Why have Corporate ISAs not taken off?

As we reach the end of the tax year the papers are full of articles on why we should be saving in Isas. There is a wealth management ISA special in the City A.M. this morning which shows from those surveyed about 70% have taken out an Isa during each of the last two tax years 2011 and 2012. Of this number about 25%had cash Isas with the remaining three-quarters being a fund selection or self-select. Positively, about 60% of the respondents also stated they had a good (positive) investment outlook over the next 5 years.

"Saving for retirement" is the top reasons given for investing in an Isa (40% of those surveyed - up 12% from last year) so one would have thought it would be right for an employer to include this as an employee savings option alongside the company pension scheme.

So why since we launched our equity Isa before Christmas have we had zero take up? Has all the due-diligence and communication been a waste of time and effort?

The City paper goes on to quote that the most common method of payment is by a lump sum with about 70% of investors paying in this way. Only 10% are paying by monthly contributions alone (20% pay by a combination of both lump sum and monthly amounts). So may be payroll deductions into an Isa are not the method by which our employees want to save - perhaps rather than paying each month as they do into their pension they would rather see how much spare savings they have at the end of the tax year and then pay in one go.

The survey goes on to show that 50% of investors buy their Isa on line and I would imagine that this would mean via a supermarket (moneysupermarket.com) to see which provider is offering the best terms at that time. Only 4% in 2012 purchased an Isa direct from the fund manager. Equally only 6% bought via an IFA (which is interesting) and the survey did not ask how many purchased via their employer! I guess this means that employees are wanting to look at "whole of market" rather than one nominated provider.

As the discussions on "wealth platforms" and "employee savings portals" escalate I suggest we need to step back for a minute and ask our employees what they really want the company to offer them by way of benefits and savings vehicles.

Comments welcome.

Life’s Rewarding Experiences

 

I have just finished reading a book which it has taken my Uncle-in-law ,Mr Leslie Davidson, (pictured above) 40 years to write and what a hilarious and deeply moving account of his early days at Unilever it is. The book is a personal record of some of the events which occurred when he was sent by Unilever in 1960 with his young family to set up one of the first oil palm plantations in Borneo. When Leslie returned to London in 1974 to become the Chairman of Unilever’s Plantation division he found in the archive every monthly report and every letter exchange between himself and Unilever’s London office and he used these records to help pull together the various stories in his book.

When I met him at his nephew’s 50^th birthday party last week we were comparing the mobility requirements of the young management of today (perhaps at Unilever but true of any large corporate) with his own experiences as a 30 year old on assignment in the 60’s.  Management today expect business travel, top class accommodation and private schooling for their children – it was “much different in his day”. He amusingly quoted from his book the aftermath of the 1963 monsoon (in his December report he predicted the monsoon would be ‘comparatively mild’ which in fact turned out to be the worst weather forecast since Noah’s wife told him it was only a passing shower!):

“As I watched our house disappearing into the darkness, I reflected sadly that although I had often stood on my verandah and waved goodbye to a boat going off down the river, it was the first time I had stood on a boat and waved goodbye to my house going down the river.”

But his stories do not reflect at all on the hardship of his living circumstances they are instead (as he states in his Preface) a tribute to some of his oldest friends who were involved in the oil palm plantation projects from his neighbours, the workers, the officials he had to entertain to the medicine-man. The people Rudyard Kipling refers to as:

Not the great nor well-bespoke,

But the mere uncounted folk.

What has happened to those young corporate executives and their sense of adventure and challenge – international assignments appear to now be all about financial reward due to sacrificing current lifestyles rather than about the rewarding life experiences of working in differing environments and cultures and having amazing stories to tell at dinner parties in years to come.

This book demonstrates Leslie's leadership not amongst Unilevlers London management team but in creating a harmonious estate community out of a truly disparate range of races and religions.

If you have any connections with Unilever today you may find it an interesting read but although it has been published you will not find it any Waterstones book store (unless in Signapore) you will need to ask me to lend you my personal copy.

 

The Living side of change

CSC’s new CEO, Mike Lawrie, joined today and addressed our employees on the change journey ahead of us.

