October 2006 Archives

The world of Interim Management continues to evolve, but so does its close allies in Management Consultancy, I was interested in this article earlier in the week which challenges the traditional model and perhaps opens up more opportunity for strategically orientated Interim Managers. What do you think?

World domination by tiny teams that span the globe-Clare Gascoigne explains how rapid technological change has made virtual consulting a reality.....

In today's global village your co-workers are as likely to be sitting thousands of miles away as at the next desk. Technology has broken down physical barriers and with an increasing variety of consultancy services going offshore, a new way of working is developing. Welcome to the virtual team.

"We are starting to see more intelligent globalisation going on", says Fiona Czerniawska of the Management Consultancies Association."The consulting process is being broken up: putting in a new IT system, for example, might mean talking to the client onshore, designing and building the system offshore, testing it both on and offshore, and moving onshore for training. That creates a lot of issues."

Paul Morrison, managing consultant at Alsbridge, says: "Many consultancies have been local businesses, perhaps with a global presence but not well integrated. Now, the business itself is offshoring functions such as IT, finance or human resources."

"Our data predicts further growth in the value of work being moved offshore" says Duncan Aitchison, partner at TPI, a sourcing advisory firm. "The approach of many companies to outsourcing has matured to the extent that it is now no longer a question of whether to offshore, but rather which elements and to what degree."

Offshoring is driven partly by cost; salaries are cheaper in eastern Europe, albeit a price differential that may be eroded in time. But it also reflects the need for 24/7 working, allowing a firm to complete a project more quickly.

Different countries are also developing different skills, says Czerniawska. "We could end up with clusters of specialist consultants in different countries," she adds. "It is the modern equivalent of the division of labour."

That process can already be seen in operation. India (which won 5.2% of offshore contracts compared with 3% in 2005, according to TPI) developed an expertise in IT that encouraged the development of education and training, which in turn attracted more people to work in IT - a virtuous circle that results in India becoming the dominant player in IT or business process outsourcing.

That may lead to a reverse offshoring, in which Indian consultants are brought to the UK to provide expertise or training - a mix-and-match solution that increasingly blurs the line between on-, off- and near-shoring. "People are now much more sophisticated about dividing up their work," says Czerniawska.

The trend towards different countries providing different skill sets could pose a problem for the management consultancy industry, warns Morrison.

Traditionally, management consultants in the UK cut their teeth on analytical, number-crunching work before moving on to strategic consultancy. Now, much of the analytical work is being offshored to other parts of the world, providing cost and efficiency benefits for UK consultancies but potentially changing the career path of their employees.

"It is a question for the whole industry," he says, "more and more analytical resources are going offshore, what does that mean for the traditional model?"

Thank you to Times Online for the inspiration behind this article

Impact Executives/ Harvey Nash plc were one of the lead sponsors for the inaugural awards of the CBI Human Capital Awards at the London Hilton yesterday evening. The rationale behind the awards was to celebrate HR/People Management programmes and initiatives and in doing so recognise the fact that innovative people management is a vital factor in the development of UK companies.

There were eight awards and I have listed for your interest the winners under each category.

1.Innovative Ways of Working

Winner-Arriva 'The programme used the performing arts to dramatise the need for cultural change. The result: 94% of employees now understand the case for diversity'

2.Service

Winner-Nationwide Nationwide's development, integration, and communication of its 'PRIDE' values is a highly impressive story of a values-led maximising its point of differentiation

3.Education, Skills and Leadership

Winner-INA Schaeffler UK 'Faced with the migration of jobs to Eastern Europe, Schaeffler UK embarked on a culture change programme to become the production location of choice. Massive productivity has followed, alongside a huge appetite for learning'

4.Managing Change

Winner-BMW Group-Oxford Plant MINI's transfer to Oxford, involving a nine week break in production, was a traumatic experience for its people. However, the New Oxford Way programme has delivered remarkable business and productivity results: culminating in BMW's further £100m investment in the plant and a clear vision for the future.

5.Growing Business

Winner-GenSet Faced with increasingly competitive market, losses and poor morale, this supplier to the UK hire industry had to act. Several years of people focus followed, involving Investors in People. The results have been striking and in the past year GenSet hit £5m profits on a £40m turnover.

6.Global Achievement

Winner-RBS Global HR head Greg Aitken has led the creation of the ground-breaking global human capital strategy and toolkit: an online suite of people resources that is embedded across all business areas. One result: reduction in employee turnover equivalent to £55m-worth of savings!

7.The People's Organisation

Winner-KPMG

KPMG's goal to be 'the best employer of the Big Four,' is addressed by offering clear paths for individual growth; compelling visions of the future; a 'total pay' policy and a 'positive workforce.' So often, such statements are cliches. At KPMG, they speak of real intent.

8.The People's Champion

Winner-Philip Williamson of Nationwide 'Who exemplifies the very best in people management'

A hearty congratulations to all the winners and indeed all those who were short listed and contrary to popular opinion I don't go to Awards Ceremonies every week, but hope you find these occasional listings interesting?

Thank you to the CBI for the inspiration behind this posting.

