Speed Read: Tips on Transformation when WFH

Since lockdown in March, many organisations have gone through the mobilise and stabilise phases and are now looking to implement some form of normality for day to day working. Alongside this, significant programmes of change which were put on hold have been rescoped and restarted, taking account of new platform and technology changes.

The most significant shift from 12 months ago to the current day is the change to remote working, and the challenges of managing teams in the middle of unprecedented personal upheaval. This requires a new way of thinking and engaging across several traditional areas. In this article we outline some of the key areas around the Target Operating Model, together with some ideas and suggestions on how to maximise team performance.

People.

Ensure you know the people in the team, and any challenges they may be facing. Focus on the team dynamic (“we are all truly in this together”). Allow for everyone to get engaged on remote calls and keep an eye out for those getting left behind. In addition to setting direction and helping employees work effectively, managers should focus on energizing the team and providing reassurance. Encourage formal and informal methods of engagement and ensure everyone understands the goals ahead.

Remember, this is a stressful time. Communicate to colleagues authentically and from a human perspective. Ensure this is hard wired into the culture of your communication.

Process.

In times of difficulty, process can become a rock for people to lean on. Setting up regular progress meetings, regular one-to-ones, and establishing frameworks and expectations can assist the team through some of the ambiguity of the wider situation. Leaders must hold themselves accountable for ensuring this is not a ‘flash in the pan’, but the new way of working. Consistency of process will help those less experienced members of team feel more secure in their role.

Review support processes such as communication and training to ensure they are fit for purpose, and to provide more information and support to employees, so they are better equipped to adopt new ways of working.

Technology.

By this stage, mobilising the technology to get colleagues effectively working from home has probably been achieved. However, development of the remote working experience needs to continue through the pandemic and beyond, as the chances of returning to a pre-COVID physical working model are minimal. As you stabilize your collaboration and technical tools, incorporate organisational change into the planning, always from the perspective of the employee experience.

Technology also plays a major part in project delivery. Complete transparency on project milestones and around the PMO ensures the team are all pulling in the right direction. Utilising file sharing and other software tools ensures that all interested stakeholders are involved in collaboration and decision making.

Structure.

Setting teams up to succeed is an imperative. A great deal of thought needs to go into the structure of programme teams. In addition, we have all seen how zoom calls with 20+ people on can be ineffective and sometimes even counterproductive. Managers should consider setting up smaller, more focussed mandated teams with which have wider responsibilities. Consider if Agile working is effective in your organisation given the new remote working constraints – is change control adversely effected? Ultimately, clarity and positive engagement rather than uncontrolled Teams calls will pay significant dividends.

In summary, a considered approach and time taken at the start of the programme is time well spent. Ensuring you are getting the best out of your team in these challenging times is essential, as not only will you deliver your programmes successfully, but also retain the engagement and loyalty of your team.

If you would like to discuss this article further, learn more about The Norman Broadbent Group, or discuss specific people or organisational challenges, please do not hesitate to contact Mike Davies via mike.davies@normanbroadbent.com for an initial confidential discussion.

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From CFO to NED

For many CFOs, becoming a non-executive director (“NED”) a logical career ‘next step’. However, before embarking on this journey, careful consideration should be taken. Being an effective NED can involve just as much work outside the boardroom as within it. During a crisis that time commitment can escalate very quickly as many NEDs will attest to this year.

Why do CFOs want to become NEDs?

Despite the challenges, a significant number of CFOs do choose to further develop their careers by taking on an NED role. From our experience, the reasons are varied and include:

  • Gaining new insights into other sectors and businesses
  • Understanding how different boards function
  • Gaining new boardroom skills and experiences
  • Being able to sit on several boards and building a portfolio of NED roles

However, while CFOs cite all the above (and more), the overwhelming majority of CFOs say the underlying driver is the ability to play an influential role in the future direction of a company.

What do companies look for in an NED?

When appointing an NED, the Board and Nominations Committee will already have a defined set of skills they want on their board so will be looking for very particular skillsets, whether it be specific global experience, specific sector knowledge, specific functional expertise etc.

Furthermore, they are likely to be looking to appoint someone who:

  • Is well respected in their industry, credible, and with a proven track record of relevant achievements
  • Is reflective, considered, and capable of listening, probing, and challenges constructively
  • Has an independence of mind, but understands the need for/accepts collective responsibility
  • Understands the boundaries of Executive and Non-Executive roles.

