Today was a very weird day…

My nephew rang me to tell me my brother, his dad, died this morning. I was getting ready for work. I hadn’t even had breakfast.

… at this point, I need to make it clear, I’m not writing this to get lots of online hugs. Today was a day of valuable, positive lessons, and I feel compelled to share them. But you have to hang in there ’til the end … then maybe you can tell me what it all means…

How do I describe how sad I was to hear my brother is dead? I cried this morning, with my loving wife and two amazing daughters cuddling me, feeling the warmth and affection of my family, at the same time as feeling the deep pain of losing a part of that family.

The scary part is I didn’t even know my brother was sick until about a month ago. He broke his arm and when the doctors tried to figure out why his bones were so brittle, they discovered secondary bone cancer. His wonderful wife asked for some privacy and space, which I respected. I thought I’d get a chance to see him before he died. I was wrong. He went into hospital and never came out.

So the first lesson of the day was very simple and direct: none of us really know how long we have on this planet. We can make all the plans we want, but make sure we’re living the life we want right now, because it might be all we have.

My second whack of news came shortly after, when one of my work colleagues told me an amazing woman we knew had committed suicide around Christmas time. They told me she had been very lonely. I found myself reviewing my last few meetings with this lady and realising she’d been reaching out to connect. Could I have given her more? Could her death have been avoided if I’d just understood what she needed?

Then I caught up with someone I hadn’t seen for 20 years. Last time we met, we were both living on the East Coast. The circumstances which brought us back together, 20 years and 4,000kms later, were also a bit weird.

… usually the universe works on cycles of time and scale which are just so enormous, we can’t possibly even begin to comprehend them. But do you ever get the feeling, every now and then, a little ripple comes through and maybe we can just feel the edge of some sort of pattern lining up? Even though we have no idea what it means, we can feel it’s there? Do you ever have that feeling? I certainly had that feeling today…

My friend from NSW 20 years ago told me the third very sad story of the day. I won’t share the details, because it’s not my story to share. Let’s just say she’s been having a really rough time. She described the last few years as ‘chaos’. As I listened to her story I found myself wondering: what could I do to help? Every day I’m privileged to work with organisations serving people in severe need – homelessness, drugs, disability, domestic violence, mental health, refugees, trauma, sexual abuse, aged care, dementia, you name it. So I figure I should at least be able to connect her with the support she needs.

But what about our personal connection? Especially after hearing about the recent suicide, I found myself wondering – how much can I give? I know I don’t have any answers. I can’t fix anyone’s life for them. I know we all have to choose our own path. So how much is enough? What can I actually do to make a difference?

All this is overlayed by another layer of weirdness, because I’ve been here before. The whole reason I came back to Perth, from NSW, 20 years ago, was to help a close friend in very similar circumstances. Have I slipped into some sort of timewarp? Have I learned anything? Can I do a better job this time around?

Suffice to say, I didn’t get tonnes of work done today. At least not that sort of work. I tried.

My wonderful wife, Kim, checked in to see how I was going, and suggested we head out for dinner with the girls. And that’s when a whole other level of learning kicked in. As we strolled down Beaufort Street, into Mount Lawley, the girls went running into Planet Books, which they love, and we bumped into some fantastic friends near the entrance.

Then we went somewhere we’d never tried before for dinner. We danced to jazz in the toilets (you kinda had to be there to appreciate it, but it was really fun) and I finished off dinner by sharing Nutella fondue with my two daughters.

On the way back, as the girls barrelled back into Planet Books, we bumped into another old friend at the entrance (forget Tinder, to meet cool people, just hang out in book shops). I found myself thinking, ‘Our girls must think we know a lot of people’.

By now the youngest kid was getting very tired, so Kim carried her, while I carried our eldest daughter upside-down, through the middle of Mount Lawley.

There were other little moments today, too. Like coming back to the office to find someone had sent me flowers after hearing about my brother. And heading into the gym at 10.30pm, to take it out on some weights.

And you know what…? Today should have been a disaster but, in the end, it was a bloody good day. I’m still really, really sad about my brother. Every time I think about it I have to hold back the tears. I don’t how long that will last, but it’s going to be a while. And, at the same time, I’m so incredibly grateful to be surrounded by such an amazing family, and to have so many really, really cool friends. I’m blessed to live this life. I don’t know how long it’ll last. I hope it’s a long time, and I hope I see a lot more of all of you. Let’s catch up soon, while we can.

