I’ve had several really useful conversations this week that have all pointed to the high levels of complacency that still exist in businesses today, particularly in the financial services sector. These are businesses that have survived the difficult trading conditions of the last few years but are seeing the increased levels of activity in the current market as reasons for not needing to change.
Although many have attempted to reduce costs to remain profitable there are still a lot of challenges ahead. Have a look at the graph below, courtesy of my friends at BankClarity Ltd, which shows how the costs per employee compare against profit per employee in the Jersey Trust Industry (Source: States of Jersey).
I’m sure this graph may also apply to other jurisdictions operating in similar regulated environments.
This tells us that making money in the 1990’s was pretty easy but for the last decade profitability has not increased at anything like the same level as staff costs. This clearly is not sustainable and something has got to change!
I believe the saying, “If you always do what you’ve always done, you’ll always get what you always got” is still believed in a lot of circles. Unfortunately this is only true when operating in a stable environment. So much is changing around us, for example: the general economy, increased client demands, regulations and technology to name but a few. Doing what you have always done will no longer produce the same results – it is a sure way to lose market share to your competitors who are changing.
So why isn’t there a huge demand for business improvement services to help improve profitability? Where has the innovation gone to take advantage of new technologies and new ways of doing business?
It seems to me that business leaders are far too complacent and very few are willing to embark on truly transformational changes to their businesses.
Fortunately I am lucky to be working (through my consulting business, Solitaire Consultng Ltd) with a few clients who aren’t complacent, are forward thinking with a strong desire to maximise efficiency and look for new ways to increase their profitability per employee.
How do we encourage others to do the same?