A letter from the CEO you should have had

CEOs have not valued their employees equal to the rest of their stakeholders.

Today I write the letter that your chief executive should have written to you. I’m assuming you are a man, but it is the same for a woman. Well, most of it, I won’t get into the issue of sexism as that would require whole volumes.

Dear Employee,

I would like to apologise to you. The past three years have been challenging, stressful and, quite frankly, confusing. It is a situation that I have never seen before, that no executive can be prepared for. This situation has created multiple dilemmas for me on how to manage the company. I have focused on profits, I have focused on the board, I have focused on shareholders, I have focused on suppliers, I have focused on clients. To my greatest shame I have not focused on you.

Did I start this letter with “Dear Employee”? I should have said “Dear Valued Employee”.

To apologise and to make amends I must first walk you through what I faced. In mid-2014 oil prices dropped fast. These things happen. It was a point of concern, but not much. All media reports and announcements from the relevant authorities pointed to a short-term price correction. Every indication was that the oil price would recover back to over US$100 per barrel within months. Continue reading

Lack of Transparency in Senior Dubai Executive Departures

Last week saw the unexplained resignation of two senior executives, the chief executive of Jumeirah Group and the chief investment officer of EmiratesNBD.

There are several pertinent facets to these announcements. First, both seemed to be abrupt as there was no permanent successor named in the reports. Second, both left after a relatively short tenure, with both executives having had taken on their roles in January 2016.

In the case of Jumeirah there are a number of relevant organisational changes: the chairman joined from the parent, Dubai Holding, in March and who in turn appointed Dubai Holding’s chief executive to “run the [Jumeirah Group] business together” with an interim chief executive from within the group. When a chief executive leaves three months after a new chairman is appointed to the parent, there may or may not be an issue. When the chief executive of a parent is sent in to co-run a subsidiary business the implications are not usually positive. Add everything together and one might consider the scenario that the board had lost confidence in the chief executive.

The matter with EmiratesNBD’s chief investment officer CIO has less going on around it but the short tenure with no prior succession planning does not augur well.

Here is my fear: are the decision-makers in these cases clear on whether the issue is with the executive or if it is simply an unavoidable consequence of our challenging economic times? If it is the latter then boards and CEOs could create unnecessary employee turnover and lose the very people who have information to help the company.

It is difficult to ascertain if this is going on as there is not enough information. This lack of transparency is unfortunate in the case of EmiratesNBD, a publicly listed company that is the second largest bank in the country and regulated by both the UAE Central Bank and the Dubai Financial Market. As Jumeirah is private there is a lower bar in terms of transparency, but if Dubai’s sovereign wealth fund the Investment Corporation of Dubai (ICD) can adopt global best practice for corporate governance and publish audited financials then I don’t see why other private entities could not adopt the same philosophy. As an aside, ICD is also the majority owner of Emirates NBD, the bank could learn from its largest investor.

This article was originally published in The National.

Compensation Foundations: Long Term Incentive Plans

Compensation Foundations: Long Term Incentive Plans
This entry is part 4 of 4 in the series Compensation Foundations

This week’s column is the third in a series that I co-author with Ray Everett, the chief executive of Aon Hewitt in the Middle East.

In our previous articles we spoke about salary – what you give people to show up every day, and incentives – what you pay them to do their job well. In today’s column we’ll cover Long-Term Incentive Plans (LTIPs) – what you pay people to do their job well over the mid to long term. Continue reading

Compensation Foundations: Designing an Effective Incentive Plan

Compensation Foundations: Designing an Effective Incentive Plan
This entry is part 3 of 4 in the series Compensation Foundations

This week’s column is the second in a series that I co-author with Ray Everett, the chief executive of Aon Hewitt in the Middle East. In the first article we discussed job identification, job grading and linking it to pay.

While people are paid salaries to do their job, incentives encourage them to do their job well. Nothing is more emotive in people management than communicating incentive numbers – people can be upset, happy or (as is often the case) neutral.

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Compensation Foundations: Grading and Job Evaluation

Compensation Foundations: Grading and  Job Evaluation
This entry is part 2 of 4 in the series Compensation Foundations

This week’s column is the first in a series that I co-author with Ray Everett, the chief executive of Aon Hewitt in the Middle East, a position that he has held for the past year, and Asia-Pacific and Middle East and Africa regional head of McLagan (a division of Aon Hewitt focusing on financial services). Aon Hewitt is one of the world’s pre-eminent human resources consulting companies and I have worked with it in the past to help me unravel one of the toughest issues that I have faced in building and managing various businesses: how to think about compensation when recruiting and promoting or awarding raises and bonuses.

This area of business haunts many managers, starting with how much to offer when recruiting. The widespread approach of simply asking for a salary receipt from the candidate’s employer is simply an admission that the hiring company has little idea on how to think about pay. The extension of this ad hoc approach to raises can lead to unfair pay differentials that are not based on merit, which harms morale and the company.

In short, the more opaque or uncertain a decision-making process is, especially with regards to human capital, the greater the damage to the company, most notably via low morale and difficulty in hiring and retaining top talent. The answer is a transparent, well-defined approach.

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What makes for a Happy Workplace?

It is thought that happy employees improve the performance of a company. This has been championed most publicly by Google, with its large assortment of toys, break rooms, food and beverages, services and transport for employees.

