Carney takes a leaf out Bernanke's book


08 Aug 2013 | Ikenna Chigbo, Global Reach Partners

BANK OF ENGALND GOVERNOR Mark Carney once again laid down his mark yesterday publishing the first quarterly inflation report within his control.

UK interest rates, which currently stand at 0.5%, will now be kept low until the unemployment rate falls below 7%. Therefore, the governor has taken a leaf out of the book of its counter-part, the US Federal Reserve, by now linking monetary policy to a key economic target.

However, there is a caveat to this decision. Given the fact that inflation is the central bank's key mandate (the BoE is targeted with keeping inflation at 2%) if current levels move beyond the desired criteria then the low rate pledge will be withdrawn. So essentially, the bank could look to increase interest rates in order to cool inflation, the latest reading of which suggests UK CPI for the year is at 2.9% - above the 2% target.

Another point to take away from the announcement is the BoE's UK growth forecast. They now expect the British economy to grow 1.6% in 2013 against 1.5% which was projected back in May. Good news for the UK.

What does this all mean for sterling?
GBP gained convincing ground as the report was published. The pound rose fully three cents versus the US dollar following the inflation report as participants digested Carney's rhetoric. It appears market participants are somewhat relieved that Mark Carney has everything pretty much in control, outlining his intentions and targets for the UK economy. Furthermore, rates staying low for a sustained period should encourage borrowing and ultimately boost the UK economy. Indeed, Mark Carney saw huge success with this policy during his tenure as Governor of the Bank of Canada. This is all positive news for the Pound.

UK economic data has also shown a large improvement for over the past couple of months; manufacturing, services, construction, export and GDP have all met with if not beat expectations. All of this is supportive for the pound, but how long will current strength last?

The Pound is trading at the top of its range today which is affording a great opportunity to UK importers. The outlook is improved as a result of yesterday's report, but by no means certain. There are still major downside risks to the pound and any softening of the data will lead to GBP weakness. Similarly, if the current trend of US dollar strength is to continue, exchange rates could fall back.
Carney has done a favour to UK importers. Don't look this gift horse in the mouth.

Ikenna Chigbo is a currency consultant at Global Reach Partners


Deputy editor's blog: A little can add up to a lot

A Lotus Formula One car

10 Jul 2013 | Richard Crump

LAST WEEKEND I not only had the pleasure of seeing Andy Murray become the first British man to win Wimbledon while wearing shorts, but also to spend a day with the Caterham F1 team at the German Grand Prix.

While Caterham still has some way to go to achieve the kind of success enjoyed by Murray in their respective sports, I was struck by how both employed the principle of marginal gains. Famously coined by British Cycling's performance director Dave Brailsford the principle of accumulated marginal improvements has become a sporting given.

Yet, the theory is equally true for business. While on the one hand the Caterham's mechanics, technicians and computer analysts are harnessing the power of big data to improve the car's performance based on minute adjustments, much the same can be said for the running of the team's finance function.

Though decidedly less glamorous than the on track performance, the same focus on efficiency is taking place behind the scenes. Take for instance how the cars are painted. Caterham changed the paints/process and managed to reduce the cost by 80% but with the same quality of finish.

Similarly, the team partnered with Truphone - a telephone network that allows you to pay local tariffs on international calls - and managed to slash its phone bills. This might seem of limited importance to a team that is run on a multi-million pound budget, yet it is part of an ethos that runs throughout the team.

If finance directors were to adopt Brailsford's theory of breaking down everything that goes into riding a bike and improving it by 1%, it would add up to a significant increase when those small and seemingly unimportant gains are put together.

Maths and commercial acumen: the perfect marriage


17 Jun 2013 | Mark Lumsdon-Taylor

NO LONGER just bean counters in ivory towers, the role of the finance professionals has evolved, and those who can marry the maths with commercial acumen are in high demand; more so now in the public sector than ever before.

There are many schools of thought on where the FD sits and how much the individual gets 'hands on' with parts of the business, especially the commercial elements. Some of the most successful leaders delegate virtually all the regular work to their staff, freeing their own time so that they can facilitate and orchestrate everyone else's performance and focus on key areas. This may improve morale and it may also result in a better product and a less stressful life for the FD.