The Interview process

While the skillset will define whether you pass through long- and short-list stages, once that gets you in front of the clients’ panel, it is all about personality, character, and cultural fit. Ethics are also very important and getting a sense of the candidate’s ethical position on a range of situations is a good indication of whether they will “fit” in culturally with the Board and organisation.

Most chairmen want genuine diversity in thought and opinion on their boards to avoid “group-think”.  Too much similarity in terms of background or experience can lead to the group moving as one along well-worn tracks, rather than exploring more radical/potentially better solutions. At the same time, the right chemistry amongst the board members is required to achieve a productive outcome.

The interview process for NED roles tends to be very thorough and can take a long time. Gone are the days of the Chairman picking an NED and the process is over. You may be interviewed by the whole board. Finally, remember that the interview process is a two-way street – you are also interviewing them.

Before accepting an appointment

Before accepting an NED role, due diligence is critical. You will already have gained insight into the organisation, its people, and culture through the interview process. But it is important to deepen your research at offer stage. Your checklist should include the following:

  • Read as much as possible in annual reports, the company website, press coverage and analyst and rating agency reports
  • Talk to the company’s auditors, bankers, lawyers and headhunters
  • Try to meet the members of the board who have not been part of the interview process. Work out key relationships, styles, and values
  • Is there an effective and constructive relationship between the CEO and chair?
  • Ask for dates of board meetings and the year-end and check for any timetable conflicts. Find out the year-end to avoid/be prepared for a heavier workload at certain times of the year.

Navigating your way around the boardroom

When it comes to starting a new NED role, you must be able to demonstrate that you know the difference between an executive role and a non-executive role. Showing the ability to step away from an executive mind-set will stand you in good stead with the rest of the board, building your credibility and their confidence in you.

As a new NED, the induction process is crucially important to understanding the ins and outs of the organisation and building relationships. Spending time with other board members, going on site visits, meeting the lawyers, understanding the company’s strategy, and simple things like learning the company’s jargon and acronyms all help to build a up picture and settle into the role.

To maximise your influence in the boardroom, as with any team, it comes down to knowing the personalities and values of fellow board members. It is important to observe and learn from how individuals on the board interact with each other and adapt your style accordingly. It is salient to challenge and ask questions, but this needs to be done in a manner that retains a positive atmosphere in the boardroom.

How do you find the right balance?

Many CFOs feel like the Audit Committee and the Auditor are working against them. However, when CFOs become an Audit Committee Chair it becomes clear that the objectives of the Executive, Audit Committee, and Auditor are all aligned. Having this insight helps individuals prioritise and manage their responsibilities in both their CFO and NED roles.

It is a fact that there will be increased demands and occasional conflict in managing your time between roles, but to turn that on its head, it is also an opportunity for you to delegate some of your CFO tasks to your team more effectively. Giving your team more responsibility allows them to step up and allows you to focus on the most important tasks, also freeing up time to do your NED role.

A supportive Chairman and CEO should see you securing an NED role as an opportunity for you to bring back your learnings from your NED role into your CFO role. This said, there must be high degrees of trust between you, your team and your Chairman and CEO for this to work most effectively. There also needs to be an acknowledgement that your executive role takes precedence over your non-executive role so being able to find the right balance, and giving the right assurances to management that your CFO role is well under control is critical.

If you would like to discuss this article further, learn more about The Norman Broadbent Group, or discuss specific people or organisational challenges, please do not hesitate to contact Angela Hickmore, Group Managing Director, via angela.hickmore@normanbroadbent.com  or Wayne Poulton, Director, via wayne.poulton@normanbroadbent.com for an initial confidential discussion.

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Digital delivers a silver lining, Trends for 2021 and beyond

2020 has delivered a seismic shift in the way we live and work. The pace of change, and the price of not changing fast enough, has never been more evident. There is no doubt that the most successful companies had already aligned their digital and corporate strategies before the pandemic meaning they were faster to adapt, prioritising innovative solutions and investing in new digital technologies.

According to a new survey by McKinsey “Covid-19 has pushed companies over the technology tipping point and transformed business forever”. The report goes on to say that, “Among the biggest differences between the successful companies and all others is talent, the use of cutting-edge technologies, and a range of other capabilities. A related imperative for success is having a culture that encourages experimentation and acting early.”

