flowing motion

Posts Tagged ‘banking

Who has an expenses, budget and payment system that they are happy with?

When I was growing up, we were paid neatly on the 25 of the month, all our bills were raised on the last day of the month, bills arrived during the first week of the month and you had 30 days to pay.

One evening each month, you sat down and reconciled your bank account, you paid your bills, and if you were really organized, you entered your payments into you cash flow plan.

Isn’t life complicated now? Employers happily pay you in the first week of the month. Credit card periods end any time. Some credit card payments are due in 3 or 4 days;others in 30 days.

Some firms want direct debits but beware – if they allow a fraudster access to your account, which happens quite often, you will spend ages cleaning up the mess and restoring your credit record.

Needed: easy cash flow payment systems

What we need are some easy cash flow payment systems. I have seen one, I forget where, that liases with a bank but that is pretty frightening. I can’t get into my internet bank reliably as it is (British banks don’t seem to get computers.)

So how do we solve this conundrum?

I am looking for a simple system to manage expenses and to plan payments at least 5 years ahead to cope with payments like domain registrations that get forgotten.

Do you know of such a system?

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Business-oriented HRM curriculum

I am teaching undergraduate and postgraduate HRM and for the last 8 weeks I have been walking the post-graduates, in particular, through a simple heuristic for understanding a business model and its HRM implications.

Of the many different businesses they have chosen to work on, two please me in particular: the first is Islamic banking and the second is insurance broking (in Cameroon).

Simple heuristic for understanding a business

I am grateful to Michael Riley of Sussex University for learning (via his writing) a simple heuristic for understanding a business.

Inspect the revenue graphs and understand how revenue varies

  • as a trend (increasing or decreasing)
  • seasonally
  • with events
  • and randomly in the short term.

Once we understand ‘sales demand”, we can look at the derived labor demand.  In manufacturing, labor demand may be mediated by technology.  In services, like banking and insurance broking, labor demand is far more direct.  When we have a good feel about who we will need, when and where, then we can set about managing our labor supply.

Variability in Islamic banking

My Islamic banker, after shyly announcing he was an Islamic banker and taking the trouble to educate me on the principle of “no interest” and the products they sell, reacted as most people do when they talk about HR.  He started describing the HR systems and described a business that was ultra-stable.  Because Michael Riley’s heuristic had cued us to look for variability, we asked a few more questions and this is what we come up with.

  • Their long term growth or contraction depends upon reputation.
  • They have three Islamic festivals, such as the Eid which is coming up shortly, when as at Christmas, spending (and borrowing) is very high.
  • As with all banks, they are affected by weather, economic and political events which they monitor closely.
  • After 9/11, they came under suspicion even from Islamic customers.

Now that we understand how the need for service varies, we can imagine when line managers will be calling for skill and the skills they will call for.  And we have a fair chance of matching labor supply to labor demand.

When we achieve this match (which will never be perfect), then we can contribute to the ‘bottom line’ of the organization.

How we do that is the technical skill of HRM.  But to use our tools, first we must have a mental image of the match we are trying to achieve.

Insurance Broking in Cameroon

The insurance brokers in Cameroon, as far as I can see, are structured as any independent insurance brokers would be.  They are a family owned firm.  Their business peaks at the calendar year end and has a steady though variable stream of business throughout the year.

Once again, once we understand this pattern, we can easily see what is necessary to match the demand with supply.

Sales Demand and the Credit Crunch

Interestingly, the cause of the credit crunch seems to be some back-room sales activity: borrowing money on the wholesale markets.  I think if HR Directors had fully understood the sales demand of their firm, they might (and this is speculative) have partitioned the business and noticed earlier that the non-wholesale parts could not sustain their payrolls.  They might certainly have taken active steps to protect the pension funds which is a serious obligation if they are also Trustees.

I remember working with the HR Director of a combined investment, corporate and retail bank.  She had noticed that their payroll exceeded their interest income (not relevant to an Islamic bank!) and they were being sustained by fees.  On that basis, she had carefully structured her payroll into ‘columns’ beginning with the essentials (basic pay, state insurance, pension, health insurance, etc) moving across the page to luxuries.  She then brokered a signed agreement with employee representatives that in a downturn, they would start removing benefits from the right hand side first.  This is proactive, sensible HR policy.

As all the above is absolutely speculative, I wonder if anyone has information on the HR and the credit crunch?  And if anyone else uses Michael Riley’s heuristic?

UPDATE: For an HR Managers perspective on the Recession, I have written a summary on a new post.


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