When I was in Chicago a few years ago, I attend the Kellogg School of Management looking at brand positioning and consumer buying strategies. A big part of this was looking at our roles...."decision-making, negotiations, and team-building skills really are the essence of leadership." The logical extreme of building a team of trusted employees and focusing on the big picture is that leaders should "do nothing" when it comes to everyday functioning.

Rumour has it that on occasion I have been known as a "control freak", not because I don't trust the teams, but because I want to make sure that we deliver to the best out of ability....."What would it be like if all of your team members were living up to their potential? Where does the role of the FD fit then? Of course, that's a perfect world, we need to know what is going on in our organisations, the question is to what level?

Unfortunately, that is easier said than done. Walking the floor can be incredibly motivation for the staff whilst equally there will always been comments "doesn't he have a job to do?"

When FDs rise up the ladder, it is critical that we stop doing the operational detailed technical work and delegate in part. Successful leaders must shift and, literally, do less of what they used to do, even though they were good at it,they feel so comfortable using their old established skills.

The demands on financial directors times will always be challenging. In reality I spend more time on strategy and business development and a smaller proportion of time on detailed finance. However, the core job is always the cash and the bottom line. Is there an answer?

Mark Lumsdon-Taylor is finance director at Hadlow College 

Mavericks, they're everywhere


20 May 2013 | Gavin Hinks

MAVERICKS: I am currently nonplussed by the frequency with which I read in the press that description of people, organisations and even whole countries. UKIP leader Nigel Farage is a "maverick politician", his party, well, a "maverick party".

Britain is becoming a "maverick state" in Europe; Quentin Tarantino is a "maverick film director"; Dave Fishwick, star of TV series Bank of Dave, is "maverick" for claiming that High Street banks are "shit", and this morning I read that Lonrho, the once mighty British conglomerate that is about to go private, was run by the colourful and "maverick" businessman Tiny Rowland, notorious for his battle with Mohamed Al-Fayed over control of Harrods.

Mavericks are everywhere. Intriguingly though, the term is used in both a negative and positive sense, applied as it is to people the press seem to favour and dislike. Sometimes it seems to reflect misty-eyed adulation. But most often it appears to have a negative connotation and I wonder whether that is the right way to see mavericks - as threatening, unpredictable, slightly dangerously bonkers.

As ever it depends on your point of view but "maverick", as a category, has not escaped the attention of academics. In 2011 psychologists Elliroma Gardiner, of the London School of Economics, and Chris J Jackson of the University of New South Wales, decided to look at workplace mavericks to figure out if personality and an appetite for risk taking were indicative of maverick qualities.

The pair defined maverickism as "a behavioural tendency to engage in creative, dynamic, risk-taking, disruptive and bold goal-directed behaviours." They then tested a set of hypotheses in an experiment with 458 men and women which sought to categorise their personality types and correlate them with maverick traits such as a willingness to take risks and "lateral preference".

Now, lateral preference is interesting because this proposition, taken seriously by academics, essentially says that if someone has a preference for their left ear, they are more likely to be maverick. Why? Because the left ear is closely associated with the right hemisphere of the brain and that in turn is associated with "visionary" or creative elements of work. So what did the boffins find? Well, the results are detailed and complex so here's a summary.

The outcomes, they say, suggest a combination of creativity and little fear of negative consequences "are at least partial drivers" behind mavericks' appetite for undertaking "unconventional" actions.

Ear preference points to a "biological" predisposition for risky behaviour, and mavericks are more likely to be "antagonistic' rather than altruistic, poor team players, extroverts and possessing "low levels of agreeableness". In short mavericks like to take their chances, don't really care what happens to other people along the way, and will keep taking the same risk in the face of strong opposition. Moreover, if their venture really does fall on its face they brush themselves off with ease and move on to the next venture with very little self-doubt.

The interesting thing is that we all know how valuable mavericks can be. In business they push ahead with their vision in spite of staggering opposition, losing friends, making enemies, and frequently win out generating vast sums of money along the way. They are the ones who will come up with the disruptive, outlier idea that nobody believes and yet against the odds turns out to be a winner.

