A number of things will happen in 2018: Russia will be hosting the football/soccer world cup.  It will be a century since the end of World War I.   For banks in Ghana, in my lifetime, it will be the busiest year due to the following ten (10) key things going to happen at the regulatory front in 2018:

1. Banks are required to enhance their business practices and risk management framework

The passage of the Banks and Specialized Deposit-taking Institutions Act 2016 (Act 930) and other Bank of Ghana (BoG) directives require banks to enhance their business practices and risk management systems.

This means the existing guidelines for the following will have to be updated:

• Credit policy
• Stress testing Framework
• Enterprise risk framework
• Risk appetite framework
• Credit risk management framework
• Non-Performing loans management framework
• Write off practices
• Loan provision practices
• Internal Capital Adequacy Assessment Process (ICAAP)

The Bank of Ghana’s Capital requirement directive will require the following new documents:

• Risk Management Framework
• Internal Capital Adequacy Assessment Program (ICAAP)
• Capital Management Framework (CMP)
• Credit Risk Management Framework (CRMF)
• Operational Risk Management Framework (ORMF)
• market risk framework (MRF)

The adoption of IFRS will also require an update to the following documents: IFRS 9 Modelling Manual, IFRS 9 Impairment process manual, Credit policy Manual, Credit Committee Manual, watch-list process, credit risk modelling process, pricing of loans, Credit risk strategy document, General ledger chart of accounts, Data quality controls, Credit risk gaps mitigation, Treasury Manual for IFRS 9 classification and measurement and Enterprise risk manual

2. Banks required to meet minimum capital requirement of GHS 400 million by end of 2018

All banks in Ghana are required to meet the minimum capital requirement of GHS 400 by end of 2018. Based on the transcript of the Monetary Policy Committee (MPC) Press conference which was held on Monday, November 27, 2017[1], below is a list of questions and responses from the Governor on the status of how banks are meeting the GHS 400 million by the end of 2018.

Based on my understanding of  sections 28 -34 of Act 930, a Bank that does not have capital of at least ¢400 million as at December 31, 2018 will be considered as an undercapitalized Bank .An undercapitalized Bank may lose its license to operate as a Bank in the following sequence of events:

1. Section 105(2b) of Act 930 – The undercapitalized Bank will be required to submit capital restoration plans within 45 days to BoG’s requesting it.
2. The Bank has 180 days from submission to conclude the capital and liquidity restoration process.
3. BoG will further impose restrictions on growth of assets or liabilities, in other words the Bank may not be able to lend or accept deposits from the public ( Section 105 (5a)(5b)(5c) of Act 930
4. Section 106 (1a) (1b)- If the problem persists after the first attempt, BoG will provide a 90 day window for a new plan and a further 180 days to remedy the situation
5. Sections 107-122 of Act 930- Third, where the initial 2 attempts fail, BoG will place the institution into official administration
6. Lastly, section 123 of Act 930 provides the BoG the right to revoke the license of the Bank if the BoG believes the Bank will be insolvent within 60 days

3. Implementation of Bank of Ghana Capital Requirement directive (Basel II & III)

On November 14, 2017 Bank of Ghana (BoG) sent a letter to all Managing Directors that they should expect an email on draft capital directive requirement (CRD or the Directive) and reporting forms. Banks are required to perform an impact assessment of the draft directive by January 31, 2018. In the draft capital directive sent to banks, Bank of Ghana requires Banks to comply with the capital directive on July 1, 2018. The BoG letter dated November 14, 2017 addressed to Managing Directors (MD) of banks stated that BoG is giving immediate priority to Basel II pillar 1 risk (i.e. credit, operational and market) and the Basel III capital framework. The letter went on to state that when the Basel regulatory framework is in place, BoG will look to introduce other parts of the Basel framework, namely Basel II pillar 2  and Pillar 3 and or  Basel III liquidity requirements. The CRD consists of four parts:

• Part 1 – Definition of Regulatory Capital;
• Part 2 – Management and Measurement of Credit Risk with three sub-sections;
• Part 3 – Management and Measurement of Operational Risk; and
• Part 4 – Management and Measurement of Market Risk.

The key impact of this new capital directive includes the following

1. Systems and data

Most banks will need to change their systems – or indeed to build new systems – to ensure that they are collecting the necessary data on their borrowers and other counterparties, and can calculate the new risk weights using the Directive

1. Capital ratio:

• Capital ratio increased from 10% to 13% due to inclusion of 3% for Capital Conservation Buffer (CCB1) means some banks may need additional capital.
• Earning retentions if Capital Conservation Buffer (CCB1) of 3% is not achieved by January 1, 2018
• Leverage ratio of 6% means some banks may need additional capital to finance its  assets
• Regulatory capital: some Banks tier 1 and 2 capital may not qualify as tier 1 and 2 capital under the Directive leading to the need for some Banks to introduce fresh capital
• The full complement of capital ratio requirements across the components of capital are summarized in the Table:

1. Numerator of the capital ratio :

The definition and constituents of regulatory capital consists of ‘tiers’ as follows:

