eNews October 22
In the News
October 22, 2020
Myth of the Shorter Work Week
—Chris Kuehl, Ph.D., NACM economist
There has been a persistent assumption that shortening the standard work week would be a boon to employee and employer alike. The basic argument has been that a 40-hour week places too much of a burden on workers these days and that moving to a four-day week would boost productivity as it would reduce fatigue. The employee would be healthier, more motivated and more well rested. The company would have more resources at its disposal as there would be more people working that four-day week. The idea was that this move would be a winning one all around—happier and more productive workers, more hiring, higher levels of employee output and lower levels of turnover as employees would have the schedules they needed. There have been positive experiences with this shift but not as many as had been expected. In fact, the majority of companies that have tried shifting away from the five day and 40-hour model have reported unhappy employees and lowered levels of productivity. It seems there are at least two major problems that crop up with the shortened work week.
The first and most vexing from the perspective of the employee is that a shortened week has meant they are struggling to get the work done that is required. The number of hours spent at work may have been reduced but the amount of work has not been reduced, and now they are under increased stress to get everything accomplished in four days when they used to have five. Of course, the business can seek to reduce that workload but that means giving up customers and performing less efficiently. Sooner or later that affects revenues and profits, and that affects raises and the ability to add more people or engage in other kinds of investment. The employee is faced with a choice—work on less and forgo additional income or continue to add to the workload in order to see higher wages and promotions. Obviously, there will be employees and employers on both sides of this issue. The second issue is whether this approach really results in the creation of additional jobs.
The motivation for moving to shorter week was mostly in order to push companies to add more workers. If the level of output were expected to be the same and there were fewer working hours it was naturally assumed that business would hire people to keep that productivity level as it had been. Assume a company with 500 employees working a 40-hour week—that would be 20,000 hours. Cut the number of hours to 35 and now you have 17,500—a difference of 2,500 hours per week, and that would potentially mean another 70 workers. Very few companies who moved to the 35-hour work week responded in this way. The majority simply kept the same staff levels and required they get what they used to get done in 40 hours. Those that sought to replace the lost hours generally turned to technology and robotics. The reality is that finding and hiring an additional 70 people was very difficult.
The majority of those out of work in any given nation are jobless for a reason. They often lack the education and training required to get hired; they may be in the wrong place at the wrong time in the sense that few jobs are available in their area. The companies that might have conducted on-the-job training in the past are now unable to do so as the employees that would have been doing the training are hard-pressed to do their own jobs without also training new people. This is not to say that a shorter work week is a bad idea or that it can’t work. It has for many millions of people, but if it is instituted there are many adjustments that have to be made and the process can be complex.
The latest challenge comes from the number of people working from home. It has been determined that these workers are falling into two broad categories. There are those that are producing at very minimal levels now that they are unsupervised while others are routinely putting in between 10 and 20 more hours per week than they did in the past. The company faces watching its best workers burning out while its worst performers get paid for doing only a fraction of their job.
Financials During a Pandemic
—Michael Miller, managing editor
The functions of a credit department can be endless. There are so many cogs involved like a watch, always ticking and moving forward without the chance of stopping. The importance of the credit department is knowing when to slow down time to ensure that the necessary functions are completed accurately and on schedule. Just as watches need repairs and batteries to continue working in top shape, credit departments need updating in the way they perform. While COVID-19 hasn’t impacted the performance of wristwear, it has affected credit departments tremendously.
All the same basic functions are there at the credit department level; however, the way it’s done is not exactly the same. Depending on the company, credit professionals are still working with the sales team, setting credit limits and making deals to get to, “Yes.” One of the most blatant interrupts to credit departments since spring began is that not everyone is in the office—credit departments or their customers. This has caused credit departments to use technology to stay informed as a group and together as a team while not being in the same building, city or state in some cases.
Information is key in uncertain times such as during a pandemic. It’s what turns a Polaroid into a Van Gogh, no offense to the amateur photographer. Not having enough information is definitely an issue, but having too much or the wrong information is just as troublesome. Take financial documents as an example. Of course, every credit department would love to get their hands on these, but financials from a year ago or even from January or February are likely outdated due to the impacts of the pandemic. However, financials are still important and part of the credit decisioning process.
“We feel financials are the best indicator of a company’s health,” said Brooke Wilson, Ed.D., ICCE, region credit controller with Volvo Penta of the Americas, LLC. “We are fortunate to work cohesively alongside our sales team who supports us with financial requests, if needed.” Wilson added that financials determine if her credit department will grant limit increases or insurance coverage and that only a small percentage of her customers are reviewed without the use of financials. But when these documents aren’t available or come into question, there must be another way credit departments can make decisions.
“The character of the customer, along with the payment history, and a D&B rating hold the most weight when reviewing. We pride ourselves on our abilities to conduct full KYCs to make the appropriate credit decision, as demonstrated by our near zero write-off percentage,” she added.
