Tuesday, May 01, 2018

Monday now Tuesday Forum - inherent conflicts in modern management

This is a very thoughtful piece Jim - my thanks. 
Some of the problems recognised in your comments are, I submit more associated with country Australia than city. There is more sense of community in country, and less transient population, making for a marketplace based on a relatively static consumer base - in my innocent opinion. There are other problems of country/rural which also don't readily translate/apply to city folk - and I'm going to move to another of those that I have been following, somewhat wistfully: dairy co-ops. 
Here's the latest post from a blog I follow quite closely: A Mexican standoff as the sun sets on MG   
- and to tie it back to your comments on newspapers, this is a blog I have come to trust more completely than the reportage to be found on the same subject in either metro or even rural press outlets. I think this is partly due to the "interests" represented by Marian compared to the "interests" of the media outlets. Agree?
But carry Marian's concerns one step further, and you can get back to a wider subject of direct and current concern: AMP Society and how it appears to have "lost its way" as revealed by the Banking Royal Commission. 
Here's Marian's linked piece on co-operatives generally:The heart of the co-op  which, I believe could as well be used as a base descriptor of our "mutuals" of the finance and banking world, because it raises the very same problem at the heart of it: the rise of a "managerial class" with objectives not completely connected to the business of its prime customers/owners. 
I'd be interested to see if you can see the same connections that I can observe in the above?
I will pick up some of kvd's comments via the New England media post. However, I thought that they might also provide an entry point for a Monday now Tuesday forum topic.

I agree with kvd that milkmaidmarion's blog provides excellent reporting and, like kvd, I have been following the fall of Murray Goulburn with sadness. I suspect I agree with the idea that the country and rural media no longer provides the reflective reporting that we might once have expected. In fairness, though, that type of reflection has generally appeared outside a press concerned with the day to day or week to week. Where I think a change has occurred is that the press can no longer pick up, report on, the more reflective stuff or follow the longer stories in a coherent way.

kvd suggests that the loss of way shown by the Murray-Goulburn disaster or the AMP fiasco, something I referred to in The fish rots from the head - the Financial Services Royal Commission, is due to the rise of a managerial class. I wonder if that's true, although I accept that it's part of the problem. Rather, I wonder if we have completed a system that is fundamentally conflicted.

I do not know how to express this clearly. It's a feeling that I would like to explore in discussion. Perhaps I might clarify a little by posing a few questions:

  • have we lost sight of the fact that organisations are formed for different purposes and need to be judged differently in terms of those purposes? For example, a cooperative might chose to earn a lower rate of return on its accumulated capital if that maximises the benefits to its members?
  • have we created a system where narrow performance measures dominate to the exclusion of other considerations?
  • have we created a system where universals such as effective governance become a distraction from, an impediment to, performance, substituting rules for a focus on ethics and purpose? 
  • have we created a system where targets, performance measures and associated remuneration dominate at organisation level even though the aggregate targets are mathematically across sectors or the economy are mathematically unachievable?        .

I will leave it here. I would be interested in your comments. 

23 comments:

Anonymous said...

Jim I will come back to the point of this post at some stage, but as this is an open thread, I just wanted to record my visit today to Office Works to purchase a new keyboard and mouse (prior versions having succumbed to an excess of coffee and cigarettes :) where, when I came to pay, I was asked if I wished to "round up" my purchase to the next $dollar for a charity they are supporting.

I hate change, so said just make it to the $5 and paid up. Now that's probably a small OW store, but there were at least 5 staff on duty and it's a high rent area, so I'm guessing they're probably knocking out btw $3 and $400 daily for the want of politely asking for loose change.

That's the sort of unobtrusive charity collection that I appreciate - MacDonalds does the same thing with their little coin chute on the drive thru - and I think this is to be supported, as opposed to the hi-vis charity galas we see from out of date sporting celebs, who seem to spend 95c to make 5c.

But I just wondered - is this sort of change "round up" at all on view in the city?

kvd

Jim Belshaw said...

Morning, kvd. I some places yes although not so much in the bigger stores. There they tend to have particular fund raisings where you buy something or donate at the checkout. I haven't seen the rounding approach in operation. Strikes me as a good idea.

marcellous said...

No "rounding up" arises if you pay by "pay wave."

Or rounding down, for that matter.

So it must be good practice to pay cash for amounts ending in 1 and 2 cents and by card for amounts ending in 3 and 4. If followed religiously perhaps one would reach the tax deductible minimum of $2 to donate to the charity of one's choice at the end of the year.

From which kvd may infer that the spirit of giving to which he alludes is not conspicuously present my part of the city.




marcellous said...

Jim

As to your post, managerial capture/plunder can also be seen in the so-called "non-profit" sector. NSW RSL is only one of the most egregious recent examples. Salaries of vice-chancellors and managing directors of arts organisations are other examples which come to mind. Doubtless the government will be looking to some juicy revelations of the position in relation to industry super funds in the near future.