As we look ahead to a new year, 2021 will be an opportunity to build a positive legacy from the scale of corporate, social, and technological knowledge gained in 2020.

Digital led businesses by their nature are future-focused, innovative, and agile in both development and delivery. Traditional businesses that do not embrace digital transformation are finding challenger brands disrupting their industries and forcing transition from the inside out. With Amazon resetting customer expectations on delivery, and Monzo and Starling Bank successfully reinventing the consumer banking journey, traditional businesses are racing to catch up.

If 2020 was about widespread digital disruption and adoption, 2021 will be about building on that capability to drive further innovation and more intuitive solutions. The intrinsic value of enhanced digital capability is clear, and a new level of strategic importance has been established. Based on our experiences, Norman Broadbent has identified five key elements to enhanced digital capability in the year ahead:

Cloud Migration

A Cisco study confirmed that cloud traffic would represent 95% of total data centre traffic by 2021. The study also identified that the demand was driven by both consumer and business applications, “Consumers favour cloud for streaming video, social networking, and Internet search. Business users favour cloud for ERP, greater collaboration, analytics, and other digital enterprise applications – these are all leading growth areas.”

Cloud offers greater agility and flexibility which supports faster innovation, but Covid-19 forced the migration most were expecting over the next 2/3 years to happen in less than a month. According to Accenture, “As an on-demand, self-service environment, cloud is now vital to achieving end-to-end digital transformation. Now, more than ever, cloud is vital to help businesses reopen, reinvent, and outmanoeuvre uncertainty.” Cloud-based services are increasingly favoured for supporting innovation in data insight as cloud-based data lakes are more suited to the complex deep learning required for AI and machine learning applications.

Amazon Web Servers (AWS) were the first to launch a cloud computing and infrastructure “as a service” back in 2008, with Microsoft Azure a heavyweight second and favoured by many who already use their operating systems. The rivalry with AWS will no doubt continue in 2021, fuelled by Microsoft landing the Pentagon’s $10 billion Jedi cloud contract. Cloud is the hottest ticket and the battle for share is driving innovation in AI, analytics, and data capability for us all.

5G and Enhanced Mobile Connectivity

Mobile connectivity is set to reach new levels of sophistication and capability next year. The continued roll out of 5G promises a significant increase in the speed and quality of mobile connection and more cloud-based data will support even smarter apps. The news in October 2020 that the latest iPhone 12 finally supports 5G is a significant step in the widespread adoption of this technology.

Looking at mobile content, 5G will enable real-time Predictive Analytics and Artificial Intelligence (AI) allowing developers to create highly personal apps that are more intuitive, and AR/VR will add another layer of engagement – they all offer the opportunity for greater User Experience (UX).

There are also significant commercial benefits provide by 5G and real-time data. SalMar, one of the largest global farmed salmon producers, is using 5G to monitor the well-being of fish in the world’s first offshore fishery. Image recognition algorithms detect when fish are over or under-feeding, and automatically release food and medicine to keep them healthy.

AI

Artificial Intelligence has increasingly been on the radar, but the volume of data collected in 2020 particularly on healthcare (largely around infection rates and behaviour) has been unprecedented. We expect to see this continue in 2021. This rich data will inform increasingly sophisticated applications and insights using AI. As our patterns of behaviour continue to alter next year, and as more and more activity takes place online or in a traceable capacity, we expect to see a greater use of data analysis, machine learning and AI.

AI is supporting advancements in a myriad of settings particularly using Computer Vision systems that rely on artificial neural networks to enable the effective interpretation of images. Facial recognition technology is increasingly being used and vehicle manufacturers are competing to add more autonomous features to their cars. There are also less well-known applications. In medicine, Computer Vision systems help diagnose disease and extend the sight of surgeons during operations. In agriculture, crops are monitored for signs of pests or disease meaning treatment is faster, and a John Deere semi-autonomous combine harvester uses AI to detect the optimal route through crops after analysing the quality of grains.  As the versatility and capability is increasingly understood we expect to see even more innovative examples in 2021.

Cyber Security

With the rapid growth of global data, from 4billion terabytes (4 zettabytes) in 2016 to 96 zettabytes in 2020, coupled with a similar growth in the ways we want to access that data, such as smartphones, wearables, tablets, cars, tv’s etc, the job of protecting it has become more important than ever. Access to the vast array of tools needed to commit a cyber-attack are widely available on the dark web, reassuringly estimated to be 5,000 times bigger than the surface web.

