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IT’S POOR DECISION-MAKING STUPID, THE POLITICALLY INCORRECT REASON FOR GB’S BUSINESS DYSFUNCTION
By Arnold Kransdorff
Despite dedicated attempts by academics, advisers and consultants to work out exactly why UK industry and commerce can’t improve their underlying productivity, the question remains unresolved (https://workinmind.org/2019/10/09/productivity-puzzle-remains-unsolved-ons-reports-worst-drop-in-5-years/). They don’t understand why others in comparable countries can produce more per hour than British workers. There is an oft-quoted quip that France, for example, can produce by Thursday lunchtime what the UK can only do by close of business on Friday. It’s been a wisecrack for decades, leaving the residual explanation to ride on the premise that its workers are lazy and/or that they have a poor business culture.
The explanation even gets oxygen by no less high-profile politicians as our recent Prime Minister Liz Truss, her Chancellor Kwasi Kwarteng, a Home Secretary Prite Patel and Chris Skidmore, Minister of State jointly at the Department for Education and the Department for Business, Energy and Industrial Strategy. They co-authored a book in 2012 that claimed that British workers were “among the worst idlers in the world” and that they should “graft” harder. The book’s infamous references were resurrected in 2022 just as the UK was expected to go into recession.
That the UK’s productivity languishes is fact, precisely recorded in the international statistics for decades and now resolutely reflected in the post-Brexit, post-Covid, post-Truss and Ukraine-war evidence currently overloading the UK’s airwaves and newsprint. At times output improves slightly as the traditional reasons are rolled out, among them unflatteringly poor skills, lagging technology, tired national infrastructure, short termism, passive reaction times, strikes, fraud, waste and, more recently, increased labour supply challenges. Over the decades efforts have been made to correct some of these issues but still the dysfunction persists – as well as the worker criticisms. Now, all have come together to provide the perfect storm of an unflattering mirror reflection of existent GB.
Responsibility is top-down, not only bottom-up
The reality is that all these issues are ordered by top-down decision-makers and because decision-making is the exclusive role of executives and supervisors, it is management that must take its share of the responsibility, arguably the greater. It is undeniable that the now widespread admission that Britain is “broken” is, simply, also the collective result of managers’ poor decision-making. Yet the deficiency is hardly acknowledged as a workplace dysfunction, making its role in business, its source and the way it’s done virtually invisible and, consequently, unaddressed. The reason? Unlike the workers, it’s politically incorrect to specifically denigrate the role of management. They – the managers – can be dismissed, often for political or moral reasons rather than on pure business grounds, but their rank and the perceived quality of their decision-making are still reverential and largely immune from criticism.
The truth is that GB decision-making is not good, also liberally demonstrated by the widespread workplace chorus of “we must learn the lessons”. Suggesting some shortcomings in existing decision-making instruction, their presence – both at strategy and operational levels in all occupational departments of business – makes UK managers poor experiential learners, a quality that normally characterises and enables organic growth, which is the building of one experience on another. This’ learning’ process is the nature of all progress, even innovative progress, which needs organic learning to survive.
It’s logical that if managers improved their decision-making, the workers would be able to both increase their performance and escape their characterisation as lazy. It’s equally rational that if GB’s strained productivity diagnosis can be acknowledged as poor decision-making, the prognosis is unavoidably more of the same unless managers directly tackle another acknowledged reason for its dysfunction – the actively encouraged flexible labour market, which today gives employees an average of upwards of 10 different employers in their working lifetime, often at the behest of individuals themselves as they move to improve their remuneration and career prospects. Given that much shorter employee tenures encourage wider awareness of commerce and industry, its mention might, at first, seem bizarre, flippant, certainly non-conformist or even sacrilegious. But with employees being the most important of any employers’ assets, consider what else the current rate of modern staff turnover imposes on both employers and employees, including important decision-makers.
There’s continuous workplace discontinuity and employer disloyalty for starters but, with every employer uniquely different with their own special character that dictates their ability to survive and remain competitive, what goes walkabout is much non-technical explicit knowledge, the type of know-how that doesn’t get into emails and other written documentation, and important tacit knowledge, the ‘lubricating’ type of information comprising the mostly subtle, obscure and intangible issues such as special cultural ideals, values, ideology, language, customs, prejudices, rituals and indigenous strengths and weaknesses that derive from interactions with the organisation’s industry, an individual’s colleagues and the process of actually getting things done. Hard-won and expensively acquired, Peter Drucker called it “techne”, Edward de Bono described it as “operacy” and Ikujiro Nonaka said it was the “the source of competitive advantage”. Both kinds of knowledge, and especially the tacit kind, are deeply buried in the employers’ historical experience, difficult for individuals to articulate and impossible to retrieve after the employers’ swing doors have finished turning.
What is happening is that employers are effectively losing their corporate memory and acquiring what’s called corporate amnesia, which is largely unaddressed in conventional induction/onboarding processes. Unable to inherit much unique knowledge, new entrants must use their own time-consuming intellect to relearn their employers practice in order to effectively adapt his/her own experiences to their new organisations’ new environments. By the time this inefficient learning process concludes, the employee is typically ready to move on and the cycle continues. This has been happening ever since the flexible labour market’s short tenure regime began more than 40 years ago, providing the workplace with its stop-start environment, effectively slowing everything down across the workplace and, importantly, removing much essential evidence with which employees can apply to their decision-making.
Putting a global spin on the subject, organic progress goes south along with productivity at a rate that compares poorly with competitors, who may also have flexible labour markets but whose decision-making is better. Simply stated, they are better experiential learners, ipso facto more able to apply past practice to better effect …..
History = experience cheaply
A GB answer? Take the advice of many grandee philosophers such as George Santayana, Winston Churchill, Abraham Lincoln, Edmund Burke, David Hume, Immanuel Kant, Ralph Waldo Emerson and Machiavelli, to name a few, about history being a valuable educational tool – and apply it to business, in particular short- and medium-term history. For a relevant British exemplar of the principal, refer to the UK’s first Professor of Business History Leslie Hannah, who gave retrospection its legitimacy when he concluded that business history provided “experience cheaply” (The Rise of the Corporate Economy: The British Experience, The Johns Hopkins University Press, 1976). Simply extrapolated, replacement employees should be made more acutely aware of their employers’ institutional or corporate history. In business speak, it’s called knowledge transfer, taking conventional induction/onboarding to a new, more practical level. With the co-operation of important exiting individuals, this can be delivered through serious and comprehensive oral debriefings in either transcript, audio or video format. The closest business comes to emulating this process is through amateurish exit interviews or 20 questions-type written enquiries that are typically used to discover why employees leave ….
The operative words for making this extended process worthwhile are’ serious’ and ‘comprehensive’, best achieved by using a suitably assertive and savvy internal employee or an independent and aptly qualified external interviewer, mainly because individuals, on their own, typically have short-, selective and defensive memories. They are generally also poor communicators about their own experiences. In practice, this then needs to be complemented with a suitable inquisitorial environment from which employees can learn. Proprietorial attitudes to knowledge sharing can be overcome by contractually agreeing knowledge sharing arrangements at appointment and/or offering a leave-taking payment to compensate employers for their employees’ new opportunistic workplace.
How this differs from conventional decision-making instruction is that the process embraces the more localised evidence that would otherwise be lost, an approach that extends the available balance of input information in both an easy-to-absorb and more comprehensive way. This qualifies as proper experiential learning, what business schools and other business education generally only teach at all-purpose, non-specific levels. It’s a learning process adapted from the documentary work of the historian ‘Studs” Terkel, who received the Pulitzer Prize for General Non-fiction in 1985 for his oral histories of common Americans, and David Kolb, Professor of Organizational Behavior in the Weatherhead School of Management at Case Western Reserve University, whose reflective model of experiential learning is acknowledged as the most advanced.
It becomes a powerful aid with which new entrants can quickly apply their own experience to their new and constantly changing conditions and circumstances. Jobs continuity is better maintained, important activity-relevant knowledge is captured and, instead of having to rely on second- or third-hand memory recall, the opportunity arises to effectively apply first-hand recollections. In management speak, the problem is corporate amnesia, the solution is knowledge transfer and the outlook is much, much better experiential learning that takes the critical discipline of decision-making out of its generalised educational process. See https://www.mrcorporateamnesia.com/, a two-part DIY toolkit instructing employers how to do knowledge transfer themselves. Also https://biggernumbers.wordpress.com/ and https://www.pencorp.co.uk/
Final words: What modern business can expect from their high turnover workplace: “No company can afford the luxury of re-discovering its own prior knowledge” – Procter & Gamble’s former Vice President J.G. Pleasants. “You’ve not had 30 years’ experience. You have had one year’s experience 30 times’ – dialogue in one of English novelist J.L. Carr’s books.