Now, credit departments are working differently to avoid risks from pandemic. “Since the start of the pandemic, we have implemented a new report utilizing Power BI,” said Wilson. “The report covers our entire region noting the full AR, insurance coverage, as well as risk portfolio. It is advantageous to all departments of the company as it also shows what will be coming due for each customer.” This is one way to work together within the company and have all parties on the same page.
“Sales now has this report prior to a conversation or customer visit with the full current and historical information. This report has been a beneficial addition to how we conduct business and evaluate customers,” Wilson said.
4 Steps to Becoming a More Self-Aware Leader
All leaders need some way to evaluate their current performance so they can continue to grow as decision-makers, managers, and colleagues. But what is the best way to find a full, honest account of one’s strengths and weaknesses—and then to act on it?
“Many leaders have the same questions,” says Karen Cates, adjunct professor of executive education at the Kellogg School. “‘How do I assess myself? How do I become more self-aware? And how can I turn that self-awareness into an effective leadership style?’”
Cates and her colleague, Brenda Ellington Booth, a clinical professor of leadership at Kellogg, have many years of experience coaching leaders through this particular challenge. Here are their four steps for becoming a more self-aware leader.
1. Look beyond assessments.
Cates and Booth both agree that assessment tools—and there are many—can be helpful. They see these tools as a way for leaders to gain new perspectives on themselves, their values, and their motivations.
“Anything that gives you a language to understand your thought patterns and behaviors can help crystallize self-awareness,” Cates says. “Leadership is dynamic, and sometimes you need to break out of the way you’ve always done things and see new possibilities.”
But the pair caution that these assessments should be thought of not as the end of the self-evaluation process, but as the beginning—as catalysts to start the kinds of discussions that lead to important insights.
Karen Cates is the Academic Director of the Kellogg Executive Education’s Executive Development Program, while Brenda Ellington-Booth is the Academic Director of its Energizing People for Performance Program.
“Assessments are helpful, but they’re not the be-all and end-all of leadership development,” Booth says. “So any assessment tool you use should be followed by a conversation with a coach, boss, or peers, because it’s important to get qualitative feedback face-to-face. It should be more like a conversation, where you can ask follow-up questions.”
Those conversations can be timed to the assessments themselves, because their results make the request for deeper feedback a natural next step. Cates and Booth recommend opening the conversation by asking to sit down and talk about how you might interpret and act on the results of the assessment, including asking for examples of how those results have played out in your work with your colleagues. Creating space for open-ended questions will allow others to add to your understanding of how the assessment might influence your personal and professional development.
Cates also recommends you tailor the questions for the person you are asking. “Your coach is going to dive deep with you. Your boss has her own goals when it comes to your leadership skills. Your peers may be more reticent. If you approach the conversation as a genuine opportunity to learn, you can help others provide more input to flesh out your assessment results.”
2. What could you be doing differently to be a better leader?
Feedback is most valuable when it leads to important, actionable insights into your behavior, personality quirks, biases, strengths, and weaknesses. Sometimes, reflection on your own emotional reactions to people and situations provides an opportunity to grow in self-awareness.
For example, one of Cates’ clients—a young female executive—had been struggling to respond to older male colleagues when they challenged her in meetings. In every other scenario she was confident, dynamic, and quick on her feet. But in those moments, she would freeze up, and she was worried this would affect others’ perceptions of her leadership and her ability to grow in her role.
So in coaching sessions, Cates and her client focused on her strengths—her ability to learn, her ability to relate—and explored ways to use those strengths to create a response mechanism that would neutralize that specific challenge and help her stay on track. They role-played past scenarios, and the client started to build a vocabulary that would help to steer others’ challenges back to the meeting’s original focus. The client was able to use these tools to increase her awareness in the moment, insert herself into the silence that followed derailing comments, and maintain the flow of the discussion.
In some circumstances, an executive’s strength can also be a weakness. Booth is coaching a woman who highly values transparency, truth, and fairness—generally understood to be positive traits. But at times it can seem to others as if she is challenging people, which comes across as intimidating.
“As long as she’s self-aware, she can decide how much she wants to adapt,” Booth says. She can read the room and the moment, and in certain cases, rather than insist on “telling it like it is,” she might try to have more compassion for people’s faults and insecurities.
3. Don’t just change for the sake of changing.
Think of feedback as useful information that helps you expand your response toolbox, rather than someone telling you what to do. After all, there might be cases where a leader chooses to tell it like it is as a matter of strategy, knowing full well it will cause discomfort.
It is important in such situations, however, to help others understand your approach. If you have received feedback that you are harsh in team meetings, Cates suggests telling your colleagues, “I’m being very direct right now because I want you to understand how important this project is, and not because I think you can’t get it done right and on time. Let’s talk about how to move forward.” This has the effects of empowering your people to tackle the project and communicating your expectations for success.