• Tier 1 Capital or ‘going-concern capital’ – capital that supports the bank’s operations and can absorb losses as required: Common Equity Tier 1 (‘CET1’) and Additional Tier 1 (‘AT1’)
• Tier 2 Capital or ‘going-concern capital’ – capital to absorb losses or convert to equity if a bank is wound up.
• Bank will need to assess eligibility of their ordinary shares as regulatory capital under the new Directive. Banks may have to obtain legal opinions to review documentation and terms and conditions of their existing share capital documents.
• Bank will need to assess eligibility of their debt instrument as tier 2 capital under the new Directive. Banks may have to obtain legal opinions to review documentation and terms and conditions of their existing debt instruments.
• Only audited profit will be accepted as part of CET1. This means interim unaudited profit will not count towards CET1 (Paragraph 35 of the Bank of Ghana Capital Requirement Directive specifies that income surplus of common equity tier 1 capital refers to profit and loss accounts at the end of the previous financial year. Banks may reckon the profits in the current financial year only after appropriate audit, verification or review procedures prescribed by BOG have been undertaken by a third party. Dividends should be deducted from CET1 in accordance with applicable accounting standards)
• Bank of Ghana should consider to allow the interim profit and loss account in the retained earnings and other comprehensive income
• Certain items such as deferred tax assets , Cash flow Hedge Reserves, Intra-group transactions for capital or funding purposes and Defined benefit pension fund assets and liabilities will be deducted from CET since they are considered to have the ability to supports the bank’s operations and can absorb losses as required

1. Denominator of the capital ratio
2. Credit risk :

• Banks will manage and measure credit risk by the Standardized Approach (SA) and the measurement of credit risks consists of three parts: on-balance sheet exposures , off-balance sheet exposures and credit risk mitigation
• Credit risk weighting will be done at a more granular level than it is currently done.
• Credit risk-on-balance sheet exposure – Risk weightings for some exposures have increased .This means some Banks may face higher or lower capital requirements as a result of the Directive, depending on the risk profile of their exposures
• The approach for credit risk will improve the robustness and risk sensitivity of the existing approach
• Depending on the Bank’s portfolio, additional capital may be required
• Credit risk systems and processes will have to be modified to accommodate the granular data requirements
• Differences in risk weighted assets (RWA) to total assets (also called RWA Density) will be minimized
• Risk weighting for past due and non-performance loans increased by additional 50% risk weighting
• A risk weight add-on of 50% will apply to a credit exposure to a counterparty, except the Government of Ghana, BOG, public sector entities (PSE) or banks that has a currency mismatch and is “unhedged”. A currency mismatch arises where the loan is denominated in a foreign currency that is not the currency of the borrower’s primary income. An “unhedged exposure” is defined as an exposure to a borrower that has no natural or financial hedge against the foreign exchange risk arising from the currency mismatch.
• Credit risk-off-balance sheet exposure – credit conversion factors for some off –balance sheet exposures have increased. This means some Banks may face higher or lower capital requirements as a result of the Directive, depending on the risk profile of their off-balance exposures

2. Operational risk

• The current approach of Basic Indicator Approach of 100% of 3yrs Average Annual Gross Income  going to be changed Standardized Approach which may lead to higher capital requirements for some banks
• The standardized approach is much more complex and risk based and will require additional capital than the basic indicator approach

3. Market risk;

• The current approach is 50% of Net Open Position (NOP). This approach capture only foreign exchange risk element of market risk and ignores other market risk such as interest rate related instruments, equities position risk and commodity position that a Bank may be currently exposed. The Directive proposes that Bank uses a standardized approach for market risk. The Standardized Approach is a building block approach where the capital charge for each risk category is determined separately. Within the interest rate and equity position risk categories, separate capital charges for specific risk and the general market risk arising from debt and equity positions are calculated.  For Banks currently having interest rate related instruments, equities position risk and commodity position may require additional capital requirements.

4. Banks are to submit plans addressing Non-Performing Loans to Bank of Ghana

The key risk in the banking industry today, is the increasing level of impaired assets.  Based on Bank of Ghana November 2017 banking sector report, the non-performing loans for the banking sector stands at 21.6 percent at the end October 2017. This has heightened banks’ risk aversion to credit delivery. Bank of Ghana’s immediate response is to reduce some of the structural bottlenecks in the credit process. Bank of Ghana is said to be reviewing the governing legislations on the credit reference and collateral registry systems. These are to ensure that banks submit both positive and adverse findings on borrowers to the bureaus and also address some thorny foreclosure issues.

Based on the increasing trends of non-performing loans, Bank of Ghana  have requested banks to provide  detailed plans on how each bank will resolve its non-performing loans – on a loan by loan basis.

5. Enforcement of loan write-off

Bank of Ghana has indicated that they are going to enforce their directive on loan write-off going forward, and require appropriate disclosure of written-off facilities in the published financial statements of banks.