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CORPORATE MEMORY AND GOOD DECISION-MAKING – REPLACING THE MISSING LINKAGE TO HELP FIX LIZ’S BROKEN BRITAIN
By Arnold Kransdorff
While growth, growth, growth is suddenly the mantra of the day, have you noticed something missing from the Liz Truss tumult? Not once have the critical players or the main pundits claiming to know how to extricate the UK from its latest economic mess, mentioned the two key constituents to the problem – endemic low productivity and the inability to make good and better decisions. To use the vernacular for effect, both suck in the UK, making whatever efforts to create the required growth less than effectually profitable or even possible.
As the statistics show, our workers cannot produce as much as our main competitors, output that has been evident for decades, while the other mantra – “we must learn the lessons” – deafens the public and private workplace. Mutually, they do little for underlying competence and indicate the one huge unaddressed difficulty of the workforce – that we’re not very good decision-makers or experiential learners, in spite of dedicated instruction out of devoted business education and training.
The debate around the UK’s productivity has never been satisfactorily resolved. Acknowledged as one of the UK’s bigger difficulties and the key to achieving greater national wealth, the issue is typically reduced to the uncomfortable idea that British workers are less than enthusiastic about hard work, a view unambiguously supported by the published comparative outputs of competitors. Even new prime minister Liz Truss was once heard saying that British workers needed to ”graft” more (https://www.theguardian.com/politics/2022/aug/16/leaked-audio-reveals-liz-truss-said-british-workers-needed-more-graft), a politically incorrect comment that, in equally politically incorrect language, avoided any specific criticism or responsibility of managers. Because decision-making is fully a managerial discipline, much of the disparaging explanation for the UK’s poor work ethic must surely also fall on supervising and executive ranks. Unquestionably, more so.
What, then, is the underlying problem that reduces the quality of managerial decision-making?
It is poor management of the common-sense workplace strategy introduced around 40 years ago to support the fast-changing marketplace which has, ever since its robust take-up, imposed on almost every single employer their biggest loss in plain sight – their own unique, hard-won and expensively-acquired knowledge and experience. Given that every employer creates its own distinct practice to competitively survive, the introduced ‘device’ was the flexible labour market to cope with the rapid market changes of the time. Instead of employees having one or two employers in their working life, employing organisations took to the idea, with employees eventually participating with gusto. Today, post-Covid, the number of different paymasters an employee has averages upwards of 10 in the UK, including senior decision-makers, all using employer change as the way to improve their remuneration and career prospects. Such high staff turnover has brought much short tenure employment to the workplace (average four years and falling and with it huge and continual corporate-specific knowledge loss that, because most corporate progress is acknowledged to come about organically – i.e. one experience on another – constrains the ability to grow naturally. Stop-start slows everything down, with incoming replacements routinely deprived of full evidence with which to apply their own experience to make good and better decisions. Conventional induction processes haven’t adapted to adequately addressing this immeasurable knowledge loss; hence the UK’s productivity shortfall, which employers struggle to contain.
“A massive vulnerability”
Examples that illustrate the dysfunctional relationship between high staff turnover and poor decision-making abound in both the public and private sectors of British industry. A classic includes the way Lord David Freud had to work during his time in office as Minister for Welfare from 2010 to 2016. He recollects: “I sat there for six and a half years, looking at the third, fourth, fifth generation of a person doing a particular area: there is no corporate knowledge retained. That’s just a massive vulnerability” (https://www.instituteforgovernment.org.uk/ministers-reflect/person/lord-freud/). A reference to staff turnover in his department, he was, in effect, living the reality of a system without any institutional memory and suffering from corporate amnesia. Imagine this happening across every disciplinary area in every employer with high staff turnover, i.e. everyone?
What managers, and specifically Human Resources (HR) and Knowledge Management (KM) can do, is provide their new employees with the evidence that would otherwise be lost. This can be done by delivering, with the co-operation of the contributor, serious and comprehensive oral debriefings of the knowledge and practice of important departees to their replacements in either transcript, audio or video format. The operative words are serious, intimately work-related and comprehensive, best coordinated by a suitably assertive and savvy internal employee or an independent and aptly qualified external interviewer. Proprietorial attitudes to knowledge sharing can be overcome by contractually agreeing knowledge sharing arrangements at appointment and/or offering a leave-taking payment to compensate employers for their employees’ new opportunistic workplace.
It becomes a powerful aid with which new entrants can apply their own experience to their new and constantly changing conditions and circumstances. Jobs continuity is better maintained, important knowledge and activity-relevant knowledge is captured and, instead of having to rely on second- or third-hand memory that offers commonplace short, selective and defensive responses, the opportunity arises to effectively apply first-hand recollections for better decision-making. In management speak, the problem is called corporate amnesia, the solution is knowledge transfer and the outlook much, much better experiential learning that takes the critical discipline of decision making out of its generalised educational context into its equally relevant corporate environment. See https://www.mrcorporateamnesia.com/, a two-part DIY toolkit instructing employers how to do knowledge transfer themselves. Also https://biggernumbers.wordpress.com/ and https://www.pencorp.co.uk/
It is worth suggesting that better top-down decision making would, by improving workers’ productivity, help to change the British labour force’s unhelpful work ethic.
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HELP needed to see if this AI-HR link-up is practical – it could be ground-breaking
Can it improve the hit-and-miss of regular recruitment?
By Arnold Kransdorff
Left to themselves, most employees are not good communicators. Which is why, when asked to explain something in writing, the recording process normally shuts down. Accurate, understandable and readable is not a skill well acquired in the classroom or the workplace. The words usually come out either very long or very short and, as the academics point out, using memory that is too often endemically wanting, selective and/or defensive. Personal and collaborative detail alongside descriptive exactitude is as rare as hen’s teeth.
In the world of Artificial Intelligence (AI), these are huge limitations, whatever the application. Software engineers may well do their best to design their programming algorithms from which to learn, but it is the availability and quality of the input data that determines the output. However graphic or overstated, the popular CICO idiom – crap in, crap out – the reality is nevertheless close to the truth. After programing, available data and individuals’ communication skills are the most important factors of production that influence the productivity of machine learning. And the fact that the recruitment process is still largely a manual exercise subject to being highly judgemental by both outside professionals and in-house HR departments, the result is that much staffing ends up being mismatched.
Any improvement in the quality and quantity of the input data will deliver much more downstream.
Knowledge transfer
For this, the skill of knowledge capture within the wider discipline of knowledge management (KM) becomes uniquely useful. With the importance of induction/onboarding in mind, the workplace’s challenge to address corporate amnesia – the institution-specific knowledge and experience that employers lose through the flexible labour market’s very high staff turnover – is both relevant and resourcefully adaptable to AI. Ordinarily, the process involves the transfer of employers’ captured knowledge and experience from important exiting employees to their replacements via transcript, audio or video format. To ensure the available detail, content is acquired through skilful oral debriefing by either an experienced independent outsider using historian-like interview skills or a trained-up in-house individual, providing the add-on value for the identified successor to be more effectively onboarded. Instead of new appointees having to depend on an extended period of corporate familiarisation and second- or third-hand recollections from remaining colleagues, this self-same evidence, which can be effortlessly removed from the wider data provision for AI, can deliver to successful appointees the wherewithal to inherit their predecessors’ practice at first hand.
At a stroke, jobs continuity in the workplace is maintained, corporate awareness is expedited and the otherwise fallow period of productivity while replacements are normally embedded, is shortened. It’s already a powerful learning tool but the addition of this detailed personal experience could also provide the AI process with a much more fertile ground for recruiters to improve their selection criteria.
Following Alexa, Siri and self-driving cars
Although still in its early development phase, AI’s applications are evolving, varied and growing, all of which employ the digital processing of vast amounts of data and information. They cover intelligent systems that have been taught or have learned how to carry out specific tasks without being explicitly programmed, such as the speech and language recognition of Amazon’s Alexa and Apple’s Siri or in the vision-recognition systems on self-driving cars. Elsewhere, there are systems capable of learning how to carry out specific tasks based on accumulated experience.
Is it now the turn of recruitment, where employees and the jobs they do is conveniently data dense? And given staff turnover’s appeal to the flexible labour market, recruitment’s time, effort and expense, not to mention the upcoming hiring blitz to address mid-Covid’s Big Quit workplace ‘clean-out’, AI would seem to be a timely opportunity to initiate the next generation of HR activity to better professionalise the discipline of staffing. Can you help? If of interest or can help, contact info@mrcorporateamnesia.com
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THE NEW INDUSTRIAL REVOLUTION: HOW VITAL IS BUSINESS HISTORY?
When climate change makes transformation a ‘must do’ and one’s corporate culture deters …
By Arnold Kransdorff
The UK’s big arguments against the awareness of history being a legitimate decision-making tool are that it is irrelevant and that the future is more important than the past. Typically, the retort is that it happened according to yesterday’s environment and circumstances. Things have changed. We don’t want to repeat it, so don’t need to be reminded. Yet, for a country that’s been complaining for years of low productivity and obvious decline as an industrial power, the low use of the historical record gives credence to the proverb that out of sight is out of mind. And that reduces the evidence that could improve decision making.
