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Bombastic Trinidadians

Dawn Rich started off her column in the Sunday Gleaner with the following:

Any reader will know that I think the country’s domestic financial sector was handed to Trinidad and Barbados on a platter. By any measure this is a strategic industry.

Also by any measure there is nothing more bombastic than a Trinidadian. The Barbadians are still conscious of the fact that they occupy a little atoll, even if its real estate prices now beat those of the Bahamas, which were high to begin with. Their sea-front villas are being snapped up by rich people from the industrialised world. As a direct consequence, the Barbadian prime minister has had to defend himself against charges of selling out the country to rich foreigners. In effect, he’s replied that he doesn’t regret it.

This is a heck of a diatribe, and is worth reading in its entirety, by clicking here.

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T’dad / Who Understands Jamaicans?

This, from an Editorial in the Trinidad Guardian:

The perception that is being spread in Kingston is that T&T businessmen are privateers or marauders just waiting to pounce on any available “meat.”

On a Jamaican radio station on Monday, one of the hosts asked me what I thought about the trade war that some elements in the north Caribbean country (including the editorial writers of a major newspaper) are pushing their government to declare on T&T.

Click here for the rest of the article.

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More Criticism from the JMA Towards T’dad

Dionne Rose, Staff Reporter

The Jamaica Manufacturers Association (JMA) has levelled harsh criticism at the actions of CARICOM partner Trinidad and Tobago who reneged on an agreement to supply Jamaica with liquefied natural gas (LNG).

President of the JMA, Doreen Frankson, yesterday described the action by the oil-rich twin-island republic as a betrayal of trust.

“Jamaica would never have given a commitment for something and then not deliver it. We have never done that,” she told The Gleaner minutes after delivering greetings at a Mass held at the Stella Maris (Roman Catholic) Church in St. Andrew to mark the JMA’s 60th anniversary.

Ms. Frankson argued that over the years, Jamaica has been extending itself “beyond the call of duty” to make the partnership work, but that other CARICOM partners such as Trinidad and Tobago had not been doing so.

“Not all our CARICOM partners will extend similar courtesies to us,” she said. “We have resolved not to repeat history but to change its course by ensuring that we are not shackled by these agreements.”

She pointed out that the time has come for Jamaica to benefit from these agreements.

“Isn’t that why wenegotiate trade agreements – to make our people better?” she asked. “Not for one-way trade.”

In 2004, Jamaica and Trinidad and Tobago signed a Memorandum of Understanding for the supply of 1.1 million tonnes of LNG for use by the Jamaican Aluminium Company Jamalco and the Jamaica Public Service Company power plants.

But recently, the agreement fell through after Trinidad and Tobago said they had none to spare. Just last week, the Government signed an agreement with Venezuela to establish an LNG plant to supply more than two million tonnes of LNG to Jamaica.

Reservations were raised, however, by president of the Natural Gas Company of Trinidad and Tobago, Frank Look Kim, about the Venezuelans’ ability to meet the 2009 date.

Minister of Industry, Technology, Energy and Commerce, Phillip Paulwell, dismissed this, and insisted that the Venezuelans would honour the agreement in the time specified.

Yesterday, Frankson expressed confidence that the Venezuelans would also deliver as promised.
“Venezuela has always been a good friend of Jamaica and yes, they will deliver,” she said with confidence.

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Time Management: The Martial Art for Working Professionals

In one of the prior blogs on Time Management, I made the point that within every time management system there lies a structure that is always present.

I compare it the bone structure that makes up the human hand.

Although hands might be different, a fully functional hand must have all the component parts. They each serve a distinct purpose. While it is possible to function without all the parts, there are a few essential bones that must be either present, or replaced, in order for the appendage to work.

In the same way, a time management system must have certain basic components, without which it does not function. These basics are Capturing, Emptying, Tossing, Storing, Scheduling, Acting now, Listing, Reviewing, Switching, Warning and Interrupting.

While no two hands are the same, functioning hands share certain basics. The same applies to time management systems.