 

 

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Not for profit mergers vs corporate mergers

The community not-for-profit sector is buzzing with talk about mergers at the moment. It would be easy to spend a day just talking about why people are considering mergers, and the structural factors at work in the sector at the moment, but let’s save that for now.

Instead, I just wanted to share a few thoughts about mergers in the community sector versus mergers in the corporate sector and highlight a few fairly obvious points of comparison.

Corporate sector

Mergers are frequently used in the corporate sector, where share price and shareholder dividends provide a clear way of measuring increases in shareholder value. There are lots of specific motives behind mergers, which can include:

  • integration along the supply chain (buying your suppliers or customers)
  • increasing market share (buying your competition)
  • tax benefits
  • acquiring new technologies
  • entering new markets…

In each case the underlying driver is generally about creating a new larger entity which is greater than the sum of the parts – in other words 1 + 1 = 3.

It’s worth noting in the corporate sector the word ‘merger’ is a bit of a euphemism. In reality, it’s nearly always an acquisition, where a larger company acquires a controlling interest in a smaller company. In the corporate sector the market’s response to a proposed merger is often telegraphed very clearly through the share price of the participating companies. The share price of the smaller, target company often spikes up rapidly, and the share price of the acquiring company can spike up or down, depending on what the market thinks about the merits of the deal.

These market fluctuations create massive financial incentives for mergers to occur, as investors stand to make large gains, or losses, in the short term and over the longer term, if the merger creates lasting shareholder value for the acquiring company.

Interestingly, studies in the corporate sector (Agus 2000) have shown such acquisitions typically create large gains for shareholders of the smaller, target entity being acquired and small losses or marginal gains for the larger, acquiring entity. However, even though a bad acquisition can destroy shareholder value over the long term, the activity itself nearly always creates an opportunity for individual investors (who might buy and sell shares in both companies) to make large gains in the short term, so the market tends to incentivise merger activity.

There are also specific individual incentives for the executives of the participating companies. While the maths suggest the CEO and several executives from the target company are likely to become surplus to requirements, they usually benefit handsomely from the deal, are rewarded with a highly lucrative golden handshake and gain kudos for having steered their smaller company to a successful sale, which has generated high returns for their shareholders.

Community sector

So how does all this play out in the community sector?

Instead of ‘shareholders’ not for profits have ‘stakeholders’ and instead of a share price the Boards of the participating NFPs have a duty to create social value for those stakeholders. Calculating social value is much trickier, and there’s no market mechanism to provide minute-by-minute updates. Social return tends to unfold over a much longer period.

The activity of a merger does not inherently create social value. On the contrary, while a merger must create long term social value for stakeholders to be worth doing, in most cases the activities of bringing a merger together can be seen as tedious distractions from the main business of delivering social services, which almost certainly reduces social value in the short term, while the merger is happening.

And what about the CEOs? The impact of any NFP merger is usually felt most at the top of the organisational chart. The number of front line staff is unlikely to radically change. There may well be opportunities to achieve efficiencies in the coordination and management of those staff, especially through the use of better technology and systems, so there may be some reshuffling in the middle tiers. But, at the top, at least one CEO and some upper management are highly likely to drop from the top tier to the second tier or become redundant.

So, while the incentives to consider an NFP merger are the opportunity to create long term social value for stakeholders, there are lots of short term disincentives for individuals within the participating NFPs.

This is summarised in the table, below.

NFP_vs_corporate_mergers

NFP vs corporate mergers: short term and long term incentives and disincentives

When you boil it down:

  • The corporate sector offers both short term and long term incentives for M&A activity. Any downside unfolds long after the merger has occurred, by which time everyone has already moved on to the next one.
  • In the community sector, all the potential benefits for a merger are long term social benefits, which are hard to measure at the best of times, while there are plenty of very immediate, tangible disincentives for the executives who stand to lose their jobs.

When you look at it like this, it’s pretty clear NFP mergers are best approached with a great deal of sensitivity and caution. There needs to be a pretty compelling long term benefit to justify the short term pain. I’ve been involved in a few such mergers and I’ve found the motivation to shift from talking about it to actually doing it often arises because one or more of the participants is facing some sort of crisis and a merger becomes the ‘least bad’ option.

At the same time, it’s worth noting the courage of those NFP leaders who do forge ahead, and who are bold enough to see and commit to the opportunity to create social value for their stakeholders, ahead of their own self-interest. Perhaps we should think about ways to reward them for their foresight and fortitude, and actively encourage such leadership behaviours?

