trust has to grow, it must have a solid basis.
2. Selectivity in recruiting which is not only for the obvious reason that we need good employees, but also because people like to be in a restricted club, to belong into an elite. From high expectations high performance might grow, but not otherwise.
3. High wages are a measure of how the organisation values its people. Given the fact that labour costs have diminished their share of total costs, it may still be possible to pay reasonable wages in many companies that have chosen not to do so. Let’s not forget that wages come in many shapes and sizes, and it’s not only money they entail but also recognition, fair treatment, or that extra help for personal circumstances. Or aren’t we asking the employees for that extra mile?
4. The pay should be related to the company in the way of an incentive pay. It could be tied to benefit, or the economic value added in any unit. That way we have remuneration aligned with strategy and a lot of self correcting processes may happen all along the organisation.
5. Employee ownership of shares is another way to align employees with shareholders, to transmit a long-view perspective throughout the organisation. In this sense it’s important to remark that employees will have a conservative approach with its shares, protecting the company from outsiders or standing in the way of market efficiency, that depends on the point of view applied.
6. Information sharing is also important. Do you want employees to share the company’s concerns while being in the dark at the same time? It doesn’t sound reasonable to me… and probably at the same time our competitors, that also know a great deal about our (and their) business, already have the information.
7. Participation and empowerment is a long forgotten one. We all talk about participation, but we do not actually put the measures in place to enable empowerment. Don’t treat people as dumb followers and then expect them to have initiative, to be entrepreneurs in the face of danger. They won’t.
8. Self-managed teams mean that people will have to actually manage themselves, and thus will have to find the way to co-ordinate and monitor what’s happening. But don’t just leave them alone and blame them in case of danger, exerting even more pressure than what they have, try to help them instead.
9. Training and skill development is also a tricky one. In order to enable workers to use their new abilities, the organisation needs to learn and evolve too. Don’t try to improve the skills of a mouse in a box but give it a nice maze instead. Align responsibilities with the development of the abilities needed, and then make both accountable.
10. Variety can be boosted with cross-utilisation and cross-training, and variety can be another way to reward people and to help them learn. It also gives the company a chance to improve job design and job transitioning, which, if trained, can help easing the company’s pain when losing a talented employee.
11. Symbolic egalitarism is one that could be argued against in many places as it might go against rewarding certain things (eliminating symbols will probably be resisted everywhere), but it also enables the organisation to increase the fluidity of its information: the sense of equality and community unites people, and united people talk more, think together and face the challenges united.
12. Wage compression also relates to egalitarism. While it seems it might be against “high wages” it is not, because it’s referring to reducing the distance between the management elite and the rest of the organisation and will spread the feeling of common purpose. Thus, less energy will be spent to fight for individual privileges and more in the well-being of the whole company.
13. Promotion from within is an additional reward that glues the organisation together and takes trust up to more senior levels of the organisation. People that come from the bottom of the ladder care about what they are managing, as opposite to seeing cold figures. On the other hand it can be argued that the zero based unemotional approach is also useful for an organisation as well as new practices brought by new entrants.

Have you wondered what actually makes a good manager? Is it something that is taught at business schools or is it something more?

Why some people have that ability to make others follow them and others do not? Is it credibility that makes people follow you? How can you grow trust and dependability.

Well, there’s no easy recipe based on power point files or blog passages, but there’s a couple of things that always work:

• Because you care, and people know that you care.
• Because you also do it, and not in some kind of gimmick, but wholeheartedly.

When you care and you lead, people will follow.

Given that, it makes me wonder how is it possible that organisations spend so much money in education and training, and so little effort in following how people really behave, how they lead, how they care.

There’s a because to that: we always prefer what is measurable.

Tell it to Kaplan and Norton when they were conceiving the balanced scorecard! Hard financial measures versus soft data such as feelings and perceptions. The hard data is in the books, in the balance sheets. It’s already there, and relatively undisputed and objective. It’s the easiest building block for the diagnose of the company. But it’s only a single point of view, and focused on what has already happened, focused on the past.

In education is exactly the same: it’s always easier to stop at the happy questionnaires at the end of the seminar. Albeit they only take soft measurements, they are easy to gather.But what do they actually gather? They are also focused on the past, on the educational experience, on what has already happened. The rear view mirror.

Following the application of what has been learned at the latest educational experience should be a must for every company. Why throwing away all that investment if you don’t measure the results? Accountability should be the norm for everyone that learns something.

That’s the deal: your company has channeled a lot of resources to give you a chance to learn, now it’s your turn to change, improve, to change the way things are done around you. You change yourself, make yourself accountable for the change, and then it shows.

In light of a recent experience (yes, I’ve been rather busy these days) I’ve been thinking about the difference between human capital and organisational capital (organizational at the other side of the ocean, of course) and how that difference impacts into everyday work.

Let’s first use the books. When defining human capital, Bontis et al. propose the following:

Human capital represents the human factor in the organization; the combined intelligence, skills and expertise that gives the organization its distinctive character. The human elements of the organization are those that are capable of learning, changing, innovating and providing the creative thrust which if properly motivated can ensure the long-term survival of the organization.

While if we focus on organisational capital (also called structural capital), and quoting Yondt this time:

Organizational capital is the institutionalized knowledge possessed by an organization, which is stored in databases, manuals, etc

As you can see there’s a difference there, a huge difference. This difference can be named as the human factor. For there’s a difference between the knowledge that the organisation owns and contains, and the knowledge, skills and abilities that every worker possesses. It’s not only a matter of accounting these different sets of knowledge as assets or not, as I reflected in my last post HRM and the triple bottom line (do we really believe in people?), there’s much more than that: the effective use of that knowledge is far more important.

