The Way to Wealth (13 page)
Authors: Steve Shipside
The way to wealth is rarely a solitary path and how well you work with your fellow travellers is going to be a large part of whether you succeed or fail. Failure to manage those who work for you is an expensive business—or as Franklin would have it
‘not to oversee workmen is to leave them your purse open’.
Back in Franklin’s day the idea of overseeing probably had a more literal sense of keeping an eye on workmen to ensure that they didn’t slack off and that they did do the task as required.
DEFINING IDEA
…In order that people may be happy in their work, these three things are needed: They must be fit for it. They must not do too much of it. And they must have a sense of success in it.
~
JOHN RUSKIN
For the modern manager, the risks of slacking off or open dishonesty, while still there, are probably lower than the far more common and insidious risk of teams failing to perform to their potential due to inadequate coaching. Overseeing in the modern environment isn’t about making staff nervous by watching them like a hawk, it’s about being a quality team leader. For that there are a number of rules to bear in mind.
• The first step in super-supervision is being absolutely clear about what the goal of the project is and what must be done on the way.
• The second is to ensure that your staff fully understand that. It’s very easy to overlook the fact that just because someone is good at what they do, doesn’t mean they know what they’re doing on this job. And, conversely, just because someone doesn’t know what they’re doing on this project doesn’t mean they’re not good at what they do.
• Don’t just consider the short-term goals—discuss the ultimate outcomes so that those working for you can see your expectations and your point of view. If you share the same understanding of the ultimate outcome, rather than just a job description of the task at hand, you are more likely to arrive at the same goal.
• Make sure you are asking the right people to do the job and make your needs and expectations as clear as possible. Get people to explain back to you what needs to be done and how it has to happen to ensure they’ve really got it.
• Make sure deadlines are also perfectly clear and understood by all, and don’t wait until the end of a task to review it. Build in some kind of review along the way to catch problems before they develop into full-blown crises.
• If things do go wrong, remember the old rule of praising in public but criticising in private.
Finally, make a point of awarding rewards that are appropriate to the goals. That could be a simple matter of fixing a price or it could entail bonuses for overachieving—but any member of staff will be more motivated by appropriate, goal-based rewards tied to a job of work.
HERE’S AN IDEA FOR YOU
…Catch people doing things right. Inexperienced supervisors believe they are there to act like prison guards watching out for misbehaviour, but you will get much better results by turning that on its head and pouncing in order to praise good work when you see it.
Although Franklin doesn’t mention pensions per se, he would definitely have approved. He even appears to pave the way to pensions when he says
‘At present, perhaps, you may think yourself in thriving circumstances, and that you can bear a little extravagance without injury; but, for age and want, save while you may’.
DEFINING IDEA
…Always be nice to bankers. Always be nice to pension fund managers. Always be nice to the media. In that order.
~
JOHN GOTTI, US GANGSTER
‘He that lives upon hope will die fasting,’
Franklin adds, which is a slightly grim but possibly accurate summation of our position if we don’t plan for old age. There’s something uncool about talking pensions, particularly amongst the young, but there again there’s something much more uncool about living off tinned food in a small flat when you could be sipping cocktails by the beach.
If you’re counting on a state pension to take care of you in your golden years then that gold is going to lose its shine pretty fast. Simply put, more of us are living longer (particularly women) and since the workforce isn’t growing that means fewer active workers putting money into the pot to pay for those claiming retirement benefits. It’s not quite as simple as that since workers are more productive these days, earnings continue to rise, and there’s the less cheerful factor that growing obesity means the next generation may halt or even reverse the trend of longer life. Despite that, the essential picture is that anyone counting solely on a state pension is likely to be leading a much less rewarding retired life than those who start to save with a private pension or investment plan.
There are hundreds of different pension plans out there but essentially three major approaches (if we ignore the basic state pension). The first is to contribute to your employer’s pension scheme. This is probably the most cost-effective, since the normal arrangement is that your employer either tops up your contribution or may match it—so you end up with more than you paid in. These days there is, however, a certain cynicism about company pensions due to unscrupulous executives raiding them. Such cases are rare but if you are genuinely hesitant about trusting your future to your company then consider a personal pension scheme.
Private pensions are still better than most other savings because most governments give them sizeable tax breaks and some even help top up your contributions. Again there have been scandals with banks failing and pension schemes evaporating, but these are extremely rare and where investment companies are covered by national banking codes individual investors should get their money back.
The third main approach is to go for investments such as property. This can be personally satisfying and a great deal more fun than simply paying into a pension fund managed by another, but you are unlikely to benefit from the same kind of tax benefits extended to more formal schemes. Don’t forget to consider the risks, though.
HERE’S AN IDEA FOR YOU
…Don’t think about a pension, think about lots of pensions. Diversify and spread your risk across a mix of tax-free savings, investments and formal pension schemes. For example, rather than buying a property think about investing in a property fund and spreading your investment that way.