So simply dumping, or avoiding, mavericks because they give you and your organisation the willies is not necessarily good business policy. All organisations need people who are willing to challenge, take risks, go against the tide. Gardiner and Jackson believe their work, identifying the left ear preference, may just give organisations a tool for identifying mavericks in their midst.

I can't help feeling though that this isn't the biggest psychological challenge. The big issue is persuading managers to discard their fear and apprehension of the mavericks in their midst and learn how to harness their natural dispositions, rather than viewing them all as problematic individuals who need to be controlled (though it should be noted that not all difficult people are maverick creative geniuses).

I once took part in a graduate recruitment drive. At the end of the day, in a selection committee, I was asked who my favoured candidate was. I picked a young woman who was bold, combative and strikingly intelligent. She questioned my questions and we had a tough back-and-forth debate which I enjoyed enormously. The committee unanimously rejected her as too difficult to manage.

She probably was difficult, but she probably would have brought "maverick" qualities that would have been invaluable. It was their loss, but another recruiter's gain.

Gavin Hinks is a freelance journalist and writes the Profits and Loss blog at

Public sector branding: Ignore it at your peril


09 May 2013 | Mark Lumsdon-Taylor

BRANDING IN THE PUBLIC SECTOR means different things to different people. For some, it's simply a logo; for others it's an underpinning philosophy. Public sector brands are some of the most powerful and engaging in existence. The NHS, the BBC and the Metropolitan Police elicit tremendous goodwill from employees and the British public have a strong emotional attachment towards them.

Often however it seems few people outside of marketing and communications departments understand the true role of their brand. Few realise that effective public sector brands are about engaging with people, understanding their beliefs and behaviours and delivering a business model they can buy into, it's not just about logos and banners. Although, of course, the visual expression is an important communication tool to capture interest and loyalty. I have seen some 'lets paint reception and change the logo' transformations over the years and they don't fix the underlying problems. The general public is too shrewd to be tricked by a superficial re-brand.

The number of public sector brands has grown exponentially in recent years. Finding a point of difference and an effective means of communicating has become vital to standing out in the crowd. Take one example, prior to the incoming administration there were no less than 48 environmental brands at the Greater London Authority. There are a number of drivers behind this proliferation, including the growth of government and its extension into all aspects of society, devolution, more outsourcing and less command and control from the centre. In the words of the US police force is the primary message for public sector 'to protect and to serve?''

Public service is interlinked to commercial ideology more than ever. The trick is retaining the public sector philosophy while applying commercial principles to ensure an efficient and effective service to the country. Brand is more than a logo is it an underpinning philosophy. In effect we must:

- Recognise that the brand perception needs to be addressed through perceptual and hard delivery.
- Lead and create a vision of what the organisation strives to be, and lead by example, in good and in bad times.
- Ensure all stakeholders, especially staff, recognise that the brand is the core of their business.
-Encourage our employees to ‘live the brand' and creating the appropriate culture and environment' around them to enable them to do so. This means they eat, breathe and sleep the values that your brand conveys, but more importantly, truly believe them.
-Be consistent.....constantly changing the logo does not solve the problem.

Branding is a big part of our lives today. It informs choice and perception. We ignore it at our peril.

Mark Lumsdon-Taylor is finance director at Hadlow College

Narrowly missing triple dip cuts chances of new capital injection


25 Apr 2013 | Torrie Callander, Global Reach Partners

THE UK HAS avoided the dreaded triple-dip recession with a positive GDP release earlier today. Markets had expected growth of 0.1% in Q1 and were pleasantly surprised when 0.3% was confirmed, a figure that will give the Pound support in the coming months.

Sterling has had a difficult year, falling by around 9% in the first two or three months of 2013. The weakness of the currency was based largely on expectations for further quantitative easing from the BoE - the money printing process designed to stimulate liquidity. Today's data has decreased the likelihood of a new QE injection and sterling has been the major benefactor.

What does this mean for UK businesses?
This is positive news for the British importer, particularly those buying in US Dollars and Euros. The GBP/USD rate has been as low as 1.4850 this year and now sits above the 1.54 level. The outlook for the Pound over the next 12 months is much improved now and importers will find their costs fall.

