26/04/2009 by Phil.

An in-site from the Evening Standard…….

How Banking functions - the European way.

Heidi is the owner of a bar in Berlin. To increase sales she decides to allow her loyal customers, most of whom are unemployed alcoholics, to drink now but pay later.

She keeps track of the the drinks consumed on a ledger (thereby granting the customers loans). Word gets around, and as a result, increasing numbers of customers flood into Heidi’s bar. Taking advantage of her customers’ freedom from immediate payment constraints, Heidi raises her prices for wine and beer, the most ordered beverages. 

Her sales volume increases massively. A young and dynamic customer service consultant at the local bank recognises these debts as valuable future assets and increases Heidi’s borrowing limit.

He sees no reason for undue concern since he has the debts of the alcoholics as collateral. At the banks corporate headquarters, expert bankers transform these customer assets into Drinkbonds (DBs), Alkbonds (ABs) and Pukebonds (PBs). These securities are then traded worldwide. No one really understands what the abbreviations mean or how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top selling items.

One day, although the prices are still climbing, a risk manager (subsequently, of course, fired because of his negativity) of the bank decides the time has come to demand payment of the debts incurred by the drinkers at Heidi’s bar. However they cannot payback the debts. Heidi cannot fulfil her loan obligations and claims bankruptcy.

DBs abd ABs drop in price by 95%. PBs perform better, stabilising in price after dropping by 80%. The suppliers of Heidi’s bar, having granted her generous payment due dates and having invested in the securities, are now faced with a new situation. Her wine supplier claims bankruptcy and her beer supplier is taken over by a competitor.

The bank is saved by the government following dramatic round-the-clock consultations by leaders from the political parties. The funds required for this purpose are obtained by a tax levied on non drinkers.

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26/04/2009 by Geoff.

If we were talking about a western film everybody would know what a deputy means! In business the real meaning and application of a deputy is rarely understood despite how powerful one can be.

So why should a key person in a business have a deputy?

• Now and again they may have holidays during work time.
• They may be off ill.
• They may get seconded to a project away from their normal job.

Without a deputy what will happen?

• If the key person has a robust system to run their area then all should be OK for a while but if they haven’t - - - — -?
• With the key person absent then the things they did don’t get done this can affect customer service, cost, profitability etc.
• Their team is unmanaged - problems don’t get resolved.

What should a deputy do?

• Keep the systems of the area running smoothly
• Do the key elements of the key persons job
• Deputise for the key person in meetings or similar
• Manage the team

What are the effects of having an effective deputy:

• The show stays on the road
• Performance is maintained - may be improved
• A subordinate gets a taste of the limelight
• The key person has to explain what’s involved in their role

The key person must see the deputy as an asset not a threat and therefore essential. For the person who deputises its an opportunity but to get the full benefit they must understand why certain things must be done. Oh and before I forget lets kill off another popular misconception - deputies are NOT just for large companies - just as key people aren’t!

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