The Hidden Law That Could Be Undermining Your Business

Do you walk the walk, or talk the talk? You can’t do both, so which is the most effective for your business?
An interesting perspective from ‘Yes, Minister’ helps us to open our eyes to a hidden corporate culture. In the initial chapter, we are introduced to the Open Government white paper. This document provides proof that they intend to help the minister implement his stated policy goals. However, as times goes on it is revealed that this document is actually a prime example of the Law of Inverse Relevance.

“The less you intend to do about something,

the more you have to keep talking about it.”

Understanding the Law of Inverse Relevance, might seem far away from what you considered the business environment to be like. However, once you surpass the confusion, it all become clears.
For example, you are scouring through a global conglomerates website and come across their well scripted mission statement.  In relation to the Law of Inverse Relevance, this statement is merely a piece of text that they want people to believe that represents their company and what they do. However this representation isn’t what they’re actually doing.  Simply writing a good quality mission statement isn’t enough – don’t just talk the talk.
This law provides explanation of why you are more likely to get ripped off at “Honest Harry’s Hardware Store” than a basic hardware shop. Another good example is an MD stating that his workforce is “one big happy family” when the reality is it is a group of dissatisfied, unhappy workers. The Law of Inverse Relevance also explain why companies employ Ethics Officers, Diversity Policies, CSR and Environmental Standards departments. It is a purely for perception.
But don’t panic, all this talk is actually saving you money! Because it’s keeping you from getting things done.
This law has brought to light some interesting revelations, including:

  • Some of the most successful businesses don’t have mission statements, because they know what they are aiming for.
  • The top innovative businesses rely on their customers to decide whether their new products are good.
  • Socially responsible businesses act responsibly from personal interest rather than for a good perceived reputation.
  • The best leaders portray great leadership rather than spending time and effort claiming to be excellent leaders.

The principle is simple you either “talk the talk” or you “walk the walk.”

2016: An expensive year for employers

The government’s new national minimum wage rules look to set back employers over £1 billion in the year to come. The new £7.20 minimum wage, agreed by George Osborne, will start as of April 2016.

This change looks to affect around 1.7 million UK workers, totalling over £650 million of wages to be paid by private employers.

This increase in the national minimum wage has also forced employers to raise wages for those working over the NMW to create wage differentials between employees. This helps to sustain the hierarchy and offer the opportunity for a pay rise or promotion. This increase has been called the “wage spillover” costs and will create a further expense for employers. Research by the RPC suggest that this cost will total around £230 million.

These new government changes are eligible for employees over the age of 25 in which their employer must pay them at least £7.20 per hour. George Osborne aims that this hourly rate will eventually increase to £9 by 2020. So the costs for private companies is likely to keep increasing.

As with an governmental change, there has been a fair share of criticism. Large UK employers argued that this increase could lead to their stores closing down. Alongside this, research from 1000 employers shows that 15% of companies would have to make redundancies to cope with the NMW increase (Resolution Foundation). Many economists have suggested that substantial increases, even if pursued over a few years, would need to be made incrementally and with a great deal of caution if they were to be effective.

Overall, the consensus from the majority of UK employers seems to be positive and they are supportive of the new wage changes. A recent study has shown that 93% of companies think this increase in national minimum wage is a “good idea”.

In addition to this the government has also been criticised for not planning far enough into the future when it comes to calculating the national minimum wage. They have only set plans for the first year and have not calculated what the yearly increases could amount to by 2020.
The Procurement Group

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