“Many organisational change programs fail as the result of some very deep misunderstanding of who people are and what is going on inside the organisation.” This was the opening statement made at a recent master class I attended to hear from the experience of Mee-Yan Cheung-Judge.

Mee-Yan has worked with over 300 clients on change management programs so she is very qualified to make such a statement.

In her experience the most successful change programs are ones which have focused on both sides of the human brain - the Left (Mechanical) Brain and the Right (Living system) Brain.

 

The Left side representing an effectiveness and efficiency focus. Metrics and measurements; technical system and process design;  evidence based decision criteria. The work which is completed so well by McKinsey or Bain.

The Right side representing an energy focus. Imagination;  engagement;  participation;  mobilisation and empowerment.

Organisational change needs to combine changes in processes, strategies and systems with a shift in people’s values and behaviours. Therefore change leaders need to be far better at understanding and managing the human dynamics within an organisation and managing the resistance to change programs.

Two wise quotes from Organisational Design (OD) consultants:

“People will support what they help to create.” Weisbord

“People do not resist change; people resist being changed.” Richard Beckhard

Mee-Yan states four rules when it comes to resistance to change:

1.       Assume resistance is rationally based, even though it is often expressed emotionally.

2.       Resistance should always be respected as a statement of who people are and what they stand for.

3.       Resistance can be both active and passive.

4.       Resistance is usually predictable.

Multiple realities/perspectives exist the moment that change is announced. An individual’s realities are stated as feelings which are supported by values and worldviews of their upbringing, professional background, personality etc. By not respecting the legitimacy of each reality and trying to get each group to become interested in one defined reality, the change will become too difficult and will collapse. So “no taking sides” as all positions are real and legitimate.

It is usually the transition process that people fight against as they lose their identity at the ending of the current world as they know it, become disorientated in the neutral zone and have a fear of failure in the new environment. So managing the transition process is vital –here are some tips:

Ending	Neutral Zone	New Beginning
Sell the why	Use the opportunity to try out new things	Re-define performance measures
Anticipate and acknowledge what is being lost	Set short term milestones	Ensure some quick successes
Define what is ending and also what is not	Communication is vital	Engage people in defining and practising new behaviours
Treat the past with respect (do not rubbish it)	Create and celebrate new experiences	Create symbols of the new beginning
Open all communication channels	Monitor the transition	Build commitment and enthusiasm
Build the leadership commitment to change	Provide support to people	Expect a mixture of emotions – some positive and some still resisting
Expect strong (and probably negative) reactions	Expect anxiety and confusion but some successes

To help manage change we should look for role models who can kick start the new ways of working – finding people that are admired, trusted and respected to guide and support.

One thing to remember is that an organisation does not go on hold whilst the change is taking place, but it needs to continue to function during an interim period. If the interim organisation or state is not recognised and legitimized, people will get confused and will not be sure whether to come forward and help with the change or stay put. The organisation therefore needs to pay attention to the following:

• Interim Components – which strategic priorities, structures, systems, culture, roles and rewards will need to be adjusted for the interim period?
• Interim Leadership – who is best equipped to lead the change? Who needs to be released from their current leadership roles to lead on the change work?
• Interim structure – what task force, committee will co-ordinate the transformation work? How should these temporary structures be aligned and how do they fit or relate to the normal governance structure?
• Interim capability – Who can be released to do the change work and who can step in to do their job as part of your succession planning/development plans? What is needed to keep the core business services going at a high quality standard whilst the organisation is undergoing transformation?
• Interim performance focus – is there a need to adjust the strategic priorities and slim down processes to ensure the work gets done as well as the change?
• Other interim adjustments – what other adjustments may need to be made with relationships with strategic partners, outsourcing partners, IT systems, finance systems?

HR will also need to take a lead in the “people component” of the interim organisation by perhaps adjusting and legitimising some of the following:

à         The Performance management process and individuals targets

à         The Reward system – eg if bonus are aligned to the current structures and performance targets

à         Talent management and succession planning

à         Leadership development and coaching

à         Having sufficient robust people data to help select change team members.

The HR leaders at CSC who will be working closely with the CEO during his first 100 days will be ensuring that the “living” as well as the “mechanical” aspects of CSC’s change program will be fully considered to make sure it is a success.