BUSINESS NEEDS TO WAKE UP TO BRAIN SCIENCE

 

NEUROSCIENCE KNOWLEDGE IS VITAL FOR HUMAN RELATIONS TEAMS

If you run a business, how do you get the best out of your staff? How do you ensure your workplace is one where people can achieve their best for you and themselves without feeling bullied or stressed?

These are pretty important questions when you realise that people attach as much importance to the workplace as a social forum as to being a place where they earn money for their labour.

That is one of the findings of the major advances that are being made in neuroscience, how our brain works. A conference was held about all this in Manchester during the last few days. It didn’t get much publicity. The media,universities, and business organisations (apart from Downtown) weren’t interested. But in a few years these findings will provide the scientific basis for most companies human resources and public relations strategies.

At the conference leading experts from around the world explained how the latest developments in neuroscience, emotional intelligence and psychology can help in a really practical way to improve the way your workforce is encouraged intelligently to think differently and reach innovative decisions.

The fact is that most people know far more about how their car works than how their brain works. And whilst on the subject of cars as far as the brain’s processes are concerned the way you speak to someone can have the same impact as getting your hand caught in a car door!

This conference came at a time of a major crisis in the reputation of many of our companies and institutions. From banking and phone hacking to MPs expenses and FIFA, we are in trouble with public perception. All this is not down to failures in regulation. Much of it is culture and values produced in the brain. So how does the brain work and how do we apply the new knowledge?

When I first thought about this subject I couldn’t fully connect how breakthrough research on the functioning of the brain could be directly linked to the world of HR and personal development.

It can perhaps be summed up with the statement that many of our assumptions about how the brain works are wrong. Many of our assumptions about what motivates people are wrong. Some of our well tried techniques for getting the best out of our workforces are at best out of date and often counterproductive.

One of the major issues for businesses is the challenge of change. It is happening all the time and the speed of change will only accelerate. But neuroscience can help people make that change. One part of our brain is primed and ready to provide us with a natural aversion to change. It is seen as a threat. People need to be given the tools to gain ownership of change decisions for themselves. We need to teach people how to learn for themselves.

We need to share challenges with workers, share information not believe that information is power and keep it to ourselves.

Of course enlightened management is putting some of this into practice already but having the scientific knowledge to back it up will help immensely.

I was particularly struck by the observation of one brain expert that whereas the common perception of the workplace is that it is a place where effort is exchanged for money; for the brain it is social space. The threat response is more powerful than the reward response. Being hungry and being ostracised provoke the same brain response. And don’t forget what I said about the car door!

There is scepticism that this is gobbledygook, or people don’t want to know for fear of getting it wrong. There are special challenges for small businesses. The need to balance theory with practical action and an acknowledgement that neuroscience is far from the whole answer to getting the best out of your workforce.

But neuroscience can certainly help you get a happy workforce.

 

TORIES MOVING AT PACE

 

GOOD FOR BUSINESS?

It’s the first wholly Tory Queen’s Speech since 1996 and David Cameron is in a hurry to get things done. That’s sensible politics because the grim reaper and rebel backbenchers may erode his fragile majority. Also after the EU referendum, the clamour will rise for him to depart. The downside is that the 20 odd bills are rammed through without proper scrutiny in the first session of the parliament in contrast to the zombie session that is likely in 2019-20. Our poor legislative calendar leads to poor laws.

The programme reflects the Conservatives breaking free from the Lib Dems and business will welcome many of the proposals. The Enterprise Bill promises to cut red tape (where have we heard that before?) and sets up a conciliation service to deal with disputes between firms. The “Tax Lock” Bill has been criticised by former Chancellor Nigel Lawson, and quite right too. Passing a law to stop rises in income tax, VAT and National Insurance is unwisely restrictive. It shows how low political credibility has shrunk and there are ways round the income tax pledge anyway. The bill to let housing association tenants buy their homes will do nothing to deal with the underlying problems of the housing market. There are already signs of overheating in the South East now that the threat of a mansion tax has gone away.

One had hoped that in, what is effectively a second term, the Conservatives would have introduced wide ranging constitutional reform to deal with ending two tier local government and the House of Lords amongst other things. Instead a piecemeal approach is being adopted. Scotland will get devo max whilst Ministers hope to make low key changes to parliamentary standing orders to introduce English votes for English laws. Then we will have a bill to give power over transport, housing, planning and policing to northern cities. And that’s it. The interim elected mayor for Greater Manchester is due to be announced this afternoon. It may be a close vote between current Combined Authority leader Peter Smith and Police Commissioner Tony Lloyd.

Trade Union members are going to have to opt in to contribute to the Labour Party in a bill that also raises the threshold for calling strikes. We now need a bill to allow customers to deduct an amount from the price they are charged by companies that fund the Tory Party.

It is good news that the EU Referendum Bill will define the question to be asked, “Should the UK remain in the EU?” That gives those of us supporting our continued membership the opportunity to be on the bright positive “yes” side whilst the better off out brigade will be associated with the negative “no” proposition.

MANDY FOR MANCHESTER?

Manchester University is on a roll under the leadership of Vice Chancellor Nancy Rothwell. The institution is embracing the Northern Powerhouse with all the opportunities for business and the academic world to work together.

Now Lord Peter Mandelson wants to lend his shoulder to the wheel by becoming Chancellor. It is an honorary position but one where he could use his worldwide contacts to benefit the university. In government he had responsibility for higher education policy and was a northern MP.