Consider business history’s non-availability in the UK. It’s not taught as a dedicated subject in the British educational system, including business schools, having been kicked into the long grass in the 1970s. Senior industrialists and young Turk managers disparage it, believing that they know better, while business owners typically overlook it, not wishing to be reminded when things went wrong. And ordinary employees, handed down the responsibility of working the engine of the whole wealth-creating machine, are unconsciously bound up in its reality, its tradition, its culture, its routine and, because of the attitudes of their seniors, untaught in its potential rewards. In any event, they belong to the 40-year-old system of employment known as the flexible labour market, where very high staff turnovers prevent so many replacements from acquiring much employer–specific knowledge and experience outside of their own short tenures; this is important because every employer is wholly dependent on their differences to remain competitive. If they were in hospital, they would have the business equivalent of the ‘nil by mouth’ instruction above their beds which, translated into business speak, is that they should receive nothing in the way of historical sustenance.
The irrelevant argument and the effects of flexible working’s short tenure also reveal a systemic naivety of how individuals best progress – progressively, i.e. one step at a time, a process that requires all employees to have a detailed awareness of their own employers’ prior practice. As such, it is exactly because of regular marketplace change that history becomes useful. Individuals’ memories are endemically short, selective and defensive, a deficiency which automatically short-changes the process of effective learning and better decision making. Given how staff turnovers have rocketed across the workplace, originally introduced to help employers better cope with the fast-moving marketplace, the whole idea of flexible working looks to be a prime example of one of the 18th century Wealth of Nations author Adam Smith’s unintended consequences.
The opportunity rears its head
With climate change on the agenda and a new industrial revolution in prospect, where much of the UK’s economy will have to be re-fashioned, is it not time to reconsider the business history weapon? New inventions, new processes and new skills, many of which will be hi-tech and truly original, will be on the cards. Called innovative change, enduring short-tenure employment will provide little workplace continuity after invention. Given that there will be little or no precedent or wider perspective from which to learn and improve, the origins and next generations of these changes will require their own in-house history to survive and prosper. In business language it’s called knowledge transfer, also a little used management skill.
The UK’s first Professor of Business History, the London School of Economics and Political Science’s Leslie Hannah, gave it its legitimacy in the 1970s. It – business history – provided “experience cheaply”, he said (The Rise of the Corporate Economy: The British Experience, The Johns Hopkins University Press, 1976). Simply extrapolated, if it is not in direct view, it will be easily forgotten or dismissed as unimportant, then lost as a tool of learning, as, indeed, the subject of business history itself was subsequently overlooked. In the 1970s Professor Hannah had been sent to the US to investigate whether Britain should embrace the curricular subject. A decade later he left the UK to join a more accommodating university in Japan. Another prominent champion of the genre, Professor Geoffrey Jones of Reading University, went to Harvard as the initial enthusiasm waned. The genre has since struggled to maintain a professional profile.
What can be done?
To specifically address the problem of the widespread, short-tenure workplace, the recall of short- and medium-term organisational memory can be resolved by what’s called Oral Debriefing, when the knowledge and experience of exiting employees is transferred to replacements via skilfully documented transcript, audio or video. The advantage this brings is that departees’ memory becomes available first hand – effectively straight from the horse’s mouth – instead of being delivered to replacements via imprecise second- or third-hand recollection. Alongside this innovative application, long-term corporate memory can be conveyed by the traditional corporate history, which is usually poorly produced as public relations at important anniversaries. And to help with instilling a wider business culture, which British employees have long lacked, long-term awareness can be delivered by introducing business history as a curricula subject into secondary schools and universities. Separately, and constructed appropriately, the genre can be used to enlighten issues from strategic management to leadership.
In simple terms, these non-existent inputs have ensured that employees have become institutionalised experiential NON-learners, the effect of which ensures that employees keep on repeating their employers’ mistakes and even find it difficult to improve on their successes. Without awareness and then learning, the most effective way that individuals and institutions progress (i.e. organically – that’s one step at a time) slows, and, after the event, especially when things go wrong, almost everyone parrots the embarrassing meme: “We must learn the lessons.” Since 2018, Google reports that the phrase was publicly repeated more than 350,000 times in the UK and over half a million times in the other big flexible labour economy, the US; it’s not rigorous research, admittedly, but nevertheless indicative of the reaction to day-to-day environments and circumstances. In fact, the UK’s own business history teaches that the workforce doesn’t learn well from experience, that we’re dyed-in-the-wool experiential NON-learners, unless ….
The UK might have more recently lost the plot with the industrial revolution it invented, but climate change’s compulsion to transform its industrial profile and decision-making skills surely cannot ignore the opportunity to indulge in much better knowledge transfer?
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WHY, OH WHY, IS THE UK SO UNPRODUCTIVE? AN UPDATED EXPLANATION AND ITS LOGICAL, SO SIMPLE, SOLUTION
“We’ve carelessly unschooled ourselves by becoming forgetful”
By Arnold Kransdorff, aka Mr Corporate Amnesia
Given that weak productivity growth is the conceded most important problem facing British industry, the most exasperating business-related question haunting the UK must be why we rank so low on its international league table. We’re the oldest industrial nation with the most business experience. So, having travelled the business road many times before, it would be logical to suggest it would be easier for us to make good and better decisions. But no, there are other developed countries that out-produce us – and they’ve been doing it for more than a few decades. France, for example, our nearest big competitor – similar populations, comparable modern developmental history – can do by Thursday afternoon what the UK can only produce by Friday evening. Only Italy under-performs us.
The prevailing explanations have been around for ages – poor business education without a focus on much historical, lower skills, an unhelpful infrastructure, subdued investment in research, development and innovation, even because our national culture is not proactive, all of which can perhaps be bunched around the broad doctrinal heading of politics and managerial arrogance. Over the years Governments have spent billions on upgrading skills, infrastructure and more, but output still lags for want of an unaddressed and crucial impact on a factor of production that’s been compounding ever since it took hold in the 1980s. Its knock-on effect is big enough to impact every single employing institution all the time, yet it is barely acknowledged even among the futile attempts that employers make to reduce its effect.
That factor of production is labour whose workplace has been changed out of all recognition by the seemingly innocuous flexible labour market to which we’ve become so accustomed as to be blindly tolerant. Introduced to help employers better cope with the fast-moving marketplace, the rising staff turnovers first initiated by employers are now supplemented by employees themselves, including professionals and top decision makers, who are increasingly using it to improve their remuneration and prospects.
Dropping the baton
Consider, then, the business of business as a marathon made up of multiple relay races, each dependent on smooth decision-making to encourage continuity for best forward movement. Discontinuity, such as dropping the baton, is the enemy within. It slows everything down. For commerce and industry, ‘discontinuity’ comes from flexible working’s short employer tenure, running at average staff turnovers of around 26% a year in the UK, higher in the US (and that was just before Covid-19). So much hard-won institute-specific knowledge and experience – both explicit and tacit – departs its host that decisions at all hierarchical levels at both top-level strategy and lower-down operational determinations are less than rigorous as replacements try to play catch-up with their new employers’ tried-and-tested practice and special way of working. Without such corporate awareness – the equal of dropped batons – many new entrants make decisions based on their previous employers’ experience rather than also taking account of their new paymasters’ special environments and circumstances.
Now run your calculator over the numbers of every departee and every replacement across the economy all the time. Then, picture this impending scenario; no sooner than the replacements for every single 26%-er clock in, another 26% gets ready to clock out. In five years the entire workforce of every employing institution could be replaced, although the likelihood is that there’ll be a handful of stalwarts who will be expected to remember everything. Fat chance ….
By letting so much of their main intellectual asset go walkabout, employers have unschooled themselves and acquired what’s called corporate amnesia, the other name for being forgetful. That means it’s more difficult for them to learn from their own special experiences which, in turn, explains the repeated mistakes and other unlearned lessons that plague the workplace. Organic progress stalls and along with associated continual jobs disruption at all levels and increased employment costs, it accounts for our difficulties with productivity growth.
The traditional approach to providing relevant corporate-specific awareness has been through little-used apprenticeships, some mentoring and minimal conversational access with exiting senior individuals, while standard induction processes usually only provide terms of employment-type information and formal introductions to future colleagues. While these approaches could be escalated and/or improved, the endemic effects of short, selective and defensive memory recall of both contributor and beneficiary in which everyone participates subdues any potential advantage. This is often accompanied by individuals’ instinctive behaviour to disclaim ownership and responsibility for others’ previous practice.
The knowledge transfer solution
There IS an unorthodox and disarmingly simple solution, however; replace what flexible working removes by transferring the knowledge and experience of important exiting employees to their replacements. Delivered in either transcript, audio or video format, the most effective way to do this is through oral debriefing, a technique that – done well – can more than substitute for the absence of its owner by providing first-hand detailed familiarity not available in traditional tutelage and/or standard induction processes. The technique is acknowledged as a tool for serious scholarship, first championed by the Pulitzer Prize winning author/historian Studs Turkel and Professor Allen Nivens, who started Colombia University’s Oral History Collection in 1948 that other universities have copied.
