Archive for August, 2012

Giving the responsibility of getting the Housing Market on its feet to Supermarkets will ultimately give money men a level of power which could make future Governments even less relevant to the bankers than they are now…

August 13, 2012 Leave a comment

You quickly learn in management that many of the things you do are down to process – even fire fighting – and this will inevitably take a certain amount of time to do properly unless you are happy to accept little more than a quick fix. So when you see Government Consultations dropping into the mix from nowhere that have all the distinct hallmarks of a ravenous siege engine working at speed, you would probably find yourself asking questions about its drivers, just like I am.

Over recent days, the Estate Agency Industry and The BIS Consultation on Encouraging new business models – the ‘Proposal to amend Estate Agents Act 1979’ has started to come into sharp focus, not least of all within the Industry itself, where the rat knocking at the door appears to be the Supermarkets.

As I recently wrote on this Blog, like many people, I am no great fan of Estate Agents and believe that as an industry, they already carry much of the burden of responsibility for the ridiculously high values which accompany property these days and which in turn has effectively priced many new entrants out of the market.

However, opening the door to the Supermarket Industry is far from the answer to getting the Property Market moving and could itself be one of the most deadly time-bombs that any visionless politician could unleash on an unsuspecting public that just wants money in its pockets once again.

It has been proven time and again that the big Retailers play a very long game as they move further and further towards a level of monopoly in goods retail. And as a monopoly, property sales is one that would have very far reaching consequences indeed, should the day ever come when Supermarkets control the prices we pay for the houses we buy.

Make no mistake, as proven with their dealings over Milk prices only recently in a process which actually took many years, dictating values within such a market would be of untold commercial value to them. So playing the loss-leading game whilst they remove the balance of standing competition from the market – as they have done with many small retailers – would be a process willingly embraced by homeowners, but at what real cost to us all in the long term?

We already have the model in place to show how little more than commission led sales within the Estate Agency Industry has contributed to the very position where a Government Department is attempting to address the effects of the problem rather than the causes. But once again, political idealists may be about to open a whole new can of worms as they blunder into doing so, which could so easily turn what is the disastrous position of the Housing Market today into a full scale catastrophe for us all tomorrow.

Gutsy decision making that will have an impact on the cause of the problem is what is required, rather than assuming that the answer to one problem will be just as suitable for another. After all, you wouldn’t use a sticking plaster to dress a broken leg and send the patient on their way with nothing more than a sweet, unless of course you had no grasp of the impact from doing so.

To get the Housing Market moving, there has to be an appreciation of the gravity of the situation. It is one which will not be solved by inviting in a new set of players onto the board who will play by the very same set of rules, but on scale which means the whole game cannot so easily be controlled.

The Estate Agency Industry needs to change its way of operating and adopt a position of responsibility to both its customers AND to the economy, particularly as the impact of having so far failed to do so has had an arguably unique impact on the economic position that we all experience today.

To play their part, Estate Agents have to move away from commission-based selling and focus upon the process of doing a good job at a fixed price, which relates to house sizes, demographics, location and all the tangible factors which should dictate the price of such a service to domestic and business customers alike. Perhaps they will then sell houses for what they are worth, rather than what they aim to get.

However, today’s Estate Agents are unlikely to make the required difference to the whole Property Market alone and devaluation of the UK’s property portfolio may be a step which no Westminster Politician will ever be prepared to openly consider, even though it may turn out to be the only solution which genuinely works . But giving the responsibility of getting the Housing Market on its feet to Supermarkets will ultimately give money men a level of power which could make future Governments even less relevant to the bankers than they are now.

Is the distance created by modern communication and business methods removing basic humanity from our relationships and has the time come for a whole new set of rules?

August 1, 2012 1 comment

So what motivates you at work or within your business? Is it doing the very best job that you can; or is it simply to earn the greatest amount as quickly as possible and perhaps keep yourself in that lucrative job that you already have, maybe progressing you to an even better paying or profiled position?

Whilst admitting that it leaves a bad taste in the mouth just as soon as the realisation dawns that other people may have noticed; for a growing number today it will be the latter and for very practical reasons that they may never really have even considered at that. Perhaps strange then that it’s a feeling of guilt which often accompanies that understanding when it arrives, as few will ever argue that we would all like to earn more or have a better lifestyle if given the option to do so.

The reality is of course that people feel bad about making money when questioned, if they hadn’t realised that it has become the purest motivation or aim in what they do, rather than being the very healthy side-effect of a career undertaking or vocation, and then doing it damn well.

With a growing concern about the ethics employed within business, not least of all illustrated by the Libor scandal, one must ask if a loss of conscience is one of the very negative aspects that the distance created by increasingly elaborate supply chains and the rise of the Internet have created?