6. Bank of Ghana corporate governance directives

Based on an address made by Dr. Ernest Addison, Governor, Bank of Ghana (BoG) at the Annual Dinner of the Chartered Institute of Bankers Ghana on Dec. 2, 2017 (https://www.bog.gov.gh/privatecontent/Speeches/Speech_Annual%20Bankers%20Dinner_Final%20Dec%202017.pdf), Bank of Ghana soon will release directives on corporate governance for the banking sector. Among others, these directives will focus on oversight responsibilities of the Board of Directors and bank management, prioritize risk management systems, and ensure independent audit roles, among others. In particular, the guidelines will impose the tenure of Chief Executive Officers and Non-Executive Directors of banks, the size of bank Boards, the retiring age for Directors and disclosure of attendance at Board meetings by Directors in annual reports.

7. Enforcement of Guide for financial publication

An area that Bank of Ghana will sought to strengthen corporate governance structures in the banking sector is through financial publications.  Bank of Ghana guide on financial publications was updated June 28, 2017.  Please see the link:

https://www.bog.gov.gh/privatecontent/Public_Notices/Guide%20for%20financial%20publication%202017V1.1.pdf

The updated guidance  include detailed corporate governance disclosures by banks and the inclusion of provisions on corporate governance under the Banks and Specialized Deposit taking Institutions Act, 2016 (Act 930). The guide for financial publications seeks to ensure that International Financial Reporting Standards (IFRS) are adopted in the preparation and presentation of financial statements. It also seeks to clarify and provide direction as well as bring uniformity in the financial reporting process across the industry.

8. Deposit protection scheme:

Based on an address made by Dr. Ernest Addison, Governor, Bank of Ghana (BoG)  at the Annual Dinner of the Chartered Institute of Bankers Ghana on Dec. 2, 2017 (https://www.bog.gov.gh/privatecontent/Speeches/Speech_Annual%20Bankers%20Dinner_Final%20Dec%202017.pdf) , the deposit protection scheme is expected to come on board next year in line with the BSDI Act and the Ghana Deposit Protection Act, 2016 (Act 931) to provide a safety net for vulnerable depositors in the event of a bank failure. The Governor entreats all banks to study the Ghana Deposit Protection Act to know the requirements for enrollment on the scheme.

9. Whistle blower policy:

Based on an address made by Dr. Ernest Addison, Governor, Bank of Ghana (BoG)  at the Annual Dinner of the Chartered Institute of Bankers Ghana on Dec. 2, 2017 (https://www.bog.gov.gh/privatecontent/Speeches/Speech_Annual%20Bankers%20Dinner_Final%20Dec%202017.pdf) ,  it was noted that  Bank of Ghana (BoG) is fine-tuning a whistleblowing policy that will encourage the general public to pass on confidential information on malpractices in banks for thorough investigations to be undertaken and appropriate sanctions applied.
The policy, which will be the first of its kind by the central bank, will also prescribe protections for whistleblowers as part of a grand strategy by the bank to help encourage whistleblowing on banks in the country.
The Governor of the BoG, Dr Ernest Addison, said that the move was part of a range of measures due to be introduced into the banking sector.

The initiatives are meant to promote transparency and accountability in the entire financial sector and the Governor noted that “We will advocate for a whistleblower provision to protect individuals who raise alerts to the BoG on malpractices by the banks,”

10. Implementation of IFRS 9 on January 1, 2018

IFRS 9 is a new accounting standard which includes guidance on loan loss provisioning. The new accounting standard will require faster level of loan loss reserve starting January 1, 2018 and is called IFRS 9 Financial Instruments. IFRS 9 will require banks to show their losses earlier than in the past. Overall, the losses themselves do not change in total over the life of the loans; only the timing of their recording by the bank will be different. The new approach is seen as more timely and it reflects the underlying economics more closely since expected future losses are already priced in the interest rate charged on the loans.

Before IFRS 9, accounting rules forced banks to “wait” for a loss event before recording a loss against a loan asset. This was the case even when banks expected that a percentage of their loans would not be paid back in full. When the downturn came they had to catch up by recording significantly larger losses all at once. The result was the heavy criticism of banks during the financial crisis for providing “too little too late”.

The international accounting standards board (IASB) field work on the impact assessment of the new accounting standard indicates that allowances could increase as follows:

• Between 30% and 250% for mortgage portfolios
• Between 25% and 60% for non-mortgage portfolios

The European Banking Authority (EBA) Impact assessment is a 30% increase in current loan loss reserves.  Also, A Deloitte survey shows approximately 50 percent more allowance as compared to the current levels of provisioning

Bank of Ghana encourages Banks to follow Basel Guidance on credit risk and accounting for expected credit losses (https://www.bis.org/bcbs/publ/d350.htm). In addition to the Basel guidance, Bank of Ghana specified its IFRS 9 expectation in its Bank of Ghana issued June 28, 2017.  Please see the link: https://www.bog.gov.gh/privatecontent/Public_Notices/Guide%20for%20financial%20publication%202017V1.1.pdf.