There are several alternatives for such capture, the most unpredictable being departing individuals writing or recording their own experiences either on a regular basis or before they depart. As a general rule, individuals, even senior decision makers, are notoriously poor communicators when it comes to autobiography and especially with difficult-to-appreciate and identify important tacit knowledge. A more reliable way is to outsource the capture to an experienced interviewer/facilitator with the ability to ask pertinent questions when the narrated answers are imprecise. When employers/managers find this too personal or private for an outsider, another option is to train up an internal individual to do the job. For this, there is a step-by-step TOOLKIT (http://mrcorporateamnesia.com/) which explains the issues around knowledge ownership, knowledge sharing and how best to capture and learn from short- medium- and long-term organisational memory (OM). The recognised tools used have been customised to accommodate today’s short-tenure employment.
Imagine replacements having personalised and detailed access to their predecessor’s knowledge and experience within days of their arrival?
Flexible working may well have turned in the unintended consequence that medicine calls dementia but the reality is that the UK’s short-term employment workplace is, fait accompli, the adopted choice of employers and the popular occupational journey for much of the workforce. At the end of the day productivity is a hands-on business and the skilful determinations of both senior and lesser decision-makers, including and especially nomadic ones at all occupational levels, are important to keep the corporate bus moving and allow new employees to efficiently apply their own experience to their employers’ special environment and circumstances. Stop-start multiplied by the number of departees and replacements requires a different and better way for the workplace to do its business.
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AN OPEN LETTER TO …
Rt. Hon. Philip Hammond, MP,
Chancellor of the Exchequer.
HM Treasury,
1 Horse Guards Road,
London SW1A 2HQ.
November 26, 2017.
Dear Mr Hammond,
Your productivity misfire – beware the ides of Peter Drucker
How many more times are your ‘expert’ advisers going to tell you that it’s possible to solve our productivity problem with fiscal efforts alone? It might help to smooth the pathway but if employers can’t make good and better decisions, then all the better roads, bridges, railways and houses you build WON’T improve productivity in any meaningful way. Nor will it work to improve tax incentives to encourage investment. Business Secretary Greg Clark’s just-announced Industrial Strategy to early fund new areas of bioscience, artificial intelligence and the automotive industry is an imaginative way to resurrect the way output was stimulated in the past – by developing new technologies – but all this still neglects to address the other big reason for our productivity dysfunction.
That a German employee, also inspired by new technologies, can do by Thursday morning what a British employee does by Friday evening.
I cite as my evidence that the record already proves this as Governments have been implementing similar fiscal-designated efforts for decades, yet productivity languishes, your own outlook is bleak for another five years and the experts have actually admitted that they don’t know why its faltering.
It’s not as if we weren’t advised. More than 25 years ago, when we were also entering innovative areas of business enterprise, our own management guru, the late Peter Drucker, told us that it was “managers, not nature, economic laws or governments, that make resources productive. The country that does this first will dominate the twenty-first century economically. Unless this challenge is met, the developed world will face increasing social tensions, increasing polarization, increasing radicalization, possibly even class war.” (“The new productivity challenge.” Harvard Business Review, Nov/Dec 1991, Vol. 69 Issue 6.)
Where does this ominous warning stand with the just-released (November 23, 2017) conclusion by the independent Institute for Fiscal Studies that UK earnings growth will likely be ZERO for the next TWO DECADES?
You don’t appear to appreciate that productivity is primarily a coalface decision-making issue rather than a problem that can be fixed fiscally. And that wage increases are economically unjustified in our market environment when they’re unsupported by increased productivity.
As the record shows we, as a country, don’t make very good decisions. Nor do we learn well from our experiences, so you would be better off balancing your fiscal efforts with encouragements to employers themselves to solve the problem. For this, the solution would appear to be Education, Education, Education, a mantra supported by continuous investment that predates your administration but which has not brought the expected improvement.
Unfortunately, both employers and business education have not been directly addressing one of the unacknowledged problems of productivity shortfall – flexible working, the downside effects of which have been compounding since its advent in the 1980s. Flexible working brought to the table higher employment but NOT higher productivity.
To explain. The change it imposed – employees, including main decision-makers, moving their employer on average every four to five years in the UK – has dramatically increased workplace disruption, overturned organic progress and dispersed the employers’ unique, hard-won and expensively-acquired knowledge and experience. Against the reality that the services of replacements – even better qualified new bloods – are never seamless, jobs are constantly in flux. It also accounts for our many repeated mistakes and other unlearned lessons that litter the workplace. With this happening to EVERY job and EVERY employer across the ENTIRE industrial spectrum, it is a systemic drag on output that contributed to UK management consultant Proudfoot’s 2005 estimate of productivity waste costing a staggering 7.5% of GDP.
Ironically, one of your former coalition Ministers, Vince Cable MP, then Business Secretary and now leader of the Liberal Democrats, admitted in 2014 that the flexible labour market “DID contribute to low productivity”. Further official understanding of the phenomenon stopped.
Given that short tenure working is now irreversible, the ONLY efficient way to address this identified dysfunction is for employers to capture and share their exiting knowledge with incoming employees alongside the largely untaught skill of Experiential Learning (EL), which is different from conventional education provision, even so-called Continuous Learning. Its precept turns on the employee ability to constructively reflect on their employers’ own knowledge and experience that, as established by flexible working, walks out of the front door on a regular basis. The full evidential base on which good and better decisions could be made has, wittingly, departed its source. It’s not rocket science – and it does nothing for productivity.
Rather than just throw Treasury money around, the answer – also simple – is for employers to address their own knowledge losses and their experiential NON-learning through better knowledge capture, its sharing down the rolling generations and its better application.
In our case, where the difficulty arises is getting the right people on board. Institutional and corporate silos seem to specialise in estrangement. Your Treasury department could better work with Education as well as Business, Energy & Industrial Strategy. And, at the frontline of commerce and industry, Human Resources (HR) and Knowledge Management (KM) will need to get together to optimise their shared interests. The goal must be better decision making. Not just better roads.
I should advise that I’ve previously pitched this discourse to two of your Government’s former Ministers (Sajid Javid & George Osborne, see biggernumbers.wordpress.com/budget), as well as previous administrations, with just patronising responses. It has additionally been cc’ed to other Government Departments and interested parties. My presumption is that Government would be interested in addressing ALL matters surrounding the important issue of productivity shortfall.
If the IFS is only half right, what’s at stake are the Ides of Peter Drucker.
Sincerely and collegially,
Arnold Kransdorff.
http://www.pencorp.co.uk
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BIG DATA is all the rage but why have we forgotten more important SMALL DATA
There’s something remiss in the worlds of Human Resources (HR) and productivity.
Productivity is an economic measure of output that rates how effectively employees produce goods and services, usually calculated at an employer 
or country level over a designated time period. It is a primary indicator of efficiency, management/employee competence, profitability and broader wealth.In an environment of high staff turnover – many developed countries, including the UK and US, have subjected themselves to what’s called the flexible labour market – one would think that issues like induction and particularly decision-making would have a higher priority.
Yet the practice of both has not changed much since the job-for-life tradition started disappearing in the 1980s.
This is relevant because high employee turnover – the average number of different employers in a working lifetime in the UK is now eight (= typical 4-5 years tenure), higher in the US – has dramatically changed many of the fundamentals of decision-making. With every job always in flux, there is no continuity alongside the rolling loss of the employers’ unique knowledge and experience and the widespread breakdown in the organic way that most progress occurs – one experience on another. With conventional induction dealing with cursory, contemporaneous issues, replacement employees typically have only limited knowledge awareness with which to make their determinations.
Then, the traditional taught methods of decision-making, which were designed to cater for the old, job-for-life workers and managers, get no advantage from abridged knowledge bases, leading to poorer decision-making. It is a phenomenon highlighted by the pandemic of repeated mistakes, reinvented wheels and other unlearned lessons that litter the workplace – as well as lower productivity to which the UK, the US and others are exposed. Employees – and this includes equally mobile managers – are, literally, being left in the dark.
What makes this unacknowledged commentary significant enough to be considered alongside the conventional explanations for low productivity is that it covers the employees of EVERY corporate, Government and local authority and charity, all of whom are making decisions without the benefit of their own employers’ hindsight. Is it not probable, then, that productivity, calculated after all on the back of employees’ actual output, will take a substantive hit?
There is a string of puzzling aspects to this oversight. Employers have seemingly been more concerned with trying to reduce their worker turnovers than solving the bigger problem of their own departing knowledge and experience. Alongside this is the apparent belief that other employers’ knowledge and experience are more important than their own and/or that replacements’ know-how will fully compensate. And if so, that the continuous import of only others’ experience will not dilute their own cultures to the point where their USPs – their unique selling points – will melt away. Equally mystifying is that business educators have not realised that employers’ evidential dearths would inevitably affect both employees’ decision-making efforts and their own decision-making instruction.
