How Hard Working are you?

Are you getting a bit tired of being told by politicians that you have to be 'Hard Working'?  
'Hard Working Families' and 'Work Hard and Play by the Rules' have become jarring clichés, robbed of their meaning by over-use.

For a lot of employees, hard work means doing longer hours for less money than previously with someone else taking the majority of the benefit.  And aren't we supposed to be working 'smarter not harder'?  That's certainly what most of us try to do.

And what's so great about hard work anyway?  Most people, while not being afraid of hard work, and giving it their all, go to work so that they can enjoy holidays, leisure, time with family & friends, whatever it is that makes life worthwhile.  Mary Evans of the LSE nails this canard here.  

" ...the vindication of what seems to be a mindless new religion, that of hard work, seems singularly pointless as well as inappropriate. Not only does this religion divert attention from more important questions about the morality of rewards (or the lack of them) but it also completely fails to ask questions about the value of work and its products. The doctrine of ‘hard working’ then becomes the worst kind of religion, refusing questions and possibilities, and all too likely to guarantee less the pious boredom of paradise than the life doomed to unrewarded servitude."

We'd all like to hear something a bit more uplifting from our leaders.

Preparing a Cash Flow Forecast - part 2

Here's the second part, which takes you step by step through preparing a forecast on Excel.

http://www.youtube.com/watch?v=3zpy6ImSC3o

Preparing a Cash Flow forecast part 1

I've made two videos on preparing a cash flow forecast.  Here is the introduction.

http://www.youtube.com/watch?v=5s2mW_psxMg

Shock news - a kinder, gentler Ryanair

Michael O'Leary has declared himself tired of the public abuse he receives about Ryanair's service and determined to improve.

He has pledged to soften Ryanair’s image and overhaul the airline’s customer relations strategy.

“We should try and eliminate things that unnecessarily piss people off,” said Mr O’Leary.

Lucy Kellaway notes that the regular on-line abuse the airline receives has had no effect. ("That extra £50-£100 difference between Ryanair and BA is taken not from your wallet but from your soul")  

However, O'Leary can no longer stomach the criticism he regularly suffers to his face, even when out with his children.

It's interesting that whatever we think about the power of social media, tackling a CEO in the off-line world may still be the best way to bring about change.

Banking Scandals

‘The public have a sense that advantage has been taken of them, that bankers have received huge rewards, that some of those rewards have not been properly earned, and in some cases have been obtained through dishonesty, and that these huge rewards are excessive, bearing little or no relation to the work done.’

So says John Lanchester, quoting the Parliamentary Commission on Banking Standards in a very readable overview of the mind-boggling banking scandals of recent years.  He categorises them as follows:-

First,  'the biggest of them all, the grotesque toxic-asset and derivative spree which took the global financial system to the edge of the abyss.  ...  The crisis and its consequences are too big to count as a scandal: they’re more like a climate.'

Second, the 'old-fashioned' banking scandals:  'Traders take financial instruments created to control risk and use them to make huge bets; sometimes they do it with their bosses’ approval, sometimes without. That’s just how they roll. Every now and then one of these bets goes wrong on a huge scale. The banks always claim they have procedures in place to control the relevant processes and manage the risks involved, until it turns out that they don’t.'  

There have been two of these recently.  'These losses were caused by Kweku Adoboli, the UBS wunderkind who lost £1.4 billion in 2011, and Bruno Iksil, the ‘London Whale’ at JPMorgan Chase, who in 2012 lost an amount described by his boss Jamie Dimon as ‘a tempest in a teacup’, until it turned out to be $6.2 billion.'

Third, banks wildly over-extending themselves through reckless lending.  The classic case here is HBOS.  'This was a traditional bank failure pure and simple. It was a case of a bank pursuing traditional banking activities and pursuing them badly. ... In other words, the single biggest factor in the collapse of HBOS was simple incompetence. And let’s not forget what happened next: when HBOS was clearly about to go broke, it was taken over by Lloyds, with the encouragement of the government. Unfortunately the extent of the losses was so great they ended up bringing Lloyds down too, and the new combined bank was bailed out by the taxpayer a month after the takeover.'