Application of IFRS 9 impairment requirements adherence to Basel guidance and Bank of Ghana financial publication guide and additional clarification guide requires the following:

1. A bank should adopt a robust process that is designed to equip the bank with the ability to know the level, nature and drivers of credit risk
2. A bank’s board of directors (or equivalent) and senior management should ensure that the bank has appropriate credit risk practices, including an effective system of internal control, to consistently determine adequate allowances in accordance with the bank’s stated policies and procedures, the applicable accounting framework and relevant supervisory guidance
3. A bank should have a credit risk rating process in place to appropriately group lending exposures on the basis of shared credit risk characteristics
4. A bank should adopt a robust approach in segmentation of their policy
5. A bank should have policies and procedures in place to appropriately validate models used to assess and measure expected credit losses
6. A bank should use experienced credit judgment, especially in the robust consideration of reasonable and supportable forward-looking information, including macroeconomic factors, is essential to the assessment and measurement of expected credit losses
7. A bank should have a sound credit risk assessment and measurement process that provides it with a strong basis for common systems, tools and data to assess credit risk and to account for expected credit losses.
8. Bank’s public disclosures should promote transparency and comparability by providing timely, relevant and decision-useful information.
9. A Bank should adopt a forward looking approach to assess significant increases in credit risk and its measurement of expected credit losses
10. A bank should adopt, document and adhere to sound methodologies that address policies, procedures and controls for assessing and measuring credit risk on all lending exposures. The measurement of allowances should build upon those robust methodologies and result in the appropriate and timely recognition of expected credit losses in accordance with the applicable accounting framework.
11. A Bank is required to have documentation around IFRS 9  models specifically the following

• Credit risk factors : How the Bank identifies  factors that affect repayment of each type of portfolio, whether related to borrower incentives, willingness or ability to perform on the contractual obligations, lending exposure terms, conditions or  Economic factors considered (such as unemployment rates or occupancy rates) and  internal and external factors such as the underwriting standards applied to a lending exposure at origination and changes in industry, geographical, economic and political factors
• Loan portfolio segmentation- the different type of loan portfolio segmentation used for staging and ECL measurement
• Segmentation criteria- description of the basis for creating groups of portfolios of exposures with shared credit risk characteristics
• Outline the bank’s policies on defaults for the different portfolios
• Staging unit of account : Whether the evaluation of credit risk  will be  conducted on a collective or individual basis,
• Staging criteria- quantitative, qualitative and other criteria for classifying financial assets into stages 1, 2 and 3
• what are the factors used to classify a loan under stage 3
• Staging probation period : Policy for upgrading/downgrading financial assets in the various stages
• The approach and process to incorporate forward looking into  staging
• Staging validation approach –
• How the life of an exposure or portfolio is determined (including how expected prepayments and defaults have been considered)
• Outline the bank’s policies and procedures on write-offs and recoveries
• The time period over which historical loss experience is presented
• The factors that are considered when establishing appropriate historical time periods over which to evaluate historical loss experience
• The ECL assessment and measurement methods (such as a loss rate method, probability of default (PD)/loss-given-default (LGD) method, or another method) to be applied to each exposure or portfolio
• The reasons why the selected ECL method is appropriate
• Limitations associated with the selected ECL method and how such limitations are going to be mitigated
• Inputs, data and assumptions used in the allowance estimation process (such as historical loss rates, PD/LGD estimates and economic forecasts)
• Process for evaluating the appropriateness of significant inputs and assumptions in the ECL assessment and measurement method chosen.
• If PD, LGD method is used, documentation of the PD approach (Regression Modelling, Transition matrices, Cohort Analysis, Pooled PD, Survival method, etc.)
• If PD, LGD method is used, documentation of the LGD method (market LGD, the implied LGD, implied historical LGD and workout LGD)
• If PD, LGD method is used, documentation of EAD approach for amortizing and revolving products
• Criteria to duly consider the impact of forward-looking information, including macroeconomic factors
• The approach to adjust historical experience with current conditions
• The approach and process to incorporate forward looking …. into ECL measurement
• The forward looking factors chosen and their relevance
• How   scenarios or consideration of other possible outcomes are required by IFRS 9.5.5.17  considered in ECL measured
• How  are scenario weights determined
• The methods used to validate models for ECL measurement
• Policies for modification and renegotiation of financial assets
• ECL approach and assumptions for off-balance sheet items (LC, guarantees, undrawn balances)
• ECL approach and assumptions for placements with other banks
• ECL approach and assumptions for ECL measurement of government securities

[1] https://www.bog.gov.gh/privatecontent/MPC_Press_Releases/Transcript%20of%20MPC%20Press%20Briefing%20-%20November%20%202017.pdf

Your Corporate Doctor is back in full gear in the year 2018. I am very sure you have been looking forward to seeing me, and probably asking where is Corporate Doctor? Well, for your information, I went to “mount up with more wings” to be able to fly to the nooks and crannies in search of quality information in order to provide better corporate solutions for your ailing businesses and employees.  We are all surrounded with issues and opportunities to choose from, and this calls for decision-making.

Decision-making is part of our daily life. An average of human being makes hundreds of decisions daily. Decision-making is an integral part of our lives and it is indispensable; even mad people or mentally retarded people make decisions. Breast-feeding or suckling babes makes decision as to which breast to feed from or suck, and at what time and intervals. Decision-making is crucial, tough, time-consuming, frustrating, costly, indispensable, and yet profitable if it is done properly.