In fact, an effective time management system in 2007 must be able to do things that a time management system in 1970 just was not designed to do. Here is why:

  • between 1950 and 2000 human knowledge doubled
  • scientific information doubles every 5 years
  • A single Sunday New York Times has the same amount of information that a person in 1750 was exposed to in their entire lifetimes
  • internet traffic doubles every 100 days

The sheer volume of information has increased rapidly, and is increasing more rapidly. A time management system created today will probably be a hindrance five years from now for those professionals that do not understand the basic components and how they need to work together.

The great thing about understanding the basics is that it reduces the temptation we might have to go out and buy the newest system that is advertised. Instead, we can make an intelligent choice about whether or not to include the new gizmo in our system — does it enhance the basics, or not? Does it fit my habits or not? Will it work with my basic components?

This is not to encourage professionals from upgrading–in fact, new technology is a must if we are to continuously upgrade our time management systems. There is a simple fact behind this need for constant upgrading.

The better a professional is, the better able he is to manage his time. The better able he is to manage his time, the more that others with whom he works are willing to give him to do.

There is an old saying: “If you really want something to be done, give it to someone who is busy.”

Clearly, there are a range of practices that a professional can use, some of which are more effective than others. For example, when given a task to perform in a meeting you may have noticed the following practices for Capturing:

Practice 1 — I’ll remember it without writing it down

Practice 2 — I’ll write it on a Post It note

Practice 3 — I’ll record it in a reliable place (e.g. a notebook) for later processing

These are all approaches that might work, in faithfully translating the given task into action. However, Practice 3 is clearly superior to Practice 1. Professionals who use more of Practice 1 than Practice 3 are likely to be less reliable.

It’s not too different from the way in which a Black belt is different from a White belt in the Tae Kwon Do. To the unpracticed eye, they might all look like they are doing the same moves, but to those experienced in the martial arts, there is a world of difference.

Professionals that are expert in time management know the different practices that are available in each of the basic components or disciplines.

In the system that we are developing, professionals will also have a chance to use a system of belts to understand where they are in the development of their own time management system.

One major difference from Tae Kwon Do is that every professional has some system that they are using to manage their time, so the starting point need not be at the bottom of the ladder, as if they know nothing.

Instead, once they understand the basic components, they will be able to decide what level they currently are at in each of the components. Our experience tells us that very few are complete Black Belts, and almost no-one is a complete White Belt. Instead, professionals tend to be a complex mix of capabilities in each component.

Therefore, the plan for each person will be different as they integrate, and learn new practices. we plan to encourage people to plot their own path, and to phase the introduction of new techniques over time, essentially giving themselves an opportunity to adapt and change to incorporate new habits that, for most people, change slowly.

The biggest mistake that we have seen professionals make in learning new time management habits is to try to learn too many new habits too quickly. The result is frustration, stress and ultimately failure as they build too steep a learning curve for themselves, innocently underestimating what it takes to change entrenched habits.

Instead, our new system will encourage them to move themselves from one level to another slowly and comfortably, adjusting their knowledge and habits as they go along. From the little that I know of Tae Kwon Do, it takes years of practice to progress all the way up the ranks.

Professionals in the workplace would do well to think of their time management practice as their own martial art.

P.S. The follow-on posts to this discussion on Time Management have been moved to an entirely new blog: The 2Time Management Blog at http://2time.wordpress.com/

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An Open Letter to Trinidadian and Jamaican Businesspeople

Written to the recipients of the report: “The Trinidadian Executive in Jamaica.”

As a recipient of our recent report “The Trinidadian Executive in Jamaica” I can imagine that the current volley of words flowing back and forth between Trinidad and Jamaica has caught your attention.

If so, I would like to you to consider taking time out of your busy schedule to put some muscle behind the formation of a Trinidadian-Jamaican (“Trini-Jam”) Chamber of Commerce.

Clearly, the growing environment of distrust and harsh words is bad for business on both sides of the Caribbean. No-one is winning, and the upset words being spoken in public are going to be harder and harder for those speaking them to take them back. Unchecked, this probably can and will grow worse.

