Business, red tape, regulation, the Nanny State and the Land of the Free

As most of we small business owners already know, in UK from 1st April 2009 all workers are entitled to 5.6 weeks paid holiday, which is 28 days for a worker on a five day week. Well, quite right too, you might say if you are not the business owner who has to grant all the employees this extra leave, with no compensation from the Government, so generous with all our money.

Now, please understand that I do acknowledge the value of having family time, and all work and no play makes Jack a dull boy (and Jill a dull girl, I suppose). However, with this latest addition to paid leave and the prospect of even longer maternity and (probably) paternity leave the small business owner is bound to come under great pressure, given that we are in a recession, profits are under the hammer and cash flow is tight. Indeed the employee-leave element is very likely to be what breaks the camel’s back, though it is hardly a straw, but an additional heavy burden.

I have recently been in the United States. Now, the recession is biting hard and there is news daily about jobs lost or expected to be lost throughout the US, property foreclosures and the rest. Americans work very hard in that they have far less paid leave than their European counterparts. As I understand it there is no statutory minimum for paid leave in the US, and most employers give between 10 and 20 days, and no doubt this depends on their jobs market. I am certainly not saying that in Europe there should be no statutory minimum; I am just wondering how the British Government, in collusion with the EU, has managed to get up to 28 days; a terrible millstone around the necks of small business in general.

I freely admit I once had entitlement to 28 days paid leave. It came after 30 years of employment and was earned through seniority and value to my employer. I started as the office junior on three weeks leave, and my parents started on two (and they worked Saturdays). I was not even allowed paid leave to take professional exams, in which my employers saw no value.

Few small business owners are able to award themselves 28 working days leave, Monday to Friday. Most work many more hours, though this time is not always productive. Talk to me about that or buy Clare Evans’ book. No, I am not on commission.

I felt a little downhearted returning to the over-taxed UK from the still free independent US where I saw no speed cameras and where everyone is carrying on regardless without too much wailing and gnashing of teeth. I know which economy will bounce back first, and it won’t be the over-taxed, over-regulated, social network monitoring (and probably steaming open our letters), paranoid Nanny-State UK.

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Bankers, untimely schadenfreude, and how to avoid their fate

I felt a little sorry for the ex-banking chiefs being quizzed by the Treasury Select Committee yesterday. They are genuinely bemused by the state in which their former employers, the banks, find themselves. We are talking specifically about the two Scottish banks, RBS and HBOS though others took risks and have made considerable write-downs of assets.

The reason I feel a small amount of sympathy is that they are akin to drivers who have been careless in the maintenance of their vehicles. There have been annoying rattles, and maybe the car has not been serviced. If there is a major failure in an important component (and in this case the wheels came off) then one should not be surprised that there is a nasty crash. Just the same, the actual event is shocking to the drivers and these guys are not over the smash, which has been very traumatic.

While it is easy to be wise after the event and we as spectators might have indulged in a little schadenfreude had we not been so badly hurt as passengers in the car, it is a lesson to everyone to make sure that we know every part of our business, and what is working well and what isn’t. The bankers took their eye off the ball. Northern Rock was by no means the first bank to fail. We had the grisly spectacle in 1995 of an old traditional bank, Barings, being brought down by the reckless actions of one man, Nick Leeson, the famous rogue trader.

The recent banking debacle was more of a cultural accident in that they were doing what everyone else was doing in the sub-prime market in the US. At the same time no one apparently thought of the risk, or what would happen if the US economy had a downturn and the domino effect on the market. Those of us in small business knew months before the initial crash in 2007 that the UK economy was struggling too, and we commented on it.

Anyway, we should all look at what we are doing in our own businesses; what works and what doesn’t, and what we should change now because it is going to stop working very soon and need to be replaced. I have stopped using Yellow Pages and Thomson’s because directories do not work for me. They work for other people but not for my businesses. Don’t do things just because other people do them. I am constantly reviewing my marketing, and need to think about whether other people getting on their bikes in the light of the large job losses which actually give my business more competition.

What about you? Do you take a step back and look at your business? Are there areas of risk you should try to eliminate? Is your marketing for purpose in the current climate?

I am taking my own advice anyway. If you need another perspective on your business ask an outsider; even ask me!