I have taken a decision to start the year with this crucial subject because of its importance to life and organisations. This subject will travel for fourteen (14) weeks, and I hope by the end of this long journey you will appreciate the power and benefits of quality decision-making and consequences of poor or bad decision-making. Keep reading and never miss this series. Happy New Year with Good Decision-making.

Sometime in the middle of the last century, Chester Barnard – a retired telephone executive and author of The Functions of the Executive – imported the term ‘decision-making’ from the lexicon of public administration into the business world. There, it began to replace narrower descriptors such as ‘resource allocation’ and ‘policymaking’.

The introduction of that phrase changed how managers thought about what they did and spurred a new crispness of action and desire for conclusiveness, argues William Starbuck, professor in residence at the University of Oregon’s Charles H. Lundquist College of Business. “Policymaking can go on and on endlessly, and there are always resources to be allocated,” he explains. “Decision implies the end of deliberation and the beginning of action.”

So, Barnard – and such later theorists such as James March, Herbert Simon and Henry Mintzberg – laid the foundation for studying managerial decision-making. But decision-making within organisations is only one ripple in a stream of thought flowing back to a time when man, facing uncertainty, sought guidance from the stars. The questions of who makes decisions, and how, have shaped the world’s systems of government, justice, and social order. “Life is the sum of all your choices,” Albert Camus reminds us. History, by extrapolation, equals the accumulated choices of all mankind.

The study of decision-making, consequently, is a smorgasbord of intellectual disciplines: mathematics, sociology, psychology, economics, and political science, to name a few. Philosophers ponder what our decisions say about ourselves and about our values; historians dissect the choices leaders make at critical junctures.

Research into risk and organisational behaviour springs from a more practical desire: to help managers achieve better outcomes. And while a good decision does not guarantee a good outcome, such pragmatism has paid off. A growing sophistication with managing risk, a nuanced understanding of human behaviour, and advances in technology that support and mimic cognitive processes have improved decision-making in many situations.

Even so, the history of decision-making strategies is not one of unalloyed progress toward perfect rationalism. In fact, over the years we have steadily been coming to terms with constraints—both contextual and psychological—on our ability to make optimal choices. Complex circumstances, limited time, and inadequate mental computational power reduce decision-makers to a state of ‘bounded rationality’, argues Simon.

While Simon suggests that people would make economically rational decisions if only they could gather enough information, Daniel Kahneman and Amos Tversky identify factors that cause people to decide against their economic interest even when they know better. Antonio Damasio draws on work with brain-damaged patients to demonstrate that in the absence of emotion it is impossible to make any decisions at all. Erroneous framing, bounded awareness, excessive optimism: the debunking of Descartes’s rational man threatens to swamp our confidence in our choices, with only improved technology acting as a kind of empirical breakwater.

Faced with the imperfectability of decision-making, theorists have sought ways to achieve if not optimal outcomes, at least acceptable ones. Gerd Gigerenzer urges us to make a virtue of our limited time and knowledge by mastering simple heuristics, an approach he calls “fast and frugal” reasoning.

Amitai Etzioni proposes “humble decision-making”, an assortment of nonheroic tactics that include tentativeness, delay, and hedging. Some practitioners, meanwhile, have simply reverted to the old ways. Last April, a Japanese television equipment manufacturer turned over its US$20million art collection to Christie’s when the auction house trounced archrival Sotheby’s in a high-powered round of rock-paper-scissors, a game that may date back as far as Ming Dynasty China.

Chances Are

Risk is an inescapable part of every decision. For most of the everyday choices people make, the risks are small. But on a corporate scale, the implications (both upside and downside) can be enormous. Even the tritely expressed (and rarely encountered) win-win situation entails opportunity costs in the form of paths not taken.

The Meeting of Minds

In the fifth century BC, Athens became the first (albeit limited) democracy. In the seventeenth century, the Quakers developed a decision-making process that remains a paragon of efficiency, openness, and respect. Starting in 1945, the United Nations sought enduring peace through the actions of free peoples working together.

There is nobility in the notion of people pooling their wisdom and muzzling their egos to make decisions that are acceptable—and fair—to all. During the last century, psychologists, sociologists, anthropologists, and even biologists (studying everything from mandrills to honeybees) eagerly unlocked the secrets of effective cooperation within groups. Later, the popularity of high-performance teams, coupled with new collaborative technologies that made it ‘virtually’ impossible for any man to be an island, fostered the collective ideal.

The scientific study of groups began, roughly, in 1890 as part of the burgeoning field of social psychology. In 1918, Mary Parker Follett made a passionate case for the value of conflict in achieving integrated solutions in The New State: Group Organisation—The Solution of Popular Government.

A breakthrough in understanding group dynamics occurred just after World War II, sparked—oddly enough—by the U.S. government’s wartime campaign to promote the consumption of organ meat. Enlisted to help, psychologist Kurt Lewin discovered that people were more likely to change their eating habits if they thrashed the subject out with others than if they simply listened to lectures about diet. His influential ‘field theory’ posited that actions are determined, in part, by social context – and that even group members with very different perspectives will act together to achieve a common goal.