Between them, they have contributed to disenfranchising employees by not addressing employer-specific knowledge loss and replacements’ ability to better learn from their employers’ own experiences.
To put a contemporary spin on what’s happened, consider what Information Technology (IT) is currently doing for industry and commerce. It’s come up with what’s called Big Data, the computerised analysis of voluminous amounts of structured and unstructured explicit data and information from inside and outside employers’ immediate orbit. What it is doing is providing an up-skilled way of upgrading the traditional approach through organisations’ data banks to planning strategy and policy.
Useful as this might be, what employers and business educators have lost sight of is what could be called Small Data, the perceived lesser component of the employers’ unique and more important non-technical and tacit way of getting things done, also known as coping skills. Its expression is implicit, ambiguous, based on observations, insights and actual experiences, and deeply rooted in values and culture. In providing what this author likens to the lubricating ‘how’ of know-how, it forms the underlying framework that makes added knowledge possible. In reality they’re inter-dependent for best practice.
So why is it that so-called Small Data has been neglected by employers and business educators have not realised that decision-making in today’s walkabout workplace is an altogether new discipline.
What hasn’t been fully appreciated is that the flexible labour market has been a game changer in sheep’s clothing. While it has broadly achieved its main objective – to allow employers to change direction more quickly and improve employment numbers – its unrecognised downside has made replacement employees less able to take full advantage of the never-higher availability of business education.
To accommodate the many-tenanted jobs, employers have to selectively capture their unique knowledge and experience before it walks out of the front door, optionally via video, audio or transcript. It then has to be shared with the rolling generations of replacements, ideally at point of entry – i.e. at induction. And finally, to realise full added value, they have to top up their conventional training with the educators’ untaught skill of Experiential Learning to enable more constructive reflection of the more comprehensive evidence base.
Imagine! Flexibility retained, the downside effects of workplace discontinuity fixed …..
Like flexible working, productivity is a much-unappreciated factor in the management dance that is business. Without it, investment is more expensive than necessary and employee remuneration lower than it might otherwise be, factors that put all sorts of familiar pressures on Government to try and help; enter macro moves such as infrastructure improvements and currency manipulation. But at the end of the day it is employees, whether in the private or public sectors, that make the big difference. In this, Small Data is key in today’s flexible labour market. 
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GRENFELL, SAD METAPHOR FOR MODERN ENGLAND
The fire that spectacularly consumed all the high-rise homes in Grenfell Tower, West London, and many of its occupants is, sadly, a metaphor for the state of the nation in England. In the wake of another tower block fire in 2009 – six lives were lost at Lakanal House in south London – the main lessons that were 
identified then were obviously unaddressed. As an acknowledged problem, the bottom line is that it was a repeated mistake and thus avoidable.
With the tragedy also symptomatic of wider safety issues, the person who called for the original Lakanai Public Enquiry rammed home the extent of the dysfunction. In uncompromising language, Jenny Jones, London Assembly Planning and Housing Committee chairwoman at the time, railed: “I said in 2009 we couldn’t allow more people to die in a tower block fire. The system of fire safety checks was not working properly and inadequate building regulations relating to the outside panels were partly responsible for the rapid spread of the fire.” Ms Jones added that those doubts continued to be expressed in the years after, in spite of the recommendations from the Public Enquiry and Coroner’s Inquest. “It is staggering that fire safety professionals were warning in March this year that the use of flammable cladding was a tragedy waiting to happen. In fact, some had been warning about the use of such materials back in 2000, well in advance of the Lakanal House fire.”
Attending the biggest preventable incident in recent memory, the new Public Enquiry and other investigations will no doubt raise the issues of money, or more familiarly, lack of it, as well as plain old negligence. Few will admit it but, whatever the outcome, it’s clear that decision makers at many levels are not very good at learning from experience, whether in the private sector or the public sector. Learning from experience is a defined skill, its absence in the workplace echoed by the catalogue of unlearned lessons that keep on littering the workplace.
But just how bad are our decision-makers? At the individual employer level, it’s been notoriously difficult to measure except through imprecise indicators such as speed of delivery, the effort involved and eventual yield/turnover/profit. But there is now a modern technology-related way of estimating the prevalence of acknowledged mistakes that could become the substance for proper experiential learning.
Short of listing them – they’ve filled many a book, mine included – I quote a simple Google search for the words must learn the lessons and then should never happen again, both public acknowledgements of mistakes. I prefaced them with the geographical location, the UK, and the numbers that came up were jaw dropping. The first was 40 million-plus, the second 39 million-plus. Yes, references to lessons that needed to be addressed – i.e. those requiring the particular skill of experiential learning – numbered at least 39 million.
I appreciate that many are separate references to the same event and that Google searches don’t make these figures rigorous or academically sound but if the net figure doesn’t suggest that something is wrong with the way we make our decisions, I refer to another, more authoritative, observation, where the examples were big enough and political enough to be mentioned in the corridors of power. Confirming that our lack of experiential learning is not new, a columnist from The Times newspaper in London did some research in Hansard, the official record of all legislative utterances in Westminster 15 years ago. Into his computer he typed the words “no stone unturned” which, he decoded, was “an inflated way to claim energetic action” for something gone wrong. The number was 4,933 over the 14-year period to 2002. “Is it really possible that someone in the House of Lords, the Commons or elsewhere in the political machine has declared their intention to leave no stone unturned, on average, once every single day for the past 14 years?”, he declared. Incidentally, “no stone unturned UK” in Google turned up 506,000 references.
Occupational fitness is a defensive subject for any national grouping but for the UK, the evidence gets firmer when it comes straight from the horse’s mouth. A rare self-assessment of decision makers in top British companies turning over more than £200 million a year found that an astonishing one in four of their determinations was wrong. Their admission to the consulting, technology and outsourcing company Capgemini was that the rate in financial services was even higher – one in three. With an average 20 ‘business critical’ decisions taken by each manager every year, the financial impact of which was computed to be worth an average £3.4 million, this equated to a wrong determination every eight weeks by each of every one of an average 33 decision-makers in every organisation. This unusual survey was undertaken in 2004, since when – on the basis that the nation’s productivity figures have languished – the evidence of any improvement is thin.
If readers are still unconvinced of the country’s decision-making infirmity, I suggest the following underlying, unacknowledged and systemic explanation; that both the nation’s specific and collective memories are short, selective and/or defensive. And even if any of these WEREN’T the case, commerce and industry are light on the skill known as Experiential Learning (EL), which is the ability to transpose prior practice, whether successful or unsuccessful, into better practice. Sadly, it’s a subject not formally taught in our business education, even in our business schools, the traditional approach being to let individuals learn for themselves spontaneously.
Not that, even if it WAS taught formally, we could have a tutored chance at being better experiential learners because of two connected and sweeping decisions in education and the workplace. Both have consciously and dramatically purged the ‘experience’ component of any proposed experiential learning across society.
The first concerns the awareness of long-term experience. All types of occupation-related history, including business, economic, management, even corporate history, are virtually non-existent in the education system, which, simply, removes enduring awareness from future employees’ consciousness. The second removes the mindfulness of short-term experience from the employers’ workplace in the form of the flexible labour market, whose short-term tenures in the UK now averages between four and five years. At this rate employers’ OWN unique knowledge, experience and wisdom continually goes ‘walkabout’, leaving replacements to rely almost exclusively on the non-specific evidence from their replacement employers. And while the experts think this is a good thing for employers to have, it comes at the expense of the employers’ own knowledge, experience and wisdom, without which tried-and-tested mistakes get repeated, wheels get re-invented and other lessons ignored (as with Grenfell), with replacements typically disassociating themselves from their predecessors’ experiences (“Not in my time”, “Not my responsibility” and “We know better”).
The coal-face effect of these two measures is a widespread memory deficit, what’s called corporate amnesia. Without it, it’s why decision makers can’t learn from experience, why there’s so little organic progress, and why – so, so tragically – so many people lost their lives in west London in June. Incidentally, at the time of writing, Grenfell Tower is among another 200 tower block examples of experiential NON-learning to date. With other blocks still to be checked, the bill for replacement cladding is already estimated to top £600 million – another heavy cost for experiential non-learning and the nation’s productivity that’s bound to be exceeded by a heavy margin ….!
The wider solution to the workplace disruption and corporate amnesia is not rocket science – to counterbalance, provide replacement employees with both the appropriate evidence base and the skills to properly APPLY the experience to new circumstances and environments. Even innovative knowledge – i.e. completely new initiatives – require experience and experiential learning to evolve.
However the “lessons” of Grenfell turn out, I bet a pound to a penny that the words ‘experiential learning’ or its antonym ‘experiential NON-learning’ will NOT appear in any of the reports into what happened. Nor will it be suggested that the flexible labour market and its unaddressed bedfellow, corporate amnesia, might be a factor in the disaster. Or that proper EL should be a more prominent subject in the workplace.
