Big firms are trashing their own people assets

Age and experience exposes the naivete of youth Clip courtesy BBC's The Apprentice

By Neil Patrick

Recently I had some bad news from a friend. His wife had been laid off in a corporate restructuring.

This lady had spent over ten years with a global blue chip employer and through professionalism and hard work had risen to the position of Global Marketing Director.

She’d done absolutely nothing to deserve her ejection. On the contrary, she had been diligent and committed. Her results and appraisals had been excellent. Her colleagues thought highly of her.

Yet in an HR spreadsheet exercise, she and several hundred other senior colleagues were terminated. No ifs, buts, or options. Just out.

Age is always side slipped in diversity programmes

The firm’s plan was to cull the most senior and expensive people and hire younger – and of course cheaper people. Doubtless, someone had bandied around the term ‘Digital natives’ in the discussions about this decision.

Perversely, their website talks a lot about creating a more diverse workforce – yet this diversity appears to mean just gender and ethnic diversity. They seem to have forgotten that age is also a diversity issue and a protected characteristic in law (in the UK, under the Equality Act, 2010).

Money talks and…you know the rest

I understand a severance package (doubtless constructed with bullet proof legal advice) is in place. But this is not the point.

The point is that this is no doubt thought of as cutting out the dead wood and saving money in the process.

We need to look at people as part of the balance sheet more than the P&L

The second irony is that her employer is one of the biggest and most prestigious advisory and consulting firms in the world. i.e people you’d expect to understand that assets like people are part of the balance sheet (at least conceptually), not just a cost on the Profit and Loss account.

Older and more expensive people are more valuable than younger and cheaper people. We need them both and we need them to work together respecting and harnessing each other’s unique skills and aptitudes.

After so many years, my friend’s wife is older. She’s more experienced. She’s more valuable than however many cheaper young people they could hire instead. Perhaps not if this was a potato farm. But this is a global leader in knowledge-based advice and solutions for large corporations and organisations. They trade in intellectual capital. And intellectual capital isn't bought, it is grown and nurtured over years.

How many times do we hear CEOs spouting the mantra that ’Our people are our most valuable asset’?

That’s right. They are. And when you have invested a decade in nurturing an asset, surely it’s idiotic to just throw it away for a cheaper and less effective one?

But she’s in marketing; like its cousins, sales and advertising, marketing jobs are notorious for over-valuing one personal characteristic; youth.

Ageism is illegal in the UK. But it is also the last of the ‘isms’ to remain socially acceptable. And since it is so easy to fudge, many employers breach this law routinely.

So her chances of a rapid and smooth transition to a comparable role elsewhere are slim and will become slimmer with each month which passes.

There’s no such thing as a specialism where youth trumps everything else

Most people believe that marketing demands high creativity, high energy, media know-how. Exuberance and slick presentation skills don’t hurt either. These are characteristics which are incorrectly (see my post about this here), believed to be more prevalent amongst the young. The reality is something else. Effective marketing teams are experts at revenue generation; nurturing client relationships; data gathering and interpretation; brand building; managing specialist suppliers.

I work all the time with smart, enthusiastic young people who have marketing roles. They are wonderful. But they are also inexperienced and limited in their understanding of how to build successful businesses. They simply have not had the depth of experience to obtain the perspectives which I learned often painfully through 30 years of hard won experience.

Sure our world is transforming faster than ever before, but this doesn’t mean it is entirely different. The digital revolution doesn’t change the fundamental workings of economics and business, it just changes the ways in which these goals are attained. The Zuckerberg mythology is just that. Facebook is a success not because of Zuckerberg’s youth. It’s a success because he did better than his Silicon Valley peers…who guess what, were also young and inexperienced.

Youth alone is not a panacea for the digital age. The future belongs to those organisations who can figure out how to satisfy the aspirations and nurture the talents of young and old alike. It’s called ‘inclusivity’ guys…

Digital business is not at all beyond the comprehension of older employees. In fact I’d wager they could bring a good deal of common sense to some of the short sighted nonsense I see written about SEO, social media and other preserves of the tyros.

Please, please please, let’s stop believing that somehow culling the most experienced people is a recipe for progress.

It’s not. It’s like setting fire to your best work and flushing the ashes down the toilet…

Fake news is not the problem. Artificial intelligence is.

By Neil Patrick

Today is a bad news day according to the news feed on my smartphone. Just like most other days then. It’s Tuesday 5th September 2017.

Like billions of other people, the news feed on my smartphone has been tailored for me by an algorithm. And my news has been written by junior hacks assembling computer generated information into ‘stories’. Doubtlessly they have been taught by their bosses that bad news and misery is the foundation of maximising readership.

These poor folk have no clue what they are writing about. They are simply painting by numbers.

I tweeted a while back in my #dearrobots series: ‘There’s a reason it’s called artificial intelligence – it’s not the same as real intelligence.’

Artificial intelligence is not just within the machines and IT that business deploys. It is penetrating the very brains of the people we need to trust for our news.

The algorithm which delivers my newsfeed has ‘learned’ what I like to read. Sort of. Because it has no ability to discern quality thought and content from junk.

And it helpfully put up the top three stories it thought would be of most interest to me.

So far so good.

The top three stories were:

Daily Telegraph: ‘Growth in UK services sector falls to 11-month low’

Reuters: ‘UK Car Sales are falling off a cliff’

Sky News: Lego sales drop: 1,400 jobs axed

Bingo! Yes these are all stories I want to know about.