Over the next decades, knowledge about group dynamics and the care and feeding of teams evolved rapidly. Victor Vroom and Philip Yetton established the circumstances under which group decision-making is appropriate. R. Meredith Belbin defined the components required for successful teams. Howard Raiffa explained how groups exploit ‘external help’ in the form of mediators and facilitators. And Peter Drucker suggested that the most important decision may not be made by the team itself, but rather by management about what kind of team to use.

Meanwhile, research and events collaborated to expose collective decisionmaking’s dark underbelly. Poor group decisions—of the sort made by boards, product development groups, management teams—are often attributed to the failure to mix things up and question assumptions. Consensus is good, unless it is achieved too easily – in which case it becomes suspect.

Irving Janis coined the term ‘groupthink’ in 1972 to describe “a mode of thinking that people engage in when they are deeply involved in a cohesive in-group, when the members’ strivings for unanimity override their motivation to realistically appraise alternative courses of action”. In his memoir, A Thousand Days, former Kennedy aide Arthur Schlesinger reproached himself for not objecting during planning for the Bay of Pigs invasion: “I can only explain my failure to do more than raise a few timid questions by reporting that one’s impulse to blow the whistle on this nonsense was simply undone by the circumstances of the discussion”.

Consensus is good, unless it is achieved too easily, in which case it becomes suspect.

It seems that decisions reached through group dynamics require, above all, a dynamic group. As Clarence Darrow neatly put it: “To think is to differ”.

FIN

Writer’s Information

The writer is an Organisational Design & Development and Human Resource Consultant working with Premium Consultancy Services Ltd. You can contact him for all your corporate solutions on:

Telephone: 0245 082 660

Email:  [email protected]

“Never mind if your nose is ugly, as long as you can breathe through it.” – Zairian proverb

Our Creator made each of us intrinsically different, and imbued us with freewill so that we could live, and not simply function like robots. All things being equal, our uniqueness should not be a source of conflict; in fact, it seems in principle to promote diversity so that we can appreciate each other and ultimately love one another.

Interestingly, quite a number among us, out of a desire for predictive behaviour, attempt to determine how others should act – and think, in some cases. What we seem to overlook is that our uniqueness is such that there will always be different opinions about every issue – and there are many advantages associated with our differences. That is why it is important we learn to listen and question those opinions which are poles apart from ours.

All of life is an accumulation of our individual adventures. And no matter the cooperation and collaborations that take place, we will always first be individuals before we can become anything else. That is why despite our shared desire for wisdom, for peace, we struggle to reach those ideals. More often than not, we approach issues with the assumption that others see and understand as we do. As a result, we never start our interactions with understanding the viewpoints of others. Too many of us, too often, start with the presumption that rationality has tamed our egos and people will be as objective as possible.

Our individual experiences of life and our relationships with it, be they physical, moral, emotional or spiritual, are so important we do not simply throw them away because someone else is asking us to. It is the kind of knowledge that has made us who we are. We would be stripped of our confidence if we were to let go all of it at a one go. That is why we always start with who we are.

We enter relationships seeking first to preserve who we are, before we become someone else. It is an attribute of our independent will. Thus, more often than not, when a person disagrees with your opinion it has to do with how much more they trust their understanding of events than what you are saying. It is like a guidance system that offer them understanding and comfort. They will agree with you when your argument offers them more trust than they can generate themselves.

Disagreements, no matter the size, offer us moments of courage. They define the individual and presents to all present a source of great learning. Embracing it not only enlarges our perspectives on issues, but also punctures our human pride so that we can lower ourselves to the level of others in order to build trust in our relationships and collaborations. The more we encourage others to be themselves the better we understand them, and the easier it is to relate to and trust them. We are a species equipped to ask questions and systematically chip away obscurity to find the answers. Why then should disagreements scare us? We should always be ready to dialogue and end up with a richer view of life than when there are no disagreements.

The call to embrace disagreement has come about because we are failing at it. We are unconsciously discouraging people to be honest with what their thoughts are on issues and events. Some of us have become demi-gods, victimising those who do not see eye-to-eye with us. We want our opinions to be law, and yet we are the first to deny this of others.

We have closed our minds to issues affecting society. Like the proverbial ostrich, we assume holding back our opinions means that we will not be affected. Well, if you find yourself in that circle, be informed that evil does not look at an individual’s opinion before it unleashes its tragedy. It sweeps across communities and societies because the good people refuse to stand up and be counted.

As history has taught us over and over again, every wonderful thing that happened to humanity was really a spectacular disagreement with an existing notion. To question and to disagree allows us to think through thoughts that would never have come to us, and this helps us to develop an open mind – that foundation of creativeness and inventiveness. Let us never treat disagreements as personal or partisan. We disagree because we believe otherwise. So, let us respect those who disagree with us, giving them the benefit of doubt – and more importantly, question their beliefs till we understand them.