Jim Belshaw said...

That paywave comment, marcellous, is a nice point. kvd wishes to do away with cash, but paywave is always exact. Of course, you can still round-up and gain the tax deduction as appropriate.

Universities are an egregious example, I think. I'm keeping my fingers crossed that there will be no juicy revelations with the industry super funds. I hope not!

Anonymous said...

Jim, I said I don't like toting around piles of coins. But yes, I also think doing away with cash is on the short horizon, and seems to me a logical extension of the government's reach into our daily lives.

marcellous makes me groan - deliberately I suspect :)

My point on the "rounding up" was the result of a purchase of, I think, $52.40 being rounded up to $53.00 and it was entirely my choice to go to $55.00

I just thought it was a fairly painless means of charity giving, and wondered if it was prevalent in our bigger cities. A shame if it's not.

But marcellous' careful attention to the last cent makes me laugh :)

kvd

Jim Belshaw said...

While there was a tease there for you in terms of past discussions on the evils of cash, kvd, pay wave does have an effect. It requires a transaction pause when we people just want to wave and go.

On Monday at Woolies eastlakes the loudspeaker was encouraging people to make a donation to a particular charity (I didn't get the name) at the checkout. It wasn't very organised.

2 tanners said...

Leaving aside overpaid executives, it is precisely the rise of the managerialist class that has given life to the one size fits all approach which declares a university, a corner shop, a co-op, a government department and Rio Tinto can (and should) all have the same approach to management - measure the inputs, the outputs, the risk arrangements and the returns and only measure those things which can be counted.

Anyone with a sufficiently poor understanding of neoclassical economics (at least 95% of the public service in the 1990s) would have supported this managerialist approach. You would need the faith of Job or the observational powers of Blind Freddy to somehow still believe that the as yet unrealised benefits are going to one day compensate for the damage done to date.

Jim Belshaw said...

Sadly, we are strongly in agreement, 2t, although I think that the managerial class is not a cause but a result. I accept that this then feeds in to the trend.

I have kept thinking about this topic. I spoke of losing sight of the purpose of the organisation. In theory, the things that you list can be tailored to purpose. The problem lies in the way ethos cannot cannot be measured.

Anonymous said...

I thought Job was an exemplar for/of patience? I mean, we all were taught the faith thing - but patience was once a virtue, I thought? Must have missed the memo.

The "managerial class" is both a cause and a result. It is a cause (not the only one) of where most if not all of our largest companies now find themselves: street-walkers in search of the next quick fix. And it is a result of the perceived need to get 'results' - this year, not next decade.

Having dealt quite closely over the years with many honourable, thoughtful, forward-thinking executives I can only say that my opinion of the present crop is that they are no better than hookers and whores - willing to do anything it takes to ensure their next bonus, and/or their next directorship.

And they do great dishonour to what was (a decade ago) a group of men and women I interacted with, and admired immensely.

kvd

Anonymous said...

Anonymous said...
Ha! I see David Thodey is appointed to review the Comm PS :)

Years ago, I had cause to email both him and Catherine Livingstone (then Telstra chair) regarding a point of absolute frustration with my (very) small retirement business. The email began "I expect you don't have time to deal directly with this - but then, neither do I".

Ms Livingstone's personal secretary rang me the next day, and detailed a very polite member of "Ms Livingstone's work group" to attend to my complaint, then left her direct line "in case I wasn't satisfied". It took a month, but was ever so politely resolved satisfactorily.

Never heard from Thodey. Good luck with that review, PS :)

kvd

2 tanners said...

Patience is only a virtue if you have faith that it is justified. Job might be able to maintain his faith in reform, and therefore patience after all these decades, mine is exhausted.

Ho, hum, yet another wide ranging review of the APS. Like under Abbot, Rudd, Gillard, Rudd and Howard, maybe Keating, Hawke and Fraser. Most recommendations will be ignored except the ones that make it easier to sack public servants, strip them of their civil rights (this post, were I a member of the APS, could already see me on a disciplinary action) or force them to work as essential services without any of the privileges that should entail. Bold innovative thinking.

Jim Belshaw said...

First of a couple of quick responses to our discussion.

kvd suggested that the rise of the "managerial class" was both a cause and effect. I think that he is right, although there are some issues around what we mean as the managerial class. The managerial class is created by current attitudes but then feeds back into the growth and perpetuation of those attitudes.

marcellous mentioned salaries paid to vice-chancellors. The salaries are broadly set by that admittedly imperfect market place for CEOs and senior executives. Performance is measured in organisational terms: the growth of the university; its place on pecking orders such as the global ranking lists; the amount of additional funding raised; the overall financial performance of the institution. Now some of us may argue that these are misleading metrics, and that word is itself a symptom of current attitudes, but I think that it's the reality. They are also metrics that can be used to justify salaries.