When will commerce and industry realise that our ability to make good and better decisions is not as good as we think it is? For the world’s oldest industrial nation – meaning that we have more experience than anyone else to inherit and with which to work – such flawed performance should not be shrugged off as normal and/or acceptable.
Postscript: Devolved Scotland is little better at experiential learning, at least in this area of activity. At the time of writing Napier University’s Bainfield Halls of Residence and 44 other Scottish schools were found to be using the same kind of cladding that was used in England. Scottish regulations were changed in 2005 after a similar fatal Scottish tower block fire in 1999.
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MIGRANTS A LEG-UP TO BETTER PRODUCTIVITY? Not in the UK, so what to do ….?
How relevant is national culture in the pursuit of economic productivity? And what effect does the worldwide influx of foreign nationals into many countries have on their hosts’ wider output?
Notoriously difficult both to define and manage, culture is 
an amorphous quality constructed of shared patterns of behaviours and interactions, cognitive constructs, and emotional understandings that are learned through a process of socialisation. Commerce and industry is one identifiable area where its effects can be quantified through one simple number – output at the individual, corporate and national level.
In the case of countries like the US, a high immigrant country, and Poland, a high emigrant country, the traditional perception is that their migrant workers are particularly diligent. Employers love them because their output and reliability is high and their wages can often be competitively low. In the UK, where immigrant labour has also been particularly high over recent times – and especially from Eastern European countries – the attitude is much the same. Compared with native labour, they’re especially valued for their estimable work ethic, which David Frost, a former Director General of the British Chambers of Commerce, assorted industrialists, even some MPs, daringly say the UK doesn’t have.
Privately, mainly because it’s probably too politically incorrect to say too loudly in the public arena, the expectancy has been that Eastern European immigrants to Britain would, by their example, help to improve the nation’s poor productivity. It appears that this prospect is ill fated.
New academic research has found that many migrants to the UK start losing their stronger work ethic after just two years. With economists equating work attendance with work ethic – one of the most valued attributes for employers – 113,804 workers from Poland and seven other eastern European countries that joined the EU in 2004 were initially more than three times less likely to be absent from work than native UK workers. This study into the question – titled Understanding the perception of the ‘migrant work ethic’ and published in the Journal Work, Employment and Society – used data from the Office for National Statics UK Labour Force Survey from 2005 to 2012.
The Bath University study found that after the two-year period of higher performance, these foreign workers were taking as many sick days as their UK counterparts, suggesting that this component of British culture – and perhaps others too – is doggedly contagious.
Given that culture is notoriously difficult to change, what’s to do to get British workers and their migrant colleagues to be more productive? Something that would override the cultural phenomenon of high absenteeism, even surmount it by a large margin …..?
One solution is to improve the quality of a NON-CULTURAL factor that affects both groups. It’s the consummate skill of decision-making, which has become inherently more ‘hit and miss’ in today’s business world because of the self-imposed workplace revolution of short-tenure employment, which has disconnected employers from their own hard-won and expensively acquired knowledge and experience. The flexible labour market came into effect around 35 years ago to help employers better cope with the fast-changing marketplace but the resultant high level of employee churn has dramatically reduced individuals’ awareness of the employers’ own unique evidence base that replacement employees would otherwise need to make good and better decisions.Ever since then and across the board – i.e. every employer and every employee, including and especially major decision-makers – there’s been much workplace stopping-and-starting, plentiful experiential NON-learning, trifling organic progress and oh-so-slow productivity growth, as the record confirms.
The problem of continual comings and going of employees hasn’t stopped there. It’s seen off most corporate loyalty in the workforce and sworn off many organisational USPs, the distinctive selling points that makes institutions special, helping to dilute overall organisational cultures in an unmanageable way that serves to make them more homogenous. And the ‘experts’ (themselves products of the flexible labour market, bless them!) admit they don’t know how to explain our productivity distress.
Truly, employers are, to use awkward medical imagery, suffering a corporate form of Alzheimer’s – without being aware of it …
To offset the intimate knowledge deficit, known as corporate amnesia, employers need to provide their replacement employees with their more comprehensive evidence base, which should include much of their culture-indicative and distinctive tacit knowledge and experience that will have otherwise walked out of their front doors. And to make this improved resource work more efficiently – i.e. allow replacement employees (and those more permanent) to APPLY rather than REPEAT past practice – employers have to add the untaught skill of Experiential Learning (EL) to their in-house training. As it implies, this variety of learning takes place from experience, but in this model erudition expressly INCLUDES the employers’ OWN knowledge and experience, which flexible working has absented.
This blog addresses both.
Postscript: Improved productivity is the no-brainer answer to many of the UK’s economic woes, confirmed at just one level by the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter the workplace. Being systemic, good and better decision-making is the single most effective way to improve profitable output, competitiveness and – coincidentally in the UK’s case – also the most effective pathway to ensure that Brexit, when it eventually happens, works. 
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How to close the gap with the richer few. Addressing the main side issue of the UK’s GENERAL ELECTION 2017
However one boils down the motivation for the UK’s upcoming General Election, the
rhetoric is as familiar as ever; the richer few will be better served than the poorer many. The priority of Brexit aside, it’s a UK chorus as old as the hills that never seems to be understood or adequately addressed by the politicians of all persuasions. Or business.
The issue is simple: in terms of remuneration, the worse off can’t keep up with the better off, mirrored unambiguously in the evident relative wealth distribution figures in the population. Politically charged, it happens to coincide with an uncomfortable and relevant issue that is only now being acknowledged – that the nation’s productivity is not competitive enough, meaning that the output of British workers is too low. What seems to be overlooked is that if productivity were better, the disparity would diminish or, more plainly, employees would become more valuable and their remuneration would rise accordingly.
But this is where economic logic seems to trip over itself. Traditionally, the blame for low UK productivity is aimed at the workers who, confirmed by research, actually work longer hours than employees in many other countries. Unsuitable education is also reproached along with the linked lack of relevant skills but what if much of their effort was misdirected and the problem was NOT primarily at the coalface, rather with the decision makers whose determinations were less than effective?
It’s a conclusion that gets little traction, no doubt because leaders would have to admit that, at the time they presided over lower productivity yields, their well-paid performances were unworthy of their remit. But consider this. Their decisions ARE automatically less than effective, as are the inevitable efforts of their subordinates, because of the unintended – and unaddressed – consequence of a policy that has upturned the character of the whole workplace, including the individuals at manager and directorial tiers.
At the individual employer level, the flexible labour market’s stop-start effect, now in place for more than 35 years, has been continuously removing the institutional knowledge base of every employer. The result is systemic – constant workplace disruption, a depleted store of organisational evidence that would otherwise allow good and better decisions to be made by replacements, the end of organic continuity (which is the main element of most progress) and, inevitably, lower productivity. They all contribute to what is called experiential NON-learning, which is where employers, representing the richer few – a.k.a. their main decision-makers – could help the poorer many.
Experiential non-learning’s antidote, Experiential Learning (EL), is a formalised skill like any other that is widely untaught and clearly essential in a working environment that encompasses short tenure. For this, EL has to be accompanied by an attendant and suitable Knowledge Management (KM) programme that more expertly captures and shares the detail of exiting experience before it walks out of the front door.
Flexible working has its advantage in an ever-changing business environment but its evident downside effects need to be offset before it can fully contribute to productivity’s restoration.
p.s. in the post-Brexit world, productivity will need to be improved anyway if there’s no shelter from the EU’s tariff breaks, which used to help sell nearly 50% of our exports. Higher productivity and remuneration would also help to assuage the lingering class war that bedevils our society. 
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Open Letter to UK Chancellor Osborne: “Here’s why your latest Budget forecast is pants”
Rt. Hon. George Osborne MP, Chancellor of the Exchequer, HM Treasury. 1 Horse Guards Road, London SW1A 2HQ.March 20, 2016.
Dear Mr Osborne,
Open Letter: “Here’s why your latest Budget forecast is pants“
Forgive the urban slang, Sir, but words these days have to be loud to get your attention. We all know that you’re trying your best to get the UK on its economic feet but your optimism is misplaced.
In your speech to Parliament, you mention the magic words productivity and productivity growth 11 times. Yes, they’re important – you accept it’s the key to your planned bottom line – but you’ve deliberately camouflaged the real position by burying our actual performance in its wider international context. It’s a yardstick, you say, that’s been “decelerating” in a vast number of countries, that it’s also a “concern” elsewhere and that it’s “too low” across the West, suggesting that everyone is suffering.
Yes, everyone IS suffering, but I must point out that our productivity and productivity growth is so low as to be competitively rubbish, which is what pants means.
Can I remind you that just six months ago (September 2015), the Office for National Statistics (ONS) was reporting that our productivity growth had hit a 25-year low – despite Government contributing to a highest-ever workforce and interventions in housing apprenticeships, skills, universities, transport and finance. Output per hour of UK workers fell 20 percentage points below the average of other leading industrialised nations, and the latest data you give on the subject is that there’s been no improvement. I can’t remember an equivalent collapse in 40 years.