Because the employer-employee is not a simply-transactional one-way relationship (at least we can say it no longer is) but a sophisticated dialogue between different entities, an usually effective interchange inserted in the complex framework of the psychological contract.

The psychological contract is a useful construct that reflects the true relationship of the employment contract as assumed by the different parts: what we really expect, what we have understood we should expect, how we agree our post has been designed and our responsibilities are, and many other things that, albeit not written anywhere, are, sometimes unconsciously, stored in our minds.

If our psychological contract is breached, what will become of our knowledge? It won’t be as readily available to our company as it used to be. In fact that’s a moment where the organisational capital will be as available as always, but the human capital simply won’t.

The human factor means that we can make choices. And the drive of those choices can range from self-interest to commitment to your organisation. This commitment modulates the real availability of human capital for the organisation.

That’s why treating people right is so important. In a zillion of a second the most committed employee can turn into an alien counting the minutes until eating-time. And it is, and will be, the responsibility of her manager to make the right decisions, in the right timing, and using the right way to do things, whatever that is.

You can’t be a good manager without caring about people. You simply can’t. As good engineers must love the systems they are designing and good teachers must love what they teach (and children too), people that are managed must matter to the manager. There’s no other way.

I’ve blogged before about hard and soft human resources management, about the Michigan and the Harvard model, about to paying lip-service to it and the gap between theory and practice, and even about commitment (to commit or not to commit). But the more I think of HRM versus the old paradigm of “personnel management”, the more inconsistencies I detect.

Because if people was that important, it would be somewhere in the so called triple bottom line of the company, made of finance, social corporate responsibility a.k.a. CSR and sustainability a.k.a. our carbon footprint.

I feel that HRM is surprisingly absent of the triad.

But if we are to believe that people are our greatest asset they should be at our triple bottom line somewhere. Or even in several places.

The first place to look could be in financials. Maybe we could find our people in-between assets? I do not think so. After all assets are usually accounted at acquisition prices. And, fortunately, people are no longer acquired in the slave market. Consequently people are not assets for any company. Not anymore.

Where are those fundamental assets for the competitive advantage of the organisation? It’s funny to point that, not being assets, our relationship with our company is actually accounted as an expense. And some related concepts, such as our pension funds as liabilities… (wait, that’s not true, the pension funds are one of the main sources of creative accounting… where finance becomes an art. I’ll write about this another day though…)

In any case, it’s quite clear that our skills and abilities are not on the assets list. Neither the real value of our relationship with our company. Even when the opportunity cost of our leaving the company can be measured with the cost of recruiting our substitute, the cost of training her, the cost of the information the organisation is going to lack now, the cost of under-performance for our customers and many more.

But when we, employees, were encouraged to pursue our own learning and self development, it was clear that those assets would consequently become ours. So there’s nothing wrong with measuring assets that way. We are just another provider in an increasingly complex and atomised supply chain. Maybe we can still be in the second or third bottom line. Around corporate social responsibility, as stakeholders that we are. After all shareholders are only entitled the rights to the residual earnings, after the employees, the creditors and the state.

Let’s wake up. CSR and carbon footprints are only valid arguments when the company is earning money. But there’s only one bottom line: finance. And after that bottom line and before the second and the third there are still other business priorities as well as short-termism, insufficient resources allocated, resistance to change, and distrustful organisations. A huge gap that can’t be easily bridged. At least not with rhetoric.

This week I’ve been listening to Cole Porter’s songs while driving to work.The Mobile World Congress 2008 has been clogging the traffic around Barcelona these days. Believe me, that has meant that I’ve had a lot of time while going to the airport. I happened to record a CD with a lot his songs and, one of them, simply surprised me: an unexpected snippet of wisdom.

It’s related to what I call ossification.

Ossification can happen in organisations, or to people. We tend to get used to the same thing, that we do increasingly efficiently.

Don’t you wish you were given the same assignment, the same topic, the same customer year after year? That would surely boost your ease and ability to achieve it. The customer would get to know you better and better… more trust, and you’d face that fright to a blank sheet no more.

But, as every good thing in life, that would also come with a trade off. You’d become less versatile, less adaptable.

You’d build muscle, yes, but your joints would calcify, become increasingly stable and unimaginative. You’d simply trade safety for vitality, stability for adaptability.

That means that not only your profit would increase but also your costs, albeit you wouldn’t perceive it, specially your opportunity costs (the gains you could have obtained if you had chosen the best available option). And your employability would decrease.

Finally, on the long run, there would be an expected outcome, that would not be the best possible outcome. Just imagine.

The treatment… that’s when Cole Porter, a composer and song writer that was born in 1891 and died in 1964 comes into play. There’s a simple but sound advice in this song. Think and reflect about it.

You all have learned reliance
on the sacred teachings of science,
so I hope through life you never will decline,
in spite of philistine defiance,
to do what all good scientists do.

Experiment,
Make it your motto day and night.

Experiment,
And it will lead you to the light.

The apple on the top of the tree
is never too high to achieve.
So take an example from Eve.

Experiment.

Be curious,
Though interfering friends may frown.

Get furious,
At each attempt to hold you down.

If this advice you’ll only employ,
the future can offer you infinite joy
and merriment.

Experiment,
and you’ll see.