Exporters however are seeing their goods become more expensive to overseas buyers, with scope for further moves against them. Many exporters are looking at long term hedging strategies to protect them from further pain. This is a wise move and one that more exporters should be considering.

Overall of course, this is good news for the UK economy. There are signs of light at the end of the tunnel and British business can take solace from a good start to the year. Lets hope there is much more good news to come.

Torrie Callander is a corporate dealer at Global Reach Partners

Global Reach Partners is running a complimentary workshop in the City of London on14 May that will looking at the main currency challenges facing UK companies



Living by Thatcher's old adage

Margaret Thatcher and Ronald Reagan

17 Apr 2013 | Mark Lumsdon-Taylor, Hadlow College

THE END OF THE WEEK and Friday night seems to be the evening of choice for civic receptions. The main topic of conversation last week was no surprise......The legacy of the Iron lady. It was pertinent given most of the guests were public servants in one form or another. Whatever your opinion of her politics, you can't argue that Margaret Thatcher had more courage in her convictions (aka balls) than most men who've been in her position since.

I had just turned 15 when Baroness Thatcher left Downing Street and the country was very different in 1990 to when she took office in 1979 but two of her guiding principles hold true even today; 'live within your means' and 'pay your bills on time'. The public sector more than ever is required to live by that adage. Public investment must generate an RoI for the economy and the question is always: "how many jobs will we create and is it sustainable?" Thatcher, whatever your personal political view, opened up the public sector to the world of efficiency and commerce .

Commerciality in the public sector is driven by strong leadership. There is now a greater number of female finance directors and CFO's than ever before. Baroness Thatcher not only broke the preconception that women could not succeed in positions of power, but shattered it into millions of pieces. She remains the only woman to make it to the top job, and she stayed there for eleven and a half years. It is shown that many companies with better gender equality often produce stronger financial results. Is there a lesson here?

This is my first blog and I look forward to contributing further to the public sector perspective on finance and how I believe it is inextricably linked into the future of our country. And in the words of the Iron Lady herself in her last address at the despatch box..."I'm enjoying this".

Mark Lumsdon-Taylor is finance director at Hadlow College

Fuelling growth through incentivising investment


05 Apr 2013 | Tim Ward, QCA

MARKETS ARE BUILT ON CONFIDENCE. Once confidence starts to grow, positive momentum takes hold.

I talk a lot about the engines of growth - our small and mid-size quoted companies - needing fuel. It's seemed over the last few years that everyone agrees with this concept but government has done very little about it.

And then rather like London buses two initiatives arrive in short order. In the Autumn Statement the chancellor announced that AIM and ISDX shares (also known as growth market shares) will be included in ISAs following consultation. The consultation on how to implement this change came out in March just before the Budget.

This has been followed in the Budget by the announcement that the 0.5% stamp duty tax will be removed on the trading of shares on growth markets from April 2014. Together with the London Stock Exchange and other industry bodies, we have been campaigning for the removal of stamp duty on trades in AIM and ISDX shares. This measure will help to increase liquidity and investment in small and mid-size quoted companies - vital engines of growth for the UK economy.

Our quarterly QCA/BDO Small and Mid-Cap Sentiment Index in November 2012 showed that including AIM and ISDX shares in ISAs and removing stamp duty on trading in small and mid-size quoted company shares were two of the five most popular fiscal measures that would have the greatest positive impact on companies were it announced in the 2013 Budget.

It is important to note that the stamp duty change is not due to take effect until the next tax year - in April 2014. Between then and now, there will be a consultation from HM Treasury on the move. Our understanding is that the consultation will not be about whether to remove stamp duty on AIM and ISDX shares, but instead how to implement it. For example, there may need to be some changes to the CREST settlement system.

All of a sudden the fuel gauges have started to flicker. Both measures will take time to come up to speed, but they are nevertheless very welcome. They will create momentum in trading. With increasing trading volumes, we should start to see an overall improvement in the valuations of growing companies. This will enable these companies to approach their investors and raise finance with more confidence. With more finance we should see more jobs and the creation of long-term value for shareholders.

Confidence creates more confidence; it's contagious. So - in the nicest possible way - perhaps we should be a Contagion Nation as well as an Aspiration Nation.

Tim Ward is chief executive of the Quoted Companies Alliance

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