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I'm currently in Austria, so haven't been following the day to day crisis that is affecting Greece. There has been a lot of talking about whether this could cause the break-up of the Euro. It seems that there are two ways in which this is being proposed might happen:

Germany Leaves the Euro

At one level this seems the most attractive option because the German Mark of equivalent could be allowed to appreciate, and there would unlikely to be a run on the dollar. Because Germany runs a current account surplus, in simple trade terms there is an excess demand of Marks (due to the surplus) would cause Mark to rise, reducing the current account surplus etc.

However, I think there are two reasons this won't happen, firstly, the Germans who have seen their real incomes fall (to account for increasing currency) are unlikely to allow the other European countries to devalue their currencies in order to allow them to re-balance output the easy way.

Secondly, the Euro is a reserve currency block, many central banks have been holding Euros as  response in the decline of the purchasing power of the US Dollar as the US Government has been running a large current account deficit. The act of Germany leaving the Euro would lead the a mass run from the Euro into the Mark, Sterling and the Dollar, something that would not benefit Germany.

Greece Leaves the Euro

Ireland has been toying with this for about a year. However, for Greece to leave the Euro would be equally difficult to achieve in the short term. If they simply decided to start paying debt, workers, benefits etc. in Drachma, however, Greek's including their creditors would be unlikely to be pleased by this, probably causing them to off-load Greek Debt, leading to spiraling inflation (as the purchasing power of Drachma declined). Thus the Greek government would achieve the cuts in real expenditure through a painful devaluation and inflation.

So either way Greeks see a fall in their real incomes.

Conclusion

Therefore, on the basis of the above, the only option is for the Euro zone to carry on, Germany will have to accept that it will have to help Greece out in return for having purchased German goods for some years. These fiscal transfers will be unpopular in Germany and the costs unpopular in Greece. However, both countries benefit from being part of a reserve currency group, that will allow them if they can get through this crisis to continue to borrow cheaply. It's the only option, and probably Europe has the political will to do it.

Sorry, been a bit quiet here.

I’ve been working on a client, where they have been having major problems with one supplier issuing invoices for services not rendered. On investigation, it seems that the selling teams are paid a bonus based on invoices and not based on actual payments. Hence they are raising invoices etc, and hoping that my client will just pay them!

It shows the importance of making the person getting the bonus for sales to be responsible for cash collection. They are often in the best place to achieve it (particularly where Accounts Receivable has been out-soured) and it also helps ensure this kind of thing does not happen.

There is a really good letter in the FT supporting changes to capital gains tax as well as supporting further changes to equalise taxation on all capital income and moving towards equalisation of tax on labour income. This would be a good thing. In the knowledge economy everyone is a small business, they take the same individual risks so should be treated no differently to any other entrepreneur.

See the letter here: http://www.ft.com/cms/s/0/1026e5f2-7d
13-11dc-aee2-0000779fd2ac.html?nclick_check=1

The recent proposed changes to Capital Gains Tax show the problem of any tax changes. Those who win stay silent whilst those who lose shout the loudest!

Therefore, what is a useful piece ot tax simplification has got to the government being attacked by the CBI and the GMB!

Accountancy Age is trailing a report by PWC saying that company board rooms do not have sufficient IT knowledge. They may be right, but in many ways this is not the problem. The problem is that board members are frightened to ask IT questions for fear of the answers or a belief that it is too technical. It's not, the role of a board member (particularly non-execs), is to ask questions and make sure they understand the answers.

The physicist Richard Feynman once said "If it can't be reduced it to freshman level. That means we don't really understand it.” Something that is too true of IT.

This might seem like an simple question, but the correct answer is not to slow them down, in fact it is to allow them to go faster!

What many people don’t understand is that only if they know they have control of their car (i.e. their brakes work), would people dream of allowing their car to accelerate. So it is with organisations, only when an organisation knows that it can control its speed and direction will it take the risks necessary to reach its goal in as quick a time as possible by going putting it’s foot on the accelerator.