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Coalition to abolish ACNC and repeal charity definition

www.acnc.gov.au

ACNC – dead-end or too early to tell?

Speculation about the future of the ACNC came up at a recent Board meeting, and again at a business gathering on Friday. No need to speculate any more, the Coalition has stated it will roll back the establishment of the Australian Charities and NFPs Commission and accompanying reforms, if it forms a Government.

The Coalition’s typically hyperbolic claim that: “The ACNC is predicated on the belief that Australia’s charities and not-for-profits are doing something inherently wrong and need greater government oversight,” is patently untrue.

The sector had been asking for greater consistency and the original proposals paving the way for the ACNC were welcomed with some optimism. 

However, sadly, but also predictably, so far the ACNC has underwhelmed with its early delivery. And it’s also true, so far the ACNC has resulted in more administrative overhead, rather than less.

I’m interested in what others think: is the current ACNC a dead-end or is it just too early to see any real results from such an ambitious reform agenda? Please post your comments below. I also posted a poll in the LinkedIn NFP WA group and will report back with the results.

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Red tape

‘Reducing red tape’ has been a hot topic between not-for-profits and government agencies over the last couple of years. The Western Australian Government has been driving a ‘free market‘ approach to encourage NFPs to be more entrepreneurial and innovative in the way they deliver value to the communities they serve.

Similarly, the Commonwealth Government has recently created the Australian Charities and Not-for-profits Commission (ACNC) with the promise of – among other things – standardised reporting for NFPs across the country and reducing red tape.

Professor David Gilchrist, a respected supporter of NFPs from Curtin Business School recently took the brave step of questioning the rhetoric in the ‘red tape’ debate, on LinkedIn.  David argued administrative process is a necessary and important part of any business and offered a definition of ‘red tape’ as being processes “that are:

  • valid but the results of which are not used by an organisation – perhaps there is a lack of capacity (knowledge and resources) in terms of applying the results; 
  • valid but inefficient – that is, an administrative process should be undertaken but new technology or better processes might reduce its cost; 
  • the cost of which outweighs the value it produces – for instance, a stock take where the value and quantum of stock is miniscule; or 
  • that is invalid (that is, it might be an anachronism, it may be that it is redundant or simply that it is not required or the results of it cannot be utilised by the organisation or its managers). 

In other words, Red Tape reduction is entirely appropriate where the cost of administrative process outweighs the benefit to an organisation.”

David makes a good point. There’s a risk we throw the ‘red tape’ label around too easily and it’s a convenient way to attack any administrative processes or policies we don’t like.

In 2010 the working groups tasked with converting recommendations of the Economic Audit Committee into policy discussed this issue of ‘reducing red tape’ at length and we came up with lots of examples of all four types of red tape you’ve listed above.

  • Requiring a hard copy of your NFP’s annual report every time you apply for a grant – even though you may have made many applications that year and the grant organisation already has multiple copies on file.
  • Collecting pages of detailed data from an NFP when there is no evidence of that data ever being used in any way.
  • Badly written documents asking for the same information to be provided three of four different ways.
  • Etc… I’m sure readers working in NFPs and government agencies can cite more examples.

So, while it’s true, we should guard against lazy misapplication of the ‘red tape’ label,  continue to collect data to inform policy, and we will always need good governance, at this stage in the conversation we still have so many efficiencies to gain by reducing red tape, it will be a fair while before we need to worry about overdoing it.

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Customer service cultures

Last year I had a couple of experiences highlighting why social researchers suggest people are becoming disengaged and cynical about government, and also why people often say rude things about public servants. To me they are very powerful examples of organisational culture.

The Tax Office

Link to ATO website

Examples of organisational culture in action: http://www.ato.gov.au

I recently received an email purporting to be from the Australian Tax Office (ATO). The email was well presented, with an authentic looking ATO logo and header, but a link in the email looked a bit suspicious, and I thought it was probably a phishing scam of some sort.

So I decided to call the Tax Office to find out if this had come from them.

Some of you will already be rolling your eyes, thinking that was a stupid idea on my part. And that’s sort of my point, we are so used to organisations like the ATO being painful to deal with, most of the time we won’t even bother, unless there’s some sort of threat of a fine or jail time. Even then, most people would rather pay an accountant to avoid having any direct contact with the ATO.

And, sure enough, the person on the phone conformed sadly to the stereotype. I explained my situation, described the email I’d received, and the person on the other end explained that such an email “almost certainly” didn’t come from the ATO, as they “generally don’t send emails like that.”

Notice the qualifications?

