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Adding up the sums of the parts

We keep hearing that companies can no longer afford to keep their financial managers in the back office, but it seems that most are still a long way from achieving adequate financial communication across the whole organisation. For example, the NAO has just released figures showing that the price paid by UK public-sector organisations for a loaf of wholemeal bread ranges from 32p to £1.10 (which makes you wonder where they shop!).
IT firms are quick to offer integrated “solutions” that will enable companies to track all expenditure from the head office down to the lowliest temp, but no accountant, no matter how zealous or how stringent their budgets, can control all spending from above. Ironically, according to two former IT managers in City banks who have now set up a course to train IT managers, IT departments are often guilty of similar extravagances – many IT managers still don’t believe they need to know the business, many don’t adequately understand licensing agreements and maintenance contracts and some are unaware that they are expected to negotiate outsourcing contracts. Given that they estimate that the cost of a single workstation, software and hardware in an investment bank can start at £100,000 (with each licence for specialist software costing a possible £120,000), surely finance teams should be pushing for more financial training for non-financial managers in all departments?

Education, education, education?

I have been interested by a debate over whether a vocational or a liberal arts education offers more benefits to society, that I found on the blog of US CIMA member Merrill Cassell.
While Cassell’s own accountancy qualification makes him lean towards the vocational side of the debate – and he points out that parents and their grown-up children tend to agree when they see the salaries offered to graduates – he also quotes the opinion of his son in law who says he would rather employ someone who knows how to think, rather than someone who knows how to do.
The argument is, of course, one that continues to trouble governments and businesses around the world. Cassell’s blog reminded me of a quote I read recently in Every Book its Reader, by Nicholas Basbanes (Harper Collins, 2005). John Adams, one of the founding fathers of the US, wrote a letter to his family explaining why he had spent so long away from them in France.
He wrote: “I must study politics and war that my sons might have the liberty to study mathematics and philosophy. My sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce and agriculture in order to give their children a right to study paintings, poetry, music, architecture, statuary, tapestry and porcelain.”
The problem is that this also reminds me of the old observation that the businesses founded by the great entrepreneurs of the UK’s industrial revolution rarely lasted past the second or third generation. The founder’s children tended to go into the professions and their grandchildren became aristocratic aesthetes with little or no interest in business. However, many did use the money they inherited to amass wonderful collections of art, books etc and some of these have ended up enriching our national heritage. Any thoughts?

What does it all mean? (revisited)

Last week I said “don’t get me started on job titles”. Well I don’t have to. Lucy Kellaway in today’s FT has done it for me. I have great sympathy. I reached comparable levels of irritation when I discovered that guards on trains had become “revenue protection officers” – note the absence of any word relating to customers or service (or tickets or trains). Please, take her two-word test. And act on it.

What does it all mean?

I don’t get. Companies spend loads on PR, so why do they still get so many simple things so wrong? It’s not just that every day I receive press releases that nobody other than, presumably, the author could ever understand, still less want to repeat. People have been whingeing about this for decades – so why do I still get press releases saying: “The deal does not in itself create value rather it gives management the opportunity to deliver the upside post deal. What the shift to neutral suggests is that the professionalization of the pre deal process has been a positive development.” Eh?

And while I’m on a rant, why don’t all companies put their business on their business cards? Isn’t that what they’re for? It might work fine when a company’s name says exactly what it does – eg Jo Blogs Family Butchers – but most companies now have weird made-up names that are inoffensive in 300 languages, or are an unpronounceable acronym of the founder’s grandfather’s initials. How are we supposed to know whether they’re lawyers, accountants, dentists or vertical solution integration empowerment facilitators? Which brings me on to mission statements. Just don’t get me started on job titles.

In search of lost time

Have companies stopped sending out business diaries at Christmas? When I started my first job as an editorial assistant, I was delighted to be given a free pocket diary (Stock Exchange, I think) by a blasé news hack who’d seen it all before and already had five better ones. Since then I have looked forward to my annual diary blitz with some excitement (I don’t get out much). I now know the relative merits of the annual Mercer offering (nifty transferable address section) and have set criteria for judging which one to keep and which to give away – a readable London Underground map is vital, world time zones are useful, vintage wine years less so. So what’s happened this year. Nothing. At all. My post tray is empty. Am I alone? Are other people receiving their diaries? Has there been a sea change in corporate freebies? Or is this an early warning of real recession hitting UK business?

Verdi, Vidi, Vici?

You have to hand it to the Italians. They have style. Most nationalities can muster a decent strike or riot when riled. The British do a good line in football hooligans and the French have recently shown that their ability to burn suburbs and build barricades has not diminished with the years. But who other than the Italians would insist that their protest was choreographed to the music of Verdi’s Requiem, played by disaffected orchestras across the land?

