The return of Marley's ghost

Welcome to this new section of the journal, dedicated to bringing you the best in thought-provoking discussion in the area. If you have a viewpoint you could share with the readership, please contact me.

In the first of our Viewpoint pieces, Peter Hall, Managing Director of The Wadenhoe Consultancy, looks at one of our best-known and most seasonal companies, and suggests some solutions to its current difficulties.

The return of Marley's ghost

Once upon a time, they were stock market darlings. Downsizing, mergers,creative accountancy – they were doing everything the City liked. Recently,however, the share price has been seriously underperforming. Is this a sign of real problems, or just a blip in the career of one of our longest-established companies, one that can trace its roots back to the Victorian era? I'm talking,as you may have guessed, about ScroogeCo International (formerly the distinguished trading house of Scrooge and Marley).

I talked to its Chairman/MD, Ebenezer Scrooge VI, a descendant of a cousin of the firm's co-founder. He was confident that the company remains on track.

I asked him about the rumour of a significant increase in staff turnover,especially at senior level. He admitted that this was true, but argued that the company needed a clean-out anyway. And they had now instituted a new performance-related pay structure, which he was confident would stem the "talent drain".

"People work for money," he insisted. "Our new system builds on this simple, obvious fact of life. It offers considerable incentives to achievers. We were also getting soft on underachievers, but that's changing,too. Now we say 'three strikes and you're out'. Management is all about sticks and carrots, as you should know as a specialist in management development."

He was unable to keep the scorn out of his voice as he spoke the last two words. I was about to point out that talk should be of performance development– Mr Scrooge is quite right to be sceptical of management development for its own sake – but he moved on at once to a scathing attack on a consultancy that had offered to construct a "Leadership Development"programme for him.

"These people thought that employees wanted all sorts of fancy things out of their work – meaning, expression, satisfaction; all that sort of stuff,"he said, then mentioned a well-known type of boiled sweet. "They said that management was about inspiring people," he went on, "and that the businesses of the future will have to spot individuals with the ability to do this and develop them. By which I suppose they meant throw money at them, then watch them leave when they get headhunted."

I found myself in some sympathy with Mr Scrooge at this point: retention of top people can be a problem. We've done a lot of work on it, and believe we have identified some key factors. When I began to outline them, however, citing our work on Effective Development of High Potential People, Mr Scrooge interrupted with a comment about boiled sweets again. Maybe it was time to change the subject.

Customers. Rumour has it that as well as losing key staff, ScroogeCo has been losing customers.

Again, Mr Scrooge did not deny the rumours. But he said that customers could be a pretty fickle lot. "We've a big sales campaign planned, which will get a new lot of punters on board. Appeal to their greed enough, and we'll have 'em coming along in droves!"

I suggested that there was a link between the issues of staff and customer retention, as when top staff leave they take customers with them. Mr Scrooge agreed, but reminded me that the new incentive system was going to keep management at their desks from now on. "Where they belong!" he added.

The subject of the Internet followed naturally: surely, the net was bringing about a seismic shift in business in favour of the customer, who was calling the tune more and more. Mr Scrooge cited the sweet again. A sheep with a computer is still essentially a sheep.

The conversation moved on to other stakeholders. Actually, it nearly didn't,as on hearing the word "stakeholder", Mr Scrooge assumed a most unpleasant expression and looked on the point of uttering a foul oath –when a young boy came up to him (Mr Scrooge prefers the company's traditional form of messaging) and said there was a crisis in the sales department. A senior manager had just handed in her notice.

The interview resumed after a break. Where were we? Oh, yes, stakeholders.

Mr Scrooge said he did not understand what this term meant. A company has shareholders, and it is the company's sole business to create value for them. Nobody else has any right to interfere with this process.

I tried to tell him that in the modern business environment, poor stakeholder relations do real damage to the bottom line. If a company is perceived as grasping and arrogant, people will take their business elsewhere. I pointed out that ScroogeCo had recently come under particular fire for its overseas activities. Lack of sensitivity to the different environments in which the company operates has been blamed for a series of rows with foreign governments,major overseas clients and NGOs. One operation even had to be closed down.

Mr Scrooge was clearly worried about this, but was not sure what to do. He said he knew what I was going to say next, that the solution was to waste a lot of money on management training. Managers who should really be working were to be stuck in language labs – why, for heaven's sake, when everyone speaks English? Oh, and no doubt there'd be stuff about getting their families involved as well …

I said he was partially right. Another major piece of work has shown that language and family involvement were indeed part of the recipe for developing real specialist international management. However these were just a part of the story. As always with management, a lot of the gain is made by spotting the right people to start with. In this case, individuals with a truly global mindset and cultural sensitivity. I began to define these qualities more precisely, citing our paper on Developing Global Leadership, but Mr Scrooge began to make strange spluttering noises …

I was keen to talk more about ScroogeCo International and its problems and even keener to talk about the solutions to those problems but Mr Scrooge glanced up at the venerable grandfather clock in his office and suddenly terminated the discussion. "Time is money!" he observed.

I left with a feeling of sadness. Despite everything, I have a soft spot for old Ebenezer. We go back a long way; we met on a training weekend (which he left on Saturday lunchtime, citing those boiled sweets again) many years ago. And his scepticism about some of the wackier fringes of management development –particularly the passion for "silver bullet" solutions that promise everything and deliver very little – does strike a chord with me. He understands that training is about delivering improved performance in the light of a company's strategy. Anything else is a luxury: too many gurus and developers have lost sight of this. Businesses are there to create wealth, and management developers are there to help them do this better.

The trouble is that the world is becoming ever more complex, and if management cannot deal with this complexity, they are doomed to fail. I find this exciting – the ever-changing business environment keeps all of us on our toes, and we like it that way. Deep down inside, Ebenezer seems afraid of the future. When I first met him, he was a cheerful, optimistic, albeit opinionated young man. Now he sounds more bitter and defensive every time we meet.

It's not too late to change. ScroogeCo could still be redesigned into a truly modern, motivated organization, responsive to pressures from all its stakeholders (especially its customers), to markets, and to its own internal dynamic changes. But as I left their City headquarters, I found myself wondering what it would take to alter Mr Scrooge's mind …

Then my thoughts moved on, to getting a cab and to my family, waiting at home to begin celebrating Christmas. It was late. The narrow City cul-de-sac where ScroogeCo International still have their corporate HQ had become fog-filled. As I reached the top of the alley, I thought I heard noises behind me. The rattle of chains, it sounded like, and a faint wailing sound.

Or was it just my imagination?

Peter HallManaging DirectorThe Wadenhoe Consultancy