I think the idea of the academy as a community of scholars, the idea that students are central to the university experience have been lost and cannot be recovered.

Jim Belshaw said...

I am skeptical about as well about the public service review because I do not think that it will really address the question of the roles of the public service. The review website states:

"This review will examine the capability, culture and operating model of the APS. It will make practical recommendations to ensure the APS is ready, over the coming decades, to best serve Australia in:

. driving innovation and productivity in the economy
. delivering high quality policy advice, regulatory oversight, programs and services
. tackling complex, multi-sectoral challenges in collaboration with the community, business and citizens
ensuring our domestic, foreign, trade and security interests are coordinated and . well managed
' improving citizens’ experience of government and delivering fair outcomes for them
. acquiring and maintaining the necessary skills and expertise to fulfil its responsibilities.

In examining these issues, the review will consider the suitability of the APS’s architecture and governing legislation. It will also consider how the APS monitors and measures performance, and how it ensures the transparent and most effective use of taxpayers’ money in delivering outcomes."

All this is modern jargon. It largely ignores the role of parliamentary government and the role of the public service in servicing the Government of the day.

Anonymous said...

https://www.smh.com.au/business/banking-and-finance/ousted-amp-directors-safe-on-big-company-boards-20180508-p4ze1s.html

Along with their now forfeited AMP directorships, Ms Kramer is deputy chairman of Australia Post and a director of Woolworths, while Ms Wallace is a director of Wesfamers and Seek and Ms Akopiantz is a director of Ramsay Health Care.

aka "the managerial class" :)

kvd

Anonymous said...

The thing which gave me pause this a.m. (5 a.m. in fact) about posting this is that AMP seems now to have thrown 4 (incl chair) women on the pyre of survival?

I find thoughts such as this quite uncomfortable:

1: are these women actually incompetent?

(I don't believe this!)

2: are these directors simply the most easily fired (in all senses, old and new) because of their sex - and thus (imo) their adherence to old-time values of personal responsibility?

(I'm unconvinced, but there used to be this old thing - aka last week - about the inherent equality of the sexes :)

3: does nobody in charge (if there is anybody?) understand that "a culture" begins, and grows, over a period of years - and thus, present directors, managers are basically scapegoats for what was begun, and encouraged, well before.

(probably best not talked about, hey? )

Nevertheless - they will float onwards, or sideways, to other thus far untapped fields of incompetence :)

Which is nothing to do with their sex; more simply everything to do with the club/class they've managed to join.

kvd

Anonymous said...

Sorry - am informed the werd of the week (this week) is 'gender' - not 'sex'. Apologies to all concerned

kvd

Jim Belshaw said...

Didn't you mean weird,kvd? :)

I hadn't actually thought of directors as belonging to the managerial class. They don't actually manage anything, although I accept that may have been acculturated.

You make a very fair point about culture. They inherited one, at least the newer ones did.A question in regard to boards. What is the role of the board in determining as opposed to monitoring or checking culture?

Anonymous said...

I've always thought of directors as part of "the managerial class" - but agree it is a very woolly term. My thought is that it consists of a fairly elite and fairly small group of persons who seem able to move seamlessly from director to CEO and back again, across industries - leaving one to wonder just what expertise they actually bring to each new role granted?

Anyway, from the mammoth super industry:

https://www.smh.com.au/business/companies/the-heads-keep-rolling-in-the-murky-world-of-super-20180515-p4zfh7.html

- and also I see the former AMP chair is to leave CocaCola board, leaving her with just the Boral (I think?) directorship to keep her busy. Can't help thinking she's being scape-goated for some reason.

kvd

Anonymous said...

But to attempt an answer to your question: their role is a combination of determining and monitoring - with the second being once-removed in that one assumes they assure themselves of adequate monitoring procedures, rather than any actual hands-on role?

kvd

Jim Belshaw said...

Interesting, kvd. I thought of directors as the bosses as compared to the managers. The word manager seems to have almost disappeared from the lexicon. Now we must all be leaders!

That was a fascinating SMH story that I had missed. Reflecting, I have become quite confused about just what the role of the board actually is and how that should really relate to owners and managers. I suspect that the principles have become quite lost in the myriad of regulations and obligations and the current obsession with Governance. And yes, I have previously read all the stuff including handbooks from AICD. Perhaps this should be a Monday Forum topic?

Anonymous said...

AICD?

Is that the Institute of Company Directors which was the subject of a Miranda Devine hit piece claiming its courses were now loaded towards women on boards, gay marriage, and climate change - as opposed to, say, ethics, responsibilities, corporate governance and the like :)

kvd

Jim Belshaw said...

That's the one, although you cannot believe everything Miranda writes! :) There is a difference between the public comments from AICD which tend to reflect current popular issues and the courses. I haven't looked at the courses for several years, but they were heavily focused on the legal duties and responsibilities of directors.