To give a hard number indication of how important you now think is this factor of production, there ARE rough estimates of the cost of lost productivity in the UK – it’s around 7.5% of GDP (Proudfoot, 2005). At today’s level, that’s around £155 billion – equivalent to more than TWICE the Office for Budget Responsibility’s £69.4 billion deficit forecast for 2015/16. Whatever the reason for why we’re so inefficient – I’ll move on to that shortly – the question arises: Is this not a big enough number for this shortfall to be addressed directly?
May I dutifully point out that the UK’s low productivity scores has been an issue for decades. And that Government has been trying to fix it, albeit half-heartedly, for almost as long, throwing around Government-style solutions costing arms and legs in spades. And giving us just pockets of real competitive advantage.
So WHY? How is it that other industrialised countries outperform us so comprehensively on this critical aspect of wealth creation?
A clue to this comes from the repertoire of the late management guru Peter Drucker, whose counsel was that “It is only managers – not nature or laws of economics or Government – that makes resources productive (Managing in Turbulent Times, 1980), meaning that, at the end of the day, output has less to do with infrastructure and monetary inputs than what happens at the coalface of industry and commerce. If employees can’t get from “A” to “B” without going via “Z”, however un-potholed is the provided road, then said employees are simply less productive, ensuring that the money that employers throw at them is not particularly gainful and, from your lofty lookout, you don’t get as much tax income.
Whilst infrastructure-like things are very important, the real problem is management pure and simple. From the figures, it’s clear that management doesn’t do management very well and when that happens, neither can employees. What this means is that while you can continue to do Government-type things until you’re blue in the face, until management raises its game, much of your effort will fall on infertile ground.
Back to WHY? You’ve actually mentioned one of the reasons, describing education as the “single most important thing we can do to boost the long-term productivity of our economy” because – also in your words – the “nation’s productivity is no more and no less than the combined talents and efforts of the people of these islands”. Education is one of those things that you’ve been banging on for years, but – as the productivity numbers confirm – we’ve continually fallen short, suggesting that there’s something in the education system we’re not being taught.
May I respectfully point it out?
It’s because we’re particularly poor experiential learners, as your and previous Governments’ persistent efforts to reverse this endemic problem clearly demonstrates. Compared with others, we don’t learn lessons well. It’s not part of our DNA to look back, assess constructively and apply. Alongside our workplace pandemic of repeated mistakes and attempted cover-ups, “We must learn the lessons” is probably one of the loudest workplace noises we make. We’re more knee-jerk, preferring to employ what another management guru, Henry Mintzberg, describes as Business School stratagems that teach packaged versions of business problems rather than understanding real-world experiences. Bottom line, our business education doesn’t teach us real Experiential Learning (EL), making us very good experiential NON-learners.
For EL to take place, an awareness of ‘experience’ is self-evidently a pre-requisite. Unfashionable ‘history’ is another word for it, yet generically both are widely and demonstrably absent in both business education and the organisations that employ us.
For example, the teaching of economic history is declining and except for the mention of the industrial revolution in some classrooms, business history is non-existent. There’s another, even more forceful, fact, widely unacknowledged and actually systemic to the problem that helps to reinforce the Mintzberg observation that real-world experiences are not adequately acknowledged in decision-making. The flexible labour market’s distinguishing feature of short employer tenure – including managers, the average in the UK is around four to five years and falling – means that much employer-specific knowledge and experience gets dispersed, a description for the condition being corporate amnesia.
Alongside huge jobs disruption, this dearth of available employer-specific knowledge and experience in the workplace – ultimately the responsibility of institutions themselves to deliver – provides little ability for rolling generations of new blood to learn from that actual experience. Any learning that does take place is from others’ experience that, while sometimes useful and even essential, is Mintzberg-like typically unconnected to the employing organisations’ ‘real-world’, requires adaptation to a new unfamiliar environment and, anyway, will suffer similar dispersal and disconnection when the new blood moves on. Persistent discontinuity + rolling corporate amnesia = programmed underperformance …..
And even if that knowledge and experience were available to be properly inherited and joined up, the skill of how best to learn from it is not provided.What’s happened is that the flexible labour market, which has its positive points, is short-changing the evidential base that employees would otherwise use to make their decisions.On the basis of your Budget speech, it seems that you’re depending on productivity improvement to reach your budgetary goal.
On current numbers, Chancellor, we’ll have to improve productivity by a factor of many, many times to get us where you need us, something we’ve never achieved before. Perhaps you’re thinking that what goes down so fast can turn up just as quickly but productivity is, and has always been in modern times, our millstone. Even our more recent historical best will be a challenge.
I’d like to think that you have the time to cheerlead such a change in workplace practice but an improvement such as you need looks to be a destination too far for your short-term horizon. Nonetheless, industry and commerce could still do it for themselves.
Getting EL right involves employers properly capturing their short-, medium- and long-term knowledge and experience before it escapes through their revolving doors. At the same time business education will need to teach the absent discipline of experiential learning to have any chance of trimming that annual £155 billion of lost productivity.
Only then will we be able to better compete with those nations whose instinctive nature for learning lessons is better than ours.
Collegially,
Arnold Kransdorff.
Postscript: Many professions – among them architecture, art, music, the military, medicine, politics, science, the clergy and so on – contain an element of their generic history in their education. Does the lack of history in business education and the workplace indicate that business, at least in its management role, is not a profession? If so, isn’t it time that a society wholly dependent on mercantile endeavour does a radical re-think? 
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An Open Letter to Britain’s Business Secretary: Our enduring productivity shortfall – Are we just inherently poor employees?
Sajid Javid, MP., Secretary of State for Business, Innovation and Skills, 1 Victoria Street,London, SW1H 0ET. September 2015. Dear Mr Javid, Our enduring productivity shortfall – Are we just inherently poor employees? I’m trying to imagine how it must feel to be in charge of a failed policy that has every chance of continuing to founder. Your colleague, George Osborne, the Chancellor, has described our evident problem as the “challenge of our time” and the key to making Britain the “richest of all major economies” to surpass even the US in 15 years. Those were the words he handed down in his pre-election speech on July 9, 2014 and which follow the efforts of both your – and previous – governments for more than 30 years. Yet 14 months later (September 18, 2015), the Office for National Statistics (ONS) reported that productivity growth – the key to which Mr Osborne was referring – had retreated to a 25-year low. Despite Government contributing to a highest-ever workforce and interventions in housing, apprenticeships, skills, universities, transport and finance, output per hour from UK workers in 2014 fell 20 percentage points – yes 20 percentage points – below the average of other leading industrialised nations. Are we inherently poor employees? No, just untutored experiential learners, meaning that, unlike many of our competitors, we don’t learn very well from our own and others’ experiences. May I respectfully point out what your experts have MISSED. If you remember back in the 1980s, it was thought that high levels of labour market regulation equated with poor economic performance. Widespread deregulation followed, providing businesses with an easier way to hire and fire. The fact that many of our competitors also have flexible labour markets and better productivity growth scores only serves to confirm that they are better experiential learners. In our case we can produce turnover (à la our rising GDP) but its cost is extraordinarily high because of our inherent inefficiencies, which helps to explain, of course, our lower wage economy and correspondingly lower standard of living …. Employers taking advantage of your flexible labour market do little to address the unique and hard-won knowledge and experience that walks out of their doors on a rolling basis – in our case every four to five years on average. Imagine ….. EVERY employer having to experience this level of disruptive output for almost EVERY one of their employees, affecting EVERY job and EVERY department ….? Bottom line, it stops in its tracks the way most progress happens – organically, i.e. from the building of one experience on another. Without their knowledge and experience, employers have little ability to benefit from their own tried-and-tested practice. The result is that they become experiential NON-learners, as demonstrated by the pandemic of repeated mistakes, re-invented wheels and other unlearned lessons that litter the workplace – and characterised by the whistle blowing, cover-ups, gagging, the different types of public enquiries, post-project reviews, tribunals, commissions and the lists of ‘not-fit-for-purpose’ activities. If employees didn’t have to reinvent their employers’ raison d’etre so often, our productivity would automatically be that much higher, which would go a long way to realising Mr Osborne’s ambitious aspiration for UK employees to be on a par with our US counterparts. Experiential learning is one of those business skills that we, as a nation, manifestly lack, and this deficit has now become especially damaging in our very flexible labour market. What’s needed is for employers to ensure that their employees share their unique knowledge and experience before they go walkabout, then provide their successors with the special corporate skills to learn from that experience. The former’s capture is an unnecessary oversight by host employers who have submissively neglected to realise that they have proprietary part-ownership of their own experience because they’ve been paying for it all the while, the latter being the defined formal discipline that takes the traditional one-size-fits-all approach to decision-making to its new required level to address the issue of short tenure. Simply stated, it’s the way to cut out many of our repeated mistakes, re-invented wheels and other poor decisions. I am not suggesting that the Chancellor’s fiscal measures are not useful but your Government could make more of an impact on productivity growth by helping to offset the downside effect of the flexible labour market that you’ve been actively encouraging for all the time that productivity growth has been lagging our major competitors. If you’re still unconvinced, your predecessor, Vince Cable, DID acknowledge that the flexible labour market was “contributing to low productivity” (Resolution Foundation, May 13, 2014). So, while the explanation for productivity growth’s weakening has got everything to do with skills, it has virtually nothing to do with the inherent decision-making abilities of employees, who are simply being short-changed by what their employers DON’T provide. If you want to improve productivity growth, may I suggest that someone take additional heed of the counsel of the late Peter Drucker, the acknowledged founder of modern management, who believed “It is only managers – not nature or laws of economics or government – that make resources productive” (Managing in Turbulent Times, 1980). Collegially, Arnold Kransdorff. See also https://biggernumbers.wordpress.com/macro-matters/
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THE ELEPHANT IN THE ROOM
January 2014: Under the surface of Britain’s latest indicator of recovery – the Office for National Statistic’s announcement of a 1.9% rise in the economy in 2013 – is buried a statistic that that has dogged the country for more than the five years of the latest recession. It is productivity, the ability to produce goods and services at a competitive rate.