But is this concept correct?

Although it is relatively clear that unhappy employees would be harmful to a company, this does not necessarily imply the opposite. And it is even less clear that just giving workers goodies will bring them joy, either.

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Strategic Downsizing

I have been involved in downsizing at many companies and have been exposed to both the theory of downsizing and the horror of the reality. In today’s business environment we are seeing faster downsizing than usual, but in many cases still not the most effective approaches.

Where senior managers and business owners make the biggest mistake is in understanding their biggest risks in these scenarios – morale. The problem with morale is that it takes time to build and is easy to shatter. The idea that damage to corporate morale can be quickly regained is false and leads to counterproductive strategies.

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Employee Operational Skills

Developing and emerging economies go through a known cycle: export of local products and commodities, FDI including agencies and technology transfer.

But what about human operating skills? What use are large amounts of foreign investments, the factories and infrastructure that they build and the advanced technology that is imported if worker operating efficiency does not increase to match the advances in all of the other facets of the economy?

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The Absent Manager: Not a Mythical Creature

The absent manager is someone most of us have worked for at some point in our lives. Let’s see how to recognise them and the only choice in dealing with them.

A manager can be absent in two ways. The first is to be physically absent. The second is to be mentally absent.

It is not easy to identify the physically absent manager as it is not simply a case of not showing up to work. Managers can be physically absent and still seem to be working quite hard.

One scenario is simply to be out of the city/country ostensibly going to training courses, conferences, marketing, due diligence trips and international client/partner/vendor visits. Although such trips can be useful they are not necessarily the best use of a manager’s time and certainly should not occur frequently.

The second scenario is similar but occurs in the same city as the manager’s office. Here the focus switches predominantly to clients. Again, a manager constantly visiting clients pitching the products and services of the company and trying to close deals is the normal course of business. On the other hand if the manager meets with clients with no specific agenda tied to identifying revenue producing opportunities then it is a waste of time.

There are many warning signs to meeting clients as a replacement for real work. This includes meetings that occur in coffee shops instead of the client’s premises. Why on earth meet in a coffee shop? There is no privacy, there are no resources to support the meeting and it is never quiet. Worse is the manager who spends his whole day wandering from coffee shop to coffee shop, an executive nomad, filling his time in between scheduled meetings with other ineffective managers swapping gossip and who believe coffee shops equate to managing. One almost wonders if the revenue of the local branches of Starbucks, Costa and Bateel aren’t a negative indicator of management effectiveness.

An internal warning sign is when a manager spends the whole day in coffee shop meetings but at the end of the day does not generate any action items. A natural consequence of any meeting is to produce minutes of that meeting highlighting decisions made, potential revenue opportunities and action items. This should happen for every single meeting. So a day filled with six coffee shop meetings and a lunch should end with several hours writing meeting minutes, reflecting on opportunities and identifying action items. Instead it seems that the only outcome of all that coffee is frequent visits to the restrooms.

The third and final choice that a manager has to be absent is to be physically present in the building but not present in the relevant offices. I do not know who cursed us with the concept of “management by walking about” but there is nothing effective about that other than to give absent managers legitimacy.

There are exceptions as always such as trading floors or factory floors where real-time work in an open space can be observed. However in most cases employees work singly in offices or cubicles and just randomly dropping in adds no value to the employee and provides no insight to the manager. Instead it gives an excuse to the manager to socialise with employees and usually waste their time. Sadly, anecdotal evidence points to attractive female employees as being the most likely target of this tactic.

One step up from this is meetings. Nothing gives the incapable and incompetent a better sense of fulfillment and accomplishment then attending a meeting. Warning signs include frequent ad hoc meetings (a week’s notice should be a minimum requirement), lack of agenda, lack of advance material, a goal other than to reach a decision (such as updates), lack of action items, lack of circulated minutes, etc. Again, these are not hard and fast rules but a pattern of such behaviour is a clear danger signal.

If you do manage to corner a professionally absent manager that doesn’t mean that you will get anything useful, especially if you are looking for a decision. The defensive judo skills of the absent manager include “Did you get sign off from the following 36 people?”, “There isn’t enough data, get more,” “Let’s run it up the flag pole” and the dreaded “Leave it on my desk.”

Entertaining as it is to talk about the absent manager, it is important to understand that he is lethal to your career. The fact that it is not overtly malicious behaviour makes it all the harder to recognise. But if you your boss is a professional absentee, you are best served by finding a new manager, even if it means going to a new company.

This article was originally published in The National.

Emirati Role Reversal: Learning to be an Expat

Emerging economies go through the same cycle. The first step is the export of products or commodities that are relatively cheap or are native to the exporting community. For examples of emerging economies exporting product simply look at the history of nearly any country in Southeast Asia. As for commodities-based economies, the UAE is a perfect example.

This in turn triggers foreign direct investment (FDI) allowing for infrastructure investments that help improve the production capacity and efficiency of the emerging market. These upgrades will usually require the need to upgrade technology as well as processes and procedures. To that end operating expertise in the form of foreign advisers and managers is imported to upgrade the training of the local population to manage these changes.

The result is a virtuous cycle in the emerging economy of an improving workforce that becomes more efficient in its production which in turn spurs further FDI and the cycle continues.

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