The conversation bogged down when I pushed for an improvement on ‘almost certainly’.

Eventually I let out a deep sigh as I asked: “What will it take to get a straight ‘yes-or-no’ answer?”

And this is where the cultural observation kicks in. This person had clearly been trained to rigorously avoid making any definitive statements about anything to a customer. Hedging was his default mode of communication. Should we be surprised at government staff behaving this way, when we see their bosses, politicians, do it every day in the media?

Supreme Court of Western Australia: Probate Division

Link to Probate Division of the Supreme Court of WA

Examples of organisational culture in action: Probate Division of the Supreme Court of WA

How many people do you think die in Australia? According to the ABS, there were 143,500 deaths registered in Australia in 2010. That’s nearly 400 people per day.

So you might think the Probate Division of the Supreme Court of Western Australia would be running like a pretty slickly oiled machine. After all, they are dealing with bereaved people at a time of loss. You might think they would have some well designed, finely tuned processes to minimise the hassles and stresses for people who are burdened with the sad task of managing the estate of a deceased loved one or relative?

You might think they would handle this difficult task with a fair degree of empathy and sensitivity for their customers?

Again, you might also think I’m an idiot for expecting such things from a government legal department?

I won’t bore you with the details of repeated visits the office to lodge documents, asking the staff if I had completed them correctly, to be told “We don’t provide legal advice,” then having the documents rejected and again asking the staff for clarification on what was required, to be told “We don’t provide legal advice.” After a few rounds of this, the whole process takes on the quality of surreal, Kafkaesque parody.

Whenever I encounter this sort of situation, I always wonder what it’s like for the people on the other side of the counter. Surely these people have experienced bad customer service too. Do they ever make the connection with their own work? Would they really like to do a better job, but they feel it’s not possible? If so, how does that make them feel?

Again, the cultural observation: why do we accept or even expect an organisation like the Probate Division of the Supreme Court is likely to combine the worst of State Government bureaucracy and legal red tape to produce a culture with almost no focus on the needs of its customers?

What are the leaders of these organisations doing to allow or encourage these cultural norms to thrive? What would it take to change them? If we, as customers, accept these cultural stereotypes as the norm, are we also tacitly condoning them?

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Money as a motivator

Stack of money

Stacks of money (from wikipedia.org)

There was a very active discussion in the Linked:HR forum recently about the importance of salary in engaging employees. Lots of experienced HR professionals made comments to the effect that ‘money is not the most important motivator’.

This idea is tossed around very freely, and there have been some studies to support it, but it requires a very important qualifier.

I coached a person who was earning $250k and he went after a $150k CEO role in the nonprofit sector, because the new role was better aligned with his values. On the other hand, I’ve also worked with a guy earning $60k who quit a job because he felt undervalued, he and his wife want to have a family, and he needs at least $80k to support them.

So – this is basic ‘Maslow’s Hierarchy of Needs 101’ – if you have enough money to take care of your basic needs, you can afford to think about other things, like self-actualisation. If you are in ‘survival’ mode, self-actualisation might seem like a distant luxury and money definitely can become your most important motivator.

This means a ‘one size fits all’ approach to remuneration is unlikely to work for everyone in your organisation. When you think about engaging and retaining staff in your more junior  or lower level roles, salary is probably a much bigger factor than it is for staff in your mid and more senior level roles.

When you think about remuneration for staff in different tiers of the organisation, you might also want to think about how this impacts on their basic living requirements in different ways.

ANSON offers a range of services to help you develop competitive remuneration and total employee engagement strategies for your organisation. If you’d like to discuss any of these in more detail, please contact me or visit the ANSON website.

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School of Philosophy – week 3

More on the School of Philosophy: [Introduction] [Week 1] [Week 2] Week 3 [Week 4] [Week 5] [Week 6] [Week 7] [Week 8] [Week 9] [Week 10]

This week I couldn’t make Thursday night, so I went to the Tuesday night class instead. There was a very different group dynamic – the average age of the group seemed a little younger, and the teacher, Jonah, was also a younger hipster, with skinny jeans.

Tonight we discussed the old hole in the sidewalk proverb.

We also talked about the states of consciouness:

  • Fully awake
  • Waking sleep
  • Dream sleep
  • Deep sleep

So far, I don’t think anyone has tried to brainwash me…

More on the School of Philosophy: [Introduction] [Week 1] [Week 2] Week 3 [Week 4] [Week 5] [Week 6] [Week 7] [Week 8] [Week 9] [Week 10]

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