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DON’T FALL BEHIND YOUR BUSINES
Ever had the feeling you’re running flat out to keep up with your business? While he tied the concept to the notion of getting up early (a key belief), Franklin also observed that some of us seem to spend all day chasing our own shadows:
‘he that riseth late, must trot all day, and shall scarce overtake his business at night’.
There are, of course, two responses. The first is not to get up late and thereby give yourself an early start. That’s sound advice now as ever, but with business life and time demands getting ever more complex you may feel that you are still running just to end up in one place.
DEFINING IDEA
…People who create 20% of the results will begin believing they deserve 80% of the rewards.
~
PAT RILEY, FORMER NBA HEAD COACH, WITH HIS TAKE ON THE PARETO PRINCIPLE
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Which means it’s time to turn to triage. The word ‘triage’ comes from the French for sorting or ordering things and is most famously used by battlefield medics selecting which patients to give their attention to, and in which order, so as to maximise the benefits of their limited resources. A similar principle can be brought to bear on your priorities during the day. Not that I’m saying your business day looks like the bloody carnage of a battlefield, just that it can seem that way…
In the 1940s the quality management pioneer Dr Juran came up with the theory of ‘the vital few and trivial many’ and named it after an Italian economist called Vilfredo Pareto who had observed that in his home country 80% of the wealth was in the hands of just 20% of the population. Hence the Pareto Principle, whereby 20% of something (the vital few) is always responsible for 80% of the results, and the remaining 80% (the trivial many) only accounts for 20% of the results. Confused? Don’t be. In daily life the application of the Pareto principle means that, for example, 20% of the job (typically the first and last 10%) will take up 80% of the time and resources. Likewise a minority of 20% of your staff will do 80% of the work, and 20% of your staff will require 80% of your time managing them (rarely the same 20%, as it happens). The trick is to focus solely on the 20% that really counts and thereby achieve 80% of the work.
Wherever possible you should work with hard figures. Whether it’s profit/loss, costs, time or headcount you can then draw up a ‘Pareto’ chart of the resource in question and find which part of the picture is the one to throw your energies at first. A simple Pareto analysis would list all the known problems associated with a project and count which ones occur most over a set time. Order them with the most frequent at the top and you may find that seemingly trivial problems add up to a huge cumulative loss of productivity. There’s your starting point.
HERE’S AN IDEA FOR YOU
…Don’t have any figures to tell you which 20% to focus on? Write a ten-point to-do list of things you have to do. Now rank that list one to ten in terms of importance, where one is least and ten is tops. Now forget about points one to eight until nine and ten are done.
Businesses spend a great deal of money on consultancy but that doesn’t mean they act on the advice they’re given. Franklin could have been speaking for every consultant out there when he said
‘We may give advice, but we cannot give conduct’.
DEFINING IDEA
…It is better to give than receive—especially advice.
~
MARK TWAIN
In
The Secrets of Consulting
Gerald Weinberg established what he called the first and second laws of consulting. The first is that clients are not rational and although they have a problem (otherwise the consultant would not be there) they will never admit it. The second is that no matter how technical the problem may appear at first glance, it will ultimately prove to be a people problem.
Be honest, doesn’t that sound just a little bit familiar? Nobody likes to admit to problems, essentially human ones, so even good advice is painful to act on. In particular, there’s one refusal to act on advice that is so widespread it has its own name; founderitis, or Founder’s Syndrome—the negative symptoms which can arise when a company founder has difficulty letting go and allowing the business to grow beyond his or her original dream.
The classic symptoms of founderitis include disrespect for new practices or formalised planning (the stock in trade of consultants), a disinclination to delegate and, above all, a resistance to advice from specialists. It’s an understandable side-effect of the amount of personal investment it takes to get a new enterprise off the ground—the business becomes your baby and you are reluctant to give it up or to be told by someone else that they are better qualified to care for it. Except that, again like kids, businesses have a tendency to grow up and they change and evolve as they do so.
It’s easy to grow by hiring people who specialise in areas you don’t deal with, and relatively easy to take their advice and even defer to it. Sooner or later, however, you’re going to have to hire people whose speciality overlaps with your home turf, either as consultants or staff, and at that point you will be forced to listen to advice that you have little inclination to respect more than your own. Why will you inevitably have to do that? Because even if you are very good at your key area, the fact that you guard it jealously means that you run the risk of becoming a bottleneck as every decision on that subject has to pass through you.
The only answer is to learn to step back and force yourself to ask for input from other people. Evaluate it, bring in third parties where appropriate to discuss it and then, finally, bite the bullet and act on it. If you don’t think anyone has better advice to offer than you do, then either you should look to recruit staff you respect more, or you should be asking yourself seriously if you are in denial about being chronically stricken with founderitis yourself. Time to get real.
HERE’S AN IDEA FOR YOU
…Take a break. A real one; a holiday with no email, no voicemail and no calls to or from the office. Then come back two weeks later and open your eyes to the fact that the business is still going. Accept that and you are more likely to accept advice as a result.