But after this promising start, everything went downhill from there. Three news stories, yet every one was so ignorantly written that they not only told the wrong story, they would actually mislead 99% of readers into believing the wrong ‘facts’.

I am the last to criticise the integrity or quality of any of these three news sources, yet each one had provided me with what can only be described as fake news.

The first two ‘stories’ are not stories at all. They are simply the normal thing which happens every summer - people stop work for a couple of weeks and go on holiday.

This is why most business slumps in August

And if you work in a service business, it’s a very good idea to go on holiday in August, because unless you are a wedding photographer or ice cream vendor, chances are your clients have gone on holiday too and you might as well join them.

It’s nothing to do with Brexit, squeezed incomes, or business confidence. Yet according to the Telegraph writer, ‘This makes last month the weakest since September 2016’.

Wow. That’s almost exactly a full year…in fact the worst since the last time everyone went on their summer hols.

The Reuters writer has fallen into the same trap of not knowing about this mysterious thing called seasonality. In the UK, car sales have always bottomed out in July because new registration plates showing the vehicle registration year (half yearly since 2001) come out in August. They have done this since August 1962.

Of course new vehicle sales slump in July, because no-one in their right mind wants to buy a car which appears to be six months old when they drive it off the forecourt.

Yes the UK car retailing sector is headed for crisis as I have written about here. But sales have slumped in July every year forever for this simple and predictable reason.

This is not a story – it’s a clueless intern churning out words about a subject they care or know zilch about.

Which brings us onto the Lego story.

Everyone loves Lego, including me. So I was sorry to hear that they were in difficulty.

1,400 lay-offs is about 8% of their workforce.

Yet here’s the fascinating thing. Just six months ago, this appeared:

Lego is the world’s most powerful brand according to Forbes and Brand Finance:

Viewed through this lens, this story is huge. The world’s most powerful brand is laying off almost 1 in 10 of its workers because of falling sales in the US and Europe.

When we look at Lego's profit history, the significance of this becomes even more stark:

Perversely, the magnitude of this story is diminished, whereas the non-stories about normal seasonal fluctuations in business stats are blown up to cause alarm to anyone who cannot assess the merit of what they are reading.

Yup fake news is everywhere. But it is AI and low grade journalism which is creating it not some evil masterminds intent on global domination.

The truth is much simpler and less sensational (as it usually is). Artificial intelligence has assumed command of the brains and fingers of the people who write our daily news.

Sure, robots don’t get drunk like old school journos. They don’t hack phones. And they don’t snoop into people’s private lives.

But they can’t write a reliable piece of news either.

Robots aren’t just stealing jobs; they are the creators of their own destruction.

By Neil Patrick

Asimov’s three laws of robotics are often cited in the debate about jobs and the threat of AI.

Isaac Asimov was a gifted and insightful science fiction writer. No more, no less. But his thoughts applied to today are about as helpful as reading Jane Austin is for tackling wealth inequality.

Asimov’s third law stated, ‘A robot may not injure a human being or, through inaction, allow a human being to come to harm.’ Most assumed this referred to physical harm. The reality is that that it is economic and social harm which we should be most worried about.

If you read this blog, you’ll know that I have been arguing for over 5 years here that the rise of the machines is unlike any previous technological change in the existence of mankind.

Its scope is so vast and the pace of change so rapid, that people, let alone institutions and government cannot keep up. And it is ordinary people who will pay the price for this.

It has been interesting to watch opinion about this shift. It started as a utopian view that the machines would free us all from the tedious and boring work; we’d all become valued for our creativity, our people skills, our innovation. Unless we didn’t have much of these things to start with…

When the raw economics revealed this was a Disney-like fantasy, then it was argued that this revolution would create a new world of work in which we’d all become freelancers, skipping merrily from assignment to assignment. The gig economy would be our liberator and digital communications would free us so we could all sit on a beach somewhere with a laptop earning our living. What happened instead was that the likes of Uber and zero-hours contracts created hideous exploitative machines of misery for millions.

Yet these were just the growing pains it was argued. Regulation and government interventions would act to calm the beast. Smooth out the inequalities and inequities. Like ensuring that Google and co. paid their fair share of tax…

I didn’t buy any of it. Yet I secretly feared that I was digging my own grave. Which would probably have a headstone including the words ‘reactionary, pessimist and Luddite’.

Then this week an article appeared in the Times by a young man named Raphael Hogarth .

Titled, ‘A life without work is not my idea of fun’, Raphael reports that the evidence from those who know most about these things such as AI entrepreneur Jeremy Howard, despair that “people aren’t scared enough”.

I agree. They are not even a little bit scared enough. This is indeed a monster unleashed. Just not quite the same one as Asimov envisaged.

The tidbits of crack cocaine attached to the monster such as online shopping, ITunes and MyFaceGram have blinded people to the reality that the monster will simultaneously pander to their desires while covertly devouring their ability to earn the money they need to live.

And in so doing, the machines will destroy their own revenue-based raison d’etre.

But to get back to Raphael’s article. What was most interesting to me was that he seemed to accept without much difficulty that his own future employment was under threat from AI. And that assuming the governments of the West manage to create a workable form of universal basic income (which I doubt), then he’d rather not have an idle life.

This is perceptive and admirable. It is also a watershed. It’s the first time I have seen in mainstream media, any commentator resigned to the reality of the AI monster.

And yet again, I find myself saddened by the fact that my own worst fears have come a step closer to being realised.