1. Is Your CEO Worth His Pay?

    August 16, 2010 by
    Due to public pressure on Wall Street CEOs to lower top management compensation and following Obama’s administration plans to order large cuts in executive compensation at companies that have received federal bailout funds many executives received a $500,000 pay cap and others received a very large pay cut, for example in 2008 Jamie Dimon, the CEO of JPMorgan, made over $35 million but in 2009 he made “only” $1.3 million.

    Does this mean that the CEOs were over-valued or in other words they were not worth it? This    would indeed be the opinion of most people.  However, this may not be correct according to a new research done by Dr. Candie Chang, a senior finance lecturer in the School of Economics and Finance at Massey University

    Chief executives are worth their pay

    Dr Chang Candie

    New research suggests the whopping pay packets of many chief executives may not only be justified but vital to ensure business success.

    An analysis of share market responses to chief executives leaving their jobs shows if the company has been performing better than competitors the market reacts more negatively to the news of the chief's departure in anticipation of shareholder wealth loss.

    Dr Candie Chang, a senior finance lecturer in the School of Economics and Finance, says her research indicates that a good chief executive officer is worth his or her high salary, bonuses and stock options, despite the somewhat jaundiced public view of high profile excesses revealed during the company collapses of recent years.

    Dr Chang's research paper, called CEO Ability, Pay, and Firm Performance, is due to be published in the United States journal Management Science this year. She studied 298 chief executive departures in the United States in the decade from 1992. She says her findings suggest that the stock market associates better prior performance and higher pay with a more capable chief executive. Not only that, but the higher the pay of the departing chief executive compared to other executives in the company, the more negative the stock price reaction.

    “The recent financial crisis and the storm over the pay of executives in financial firms have brought the questions of whether chief executives meaningfully add value to the companies they manage, and whether their pay reflects ability or power, into sharp focus,” Dr Chang says.

    “Collectively, our results provide strong support for the notion that firm value and performance are not simply outcomes of the firm’s core competency, product markets, or luck. Chief executive talent matters and is rewarded internally and recognised by external markets.”

    She also studied where chief executives end up when they leave their companies and found two extremes. The first was that many do not have management positions within three years but at the other end, several move up to bigger firms or better paying jobs.

    “We find that chief executive officers are more likely to 'move up' when the market reacts more negatively to their departure,” Dr Chang says. “The results suggest that the managerial labour market associates higher pay and better prior performance with higher chief executive ability and rewards them accordingly.”

    Firms that lost a highly paid chief executive suffered a slump in performance after the departure if the prior performance had been good and the stock market reacted negatively to the departure.


  2. Global Benchmarking Network newsletter No. 13

    August 6, 2010 by
    Global Benchmarking Network

    The Global Benchmarking Network newsletter is out. Download from here

    The newsletter includes the latest news from the GBN about members, events, projects and other activities, topics highlighted in this issue:

    • Welcome the new members of our benchmarking community:
      • Ruler’s Court of Ajman (United Arab Emirates)
      • Abu Dhabi International Centre for Organizational Excellence (United Arab Emirates)
      • Intelligent Persian Consultants (IPC), Iran
      • TeamOne Consulting / KSA Benchmarking Network, Kingdom of Saudi Arabia
      • Gulf Lead Consultants, Kuwait

    • GBN Projects:

    • Next GBN AGM and 5th International Benchmarking Conference:

    • Review:
      • GBN Roadshow (Mumbai)
      • 4th International Benchmarking Conference (Bahrain)
    • New structure and members of the GBN Board
    • News from the GBN Secretariat and outlines some ideas how the GBN can use social media platforms

     

    About GBN: The Global Benchmarking Network (GBN) is an alliance of leading benchmarking centres worldwide who share a common vision and mission. Current Membership comprises more than 20 benchmarking centres which represent more than 30,000 businesses and government agencies.

    The GBN was founded in November 1994 by representatives from benchmarking centres in Germany, Italy, Sweden, the United Kingdom and the United States. The GBN is a non-profit organization. It has a Chairman, a Vice Chairman and a Secretary General. The GBN comprises benchmarking centres in the following countries: Australia, Bahrain, Canada, Czech Republic, Germany, Hungary, India, Iran, Ireland, Kuwait, Malaysia, Mauritius, New Zealand, Romania, Russia, Saudi Arabia, Sweden, Switzerland, Taiwan, UAE (Abu Dhabi, Ajman, Dubai), UK and USA.