I don’t know about you, but I believe that we, Trinidadians and Jamaicans, can all do much more, and probably should have done much more a long time ago to help create stronger and more lasting bridges between businessmen in both countries.

I suspect that you know what I am talking about. You know Trinidadian and Jamaican businesspeople who have never visited the other island saying things that you know are sheer nonsense, and come from a simple lack of experience. You may have heard talk about people being “backward,” and other talk of “Tricky-dadians.”

What it will take to reverse the current slide into something none of us can afford is simple — it will take you and I. We are ones to be proactive, and to forge an environment of trust, partnership and prosperity.

Let us:
  • meet to get a Trinidadian-Jamaican Chamber off the ground, with a chapter in Kingston and another in Port of Spain

  • pass this email on to others who have a vested interest in Trinidadian-Jamaican business relations

  • start to convince our colleagues in the two countries to get on planes, attend trade shows, take vacations — whatever they need to do to start to become familiar with our countries

First step: send me an email to francis@fwconsulting.com letting me know that you are interested in participating (i.e. with some of your personal time) in the formation of a Trinidadian-Jamaican Chamber. I will schedule a face-to-face meeting once we have 5-8 who are interested here in Kingston.

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The War of Words Between Kingston and Port of Spain

Thanks to my colleague Wayne for sending this over:

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Jamaica Gleaner EDITORIAL –

More action less talk, Mr Manning
published: Tuesday | February 13, 2007

Mr. Patrick Manning, the Prime Minister of Trinidad and Tobago, has to do more than make statements if he expects to win back Jamaica’s trust and assure us of his government’s commitment to the ideals of the CARICOM Single Market and Economy (CSME).

His declarations, therefore, have to be backed by concrete action. So, we look forward to the follow-up from Mr. Manning to his promise that Jamaica will be supplied with LNG from Trinidad and Tobago, to fuel a major energy conversion programme here. We, however, would not advise Prime Minister Simpson Miller nor the Jamaican authorities to hold their breaths.

Indeed, the Trinidadians knew that a US$1.6 billion investment by Alcoa to double the capacity of the 1.5 million tonne alumina refinery it jointly owns with the Jamaican Government was predicated on the LNG project that would lower the cost of energy and help make the plant globally competitive.

At first, Port-of-Spain quarrelled over what would be their pricing obligation for LNG, within the concept of the CSME, this seamless economic space that the countries of the Caribbean Community are seeking to create. Kingston insisted that Jamaica, being part of the same market, should enjoy the same price that Trinidadian domestic producers pay for natural gas. The only addition would be for cost liquefaction and transportation.

The Trinidadians held that LNG was a different product that should be subject to Henry Hub pricing, thus seeking to place Jamaica on the same plane as “foreign” buyers. This is a dispute that will eventually be resolved by the Caribbean Court of Justice, but in 2004, Mr. Manning signed a memorandum with then Prime Minister P.J. Patterson to supply 1.1 million tonnes of LNG a year on a preferential basis, although the specific price was not agreed. He signed the same agreement with Mrs. Simpson Miller when she succeeded Mr. Patterson.

But in reality, Port-of-Spain dithered, and while Jamaica waited, Alcoa began to have second thoughts about the expansion project. Alcoa’s and Jamaica’s fears would have been deepened with the statement late last year by Frank Look Kim that Trinidad did not have the natural gas with which to supply Jamaica. It could hardly be Mr. Look Kim to whom Mr. Manning referred as the “dubious sources” that had stated Port-of-Spain’s inability to fulfil the LNG compact. What Mr. Manning should be aware of is that Jamaica’s project cannot await an agreement with Venezuela on the development of gas fields that straddle the borders of the two countries. By the time that happens, new alumina refineries will be well under way in China and the Alcoa plant will hardly be as attractive as it used to be. In other words, this is an issue that demands urgency.