UK public-sector workers were recently outraged by proposals to alter their pension provision, but I don’t recall any musical pickets. Couldn’t we learn from this? If the country objects to the Pre-Budget Report on 5 December, maybe we should protest with a rousing performance of Elgar? Objections to Tony Blair could be demonstrated with Pomp and Circumstance, although The Enigma Variations would, perhaps, be more suitable for Gordon Brown.

Maximising resources?

I sometimes wonder how many managers realise that the FT’s weekly “Martin Lukes” column is a spoof. He may have coined the words “creovative” and “integethical”, but many real-life academics and management teams regularly come up with words that are just as useful. My current fave has to be “talentship”. Fortunately for those of us who are baffled, the two US academics responsible explain their bright idea in exhaustive detail in a recent issue of People Management.
Apparently, whereas “fields such as finance [have] redefined their service delivery model with a decision science paradigm that teaches the frameworks to make good choices”, HR has not. “We have coined the phrase ‘talentship’ to describe the new decision science and to reflect the notion of stewardship for the resource of employee talents,” they explain. “As talentship evolves, organisations will increasingly succeed not simply through HR practice, but through the quality of decisions about talent resources.”
Jolly good.
Just one question from the finance angle – now that we have human resources able to wield their talent resources effectively, what impact will this have on our resources resources?

Shooting the messenger?

There’s nothing new about marketing managers jumping on the bandwagon of a new blockbuster film – The Lord of the Rings must have done wonders for holidays to New Zealand (although I can’t help thinking that there must be some bemused tourists still wandering around looking for the ancient statues of the kings at Sarn Gebir). Peter Jones department store, however, has surely got a winner in its furry “Aslan” throws, obviously aimed at capturing Narnia-mania when the new film of The Lion, the Witch and the Wardrobe opens. It reminds me of the butcher who, after the success of Watership Down, put a notice in his window saying “You’ve seen the film, now eat the cast”. This time, of course, it’s more a case of “You’ve seen the film, now snuggle up under the hero’s pelt”. Presumably, however, Peter Jones should be careful. Given the story’s strong allegorical element, and the association of Aslan with Christ, how long is it before someone decides that this constitutes incitement to religious hatred? The White Witch would approve.

Cheap and cheerful?

Has anyone else noticed that every retailer that caters for the lower end of the market is now called a “discount” chain? Call me a pedant, but I thought discount meant “discounted from being more expensive elsewhere”. TX Maxx is a discount chain. Primark and Wilkinsons are just plain cheap aren’t they? So what’s wrong with saying so?

Peter Cook's guide to pensions

The fact that we’re now officially allowed to invest our pensions in houses reminds me of an old exchange between Peter Cook and Dudley Moore when discussing the end of the world. This goes along the lines of:

DM: “And will the wind be so mighty as to lay low the mountains of the earth?”
PC “No it will not be quite that mighty. That is why we have come up into the mountains you stupid git. Here we will be safe. Safe as houses.”
DM “But what will happen to the houses?”
PC “Well, naturally they will all be swept away.”

Opening up pensions investments to include houses could help to make the idea of investing in other alternative investments more popular. If you can rely on the housing market, why not take a punt on the things inside your house also gaining in value – art, antique furniture or even fine wine?

Over the long term, people who began investing in antiques in 1968 have generally done substantially better than they would have had they invested in the FTSE 250. That was the year that the Antique Collectors’ Club began to compile a helpful index comparing investment in different types/periods of antiques with the FTSE 250, house prices in the South East of England (excluding London) and, amusingly, the Mars Bar index – an indicator of general consumer goods inflation. Anyone interested in learning more should visit the Club’s website at Antique Collectors' Club

Sure, there’s a downside: most people are not experts. It’s one thing to dabble in wine and quite another to think seriously about gambling your future livelihood on your purchases.

And while shares don’t need maintenance or shelf space, properties need investment. Similarly, if you spill a glass of vodka on a polished antique chest or shut a teething puppy in a room with a valuable Georgian chair, your investment will take a nasty tumble, irrespective of general market performance.

But the clincher on the alternatives side is that, if you are careful with your possessions, you can also end up with a house full of beautiful objects. Whether or not you’ll ever have the heart to sell them and buy Ikea in your old age is another matter. You could also argue, if trying to justify an extravagant splurge on a beautiful picture or Tiffany lamp, that diversifying risk tends to be safer than pouring all your investment into the hands of a single financial adviser. As Peter Cook remarked so philosophically: “We must get a winner one day.”

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