Workplace tribalism

In the week that we learn from the CBI that 38% of small businesses have laid off staff in the last quarter of 2008. Workplace tribalism many of us will feel uncomfortable over the strikes at the oil terminals and elsewhere over the employment of foreign labour. At times when the economy is weak and there are job losses, workers of larger organisations tend to blame the foreigners for their problems, whether or not the local labour force is qualified to do it; indeed as we know in more recent and prosperous times foreigners have been doing low paid jobs that resident workers (not just British workers) have not been prepared to do because the pay was not good enough. At the Lincolnshire oil refinery where the recent wave of strikes started the workers brought in are from an Italian contractor. I suppose it is pointless to mention that these workers have freedom of movement within the EU and British citizens are entitled to work in Italy if they wish. There would be arguments over the effect on family life but no doubt these issues have already been addressed by the Italian families providing the contractors at the Lindsey plant.

I do not want to get into the issue of prejudice. That is a touchy subject and one on which I am hardly an expert, though I was once shouted at in racist terms (no, twice, come to think of it) and it is pretty unpleasant to be on the receiving end.

What the whole business of apparent xenophobia in the workplace does bring into focus is the tribalistic “we are all in it together attitude”. In a large business the workplace camaraderie is often a great asset in ensuring that all workers pull in the right direction. In the same way that the print industry skiving which existed up to the seventies was proliferated by its own culture, it is also true to say that such sticking together can make for better and greater productivity and less shirking on the basis that the lazy let everyone down. At the same time an unsatisfactory work culture can lead to a lowering of morale and lower productivity due to a loss of respect and loyalty for management. I have seem both ends of this spectrum when an employee.

Anyway, a workforce that sticks together is admirable, but because employees become used to a stable environment, when something goes wrong there is a need to apportion blame. I have written recently about those in charge taking responsibility. We in our own businesses know that we are largely responsible for our success and avoiding failure. However, sometimes accidents happen; at least events over which we have no control even if we think Governments or regulatory bodies ought to have had. I do not think we could quite have imagined in 2005 or 2006 (2007 perhaps) that a steel producer providing material for ships, cars and particularly construction would suddenly find itself short of orders. It is no good blaming the company or its orders. They had a niche in the economy producing materials that were needed and they were hostages to fortune. It is not their fault if they have to lay off workers any more than it is the car manufacturers fault if they have to close for months because no one is buying new cars. In as much as these companies and their workers can be, they are victims of an accident. It is human nature to blame those closest but if there are culprits they are further away.

The point is that as employees we are paid weekly or monthly. We know that the money will appear and while we might do our work diligently we only have responsibility to ourselves and our comrades. The fear over the potential or actual loss of a job is terrifying. How can we survive? You need someone to blame close at hand. I know, I have been there, but lashing out and soft targets is not the way.

Small business owners are making hard decisions over job cuts and have to face the music and their workers. Some businesses could not be viable with less than a certain number of workers if the work is hands-on. I saw an example on television this morning of a small bakery down to a core of five staff. For many there is just a minimum number of workers without whose output the business cannot pay the rent and make any money. It is even harder for small business owners to make tough decisions because they are close enough to their workers to be part of the “tribe”. However when out of a job you are out of the tribe which is a terrible shock, and an owner letting an employee go is at risk of being out of the tribe or family too depending how the other employees take the loss of their comrade.

Despite my comments about taking responsibility, I am not going to say that laid off workers should all start their own small businesses. That would be absurd, especially given the current economic climate. Some may and I wish them all the best. Doing something for yourself rebuilds self-esteem which is the biggest loss when you lose your job. Nor is this a “be positive” pep-talk though It does help to be happy with what we have. As a population we will not be as badly off ever as in the only two Third World countries I have visited where the level of poverty and especially poor sanitary conditions was shocking for me even though I thought I was prepared. No, we have to stick it out, help families who have no incomes through taxation of our own and future incomes as we can. This is not a sermon, so I will not say we should be thankful; just remember that we are better off than many, no matter how long the recovery takes.

Just look past the tribal culture and be tolerant. Almost the whole world is in this economic mire and we will not solve anything by using our valuable workplace tribal culture to bash foreigners. If we have to let people go, handle the matter as kindly as possible and if we do know of any niches with our friends, businesses, see if we can facilitate a move through our network.

© Jon Stow 2009