It also demands common sense politics, which, for Trinidad and Tobago, also translates into good economics. Jamaica is Port-of-Spain’s largest market in CARICOM; it enjoys a balance of trade of about US$500 million. It is in Trinidad and Tobago’s interest to support Jamaica’s economic growth to help maintain that market. And Jamaica, after all, only requires a fifth of its current gas supply. Some market shifting may be in order.

And Mrs. Simpson Miller must not let Mr. Manning forget that balance of trade figure.

Financial Gleaner
March 10 2007
By Wilberne Persaud, Financial Gleaner Columnist

Surviving regional operations of the colonial enterprise known as the British West Indies and the sabotaged West Indies Federation include cricket, meteorological services, University of the West Indies – morphed by UWI Alumni-led governments and compliant former administrations into a besieged dependent, struggling hybrid – and not much else.

Let me immediately avoid misinterpretation: Jamaica’s referendum was no act of sabotage.

I refer to manoeuvrings of the former British Colonial Office which in a sense were calculated to end in that referendum. The British knew political expedience, poverty, uninformed opinion, conflict over Chaguaramas as United States Military Base vs. Federal Capital and political rivalry would take us there. Eric Williams aptly concluded: ‘One from 10 leaves zero’.

Recently, P.J. Patterson checked with Patrick Manning, trying to make one plus zero ten again.

They too failed causing The Gleaner to replace ‘one from ten leaves zero’ with “Myopic economic nationalism” – the title of its February 25 editorial – its description of Prime Minister Manning’s reneging on an “undertaking to supply Jamaica with liquefied natural gas (LNG) for an energy conversion project critical to Alcoa’s proposed US$1.6 billion investment to double the capacity of its Jamalco alumina refinery here.”

Sluggish growth

The Gleaner opines: “Jamaica, with its troubled economy with sluggish growth, is Trinidad and Tobago’s largest and most lucrative market. Port-of-Spain enjoys a US$500 million trade balance with Kingston.”

Discussing Trinidad’s non-supply of LNG, The Guardian had resorted, according to The Gleaner, to jingoism in making an “inconsequential case [seeking] to claim it was an attempt by Prime Minister Portia Simpson Miller to divert attention from corruption and criminality in Jamaica ahead of a general election”.

Stranger things have happened. Yet, The Guardian’s views on supply of LNG, Jamalco expansion and the rationale for subsidy rested on solid foundation.

The case relies on the fact that subsidised LNG would facilitate the “profitable operation of a three million-tonne alumina refinery in Jamaica that would be 80 per cent owned by Alcoa. Alcoa would then transfer the alumina, which is being produced at a lower price because of subsidised LNG, to T&T, where it would be smelted into aluminium in the 100 per cent Alcoa-owned facility in T & T.”

Subsidies

The question for Manning was how to justify subsidies to Alcoa in face of Trinidad and Tobago’s other pressing needs.

But this question raises so many others in the saga of bauxite in Jamaica and West Indian economic cooperation. The idea of Jamaican bauxite with Trinidad and Tobago power generation is not new.

The LNG idea may be. Because Jamaica has no money to invest with Alcoa in expanding the plant, our ownership stake is diluted.

Of greater interest is why Jamalco becomes only 20 per cent Jamaica owned after significant contributions to capital potential in the form of the bauxite levy? And why have we seemingly moved away from a bauxite ore basis of payment back to an income tax basis after the long hard struggle to change it?

Bauxite is a wasting asset. Mining and processing create huge environmental and other problems.

In the deals colonial administrations brokered with mining companies it would not be uncommon for US$0.20 cents or thereabouts to be the norm a country realised per ton of ore extracted.

Bauxite has no known market price since really, no market exists. Our formula, the core of which was developed by Alfred Francis, now retired, Emeritus Professor of Applied Economics at UWI, used the revealed price of aluminium ingot, a commodity for which there is a ruling price on the London Metal Exchange.

Obviously, if bauxite becomes aluminium there is a conversion ratio for bauxite input to aluminium output – elementary really, and equitable too, it seems to me.

