bizRichard

I was reading an article in the Times today – that the job of ‘Director General NHS IT’ is to be split in two following the resignation of it’s present incumbent – but are they going to split the £275,000 salary cost in two? Of course NOT!

But it wasn’t actually the poor taxpayer ‘footing the increased cost’ that got me thinking - it was the ‘why’? Admittedly, as jobs go, this one’s a biggie; but how can you have TWO people doing ONE job?

But then this IS the civil service I suppose! And haven’t we been seeing this phenomenon evolving everywhere we look in the NHS – more and more managers, multiplying like the very viruses they are ultimately seeking to eradicate?

And it’s this curious phenomenon, which I know you too will have experienced for yourself, that I wanted to discuss today.

It’s called “Parkinson’s Law”, a humorous observation (not a scientific law) that states that “work expands to fill the time available”. The observation was first articulated by ‘Cyril Northcote Parkinson’, appearing as the first sentence of a humorous essay published in The Economist in 1955, later reprinted together with other essays in the book Parkinson’s Law: The Pursuit of Progress.

And guess what - he derived the dictum from his ‘extensive experience in the British Civil Service’.  Now isn’t that a coincidence?

So here it is – this man, Parkinson, says that it will take you as long to do a task, as you have time to do it. So basically, the amount of work you have will expand to fit the available time you have, or the available time you give it.

And here is my point – when you need to achieve something, setting yourself deadlines becomes very important.

You see, without deadlines and time pressure, you rationalise your tasks within the parameters of Parkinson’s Law.

And, short-term deadlines are far better and more tangible than long-term deadlines (or goals) - long-term goals are just too distant to be real enough to need reacting to. Not that you shouldn’t set long term goals - I do - but for effectiveness, a series of short-term goals is very likely to be just the motivation you need.

So get out there, set your deadlines, keep up the pressure, and watch your output improve.

Richard C

I don’t know about you, but I can’t stand shopping at Ikea.

I don’t particularly mind putting together flatpacks. It’s a great concept – well designed and functional furniture that people can afford. And I’d much rather have a house kitted out with Ikea products than the dreary stuff obtainable from most other DIY chains.

It’s just that I find elbowing my way around one of their warehouse is such a depressing experience. Even if you go in just one item, it still seems to take most of the day to get in and out of the place. (And heaven forbid that you have take something back for a refund or replacement – that takes even longer!)

But where am I going with all of this? Well, as much as I find their shops depressing, I have to say that an interview with the company’s president in this weekend’s Sunday telegraph stopped me in my tracks. . .

Anders Dahlvig, president of Ikea, came out of with one of the smartest business quotes I’ve read all year!

He was discussing the impact of the housing slump with interviewer James Hall. Noted, was the fact that many DIY retailers are pretending that a housing downturn is not an issue, on the basis that if they bluff it out and persuade people to stay put rather than buy new homes, they will then spend more money ‘DIY’ing up’ their existing house.

Dahlvig dismissed this with refreshing honesty. “Oh, they (consumers) spend less. Overall consumption is always down, especially when the housing market is down. It is not a concern, as that is the nature of business. You have good times and bad. After sunshine comes rain. We have to accommodate that.”

Now, Dahlvig is of course in the lucky position of running the market leader, said he can afford to be blunt about a recession – his rivals are likely to suffer more than he does. So there was nothing staggering in this comment. It doesn’t take an Einstein to understand that business goes through ups and downs. Economists even call it the “business cycle”. But to hear this clearly stated amidst the gibberish that most business people and politicians are currently sprouting about the ‘credit crisis’, is unfortunately rare.

You can’t eliminate the business cycle

Gordon Brown said he had eliminated boom and bust. We all knew that was rubbish, but everyone went along with it because he said it in the middle of a boom - and no one wants to believe that the boom is going to end.

And that is the trouble. You can’t eliminate the ‘business cycle’. Because to get rid of the bust, you also have to get rid of the boom. And as booms make everyone feel richer, no one wants to do that.

So we all pretend that a boom is not a boom. And we come up with increasingly ridiculous justifications to maintain this pretence. House prices rise because there is too little supply, or there’s too much demand, or there’s not enough land! And if credit does have anything to do with it, well, that’s okay, because we are now in a world of rising incomes (not inflation), permanently low risk, and permanently low interest rates.

Maybe if we all just accepted Dahlvig’s point – that ‘ups and downs’ are simply the nature of business, and life for that matter – then we wouldn’t be so terrified of booms coming to an end. Also, we would make sure we prepared ourselves for the hard times ahead while the good times are still around. (They even knew this in biblical times if you’ve read the story about Joseph.) If we accepted that good times had to end then we wouldn’t strive so desperately to keep these booms going way past their sell by date, and thereby ensuring the bust wouldn’t be quite so brutal.

Why the squeeze on small /medium sized business is bad for us all

Of course, it’s now too late for us in this business cycle. And while the Ikea’s of this world can ride out the hard times, is much tougher for your average business owner. In the first three months of 2008, profit warnings hit a seven-year high, say Ernst & Young, international accountants. Life for small businesses is particularly tough.

Late payment is one of the big issue for small businesses, says the British Chamber of Commerce. Just as the banks are tightening up, so the big corporates are also paying less promptly, thus turning the screw even more on their less fortunate suppliers. The Federation of Small Businesses reckon that 10% of business failures are caused simply by late payments resulting in severe cash flow crises, reports the Times.

But is this the real point?

Nearly 3/5 of the private sector employees work in small businesses. Anyone still predicting that the UK can ride out a credit crunch without a rise in unemployment, and the consequent decrease in consumer spending, should perhaps take these figures into account.

So, for you SME business owners, now’s the time to make sure you keep your credit control tight and your liquidity strong. Remember, “cash is king”! You can’t pay your bills with stock, debtors or promises – your suppliers will only take cash. And no cash = no supplies = nothing to sell = bust business (and probably a ‘broken’ you too).

Apologies for the morbid realities stated above, but my concern is for you – just get out there now, optimise your business, make money the smart way, sort it, and you too will not only  survive the ‘bust’ end of the business cycle but be ready to ‘make a fortune’ next time round!

Richard C