According to Roger Grimes, a 30-year tech industry road warrior who spent 11 years as a Principal Security Architect at Microsoft, “Every company will be hacked.” Healthcare providers were already a target before the pandemic but our increased reliance on them has made them even more vulnerable.

So, how do we combat the increased threat level? The current shortfall of cybersecurity talent is 4 million worldwide, according to the ICS² latest cybersecurity workforce study. This is not something we can just hire our way out of or leave to an overstretched team. Successful organisations will rapidly improve their understanding of cyber security through widespread training and development, creating a culture of collective responsibility.

Extended Reality

Like many elements in this article, Augmented Reality (AR) and Virtual Reality(VR) are not new. However, their value and versatility have been enhanced by our changing patterns of behaviour and the increase in capability and connectivity provided by cloud migration and 5G roll-out. Aside from enhanced gaming and experiential applications there are also innovations in education and medicine that are very relevant in the current environment. Using AR and VR, classes could be taught virtually, avoiding the need for crowded classrooms. Teachers can transport students to experience the culture, events, or examples they are describing – foreign countries, historical events, the formation of stars etc. In medical applications, opticians can use VR to conduct a full eye test remotely using high-definition cameras. An AR tool then allows customers to see a range of glasses on their own face, all without leaving home. Physical travel may still be limited in 2021 but virtual reality will be transporting us way beyond our immediate environs.

Moving Forward

The pain most organisations have endured this year needs to translate into positive changes in the year ahead. This positive change needs to be led by insight and inspired by innovation. We will have to continue to be brave and move forward, embracing technology and digital innovations that increase our efficiency, enhance our understanding, and improve our culture, enabling us to survive and thrive in 2021 and beyond.

If you would like to discuss this article further, learn more about The Norman Broadbent Group, or discuss specific people or organisational challenges, please do not hesitate to contact Richard Jones via richard.jones@normanbroadbent.com

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The Case for Grey Hair

COVID-19 has sent shockwaves across all industries and sectors with many companies launching redundancy programmes cutting back hiring plans. Much attention has been paid to the impact this will have on today’s school- and university-leavers, who will be competing for fewer jobs than ever before. The Government has offered implemented numerous measures and incentives such as the Kickstart Scheme aimed at promoting the hiring of younger workers in the 16-24 age bracket.

As research has suggested that many young workers could feel the aftereffects of the COVID period for the duration of their careers, any steps taken to avert a youth unemployment crisis should be applauded, However, the focus on young people alone ignores the future potential of other age groups and the benefits they can offer business.

Older workers (defined as 50+) are, by their very definition, experienced individuals with much to offer. In times of upheaval where leaders face new and innumerable challenges, their past experience could prove invaluable. Norman Broadbent is already seeing a rise in demand for our Interim executive services as businesses continue to grapple with rapidly evolving marketplaces and fresh challenges.

The average number of years of industry experience that a Norman Broadbent interim brings is 31 years, and, for many, most of that time was spent in a single or parallel industries bringing a wealth of understanding to any assignments they undertake. The correlation between their past experience and new assignments is evidenced by 87% of them undertaking work in the same or similar industry to where they spent their executive career.

More experienced workers have been shown to outperform all other age groups on measures of soft skills such as negotiation, problem-solving, communication, and teamwork. Interims are also able to adapt swiftly to fresh environments and enjoy working with and mentoring people. Interim executives harness these skills to not only support the businesses they work with, but also pass on their experiences and knowledge to the permanent business team, unlike consultancy services.

Post-COVID, there is likely to be an increase in start-ups as new ideas come to the fore. Many of these will experience high levels of staff turnover as they grow, establish their place in the market, and develop at pace. This is where experience is needed, particularly when organisational culture is developing, and the changing environment may prove unsettling to less experienced staff. Maturity and a lifetime’s worth of experience can often provide strong and stable leadership to young teams.

Interim executives can also be effective board advisors on everything from scaling a business and funding, through to stimulating ideas for growth. They also tend to be good in a crisis. Both interims and other older workers are often more willing to consider part time or flexible working arrangements, enabling businesses to harness the benefits of their knowledge and experience without the liabilities associated with employing somebody fulltime.