Bauxite levy

That formula was instituted around 1974 and the payment termed the bauxite levy. It provided Jamaica payments ranging from US$12-16 per ton of ore extracted.

My late friend Ronald Manderson-Jones, brilliant historian, foreign affairs practitioner and lawyer, always insisted that a different name should have been found for it and that Prime Minister Michael Manley should have refrained from discussing it as a triumph over the multinationals.

This,he suggested, created problems Jamaica did not need.

That aside, the question remains: Would Trinidad and Tobago have provided LNG if Jamaica owned 50 per cent of both Jamalco and the smelting operation in Trinidad and Tobago? Interesting questions, answers to which I could not provide.

wilbe65@yahoo.com

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Trinidad Guardian March 14th

Jamaica manufacturers threaten blockade of T&T products

BY SANDRA CHOUTHI

Doreen Frankson, president of the Jamaica Manufacturers Association, has threatened to lobby the Jamaica government to ensure that products from T&T do not enter that market as freely as they have been.

So said Paul Quesnel, president of the T&T Manufacturers Association (TTMA), stating that Frankson had written a response to an editorial in the Jamaica Gleaner on February 13, which criticised T&T Prime Minister Patrick Manning for reneging on a Memorandum of Understanding (MOU) to sell natural gas to Jamaica.

Venezuela and Jamaica on Monday signed an MOU which will allow Kingston to buy 2.5 million tonnes of liquefied natural gas (LNG) annually from Caracas- a development that will give impetus to Jamaica’s plan for major developments in the bauxite/alumina and electricity generation sectors.

The agreement, signed at the Half Moon Hotel in Montego Bay by Jamaica’s Prime Minister Portia Simpson Miller and Venezuela’s President Hugo Chavez, came two weeks after T&T, which was to sell Jamaica 1.15 million tonnes of LNG, backed out of the deal.

The Gleaner wrote in its editorial: “Indeed, the Trinidadians knew that a US$1.6 billion investment by Alcoa to double the capacity of the 1.5 million tonne alumina refinery it jointly owns with the Jamaican Government was predicated on the LNG project that would lower the cost of energy and help make the plant globally competitive.”

Responding to these developments, Quesnel yesterday said there are no hostilities toward Trinidad businesses operating in Jamaica.

In reply to Frankson’s statement that it’s not as easy for Jamaican businesses to set up shop in Trinidad as it is for the latter to operate in Jamaica, Quesnel said: “Trinidad businesses face problems in Trinidad, that it takes well over 18 months to get all necessary approvals to set up a business.”

Quesnel said, too, that all the industrial parks in Trinidad are full and E-Teck, which is responsible for such parks, has not built a new one for the last three years.

Quesnel quoted Frankson as saying that Trinidad had a lot of non-tariff barriers to block Jamaican businesses from entering the Trinidad market, to which he has offered the TTMA’s assistance to any Jamaican business that feels it is being discriminated against.

I haven’t had a call yet. The TTMA is willing to assist any Jamaican or Caricom partner who wishes to set up a business in Trinidad in whatever way we can, be it lobbying government or helping it to get through the paperwork,” Quesnel said.

Quesnel also said that the Jamaica Manufacturers Association has not attended the TTMA’s Trade and Investment Convention (TIC) for the last five years.

They say they can’t do business in Trinidad. If the Jamaicans wanted to do business here, the TIC is an ideal place for them to come, expose their wares, meet all the regional agencies, E-Teck, Customs, the Bureau of Standards, to be able to find out firsthand what they need to do to enter the Trinidad market,” Quesnel said.

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Trinidad Guardian

Editorial March 15th

That MOU just a fairy tale

ON MONDAY, Jamaica Prime Minister Portia Simpson Miller and Venezuela President Hugo Chavez signed a memorandum of understanding covering the supply of liquefied natural gas (LNG) to Jamaica from Venezuela.

This MOU has some significance for the local business community which has looked on in shock and awe at the bellicose rumblings coming from Jamaica on this thorny issue of LNG.