Many of us have simply adapted and in many cases thrived from the changes and opportunities brought into being by the rise of the Communication Age.  So workers within Internet and information technology reliant businesses are perhaps excusably less aware of the fallout hitting customers they may never even see from decision making which is without a tangible fear or concern for the ‘human factor’. One also wonders if they are therefore insulated from the future catastrophes they now have the power to create in what may seem little more than parallel lives, which to the more aware would only ever be dressed as distant elephants that look less than the size of a gnat on their horizon.

To perhaps emphasise the downside of distance more effectively, I will take a step back to an industry that we all love to hate. A profession that has always had the benefit of distance between business and customer once they have been commissioned; but a distance which is also created by time and process rather than by the remote contact of a broadband cable.

Within the property market, many are quick to become cynical of the inflation-setting-overpricing of houses and wonder how they find themselves unable to afford even a modest home.

Some would blame the gargantuan super-tanker that was ‘right-to-buy’ as set in motion by Margaret Thatcher, but can quickly forget how it was that very act in the first place which encouraged massive property ownership within parts of society where people would never have dared even dream of being homeowners before her tenure, and perhaps led to those very same people being able to aspire to making such dreams their reality to begin with.

Others would look perhaps more accurately to the realms of Estate Agents who have ruthlessly pushed prices up and up, month-after-month and year-after-year in order to secure greater and greater percentage based sales fees.

Estate Agents actually do a job that they could choose to do very well on sensible margins – even in a good market. But repeat custom is to them a very long game and if someone else is saying they can sell a house for more, it doesn’t take much excuse to follow or to lose out because the risks to them seem very distant indeed.

After all, very few owners will willingly lose many thousands of pounds on a sale just because one agent tells them what its actually worth, when another says different. The agent who ‘does what it says on the can’ will have ‘priced to sell’ and done what they were commissioned to do, whereas the second agent plays the long game, watching the market rise to the price they suggested, thereby getting the fee they want but paying little note of the pain that their customer experiences in the meantime. No wonder then, that so many Estate Agency businesses have stopped trading or been forced to make substantial cutbacks during the economic crisis.

The long-term effects of such business practices are potentially incalculable and one can only speculate on just how overpriced our homes now actually are, and how far back in time standards of living and subsequent social mobility could actually be pushed as a result of the out-pricing of starter homes for young people; a situation created purely on the basis of making higher and higher margins for just a few without any apparent risk to the many from doing so.

So with the rise of the Internet and information technology, many more businesses now find themselves enjoying a distance between themselves and  customers which is to such a degree that the abuse of such apparently lucrative opportunities could create all manner of future problems, which may only ever become apparent much further down the line.

For instance, a once heavily hands-on recruitment industry which only a few years ago interacted with perhaps every candidate who made the effort to post them a CV, has been replaced by one which has discovered a seemingly bombproof level of security from risk of losing fees by targeting ‘perfect fit’ or tick box candidates, simply by focusing on electronic advertising and administration techniques. 800 applications through an Internet Job Board sounds a lot to handle; but not if you have set up a machine to identify perhaps a minimum of 8 ‘keywords’ or phrases from 10 in those CV’s before the hand of a human with any kind of feeling will go anywhere near them.

Nobody talks about the longer-term threat to hiring businesses of all shapes and sizes that comes from recruiting candidates from what by default effectively becomes a closed field of applicants who only know and understand a specific discipline within business, illustrated by the use of a series of words. Words which may themselves actually just be buzzwords or the esoteric ensemble of a recent graduate.

And why in purest profitability terms should recruiters care when today’s bottom line is secure and they achieved it with the benefit of never having to even speak to perhaps 3 times as many candidates as they actually did. Candidates who may have provided the recruiter’s customer with benefits and untold added value which they never had the chance to see but paid for nonetheless.  A situation leaving perhaps the best candidates finding themselves removed from the running by a software package that reduced the time involved for the recruiter to all but a mere fraction of what they would have ‘wasted’ otherwise.

It is quite concerning that labour and cost saving technology for one business can itself create the opposite effect not just for one, but potentially many others. But then if you also look at the dark-art-creativity of the financial sector and money-making ideas such as cereal futures and funds that own shares in supermarkets and dairy processors, you can quickly begin to see just how the mechanics of distance and its ability to negatively affect the lives of many people actually are. After all, what is 1p on the price of a pint of milk every couple of days when you had a £1 Million bonus last year?

On the one hand, technical advances and the heralding of an information-based communication age encouraging openness and sharing is driving a potentially buyer-led age where businesses have no option but to sell on the basis of making ‘just enough’ profit and delivering quality on time every time.

On the other, the opening of doors to many more  ‘golden-egg’ opportunities which are great for those picking up the product as it is found, but like the ever expanding and deepening ripples from a tiny stone tossed into a still pond, can cause mayhem and disaster in places that they had never even considered.

So the question needs to be asked; Is the distance created by modern communication and business methods removing basic humanity from our relationships and has the time come for a whole new set of rules?

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