Experienced Interim Executives are outcome focused, objective individuals who are good communicators and listeners. They can be the difference between a good and efficient outcome, or a slow and inefficient solution. Access to experienced, immediately available professionals can add bandwidth to Senior Leadership Teams, help businesses tackle challenges or get ahead of the competition, and introduce new ways of working and ideas to your business.

If you’d like to learn more about The Norman Broadbent Group, or discuss how an Interim Executive could help you tackle your challenges, please contact our Group Managing Director, via angela.hickmore@normanbroadbent.com for an initial confidential discussion.

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Global Pharma: Leadership borne from adversity

There is little doubt that the upheavals of 2020 have impacted globally across all sectors. The effects have been more complex in the pharmaceutical sector, who have not only had to deal with the implications of multiple shutdowns across the globe, disrupted supply chains, and the challenges of moving those workers who can do so to WFH, but they have also had a critical role to play in developing therapies and vaccines for the virus. This is on top of the complex issues that previously faced pharmaceutical industry leaders. Healthcare reform and changes in technology, government policy, and consumer expectations are revolutionising relationships with key stakeholders and impacting operations in unforeseen ways.

Even prior to COVID, globalisation has long presented its own set of challenges for the pharmaceutical sector – from development to marketing to regulatory. Add to the mix the ‘patent cliff’, regulation, pressure on R&D budgets, and sluggish sales pipelines, and you have a combination of pressures that would challenge even the most seasoned leadership team. Looking ahead to 2021, it seems likely that the challenges inherent in rolling out a vaccine globally will continue to disrupt and challenge our pharmaceutical leaders.

Broadly speaking, organisations which thrive in the face of adversity show several characteristics. They are innovative, flexible, collaborative, and agile when facing challenges. Their leadership tends to show similar attributes. The question facing the pharmaceutical industry right now is a critical one: what are the skills and attributes our leaders need to navigate this complex and rapidly changing landscape? And how do our leaders stack up?

Research from the Centre for Creative Leadership suggests that the ability to build collaborative relationships should be a top priority for leaders in the Pharmaceutical sector. We are far beyond the days of autocratic or figurehead leaders. Instead, given the rise of collaborations and partnerships in the sector, businesses require leadership that can leverage relationships across industry, government, healthcare professionals, and patients. Building collaborative relationships is a key competency to thriving in this new environment. Leaders should also be able to leverage these interpersonal skills internally, for example in building and empowering strong cross-functional teams, leading change and encouraging internal development and growth.

Norman Broadbent’s own research has suggested in the past that although many leaders understand the desirable skills in the leaders of tomorrow, they have little faith in the ability of their talent and succession planning processes to deliver. This is supported by the research from the Centre for Creative Leadership, which suggests that although the ability to build collaborative relationships is a vital one in tomorrow’s leaders, was ranked sixth lowest in terms of actual utilised skills. They also ranked poorly on their ability to confront problem employees, which is a critical test of interpersonal and relationship building skills.

The Centre for Creative Leadership’s research indicates a critical gap between the skills many leaders in pharma know are desirable, and the reality of existing and future leaders in the pipeline. So, what can be done to ensure businesses are well-positioned to face the rocky road ahead? The Norman Broadbent Group has been delivering talent assessment, development, and benchmarking programmes for over forty years offering data and insight to make evidence-based people decisions. Often the gap between what we know to be desirable and the reality of those who are hired or promoted, stems from decisions made on ‘gut feel’, which are not only wholly subjective but can often have disastrous outcomes for teams and organisations.

What we do know is that those pharmaceutical businesses that survive and thrive in the ‘new normal’ will be those that develop these important leadership competencies. They will have prepared their leadership team to handle the performance challenges ahead and, by being proactive around their business-critical human capital, will stand more chance of being ‘match-fit’ for the future.

If you would like to discuss this article further, learn more about The Norman Broadbent Group, or discuss specific people or organisational challenges, please do not hesitate to contact James Gregory via james.gregory@normanbroadbent.com for an initial confidential discuss

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Consultancy is dead …

Change is the new Norm.  Post COVID, the world of business has been forced into further change and whether impacted positively or negatively, most businesses have a change agenda. So here is the conundrum organisations must grapple with – how to deliver change and transformation in a timely, cost effective way when there is a lack of skills and experience in the business to successfully deliver that change.

For many Clients, having reluctantly accepted the need for external help, they call in a top consultancy. Most will go on to tell of eye watering costs, how the project over ran or did not go to plan, poor execution/implementation, lack of expertise etc. Sound familiar?