  3. Learning from the best: an interview with Dr. Robert Camp

    July 12, 2010 by

     

    Dr. Robert Camp

     

    If benchmarking today is an established business practice, much of the credit goes to the efforts of Dr Robert C Camp, lifetime president of the Global Benchmarking Network (GBN), principal of the Best Practice Institute, US, and the man known around the world as the guru of benchmarking. Dr Camp was in Mumbai in June for the 2nd GBN Benchmarking Roadshow organised by BestPrax Club (India) and Benchmarking Partnerships (Australia).

    Based in Ithaca, New York, Dr Camp works with government agencies, non-profit organisations, educational institutions and many large domestic and international manufacturing and service firms. He has written three books – Benchmarking: The Search for Industry Best Practices that Lead to Superior Performance, Business Process Benchmarking: Finding and Implementing Best Practices and Global Cases in Benchmarking: Best Practices from Organisations Around the World along with dozens of articles on the subject. His first and best-selling book on benchmarking has been translated into 14 languages.

    Vivek Dev (from domain-b.com) spoke to Dr Camp on various aspects of benchmarking during his recent visit to Mumbai.

    1- Tell us about your personal experience with benchmarking. How were you initiated into the process?
    I started with benchmarking when I was at Xerox Corporation. At the time, benchmarking was a fairly new improvement process and I was asked by my manager to implement it in the logistics function. 

    2- Why should companies benchmark? What does benchmarking achieve?
    Benchmarking is an experience where you can learn from others who have solved a problem you are trying to solve. As they have gone through the experience and implemented improvement processes, this learning can be used as the basis for improving one's organisation through internal, competitive, functional or generic benchmarking.
    Any organisation can improve provided it is willing to improve. One can almost be assured that the organisation will get value out of the benchmarking exercise.

    3- How should a benchmarking investigation be carried?
    There is a defined process for carrying out benchmarking. First, you decide what to benchmark, and then decide whom you benchmark against. Next, you gather the information, conduct the analysis, and define the process(es) for best practices search. The benchmarking process is best facilitated with help from a professional benchmarking expert who can act as a guide or mentor. Often, a knowledgeable librarian can offer valuable inputs for information search.

    4- Identifying a candidate list for benchmarking is comparable to laying the foundation of an organisation. What factors are considered while putting together a candidate list?
    Most of the time people in various functions have a pretty good idea of superior practices in other organisations, so that knowledge is already there in the organisation. People in particular functions, say, logistics, know from various sources, say, trade journals, peers, etc, on how things are done in other organisations. By putting together the knowledge thus available, a list can be prepared.

    5- What is the significance of benchmarking in the operations and growth of an organisation? How does it positively impact organisations?
    Benchmarking is a fairly fast way to improve and a very powerful way to justify funding. People have been known to achieve significant results with benchmarking in a short time.

    6- Is benchmarking relevant across industries (marketing, manufacturing, administrative support, finance and personnel functions)? Can lessons learnt from one be applicable to another? Please give an example.
    In certain processes, lessons can be learnt across industries. Typically, there are three types of functions in industry – management, support and operations. While management and support function processes have much in common across industries, the function process of operations is unique to industries. For example, support function processes such as in HR or IT can be benchmarked across industries.

    7- What role does benchmarking play in innovation? Can you elaborate?
    Benchmarking is a necessary ingredient in innovation. Firstly, it is necessary to benchmark the extent of the innovation focus through a search. Defining the standard or benchmark is in itself a creative process so innovation and benchmarking are concepts that are interlinked from the very start.
    Secondly, combining the creative and innovative talents of the innovation team members with the insights gained through benchmarking is a powerful and often revealing experience and may markedly improve the result. Further, the actual process of people going through the exercise opens their minds and brings about new ideas and thinking.
    Benchmarking is a critical tool for how you run your business. It is a strategic strength when practiced and a fatal weakness if not pursued.

    8- The term best practices is widely used in every stream of business (particularly, insurance, banking and mutual funds) and not-for-profit-enterprises. Does this have any connection with benchmarking?
    It is the essence of benchmarking. Benchmarking is a process of finding and implementing best practices. It is the desired output of the benchmarking process. It is only through an understanding of best practices that the way to improvement is revealed.
    The process of identifying, understanding and adapting superior practices from organisations locally and worldwide, within and outside the industry, helps an organisation improve its performance and achieve priority business results.

