THE SHIFT TO THRIFT

Background:

There was a time when people would choose a company because of what the company stood for. This was always to do with ethics, values and a great standing in the community at large. Most of all, these were values that most employees wanted to be part of.

Every proud parent would stay awake at night praying that their children would join an organisation that would look after them much in the way they had looked after them.

People were not after short term jobs. They wanted careers.

For those of us in the UK this meant firms like Marks & Spencer, BP, Unilever or Barclays Bank. In Europe it was the likes of Philips, Carrefour or Nestlé. In North America everyone was beating a path to the doors of Boeing, Procter & Gamble, GM or IBM.

They were "academy" businesses and all had striking similarities.

Academy Rules:

- Strong, market-facing brands
- Rock solid employer brands
- Paternalistic cultures
- Strong ethos and values
- Long average length of service
- Low staff turnover
- "Best in class" training and development
- Prominent staff welfare programmes
- Generous pension schemes
- Home-grown, "caring" leaders with a huge knowledge of their industry
- Strong recruitment processes
- Job circulation within the business - "15 jobs in 35 years"
- A string of non-financial perks (staff discounts, free dentist, interest-free loans, free hairdressing etc.)

Historically there were no financial bonuses but still the "best of the best" school leavers, apprentices and graduates would dream of working for one of these organisations.

And if you did get in you never left.

Every employee became an ambassador for the business and was proud to show off their business cards at every opportunity.

The Quarter Culture:

The increasing demands by city analysts for rock-solid forecasts of quarterly earnings, followed by a myopic stranglehold on the delivery of those forecasts, has created an environment that has long since replaced this model; the quarter culture.

The only perceived measurement of success has become the delivery of quarterly targets and in recent years this has moved from being a guideline target to an unhealthy obsession and blood commitment of the board of directors.

Far too many industries leave behind any form of common sense, business acumen or compassion in the week the quarter finishes and it has created a generation of customers who wait until the last few days of a quarter to get the best deals out of desperate sales people.

More businesses than ever are run on a quarterly basis and to reinforce these heavily structured deliverables, targets, behaviours and thinking, we have witnessed the rise and rise of the quarterly bonus.

Even if bonuses are paid annually, they are normally the aggregation of quarterly performance ratios.

For the very short term this seemed to establish performance cultures where people seemingly moved faster, delivered more and fostered a "can do" attitude.

But the reality is that it killed team playing and collaboration, announced the promotion of the individual, destroyed humility and eventually brought down business after business.

Investment banks showed it at its most acute. People became obsessed with delivery over quality; creating corrosive problems such as sub-prime mortgages and toxic assets.

Even worse it saw the re-emergence of replicas of Wall Street's Gordon Gekko, even down to his memorable mantra, "greed is good".

Something has to give.

Built To Last:

Many people hark back to the "good old days" and we are usually the first to dismiss nostalgia and encourage all to escape the pull of the past.

But the current global recession is telling us to think a little differently. And in this case differently means looking back to look forward.

When a business is in serious trouble we always get them to go back to a time when the business worked well and then understand what has changed.

For many of our great global institutions, they need to go back to their time as "academy" businesses.

Just look at two topical names - BP and Woolworths.

Under the last days of Lord John Browne, BP lost its moral compass; it became a little too arrogant and big for its boots.

They allowed their marketers to go just a step too far and when they changed their name from British Petroleum to Beyond Petroleum.

People just didn't believe them; their green credentials simply didn't stack up.

The culture meant that people on the inside were too scared to speak out whilst the business' values moved further and further away from those of their customers.

In short, nobody knew what BP stood for anymore.

When Tony Hayward took over he put BP back on the path they used to tread and went back to where they came from. He positioned the business to take advantage of its strengths and made no hiding of the fact that BP is a petroleum company.

And a very successful one at that.

Investment in new technology such as wind farms and solar energy was no longer seen as proof of BP's green credentials but as a necessary eye on the future to ensure its survival and competitiveness.

Behind the scenes and BP is inexorably returning to an "academy" business once more.

Woolworths never took the look backwards.

By the time the retailer came to its predictable demise, nobody knew what it stood for; be it the leadership, employees or customers.

There was only going to be one result.

Both passed our "academy" rules during their golden trading periods but whereas BP took the time to change, Woolworths kept blindly following the quarter culture just because it was "the thing to do".

Unilever:

The new CEO of Unilever, Paul Polman, recently dropped issuing financial targets and suggested the company may do away with such guidance permanently.

"I just happened to be the first one (to drop financial targets), but the amount of correspondence I got from many people in the industry was quite encouraging," he said.

"Many would privately say, especially American companies: 'I wish I could do that' ... the move to have less targets (externally) is not an unhealthy thing.

"I think it would be a good thing for the world if we formed new habits, and (avoid) chasing our tail, especially in businesses that are seasonal."

L'Oreal has since followed Unilever and with it the first steps are being taken to change the culture and revert to a different way of doing business.

But you don't have to be a huge multinational or conglomerate to have rock solid values and ethics and a strong ethos.

Every business can be an academy business.

It just needs inspired leadership to drive it through and a vision that is shared throughout the company, but most of all, values that all believe in and practice.

Perhaps the time really has come for a profound change in the way we run our businesses again.

What does your business stand for?