It is also good to keep in mind that just because you learn something actionable about yourself doesn’t mean you necessarily have to act on that knowledge. “It’s more about listening and deciding, ‘OK, given what I’m trying to do for the organization, and for myself, is it worth it to make the change or not?’ Effective leaders read the situation, figure out what’s required of them, and choose to respond in a way that’s appropriate, authentic, and valuable to their team,” Booth says.
Booth is coaching a client in a relatively senior position who came to realize through self-assessment that he dislikes being rushed towards decisions, especially if the decision involves processing large amounts of information. His group members value him highly, but the feedback he recently received suggests they were worried he was slowing things down.
“Once he became more self-aware, he felt better about himself,” Booth says. “He thought, ‘OK, that’s just who I am.’ But then he had to figure out how to communicate that to his team members—to explain that he might need 24 hours to make a big decision, or that he values taking the time to do a deeper analysis so that the group can make an informed decision. He was able to shift perception of himself, and the assessment—combined with feedback and coaching—made it possible.”
In a sense, Cates says, it’s a process of learning how to be comfortable in your own skin.
“You build confidence in who you are, then help others understand what’s valuable about who you are.”
4. Cultivate targeted self-reflection on your leadership style.
Both Cates and Booth suggest that leaders learn to cultivate self-reflection. But self-reflection only helps if it is done with a real purpose in mind, and that means thinking strategically about what is most important for the leader and the organization. Self-reflection isn’t just about looking backward; it also allows you to be proactive instead of reactive.
Some leaders meditate and practice mindfulness to achieve “aha moments.” Others journal or join a round table to reflect on particular issues or obstacles. Many leaders turn to executive coaching as a proactive means of self-reflection. Coaches provide an opportunity to work one-on-one to challenge assumptions, reframe problems, and digest feedback.
“Leadership isn’t just about taking assessments, attending seminars, or reading articles and filing them away in a folder on your desktop,” Cates says. “It has to be a living thing.”
For example, it can help to spend an hour or two each week just thinking about upcoming meetings, conversations, or presentations. Consider what your natural response might be in each situation, then consider whether that response is appropriate and valuable. How might you adjust to be more effective? What questions should you prepare? This is how a leader can practice and reinforce their self-awareness.
“It’s an ongoing process,” Booth says. “You learn, you evolve, you adapt. And in the back of your mind, you’re always thinking: Where might I add value?”
Previously published in Kellogg Insight. Reprinted with permission of the Kellogg School of Management. The original article can be viewed here.
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As the fiasco of late payments persists in the U.K., the government is pursing legislation to bring fines or court orders to large companies that fail to pay smaller suppliers in a timely manner. An article in the Financial Times reported some large businesses are paying their suppliers months after the agreed upon date, garnering attention from small business advocates to address the problem.
According to the Financial Times, ministers are discussing the role of the commissioner and whether they should be able to order companies to pay their suppliers by lump sum or an agreed payment plan, or penalize late payments, e.g., fines. Ministers will determine the commissioner’s ability to “compel companies to share information during an investigation” as well as pursue investigations of poor payment practices before complaints are filed. Increased responsibility of the board and good practice standards are also under discussion.
Some measures already in place include a government requirement that large companies publish payment data twice a year online in addition to SMEs’ ability to charge interest on late payments, both of which have been criticized.
“We know that paying small businesses late is debilitating, and the practice has increased during COVID-19,” Mike Cherry, national chairman of the Federation of Small Businesses (FSB), said in the article. “It deprives small firms of cash flow, holds back growth, undermines productivity and forces many to take out external finance. In thousands of cases a year, this causes the closure of small businesses.”
Recent research from FSB found approximately 50,000 small companies close each year because of late payments, with roughly £23.4bn in late payments owed to small- and medium-sized businesses in 2019 alone. Paul Scully, minister for small business, told the Financial times that it also cost £4.4bn a year to collect late payments.
FCIB’s March 2020 International Credit and Collections survey found late payments are an ongoing issue for U.K. businesses, specifically, because of the pandemic and Brexit delays. Nearly 50% of respondents said payment delays increased in March 2020, almost twice the number of respondents who reported increased payment delays the prior year. Between August 2019 and March 2020, more respondents began establishing 31- to 60-day payment terms, while 38% set terms within 30 days.
“The U.K. economy is being hit hard by combination of Brexit and Coronavirus,” one respondent said at the time of the survey. “Many companies are closed or have been severely impacted [and there’s] no set time frame for recovery.”
“Many companies are shut down and unable to pay,” another respondent added. “The economic outlook is uncertain due to virus and Brexit delays.”
When asked about the cause behind late payments, more than a quarter of respondents attributed delays to cash flow issues, followed by 13% who said customers were unwilling to pay, 13% who said it was due to customer payment policy and 13% who noted other disputes.