Such failures were evidenced by McKinsey who found that 70% of all change programmes fail (Why do most Transformations Fail: McKinsey, 2019). But why is this?  We believe it is down to poor planning, poor execution and, most importantly, the wrong people delivering.

Unfortunately, despite McKinsey’s findings, there have been few, if any, alternatives. Until now!  With The Norman Broadbent Group you will get access to experienced, outcome focused professionals. They will involve your teams, mentor and coach your people through the change process, and deliver as promised – on time and to budget – before seamlessly transitioning everything back to you. Our network of tried and tested ex-Big 4 Consulting and C-Suite Professionals have a proven history delivering long standing and sustainable transformational change. From establishing the business case, through to PMO creation, the design, testing, delivery, and hand over … you will get a team that works with you to understand your challenges and mobilises with the end delivery in mind. Our teams are there for the duration to ensure successful delivery and transition into BAU.

In summary the benefits of using our Interims versus highly priced Consultants are as follows:

  • By creating a platform for change with good governance, checks and balances can be redeployed
  • The engagement of internal staff means they will not only learn new skills but also help embed that change into the business
  • You will see up to 50% cost savings against the typical rate card of a consultancy
  • A programme team that will report to you as the client
  • A team which will be controlled and selected by you, the client
  • Delivery which is enhanced by an effective transition programme to hand back to BAU
  • Programmes delivered on time, on budget, and with an engaged team

Our 2020 Free White paper which explores the benefits as well as exclusive data collected over 45 PLC’s as to the charge rates of the Consultancy houses is available on request.

Finally, let me leave you with this thought. As the world has changed, it’s time to think differently about how your business delivers change.

If you would like to confidentially discuss how The Norman Broadbent Group could help you overcome your business or people challenges, please contact, Angela Hickmore on 07483 015 584 or via email at angela.hickmore@normanbroadbent.com

 

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“In the end, it’s all about the people …”

During any period of forced disruption the pace of change and development is accelerated, often at an unimaginable pace. In today’s Covid-19 context, new technologies are emerging, and we are adapting existing routines and processes to fit the challenges we face enabling us to learn and evolve to survive, cope and thrive.  However, the pace and success of that change will be heavily shaped and influenced by some major people factors. These are:

  • Culture: the way we do stuff around here
  • Skills: the technical and management skills that exist organisationally and individually
  • Attributes: a quality, feature or characteristic that exists at an individual or organisational level

Underpinning the above is the difference between success and failure.  That is leadership. Any crisis demands a style of leadership that is very different to the norm. Whilst the fundamental characteristics will be constant, certain traits will be elevated and be more in demand.

So, in simple terms the success you and your organisation derives from any disruption is determined by your people. Yet history is littered with examples of failure caused by this obvious factor being ignored or underestimated. Why is this? Studies and our own experience can shed light on this, as structure/process/routines are all logical and can be modelled, evidenced, constructed, while people are unpredictable/emotional/irrational and therefore cannot.  Well, maybe not, however we can model those characteristics that are required to suit a particular context, we can then assess scientifically the culture/skills and attributes that are needed, and then we can do the same with leadership. Many organisations do and certainly are doing now, with one eye on the future to ensure they have the capability required to come out ahead of the curve and their competitors.

There are some simple, practical steps to take, the first of which is a list of questions to ask yourself before diving into any set of solutions.  Start by mapping what the future may look like for you and your organisation and then ask:

  • “How relevant will what you do be and the way you do it?”
  • “How much will you need to transform, adapt, and pivot?”
  • “What will be different, how will it differ?”
  • “What will you need in order to transform successfully – is it investment, skills or culture?”
  • “Do you have the right mix of experience, skills, attitude, and agility from Board to shop floor to deliver the transformation required?”
  • “What’s the gap and how big is it at an individual, team and collective level? How do you bridge/close it?”
  • “What should you be doing now to make sure those critical personnel in your organisation, and the customers who will be vital to your future success, are fully engaged and with you, for the short and long term?”

Underpinning all these questions will be “Do I have the right people to get me to where I need to be?” By answering that question, identifying the consequences of your analysis, and then implementing the solutions, you will be taking control, preparing for the future, getting ahead, and beating your competitors.