Jamaica’s private sector is upset at what it perceives to be T&T’s failure to live up to its undertaking to provide cargoes of LNG to Jamaica.

Last week, the Jamaica Manufacturers Association (JMA) said it had reached the end of its tether with respect to trade relations with T&T. Referring to T&T’s private sector, the JMA said it had never witnessed a “more insular and selfish group” which seemed to be only interested in “plundering our country to increase their wealth and the current US$500 million trade surplus which they enjoy with our economy.”

The JMA also advocated that T&T “must be brought to book and held accountable” and threatened the Jamaican Government that if it did not do so “the JMA will be forced to act on behalf of its constituents.”

Not to be outdone, the Jamaica Chamber of Commerce issued a news release stating that T&T’s perceived failure to supply Jamaica could threaten the future of the Caricom Single Market and Economy and disrupt Jamaica’s future development.

“The perception of a large segment of the Jamaican business sector is that it has always been difficult to trade with Trinidad, because non-tariff barriers are used to block the entry of Jamaican goods and services into Trinidad, even while there is the expectation that Trinidad will have free access to the Jamaican market,” the Chamber said.

Thankfully, the local private sector and its leaders have responded in a mature and measured fashion to the intemperate language coming out of Kingston.

Is the anti-integrationist rhetoric from Jamaica’s private sector justified? Absolutely not.

The first difficulty for our northern neighbours lies in an appreciation of the difference between an MOU and other kinds of agreements.

By its very definition, an MOU is an expression of intent and not a promise to supply.

By its very definition, therefore, an MOU cannot be breached because in signing an MOU one undertakes to use one’s best efforts to deliver a product or service. Such an expression of intent is subject, always, to the undertaking of feasibility studies and negotiation of the final terms.

So the common-sense understanding of the MOUs between T&T and Jamaica (one in 2004 and one last year) is that T&T expressed an intention to supply 160 million cubic feet of LNG to Jamaica by 2009.

The MOUs that T&T and Jamaica signed are likely to be quite similar to the one signed by Jamaica and Venezuela on Monday. This means that Venezuela would have expressed an intention to supply LNG to Jamaica by 2009, just as T&T had done.

It would be interesting for the Jamaican private sector to note that President Chavez signed the MOU without having in place any identifiable LNG facilities whatsoever. While President Chavez may purchase LNG shipments on Jamaica’s behalf, it would be difficult for Venezuela to supply LNG over the long term without the requisite liquefaction units.

It is also worth mentioning that it took Atlantic LNG four years from the signing of the sales contracts (not the MOU) to the delivery of the first LNG shipment-and that was considered to be warp speed in the LNG industry at the time.

Also relevant is the fact that Venezuela has been trying since the early 1970s (more than 30 years) to get an LNG facility off the ground and that the closest the South American country has come is the framework agreement signed by Shell and Mitsubishi five years ago. Little has been heard of that project, involving two blue chip multinationals, since 2002.

Monday’s natural gas MOU, then, is a fairy tale as it is highly unlikely that Venezuela will be able to deliver LNG to Jamaica within two years.

However, if Jamaica’s private sector believes that President Chavez’s fairy-tale MOU will come through for it, it may stop trying to provoke Mrs Simpson-Miller into declaring a trade war against T&T.

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One Page Digest Issue 10.0

Framework One-Page DigestIssue 10.0

We sent you this digest because we believe you have an interest in these topics. Please PASS IT ON to others of like mind. If we are incorrect, please send us email at newsletter@fwconsulting.com, or follow the directions at the end to be automatically unsubscribed.

Links

Getting Things Done (time management): If there is one common area that professionals everywhere must continue to master, it is time management. This site, based on the book by David Allen, is the best resource on the web, and the perfect compliment to his book by the same name.

Google (Blog/News) Reader (web service): If you are a heavy blog reader, then it’s time you stopped skipping from one blog to another to find out whether anything new has been added. Google’s reader picks up the latest entries and puts them all in one place, saving you time and effor. While you’re at it, add in our company blog to get the region’s latest ideas for running your business.