He obviously brings some political baggage but he would be a high profile successor to Urban Splash boss Tom Bloxham.

Mandelson is opposed in the election by writer and broadcaster Lemn Sissay and the Music Director of the Halle Orchestra Sir Mark Elder.

 

PUTTING THE BOOTS INTO BUSINESS

 

 

MILIBAND AND BUSINESS

 

Ed Miliband is staking everything on being the people’s champion against vested interests. He may be personally awkward and unable to eat a bacon sandwich but he is convinced that voters will rally to Labour as the party for people who are fed up with the fat cats getting away with it. He may be right and if he can get enough of them to vote, he might win. On the other hand the Tories may succeed in nailing him as a leftie with a downer on enterprise.

 

It is essential that Miliband breaks out of the torpor that has surrounded his leadership. He can’t change his personal image, he can’t change the fact that the economy is on the mend but he has developed a habit of courageously taking on vested interests.

 

This began with Rupert Murdoch when revelations about phone tapping first emerged. Next were the energy companies threatened by a price freeze. Now Stefano Pessina of Boots and Tory donor Lord Fink are caught up in Ed’s latest campaign for people to pay their fair share of tax in the UK.

 

He is definitely on to something here. It is a common complaint that ordinary people on PAYE, well known to Inland Revenue and Customs, are readily fined for being a few days late with their tax forms whilst it seems these fat cats with their money stashed abroad are treated with awe and respect. The approach is justified on the grounds that being nice and polite might get some money back whereas going in hard with court cases will be costly and not productive. Well let’s try it and see whether the bad publicity leads to lots of these tax exiles paying up at the court door.

 

This matters. We are talking billions of pounds that could be being spent reducing the deficit and saving public services. If Ed Miliband can convince people it won’t be business as usual under him, he might be on to something at last.

 

KEY NORTHERN SEATS: SOUTHPORT.

 

Each week between now and the General Election I will be looking at some of the key contests in the Downtown in Business areas of the North West and Leeds.

 

We start with the battle between the Conservatives and Lib Dems in the genteel streets of Southport. In times past the constituency fluctuated regularly between the two parties. But since 1997 it has been in Lib Dem hands, initially in the shape of the flamboyant Ronnie Fern, but for the last three elections John Pugh has held the seat. Pugh, a school teacher for thirty years was a big contrast to Ronnie Fearn. He has earned a reputation as a good constituency MP recently highlighting the economic problems of resort towns in a Commons debate. Shamefully overlooked for ministerial office in the Coalition, he has distanced himself from some of the government’s policies.

 

His Tory opponent is supermarket executive and Preston councillor, Damien Moore. He has to overcome a six thousand Lib Dem majority, so the party will have to be in real meltdown for this seat to change hands.

 

Next week: Rossendale and Darwen.

 

 

 

GERMAN STYLE REGIONAL BANKS….THE ANSWER FOR GREECE AND BRITAIN.

Angela Merkel arrives at passport control at Athens airport. She is asked “Name?”  The German Chancellor replies “Angela Merkel”. “Occupation?” “No,I’m only here for three days.” I was told that one by a German friend by the way before you accuse me of old stereotypes. But at a time when relations are very tense between the successful Germans and the struggling Greeks, it might be worth considering how Greek and British small and medium sized businesses might benefit from the Mittelstand way of doing things.

 

Next week a sell out conference is being held here in the north by the German British Forum. Business people will find out how middle sized and small companies are supported in Germany by the mighty Mittelstand. If George Osborne is serious about Britain becoming economic top dog by 2030, he should try and squeeze into next week’s conference.

 

Not that it will be all about knocking the British way of doing things. The Germans admire our creativity, customer service and economic growth. However our productivity, lack of skills, short term shareholder focused approach to investment and lack of bank support hold back our SMEs.

 

So what is this mighty Mittelstand? It describes a middle sized company but has also come to stand for a particular German way of doing business which might commend itself to many northern businesses if we could get the economic framework right to support it.

95% of Mittelstand companies are family owned and 85% owner managed. They are customer, employee and community focused whereas many of our companies are obsessed with the short term need to reward the shareholder.

 

How is it possible not to worship at the alter of the shareholder? After all in this country it is they who are investing their cash. The German system is rooted in the regions or lander, the highly successful system of sub national government that we created for the Germans after 1945 but seem incapable of having here.

 

Mittelstand companies finance themselves from retained profits with bank debt and equity funding making up smaller components of the mix. Crucially they are supported by a network of three thousand independent banks. The UK has a dozen business banks. These banks have managers who know the local businesses.

 

There is a close relationship between business and education ranging from school visits at an early age and a well thought out apprenticeship scheme. 67% of German youngsters go into apprenticeships and there is no snobbery about vocational training with 50% training in trade, crafts and technology and 50% in administration and service.

 

This system of locally based finance has led to major export success particularly for the so called “hidden champions”, middle sized companies exporting all over the world and contributing 200bn Euros to the German economy. For instance Brita Water Filters rose from nothing to now having a 7bn Euro turnover. The “hidden champions” are founded on innovation, excellent product standards, and long service senior management.

 

As we debate how the northern powerhouse might look in terms of organisation and democratic structures, it would be good to build in some “mittlestand” thinking. Perhaps our Local Enterprise Partnerships could be part of the banking structure for our SMEs or possibly a Bank of the North with local managers in our towns and cities bringing their local knowledge to investment decisions.

 

Follow me @JimHancockUK