Finally, let’s not forget that post-Covid, all leaders will be judged on how they acted, the results they achieved, and the new foundations they laid for the future. Now is the time to look ahead and set yourself up to succeed.

If you would like to confidentially discuss how The Norman Broadbent Group  could help you overcome your business or people challenges,  please contact, Tim Drake, on 07912 465162 or via tim.drake@normanbroadbent.com

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‘Future-Fit?

Despite the decline in British manufacturing since the 1970’s, when manufacturing contributed 25% of UK GDP, the UK is still the ninth largest manufacturing nation in the world.  On average, the UK’s industrial sector has increased by 1.4% Y-o-Y since 1948, according to a recent report from the Office for National Statistics (ONS). The ONS attributes the sustained growth to a better quality/more skilled workforce; a shift in production from low to high productivity goods; improvements in automation and technology; increased investment in R&D, and a more integrated global economy. According to Make UK (formerly EEF), UK manufacturing currently:

  • employs 2.7 million people, earning an average of £32,500
  • contributes 11% of GVA
  • accounts for 45% of total exports totalling £275bn
  • represents 69% of business research and development (R&D)
  • provides 13% of business investment

Although the contribution of manufacturing to GDP has declined on paper, many of the services provided to manufacturers which would have once been considered part of manufacturing (catering, cleaning, building services, security, logistics etc.) are now allocated into different areas of the economy. Those contributions however are directly reliant on manufacturing for continued business which could be considered as a part of manufacturing’s GDP input. As such, many are calling for the true value of manufacturing to be recognised, a move which would see the widely cited figure of 11% of GVA more than doubling to 23%.

Risks, challenges and opportunities within the UK manufacturing sector

The UK is undoubtedly still a leader in manufacturing innovation but is facing many new challenges and opportunities reflecting a changing market dynamic. A greater competition for talent could limit manufacturers’ abilities to evolve, grow and adopt new technologies.

The costs and rewards of operating in different countries around the world continue to evolve making decisions about where to design, make and service products increasingly difficult, whilst manufacturing leaders are struggling to find the best people and skills to develop the next generation of products.

Whilst apprenticeships are being created, more must be done to encourage young people to become engineers. Staff retention is also an increasing challenge, while recruitment of smart and innovative people is vital to the industry, our younger generations are more evidently more attracted to more “glamourous” sectors such as Technology.

Every year Hennik Research publishes the Annual Manufacturing Report. The 2019 Report reflected on a surprisingly resilient mood among UK manufacturers, surprising to those who haven’t been paying attention to the uncertainty surrounding the recent Brexit negotiations.  The key findings were:

  • 81%say they are ready to invest in new digital technologies to boost productivity
  • 71%of UK manufacturers say Brexit is damaging strategic-planning and business prospects
  • 64%say Brexit will cause chaos for the manufacturing sector
  • 55%say the government could do more to promote exports
  • 57%say the education system is a disaster for industry and needs a total overhaul
  • 66%say the British people do not understand the importance of manufacturing to the economy

The UK has now left the EU, but that’s certainly not the end of the Brexit story.  As negotiations on the future trading relationship of the UK and the EU start, UK manufacturers will need to remain agile to respond to the risks and opportunities this new world will present.

So, what is the role of a CFO in an ever-changing manufacturing landscape?

A truly effective manufacturing CFO may need to provide guidance in areas such as revenue growth, inventory costs, supply chain management, M&A, product lifecycle management, sales and operations management.

The role of the CFO continues to evolve to include casting a protective eye over security, regulations, and compliance, all critical issues with high stakes attached. Now, as the digital revolution sweeps through manufacturing, the role of the CFO must evolve again. Today, the manufacturing industry needs the CFO to be less concerned about finances and more engaged in strategy.

It may be a new hat to wear for some CFOs, but one that is a good fit for individuals who understand the value of investing capital back into the facilities, expanding market presence, and growing through modernisation. Many CFO’s certainly have the background, insight, and understanding of the market landscape needed to advise the company as it moves forward through new terrain.

The CFO position is transforming as manufacturing businesses are increasingly bringing operations back to the UK and shifting gears from cost-cutting toward growth. Investor interest in the sector has blossomed alongside the manufacturing renaissance in the US.  In a recent survey of private equity executives by BDO, manufacturing was the industry sector most frequently cited as being the ripest area for new investment. Investment activity tends to invite change in the C-suite and puts different pressure on the skills CFOs need to be successful.