    9- What would you say is the value proposition of benchmarking?
    I would say 'quick learning to improve'. The important aspect here is 'quick learning'.

    10- When and why did you establish the GBN? Does it have a presence in India?
    The objective of the GBN, established in 1994, is to have benchmarking competency centres around the globe so that assistance with benchmarking is available locally, and so it can be adapted to local conditions. In India, the GBN is represented by the BestPrax Club, Mumbai, founded by Suresh Lulla.

    11- If Indian organisations have to leapfrog into the global arena, can the GBN help in finding benchmarking partners?
    The experience of the GBN member organisations would substantiate that finding. Every gathering of those interested in benchmarking, including the recent GBN Roadshow and Executive Briefing, should be used as an opportunity to establish potential partners.

    12- With your wealth of experience, how do you visualise India 2020?
    A sage person once said, ''I hesitate to make predictions especially when it involves the future!'' I would leave the details of 2020 to the economists and others more knowledgeable of the particulars in India. I would trust however that India would continue to pursue its competitiveness through ''best practice'' benchmarking.

    About Dr Robert Camp: Principal, Best Practices Institute, talks on the various aspects of benchmarking in an interview with Vivek Dev

    Source:
    http://www.domain-b.com/people/interviews/20100629_robert_camp.html
    http://economictimes.indiatimes.com/Features/Corporate-Dossier/Benchmarking-with-best-practices-outside-industry-works/articleshow/6116117.cms?curpg=1


  4. Workplace wellness – simple ways to keep fit

    July 7, 2010 by

    Veronica Marsden [1] president of Canadian organisation “Tri Fit” suggests the following 10 simple ways for keeping fit at work:

    1.  Take five-minute stretch breaks.
    2.  Organise a walking club.
    3.  Park your car at the far end of the parking lot, or at a distance from work.
    4.  Cycle to work.
    5.  Get off the bus or subway one stop earlier.
    6.  Deliver a message on foot instead of by email.
    7.  Organize a lunchtime exercise class.
    8.  Hold meetings outside and walk while you talk.
    9.  Use washroom facilities furthest away from your workstation.
    10.  Set an alarm to remind you to get up and move around every hour.

    [1] R10857 Marsden, V., (2010), Taking fitness and nutrition beyond 'flavour of the month', Canadian HR Reporter, Vol 23, Iss 11, p 17, Carswell Publishing, Scarborough

    Neil Crawford
    BPIR

    Members may read the full article here .


  5. Healthcare – communications breakdown

    July 4, 2010 by

    Patient handoffs, both within hospitals and elsewhere, are often subject to errors. A 2005 Joint Commission analysis found that 70% of events which resulted in a patient’s death or serious physical/psychological injury were caused by communication breakdowns, half of which occurred during patient handoffs.  Lee Ann Runy [1] writes that The key effective handoffs is to implement processes that clearly define the transfer of responsibility from one caregiver to another, standardize the communication process, and allow for an interactive exchange between the parties involved. The common denominator should always be the patient. Various tools and techniques can be implemented to streamline the handoff process and establish standardised communications. Structured tools e.g. mnemonics, templates or checklists can help to ensure that information is not lost during the handoff, and lead to a timely, accurate exchange of information.
    The following are 10 tips for effective patient handoffs:  [1]

    1. Ensure face-to-face patient handoffs whenever possible
    2. Ensure two-way communication during the handoff process
    3. Allow as much time as necessary for handoffs
    4. Use both verbal and written means of communication
    5. Conduct handoffs at the patient bedside whenever possible. Involve patients and families in the handoff process. Provide clear information at discharge
    6. Involve staff in the development of handoff standards
    7. Incorporate communication techniques, such as the SBAR mnemonic (Situation-Background-Assessment-Recommendation), and require a verification process to ensure that information is both received and understood
    8. In addition to information exchange, handoffs should clearly outline the transfer of patient responsibility from one provider to another
    9. Use available technology, such as electronic medical records, to streamline the exchange of timely, accurate information
    10. Monitor use and effectiveness of the handoff and seek ongoing feedback from staff members.

    [1] R10938 Runy, L. A., (2008), Patient Handoffs, Hospitals & Health Networks, Vol 82, Iss 5, pp 41-47, Health Forum Inc., Chicago

    Neil Crawford
    BPIR

    Members may read the full article here which provides further advice about recognition schemes.