Comments, suggestions and requests should be sent to the author at [email protected]

Reading is good, but action is better.  As a startup, you will be carried away by the loads of work to be done and get lost most of the times in them. An excuse to not get some knowledge and inspirations from others who have thrived and been successful, will be denying yourself business and personal growth.

Many entrepreneurs have been on the same path you are finding hard but you’re only a book away to learn more from their stories.

These excellent books are written by successful and driven entrepreneurs – business moguls; and others by recommendations. They will shape your entrepreneurialism, business intelligence, habits, and give you in-depth insights to help lead your startup business to a peak.

Let’s warm up into the year by looking at some best books every startup entrepreneur must read and add to their bestselling collections.

1. The $100 Startup: Fire your boss, do what you love and work better to live more – by Chris Guillebeau

If you are the kind who loves inspiring stories and moved into action by other’s successful deeds, this is a book for you. Turning passions into profitable ventures are what most entrepreneurs are living by these days. Chris Guillebeau will in a beautiful way push you beyond your limits to think creatively and big in this book.

2. The Lean Startup – by Eric Ries

Many startup entrepreneurs have highly recommended this book. It’s quite a famous book: a personal experience of the author himself, Eric Ries. He believes startups can best organize the development of their products in a much better way than they are currently doing through the process of treating their startup businesses like an experiment.

A book I will recommend to challenge every startup entrepreneur’s continuous art of innovation and business success.

3. 45 Effective Ways For Hiring Smart: How to predict winners & losers in the incredibly expensive people reading game –By Pierre Mornell

Startups need team contributions when scaling up. It is important for their expansion and growth. 45 effective ways for hiring smart will give you better dimensions to how best to achieve results when hiring. It is also an easy and straightforward book: quite an effective read for startup newbies.

4. Making Ideas Happen – By Scott Belsky

Generating new ideas can be easy as running water, but quiet a task to execute. Making ideas happen will compel anyone with tones of innovative ideas but clueless on how to effectively turn them into visions and tangible outcomes.

“Ideas are easy. Implementation is hard. This book helps you with the hard part.” – Guy Kawasaki, Former Apple Chief Evangelist. Startup founders with viable business ideas will achieve more with “Making Ideas Happens”.

5. Business Stripped Bare – by Richard Branson

From an iconic entrepreneur, anything written by him is worth the read. Richard Branson – “The brave may not live forever – but the cautious do not live at all.” Talking about how you can succeed and make a difference, he shared the ‘inside track’ on his life in business and also reveals the truth about his most risky and brilliant deals. It’s a revealing invaluable advice and Virgin’s greatest achievements and setbacks.

6. Zero to One – By Peter Thiel with Blake Masters

This incredible piece was recommended by Mark Zuckerberg, CEO of Facebook and Ellon Musk. Zero to One: Notes on startups or how to build the future will guide to drive your startup growth in the quest of business success.  Personally, one of my favorite books.

7. Hooked: How to build habit forming products – by Nir Eyal

Another reading delight. This is an excellent book for every startup. On building the perfect product for customer or user engagement, Nir emphasized on how emotions can play a major role in driving behaviors. If you are looking forward to a potential startup success, this is a must pick.

8. Traction: How any startup can achieve explosive customer growth – Gabriel Weiberg and Justin Mares

Traction is definitely resourceful. Achieving an exponential customer growth is an expectation of every business. An awesome guide to getting the customers. Most startups don’t fail because they can’t uniquely build a product but, because they can’t get traction. How do you get the customers? Get this book.

9. Finding my virginity – By Richard Branson

First, I found it intriguing and at the same time mischievous: I just wanted to read it. It’s the latest from the renowned business man. You can’t expect anything less from this book. A candid detail of a lifetime of triumphs and failures and what he really thinks about his unique life and career is well captured.

“Finding my virginity is a much more than a series of business adventures”.

This book, since its release, has been added to my favorite books list. It should do great for you.

10. The Hard Thing About Hard Things – By Ben Horowitz

A success story from one entrepreneur to another. Ben shades some insights of his personal struggle and the understanding of no short cuts to knowledge. The need for every entrepreneur to know it is a tough business world out there: that, it is worth the hurdles and the thrilling stories of successful entrepreneurs who had been on similar path, will definitely boost your efforts towards your goals. His story makes this book a masterpiece.

11. 18 Minutes: Find your focus, master distraction and get the right things done – by Peter Bregman

Bregman, works from the premise that the best ways to combat constant and distractive interruptions is to create a productive distraction of your own. Productivity is key in every startup business:18 minutes clearly helps define how you can find ways to stay focus on the key priorities in your life and cutting out the daily clutter distractions. To find balance between running your startup business and individual life, this book is recommended.

12. Creativity Inc. by Ed Catmull with Amy Wallace

The book Creativity Inc, will give you an insight into what it takes to continuously and persistently create incredible things.

13. The E-Myth Revisited – By Michael E. Gerbber

There have been many deterring stories about building businesses. Some startups today are faced with many challenges because of these myths. Michael through valuable guide dispels these myths. This book gives a deeper insight that will get you through the conception stages, growth stages and the learning processes of running a business.