Fourth, LIBOR manipulation.  ‘This dwarfs by orders of magnitude any financial scam in the history of the markets'.  The full scorecard isn't yet in plain sight as cases wind through courts around the world, but especially in the litigious USA.  Total compensation costs are expected to run into tens of billions.

Fifth, 'sexier forms of overt criminality such as money laundering and drug dealing.'  Standard Chartered and HSBC have both been fined hundreds of millions of dollars in the USA.

Sixth, the RBS back-end payment system implosion of 2012.  The UK taxpayer paid out billions to keep the cash machines open in 2008, then RBS managed to shut them down from sheer incompetence.  ‘Completion of new home purchases were delayed, others were stranded abroad, another was threatened with the discontinuation of their life support machine in a Mexican hospital, and one man was held in prison.’

Seventh, PPI mis-selling.  The costs of this scandal keep going up and the latest estimate is £16 billion.  Lanchester feels this is the worst of all, 'because it involves a more basic breach of what banking is supposed to be about: looking after other people’s money. That’s the first thing that is qualitatively different about PPI; the second is that the misdeeds happened not inside rogue units of these huge global institutions but at the centre of their retail operations. This was an industry-wide, systematic cheating of the banks’ own customers.'

It's well worth reading in full and quoting whenever anybody tries to convince you that a large financial sector is a good thing for an economy or a country.

Keeping Your Suppliers Happy

Managing suppliers is an often neglected part of the financial manager's craft.  Everyone understands the importance of keeping customers happy (provided they pay their bills) but there can be a different attitude to suppliers, who are seen as a necessary evil at best, an annoying distraction at worst. There always seems to be a supplier kicking up trouble for you at the very time when you’re busiest with other things.

The positive side for you is that suppliers only want one thing from you – cash. If you can keep a steady flow of funds to them, they will not bother you.

This article sets out how to look after suppliers in a way that will minimise the distraction and the time spent.  

Key points:

• Work on your systems to ensure they are as efficient as possible

• Target a reduction in phone calls received from suppliers chasing money

• Build relationships internally and externally

• You may still have to delay payments, but don’t compromise your ethical standards

How secure is your data?

The recent revelations of the extent of Government surveillance of the internet have generated much commentary on the implications for individual privacy, as well as coverage of the attempts of those involved with the whistle-blowing to stay out of the hands of the law.  Surprisingly little has been written about the implications for the commercial world.

Firstly, you have to assume that your email and social media traffic is being capable of being read by at least the UK & USA governments.  For the vast majority of traffic, there's nothing that could possibly be of interest.  However, if you have business dealings with the Government, or if you're involved in any activities that may be seen to be on the edges of legality, then you should be worried.  This certainly applies if you're involved in 'tax mitigation' activity.

Secondly, the knowledge about how to crack internet security must be extremely widespread.  Edward Snowden was a lowly employee of a sub-contractor, but easily got to understand the entire scope of the NSA operation.  If someone in a similar position to Snowden decided to just take what he could and sell it to a foreign government, or criminal gang, would we ever know?  The technical knowledge of how to tap into communications must be in the hands of many thousands of people, with worrying implications for the security of corporate networks.

Thirdly, there is worrying evidence of intimidation of journalists going on.  Glenn Greenwald at 'The Guardian' and his colleagues are bravely standing up to this  If other journalists have given in to intimidation, then we probably wouldn't hear about it.  So we have to be sceptical whether we are getting all of the news and information we need in this area.

Fourthly, if you're concerned about data security, you should be very cautious about using products from large American or British suppliers.  Companies with data stored on American servers may well already be in breach of European data protection law.

And fifthly, a whistle blowing policy is essential for any organisation wishing to keep its reputation intact.

There are, I'm sure, many other implications of this affair which should be leading us all to rethink our use of technology.