This needs to be the attitude taken to internal controls within an organisation. They are not an activity that stops the company from going where it wants to go, they give management control, so that they can slow down when they need to, and thus allow them accelerate when it is safe to.

Equally, when a car tries to accelerate, you do not throw the brakes out in order to make the car go faster, instead you know how to release the breaks.

However, those working in internal controls in an organisation face a real challenge, in order to act as an effective control on an organisation, they cannot be just a permanent break, or the car will never accelerate and reach its destination. Instead they must function how we are taught to drive a car, breaking early and smoothly..

This involves all the key skills of driving: effective training, learning from experience, reading the road ahead and not just where you are, and not being distracted. Those designing, implementing and operating controls in an organisation, would do well to consider during their working day, would I drive like this on the way home?

Thursday is Learning at Work Day. National Learning at Work Day is an annual awareness campaign, promoting and supporting workplace learning events across England.

http://www.campaign-for-learning.org.uk/cfl/WorkplaceLearning/lawday/index.asp

Useful HR Zone feature on mentoring here:
http://www.hrzone.co.uk/cgi-bin/item.cgi?id=167729&d=1063 .

I think it makes a few good points:

• mentoring isn't just for newbies
• mentoring is about being a sounding board not giving advice
• being a mentors is a good way for people to experience career development even after they have "peaked.

All in all a very worthwhile contribution.

With all the screaming and shouting there has been over GMTV’s competition calls, many businesses outside broadcasting might fail to recognise some more general issues.

The primary objective of management in any organisation is to identify and manage risks. What the GMTV situation revealed is that there was a systematic failure to identify and manage a potentially large risk. In engaging in a contract with an external agency there was a significant risk to their reputation. Customers would inherently identify this service provider with GMTV; however, had GMTV considered the nature and risks with this relationship?

======STOP SUMMARY=====

What this and a similar incident at Blue Peter revealed that producer’s management had not recognised the risks associated with this activity and set out to identify, monitor and manage them appropriately. What seems to have happened is that GMTV identified this as a separate revenue from subsidiary activity and seeing no risk took their eye off the ball pacing the activity in the hands or a third party of in the case of Blue Peter, very junior staff.

Would either of these companies have done this with editorial content? The answer is certainly not. Like any organisation, producers recognise that when you are talking about any customer focussing activity you have to be very careful. In GMTV’s case what they recognised is a potential revenue stream and contracted a 3rd party to organise the relationship and revenue earning between their customers and themselves.

There is absolutely nothing wrong with using third parties to communicate with your customers and to sell to them. Companies use agents, franchises and a whole host of other relationships every day. However, they recognise the risks involved and take steps to manage the risk and plan for possible contingencies.

Consequently, what can companies learn from GMTV’s mistake? There are two things:

Firstly, establish good relations with your service providers especially ones that are customer focussed. You need to understand what drives them and ensure that the culture in your organisation and theirs is compatible. The relationship cannot be simply about delivering a service-level agreement (although this is important), it has to operate on a variety of levels proportional to the level or risk (not the current level of income or expenditure).

In addition, this relationship has to be managed by someone who understands the issues involved and will be listened to by management.

Secondly, when embarking on new business areas or activities, manage and recognise this risks this might present. You cannot outsource a management role to a service organisation and as I outlined above managing risk is a key management role. The fact you are using an outside expert company does not eliminate the requirement for you to identify, monitor and manage the risks involved.

Where you could use a service provider is to use their experience to help identify and report on this risks to management. As well as to develop a plan of action to manage these risks. However, even this cannot take away the primary responsibility of management to identify monitor and manage these risks..

Read an article on Social Networking in the Economist. You can read it here .

It is refering to a new IBM tool called Lotus Connections that is to be released soon "that lets company employees post detailed profiles of themselves, team up on projects and share bookmarks. One manufacturer testing the software is using it to put inexperienced members of its customer-services team in touch with the right engineers.".

Certainly looks interesting. I think it also links to the idea of producing innovation hot-spots, see my entry "Hotspots — the way to manufacture genius in the workplace ". If you can create interactions that would not normally occur in the physical world then you create more opportunity for innovative interactions.