14. The Power of Habit: We do what we do in life and business –  by Charles Duhigg

The power of habit gives readers understanding of human psychology that can be applied in everyday life, business and developing products. It will help you identify the extreme values necessary to make a product part of the customer’s habit. Habits are powerful and as much as the good ones will promote success, they can also serve as distractive tool for progress. Building great businesses today require the understanding of how people – customers think and act and factoring their most desirable concerns into your products.

15. The Art of Startup Fundraising: Pitching investors, negotiating the deal, and everything else entrepreneurs need to know – By Alejandro Cremades

For startups, money means everything. This book throws light on the power of the new digital world of finance with some good tricks on raising good money and investing in startups. It also shows you how startups funding actually works; crafting your pitch, finding the right investors and importantly, getting access to the money you need to keep the business running. The advices are enormous on how to raise capital.

Finding it hard to read ideally any good books? Join our Startupreneurs –Reading Challenge to stay motivated, inspired and keep up with the reading gurus. Get weekly updates on collections and recommended books, share your collections and look forward to some give away business packages. To share your reading collections with us or ask for recommended books, send your emails to: [email protected]

Christmas has ended, with all the fun and excitement it brings. I sometimes have to pinch myself to accept the reality that the season has gone by so quickly. For retailers, it’s always been a peak period for sales; and, certainly, Christmas just gone by was no exception. The season is over, but retail competition remains unabated. As intense as ever, it stares us in the face all-year-round.  How do you remain visible among the competition and still maximise your sales? Now is the period to explore the potentials of your people to your advantage. Get your people to sit up and patch-up any holes that will help you stay afloat in the stormy waters of competition.

Here are 7 ways by which you can use your people to manage sales and remain competitive in the seemingly quiet period.

1. Review your Staff Key Performance Indicators (KPI’s)

It is necessary to develop performance indicators for all staff to assess how well they are meeting set targets for a period. What was your target for the just-ended peak period? Review your staff KPI’s against set targets to identify star performers and individuals whose performances ought to be improved.  Of course, star performers should be rewarded and given a boost to do even better in the future. This activity also reminds staff of accountability for their time and effort you pay for.

2. Set a Benchmark for future expectations

The absence of sales expectations may build a laid-back attitude in some employees, who would still expect to be paid at the end of the month irrespective of whether they have contributed to sales or not. Draw a performance benchmark from the review of targets to serve as a blueprint for future performance. This benchmark will push even the dullest of your employees to pull their weight in terms of selling. With each employee doing their bit to sell more, overall sales and your bottom line will eventually see massive improvement.  This is the most conducive time to refocus and re-energise staff toward the expected peak performance.

3. Encourage Staff Feedback and Coaching

Feedback and monitoring should form an integral aspect of your KPI system.  How well employees are doing or how poorly they are performing should not be kept secret from them. Provide post-review feedback so employees are made aware of where they are now, future expectations and areas of commendation or otherwise.  Honest and unbiased feedback requires keen monitoring of employee behaviour, attitude and work performance. Also, welcome honest but negative feedback from employees regarding work systems. You never know the good counsel you’re likely to unearth if you give a listening ear to all employees.

4. Identify and Communicate Staff behaviour that negatively impacts performance

Lateness, rudeness, apathy, and dishonesty are a few of the undesirable behaviours retail employees often exhibit. Do not let such behaviour go uncommented and be accepted as a norm that can only be corrected by replacing culprits with new recruits. End the vicious cycle of ill-performing staff! It is better to trim the rough edges regarding behaviour of the people you have now, because there are no angels out there. Improved employee behaviour implies happy customers and improved sales.

5. Ensure the management team is well-informed and well-armed to enforce decisions

Get the buy-in of the entire management regarding your people management policies, and especially the review exercise for key performance indicators. Also, ensure management is well-informed and understand what is expected of them. Employees desire to see a united front with consistency in decision-making and enforcement.

6. Train and develop staff with potential

Age old principle of training cannot be omitted from this discussion. Your employees have worked through the busiest period of selling; serving customers and meeting their needs. Get them together and create a training program to allow them unwind. Let them share ideas with their best and worst experiences over the peak period and get them to build them on their knowledge for improved performance. You may also train on evolving trends in customer expectations and selling skills such as building rapport with customers, selling value and offering add ons. This could be a very strong refreshing factor that creates a whiff of readiness to fly.

7. Reward deserving Employees

As you embrace the contributions of your people, they should be duly rewarded for their efforts. This is the time to reward employees who have gone the extra mile to keep your customers happy and have fetched more sales. Create a wall of fame that shows photos with descriptions of achievements for each top performing employee. You may even throw a simple “employee/s of the year” party to celebrate your star performers.

When good employees are recognized, it sends out the message to the entire team that every member is worthwhile. The employees you celebrate today will be there tomorrow to keep the business afloat in stormy times.

By Amma Adjeiwaa Antwi, M-DoZ Consulting (www.m-doz.com)

M-DoZ Consulting offers Organisational Development, Corporate Training and Financial Planning Services. We can be reached on +233247-247-200, +23320-1196-080, Email: [email protected], Facebook: mdozghana