Once again the figures showed a decline in output per hours worked, an outcome that has, according to reports, confounded our officials. The worry is that this dysfunction will ultimately make the recovery less sustainable, allowing any advantage acquired to dissipate.
The fact that productivity’s poor performance goes beyond the latest crisis signposts a more endemic problem. Which raises the question: what is stopping Britain from becoming more competitive?
Here it is. It is the inability to learn from our own experiences.
Beyond the usual educational and management suspects, there is an issue that few of these officials acknowledge. In fact it is actively encourage. It is the flexible labor market, that modern workplace phenomenon that has given us short jobs tenure. Forty years ago, an individual would have one, perhaps two, employers in their working lifetime. Today, the average number is around eight. In the US, for example, the median level of tenure of ALL the Fortune 500 companies is just three years and eight months. That’s across the board – all grades, including managers.
How this affects productivity is simple. Against the flexible labor market’s clear benefits, there is an iceberg-like limitation. It provides a discontinuous and incomplete institutional knowledge base, otherwise called corporate amnesia. This constrains much of the ability to learn from one’s own experience. Given that most progress is organic – i.e. organization-specific and dependent on the building of one experience on another – this increases the rate of repeated mistakes, re-invented wheels and other unlearned lessons. Expensive! VERY expensive!
Without an intimate awareness of one’s employers’ own knowledge and experience, any experiential learning is restricted to the knowledge and experience of replacement employees. Their contribution to the decision-making process is the business equivalent of a seedbed of otherwise healthy plants without any suitable top-dressing.
Whilst not railing the clear benefits of flexible working, the battle cry of “We’ve got to learn the lessons …” is now so common as to make the solution urgent. This blog explains how good Knowledge Management can help to make an employer’s tried-and-tested knowledge and experience less discontinuous for transiting employees, allowing for better experiential learning and decision-making.
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“Dear Mr Osborne ….” – An Open Letter About Productivity
Rt. Hon. George Osborne MP, Chancellor of the Exchequer, HM Treasury. 1 Horse Guards Road, London SW1A 2HQ. March 22, 2013.Dear Mr Osborne,
Open Letter – What your 2013 Budget doesn’t grasp
I listened to your 2013 budget speech but not once did I hear you mention the single word that would have made all your efforts to kick-start growth more credible.
That word was productivity. As you well know our productivity is wretched. By 2010 the productivity gap with the US had soared by nine percentage points compared with 2006, the largest gap since 1994 (Office for National Statistic, 2011). For the two previous years the proportion of national income created by each worker per hour leapt in France, Germany and the US while it remained stagnant in the UK. US productivity per hour worked was 23 percentage points higher than the UK while Germany and France were ahead by 18 and 16 percentage points respectively. In October 2012, our outgoing Governor of the Bank of England, Sir Mervyn King, reported that productivity had dropped by 4% over the previous five years, with no-one – his words – really understanding why (http://www.bankofengland.co.uk/publications/Documents/speeches/2012/speech613.pdf).
Chancellor, the private sector may well have picked up more than a million jobs under your stewardship, much of it from the public sector, but this means very little if that employment’s output is less than competitive.
The importance of productivity – real productivity, not output disguised by a reduced sterling value and things like less red tape – has not been adequately addressed for years. It’s about producing products and services cheaper, quicker and better, in other words getting from A to B without going via Z. In addition to Government’s red tape-like efforts, it means better decision making at the sharp end of commerce and industry.
Did you know that the annual cost of wasted productivity is around £120 billion – yes £120 billion (Proudfoot Consulting, 2005)? That was in a year when the economy was in its bull mode. Is not this a big enough figure for you to do something – or get someone else to do something?
This elephantine sum includes all the repeated mistakes, re-invented wheels and other unlearned lessons that litter the public and private sectors. Do you recognise this business landscape? The fact that productivity’s other matrix, productivity growth – a measure of inbuilt headway and another good indicator of policy and decision-making skills – has been declining since the 1950s (Groningen Growth and Development Centre and the Conference Board, Total Economy Database, 2004) surely confirms that we’re pretty poor experiential leaners. And given this conclusion covers a period when business education’s availability has never been greater, our ability to teach how to make good and better decisions is similarly suspect.
Mervyn King said no one understood why our productivity had dropped recently. May I point out a contributing factor – and what you could do to help?
You may not be aware that the actively encouraged flexible labour market has had an enormous unintended consequence. The high level of employee turnover has meant that employing institutions’ own unique knowledge and experience is constantly walking out of the front door. There is good academic research that points out that when individuals leave, they take with them up to 90% of their employers’ distinctive knowledge and experience (D. Bonner, American Society for Training & Development, 2000), leaving only their paper trail. What actually disappears is the vital tacit knowledge component of their tenure that is typically unrecorded and, usually, just as important as the remaining explicit data and information. The result? Our institutions can’t learn very well from their own special experiences.
I am not going to suggest that the flexible market be discouraged – it has some very valuable short-term benefits for both employers and employees; rather, commerce and industry need to be encouraged to use their past knowledge and experience to allow their walkabout employees to better learn the lessons for which they’ve already expensively paid.
Experiential Learning (EL) is now a recognised and dedicated discipline that business education and commerce/industry have been slow to take up. As its name suggests, it’s a way of applying the evidence of tried-and-tested precedent (whether successful or not) to improve decision-making instead of having to re-invent things every generation. It falls under the wider discipline of knowledge management that involves the efficient capture of said knowledge and experience before it walks out of the front door. Then walkabout employees need to know how best to apply this valuable intellectual capital to their employers’ new circumstances and conditions in the cause of better decision making, which is where the opportunity arises for our business educators.
If decision-making improves, costs can come down, prices can be reduced, competitiveness will get better, sales will rise, ipse facto GROWTH. It’s not rocket science and it doesn’t require huge capital expenditure around which commerce and industry is balking. What it does do is capitalise on the knowledge and experience that we’ve already paid for at great expense. The oldest industrial economy in the world should be able to utilise its tried-and-tested experience to much better advantage.
Most people would see this as a way of using “history” as a management tool. True enough. There are plenty of words of wisdom that more eloquent people have uttered to support the concept – among them Winston Churchill’s “The furthest backward you can look, the furthest forward you can see” and George Santayana’s “Those who cannot remember the past are condemned to repeat it”. My own preference is US author Russell Hoban in his 1973 book The Lion of Boaz-Jachin and Jachin-Boaz: “If the past cannot teach the present and the father cannot teach the son, then history need not have bothered to go on, and the world has wasted a great deal of time.” Truly, history – I call it organisational memory (OM) – can provide experience cheaply. It gives institutions a way of using the knowledge and experience of prior employees – without putting them back on the payroll. Discarding it makes no sense.
If you need further endorsement of the pathway to growth, look at what our next Governor of the Bank of England, Mark Carney, said in Davos about “self-sustaining productivity” (http://www.dailymail.co.uk/news/article-2269099/Growth-important-inflation-says-new-Bank-boss-insists-maxed-ideas.html) and the President of the European Commission José Manuel Barroso’s appeal for greater competitiveness across his 27-country constituency (http://ec.europa.eu/news/pdf/sg-2013-00286-01-04-en-tra-00.pdf). After that, look at the March 13, 2013 issue of Civil Service World (http://www.civilserviceworld.com/every-department-should-have-a-historical-adviser-argues-lord-butler-of-brockwell/) where the former Cabinet Secretary Lord Butler suggests that Government departments appoint historical advisers to improve their decision-making.
Then, follow https://biggernumbers.wordpress.com/ for the extent of the problem – and the solution.
Collegially,
Arnold Kransdorff. ak@corporate-amnesia.com www.pencorp.co.uk
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