Interim Managers often have a high degree of entrepreneurism, approximately just over 5% of Interim assignments are pure new business start ups, but many more assignments are driven by organisations looking for growth where Interims entrepreneurial skills are highly valued. I was privileged to attend yesterday evening, the Entrepreneur of the Year Awards Ceremony hosted by Ernst & Young, a highly enjoyable event at the Grosvenor. The National finalists had emerged as the winners from the regional finals held during 2006.

I have listed the winners in each category as they are certainly individuals/organisations to track for the future!

Emerging Entrepreneur- David Gordon- David founded Windsave in 2002, born out of curiosity as to how he could capture the raw energy of the wind and put it in to a building. By harnessing the natural resource of wind and utilising modern technology the Windsave turbine provides the first on-site generation of electricity for the mass market.

Master Entrepreneur- Sir Anwar Pervez- Anwar founded Bestway Holdings, operators of cash-and-carry warehouses in 1976 with his first warehouse in Acton, West London. Bestway are now one of the largest operators in the UK.

Quoted Entrepreneur- Jonathan Straight- Straight was founded in 1993 supplying innovative container solutions for handling all elements of the waste stream. Current products include recycling boxes, home compost bins, kerbside baskets and wheeled bins.

Young Entrepreneur- Christina Domecq- Christina set up SpinVox in 2003 as the world's first voicemail-to-text service converting voicemails into texts sent directly to mobile phones or emails. Within two years Christina hopes that SpinVox will be providing services to 70% of the UK market within two years.

Business Products and Services- Assem Allam- Assem identified a gap in the world market of generating sets, believing that volume and economies of scale would be key to future success he developed a cash and carry model, Assem would like Allam Marine to achieve £100m turnover by 2010.

Consumer Products and Services and overall National WINNER- Tim Richards- Tim left a lucrative job with one of the world's largest international cinema operators in the US deciding to go it alone, Vue Entertainment was subsequently founded in 1998. There are now 53 cinemas and Tim plans to open another 20 over 2 years. The future is in digital projection and 3D movies.

Social Entrepreneur- Andrea and Barry Coleman- Andrea and Barry established Riders for Health in the motorcycle community to raise funds for children in difficulty in developing countries. The key initiative is to use motor bikes to improve healthcare delivery in isolated parts of Africa.

Technology and Communication- Dylan Thwaites- Dylan bought e-commerce company Corporem in 2001 which focussed on search engine marketing. In 2005 they re branded the business Latitude Group and today, they consider themselves the largest search engine marketing company in the UK with a turnover of £21m

I was seated next to the Chief Executive of Unusual Hotels of the World.com, which is an online guide for travelers wanting to stay somewhere different including underground, inside an igloo, up a tree, inside a giant dog or underwater - a fascinating and unusual site worth a surf.

Link to site: http://www.unusualhotelsoftheworld.com/

Thank you to Ernst & Young LLP for the inspiration behind this posting

Life is looking pretty rosy currently; Impact Executives' most recent survey (06-Q2) suggests that day rates are rising again, with 37% of respondents saying their current assignment is better paid than their previous one. That figure has risen from 32% six months ago. It is particularly healthy among Interim Managers' earning between £700 and £1500 a day and this is perhaps reflecting the more strategic use of Interims? As if this was not enough, this week it gave us great pleasure to read that UK Corporate Profits have reached record rates of return in the second quarter according to official figures in Times Online-keep bringing on the good news.

"British businesses achieved record rates of return in the second quarter as the services sector shrugged off higher energy costs and tapped cheap labour markets to lift margins, according to official figures published today.

The overall profitability of non-financial companies reached 14.7 per cent in the second quarter, up from 14.4 per cent in the previous three months. The figure is the highest since the data series began in 1989, the Office for National Statistics said.

The performance was boosted by a strong showing in the services sector, which accounts for the lion's share of the UK economy, where the net rate of return rose to 20.1 per cent from 19.5 per cent, itself a record.

Howard Archer, the chief UK and European economist at Global Insight, said: "Firms have been able to keep their overall costs down by limiting wage increases amid increased slack in the labour market, while relatively healthy economic activity in the first half of the year lifted demand and boosted companies' pricing power."

Record profitability levels also boosted hopes for stronger investment, Mr Archer said.

However, high energy and commodity prices have hit manufacturers, where profitability fell back to 6.1 per cent in the second quarter - down from an average of 9.3 per cent in 2005. In general, capital intensive manufacturers trail service businesses in terms of profitability levels.

The fall in manufacturing returns follows a report published yesterday by the Chartered Institute of Purchasing and Supply which showed manufacturers maintained a solid degree of pricing power in September, as average factory gate prices rose for the 14th month running.

The rate of increase in raw material prices eased to a five-month low, suggesting that the recent upturn in input cost inflation may have peaked in the previous month.

Roy Ayliffe, director of professional practice at CIPS, said: "To mitigate the continued high input prices, purchasing managers are shrewdly managing stock inventory by reducing both pre- and post- production stock."

According to today's ONS figures, profitability at oil and gas extraction companies fell to 38.7 per cent in the second quarter, from 39.6 per cent in the previous quarter, as oil prices dipped in recent weeks.