CANA News Agency(online news service): For regional news that is timely and far-reaching, this source can be viewed as an RSS feed — by the same Google Reader described above.

YouTube.com (Framework video): This link will take you my own bio — which is not the point — but it has a video introduction at the bottom of the page that demonstrates the power of YouTube by example. I love how easy it is to use, and the world it opens up. Coming up soon: a full speech on techniques for Caribbean networking.

Also of Interest
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More Depth?
In FirstCuts, our monthly ezine, we share our newest management ideas in depth. In the latest issue: “Delegating in Caribbean Companies” we look at why finding and training replacement managers is so difficult for executives in the region.

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HBR: Proving Some Common Sense

I like it when a source like the Harvard Business Review finds some evidence that backs up some hunch I have had. Here are a couple:

From the June 2006 issue.

When to Let Them Duke It Out

In a white paper I wrote a few years ago entitled “An Executable Strategy for Every Employee” (available by sending email to fwc-exstrategy@aweber.com) I argued that it is important to have executives fight amongst each other in order to come to consensus. We encourage that they do so in our particular approach to strategic planning.

This is the very opposite of dividing up a document into parts and then farming it out to different vice presidents.

In this short article, Tony Simons and Randall Peterson show that

  1. Teams whose members mistrust one another are less effective in implementing their strategic decisions
  2. Decisions imposed by a powerful executive are twice as likely to create distrust that damages implementation, than decisions derived by consensus

In short, politically driven teams, or those driven by mistrust benefit the most by making consensus decisions.

I witnessed a CEO fired during a strategic planning retreat (to his surprise.) In 18 months, his successor who was at the retreat was also gone.

It was an ugly situation that undermined any trust that might have been possible, and today the company still suffers from the aftermath of that inexplicable decision.

A the very end, the authors deliver a zinger — CEOs that think this doesn’t apply to them might be in trouble, as the vast majority of CEOs in the study “couldn’t accurately describe the level of trust among their team members. It’s as if they were describing a different team and did not realize it.”

The High Cost of Chinese Labour

Replace the word Chinese with the word Caribbean and all of a sudden, this article makes sense to us in the region.

Low cost labour measured on an hourly basis is an incomplete indicator of total costs.

In fact, the cheaper the labour, the more likely there is to be turnover because a 5 cents per hour difference might be small to someone earning US$10 per hour, but to a Chinese worker earning 75 cents per hour, it represents a big difference.

Here in the region, our workers seem to be quite inefficient, evidenced by the number of human beings sitting idle or moving sluggishly at any fast-food establishment, construction site or manufacturing facility.

Yet, we know that if you take many of those same people and give them visas to live in Toronto, all of a sudden they are able to work many times harder at 2-3 jobs at one time.

Why?

It seems that our managers do not understand the total costs of labour, as described in this article, and fail to take into account the costs related to turnover. Whenever a manager says “I can just find someone else,” they are probably ignorant of this cost.

Also, managers fail to see that hiring 10 people is not the same as hiring 5 at double the wage. It might be the same in the narrow sense of dollars and cents paid in payroll, but the principle of the mythical man month is well-known to software developers, but ill-understood outside that industry.

Here is the idea: doubling the number of programmers on a project almost never cuts development time in half. The reason is that while the number of people may increase linearly, the number of working relationships and communication channels to manage increases by the square of the number of people.

For example, increase the team by 1 person, from 3 to 4, and the number of communication links goes from 3 squared =9 to 4 squared = 16. Increase from 5 to 10 and the number of links goes from 25 to 100.

Managing these links becomes much more difficult very quickly.

To put it in more concrete terms, the number of ways in which one worker could diss another (resulting in the need for a managerial intervention to prevent a fight or a prolonged cold shoulder) goes up dramatically. Their job becomes radically harder extremely quickly.

By virtue of these socio-psychological economies of scale, it makes sense to hire very carefully, and to consider total costs (measurable or not) rather than just the unit cost of labour.