Monday, 21 December 2015

Awful Management, Horrible People

The longer you invest in companies, the more you realise that management are the key to everything the business does. You don't have to look hard to see companies behaving badly in this world. From oil companies, banks, utilities, and retailers - it seems everyone is putting their hands in the till, robbing their customers, destroying the environment or mistreating their staff. Bad management has been mentioned before on the blog and its a theme that needs continuing.

What continues to surprise though is that at the top of companies and in management positions everywhere are PEOPLE. People just like you and me who wouldn't want to be treated poorly, paid badly, or provided an inferior service. As a shareholder, I want the staff in those companies to feel valued, paid fairly, and therefore be productive at work and in their communities. As a shareholder, I want the customers to get great service, buy more products / services and recommend the company to friends and families creating a growing business. As a shareholder I don't want either of the next two examples happening to me.

Just this week (and it's Christmas remember), we've got another couple of examples of terrible management making bad decisions for staff and customers.

First, there's Mike Ashley and his team of thugs who run Sports Direct. The Guardian have produced an expose on working conditions there and detailed how poorly staff are paid and treated. The share price of SPD.L has dropped to 570p after averaging around 700p during the last 6 months. Poor treatment of staff has not just affected Mike's workers but also the millions of people who have shares in Sports Direct in their pensions. This poor attitude to people has cost everyone money.

Secondly, NPower's customer service has been so bad they've been fined £26M. Mental! Had they bothered answering their phone, treating customers with dignity, and sorting out the problems they would have avoided having to pay this fine. As it is, behaving like a normal company would almost certainly have cost them less than the fine - spending a few million more on a customer service centre would have solved most of the issues. NPower is run by German company RWE and routinely loses money in the UK. It's a basket case that should probably be closed or be absorbed by someone who knows what they're doing.

I'm reminded of Seth Godin's writings here. Whatever you feel about Seth, his common sense posts may just be spouting the obvious a lot of the time, at least he's putting these observations into print. A recent post suggested the pursuit of perfection in companies was impossible, the resources required to make small incremental increases in service levels were unaffordable. He called it 'Understanding the Doublings'.
One approach, which some organizations use, is to redefine your usual systems so you are able to please most people without your team going through a Herculean sprint every day, and then (this is a key element as well), eagerly and regularly apologizing and giving refunds to the one in 150 where it just can't be done.
Common-sense stuff. Nobody's perfect. Trying to get there is impossible, but having a system in place to compensate when you can't meet impossible expectations is good business. Your customer isn't put out and your reputation stays intact. This just isn't happening in the UK at the moment. Everybody has given up on perfection - that's fine. But they've also given up on Good, OK, Average and Mediocre. I can think of only one place in the country that has any standards whatsoever in customer service and that's John Lewis.

No wonder people are beginning to seek local over national. Reputation is easier to to ascertain with a local company or person - a few phone calls and you've got the recommendations that you require. Locally a Facebook group helps with recommendations on companies that provide great service and products. A quick post to find out the best plumber, electrician, etc. gets plenty of replies in our community. How are the Sports Directs / NPowers of the world going to compete against that? Answer: They're not. They're dinosaurs that are going to die.

Bad management doesn't seem to be going away in the UK, despite numerous fines and general contempt now commonplace for industries that perennially offend (eg. Banks, Utility companies). Why do leaders behave this way? Would they want to be treated this way themselves? Are they so removed from society they no longer understand how the world works?

For more information on how to behave properly as a manager in an organisation see any of Tom Peter's books or his blog. Putting People First is basically his entire manifesto and would be a great place to start for any manager / leader of a bank, shitty retailer, or utility company.