With these factors in play, broader industrial businesses are seeing an increased turnover at the CFO level.

For financial professionals eyeing a CFO position in the next year or two, it will be critical to seek out opportunities that help to demonstrate operational prowess, a mindset toward growth and strong fiscal leadership.

Operational prowess

Industrial companies tend to be among the most risk-averse when it comes to hiring talent. The executive ranks are largely populated with people who have grown up in the industry. In recent years especially, CFO candidates tend to be plucked from within an organisation’s ranks, and it has become increasingly difficult for competitors to entice strong candidates to jump ship.

An increasing amount of these CFO candidates are coming directly from, or have recently rotated through, general management roles. CFOs in the manufacturing world today must have a thorough understanding of how to drive growth and find efficiencies in their operations and the supply chain, especially with rising interests in bringing certain functions back to the UK.

Larger industrial companies continue to create new positions where finance professionals are exclusively supporting the supply chain. Experience in a management or operational finance role enables candidates to demonstrate an understanding of lean manufacturing techniques, process improvements and how to run a P&L, arming them with a fuller appreciation of the directional responsibilities required when stepping into a top finance seat. Operational knowledge is invaluable for managing enterprise risk as well, which will continue to be closely scrutinised in the coming year.

A rotation in general management also allows CFO candidates to acquire first-hand knowledge of the right technological investments that will propel the organisation forward. Technology is at the heart of the manufacturing resurgence, and candidates who are savvy about investments in new R&D that advances manufacturing processes or more sophisticated analytics that hit the bottom of the organisation will be well positioned to handle these responsibilities.

Growth Mindset

As confidence has grown in the domestic economy and the appeal of offshoring has lost some steam, optimism has returned to the manufacturing sector. Controlling costs and predictably growing margins has been the main purview of manufacturing CFOs for some time, but now shareholders are putting pressure on growth and innovation. CFOs are hearing a steady drumbeat about being a partner in their company’s growth strategy, but there are fewer candidates applying for the job that have previous “growth mode” experience.

CFO candidates should look for projects that provide exposure to funding innovation or making smart investments that give the company a competitive advantage. Equally important, CFOs must have a keen eye on what drives shareholder value and ensure the right metrics are in place to track success. In order to build experience in this space, financial executives could take a prominent role in a process improvement program or initiative, such as Six Sigma or lean manufacturing, which helps the finance executive better appreciate how the business improves and protects value. Additionally, gaining exposure with investor relations and analysts sharpens one’s perspective toward the enterprise initiatives that can move the needle in shareholder return.

Leadership abilities

CFO candidates should search for exposure by working with rating agencies, banks, investors and the board. As manufacturing draws increased investor attention, it also brings with it activists and analysts.

A strong CFO candidate should be able to prove that they can stand strong in the face of adversity and exude a confidence that will bode well with shareholders. They must also be able to effectively build relationships that can help strengthen the company’s reputation to secure financing and access to the capital markets. Operational experience is beneficial here as well, as is rotating through a treasury or financial planning and analysis role.

From the outside, looking in

Candidates with limited experience in the manufacturing industry will likely find it extremely difficult to make an industry leap. Large industrial companies may offer more opportunities for an outside to be brought on as CFO, since there are numerous people inside who understand the nitty-gritty of the business and can help provide a critical industry-specific lens. However, it continues to be perceived as a significant leap.

Candidates seeking to penetrate the industry should consider the unique CFO capabilities they bring to the job that will help further the organisation’s goals. Experience with investor relations or prior experience leading a transaction could translate well, depending on how and where the organisation is trying to create value.

For example, a manufacturing organisation might be looking to take a product business or engineering advisory and develop it into a more legitimate services business. A candidate without deep industry experience could point to parallel experience taking their current firm in that direction.

Shaping the future

CFOs have an opportunity to help shape the future of manufacturing as it enters an exciting new chapter. Strong candidates will be distinguished by their ability to help guide company growth and uncover new paths for innovation, in order to gain a comprehensive edge. Operational knowledge and strong leadership abilities will outweigh strong technical skills as CFO’s become more of a partner in influencing the company’s future.

If you would like to confidentially discuss how Norman Broadbent Group could help you overcome your business or people challenges, please contact, Marcus Blackburn, on 07483 015595 or via marcus.blackburn@normanbroadbentsolutions.com

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